<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------------------
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission file number 000-22933
---------
WEEKS REALTY, L.P.
(Exact name of registrant as specified in its charter)
Georgia 58-2121388
------- ----------
(State of Incorporation) (I.R.S. Employer Identification No.)
4497 Park Drive, Norcross, Georgia 30093
-----------------------------------------
(Address of principal executive offices, including zip code)
(770) 923-4076
--------------
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
------------------- ----------------
Units of Limited Partnership Interest ("Units") Not applicable
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. ___
The aggregate market value of the Common Units held by non-affiliates
was approximately $645,495,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of Weeks Corporation's Proxy Statement in connection with its
Annual Meeting of Shareholders to be held May 20, 1998, are incorporated by
reference in Part III, Items 10, 11, and 13.
<PAGE>
TABLE OF CONTENTS
Item No. FINANCIAL INFORMATION Page No.
- ------- --------------------- --------
PART I
1. Business....................................................3
2. Properties.................................................16
3. Legal Proceedings..........................................28
4. Submission of Matters to a Vote of Security Holders........28
X. Executive Officers of the Registrant.......................29
PART II
5. Market for Registrant*s Common Equity
and Related Shareholder Matters........................32
6. Selected Financial Data....................................34
7. Management*s Discussion and Analysis of Financial
Condition and Results of Operations....................35
8. Financial Statements and Supplementary Data................48
9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure....................48
PART III
10. Directors and Executive Officers of the Registrant.........48
11. Executive Compensation.....................................48
12. Security Ownership of Certain Beneficial
Owners and Management..................................49
13. Certain Relationships and Related Transactions.............51
PART IV
14. Exhibits, Financial Statement Schedule
and Reports on Form 8-K................................51
2
<PAGE>
PART I
ITEM 1. BUSINESS
THE OPERATING PARTNERSHIP
Weeks Realty, L.P. (a Georgia limited partnership, the "Operating Partnership"
or "Registrant") and its subsidiaries own, operate, develop, construct, acquire
and manage industrial and suburban office buildings in the southeast United
States. Weeks Corporation (a Georgia corporation), through its wholly owned
subsidiaries, Weeks GP Holdings, Inc. ("Weeks GP") and Weeks LP Holdings, Inc.
("Weeks LP"), referred to herein as the "Company," is the sole general partner
and a limited partner and owns a majority interest in the Operating Partnership.
The Operating Partnership, including the operations of its subsidiaries,
conducts substantially all of the on-going operations of Weeks Corporation, a
publicly traded company that operates as a self-administered and self-managed
real estate investment trust ("REIT") under the Internal Revenue Code of 1986,
as amended (the "Code"). Since 1965, the Operating Partnership, together with
its affiliates and predecessors, has developed, owned, managed, constructed and
acquired primarily institutional-quality industrial and suburban office
properties in select metropolitan markets in the Southeast.
The Operating Partnership, including the operating entities described below, is
the entity through which all of the Company's operations are conducted. At
December 31, 1997, the Company controlled the Operating Partnership as the
holder of a 75.9% ownership interest in the Operating Partnership. At December
31, 1997, the Company owned the sole 1.0% general partnership interest in the
Operating Partnership through Weeks GP and a 74.9% limited partnership interest
through Weeks LP. Additionally, at December 31, 1997, Weeks LP owns all of the
6,000,000 series A preferred units outstanding, as discussed below. The other
limited partners of the Operating Partnership are those individuals and entities
(including certain officers and directors of the Company) (i) who, at the time
of the Company's initial public offering, elected to hold all or a portion of
their respective interests in the Company in the form of Units rather than
receiving shares of the Company's common stock and (ii) who have contributed,
directly or indirectly, certain assets, properties and businesses to the capital
of the Operating Partnership (collectively, the "Limited Partners"). At December
31, 1997, the Operating Partnership had 23,336,687 Common units of limited
partnership interest ("Common Units") and 6,000,000 8% series A preferred units
outstanding. The Common Units have substantially the same economic
characteristics as the Company's common stock. The series A preferred units have
substantially the same economic characteristics as the Company's series A
preferred stock. The series A preferred units carry an 8% cumulative
distribution requirement and have a liquidation preference of $25.00 per unit.
Each Common Unit may be redeemed by the holder thereof for either one share of
the Company's common stock or cash equal to the fair market value thereof at the
time of such redemption, at the option of the Company. As of December 31, 1997,
the Company had issued common stock in connection with all redemptions. With
each redemption of outstanding Common Units for the Company's common stock, the
Company's percentage ownership in the Operating Partnership will increase. In
addition, whenever the Company issues shares of its equity securities, the
Company will contribute any net proceeds therefrom to the Operating Partnership
and the Operating Partnership will issue an equivalent number of Units to either
Weeks GP or Weeks LP, as appropriate, having substantially the same economic
characteristics as the equity securities issued by the Company. The Company's
weighted average ownership interest in the Operating Partnership was 76.5% and
80.6% for the years ended December 31, 1997 and 1996, respectively. Both Weeks
GP and Weeks LP are qualified REIT subsidiaries within the meaning of Section
856(i)(2) of the Code and their existence will be disregarded for federal income
tax purposes.
3
<PAGE>
As of December 31, 1997, the Operating Partnership's in-service property
portfolio consisted of 218 industrial properties, 21 suburban office properties
and three retail properties comprising 17,015,000 square feet. One additional
in-service property totaling 86,000 square feet was held in a 50% owned entity.
In-service properties exclude properties under development that are not yet
stabilized (i.e., substantially leased) and properties under agreement to
acquire. As of December 31, 1997, the Operating Partnership's primary markets
and the concentration of the Operating Partnership's portfolio (based on square
footage of in-service properties) are Atlanta, Georgia (70%), Nashville,
Tennessee (12%), Raleigh-Durham-Chapel Hill (the "Research Triangle"), North
Carolina (12%), Orlando, Florida (4%), and Spartanburg, South Carolina (2%). In
addition, 55 industrial, suburban office and retail properties were under
development, in lease-up or under agreement to acquire at December 31, 1997,
comprising an additional 6,210,000 square feet (see "Properties" below).
As sole general partner, the Company (through Weeks GP), has the exclusive power
under the agreement of limited partnership of the Operating Partnership to
manage and conduct the business of the Operating Partnership, subject to the
consent of a majority in interest of the Limited Partners (other than Weeks LP)
in connection with (i) the sale of all or substantially all of the assets of the
Operating Partnership, (ii) the merger of the Operating Partnership into another
entity if the Operating Partnership is not the surviving entity, (iii) the
dissolution of the Operating Partnership or (iv) the acquisition of any personal
or real property other than in the name of the Operating Partnership or of
certain other entities in which the Operating Partnership has an interest. The
board of directors of the Company manages the affairs of the Company, which
directs the affairs of the Operating Partnership through Weeks GP. The
Operating Partnership cannot be terminated, except in connection with a sale of
all or substantially all of the assets of the General Partner or a decree of
judicial dissolution of the Operating Partnership pursuant to the provisions of
Georgia law, prior to December 31, 2093, without a vote of the Limited Partners.
The Company's limited and general partnership interests in the Operating
Partnership entitle it to share in cash distributions from, and in profits and
losses of, the Operating Partnership in proportion to the Company's percentage
interest therein (through Weeks GP and Weeks LP) and entitle the Company to vote
(through Weeks LP) on all matters requiring a vote of the Limited Partners
(other than the matters set forth in subsections (i) through (iv) of this
paragraph).
Additionally, the terms of the limited partnership agreement obligate the
Company to contribute the net proceeds from the issuance of additional equity
securities, including issuances under the Company's incentive stock plan, to the
Operating Partnership in exchange for Units having substantially the same
economic characteristics as the equity securities issued by the Company.
Operating Partnership net profits, net losses and cash flow (after all
allocations to preferred ownership interests) are allocated to the partners in
proportion to their common ownership interests. Cash distributions from the
Operating Partnership shall be, at a minimum, sufficient to enable the Company
to satisfy its annual dividend requirements to maintain its REIT status under
the Code.
4
<PAGE>
The Operating Partnership conducts its third-party service businesses through
two subsidiary companies (the "Service Companies"): Weeks Realty Services,
Inc. ("Weeks Realty Services"), conducts third-party landscape, property
management and leasing services, and Weeks Construction Services, Inc. ("Weeks
Construction Services"), conducts third-party construction services. The
Operating Partnership holds 100% of the nonvoting and 1% of the voting common
stock of these Service Companies. The remaining voting common stock is held by
three executive officers of the Operating Partnership. The ownership of the
common stock of the Service Companies entitles the Operating Partnership to
substantially all (99%) of the economic benefits from the results of the Service
Companies' operations (see Notes 2 and 6 to the consolidated financial
statements).
On August 24, 1994, the Company completed a business combination and an initial
public offering of common stock resulting in the organizational and operating
structure discussed above. The Operating Partnership and its subsidiaries,
including the Service Companies, succeeded to substantially all of the interests
in certain land and industrial and suburban office buildings under common
ownership and to the development, construction, landscape and management
businesses of the predecessors to the Operating Partnership referred to herein
as the "Weeks Group."
The Operating Partnership owns five of its industrial buildings in Atlanta,
Georgia through its 99% ownership of Weeks Financing Limited Partnership (the
"Financing Partnership"). The Financing Partnership buildings are encumbered by
mortgage indebtedness. The remaining 1% ownership interest in the Financing
Partnership is held by Weeks Realty Services.
Four buildings located in the Research Triangle are owned by Weeks NC Financing
Limited Partnership (the "NC Financing Partnership"), a subsidiary of the
Operating Partnership. The Operating Partnership owns a 99% interest in the NC
Financing Partnership. The remaining 1% interest is owned by a wholly owned
subsidiary of the Operating Partnership. The NC Financing Partnership buildings
are encumbered by mortgage indebtedness.
Based on the Units outstanding on February 28, 1998, executive officers and
directors of the Company own approximately 14% of the Units of the Operating
Partnership, including those Common Units attributable to shares of the Company
that are owned by such executive officers and directors. Such ownership
excludes 2,774 shares of Company common stock and 320,124 Common Units
beneficially owned A. Ray Weeks, Jr., as trustee of two trusts for the benefit
of certain members of the Weeks family, 31,810 shares of Company common stock
held by a foundation of which A. Ray Weeks, Jr., is a director, 3,000 shares of
Company common stock held by a family trust of which A. Ray Weeks, Jr., is a
trustee, 1,307,647 Common Units and 57,278 shares of common stock beneficially
owned by John W. Nelley, Jr. and Albert W. Buckley, Jr., as general partners of
NWI Warehouse Group, L.P., and 546,435 shares of Company common stock issuable
upon the exercise of options outstanding on February 28, 1998, granted to
executive officers and directors of the Company.
This Annual Report on Form 10-K, including documents incorporated herein by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act").
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, financial and otherwise, may
differ materially from the events and results discussed in the forward-looking
statements. Factors that might cause such a difference include, but are not
limited to, the general economic climate, competition and the supply of and
demand for industrial and suburban office properties in the Operating
Partnership's markets, interest rate levels, the availability of financing,
potential environmental liability and other risks associated with the ownership,
development and acquisition of properties, including risks that tenants will not
take or remain in occupancy or pay rent, or that construction or operating costs
may be greater than anticipated, and those discussed in "Management's Discussion
and Analysis of Results of Operations and Financial Condition" appearing
elsewhere herein.
5
<PAGE>
Operating Partnership History
The Operating Partnership's predecessor entities were founded in 1965 by A.R.
Weeks, Sr., the father of A. Ray Weeks, Jr., the Company's Chairman of the Board
and Chief Executive Officer. Under the leadership of A. Ray Weeks, Jr. and
Forrest W. Robinson, the Company's President and Chief Operating Officer, the
Operating Partnership's predecessor entities operated as a private real estate
organization until August 1994, when the Company completed an initial public
offering and elected to be taxed as a REIT and the Operating Partnership was
formed. Thomas D. Senkbeil joined the Company as Vice Chairman of the Board and
Chief Investment Officer in October 1992. Prior to joining the Company, Mr.
Senkbeil had been a principal in another real estate development and management
firm in Atlanta, Georgia.
In November 1996, the Operating Partnership completed the initial phase of the
acquisition of the properties and related operations of NWI Warehouse Group,
L.P. ("NWI"), and Buckley & Company Real Estate, Inc. ("Buckley"), each of
Nashville, Tennessee (see Note 7 to the consolidated financial statements).
Through that transaction, the Operating Partnership established a presence in
Nashville, Tennessee, and both of the principals of NWI and Buckley, John W.
Nelley, Jr., and Albert W. Buckley, Jr., joined the Company as Managing
Directors with responsibility for the Operating Partnership's activities in
Nashville, Tennessee. In December 1996, the Operating Partnership completed the
initial phase of its acquisition of the properties and related operations of
Lichtin Properties, Inc. ("Lichtin"), of the Research Triangle area of North
Carolina (see Note 7 to the consolidated financial statements). Through that
transaction, the Operating Partnership established a presence in the Research
Triangle, and Harold S. Lichtin, the President of Lichtin, joined the Company's
Board of Directors. John W. Nelley, Jr. and Harold S. Lichtin currently serve on
the Company's Board of Directors.
In January 1998, the Operating Partnership acquired a 2,477,000 square foot, 24-
building property portfolio in Miami, Florida (see Note 7 to the consolidated
financial statements) and in February 1998, one of the Service Companies
acquired a one-third interest in Codina Group, Inc., a South Florida commercial
and industrial real estate services company that developed the Miami portfolio
(see Note 6 to the consolidated financial statements). St. Joe Corporation, a
publicly traded company which, through its subsidiaries, is the largest single
private landowner in the State of Florida, also purchased a one-third interest
in Codina Group, Inc. Through these combined transactions, the Operating
Partnership established a presence in South Florida with the intention of
pursuing development and acquisition activity in that market.
The Operating Partnership's principal executive offices are located at 4497 Park
Drive, Norcross, Georgia 30093 and its telephone number is (770) 923-4076. The
Company was incorporated in Georgia as A. R. Weeks & Associates, Inc. in 1983,
and changed its name to Weeks Corporation in June 1994. Weeks GP, a Georgia
corporation, was incorporated in October 1996. Weeks LP, a Georgia corporation,
was incorporated in October 1996. The Operating Partnership is a Georgia
limited partnership that was formed in June 1994 for the purpose of
consolidating the operating and development businesses of the Company and a
portfolio of certain of the properties described herein. The Company, the
Operating Partnership and the Service Companies currently employ approximately
408 full-time employees.
6
<PAGE>
Competition
Numerous properties compete with the Operating Partnership's properties in
attracting tenants and corporate users. Some of these competing properties may
be newer or better located than the Operating Partnership's properties. The
number of competitive industrial or suburban office properties and the
availability of land suitable for industrial or suburban office development in a
particular area could have a material effect on the Operating Partnership's
ability to lease or develop space. The Operating Partnership may be competing
with other developers that have greater resources than the Operating
Partnership. In addition, in order to maintain the Company's qualification as a
REIT, the Operating Partnership will be required under the Code to distribute
annually significant amounts of cash from operations, while some of its
competitors may be able to retain more of their working capital to finance
projects.
The Operating Partnership competes for tenants based on its high level of client
service, the quality of its properties and business parks, and its ability to
successfully develop a wide range of industrial and suburban office properties.
Leases at the Operating Partnership's properties are priced competitively based
on market conditions, supply and demand characteristics, and the quality of the
Operating Partnership's properties and services. The Operating Partnership does
not seek to compete solely on the basis of providing the low-cost solution for
all tenants.
Real Estate Investments
The Operating Partnership's real estate investments are subject to varying
degrees of risk. Income from the Operating Partnership's properties and the
demand for new development properties may be adversely affected by the general
economic climate; local conditions such as oversupply of industrial or office
properties or a reduction in demand for industrial or office properties in the
markets where the Operating Partnership owns properties; the attractiveness of
the Operating Partnership's properties; the ability of the Operating Partnership
to provide adequate maintenance and insurance; and increased operating costs
(including real estate taxes). In addition, income from the Operating
Partnership's properties and the value of its real estate are also affected by
such factors as the cost of regulatory compliance, interest rate levels and the
availability of financing. The Operating Partnership's income and operations
would be adversely affected if a significant number of tenants were unable to
pay rent or the Operating Partnership's properties could not be rented on
favorable terms. Certain significant expenditures associated with the Operating
Partnership's investments in real estate (such as mortgage payments, if any,
real estate taxes and maintenance costs) are generally not reduced when
circumstances cause a reduction in income from the property.
Environmental Liabilities
Under various federal, state and local laws and regulations, an owner or
operator of real estate may be held liable for the costs of removal or
remediation of hazardous or toxic substances located on or in the property.
These laws often impose such liability without regard to whether the owner knows
of, or was responsible for, the presence of such hazardous or toxic substances.
The costs of any required remediation or removal of such substances may be
substantial. In addition, the owner's liability as to any property is generally
not limited under such laws and regulations and could exceed the value of the
property and/or the aggregate assets of the owner. The presence of such
substances, or the failure to remediate such substances properly, may also
adversely affect the owner's ability to sell or lease the property or to borrow
using the property as collateral. Under such laws and regulations, an owner or
entity that arranges for
7
<PAGE>
the disposal or treatment of hazardous or toxic substances at a disposal or
treatment facility may also be liable for the costs of removal or remediation of
all such substances at such facility, whether or not such facility is owned or
operated by such person. Certain tenants of the Operating Partnership handle and
store hazardous substances at the Operating Partnership's properties. As a
result, in connection with the ownership of the Operating Partnership's
properties or land held for development and a tenant's improper handling,
storage, disposal or treatment of such hazardous or toxic substances, the
Operating Partnership may be liable for such costs, including the removal or
remediation of all such substances from such properties. Some laws and
regulations impose liability for the release of certain materials into the air
or water from a property, including asbestos, and such release can form the
basis for liability to third parties for personal injury or other damages. Other
laws and regulations can limit the development of and impose liability for the
disturbance of wetlands or the habitats of threatened or endangered species.
The Operating Partnership regularly makes capital expenditures and reviews the
conditions of its properties and its land held for development in order to
maintain compliance with applicable environmental laws. Based on facts
currently known to it, the Operating Partnership does not believe it will be
required under existing environmental laws to expend amounts that would have a
material adverse effect on its results of operations, financial condition or
liquidity. However, no assurance can be given that material environmental
liabilities do not exist, that any prior owner or operator of a property or land
held for development did not create any material environmental condition not
known to the Operating Partnership, that a material environmental condition does
not otherwise exist as to any one or more of the properties or land held for
development, or that future uses and conditions (including changes in applicable
environmental laws and regulations and the uses and conditions of properties in
the vicinity, such as leaking underground storage tanks and the activities of
the tenants) will not result in the imposition of environmental liability. No
material expenditures were made by the Operating Partnership in 1997, 1996 or
1995 relating to environmental matters.
INVESTMENT OBJECTIVES AND OPERATING STRATEGIES
The Operating Partnership's primary investment objective is to increase per unit
cash available for distribution by (1) developing institutional-quality,
functional multi-tenant and build-to-suit industrial and suburban office
properties, (2) acquiring industrial and suburban office properties in strategic
locations where the Operating Partnership can establish or enhance its market
presence, (3) maximizing cash flow through active leasing and management of its
properties, and (4) expanding strategically into new geographic markets. The
Operating Partnership has structured its operations, as discussed in more detail
below, to meet these investment objectives.
8
<PAGE>
Fully Integrated Real Estate Organization
The Operating Partnership is a fully integrated real estate organization with
resources dedicated to:
. marketing . landscaping
. development . property management
. construction . civil engineering
. investment analysis . legal
. asset management . design
. financing . information systems
The Operating Partnership believes that by providing a full range of services it
can control quality and provide greater client service, improve timely delivery
of its industrial and suburban office developments and promote cost savings.
Development of Business Park Environments
The Operating Partnership develops and owns its properties primarily in business
park environments (see discussion under "Properties"). Alone or with its joint
venture partners, the Operating Partnership controls all aspects of the
development process in a majority of the business parks in which it operates,
including site selection and project concept, master planning and zoning, design
and construction, leasing and property management. Each business park is in
proximity to an interstate highway interchange and retail and residential
amenities.
The Operating Partnership's business parks emphasize flexible land plans,
extensive landscaping and protective covenants which restrict the uses and
control the architecture and signage. In addition to its properties, the
Operating Partnership provides landscaping services for other corporate users in
its controlled business parks. The Operating Partnership will continue to
emphasize business park development in future years.
Product Focus
The Operating Partnership develops or acquires industrial and suburban office
properties, primarily in suburban locations (see related discussion of product
types under "Properties"). The Operating Partnership's properties can include
both single-tenant (build-to-suit) buildings and multi-tenant buildings. The
Operating Partnership designs properties that can be modified economically to
meet the needs of various clients and that can often function as either multi-
tenant or single-tenant buildings.
The Operating Partnership develops institutional-quality, general purpose
properties that are designed to be architecturally attractive and to serve the
needs of a variety of tenants in a particular submarket. The Operating
Partnership attempts to limit tenant improvement expenditures to those which are
in demand by, and adaptable with moderate modification to, a high number of
users in a market. The Operating Partnership controls tenant improvement
expenditures by utilizing its in-house interior finish department to supervise
the construction process and by compensating its marketing representatives based
on a formula which takes into account the cost of tenant finish requirements.
The Operating Partnership uses standard
9
<PAGE>
finish materials for most of its tenants. The Operating Partnership's annual
purchase programs allow it to procure these materials on a volume discount
basis.
Southeast Market Focus
The Operating Partnership focuses its activities in what it believes are some of
the fastest growing markets in the Southeast. As detailed below, states within
the Southeast where the Operating Partnership focuses its activities have
generally experienced greater percentage growth in employment and population
than the United States as a whole.
Employment and Population Growth
(percentage change)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Non-Farm
Employment Growth Population Growth
Jan '97 - Jan '98/(a)/ Jul '96 - Jul '97/(b)/
- --------------------------------------------------------------------------------
<S> <C> <C>
Georgia 3.4% 2.1%
Florida 4.1% 1.6%
North Carolina 3.2% 1.6%
South Carolina 3.0% 1.2%
Tennessee 2.3% 1.1%
U.S. Average 2.7% 0.9%
</TABLE>
(a) Source: Bureau of Labor Statistics.
(b) Source: U.S. Census Bureau.
Metropolitan Atlanta, Georgia. The Operating Partnership was founded and is
currently headquartered in metropolitan Atlanta, and is one of metropolitan
Atlanta's largest industrial property owners. Metropolitan Atlanta's rapid
growth in both employment and population is due in part to its role as a
business and distribution center for the entire Southeast.
According to Jamison Research, Inc. ("Jamison"), which publishes data on
metropolitan Atlanta's industrial and office real estate markets, the
metropolitan area in 1997 recorded industrial net absorption of approximately
13.2 million square feet, and over the past five years, metropolitan Atlanta's
industrial net absorption has totaled more than 50 million square feet. Also
according to Jamison, metropolitan Atlanta's office market recorded net
absorption of approximately 3.8 million square feet during 1997. The
approximately 17.0 million square feet of combined industrial and office net
absorption in metropolitan Atlanta in 1997, compares to approximately 12.6
million square feet in 1996.
The Operating Partnership's completed and in-service properties located in
metropolitan Atlanta consisted of approximately 93% industrial properties and
approximately 7% suburban office properties at December 31, 1997, and had an
average occupancy rate on such date of 96.0%, nearly four percentage points
better than the overall market occupancy, according to figures published by
Jamison. The Operating Partnership believes that one of the reasons that the
occupancy rate of its metropolitan Atlanta properties is higher than the overall
market is that it generally focuses its activities on the submarkets that are
among the metropolitan area's strongest. According to Jamison, the major
submarkets where the Operating Partnership generally focuses its activities
accounted for less than 50% of metropolitan Atlanta's approximately 416 million
square feet of industrial and office space at
10
<PAGE>
December 31, 1997, but recorded more than 70% of the metropolitan area's net
absorption in 1997. The Operating Partnership allocates its development activity
in metropolitan Atlanta among all four of its primary industrial and suburban
office property types and among a number of distinct submarkets, based on its
determination of supply and demand conditions.
Nashville, Tennessee. The Operating Partnership entered the Nashville market in
November 1996, with its acquisition of NWI (see Note 7 to the consolidated
financial statements). Like Atlanta, Nashville is the state capital and has a
well-developed transportation infrastructure. Nashville is also well located as
a point of distribution. According to the Nashville Area Chamber of Commerce,
Nashville lies within a 600 mile radius of 50% of the United States population.
Because of NWI's established presence in the Nashville industrial real estate
market, the Operating Partnership is operating in Nashville under the name
"Weeks/NWI."
At December 31, 1997, all of the Operating Partnership's completed and in-
service properties in Nashville are industrial properties and had an average
occupancy rate on such date of 91.8%.
Research Triangle, North Carolina. The Operating Partnership entered the
Research Triangle area of North Carolina in December 1996, with its acquisition
of Lichtin (see Note 7 to the consolidated financial statements). The Research
Triangle market is characterized as a center for high technology,
communications, research and development and health care, and attracts many of
its employees from its three universities: Duke University, The University of
North Carolina and North Carolina State University. Research Triangle Park,
which is located adjacent to most of the Operating Partnership's portfolio, is
one of the nation's largest planned research parks, with more than 70 national
and international research organizations employing over 35,000 people. Research
Triangle Park generally consists of corporate-owned facilities devoted to
research and development. Many of the Operating Partnership's properties house
administrative, technology and service functions that complement the activities
of businesses with facilities located within Research Triangle Park.
The Operating Partnership's completed and in-service properties in the Research
Triangle comprised 20 industrial properties and eight suburban office properties
at December 31, 1997, and had an average occupancy rate on such date of 98.1%.
Orlando, Florida. The Operating Partnership entered the Orlando market in April
1995 with the purchase of an approximately 190,000 square foot portfolio of
industrial properties. The Operating Partnership's decision to expand into
Orlando was based in part on the city's geographic location as a point of
distribution for the state of Florida, the most highly populated state in the
Southeast. Since entering Orlando in 1995, the Operating Partnership has
increased its portfolio of in-service properties to approximately 739,000 square
feet as of December 31, 1997, and has opened a local office. All of the
Operating Partnership's 11 completed and in-service properties in Orlando at
December 31, 1997, are industrial properties and had an average occupancy rate
on such date of 97.9%.
11
<PAGE>
Tampa, Florida. The Operating Partnership entered the Tampa market in 1997, with
plans to develop two new business parks, totaling approximately 1.5 million
square feet. At year-end, the Operating Partnership did not have any in-service
properties in the Tampa market. The Operating Partnership currently runs it
Tampa operations using personnel located in Orlando, however, the Operating
Partnership recently acquired an experienced Tampa-based marketing officer.
Jacksonville, Florida. The Operating Partnership entered the Jacksonville market
in 1997 by acquiring the rights to the remaining land at the Jacksonville
International Tradeport, the only industrial park in a tax increment financing
district, located near Jacksonville International Airport. The Operating
Partnership estimates that the development potential of this land at December
31, 1997, may total more than 2.0 million square feet. The Operating Partnership
also hired two local market officers who had primary responsibility for
developing Jacksonville International Tradeport. The Operating Partnership's one
in-service industrial property in Jacksonville was 100% occupied as of December
31, 1997.
Miami, Florida. The Operating Partnership entered the Miami market in early 1998
through the acquisition of Beacon Centre, a 24-building, 2.5 million square foot
mixed use industrial, office and retail development, located near the Miami
International Airport. In connection with the acquisition of Beacon Centre, the
Operating Partnership also acquired a one-third interest in Codina Group, Inc.,
a South Florida commercial and industrial real estate services company that
developed the property (see Notes 6 and 7 to the consolidated financial
statements). St. Joe Corporation, a publicly traded company which,
through its subsidiaries, is the largest single private landowner in the State
of Florida, also purchased a one-third interest in Codina Group, Inc. Through
these combined transactions, the Operating Partnership intends to pursue
additional development and acquisition activity throughout South Florida.
Spartanburg, South Carolina. Spartanburg is the Operating Partnership's smallest
market and is served out of the Operating Partnership's Atlanta headquarters.
The Operating Partnership's activities in Spartanburg consist of properties
owned and developed at Hillside business park. Hillside is located one exit
north on I-85 from BMW's automobile production facility that opened in 1995. The
occupancy rate of the Operating Partnership's approximately 386,000 square feet
of completed and in-service properties in Spartanburg was 100% as of December
31, 1997.
BUSINESS GROWTH STRATEGY
Development
The Operating Partnership is an experienced developer of institutional-quality,
general purpose industrial and suburban office multi-tenant and build-to-suit
properties, and has personnel engaged in all phases of the development process,
including market analysis, site selection, zoning, design, civil engineering,
construction and landscaping. The Operating Partnership currently has adequate
sources for raw materials needed to construct its new properties, including
access to qualified labor and subcontractors. In 1997 and 1996, the Operating
Partnership completed and stabilized 26 development properties and two property
expansions totaling approximately 2.8 million square feet.
12
<PAGE>
Acquisitions
The Operating Partnership balances its development activity by making
opportunistic acquisitions in strategic locations that establish or enhance the
Operating Partnership's market position, or where the Operating Partnership's
skills and market knowledge can enhance value through additional development,
property management or physical upgrades. In 1997 and 1996, the Operating
Partnership acquired 83 properties totaling approximately 5.4 million square
feet.
Risks of Development and Acquisitions
New project development is subject to a number of risks, including risks of
construction delays or cost overruns that may increase project costs, risks that
the project will not achieve anticipated occupancy levels or sustain anticipated
rent levels, and new project commencement risks such as the failure to obtain
zoning, occupancy and other required government permits and authorizations, and
the incurrence of development costs in connection with projects that are not
pursued to completion.
Acquisitions entail risks that (i) existing agreements to acquire properties may
fail to close, (ii) acquired properties may not perform in accordance with
management's expectations, including projected occupancy and rental rates, (iii)
the senior executives and employees of an acquired business will not be
successfully integrated into the Operating Partnership, or (iv) the Operating
Partnership may have underestimated the cost of improvements required to bring
an acquired property up to standards established for the market position
intended for that property. Although the Operating Partnership has successfully
acquired properties and effectively integrated their operations in the past,
there can be no assurance that the Operating Partnership will be able to
continue to make successful acquisitions in the future or that any such
acquisitions will be successfully integrated into the Operating Partnership's
operations. Furthermore, there can be no assurance that an acquisition will not
have an adverse effect upon the Operating Partnership's operating results,
particularly in the fiscal quarters immediately following the consummation of
such acquisition, or that the Operating Partnership will be able to continue to
operate an acquired business in a profitable manner.
Both development and acquisitions also involve risks that the Operating
Partnership will fail to obtain adequate sources of financing (see "Management's
Discussion and Analysis of Financial Condition and Results of Operations '
Liquidity and Capital Resources").
Land Control
An important part of the Operating Partnership's development strategy is to own
or control land sufficient to allow it to develop exclusive business park
environments and to accommodate the expansion and relocation needs of its
tenants. The Operating Partnership employs a number of ownership and control
arrangements in its land strategy, including outright purchases, joint ventures,
staged acquisitions, options and exclusive marketing and development agreements.
By doing so, the Operating Partnership believes that it can control sufficient
land acreage, while mitigating the negative impact of land carrying costs.
13
<PAGE>
At December 31, 1997, the Operating Partnership also owned or controlled
(through agreements to purchase, options and marketing and development
agreements) approximately 2,017 net usable acres of undeveloped land, located
primarily in existing business parks with zoning and infrastructure in place.
The Operating Partnership believes the development potential of this land may
ultimately total approximately 20.3 million square feet (see "Properties").
Internal Growth
The Operating Partnership attempts to maximize its available cash flow by
increasing the occupancy rate of those properties that are not fully leased,
maintaining high occupancy rates, raising effective rental rates and controlling
operating expenses and capital expenditures. The occupancy rate of the Operating
Partnership's stabilized properties (i.e., those having reached substantial
lease-up) was 96.0% as of December 31, 1997. The Operating Partnership believes
that its emphasis on providing quality facilities and client service has
resulted in a high retention of its tenants and low turnover. Of the leases that
expired in 1997 (representing approximately 3.0 million square feet), tenants
occupying approximately 72% of such space renewed their leases with the
Operating Partnership. The Operating Partnership believes that this high
retention of its tenants results in lower re-leasing costs and decreased
potential loss due to vacancy. In addition, in 1997, 55 tenant expansions were
completed for existing tenants, totaling approximately 650,000 square feet.
The leases for the Operating Partnership's properties have terms ranging from
one to fifteen years, with terms for multi-tenant properties typically between
three and five years and for build-to-suit properties typically between seven
and ten years. Typically, the tenant in a multi-tenant property pays for
increases in taxes, operating costs and insurance above a base year level. For
build-to-suit properties, the tenant typically pays for all taxes, insurance and
operating costs. Approximately 65% of the Operating Partnership's leases (based
on leased square footage as of December 31, 1997) contain contractual rent
escalations.
The high average occupancy of the Operating Partnership's properties reflects
the generally strong supply and demand conditions in its markets. As a result,
the Operating Partnership continues to be able to increase average rents and
generally to avoid offering tenant concessions. During 1997, the Operating
Partnership renewed or re-leased approximately 3.0 million square feet of
second-generation space in its properties. Cash-basis rental rates on this space
increased by an average of 6.0%, calculated by comparing the initial cash-basis
rent to be paid by the tenant under the new or renewed lease with the ending
cash-basis rent paid by the tenant under the previous lease on the same space.
As shown in the table provided under "Properties ' Tenants," no single tenant
accounted for more than 3.1% of annualized base rent from leases under which
tenants were paying rent as of December 31, 1997.
Geographic Expansion
From the Operating Partnership's base in metropolitan Atlanta, Georgia, the
Operating Partnership intends to continue expanding carefully into new
southeastern markets. Additionally, the Operating Partnership intends to explore
opportunities in other major growth markets which are a logical expansion of its
current southeastern geographic focus. Such markets could extend into the
southwestern and mid-Atlantic regions of the United States. The
14
<PAGE>
Operating Partnership intends to expand into other markets only when it believes
it can achieve over time a significant market presence. The Operating
Partnership's geographic expansion activities to date have included the 1990
expansion into Spartanburg, South Carolina, the 1995 expansion into Orlando,
Florida, the 1996 expansions into Nashville, Tennessee and the Research Triangle
area of North Carolina, the 1997 expansions into Tampa and Jacksonville, Florida
and the early 1998 expansion into Miami and the greater South Florida markets.
As a result of its geographic expansion, the Operating Partnership has reduced
its concentration of properties in metropolitan Atlanta, Georgia, to 70% at
December 31, 1997 (based on square footage of in-service properties, excluding
properties under development and/or under agreement to acquire), from 95% at
December 31, 1995 (calculated on the same basis). The Operating Partnership's
concentration in metropolitan Atlanta, Georgia is expected to continue to
decline with the expansions into additional markets. For a breakdown of the
Company's properties by market, including properties under development or in
lease-up or under agreement to acquire, see the table following.
15
<PAGE>
ITEM 2. PROPERTIES
As of December 31, 1997, the Operating Partnership owned or had agreements to
acquire 297 properties, including 28 properties which were under development or
in lease-up and 27 properties that were under agreement to acquire. One
additional property was held in a 50% owned entity. Of these 298 properties
(including the 50% owned property), 264 were industrial buildings, 29 were
office buildings and five were retail buildings. The Operating Partnership's 243
completed and in-service properties (i.e., excluding properties under
development or in lease-up or under agreement to acquire) were 96.0% occupied at
December 31, 1997.
The following table sets forth, as of December 31, 1997, the location and type
of property by square feet for the 298 properties discussed above.
Location and Type of Properties
(by square feet)
<TABLE>
<CAPTION>
Percent
Business Bulk Business Total Suburban of Total
Location Distribution Warehouse Service Industrial Office Retail Total
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Atlanta, GA 6,730,995 4,409,490 1,342,488 12,482,973 1,154,460 48,977 13,686,410 58.7%
Miami, FL 1,951,113 -- 136,361 2,087,474 63,240 415,851 2,566,565 11.0%
Nashville, TN 1,699,476 636,282 353,775 2,689,533 -- -- 2,689,533 11.6%
Research Triangle, NC 630,775 -- 982,453 1,613,228 810,120 -- 2,423,348 10.4%
Orlando, FL 310,007 486,883 241,330 1,038,220 108,000 -- 1,146,220 4.9%
Spartanburg, SC 92,400 293,200 -- 385,600 -- -- 385,600 1.7%
Tampa, FL 68,480 173,514 -- 241,994 -- -- 241,994 1.0%
Jacksonville, FL -- 171,000 -- 171,000 -- -- 171,000 0.7%
- --------------------------------------------------------------------------------------------------------------------------
Total 11,483,246 6,170,369 3,056,407 20,710,022 2,135,820 464,828 23,310,670 100.0%
- --------------------------------------------------------------------------------------------------------------------------
Percent of Total 49.3% 26.4% 13.1% 88.8% 9.2% 2.0% 100.0%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
Industrial Properties
The Operating Partnership owned, had under development or in lease-up or had
agreements to acquire 264 industrial buildings as of December 31, 1997, of which
173 are located in Atlanta Georgia, 26 are located in Nashville, Tennessee, 21
are located in the Research Triangle area of North Carolina, 22 are located in
Miami, Florida, 15 are located in Orlando, Florida, three are located in
Spartanburg, South Carolina, two are located in Tampa, Florida and two are
located in Jacksonville, Florida. These buildings can be characterized by their
use: business distribution, bulk warehouse or business service. The Operating
Partnership owned, had under development or in lease-up or had agreements to
acquire 166 business distribution buildings, 40 bulk warehouse buildings, and 58
business service buildings at year-end.
The Company's business distribution buildings are generally 20,000 to 200,000
square feet in size, have warehouse clear ceiling heights of 18' to 24',
building depths of 100' to 240', office finish of 10% to 55%, dock-high truck
doors (which are designed to accommodate tractor-trailers) and typically cost
$37 to $48 per square foot to construct. These buildings may function as
headquarters, sales and administration, research and development and light
manufacturing facilities in addition to distribution facilities.
16
<PAGE>
The Company's bulk warehouse buildings are generally 75,000 to 360,000 square
feet in size, have clear ceiling heights of 24' to 30', building depths of 200'
to 500', office finish of 2% to 20%, dock-high truck doors and typically cost
$22 to $28 per square foot to construct. These buildings generally function as
regional or local distribution and warehouse facilities.
The Company's business service buildings are generally 20,000 to 110,000 square
feet in size, have clear ceiling heights of 14' to 16', building depths of 80'
to 160', office finish of 35% to 100%, drive-in truck doors (which are designed
to accommodate delivery vans) and typically cost $65 to $80 per square foot to
construct. These buildings are used by tenants primarily for clerical,
administrative and executive offices.
Office Properties
At December 31, 1997, the Operating Partnership owned, had under development or
in lease-up or had agreements to acquire 29 suburban office buildings, of which
16 are located in Atlanta, Georgia, 11 are located in the Research Triangle area
of North Carolina, one is located in Miami, Florida and one is located in
Orlando, Florida. The Operating Partnership's typical suburban office building
ranges in size from approximately 30,000 to 150,000 square feet, with an average
of 4.5 parking spaces per 1,000 square feet of leasable space and a typical
replacement cost of $85 to $115 per square foot.
Occupancy Rate of In-Service Properties by Property Type
The occupancy rate of the Company's in-service properties as of December 31,
1997 (by Property type) was as follows:
Occupancy Rate of In-Service Properties
as of December 31, 1997
(by Property type)
Business distribution 95.7%
Bulk warehouse 99.2%
Business service 91.3%
----------------------------------------
Total industrial average 96.1%
----------------------------------------
Suburban office 94.3%
Retail 97.5%
----------------------------------------
Total average 96.0%
----------------------------------------
Business Parks
A key to the Operating Partnership's success has been the development of
properties within business parks where the Operating Partnership controls
virtually all aspects of the development process, including site selection and
project concept, master planning and zoning, design and construction, leasing
and property management. For developments of land held in joint ventures, the
Operating Partnership must obtain certain approvals from its joint venture
partners.
17
<PAGE>
The Operating Partnership's business parks are generally in proximity to an
interstate highway interchange and are close to retail and residential
amenities. The business parks are generally master planned to accommodate a
variety of uses. The business parks are generally well landscaped with
protective covenants which restrict the uses and control the architecture and
signage.
The majority of the Operating Partnership's properties and land held for
development are located in business parks. The Operating Partnership's ability
to develop both multi-tenant buildings for lease and build-to-suit buildings for
lease or sale results in more rapid development of the business parks. The
Company's control of land in business parks also generates revenues from various
sources including land sales, building construction, landscape installation and
maintenance, lease commissions and property management fees.
The buildings within business parks typically have a mix of uses ranging from
distribution and service to office and light manufacturing. The Operating
Partnership facilitates the coexistence of these diverse functions within
business parks through controlled signage and architecture, landscaping and
placement of buildings.
The information provided in the table set forth below reflects information
regarding the Operating Partnership's properties (summarized by submarket and
business park) as of December 31, 1997, including properties under development
or in lease-up, or under agreement to acquire.
18
<PAGE>
Weeks Realty L.P.
(As of December 31, 1997)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish/(1)/ Rate/(2)/
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
IN-SERVICE PROPERTIES
METROPOLITAN ATLANTA, GA
NORTHEAST/I-85 SUBMARKET
Gwinnett Park 38 2,366,481 40.2% 93.4%
Horizon 6 1,063,354 7.0% 100.0%
Northwoods 16 709,625 41.1% 93.7%
Gwinnett Pavilion 8 538,713 42.0% 99.8%
Berkeley Lake Distribution Center 3 514,160 3.2% 100.0%
Peachtree Corners Business Center 4 356,355 10.7% 96.6%
Pinebrook 3 346,402 13.9% 100.0%
Northbrook 2 308,480 5.9% 94.8%
Druid Chase Office Park 4 281,198 98.5% 97.1%
Meadowbrook 4 249,767 34.9% 100.0%
Crestwood Pointe 1 105,295 100.0% 88.9%
Park Creek 2 103,477 50.4% 100.0%
Sugarloaf/(3)/ 1 86,000 100.0% 100.0%
River Green 2 59,138 80.0% 100.0%
Other Northeast/I-85 10 677,434 32.9% 97.6%
- ------------------------------------------------------------------------------------------------------------------------------
Total Northeast/I-85 Submarket 104 7,765,879 32.7% 96.6%
- ------------------------------------------------------------------------------------------------------------------------------
NORTH CENTRAL SUBMARKET
Northmeadow 10 570,036 75.5% 94.0%
Hembree Crest 4 285,247 16.3% 100.0%
Mansell Commons 9 223,762 55.9% 100.0%
Hembree Park 5 221,304 64.2% 95.4%
Northwinds 1 64,981 100.0% 100.0%
Other North Central Properties 1 58,093 100.0% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Total North Central Submarket 30 1,423,423 60.9% 96.9%
- ------------------------------------------------------------------------------------------------------------------------------
AIRPORT/SOUTH ATLANTA SUBMARKET
Southridge 7 452,241 20.0% 94.6%
Sullivan International 4 78,168 36.1% 95.0%
Other Airport/South Atlanta Properties 1 253,890 1.2% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Total Airport/South Atlanta Submarket 12 784,299 15.5% 96.4%
- ------------------------------------------------------------------------------------------------------------------------------
NORTHWEST/I-75 SUBMARKET
Northwest Business Center 10 376,080 62.4% 95.7%
Franklin Forest 9 306,321 69.8% 94.9%
Town Point 3 305,200 17.7% 89.5%
Other Northwest/I-75 Properties 2 385,551 15.0% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Total Northwest/I-75 Submarket 24 1,373,152 40.8% 95.4%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
Weeks Realty L.P.
(As of December 31, 1997)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish/(1)/ Rate/(2)/
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
STONE MOUNTAIN SUBMARKET
Park North 8 542,470 49.1% 86.2%
- ------------------------------------------------------------------------------------------------------------------------------
Total Stone Mountain Submarket 8 542,470 49.1% 86.2%
- ------------------------------------------------------------------------------------------------------------------------------
CHATTAHOOCHEE SUBMARKET
Chattahoochee 1 48,007 25.8% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Total Chattahoochee Submarket 1 48,007 25.8% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL METROPOLITAN ATLANTA, GA 179 11,937,230 36.6% 96.0%
- ------------------------------------------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NC
Perimeter Park 8 473,574 96.9% 98.8%
Perimeter Park West 6 413,510 95.3% 96.1%
Enterprise Center 3 281,497 62.0% 94.4%
Metro Center 3 271,219 56.4% 100.0%
Woodlake Center 2 205,500 63.5% 100.0%
Research Triangle Industrial Center 3 154,056 12.6% 100.0%
Interchange Plaza 2 106,781 49.1% 100.0%
Other Research Triangle Properties 1 93,990 90.7% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RESEARCH TRIANGLE, NC 28 2,000,127 73.4% 98.1%
- ------------------------------------------------------------------------------------------------------------------------------
NASHVILLE, TN
Airpark Business Center 13 1,160,212 39.7% 90.5%
Brentwood South Business Center 6 504,264 19.0% 92.3%
Four-Forty Business Center 1 165,902 3.0% 100.0%
Aspen Grove Business Center 1 127,285 26.4% 90.4%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NASHVILLE, TN 21 1,957,663 30.4% 91.8%
- ------------------------------------------------------------------------------------------------------------------------------
ORLANDO, FL
Park South Distribution 3 368,633 13.7% 100.0%
Airport Commerce Center 7 310,007 36.1% 98.1%
Technology Park 1 60,711 73.0% 84.0%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ORLANDO, FL 11 739,351 28.0% 97.9%
- ------------------------------------------------------------------------------------------------------------------------------
SPARTANBURG, SC
Hillside 3 385,600 15.2% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL SPARTANBURG, SC 3 385,600 15.2% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
JACKSONVILLE, FL
Jacksonville International Tradeport 1 81,000 5.8% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL JACKSONVILLE, FL 1 81,000 5.8% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES IN SERVICE/(3)/ 243 17,100,971 39.2% 96.0%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
Weeks Realty L.P.
(As of December 31, 1997)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish/(1)/ Rate/(2)/
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PROPERTIES UNDER DEVELOPMENT OR IN LEASE-UP
METROPOLITAN ATLANTA, GA
NORTHEAST/I-85 SUBMARKET
Horizon 1 267,619 10.0% 100.0%
Sugarloaf 1 79,588 20.1% 67.2%
Berkeley Lake Distribution Center 1 152,000 10.0% 42.3%
Crestwood Pointe 1 105,295 100.0% 19.9%
Park Creek 1 80,450 100.0% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Total Northeast/I-85 Submarket 5 684,952 35.6% 71.1%
- ------------------------------------------------------------------------------------------------------------------------------
NORTH CENTRAL SUBMARKET
Hembree Park 2 189,000 12.5% 80.0%
Northwinds 1 149,797 100.0% 12.3%
Brookside 1 106,631 100.0% 100.0%
Northmeadow 1 47,600 50.0% 80.5%
- ------------------------------------------------------------------------------------------------------------------------------
Total North Central 5 493,028 61.6% 63.8%
- ------------------------------------------------------------------------------------------------------------------------------
AIRPORT/SOUTH ATLANTA SUBMARKET
Liberty Distribution Center 2 511,200 3.1% 41.2%
Southridge 1 60,000 13.0% 100.0%
- ------------------------------------------------------------------------------------------------------------------------------
Total Airport/South Atlanta Submarket 3 571,200 4.2% 47.4%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL METROPOLITAN ATLANTA, GA 13 1,749,180 32.7% 61.3%
- ------------------------------------------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NC
Regency Forest 1 102,561 100.0% 97.1%
Perimeter Park West 2 176,923 100.0% 100.0%
Enterprise Center 1 143,737 50.0% 6.4%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL RESEARCH TRIANGLE, NC 4 423,221 83.0% 67.5%
- ------------------------------------------------------------------------------------------------------------------------------
NASHVILLE, TN
Nashville Business Center 1 194,750 10.0% 0.0%
Metro Center 1 166,441 10.0% 0.0%
Four-Forty Business Center 1 103,473 25.0% 84.7%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NASHVILLE, TN 3 464,664 13.3% 18.9%
- ------------------------------------------------------------------------------------------------------------------------------
ORLANDO, FL
Orlando Central Park 1 118,250 0.0% 27.4%
Technology Park 2 117,819 0.0% 8.4%
Northpoint 1 108,000 100.0% 0.0%
Celebration Service Center 1 62,800 0.0% 0.0%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ORLANDO, FL 5 406,869 26.5% 10.4%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
21
<PAGE>
Weeks Realty L.P.
(As of December 31, 1997)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Total
Number of Square Office Occupancy
Market/Business Park Buildings Feet Finish/(1)/ Rate/(2)/
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JACKSONVILLE, FL
Jacksonville International Tradeport 1 90,000 0.0% 60.0%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL JACKSONVILLE, FL 1 90,000 0.0% 60.0%
- ------------------------------------------------------------------------------------------------------------------------------
TAMPA, FL
Fairfield Distribution Center 2 241,994 0.0% 0.0%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL TAMPA, FL 2 241,994 0.0% 0.0%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES UNDER DEVELOPMENT OR IN LEASE-UP 28 3,375,928 32.4% 45.7%
- ------------------------------------------------------------------------------------------------------------------------------
PROPERTIES UNDER AGREEMENT TO ACQUIRE
NASHVILLE, TN
Aspen Grove Business Center 2 267,206 25.0% 55.2%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NASHVILLE, TN 2 267,206 25.0% 55.2%
- ------------------------------------------------------------------------------------------------------------------------------
MIAMI, FL
Beacon Centre 25 2,566,565 27.2% 96.5%
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL MIAMI, FL 25 2,566,565 27.2% 96.5%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL PROPERTIES UNDER AGREEMENT TO ACQUIRE 27 2,833,771 27.0% 92.6%
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL PORTFOLIO/(3)/ 298 23,310,670 36.7% 88.3%
==============================================================================================================================
</TABLE>
/(1)/ Represents the percentage of rentable square feet that is built out as
office space rather than as warehouse or distribution space. For
properties under development represents current budgeted office finish.
/(2)/ Occupancy or leasing rate includes percentage occupancy for completed and
in service properties at December 31, 1997. For properties under
development or in lease-up represents leasing or pre-leasing as of
February 28, 1998.
/(3)/ Includes one building totaling 86,000 square feet held in a 50% owned
entity.
22
<PAGE>
Development Land
The following schedule details the Operating Partnership's undeveloped land
interests at December 31, 1997. The land detailed below is located primarily in
existing business parks with zoning and infrastructure in place. The Operating
Partnership estimates that the total development potential of the development
land could ultimately total approximately 20.3 million square feet.
Development Land
at December 31, 1997
(in net usable acres)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
Estimated
Research Development
Atlanta, Nashville, Triangle, Orlando, Tampa, Jacksonville, Spartanburg, Potential
GA TN NC FL FL FL SC Total (square feet)/(1)/
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Company owned 220.9 55.7 30.5 41.4 42.1 -- -- 390.6 5,061,000
Owned in joint
ventures/(2)/ 213.2 -- -- -- -- -- 372.7 585.9 5,016,500/(5)/
Under agreement
to acquire/(3)/ 68.2 104.5 53.0 12.0 23.4 227.8 -- 488.9 5,629,000
Optioned -- -- 166.9 118.1 18.6 -- -- 303.6 2,940,000
Marketing/
development
agreements/(4)/ 224.7 -- -- -- 23.4 -- -- 248.1 1,647,500
- --------------------------------------------------------------------------------------------------------------------------------
Total 727.0 160.2 250.4 171.5 107.5 227.8 372.7 2,017.1 20,294,000
================================================================================================================================
Estimated development
potential (square
feet)/(1)/
7,837,500 1,946,000 2,670,000 1,959,000 1,265,000 2,019,000 2,597,500 20,294,000
================================================================================================================================
</TABLE>
(1) Based upon the Company's estimate of the appropriate density and anticipated
building types that may be developed, net of land necessary to provide for
adequate infrastructure. There can be no assurance that the Company's
estimate of development potential will be realized.
(2) The Company's interests in its undeveloped land held in joint ventures range
from 0% to 30%.
(3) The Company has agreed to purchase this land over various periods ranging up
to approximately five years, subject to the completion of due diligence and
customary closing conditions.
(4) Under the terms of the development agreements, the Company will generally
either develop properties for a fee, or have certain rights to acquire land
for development or to acquire developed properties upon their completion.
The marketing agreements generally provide for the Company or its
subsidiaries to be paid marketing or management fees in conjunction with
services provided. Both the development and marketing agreements generally
contain certain non-competition provisions covering a limited geographic
area.
(5) The Company estimates it will eventually develop approximately one-half the
acreage in Spartanburg it owns in joint ventures and that the remainder will
be sold to third parties. Estimated development potential reflects only that
land which is not currently expected to be sold.
Tenants
The Operating Partnership believes that its emphasis on developing quality
properties and providing a high level of client service has resulted in
increased tenant retention. As of December 31, 1997, the Operating Partnership's
properties were leased to 727 tenants including local, regional, national and
international companies. The Operating Partnership's 30 largest tenants
(measured by annualized base rent at December 31, 1997) occupy a total of
approximately 4.6 million square feet and represent 29.2% of the Company's total
annualized base rent as shown in the table below.
23
<PAGE>
<TABLE>
<CAPTION>
30 Largest Tenants Measured By Annualized Base Rent
- -------------------------------------------------------------------------------------------------------------------
% of Total
Square Number Annualized Annualized
Tenant Feet of Leases Base Rent/(1)/ Base Rent/(1)/ Location
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1 Northern Telecom, Inc./(2)/ 416,271 9 $ 3,085,968 3.1% NC,TN
2 Scientific Atlanta, Inc. 600,413 11 2,693,337 2.7% GA
3 IKON Office Solutions, Inc. 170,000 3 1,422,900 1.4% GA
4 GTE Mobilnet Service
Corporation 126,124 3 1,320,874 1.3% GA,NC
5 360(degree) Communications 114,476 7 1,283,731 1.3% NC
6 Radian International LLC 90,159 2 1,170,275 1.2% NC
7 Square D Company 100,822 1 966,816 1.0% TN
8 Honeywell, Inc. 70,016 3 963,953 1.0% GA
9 DeVry, Inc. 64,981 1 928,269 0.9% GA
10 PPD Pharmaco, Inc. 89,130 5 917,349 0.9% NC
11 The Athlete'e Foot Group, Inc. 162,651 1 897,155 0.9% GA
12 Fisher Scientific Company 223,219 1 875,019 0.9% GA
13 Tridom Corporation 117,403 4 826,437 0.8% GA
14 National Data Corporation 50,283 4 786,777 0.8% GA
15 AT&T Corp. 67,551 5 752,082 0.8% GA
16 Saab Cars U.S.A., Inc. 63,625 3 749,509 0.8% GA,NC,TN
17 Intelligent Systems Corporation 137,100 1 719,775 0.7% GA
18 Best Buy Stores, L.P. 222,643 1 703,552 0.7% GA
19 United Healthcare 72,991 2 699,856 0.7% GA,SC
20 Sally Foster, Inc. 197,200 2 673,237 0.7% SC
21 Data General Corporation 86,000 1 670,800 0.7% GA
22 Vanstar Corporation 86,880 4 668,124 0.7% GA
23 Yokohama Tire Corporation 252,092 1 665,383 0.7% GA
24 Auto-Lok, Inc. 222,900 2 658,879 0.7% GA
25 Ahlstrom Recovery, Inc. 62,893 2 649,493 0.7% GA
26 Astronet Corporation 34,138 1 648,622 0.7% GA
27 Siemens Energy & Automation,
Inc. 240,000 3 637,200 0.6% GA
28 The Bombay Company, Inc. 253,890 2 631,344 0.6% GA
29 Southern Multimedia
Communications, Inc. 117,647 3 604,692 0.6% GA
30 United Parcel Service, Inc. 128,275 3 594,201 0.6% TN,FL
- -------------------------------------------------------------------------------------------------------------------
4,641,773 91 $ 28,865,609 29.2%
===================================================================================================================
</TABLE>
(1) Annualized cash base rent net of rental concessions, if any, based on
leases in place for stabilized properties and properties in lease-up where
tenants were paying rent as of December 31, 1997.
(2) Leases with Northern Telecom totaling 370,824 square feet expire on June
30, 2005, but are subject to an early-termination right that permits
Northern Telecom to terminate any of the leases on June 30, 2000, by
delivering an early-termination notice to the Operating Partnership on or
before June 30, 1999. In the event it exercises its early-termination
option, Northern Telecom will be obligated to make certain termination
payments to the Operating Partnership.
24
<PAGE>
Lease Expirations
The following tables show scheduled lease expirations for the Operating
Partnership's total property portfolio, for its industrial property portfolio
and for its office property portfolio based on leases under which tenants were
paying rent as of December 31, 1997, assuming no exercise of renewal options or
termination rights, if any:
<TABLE>
<CAPTION>
% of Total
Year of Square % of Total Annualized Annualized
Expiration Feet Square Feet Base Rent/(1)/ Base Rent
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total Portfolio
1998 3,329 19.5% $ 17,397 16.7%
1999 1,921 11.3% 11,565 11.1%
2000 3,105 18.2% 18,322 17.5%
2001 1,379 8.1% 8,078 7.7%
2002 2,291 13.5% 17,629 16.9%
2003 679 4.0% 6,235 6.0%
2004 1,050 6.2% 5,763 5.5%
2005 875 5.1% 5,389 5.2%
2006 612 3.6% 3,046 2.9%
2007 1,104 6.5% 6,627 6.3%
2008 223 1.3% 783 0.7%
2009 20 0.1% 157 0.2%
2011 294 1.7% 1,704 1.6%
2012 152 0.9% 1,744 1.7%
--------------------------------------------------------------------------------------------------------
17,034/(2)/ 100.0% $ 104,439 100.0%
========================================================================================================
Industrial Properties
1998 3,150 20.1% $ 14,947 17.8%
1999 1,833 11.7% 10,485 12.5%
2000 2,890 18.5% 15,298 18.2%
2001 1,303 8.3% 6,976 8.3%
2002 1,954 12.5% 12,191 14.5%
2003 475 3.0% 3,162 3.8%
2004 946 6.0% 4,063 4.8%
2005 846 5.4% 4,950 5.9%
2006 590 3.8% 2,677 3.2%
2007 1,054 6.7% 6,168 7.3%
2008 223 1.4% 783 0.9%
2009 20 0.1% 157 0.2%
2011 294 1.9% 1,704 2.0%
2012 87 0.6% 580 0.6%
--------------------------------------------------------------------------------------------------------
15,665 100.0% $ 84,141 100.0%
========================================================================================================
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
% of Total
Year of Square % of Total Annualized Annualized
Expiration Feet Square Feet Base Rent/(1)/ Base Rent
-------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Suburban Office
Properties
1998 178 13.5% $ 2,437 12.3%
1999 86 6.5% 1,058 5.3%
2000 178 13.5% 2,715 13.7%
2001 76 5.8% 1,102 5.6%
2002 338 25.5% 5,438 27.4%
2003 204 15.4% 3,073 15.5%
2004 104 7.9% 1,700 8.6%
2005 26 1.9% 382 1.9%
2006 17 1.3% 309 1.6%
2007 50 3.8% 460 2.3%
2008 0 0.0% 0 0.0%
2009 0 0.0% 0 0.0%
2011 0 0.0% 0 0.0%
2012 65 4.9% 1,164 5.8%
--------------------------------------------------------------------------------------------------------
1,322 100.0% $ 19,838 100.0%
--------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized base rent represents the annualized monthly base rental at
the time of lease expiration.
(2) The total square footage expiring as of December 31, 1997 is
comprised of 16,408,572 square feet of leases in stabilized
properties, and 625,543 square feet of leases in development
properties where tenants are paying rent as of December 31, 1997.
Re-leasing Costs
Although re-leasing costs may vary from year-to-year depending on conditions in
the Operating Partnership's real estate markets and the mix of leasing among
property types, the Operating Partnership endeavors to control re-leasing costs
by:
. acting as general contractor with respect to construction of tenant
improvements, thereby saving the fees paid to outside contractors and
enabling the Operating Partnership to control the quality and timely
completion of the work;
. constructing general purpose improvements that can be adapted to
different tenants' requirements at relatively low cost;
. paying leasing commissions to its in-house marketing representatives that
take into account the cost of tenant improvements thereby providing an
incentive to minimize cost; and
. using its in-house marketing representatives to negotiate directly with
tenants when possible, thereby saving the cost of commissions to outside
brokers.
26
<PAGE>
The following table summarizes by year the Operating Partnership's capitalized
tenant improvement and leasing costs incurred in the renewal or re-leasing of
previously occupied space.
<TABLE>
<CAPTION>
Capitalized Tenant Improvements and Leasing Costs
- --------------------------------------------------------------------------------------------------------------
(In thousands, except per square foot information) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Industrial Properties
Re-leasing
Square feet leased 1,073 678 317
Capitalized tenant improvements and
leasing commissions $ 2,276 $ 1,395 $ 462
Capitalized tenant improvements and
leasing commissions per square foot $ 2.12 $ 2.06 $ 1.46
Renewal
Square feet renewed 2,358 1,027 814
Capitalized tenant improvements and
leasing commissions $ 1,392 $ 1,055 $ 469
Capitalized tenant improvements and
leasing commissions per square foot $ 0.59 $ 1.03 $ 0.58
Total
Square feet 3,431 1,705 1,131
Capitalized tenant improvements and
leasing commissions $ 3,668 $ 2,450 $ 931
Capitalized tenant improvements and
leasing commissions per square foot $ 1.07 $ 1.44 $ 0.82
Suburban Office Properties
Re-leasing
Square feet leased 69 16 111/(1)/
Capitalized tenant improvements and
leasing commissions $ 493 $ 45 $1,578/(1)/
Capitalized tenant improvements and
leasing commissions per square foot $ 7.11 $ 2.80 $14.25/(1)/
Renewal
Square feet renewed 134 106 47
Capitalized tenant improvements and
leasing commissions $ 267 $ 290 $ 50
Capitalized tenant improvements and
leasing commissions per square foot $ 1.99 $ 2.74 $ 1.06
Total
Square feet 203 122 158/(1)/
Capitalized tenant improvements and
leasing commissions $ 760 $ 335 $1,628/(1)/
Capitalized tenant improvements and
leasing commissions per square foot $ 3.74 $ 2.75 $10.27/(1)(2)/
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes $1,377,000 or $15.68 per square foot to re-tenant 87,845 square
feet of the Operating Partnership's 94,677 square foot suburban office
property which was vacated and then converted from a single tenant to a
multi-tenant property.
(2) Excluding amounts incurred to re-lease the office property discussed in (1)
above, capitalized tenant improvements and leasing commissions would have
been $3.55 per square foot for released and renewed space during 1995.
27
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
The Operating Partnership is not currently involved in any material litigation
other than litigation which is expected to be covered by liability insurance or
which is not expected to have a material adverse effect on the Operating
Partnership's results of operations or financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to security holders for a vote during the fourth
quarter of 1997.
28
<PAGE>
ITEM X. EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of the Operating Partnership and the Company and their
positions are as follows:
<TABLE>
<CAPTION>
Name Age Title
-------------------------------------------------------------------------------------------------
<S> <C> <C>
A. Ray Weeks, Jr. 45 Chairman of the Board and Chief Executive Officer
Thomas D. Senkbeil 48 Vice Chairman of the Board and Chief Investment Officer
Forrest W. Robinson 46 President, Chief Operating Officer
John W. Nelley, Jr. 49 Managing Director, Nashville Operations
Albert W. Buckley, Jr. 54 Managing Director, Nashville Operations
David P. Stockert 35 Senior Vice President and Chief Financial Officer
Robert G. Cutlip 48 Senior Vice President, North Carolina Operations
Charles D. Graham 54 Senior Vice President, North Florida Operations
Clyde H. Duckett 55 Senior Vice President, Construction Services
Mark W. Flowers 40 Senior Vice President, Landscape Services
Eben Hardie, III 39 Senior Vice President, Development
Klay W. Simpson 42 Senior Vice President, Marketing
Bobby L. Beavers 52 Vice President, Jacksonville Operations
Elizabeth C. Belden 43 Vice President, Corporate Counsel
Arthur J. Quirk 40 Vice President and Controller
Thomas W. Trocheck 43 Vice President, Development & Acquisitions
Susan C. Walker 44 Vice President, Investor Relations
Robert T. Weeks 37 Vice President, Information Technology
-------------------------------------------------------------------------------------------------
</TABLE>
The following is a biographical summary of the experience of the executive
officers of the Operating Partnership and the Company:
A. Ray Weeks, Jr. Chairman of the Board and Chief Executive Officer of the
Company since 1983. President of the Company from January 1982 through March
1991. Chairman of the Board of the Georgia Department of Industry, Trade and
Tourism. Chairman, Metro Business Forum. Co-Chairman, Regional Leadership
Institute. Juris Doctor from Mercer University, Master of Social Science in
Urban Studies from Georgia State University and Bachelor of Arts from Furman
University.
Thomas D. Senkbeil. Vice Chairman of the Board and Chief Investment Officer of
the Company since 1992. Executive Vice President and Managing Partner of
Senkbeil & Associates Inc. and Anderson & Senkbeil Inc., each a real estate
development firm, from September 1984 to October 1992. Immediate Past President,
National Executive Committee of the National Association of Industrial and
Office Properties. Master of Business Administration from the University of
North Carolina and Bachelor of Science in industrial engineering from Auburn
University.
Forrest W. Robinson. Board member, President of the Company since April 1991 and
Chief Operating Officer since May 1988. Senior Development Officer from March
1986 to April 1988. Executive Vice President, Marketing from February 1984 to
February 1986. Joined the Company in 1977. Bachelor of Business Management from
Jacksonville State University.
29
<PAGE>
John W. Nelley, Jr. Board member, Managing Director of the Company, with
responsibilities for the Company's activities in Nashville, Tennessee, since
November 1996. Since 1982, General Partner and Chief Financial Officer of NWI
Warehouse Group, L.P., an industrial warehouse development Company in Nashville,
Tennessee whose assets and business have been acquired, or are under agreement
to be acquired, by the Company. Also since 1973, a practicing attorney and CPA
specializing in real estate and estate planning. Juris Doctor from the
University of Notre Dame and Bachelor of Science in Accounting from Western
Kentucky University.
Albert W. Buckley, Jr. Managing Director of the Company since November 1996.
General Partner and Chief Executive Officer of NWI Warehouse Group, L.P., an
industrial warehouse development Company in Nashville, Tennessee from 1982 to
1996. Also since 1976, President of Buckley & Company Real Estate, Inc., a real
estate brokerage firm specializing in industrial property management and
development. Master of Business Administration and Bachelor of Science in
Business Administration from Middle Tennessee State University.
David P. Stockert. Senior Vice President and Chief Financial Officer of the
Company since June 1995. Vice President and Associate in the Real Estate
Investment Banking Group of Dean Witter Reynolds Inc. (now Morgan Stanley Dean
Witter) from July 1990 to June 1995. CPA with Ernst & Whinney (now Ernst &
Young) from May 1985 to August 1988. Master of Business Administration from
Columbia University Business School and Bachelor of Science in Accounting from
the University of Colorado.
Robert G. Cutlip. Senior Vice President, North Carolina Operations, of the
Company since October 1997. Senior Vice President, Development, of the Company
from April 1993 to September 1997. Vice President and Principal-in-Charge of
Dallas Industrial and Phoenix/Colorado Operations from January 1992 to April
1993, Paragon Group, a real estate development firm, Vice President and
Principal of Dallas Industrial from January 1990 to December 1991 and Vice
President, Operations from January 1988 to January 1990. Master of Business
Administration from University of Southern California, Master of Science in
Civil Engineering from Vanderbilt University and Bachelor of Science in Civil
Engineering from U.S. Air Force Academy.
Charles D. Graham. Senior Vice President, North Florida Operations, since
October 1997. President of Wilma, Inc., a national real estate development firm,
from June 1983 to October 1997. Vice President and Chief Financial Officer of
the Sea Pines Company, a national real estate developer of resort communities,
from 1980 to 1983. Master of Accountancy and Bachelor of Science in Business
Administration from Florida State University.
Clyde H. Duckett. Senior Vice President, Construction Services, of the Company
since January 1989. Professional Engineer registered in Georgia, South Carolina
and Tennessee. Bachelor of Science in Mechanical Engineering from Tennessee
Technological University.
Mark W. Flowers. Senior Vice President, Landscape Services, of the Company since
October 1993. Vice President, Landscape of the Company from October 1987 through
September 1993. Bachelor of Science in Horticulture from the University of
Georgia.
30
<PAGE>
Eben Hardie, III. Senior Vice President, Development of the Company since
October 1997. President of Cauble Development Services Company from December
1994 to October 1997. Senior Vice President, Kern Realty Services from 1988 to
1994. Bachelor of Science in Economics from the Wharton School of the University
of Pennsylvania.
Klay W. Simpson. Senior Vice President, Marketing, of the Company since October
1992. Vice President of Marketing of Senkbeil & Associates Inc. and Anderson &
Senkbeil Inc., each a real estate development firm, from 1986 to September 1992.
Bachelor of Business Administration from Stephen F. Austin State University.
Bobby L. Beavers. Vice President, Jacksonville Operations, since October 1997.
Senior Vice President of Wilma South, a national real estate development firm,
in charge of the Florida operations, from December 1991 to September 1997.
Bachelor of Science in Construction Management from North Texas State
University.
Elizabeth C. Belden. Vice President, Corporate Counsel, of the Company since
October 1985. Juris Doctor from Emory University and Bachelor of Social Sciences
from Colorado State University.
Arthur J. Quirk. Vice President and Controller of the Company since December
1994. Vice President-Controller and Chief Accounting Officer for Allegiant
Physician Services, Inc., a physician management services Company, from August
1993 to November 1994. Chief Financial Officer/Controller for TransTel Group
Inc., a start-up telecommunications Company, from November 1991 to July 1993.
From June 1980 to October 1991 served in various capacities including Senior
Audit Manager at Arthur Andersen LLP. Bachelor of Science in Accounting from
Auburn University.
Thomas W. Trocheck. Vice President, Development & Acquisitions, of the Company
since May 1989. Professional Engineer registered in Georgia, Florida and South
Carolina. Bachelor of Science in civil engineering from the Georgia Institute of
Technology and Bachelor of Arts in Government and Business Administration from
Florida State University.
Susan C. Walker. Vice President, Investor Relations, of the Company since
October 1997. Public Information Manager and speechwriter for the President of
the Federal Reserve Bank of Atlanta from June 1991 through September 1997.
Previous editorial positions with the Gwinnett Daily News, the Washington
Business Journal, and Inc. magazine. Bachelor of Arts in Classics from Stanford
University.
Robert T. Weeks. Vice President, Information Technology, of the Company since
January 1992. Director of Information Systems of the Company from March 1989
through December 1991. Master of Business Administration from Georgia State
University and Bachelor of Business Administration from the University of
Georgia. Ray Weeks and Robert Weeks are first cousins.
31
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS
There is no established public trading market for the Common Units. As of March
20, 1998, there were 48 holders of record of Common Units of the Operating
Partnership.
The following table sets forth the quarterly per Unit distributions paid by the
Operating Partnership to holders of its Common Units with respect to each such
period.
Quarter Ended Distribution
-------------------------------------------------------
1996
March 31, 1996 $ 0.40
June 30, 1996 $ 0.40
September 30, 1996 $ 0.40
December 31, 1996 $ 0.43
1997
March 31, 1997 $ 0.43
June 30, 1997 $ 0.43
September 30, 1997 $ 0.43
December 31, 1997 $ 0.465
The Operating Partnership currently anticipates making regular quarterly
distributions to holders of the Units in sufficient amounts to enable the
Company to satisfy the dividend requirements necessary to maintain its status as
a REIT. The distributions for each quarterly period are declared and paid one
quarter in arrears. Future distributions are dependent upon many factors
including the Operating Partnership's earnings, capital requirements, its
financial condition and its available cash flow and are governed by the
discretion of the Board of Directors of the Company.
Effective December 1, 1997, the Operating Partnership issued a total of 422,432
Common Units, in partial or full consideration for the acquisition of certain
real estate properties of NWI. The aggregate value of the properties acquired by
the Operating Partnership in exchange for such Common Units was approximately
$13.4 million. Common Units are convertible by their holders into shares of the
Company's common stock on a one-for-one basis, or into cash, at the Company's
option. The Common Units were issued pursuant to an exemption from registration
under Section 4(2) of the Securities Act in reliance, in part, upon the
representations and warranties set forth in the NWI acquisition agreements.
These Common Units are subject to a registration rights and lock-up agreement
which restricts the disposition of the Common Units for a period of one year
from the date of issuance with respect to all Common Units and further restricts
the disposition of Common Units beneficially owned by John W. Nelley, Jr. and
Albert W. Buckley, Jr. (approximately 43% of the total Common Units issued)
until November 1, 1999.
32
<PAGE>
Effective October 1, 1997, the Operating Partnership issued 57,300 Common Units
in partial or full consideration for the acquisition of certain real estate
properties of Lichtin. The aggregate value of the properties acquired by the
Operating Partnership in exchange for such Common Units was approximately $1.5
million. The Common Units were issued pursuant to an exemption from registration
under Section 4(2) of the Securities Act in reliance, in part, upon the
representations and warranties set forth in the Lichtin acquisition agreements.
The Common Units are subject to a registration rights and lock-up agreement
that restricts the disposition of the Common Units until December 31, 1999.
On October 27, 1997, November 15, 1997, and December 30, 1997, the Operating
Partnership issued 11,561 Common Units in partial or full consideration for the
acquisition of certain land and real estate properties located in Jacksonville,
Florida. The aggregate value of the land and properties acquired by the
Operating Partnership in exchange for such Common Units was approximately
$374,000. The Common Units were issued pursuant to an exemption from
registration under Section 4(2) of the Securities Act in reliance, in part, upon
the representations and warranties set forth in the acquisition agreement. The
Common Units are subject to a registration rights and lock-up agreement that
restricts the disposition of the Common Units for a period of one year from the
date of issuance.
The Operating Partnership has issued additional Common Units to Weeks GP
Holdings and Weeks LP Holdings in exchange for the contribution of funds
received pursuant to sales of Company common stock. Such issuances of Common
Units were effected in reliance on the exemption from registration under Section
4(2) of the Securities Act.
33
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Weeks Realty, L.P. Weeks Group/(1)/
--------------------------------------------------- -------------
(In thousands, except per share amounts) 1997 1996 1995 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance Sheet Data, at year end
Real estate assets before accumulated depreciation $856,500 $ 592,841 $ 319,763 $ 162,709 $ 95,831
Real estate assets, net 794,952 551,372 289,874 139,750 76,944
Total assets 852,361 591,849 320,441 176,674 101,366
Total indebtedness 275,515 296,975 147,305 71,961 117,280
Other limited partners' capital interests,
at redemption value 180,246 149,133 64,508 56,723 --
Partners' capital (owners' deficit) 377,146 132,808 99,104 41,630 (24,197)
</TABLE>
<TABLE>
<CAPTION>
Weeks Realty, L.P. Weeks Group/(1)/
----------------------------------------------------- ----------------------------
Year Ended Year Ended Year Ended Aug. 24 to Jan. 1 to Year ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31, Aug. 23, Dec. 31,
1997 1996 1995 1994 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Operating Data
Rental and reimbursement revenues $ 90,806 $ 52,679 $ 34,015 $ 8,877 $ 11,914 $ 18,023
Total revenues 92,020 53,883 35,271 9,312 16,538 24,817
Operating, maintenance and
real estate tax expense 18,488 10,750 6,896 1,714 2,721 3,928
Depreciation and amortization 24,144 13,474 8,177 2,098 2,920 4,456
Interest expense 17,900 11,779 8,106 1,958 6,682 10,254
Amortization of deferred financing costs 933 864 691 252 322 372
General and administrative expenses 5,068 3,039 1,848 472 1,514 2,191
Interest income 1,509 492 334 224 -- --
Equity in earnings of unconsolidated entities 1,989 1,340 1,220 692 91 (113)
Income before extraordinary loss 29,194 15,809 11,107 3,734 516 998
Net income 29,194 15,809 11,107 1,067 516 998
Net income available to Common Unitholders 26,474 15,809 11,107 1,067 516 998
Weighted average Common Units - basic 21,380 14,280 10,760 10,268
Weighted average Common Units - diluted 21,580 14,386 10,832 10,286
Per Common Unit Data
Income before extraordinary loss - basic $ 1.24 $ 1.11 $ 1.03 $ 0.36
Income before extraordinary loss - diluted 1.23 1.10 1.03 0.36
Net income - basic 1.24 1.11 1.03 0.10
Net income - diluted 1.23 1.10 1.03 0.10
Distributions/(2)/ 1.755 1.63 1.525 0.525
Other Data
Cash provided by (used in):
Operating activities $ 49,097 $ 28,031 $ 18,678 $ 3,954 $ 2,769 $ 3,569
Investing activities (173,574) (120,323) (117,127) (38,148) (14,953) (1,974)
Financing activities 129,638 91,570 93,097 40,352 12,229 (1,541)
Funds from operations/(3)/ 50,343 29,323 19,307 5,832 -- --
</TABLE>
(1) Represents the historical combined operations and combined financial
position of Weeks Group, the predecessor entity. On August 24, 1994, Weeks
Corporation, parent of Weeks Realty, L.P. (the "Operating Partnership"),
completed an initial public offering and related formation transactions.
(2) Distributions are paid quarterly in arrears. Amounts reflect distributions
attributable to the year presented.
(3) The Operating Partnership believes that funds from operations provides an
additional indicator of the financial performance of the Operating
Partnership. Funds from operations is defined by the National Association
of Real Estate Investment Trusts ("NAREIT") to mean net income (loss)
determined in accordance with generally accepted accounting principles
("GAAP"), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures will be calculated to
reflect funds from operations on the same basis. The Operating Partnership
computes funds from operations under the current NAREIT definition by
subtracting from net income the distributions to preferred unitholders
before making an adjustment for the non-cash items described above. Funds
from operations does not represent cash flow from operating, investing and
financing activities as defined by GAAP, and detailed above. Additionally,
funds from operations does not measure whether cash flow is sufficient to
fund all cash flow needs, including principal amortization, capital
expenditures and distributions to Common Unitholders, and should not be
considered as an alternative to net income for purposes of evaluating the
Operating Partnership's operating performance or as an alternative to cash
flow, as defined by GAAP, as a measure of liquidity. Funds from operations
presented herein under the NAREIT guidelines is not necessarily comparable
to funds from operations presented by other real estate companies due to
the fact that not all real estate companies use the same definition.
However, the Operating Partnership's funds from operations is comparable to
the funds from operations of real estate companies that use the current
NAREIT definition.
34
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Selected Financial Data and the accompanying Consolidated Financial Statements
of the Operating Partnership and the notes thereto.
General
The Company was founded in 1965 and operated as a private real estate company
until August 1994, when it completed an initial public offering ("IPO") and
elected to be taxed as a real estate investment trust ("REIT"). As a
self-administered and self-managed REIT, the Company through the Operating
Partnership owns, develops, acquires and manages primarily industrial and
suburban office properties in the southeastern United States. The Operating
Partnership's third-party service businesses are conducted through two
subsidiaries (the "Service Companies"), Weeks Realty Services, Inc. (fee
landscape, property management and leasing services) and Weeks Construction
Services, Inc. (fee construction), which are accounted for on the equity method.
For a further description of the Operating Partnership, see Note 1 to the
consolidated financial statements.
Results of Operations
Operating results in 1997 when compared to 1996, reflect the Operating
Partnership's continued strong performance as measured by increases in total
revenue of $38,137,000 or 70.8%, net income attributable to Common Unitholders
of $10,665,000 or 67.5%, and net income per Common Unit (basic) of $0.13 or
11.7%. As discussed in more detail below, these increases were achieved through
both the operating results from acquired properties and stabilized development
properties (i.e., those development properties placed in-service) and to a
lesser extent the increased year-to-year performance of the core or "same store"
property portfolio.
A large part of the Operating Partnership's operating achievements for 1997 can
be attributed to its fourth quarter 1996 acquisition of 31 properties totaling
2,513,000 square feet and the related business operations of two privately-owned
real estate companies -- NWI Warehouse Group, L.P. and affiliates ("NWI"), whose
properties and operations are located in Nashville, Tennessee, and Lichtin
Properties, Inc. and affiliates ("Lichtin"), whose properties and operations are
located in the Raleigh-Durham-Chapel Hill area of North Carolina (see Note 7 to
the consolidated financial statements). In addition to these properties acquired
in late 1996, operating results for the year were also positively impacted by an
additional 18 stabilized development properties totaling 1,447,000 square feet
acquired from NWI and Lichtin in 1997, all of which represented additional
phases of the 1996 acquisition arrangements with those two companies.
35
<PAGE>
The Operating Partnership's operating results also continue to be positively
impacted by an active development program which resulted in the stabilization of
eight properties and one property expansion totaling 834,000 square feet in 1996
and 18 properties and two property expansions totaling 2,014,000 square feet in
1997. These stabilized development properties continue to achieve higher yields
than those achieved on acquisition properties, and, as a result, are expected to
continue to be a significant element of the Operating Partnership's future
growth strategy. Core properties, as defined below, also contributed to overall
operating results with increased property operating revenues less property
operating expenses, of 1.3% in 1997.
The Operating Partnership continues to diversify its property holdings
throughout the southeastern United States. Including properties under
development and under agreement to acquire at year end 1997, the Operating
Partnership's current portfolio is located in eight cities in five states and
the percentage of its holdings in each state (measured by square feet) are
Georgia (58.7%), Florida (17.6%), Tennessee (11.6%), North Carolina (10.4%), and
South Carolina (1.7%). This compares to two cities in two states at year end
1994, with Georgia representing 96.2% of the portfolio at that time (also
measured by square feet and including properties under development and under
agreement to acquire).
Operating information relating to the Operating Partnership's properties for
1997, 1996 and 1995 is summarized below (in thousands):
<TABLE>
<CAPTION>
% Change % Change
1997 vs. 1996 vs.
1997 1996 1995 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Rental revenues $ 80,419 $ 48,162 $ 31,217 67.0% 54.3%
Tenant reimbursements 10,387 4,517 2,798 130.0% 61.4%
- -------------------------------------------------------------------------------------------------------------------
Property operating revenues $ 90,806 $ 52,679 $ 34,015 72.4% 54.9%
- -------------------------------------------------------------------------------------------------------------------
Operating and maintenance
expenses $ 11,278 $ 6,025 $ 3,899 87.2% 54.5%
Real estate taxes 7,210 4,725 2,997 52.6% 57.7%
Depreciation and amortization 24,144 13,474 8,177 79.2% 64.8%
- -------------------------------------------------------------------------------------------------------------------
Property operating expenses $ 42,632 $ 24,224 $ 15,073 76.0% 60.7%
- -------------------------------------------------------------------------------------------------------------------
Property operating revenues
less property operating expenses $ 48,174 $ 28,455 $ 18,942 69.3% 50.2%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
Comparison of Year Ended December 31, 1997 to Year Ended December 31, 1996
Year to year comparisons of property operating revenues and expenses for 1997
and 1996 are discussed herein using the categories "core properties,"
"development properties" and "acquisition properties." Core properties are
defined as properties which were stabilized and operating for comparable full
year periods. The Operating Partnership defines a property as stabilized upon
the earlier of substantial lease-up or one year from building shell completion.
Development properties reflect properties completed and stabilized, and
acquisition properties are properties acquired, subsequent to January 1, 1996.
36
<PAGE>
Property operating revenues increased $38,127,000 or 72.4% in 1997. Of this
increase, $29,626,000, $7,660,000 and $841,000 were attributable to acquisition,
development and core properties, respectively. The increases from acquisition
and development properties were due to the acquisition of 83 stabilized
properties (37 in 1997 and 46 in 1996) totaling 5,402,000 square feet and the
stabilization of 26 development properties (18 in 1997 and eight in 1996) and
three property expansions (two in 1997 and one in 1996) totaling 2,848,000
square feet. Property operating expenses increased $18,408,000 or 76.0% between
years, due primarily to the growth in the property portfolio resulting from the
acquisition and development properties discussed above.
For the comparable years of 1997 and 1996, operating results of the core
properties, representing 134 properties totaling 8,861,000 square feet, are
summarized below (in thousands):
<TABLE>
<CAPTION>
1997 1996 % Change
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental revenues $ 43,216 $ 42,549 1.6%
Tenant reimbursements 4,196 4,022 4.3%
- -----------------------------------------------------------------------------------------------------
Property operating revenues $ 47,412 $ 46,571 1.8%
- -----------------------------------------------------------------------------------------------------
Operating and maintenance
expenses $ 5,914 $ 5,539 6.8%
Real estate taxes 4,114 4,299 (4.3%)
Depreciation and amortization 12,229 11,889 2.9%
- -----------------------------------------------------------------------------------------------------
Property operating expenses $ 22,257 $ 21,727 2.4%
- -----------------------------------------------------------------------------------------------------
Property operating revenues less
property operating expenses $ 25,155 $ 24,844 1.3%
- -----------------------------------------------------------------------------------------------------
Average occupancy 95.2% 96.1%
- -----------------------------------------------------------------------------------------------------
</TABLE>
Property operating revenues from core properties increased 1.8% despite the
impact of lost property operating revenues between years of approximately
$242,000 resulting from the sale of a 96,000 square foot building in April 1997
and a small decrease in overall average occupancy. Adjusted for the building
sale discussed above, property operating revenues from core properties increased
2.3% between years. This increase was due to both rental rate and reimbursement
increases between periods. Property operating expenses increased 2.4% due
primarily to increased utilities, repair and maintenance expenses offset by
lower real estate taxes in 1997. Lower real estate taxes resulted primarily from
the successful resolution of disputed property tax assessments. Property
operating revenues less property operating expenses from core properties
increased 2.3%, exclusive of depreciation and amortization expense and after
adjusting for the building sale discussed above.
Interest expense increased $6,121,000 or 52.0% from $11,779,000 in 1996 to
$17,900,000 in 1997, due to higher interest on mortgage notes payable in 1997
offset by lower interest on the Operating Partnership's revolving line of credit
(the "Credit Facility"). Mortgage interest increased $6,418,000 due to interest
costs associated with mortgage indebtedness assumed in connection with the
Operating Partnership's 1996 and 1997 acquisitions. Interest expense on Credit
Facility borrowings decreased $297,000 due primarily to a larger percentage of
Credit Facility borrowings being utilized for the Operating Partnership's
increased development activity in 1997, resulting in increased interest
capitalization as a percentage of total Credit
37
<PAGE>
Facility interest expense in 1997 compared to 1996 (see Note 4 to the
consolidated financial statements).
Operating Partnership general and administrative expenses increased $2,029,000
or 66.8% from $3,039,000 in 1996 to $5,068,000 in 1997, due primarily to
increased personnel and related administrative costs attributable to the
Operating Parntership's southeast expansion. The majority of the increase
relates to the additional general and administrative expenses associated with
the Operating Partnership's Nashville, Tennessee and Raleigh, North Carolina
operations, both of which were acquired in the fourth quarter of 1996, and
expenses related to the establishment of an office in Orlando, Florida, which
also occurred in the fourth quarter of 1996. As a percentage of total revenue,
general and administrative expenses decreased from 5.6% in 1996 to 5.5% in 1997.
Interest income increased $1,017,000 or 206.7% from $492,000 in 1996 to
$1,509,000 in 1997. Of the total increase between years, $442,000 relates to
interest earned on loans to affiliated entities and others with the remaining
increase due primarily to increased loan balances on real estate development
loans (see Note 5 to the consolidated financial statements).
Equity in earnings of unconsolidated entities primarily represents the Operating
Partnership's 99% economic interest in the earnings of the Service Companies and
their subsidiaries after the elimination of interest expense and gains on
property sales to the Operating Partnership. The Operating Partnership's share
of the earnings of the Service Companies and their subsidiaries increased by
$629,000 or 46.9% from $1,340,000 in 1996 to $1,969,000 in 1997 due primarily to
gains on sales of real estate properties, principally land, and increased
earnings from partnerships and joint ventures, also principally due to gains
from land sales. Apart from these gains, net earnings from the operations of the
Service Companies was comparable between years.
Comparison of Year Ended December 31, 1996 to Year Ended December 31, 1995
Year to year comparisons of property operating revenues and expenses for 1996
and 1995 are discussed herein using the "core properties," "development
properties" and "acquisition properties" categories discussed above. However,
for purposes of this comparison, development properties reflect properties
completed and stabilized, and acquisition properties are properties acquired,
subsequent to January 1, 1995.
Property operating revenues increased $18,664,000 or 54.9% in 1996. Of this
increase, $13,733,000, $3,750,000 and $1,181,000 were attributable to
acquisition, development and core properties, respectively. The increases from
acquisition and development properties were due to the acquisition of 81
properties (49 in 1995 and 32 in 1996) totaling 4,727,000 square feet, excluding
14 properties totaling 1,109,000 square feet acquired on December 31, 1996, and
the stabilization of 15 development properties (seven in 1995 and eight in 1996)
and two property expansions (one each year) totaling 1,799,000 square feet.
Property operating expenses increased $9,151,000 or 60.7% between years, due
primarily to the growth in the property portfolio resulting from the acquisition
and development properties discussed above.
38
<PAGE>
For the comparable years of 1996 and 1995, operating results of the core
properties, representing 78 properties totaling 5,331,000 square feet, are
summarized below (in thousands):
<TABLE>
<CAPTION>
1996 1995 % Change
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Rental revenues $ 25,157 $ 24,045 4.6%
Tenant reimbursements 2,000 1,931 3.6%
- -----------------------------------------------------------------------------------------------------
Property operating revenues $ 27,157 $ 25,976 4.5%
- -----------------------------------------------------------------------------------------------------
Operating and maintenance
expenses $ 3,685 $ 3,210 14.8%
Real estate taxes 2,299 2,300 --
Depreciation and amortization 7,178 6,310 13.8%
- -----------------------------------------------------------------------------------------------------
Property operating expenses $ 13,162 $ 11,820 11.4%
- -----------------------------------------------------------------------------------------------------
Property operating revenues less
property operating expenses $ 13,995 $ 14,156 (1.1%)
- -----------------------------------------------------------------------------------------------------
Average occupancy 95.1% 95.9%
- -----------------------------------------------------------------------------------------------------
</TABLE>
Property operating revenues from core properties increased 4.5% despite a small
decrease in overall average occupancy. This was due in part to re-leasing two
buildings totaling 344,000 square feet vacated in early 1995; re-leasing these
two buildings produced a property operating revenue increase of $912,000 in
1996. The positive impact of re-leasing these buildings was offset by decreased
average 1996 occupancy in six other buildings totaling 336,000 square feet which
resulted in decreased property operating revenues of $691,000. Exclusive of
these occupancy related impacts, core property operating revenues increased 4.2%
between years due primarily to rental rate increases.
Property operating expenses increased 11.4% due to both increased operating and
maintenance expenses and depreciation and amortization in 1996. Net of the
impact of the eight buildings affected by occupancy changes, property operating
expenses increased by 8.6% (6.1% excluding depreciation and amortization
expense). The increase in property operating and maintenance expenses reflects
increased property maintenance and security expenses between years. Excluding
the impact of the eight buildings affected by occupancy changes, property
operating revenues less property operating expenses from core properties,
increased 3.7%, exclusive of depreciation and amortization expense between
years.
Interest expense increased $3,673,000 or 45.3% from $8,106,000 in 1995 to
$11,779,000 in 1996, due to higher interest on Credit Facility borrowings and
higher mortgage interest in 1996. Higher weighted average Credit Facility
borrowings in 1996 compared to 1995, due to the Operaring Partnership's
acquisition and development activity, resulted in increased Credit Facility
interest costs in 1996 of $1,410,000. Mortgage interest increased $2,263,000 due
to interest costs associated with mortgage indebtedness assumed in connection
with the Operating Partnership's 1995 and 1996 acquisitions.
Amortization of deferred financing costs increased by $173,000 or 25.0% from
$691,000 in 1995 to $864,000 in 1996, due primarily to the amortization of the
deferred financing costs associated with a $5,140,000 industrial revenue bond
refinancing in the first quarter of 1996 and costs associated with increasing
the availability under and restructuring of the Credit Facility.
39
<PAGE>
Operating Partnership general and administrative expenses increased by
$1,191,000 or 64.4% from $1,848,000 in 1995 to $3,039,000 in 1996, due primarily
to increased personnel and related administrative costs attributable to the
Operating Partnership's growth and to a lesser extent by a shift in certain
expenses relating to properties which were fee-managed by the Service Companies
in 1995, but which were subsequently acquired and owned by the Operating
Partnership in 1996. A portion of the increased expenses in 1996 also relates to
establishing of an office in Orlando, Florida and the general and administrative
expenses associated with the Operating Partnership's acquired Nashville,
Tennessee operations, both of which occurred in the fourth quarter of 1996. As a
percentage of total revenue, general and administrative expenses increased from
5.2% in 1995 to 5.6% in 1996. General and administrative expenses of the
Operating Partnership, when combined with the general and administrative
expenses of the Service Companies increased $1,367,000 or 40.6% from $3,366,000
in 1995 to $4,733,000 in 1996 for the reasons discussed above. As a percentage
of the combined revenues of the Operating Partnership and the Service Companies,
the combined general and administrative expenses of the Operating Partnership
and the Service Companies decreased from 8.0% in 1995 to 7.6% in 1996.
Interest income for the year ended December 31, 1996, consists primarily of
interest earned under the real estate loan arrangements discussed more fully in
Note 5 to the consolidated financial statements. For the year ended December 31,
1995, interest income represented $213,000 earned under a short-term note
arrangement, made in connection with a 1995 property acquisition, $60,000 earned
under the real estate loan arrangements discussed above, with the remainder
earned on short-term cash investments.
Equity in earnings of unconsolidated entities represents the Operating
Partnership's 99% economic interest in the earnings of the Service Companies and
their subsidiaries after the elimination of interest expense to the Operating
Partnership. The Operating Partnership's share of the earnings of the Service
Companies and their subsidiaries increased $120,000 or 9.8% from $1,220,000 in
1995 to $1,340,000 in 1996. This increase was due to increased profitability of
both the third-party fee construction and landscape businesses in 1996, offset
by decreased earnings from the property management fee business due to the
Operating Partnership's acquisition in late 1995 of 37 properties which were
previously fee-managed.
Liquidity and Capital Resources
The Operating Partnership continues to generate increasing cash flows from
operations. Cash provided by operating activities increased 75.2% or $21,066,000
to $49,097,000 in 1997. The increase resulted primarily from a full year of
operating income in 1997 from 46 buildings acquired and eight development
properties and one property expansion stabilized in 1996, and from the partial
year operating income from 37 buildings acquired and 18 development properties
and two property expansions stabilized in 1997.
The Operating Partnership's net cash flow from operations is currently
sufficient to meet the Operating Partnership's current operational needs and to
satisfy the Operating Partnership's current quarterly distribution requirements,
which are structured to ensure that the Company can satisfy the dividend
requirements necessary to maintain its status as a REIT. Operating Partnership
management believes that operating cash flows will continue to be adequate to
fund these requirements in 1998.
40
<PAGE>
In 1997, the Operating Partnership invested $182,762,000 in property
acquisition, development, construction and real estate loan activities. This
compares to $121,202,000 in 1996. This increased cash investment activity
primarily reflects the impact of increased development and land acquisition
activity in 1997.
Financing for the Operating Partnership's property investment activities
consisted primarily of $251,916,000 from both common and preferred capital
contributions from the Company, offset by repayments of Credit Facility
borrowings and retirements of mortgage and other notes payable of $86,329,000,
in 1997, compared to $69,279,000 from a common capital contribution from the
Company and $45,042,000 of additional net borrowings in 1996. The debt and
equity components of the Company's or Operating Partnership's on-going financing
strategy may differ based upon future market conditions.
In 1997, the Operating Partnership increased its available borrowing capacity
under its multi-bank, unsecured, Credit Facility from $175,000,000 to
$225,000,000 and lowered its borrowing costs from LIBOR plus 1.35% to LIBOR plus
1.05%. The Credit Facility may be used to, among other things, meet the
Operating Partnership's operational obligations and to fund the distributions
necessary for the Company to meet its annual REIT dividend requirements. The
Operating Partnership currently intends to finance its development, construction
and acquisition activities primarily through borrowings under the Credit
Facility. At December 31, 1997, the Operating Partnership had available capacity
under the Credit Facility of approximately $125,000,000 (see Note 4 to the
consolidated financial statements). The Credit Facility matures on December 31,
2000, and provides for annual extensions through December 31, 2002.
In January 1998, the Operating Partnership acquired a 2,477,000 square foot,
24-building property portfolio in Miami, Florida for approximately $175,000,000
(see Note 7 to the consolidated financial statements), including cash of
approximately $64,400,000 funded through Credit Facility borrowings.
Additionally, in February 1998, one of the Service Companies acquired a
one-third interest in Codina Group, Inc., for approximately $9,000,000 (see Note
6 to the consolidated financial statements), in cash also from Credit Facility
borrowings, and the Operating Partnership received capital contributions from
the Company of approximately $33,100,000 resulting from a 1,073,000 share
Company common stock offering which was used to repay Credit Facility
borrowings. Net of these activities, the Operating Partnership's available
capacity under the Credit Facility would be approximately $85,000,000.
The Operating Partnership received unsecured debt ratings from Standard &
Poor's, Moody's and Duff & Phelps in 1997. The ratings achieved will give the
Operating Partnership "investment grade" status for all current senior unsecured
debt offerings. These ratings will serve to reduce the Operating Partnership's
unsecured debt interest costs compared to unrated unsecured debt. These rating
levels are subject to change based on the above agencies' continuing assessments
of the Operating Partnership's financial strength and operating performance. Any
change in rating status could increase or decrease the Operating Partnership's
borrowing costs.
The Operating Partnership believes it currently has adequate liquidity and
sources of capital, including available borrowing capacity under its existing
Credit Facility and remaining capacity of $415,000,000 under a $600,000,000
universal shelf registration of the Company and Operating Partnership (including
$300,000,000 of remaining debt securities capacity relating to
41
<PAGE>
the Operating Partnership), to meet its current operational requirements, to
fund annual principal requirements under existing mortgage notes payable and to
fund its current development and acquisition activity. It is management's
expectation that the Operating Partnership will continue to have access to the
additional capital resources necessary to further expand and develop its
business and to refinance mortgage notes payable as they begin to mature in
1998. These resources include debt and equity financings, in both public and
private markets, including the use of its available capacity under the current
universal shelf registration. Future development and acquisition activities will
be undertaken by the Operating Partnership only as suitable opportunities arise.
Such activities are not expected to be undertaken unless adequate sources of
financing are available and a satisfactory budget with targeted returns on
investment has been internally approved. The Operating Partnership maintains
staffing levels sufficient to meet its existing construction and leasing
activities. If market conditions warrant, the Operating Partnership may adjust
staffing levels to avoid a negative impact on the Operating Partnership's
results of operations.
Total consolidated debt amounted to $275,515,000 at December 31, 1997, including
Credit Facility borrowings of $82,920,000 and mortgage notes payable of
$192,595,000. Of the $192,595,000 of mortgage indebtedness, $186,798,000 is
fixed rate and $5,797,000 is variable rate. At December 31, 1997, the weighted
average interest rate on the Operating Partnership's fixed rate mortgage debt
was 8.1% and on its variable rate mortgage debt was 4.5%. The weighted average
interest rate under the Credit Facility, exclusive of the impact of the interest
rate swaps discussed below, at December 31, 1997, was 7.0%. Based on the
outstanding balance of mortgage notes payable at December 31, 1997, the weighted
average interest rates on the mortgage notes with a final maturity in each of
the next five years and thereafter were 8.6% in 1998, 7.4% in 1999, 8.7% in
2000, 7.4% in 2001, 8.2% in 2002 and 8.1% thereafter.
At December 31, 1997, the Operating Partnership's mortgage debt on its
consolidated properties totaled $192,595,000. Including Credit Facility
borrowings of $82,920,000 for the Operating Partnership and $16,620,000 for the
unconsolidated Service Companies and their subsidiaries and $2,000,000 of other
notes payable on unconsolidated properties, the total debt obligations of the
Operating Partnership and its unconsolidated entities was $294,135,000 or 25% of
the Operating Partnership's total market capitalization (defined as total debt
plus the market equity value of the Common Units as calculated herein) at
December 31, 1997. At December 31, 1997, (based on the closing price of the
common stock of the Company of $32.00 on December 31, 1997) the 23,336,687
Common Units outstanding would have a total market value of $746,774,000, and
the 6,000,000 preferred units outstanding would have a total market value of
$150,000,000 (based on the closing stock price of the preferred stock of the
Company of $25.00 on December 31, 1997), resulting in total equity value of
$896,774,000.
As discussed above, the Operating Partnership acquired certain properties in
Miami, Florida in January 1998 for approximately $175,000,000, and the Service
Companies acquired a one-third interest in a related real estate services
company in February 1998 for approximately $9,000,000. The Operating Partnership
also received capital contributions from the Company of approximately
$33,100,000 from a February 1998 Company common stock offering. Adjusted for
these transactions, the total debt obligations of the Operating Partnership and
its unconsolidated entities would have been $413,000,000 or 30% of total market
capitalization of $1,373,000,000 (also reflecting the equity value of these
transactions), at December 31, 1997.
42
<PAGE>
Management of Interest Rate Risks
The Operating Partnership uses interest rate swap and treasury rate guarantee
hedge arrangements to manage its exposure to interest rate changes on its
variable rate indebtedness. The Operating Partnership has in place interest rate
swap agreements to effectively fix the Operating Partnership's interest costs on
$50,000,000 of variable rate Credit Facility borrowings. The weighted average
effective interest rate under the fixed swap arrangements is approximately 7.7%.
If interest rates under the Credit Facility, in excess of the $50,000,000
discussed above, and under the Operating Partnership's variable rate mortgage
debt fluctuated by 1.0%, interest costs to the Operating Partnership, based on
outstanding borrowings at December 31, 1997, would increase or decrease by
approximately $600,000 on an annualized basis. In 1997, the Operating
Partnership entered into a treasury rate guarantee hedge arrangement to fix its
interest costs on an anticipated public debt financing transaction. This hedge
effectively locks in, for the period through March 1998, a seven year treasury
rate of approximately 6.3% on anticipated borrowings of approximately
$100,000,000.
These swap and hedge arrangements serve to decrease the negative impact of
increased interest rates on the Operating Partnership's financial results by
fixing interest rates on otherwise variable rate debt instruments. However, due
to the decline in interest rates at the end of 1997, these arrangements would
require the payment of approximately $4,265,000 (at December 31, 1997), if the
arrangements were terminated. Under current accounting rules, these potential
costs are not recognized currently in the Operating Partnership's financial
statements, but instead are reflected as part of interest expense over the life
of the related hedged borrowings, causing reported interest costs to be higher
than current interest costs on similar unhedged debt securities. The costs
associated with terminated swap and hedge arrangements can result in charges to
operations to the extent hedged borrowings are not completed or are no longer
outstanding.
Current Development and Acquisition Activity
At year end, the Operating Partnership had committed development and
acquisitions totaling approximately $200,004,000 representing 31 buildings
totaling 3,733,000 square feet, exclusive of the 2,477,000 square foot, 24
building Miami, Florida acquisition, completed in January 1998 at a total cost
of approximately $175,000,000. In February 1998, the Operating Partnership
announced additional committed developments totaling $110,590,000 representing
15 buildings and one property expansion totaling 2,074,000 square feet.
Including the developments announced in February 1998 and net of two buildings
stabilized in 1998 totaling 140,000 square feet at a total cost of $8,624,000,
the Operating Partnership had at February 28, 1998, committed development and
acquisitions totaling approximately $301,970,000 representing 44 buildings and
one property expansion totaling 5,667,000 square feet. Properties to be acquired
as of February 28, 1998, consist of three buildings totaling 357,000 square feet
with a total expected cost of approximately $17,295,000. Development properties
as of February 28, 1998, consist of 41 buildings and one building expansion
totaling 5,310,000 square feet with a total expected cost of $284,675,000.
43
<PAGE>
It is expected that such development and acquisition properties will stabilize
or be acquired as detailed below:
- --------------------------------------------------------------------------------
Square Estimated
Year Buildings Feet Cost
- --------------------------------------------------------------------------------
1998 20 2,900,000 $137,209,000
1999 23 2,664,000 154,085,000
2000 1 103,000 10,676,000
- --------------------------------------------------------------------------------
44 5,667,000 $301,970,000
================================================================================
In addition, the Operating Partnership has committed, subject to due diligence
procedures, to acquire development land totaling $25,403,000 over various
periods ranging up to five years.
It is expected that future development and land acquisition expenditures will be
funded primarily through Credit Facility borrowings, refinanced as required
through new debt or equity offerings in both private and public markets, and
future acquisitions will be consummated primarily through a combination of cash
funded through borrowings under the Credit Facility, the issuance of Common
Units and the assumption of indebtedness, some of which will also be repaid
through borrowings under the Credit Facility.
The information provided above includes forward-looking data about expected
property acquisitions or stabilizations that is based on current construction
schedules, the status of lease negotiations with potential tenants, the
successful completion of due diligence procedures and other relevant factors
currently available to the Operating Partnership. There can be no assurance that
any of these factors will not change or that any change will not affect the
accuracy of such forward-looking data.
Supplemental Disclosure of Funds from Operations
The Operating Partnership believes that funds from operations provides an
additional indicator of the financial performance of the Operating Partnership.
Funds from operations is defined by the National Association of Real Estate
Investment Trusts ("NAREIT") to mean net income (loss) determined in accordance
with generally accepted accounting principles ("GAAP") excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. Adjustments for unconsolidated partnerships and joint ventures will be
calculated to reflect funds from operations on the same basis. The Operating
Partnership computes funds from operations under the current NAREIT definition
by subtracting from net income the distributions to preferred unitholders before
making an adjustment for the non-cash items described above. Funds from
operations is influenced not only by the operations of the properties, but also
by the capital structure of the Operating Partnership. Accordingly, management
expects that funds from operations will be one of the factors considered by the
Board of Directors of the Company in determining the amount of cash
distributions the Operating Partnership will pay to its Unitholders. Funds from
operations does not represent cash flow from operating, investing and financing
activities as defined by GAAP, which are discussed under "Liquidity and Capital
Resources" above. Additionally, funds from operations does not measure whether
cash flow is sufficient to fund all cash flow needs, including principal
amortization, capital expenditures and distributions to Unitholders, and should
not be considered as an alternative to net income for purposes of evaluating the
Operating Partnership's operating performance or as an alternative to cash flow,
as defined by
44
<PAGE>
GAAP, as a measure of liquidity. Funds from operations presented herein under
the NAREIT guidelines is not necessarily comparable to funds from operations
presented by other real estate companies due to the fact that not all real
estate companies use the same definition. However, the Operating Partnership's
funds from operations is comparable to the funds from operations of real estate
companies that use the current NAREIT definition.
The Operating Partnership's calculation of funds from operations follows the
guidelines issued by NAREIT, including the recognition of rental income on the
"straight-line" basis consistent with its treatment in the Operating
Partnership's statement of operations under GAAP. The "straight-line" rental
adjustment increased rental revenues by $680,000 and $475,000 in 1997 and 1996,
respectively, and decreased rental revenue by $19,000 in 1995. In accordance
with the NAREIT guidelines, the Operating Partnership excludes gains or losses
on sales of operating (previously depreciated) real estate assets in calculating
funds from operations, but includes gains or losses on sales of undepreciated
assets (land) that are of a recurring nature. Pre-tax gains on land sales are
included in funds from operations in the amount of $636,000, $67,000 and
$125,000 in 1997, 1996, and 1995, respectively.
In 1997, funds from operations available to Common Unitholders increased
$21,020,000 or 71.7% to $50,343,000 compared to funds from operations of
$29,323,000 in 1996. Funds from operations for 1997, 1996 and 1995, are detailed
below (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income available to Common
Unitholders $ 26,474 $ 15,809 $ 11,107
Depreciation and amortization 24,144 13,474 8,177
Depreciation and amortization --
unconsolidated entities 10 40 23
Gain on sale of operating real estate
property (209) -- --
Gain on sale of operating real estate
property-- unconsolidated entities (76) -- --
- ----------------------------------------------------------------------------------------------------------
Funds from operations available to
Common Unitholders $ 50,343 $ 29,323 $ 19,307
- ----------------------------------------------------------------------------------------------------------
Weighted average Common Units
Basic 21,380 14,280 10,760
Diluted/(a)/ 21,580 14,386 10,832
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents the weighted average Common Units outstanding plus the dilutive
effect of outstanding stock options. Common Unit equivalents related to the
Company's outstanding stock options totaled 200,000, 106,000 and 72,000 in
1997, 1996, and 1995, respectively.
45
<PAGE>
Supplemental Information on Capital Expenditures and Leasing Costs
The following table details the Operating Partnership's capital expenditures and
leasing costs for 1997, 1996, and 1995 (in thousands):
<TABLE>
<CAPTION>
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Building acquisitions/(1)(2)/ $ 129,884 $ 201,660 $ 110,141
Development and land acquisition activity/(3)(4)/ 137,815 70,476 42,835
Non-revenue-producing building improvements 1,059 543 331
Revenue-producing building improvements/(5)/ -- -- 3,520
Tenant improvement and leasing costs on
second-generation leases/(6)/ 4,541 2,995 2,597
- -------------------------------------------------------------------------------------------------------------------
$ 273,299 $ 275,674 $ 159,424
===================================================================================================================
</TABLE>
(1) Building acquisitions in 1997 included two buildings acquired while still
under development. These buildings were not stabilized as of December 31,
1997.
(2) Reflects aggregate acquisition costs including the settlement of real estate
loans of $7,376,000, the assumption of indebtedness of $64,869,000, the
issuance of $31,598,000 of Common Units and other acquisition related
payables, net of receivables, of $756,000 in 1997; including the assumption
of mortgage notes payable of $104,628,000, the issuance of $55,209,000 of
Common Units and other acquisition related payables, net of receivables, of
$906,000 in 1996; and including the assumption of mortgage notes payable of
$39,511,000 and the application of notes receivable and deposits of
$3,540,000 in 1995 (see Note 14 to the consolidated financial statements).
(3) Includes first-generation leasing costs on development properties totaling
$3,774,000, $1,287,000 and $1,292,000 in 1997, 1996, and 1995, respectively.
(4) Reflects aggregate development and leasing costs, exclusive of the decrease
in construction payables of $776,000 and $743,000 in 1997 and 1996,
respectively, and the increase in construction payables of $52,000 in 1995.
(5) In 1995, revenue-producing building improvements included $520,000 in
building improvements to convert a 94,677 square foot single-tenant office
building to a multi-tenant facility. By dividing the space for lease to a
number of tenants, rather than leasing the entire building to a single
tenant, the Operating Partnership believes it has achieved higher rents and
has substantially reduced its rollover risk and potential loss due to
vacancy. Also in 1995, the Operating Partnership invested approximately
$3,000,000 in building improvements to convert a 249,200 square foot bulk
warehouse building to a manufacturing facility. The new tenant also invested
a similar amount in improvements to the building. Management believes that
this combined investment has enhanced the value of the building and that the
Operating Partnership has achieved higher rent as a result of the renovation
and conversion of this building.
(6) Includes second-generation leasing costs totaling $2,073,000, $1,331,000 and
$1,159,000 in 1997, 1996, and 1995, respectively.
Recent Accounting Pronouncements
In February 1997, Statement of Financial Accounting Standards ("SFAS") 128,
"Earnings per Share," was issued prescribing a new method for computing earnings
per share, which superseded Accounting Principles Board Opinion 15, "Earnings
per Share," the prior accounting literature utilized in computing earnings per
share under generally accepted accounting principles. SFAS 128 became effective
for the Operating Partnership during the fourth quarter and year ended December
31, 1997. Under SFAS 128, the Operating Partnership has presented both basic and
diluted net income per Common Unit in its consolidated financial statements and,
as required under SFAS 128, all prior period net income per Common Unit data was
restated. The impact of SFAS 128 on the Operating Partnership's consolidated net
income per Common Unit amounts and additional disclosures required by SFAS 128
for 1997, 1996 and 1995 are discussed in Note 8 to the consolidated financial
statements.
46
<PAGE>
In June 1997, SFAS 130, "Reporting Comprehensive Income," was issued
establishing new standards for the reporting and display of comprehensive income
and its components in a full set of financial statements. SFAS 130 will be
effective for the Operating Partnership beginning with the fourth quarter and
year ended December 31, 1998. The implementation of SFAS 130 is not expected to
have a material impact on the Operating Partnership's financial statement
presentation.
In June 1997, SFAS 131, "Disclosures About Segments of an Enterprise and Related
Information," was issued prescribing new guidelines for the reporting of segment
data. SFAS 131 will apply to all public, for-profit companies and will be
effective for the Operating Partnership beginning with the fourth quarter and
year ended December 31, 1998. The Operating Partnership was not subject to
segment reporting under prior accounting standards, but will be required to
provide certain segment disclosures under SFAS 131. The Operating Partnership
has not yet determined the specific nature and magnitude of the disclosures
required by SFAS 131.
Impact of Inflation
In the last three years, inflation has not had a significant impact on the
Operating Partnership because of the relatively low inflation rate.
Substantially all tenant leases do, however, contain provisions designed to
protect the Operating Partnership from the impact of inflation. Most of the
Operating Partnership's leases require the tenants to pay a share of operating
expenses, including common area maintenance, real estate taxes and insurance,
thereby reducing the Operating Partnership's exposure to increases in costs and
operating expenses resulting from inflation. In addition, many of the leases are
for terms of less than seven years which may enable the Operating Partnership to
replace existing leases with new leases at higher base rentals if rents under
the existing leases are below the then-existing market rate. However, there can
be no assurance that the Operating Partnership would be able to replace existing
leases with new leases at higher base rentals.
Other Matters
The Operating Partnership is currently assessing the potential impact of the
year 2000 on the processing of date-sensitive information by the Operating
Partnership's hardware and software information systems. The year 2000 issue is
the result of many computer programs recognizing a date ending with "00" as the
year 1900 rather than the year 2000, causing potential system failures or
miscalculations which could result in disruptions of normal business operations.
The Operating Partnership's primary financial and operating systems are supplied
by third-party suppliers. Based on communications with third-party suppliers,
evaluations of third-party systems and internal assessments of in-house
information systems, the costs of addressing potential year 2000 issues are not
expected to have a material adverse impact on the Operating Partnership's
financial position, results of operations or cash flows in future periods. In
fact, most of the Operating Partnership's software systems are either currently
year 2000 compliant or will be compliant well in advance of January 1, 2000.
However, such conclusions are based upon communications, evaluations and
assessments to date and if future negative events occur which can not be
resolved in a timely manner, it could result in material financial risk to the
Operating Partnership. The Operating Partnership plans to allocate the time and
resources necessary to timely resolve any significant year 2000 issues.
47
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Registrant and supplementary data
are detailed under Item 14(a) and filed as part of this report on the pages
indicated.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The sections under the heading "Election of Directors" entitled "Nominees for
Election -- Terms Expiring in 2001," "Incumbent Directors -- Terms Expiring in
2000," "Incumbent Directors -- Terms Expiring in 1999" and "Section 16(a)
Beneficial Ownership Reporting Compliance" of the Company's Proxy Statement for
the 1998 Annual Meeting of Shareholders to be held May 20, 1998 (the "Proxy
Statement") are incorporated herein by reference for information regarding
Directors of the Company. See Item X in Part I hereof for information regarding
executive officers of the Registrant.
ITEM 11. EXECUTIVE COMPENSATION
The section under the heading "Election of Directors" entitled "Compensation of
Directors" of the Proxy Statement and the sections under the heading entitled
"Executive Compensation" of the Proxy Statement are incorporated herein by
reference.
48
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial ownership
of Common Units of the Operating Partnership as of February 28, 1998 for (i)
directors of the Company, (ii) the Chief Executive Officer and each of the four
other most highly compensated executive officers of the Operating Partnership
and the Company (collectively, the "Named Executive Officers"), (iii) the
directors of the Company and executive officers of the Operating Partnership and
the Company as a group and (iv) each person known to the Operating Partnership
who is, or may be deemed to be, the beneficial owner of more than a 5% interest
in the Operating Partnership. Unless otherwise indicated in the footnotes, all
of such interests are owned directly, and the indicated person or entity has
sole voting and disposition power.
49
<PAGE>
<TABLE>
<CAPTION>
Name and Address Number of Common Units Percent
of Beneficial Owner Beneficially Owned/(1)/ of Class
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Weeks LP Holdings, Inc./(2)(3)/ 18,655,066 72.93%
Weeks GP Holdings, Inc./(2)(3)/ 337,503 1.32%
NWI Warehouse Group, L.P. 2,281,273 8.92%
1410 Donelson Pike
Nashville, TN 37217
A. Ray Weeks, Jr./(2)/ 1,432,905/(4)/ 5.60%
Thomas D. Senkbeil/(2)/ 96,067/(5)(6)/ *
Forrest W. Robinson/(2)/ 72,127/(5)(6)/ *
David P. Stockert/(2)/ -- *
Klay W. Simpson/(2)/ 4,110 *
John W. Nelley, Jr./(2)/ 2,281,273/(7)/ 8.92%
Harold S. Lichtin/(2)/ 624,298/(8)/ 2.44%
Barrington H. Branch/(2)/ -- *
George D. Busbee/(2)/ -- *
William Cavanaugh III/(2)/ -- *
Charles R. Eitel/(2)/ -- *
William O. McCoy/(2)/ -- *
All executive officers and directors
as a group (20 persons) 4,456,586 17.42%
</TABLE>
* Represents less than 1% of the Operating Partnership's outstanding Common
Units.
(1) Except as otherwise indicated, each of the parties listed has sole voting
and investment power over the units owned.
(2) Beneficial owner's address is 4497 Park Drive, Norcross, GA 30093.
(3) Each company is a wholly-owned subsidiary of Weeks Corporation.
(4) Includes 400,155 Common Units held by trusts of which Mr. Weeks is co-
trustee and a 20% beneficiary, and 255,263 Common Units held by corporations
that Mr. Weeks controls, including by those corporations discussed in notes
(5) and (6) below, and 163,048 Common Units held by Mr. Weeks' spouse.
(5) Includes 42,993 Common Units held by a corporation which is owned 60%, 30%
and 10%, respectively, by Mr. Weeks, Mr. Senkbeil and Mr. Robinson.
(6) Includes 257 Common Units held by a corporation which is owned 75%, 20% and
5%, respectively, by Mr. Weeks, Mr. Senkbeil and Mr. Robinson.
(7) Includes 2,281,273 Common Units held by NWI Warehouse Group, L.P. of which
Mr. Nelley is a general partner. Mr. Nelley disclaims beneficial ownership
of 1,789,358 of such Common Units.
(8) Includes 595,365 Common Units held by entities which Harold S. Lichtin
controls and 153 Common Units held by Mr. Lichtin's spouse.
50
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The sections under the heading titled "Certain Transactions" of the Proxy
Statement are incorporated herein by reference.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND
REPORTS ON FORM 8-K
(A) 1. Financial Statements
The following Consolidated Financial Statements of the Registrant,
together with the applicable Report of Independent Public Accountants,
are listed below:
<TABLE>
<CAPTION>
Weeks Realty, L.P. and Subsidiaries Page Number
<S> <C>
Report of Independent Public Accountants on Financial
Statements and Schedule..................................................................F-1
Consolidated Balance Sheets of the Operating Partnership
at December 31, 1997 and 1996............................................................F-2
Consolidated Statements of Operations of the Operating Partnership
for the years ended December 31, 1997, 1996 and 1995.....................................F-3
Consolidated Statements of Partners' Capital of the Operating
Partnership for the years ended December 31, 1997, 1996 and 1995.........................F-4
Consolidated Statements of Cash Flows of the Operating
Partnership for the years ended December 31, 1997, 1996 and 1995.........................F-5
Notes to Consolidated Financial Statements....................................................F-6
2. Financial Statement Schedule
Schedule III - Real Estate Assets and Accumulated Depreciation........................S-1 to S-11
</TABLE>
3. Exhibits
Certain of the exhibits required by item 601 of Regulation S-K have
been filed with previous reports by the Registrant and are herein
incorporated by reference thereto.
51
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Description
- -------------------------------------------------------------------------------------------------------------------
<C> <S>
2.1* Agreement of Merger by and between NWI Warehouse Group, LLC and Weeks Realty, L.P., dated
November 1, 1996.
2.2* Contribution Agreement for Development Properties between Weeks Realty, L.P., and NWI
Warehouse Group, L.P., dated November 1, 1996.
2.3* Contribution Agreement for Aspen Grove Land between Weeks Realty, L.P., and NWI Warehouse
Group, L.P., dated November 1, 1996.
2.4* Contribution Agreement for I-440 Land between Weeks Realty, L.P., and NWI Warehouse
Group, L.P., dated November 1, 1996.
2.5* Contribution Agreement for NWI Operating Business by and between Weeks Realty, L.P. and
NWI Warehouse Group, L.P., dated November 1, 1996.
2.6* Contribution Agreement for Buckley Operating Business by and between Weeks Realty, L.P.
and Buckley & Company Real Estate, Inc., dated November 1, 1996.
2.7* Contribution Agreement for Briley Land between Weeks Realty, L.P. and NWI Warehouse
Group, L.P., dated November 1, 1996.
2.8** Contribution Agreement by and between Harold S. Lichtin and Weeks Realty, L.P., dated
December 31, 1996.
2.9** Contribution Agreement for Northern Telecom Properties, among the Contributors identified
therein (the "Contributors") and Weeks Realty, L.P. doing business as Weeks Realty Limited
Partnership, dated December 31, 1996.
2.10** Contribution Agreement (Perimeter Park West Land) among Harold S. Lichtin, Marie
Antoinette Robertson, and Perimeter Park West Associates, and Weeks Realty, L.P. doing
business as Weeks Realty Limited Partnership, dated December 31, 1996.
2.11** Contribution Agreement for Completed Properties Lichtin Portfolio among the Contributors
and Weeks Realty, L.P. doing business as Weeks Realty Limited Partnership, dated December
31, 1996.
2.12** Contribution Agreement for Development Properties and Regency Forrest Land among the
Contributors and Weeks Realty, L.P. doing business as Weeks Realty Limited Partnership,
dated December 31, 1996.
2.13**** Beacon Centre Contribution Agreement dated January 2, 1998 by and between Armando Codina,
Codina West Dade Development Corporation, Codina Family Investments, Ltd., The Benenson
Capital Company, Raha Associated, Inc., Laurence Tisch, Preston Tisch, Raha Associates II,
Inc., Codina West Dade Development Corporation No. 5, and Weeks Realty, L.P., and Weeks
Corporation.
4.1* Second Amended and Restated Agreement of Limited Partnership of Weeks Realty, L.P., dated
October 30, 1996.
4.2* First Amendment to the Second Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P. by and among NWI Warehouse Group, L.P., Buckley & Company Real Estate,
Inc. and Weeks GP Holdings, Inc., dated November 1, 1996.
4.3** Second Amendment to the Second Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P. by and among Harold S. Lichtin, Noel A. Lichtin, Marie Antoinette
Robertson, Amy R. Ehrman, Roland G. Robertson and Perimeter Park West Associates Limited
Partnership, Weeks GP Holdings, Inc. and Weeks Corporation, dated December 31, 1996.
4.4++ Third Amendment to Second Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P., dated January 31, 1997.
</TABLE>
52
<PAGE>
<TABLE>
<C> <S>
4.5 Fourth Amendment to Second Amended and Restated Agreement of Limited Partnership of Weeks Realty, L.P.,
dated August 1, 1997.
4.6++++ Fifth Amendment to Second Amended and Restated Agreement of Limited Partnership of Weeks Realty, L.P.,
dated October 7, 1997.
4.7 Sixth Amendment to Second Amended and Restated Agreement of Limited Partnership of Weeks Realty, L.P.,
dated October 27, 1997.
4.8 Seventh Amendment to Second Amended and Restated Agreement of Limited Partnership of Weeks Realty, L.P.,
dated December 30, 1997, but effective as of August 1, 1997.
4.9**** Eighth Amendment to the Second Amended and Restated Agreement of Limited Partnership of Weeks Realty, L.P.
dated January 9, 1998.
4.10***** Indenture among Weeks Realty, L.P. and State Street Bank and Trust Company, as Trustee.
10.1*** Employment Agreements between Weeks Realty, L.P. and A. Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W.
Robinson, respectively.
10.2*** Employment Agreements between Weeks Realty Services, Inc. and A. Ray Weeks, Jr., Thomas D. Senkbeil and
Forrest W. Robinson, respectively.
10.3*** Employment Agreements between Weeks Construction Services, Inc. and A. Ray Weeks, Jr. and Forrest W.
Robinson, respectively.
10.4*** Noncompetition Agreements among the Company, Weeks Realty, L.P., Weeks Realty Services, Inc., Weeks
Construction Services, Inc. and each of A. Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W. Robinson.
10.5+ Credit Agreement dated September 25, 1996, by and among Wachovia Bank of Georgia, N.A., as agent bank for
Wachovia Bank of Georgia, N.A., First Union National Bank of Georgia, Commerzbank A.G. and Mellon Bank,
N.A. as lenders, Weeks Realty, L.P., Weeks Construction Services, Inc., Weeks Realty Services, Inc., Weeks
Development Partnership and Weeks Financing Limited Partnership, as borrowers, and Weeks Corporation and
Weeks Realty, L.P., as guarantors.
10.6/++/ Park North Purchase and Sale Agreement between Copley Properties Inc., Parknorth Associates, Parknorth
Associates II, Parknorth Associates III and Weeks Realty, L.P., dated March 28, 1995.
10.7# Purchase and Sale Agreement by and among North Meadow Associates Joint Venture, ASC North Fulton Associates
Joint Venture and Weeks Realty, L.P., dated July 7, 1995.
10.8## Noncompetition Agreement between Weeks Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc. and
Weeks Construction Services, Inc. and David P. Stockert, dated June 26, 1995.
10.9## Agreement of Purchase and Sale between Premprop-Northwoods 6 Partnership, Premprop-Northwoods 18-22
Partnership, and Premprop-Northwoods 23 Partnership and Weeks Realty, L.P. dated November 6, 1995. The
Exhibits and Schedules to this Agreement are listed in, but not filed with, this exhibit. Such Exhibits and
Schedules have been omitted for purposes of this filing, but will be furnished to the Commission
supplementary upon request.
10.10### Real Estate Purchase and Sale Agreement by and between Principal Mutual Life Insurance Company and Weeks
Realty, L.P., dated May 28, 1996.
10.11* Noncompetition Agreement by and among NWI Warehouse Group, L.P., Weeks Corporation, Weeks Realty, L.P.,
Weeks Realty Services, Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP
Holdings, Inc., and their respective successors, dated November 1, 1996.
</TABLE>
53
<PAGE>
<TABLE>
<C> <S>
10.12* Noncompetition Agreement by and among John W. Nelley, Jr., Weeks Corporation, Weeks
Realty, L.P., Weeks Realty Services, Inc., Weeks Construction Services, Inc., Weeks GP
Holdings, Inc., Weeks LP Holdings, Inc., and any other entity under the common control of
Weeks Corporation, and their respective successors, dated November 1, 1996.
10.13* Noncompetition Agreement by and among Albert W. Buckley, Jr., Weeks Corporation, Weeks Realty, L.P., Weeks
Realty Services, Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP Holdings,
Inc., and any other entity under the common control of Weeks Corporation, and their respective successors,
dated November 1, 1996.
10.14** Noncompetition Agreement by and between Harold S. Lichtin, Weeks Corporation, Weeks Realty, L.P., Weeks
Realty Services, Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks LP Holdings, Inc.,
and any other entity under the common control of Weeks Corporation, and their respective successors, dated
December 31, 1996.
10.15+++ First Amendment to Credit Agreement dated September 1, 1997 by and among Wachovia Bank of Georgia, N.A., as
agent bank for Wachovia Bank of Georgia, N.A., First Union National Bank of Georgia, Commerzbank A.G. and
Mellon Bank, as lenders, Weeks Realty, L.P., Weeks Construction Services, Inc., Weeks Realty Services,
Inc., Weeks Development Partnership and Weeks Financing Limited Partnership, as borrowers, and Weeks
Corporation, Weeks GP Holdings, Inc., Weeks LP Holdings, Inc., and Weeks Realty, L.P., as guarantors.
10.16 Consulting Agreement by and between Harold S. Lichtin and Weeks Corporation, dated December 30, 1997,
effective October 1, 1997.
10.17 Settlement Agreement and Mutual Release by and among Weeks Corporation, the affiliates and related
companies of Weeks Corporation identified therein, and Harold S. Lichtin, dated December 30, 1997,
effective October 1, 1997.
10.18#### Securities Purchase Agreement among Codina Group, Inc., Armando Codina, St. Joe Corporation and Weeks
Realty Services, Inc. dated as of February 24, 1998.
10.19#### Shareholders' Agreement among Codina Group, Inc., Armando Codina, St. Joe Corporation and Weeks Realty
Services, Inc. dated as of February 24, 1998.
11.1 Computation of earnings per Common Unit.
21.1 List of subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP regarding Weeks Realty, L.P.'s S-3, file No. 333-32755.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the year ended December 31, 1996, as restated for the implementation of SFAS
128.
27.3 Financial Data Schedule for the nine months ended September 30, 1997, as restated for
the implementation of SFAS 128.
</TABLE>
* Filed as an exhibit to the Company's Current Report on Form 8-K
dated November 1, 1996.
** Filed as an exhibit to the Company's Current Report on Form 8-K
dated December 31, 1996.
*** Filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
**** Filed as an exhibit to the Company's Current Report on Form 8-K
dated January 9, 1998.
***** Filed as an exhibit to the Company's Registration Statement on
Form 8-A dated March 17, 1998.
# Filed as an exhibit to the Company's Current Report on Form 8-K
dated August 31, 1995.
## Filed as an exhibit to the Company's Annual Report on Form 10-K
for the year ended December 31, 1995.
### Filed as an exhibit to the Company's Current Report on Form 8-K
dated August 9, 1996.
#### Filed as an exhibit to the Company's Current Report on Form 8-K
dated March 17, 1998.
+ Filed as an exhibit to the Company's Quarterly Report on Form
10-Q for the quarterly period ended September 30, 1996.
/++/ Filed as an exhibit to the Company's Current Report on Form 8-K
dated July 12, 1995.
++ Filed as an exhibit to the Company's Current Report on Form 8-K
dated May 7, 1997.
+++ Filed as an exhibit to the Operating Partnership's Quarterly
Report on Form 10-Q for the quarterly period ended
September 30, 1997.
54
<PAGE>
++++ Filed as an exhibit to the Company's Current Report on Form 8-K
dated October 7, 1997.
(B) 1. Reports on Form 8-K
Form 8-K dated October 3, 1997, and filed on October 6, 1997, reporting
the acquisition of operating real estate properties from NWI and
Lichtin in 1997.
55
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
WEEKS REALTY, L.P.
(Registrant)
By: Weeks GP Holdings, Inc.,
as General Partner
March 30, 1998 /s/ A. R. Weeks, Jr.
--------------------------------------------
A. R. Weeks, Jr.
Chairman of the Board, Chief Executive Officer and
Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capabilities on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ A. R. Weeks, Jr. Chairman of the Board, Chief March 30, 1998
- -------------------------------------------- Executive Officer and Director
A. R. Weeks, Jr.
/s/ Thomas D. Senkbeil Vice Chairman, Chief March 30, 1998
- -------------------------------------------- Investment Officer and Director
Thomas D. Senkbeil
/s/ Forrest W. Robinson President, Chief Operating March 30, 1998
- -------------------------------------------- Officer and Director
Forrest W. Robinson
/s/ David P. Stockert Senior Vice President and March 30, 1998
- -------------------------------------------- Chief Financial Officer
David P. Stockert
/s/ John W. Nelley, Jr. Managing Director and March 30, 1998
- -------------------------------------------- Director
John W. Nelley, Jr.
/s/ Arthur J. Quirk Vice President and Controller March 30, 1998
- --------------------------------------------
Arthur J. Quirk
/s/ Barrington H. Branch Director March 30, 1998
- --------------------------------------------
Barrington H. Branch
/s/ George D. Busbee Director March 30, 1998
- --------------------------------------------
George D. Busbee
/s/ William Cavanaugh III Director March 30, 1998
- --------------------------------------------
William Cavanaugh III
/s/ Charles R. Eitel Director March 30, 1998
- --------------------------------------------
Charles R. Eitel
/s/ Harold S. Lichtin Director March 30, 1998
- --------------------------------------------
Harold S. Lichtin
/s/ William O. McCoy Director March 30, 1998
- --------------------------------------------
William O. McCoy
</TABLE>
56
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Weeks Realty, L.P.:
We have audited the accompanying consolidated balance sheets of Weeks Realty,
L.P. and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated statements of operations, partners' capital and cash flows for each
of the three years in the period ended December 31, 1997. These financial
statements and the schedule referred to below are the responsibility of the
Operating Partnership's management. Our responsibility is to express an opinion
on these financial statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Weeks Realty, L.P. and
subsidiaries as of December 31, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997 in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedule listed in the index to
financial statements is presented for purposes of complying with the Securities
and Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing procedures applied
in the audits of the basic financial statements and, in our opinion, fairly
states in all material respects the financial data required to be set forth
therein in relation to the basic financial statements taken as a whole.
/s/ ARTHUR ANDERSEN LLP
------------------------
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 27, 1998
F-1
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31
------------------------------------------------
(In thousands, except unit data) 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate assets
Land $ 106,196 $ 77,233
Buildings and improvements 627,309 450,002
Accumulated depreciation (61,548) (41,469)
- ----------------------------------------------------------------------------------------------------------------------
Operating real estate assets 671,957 485,766
Developments in progress 100,433 56,571
Land held for future development 22,562 9,035
- ----------------------------------------------------------------------------------------------------------------------
Net real estate assets 794,952 551,372
Real estate loans 12,952 9,455
Cash and cash equivalents 5,421 260
Receivables 7,031 5,858
Deferred costs, net 13,087 10,286
Investments in and notes receivable from
unconsolidated entities 11,782 7,760
Other assets 7,136 6,858
- ----------------------------------------------------------------------------------------------------------------------
$ 852,361 $ 591,849
======================================================================================================================
Liabilities and Partners' Capital
Mortgage notes payable $ 192,595 $ 197,575
Credit facility borrowings 82,920 99,400
Accounts payable and accrued expenses 14,578 9,970
Other liabilities 4,876 2,963
- ----------------------------------------------------------------------------------------------------------------------
Total liabilities 294,969 309,908
- ----------------------------------------------------------------------------------------------------------------------
Commitments and contingencies
Other limited partners' capital interests, 5,632,695 and
4,485,190 Common Units at December 31, 1997
and 1996, respectively, at redemption value (Note 1) 180,246 149,133
- ----------------------------------------------------------------------------------------------------------------------
Partners' capital
Preferred Units, at $25.00 liquidation preference,
6,000,000 of 8% Series A Preferred Units outstanding
at December 31, 1997 150,000 --
Common Units, 17,703,992 and 14,048,593 Common Units
outstanding at December 31, 1997 and 1996, respectively 227,146 132,808
- ----------------------------------------------------------------------------------------------------------------------
Total partners' capital 377,146 132,808
- ----------------------------------------------------------------------------------------------------------------------
$ 852,361 $ 591,849
======================================================================================================================
</TABLE>
The accompanying notes are an integral part of these balance sheets.
F-2
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------------------------
(In thousands, except per unit data) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Rental $ 80,419 $ 48,162 $ 31,217
Tenant reimbursements 10,387 4,517 2,798
Other 1,214 1,204 1,256
- --------------------------------------------------------------------------------------------------------------------------------
92,020 53,883 35,271
- --------------------------------------------------------------------------------------------------------------------------------
Expenses
Property operating and maintenance 11,278 6,025 3,899
Real estate taxes 7,210 4,725 2,997
Depreciation and amortization 24,144 13,474 8,177
Interest 17,900 11,779 8,106
Amortization of deferred financing costs 933 864 691
General and administrative 5,068 3,039 1,848
- --------------------------------------------------------------------------------------------------------------------------------
66,533 39,906 25,718
- --------------------------------------------------------------------------------------------------------------------------------
Income before Equity in Earnings of Unconsolidated
Entities, Interest Income and Gain on Sale of
Real Estate Property 25,487 13,977 9,553
Equity in earnings of unconsolidated entities 1,989 1,340 1,220
Interest income 1,509 492 334
Gain on sale of real estate property 209 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net Income 29,194 15,809 11,107
Distributions to preferred unitholders (2,720) -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net Income Available to Common Unitholders $ 26,474 $ 15,809 $ 11,107
================================================================================================================================
Net Income Per Common Unit
Basic $ 1.24 $ 1.11 $ 1.03
Diluted 1.23 1.10 1.03
- --------------------------------------------------------------------------------------------------------------------------------
Weighted Average Common Units
Basic 21,380 14,280 10,760
Diluted 21,580 14,386 10,832
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS' CAPITAL
<TABLE>
<CAPTION>
Weeks Corporation and Subsidiaries Other
---------------------------------------------- Limited
Total Partners'
Preferred Common Partners' Capital
(In thousands, except per share amounts) Units Units Capital Interests
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994 $ -- $ 41,630 $ 41,630 $ 56,723
Cash contributions from Company - common units -- 72,800 72,800 --
Conversion of redeemable common units into shares -- 234 234 (234)
Net income -- 8,426 8,426 2,681
Distributions to common unitholders ($1.50 per unit) -- (11,513) (11,513) (3,890)
Adjustments primarily to reflect other limited partners'
capital interest at redemption value -- (12,473) (12,473) 9,228
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 -- 99,104 99,104 64,508
Cash contributions from Company - common units -- 69,279 69,279 --
Units issued in exchange for property -- 7,124 7,124 48,085
Net income -- 12,745 12,745 3,064
Distributions to common unitholders ($1.60 per unit) -- (17,860) (17,860) (4,108)
Adjustments to reflect other limited partners' capital
interest at redemption value -- (37,584) (37,584) 37,584
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1996 -- 132,808 132,808 149,133
Cash contributions from Company - common units -- 107,291 107,291 --
Cash contributions from Company - preferred units 150,000 (5,375) 144,625 --
Units issued in exchange for property -- -- -- 31,876
Net income 2,720 20,255 22,975 6,219
Distributions to common unitholders ($1.72 per unit) -- (27,321) (27,321) (7,782)
Distributions to preferred unitholders ($0.45 per unit) (2,720) -- (2,720) --
Restricted share grants, net of deferred compensation -- 288 288 --
Adjustment to reflect other limited partners' capital
interest at redemption value -- (800) (800) 800
- ------------------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1997 $ 150,000 $ 227,146 $ 377,146 $ 180,246
====================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
WEEKS REALTY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended December 31
------------------------------------------------------
(In thousands) 1997 1996 1995
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating Activities
Net income $ 29,194 $ 15,809 $ 11,107
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 24,144 13,474 8,177
Amortization of deferred financing costs 933 864 691
Amortization of deferred compensation 288 -- --
Straight-line rent revenue (680) (475) 19
Gain on sale of real estate property (209) -- --
Net change in:
Receivables (1,151) (184) (734)
Other assets (1,970) (1,427) (1,015)
Deferred costs (5,847) (2,618) (2,451)
Accounts payable and accrued expenses 2,482 1,366 2,078
Other liabilities 1,913 1,222 806
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 49,097 28,031 18,678
- --------------------------------------------------------------------------------------------------------------------------------
Investing Activities
Property acquisition, development and construction (163,589) (113,056) (113,870)
Real estate loans (19,173) (8,146) (1,309)
Proceeds from sale of real estate property 2,484 -- --
Collections on real estate loans,
notes receivable and other 9,208 879 2,302
Notes receivable and deposits -- -- (4,540)
Distributions from (investments in)
unconsolidated entities (2,504) -- 290
- --------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (173,574) (120,323) (117,127)
- --------------------------------------------------------------------------------------------------------------------------------
Financing Activities
Capital contributions from Company - preferred units 144,625 -- --
Capital contributions from Company - common units 107,291 69,279 72,800
Line of credit proceeds (repayments), net (16,480) 65,117 34,283
Payments of mortgage and other notes payable (69,849) (20,075) (3,650)
Proceeds from mortgage notes payable -- -- 5,200
Deferred financing costs (126) (783) (133)
Distributions (35,823) (21,968) (15,403)
- --------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 129,638 91,570 93,097
- --------------------------------------------------------------------------------------------------------------------------------
Increase (Decrease) in Cash and Cash Equivalents 5,161 (722) (5,352)
Cash and Cash Equivalents, beginning of period 260 982 6,334
================================================================================================================================
Cash and Cash Equivalents, end of period $ 5,421 $ 260 $ 982
================================================================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
WEEKS REALTY, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS
Weeks Realty, L.P. (a Georgia limited partnership, the "Operating
Partnership") and its subsidiaries own, operate, develop, construct,
acquire and manage industrial and suburban office buildings in the
southeast United States. Weeks Corporation (a Georgia corporation),
through its wholly-owned subsidiaries, Weeks GP Holdings, Inc. and Weeks
LP Holdings, Inc., referred to herein as the "Company," is the sole
general partner and a limited partner and owns a majority interest in the
Operating Partnership. The Operating Partnership, including the
operations of its subsidiaries, conducts substantially all of the
on-going operations of Weeks Corporation, a publicly traded company which
operates as a self-administered and self-managed real estate investment
trust ("REIT") under the Internal Revenue Code of 1986 (the "Code").
As of December 31, 1997, the Company owned 75.9% of the common units of
limited partnership interest ("Common Units") in the Operating
Partnership. Common Units held by persons other than the Company (the
"Other Limited Partnership Interests") represented a 24.1% partnership
interest in the Operating Partnership. The Company's weighted average
ownership interest in the Operating Partnership was 76.5% and 80.6% for
the years ended December 31, 1997 and 1996, respectively.
The Operating Partnership conducts its third-party service businesses
through two companies (the "Service Companies") and their subsidiaries:
Weeks Realty Services, Inc. conducts third-party landscape, property
management and leasing services, and Weeks Construction Services, Inc.
conducts third-party construction services. The Operating Partnership
holds 100% of the nonvoting and 1% of the voting common stock of these
Service Companies. The remaining voting common stock is held by three
executive officers of the Operating Partnership. The ownership of the
common stock of the Service Companies entitles the Operating Partnership
to substantially all (99%) of the economic benefits from the results of
the Service Companies' operations.
Under the provisions of the limited partnership agreement, as amended,
the Operating Partnership is obligated, upon request, to redeem each
Common Unit held by the Other Limited Partnership Interests for shares of
Weeks Corporation common stock on a one-for-one basis, or cash, at the
Company's option. The Company currently anticipates that it will elect to
issue common stock for Common Units presented for redemption by the Other
Limited Partnership Interests in the Operating Partnership. The Other
Limited Partnership Interests redemption rights are reflected in the
caption "other limited partners' capital interests" in the accompanying
consolidated balance sheets at the cash redemption price (computed using
the Weeks Corporation closing stock price as quoted on the New York Stock
Exchange) at the balance sheet dates.
Additionally, the terms of the limited partnership agreement obligate the
Company to contribute the net proceeds from the issuance of additional
equity securities, including issuances under the Company's incentive
stock plan (Note 11), to the Operating Partnership in exchange for
Units having substantially the same economic characteristics as the
equity securities issued by the Company.
F-6
<PAGE>
Operating Partnership net profits, net losses and cash flow (after
allocations to preferred ownership interests) are allocated to the
partners in proportion to their common ownership interests. Cash
distributions from the Operating Partnership shall be, at a minimum,
sufficient to enable the Company to satisfy its annual dividend
requirements to maintain its REIT status under the Code.
As of December 31, 1997, the Operating Partnership's in-service property
portfolio consisted of 218 industrial properties, 21 suburban office
properties and three retail properties comprising 17,015,000 square feet.
In-service properties exclude properties under development which are not
yet stabilized and properties under agreement to acquire. The Operating
Partnership's primary markets and the concentration of the Operating
Partnership's portfolio (based on square footage of in-service
properties) are Atlanta, Georgia (70%), Nashville, Tennessee (12%),
Raleigh-Durham-Chapel Hill, North Carolina (12%), Orlando, Florida (4%),
and Spartanburg, South Carolina (2%). In addition, 55 industrial,
suburban office and retail properties were under development, in lease-up
or under agreement to acquire at December 31, 1997, comprising an
additional 6,210,000 square feet.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements include the
consolidated financial position of the Operating Partnership and its
subsidiaries at December 31, 1997 and 1996, and their results of
operations for each of the three years in the period ended December 31,
1997. The Service Companies and their subsidiaries are reflected in the
accompanying consolidated financial statements on the equity method of
accounting as discussed below. All significant intercompany balances and
transactions have been eliminated in the consolidated financial
statements.
Real Estate Assets
Real estate assets are stated at depreciated cost. Major improvements and
replacements are capitalized and depreciated over their estimated useful
lives when they extend the useful life, increase capacity or improve
efficiency of the related asset. All other repairs and maintenance are
expensed as incurred. Costs related to the acquisition, planning,
development and construction of buildings and improvements, including
interest, property taxes and insurance and allocated overhead costs
incurred during the construction period, are capitalized.
Depreciation is calculated using the straight-line method, generally over
35 years, for buildings and improvements. Tenant improvements are
capitalized and depreciated using the straight-line method over the term
of the related lease.
Cash and Cash Equivalents
Cash and cash equivalents include cash and highly liquid investments,
consisting primarily of money market accounts, with original maturities
of three months or less.
Revenue Recognition
Rental income from operating leases is recognized on a straight-line
basis over the terms of the respective leases. Straight-line rent
receivables totaled $3,703,000 and $3,023,000 at December 31, 1997 and
1996, respectively. Tenant reimbursements for property taxes and other
recoverable expenses are recognized as revenues in the period the
applicable expenses are incurred. Revenues for development, construction,
landscape, property management and leasing services provided by the
Service Companies are recognized over the period during which the related
services are rendered.
F-7
<PAGE>
The Operating Partnership accounts for one lease as a direct financing
lease. Direct financing lease income totaled $754,000, $768,000 and
$776,000 in 1997, 1996 and 1995, respectively, and was included in other
revenues in the accompanying consolidated statements of operations. The
net carrying value of the direct financing lease, included in other
assets in the accompanying consolidated balance sheets, was $5,003,000
and $5,136,000 at December 31, 1997 and 1996, respectively.
Deferred Costs
Costs incurred to procure operating leases and in connection with
financing arrangements are capitalized and amortized on a straight-line
basis over the terms of the related lease or loan arrangements.
Unamortized lease and financing costs are written off upon the early
termination of the related lease or loan agreement.
Investments in Unconsolidated Entities
The Operating Partnership accounts for its investments in the Service
Companies and their subsidiaries and other non-majority owned entities on
the equity method of accounting.
Interest Rate Swap Agreements
The Operating Partnership uses interest rate swap and treasury rate
guarantee hedge arrangements to manage its exposure to interest rate
changes. Such arrangements are considered hedges of both specific current
borrowings and anticipated debt financing transactions. The costs paid or
benefits received under interest rate swap arrangements are recognized as
adjustments to interest expense. The costs or benefits resulting from the
early settlement of interest rate swap arrangements are deferred and
recognized as adjustments to interest expense over the original life of
the related swap arrangement as long as the specific borrowings are
outstanding. The costs or benefits resulting from the settlement of
treasury rate guarantee hedge arrangements are recognized as adjustments
to interest expense over the term of the specifically hedged anticipated
borrowings upon issuance of the indebtedness. The costs or benefits of
terminated interest rate swap or treasury rate guarantee hedge
arrangements are recognized in income or expense in the period of
settlement to the extent hedged borrowings were not outstanding or the
specifically hedged anticipated debt was not incurred.
Income Taxes
The Operating Partnership is a limited partnership and, therefore, is not
subject to federal and state income taxes. The respective share of
taxable income or loss of the Operating Partnership is required to be
included in the individual partners' income tax returns. Accordingly, no
income taxes have been provided for in the accompanying consolidated
financial statements.
The Service Companies, which conduct the related construction, landscape,
property management and leasing service businesses, are taxed as regular
taxable corporations. The impact of income taxes, if any, reduces the
amount of the earnings of the Service Companies otherwise recognized by
the Operating Partnership under the equity method. For the three years in
the period ended December 31, 1997, the impact of the Service Companies'
income taxes and their related tax attributes were not material to the
accompanying consolidated financial statements.
F-8
<PAGE>
Per Common Unit Data
Effective for the fourth quarter and year ended December 31, 1997, the
Operating Partnership computes net income per Common Unit under the
provisions of Statement of Financial Accounting Standards ("SFAS") 128,
"Earnings per Share." As prescribed by SFAS 128, all prior period net
income per Common Unit data has been restated to conform with the
provisions of SFAS 128. Under SFAS 128, basic net income per Common Unit
is computed based upon the weighted average number of Common Units
outstanding during the period. Diluted net income per Common Unit is
computed to reflect the potential dilution of all instruments or
securities which are convertible into Common Units.
Stock-Based Compensation
During the year ended December 31, 1996, the Operating Partnership
adopted SFAS 123, "Accounting for Stock-Based Compensation," which
required disclosure of certain fair value and other prescribed
disclosures relating to outstanding stock options. The Operating
Partnership elected under the provisions of SFAS 123 to continue to
account for stock-based compensation under the intrinsic-value method
prescribed by Accounting Principles Board ("APB") Opinion 25, "Accounting
for Stock Issued to Employees."
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and notes thereto. Actual results could differ from those estimates.
Recent Accounting Pronouncements
In June 1997, SFAS 130, "Reporting Comprehensive Income," was issued
establishing new standards for the reporting and display of comprehensive
income and its components in a full set of financial statements. SFAS 130
will be effective for the Operating Partnership beginning with the fourth
quarter and year ended December 31, 1998. The implementation of SFAS 130
is not expected to have a material impact on the Operating Partnership's
financial statement presentation.
In June 1997, SFAS 131, "Disclosures About Segments of an Enterprise and
Related Information," was issued prescribing new guidelines for the
reporting of segment data. SFAS 131 will apply to all public, for-profit
entities and will be effective for the Operating Partnership beginning
with the fourth quarter and the year ended December 31, 1998. The
Operating Partnership was not subject to segment reporting under prior
accounting standards, but may be required to provide certain segment
disclosures under SFAS 131. The Operating Partnership has not yet
determined the specific nature and magnitude of the disclosures required
by SFAS 131.
Reclassifications
Certain prior year amounts have been reclassified to conform to the 1997
presentation.
F-9
<PAGE>
3. DEFERRED COSTS
Deferred costs consist of the following (in thousands):
December 31
------------------------------
1997 1996
--------------------------------------------------------------
Deferred lease costs $ 18,551 $ 12,781
Deferred financing costs 3,996 3,870
--------------------------------------------------------------
22,547 16,651
Less accumulated amortization (9,460) (6,365)
--------------------------------------------------------------
$ 13,087 $ 10,286
==============================================================
4. BORROWINGS
At December 31, 1997, the Operating Partnership, the Service Companies
and Weeks Development Partnership, a subsidiary of the Service Companies,
as co-borrowers, had a $225,000,000 syndicated revolving credit facility
(the "Credit Facility") with four banks. The Credit Facility is unsecured
and can be used for development and construction, acquisitions and
general corporate purposes. Each co-borrower is liable for its own
borrowing; however, the entire Credit Facility is guaranteed by the
Company and the Operating Partnership. Additionally, the Operating
Partnership and the co-borrowers are required to meet certain financial
and non-financial covenants including those governing the Operating
Partnership's maximum unsecured borrowings, total leverage, limitations
on secured borrowings and a restriction on the amount of distributions to
not more than 95% of funds from operations, a REIT industry measure of
operating performance, unless additional amounts are necessary to
maintain the Company's REIT status under the Code.
Credit Facility borrowings were as follows (in thousands):
December 31
------------------------------
1997 1996
--------------------------------------------------------------
Operating Partnership $ 82,920 $ 99,400
Service Companies 13,535 1,510
Weeks Development Partnership 3,085 2,085
--------------------------------------------------------------
$ 99,540 $ 102,995
==============================================================
Interest under the Credit Facility accrues at bank prime minus 0.25% or
at LIBOR plus 1.05% (1.35% prior to October 1997) at the election of the
co-borrowers and the Credit Facility matures on December 31, 2000. The
Credit Facility may be extended annually through December 31, 2002,
subject to annual extension fees of 0.125%. The weighted average interest
rate on Credit Facility borrowings, exclusive of the impact of the
interest rate swaps discussed below, was 7.0% and 6.9% at December 31,
1997 and 1996, respectively. Fees on the unused portion of the Credit
Facility are 0.15% (0.20% prior to October 1997).
F-10
<PAGE>
The Operating Partnership has in place three interest rate swap
agreements with a commercial bank to effectively change the interest
costs on $50,000,000 of Credit Facility borrowings from the variable
rates discussed above to fixed rates. The agreements, with notional
principal amounts of $10,000,000, $10,000,000 and $30,000,000, terminate
in July 1998, July 1999, and July 2001, with effective fixed interest
rates of 7.4%, 7.6% and 7.8%, respectively (7.7%, 7.9% and 8.1%,
respectively, prior to October 1997 and prior to the corresponding
decrease in the interest rate charged on the Operating Partnership's
Credit Facility borrowings).
Mortgage notes payable, specifically listed for notes with outstanding
balances in excess of $10,000,000, consist of the following (in
thousands):
<TABLE>
<CAPTION>
December 31
------------------------------------
1997 1996
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fixed Rate
Mortgage note, interest only at 7.13%,
due in 1999 $ 38,000 $ 38,000
Mortgage note, principal and interest at 9.24%,
due in 2005 15,800 16,028
Mortgage note, principal and interest at 9.625%,
due in 2000 12,897 --
Mortgage note, principal and interest at 8.10%,
due in 2006 12,015 12,278
Mortgage note, interest only at 7.625%, due in 2000 10,300 10,300
Three mortgage notes, interest only at 7.75%,
due in 1998 -- 31,170
Other mortgage notes (27 at December 31, 1997),
principal and interest at 6.00% to 9.80%,
due in 1998 to 2012 97,786 83,956
Variable Rate
Industrial revenue bonds, interest at 4.20% to 6.65%
at December 31, 1997, due in 2004 and 2010 5,797 5,843
- ----------------------------------------------------------------------------------------------------------------
$ 192,595 $ 197,575
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1997 and 1996, fixed rate mortgage notes payable had a
weighted average interest rate of 8.1% and 8.0%, respectively. The
weighted average term to maturity of fixed rate mortgage notes payable
was 4.9 years at December 31, 1997. Fixed rate mortgage indebtedness
decreased in 1997 due to the assumption of mortgage notes totaling
$28,523,000 in connection with the Operating Partnership's building and
land acquisitions (Note 7), offset by mortgage principal repayments and
retirements totaling $33,503,000. Certain Operating Partnership and
Company officers and Common Unitholders guarantee a portion of the fixed
rate mortgage notes.
F-11
<PAGE>
Scheduled maturities of mortgage notes payable, at December 31, 1997,
were as follows (in thousands):
Year Amount
------------------------------------------------------
1998 $ 9,498
1999 51,022
2000 35,482
2001 10,990
2002 7,812
2003 and thereafter 77,791
------------------------------------------------------
$ 192,595
======================================================
Net real estate assets totaling $242,268,000 and $265,235,000 at December
31, 1997 and 1996, respectively, were pledged as collateral under
mortgage notes payable. Interest capitalized in 1997, 1996 and 1995,
totaled $5,289,000, $2,358,000 and $1,198,000, respectively.
In September 1997, the Operating Partnership entered into a treasury rate
guarantee hedge arrangement to hedge its interest costs on an anticipated
debt financing transaction. The impact of the hedge arrangement is to
effectively lock in, for the period through March 1998, a seven-year
treasury rate of approximately 6.3% on an anticipated borrowing of
approximately $100,000,000.
5. REAL ESTATE LOANS
As part of certain joint development agreements entered into with third
parties, and upon the Operating Partnership's approval of the joint
development projects, the Operating Partnership lends funds on a secured
basis to develop and construct certain properties and may be required by
its development partners to acquire the properties upon their completion
based on the terms specified in the development agreements, generally at
prices equal to the greater of capitalized costs or the amount computed
based on the property's net operating income capitalized at specified
capitalization rates, as defined. Additionally, the Operating Partnership
has options to acquire the properties upon substantial lease-up of the
buildings. At December 31, 1997, the Operating Partnership had funded
$6,455,000 under development loan agreements relating to three industrial
buildings under development in Atlanta, Georgia. Total loan commitments
from the Operating Partnership for the three approved projects are
approximately $9,739,000. Loans under these agreements are secured by the
industrial buildings under development, bear interest at LIBOR plus
2.35%, and mature from March 1999 to January 2000.
Additionally, at December 31, 1997, the Operating Partnership had a real
estate loan to an affiliated joint venture with an outstanding balance of
$2,047,000 ($1,810,000 at December 31, 1996). In February 1998, the
Operating Partnership acquired the property from the affiliated joint
venture for approximately $2,600,000, including the settlement of the
real estate loan.
In 1997, the Operating Partnership advanced $4,450,000 to NWI (see Note
7) under a $5,700,000 demand loan agreement. The loan bears interest at
LIBOR plus 2.10% and is secured by real estate properties held by NWI,
for which the Operating Partnership has arrangements to acquire in future
periods. Interest earned under the agreement and included in the
accompanying statements of operations totaled approximately $197,000 for
the year ended December 31, 1997.
F-12
<PAGE>
6. INVESTMENTS IN AND NOTES RECEIVABLE FROM UNCONSOLIDATED ENTITIES
The Operating Partnership conducts third-party construction, landscape,
property management and leasing service businesses through the Service
Companies and their subsidiaries. Additionally, the Service Companies and
their subsidiaries also own land held for sale or future development,
either directly or through ownership interests in real estate
partnerships and joint ventures. The Operating Partnership intends, based
on market conditions, to acquire land from the Service Companies and
their subsidiaries for the development of future properties. As discussed
in Note 2, these Service Companies and their subsidiaries are accounted
for on the equity method of accounting. Under the equity method, the
Operating Partnership recognizes, in its consolidated statements of
operations, its economic share (99%) of the Service Companies' earnings
and losses.
The following information summarizes the financial position, results of
operations and cash flows of the Service Companies and their subsidiaries
on a combined basis (in thousands):
<TABLE>
<CAPTION>
December 31
---------------------------------------
Financial Position 1997 1996
----------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Real estate assets, principally land $ 12,403 $ 7,200
Investments in real estate partnerships
and joint ventures 2,849 3,025
Receivables and other assets 20,158 13,113
----------------------------------------------------------------------------------------------
$ 35,410 $ 23,338
==============================================================================================
Liabilities and Equity
Notes payable to Operating Partnership $ 10,900 $ 10,921
Credit facility borrowings 16,620 3,595
Other borrowings 2,000 1,261
Other liabilities 7,513 10,725
Total equity (1,623) (3,164)
==============================================================================================
$ 35,410 $ 23,338
==============================================================================================
</TABLE>
The notes payable to the Operating Partnership accrue interest at 12%,
payable annually, and mature in 2004. The notes are secured by land and
interests in real estate partnerships and joint ventures. The operations
of the Service Companies and their subsidiaries are financed through
direct borrowings under the Credit Facility (see Note 4).
At December 31, 1996, the Operating Partnership's investment in and notes
receivable from the Service Companies and subsidiaries totaling
$9,257,000 includes notes receivable from the Service Companies and
subsidiaries of $10,900,000 and the Operating Partnership's equity in the
Service Companies of ($1,643,000).
F-13
<PAGE>
<TABLE>
<CAPTION>
Years Ended December 31
-----------------------------------------------------------
Results of Operations 1997 1996 1995
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue
Construction and development fees $ 2,517 $ 2,233 $ 1,483
Landscape 5,974 5,035 3,854
Commissions 828 448 582
Property management fees 172 193 498
Other 277 316 191
------------------------------------------------------------------------------------------------------------
9,768 8,225 6,608
------------------------------------------------------------------------------------------------------------
Costs and Expenses
Direct Costs 5,202 4,327 3,504
Interest expense -- Operating Partnership 1,308 1,314 1,326
Interest expense -- third parties 372 365 295
General and administrative 2,397 1,694 1,518
Other 494 498 173
------------------------------------------------------------------------------------------------------------
9,773 8,198 6,816
------------------------------------------------------------------------------------------------------------
Income (loss) before gains on sales
of properties and equity in
earnings of partnerships and
joint ventures (5) 27 (208)
Gain on sale of properties -- third parties 422 -- --
Gain on sale of property --
Operating Partnership 580 -- --
Equity in earnings of partnerships
and joint ventures 257 (1) 101
------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1,254 $ 26 $ (107)
------------------------------------------------------------------------------------------------------------
Net income (loss) attributable
to the Operating Partnership $ 1,241 $ 26 $ (106)
Interest expense-- Operating Partnership 1,308 1,314 1,326
Gain on sale of property --
Operating Partnership (580) -- --
------------------------------------------------------------------------------------------------------------
Equity in earnings of Service Companies $ 1,969 $ 1,340 $ 1,220
------------------------------------------------------------------------------------------------------------
Distributions and interest paid
to the Operating Partnership $ 1,311 $ 1,313 $ 1,510
------------------------------------------------------------------------------------------------------------
Cash Flow
------------------------------------------------------------------------------------------------------------
Operating activities $ (4,915) $ 4,460 $ 1,529
Investing activities (4,086) (2,540) (2,786)
Financing activities 11,979 (487) 1,190
</TABLE>
At December 31, 1997, the Operating Partnership owns a 50% interest in a
limited liability company ("LLC") which owns an 86,000 square foot
industrial building in Atlanta, Georgia. The Operating Partnership's
investment in this LLC totaled $2,525,000 at December 31, 1997 and its
equity in earnings were $20,000 for the year ended December 31, 1997. The
total assets, liabilities and equity of the LLC were $5,645,000, $595,000
and $5,050,000, respectively, at December 31, 1997.
F-14
<PAGE>
In connection with the Operating Partnership's January 1998 acquisition
of a real estate portfolio in Miami, Florida (see Note 7), the Service
Companies acquired a one-third interest in Codina Group, Inc., a
Miami-based real estate services Operating Partnership, for aggregate
consideration of approximately $9,000,000.
7. ACQUISITIONS / DISPOSITIONS
The Operating Partnership made initial acquisitions of property
portfolios and the business operations of NWI Warehouse Group, L.P
("NWI") in Nashville, Tennessee, and Lichtin Properties, Inc., and
affiliates ("Lichtin") in the Raleigh-Durham-Chapel Hill area of North
Carolina (the "Research Triangle"), on November 1, 1996 and December 31,
1996, respectively, in transactions accounted for under the purchase
method (see below). In 1997, the Operating Partnership acquired an
additional four industrial buildings totaling 556,000 square feet from
NWI for aggregate acquisition consideration of $29,886,000 and 15
industrial and suburban office buildings totaling 991,000 square feet
from Lichtin for aggregate acquisition consideration of $62,870,000. The
aggregate acquisition consideration of $92,756,000 was comprised of the
assumption of mortgage indebtedness of $24,010,000, the issuance of
$31,114,000 of Common Units in the Operating Partnership and the
assumption and repayment of other indebtedness and the payment of cash
through borrowings under the Credit Facility totaling $37,632,000. Also,
in 1997, the Operating Partnership acquired land from Lichtin for total
consideration of $1,000,000, consisting of $388,000 of Common Units and
$612,000 of cash.
Additionally in 1997, the Operating Partnership acquired 20 buildings
totaling 778,000 square feet for $37,128,000, including closing costs and
acquisition expenses. These acquisitions were primarily funded through
Credit Facility borrowings. Three of the acquired buildings, totaling
232,000 square feet are located in Florida and the other buildings are
located in Atlanta, Georgia. The Operating Partnership also sold in 1997,
a 96,000 square foot industrial building located in Spartanburg, South
Carolina to one of the building's tenants for $2,484,000, resulting in a
gain of $209,000. For income tax purposes, the Operating Partnership
completed a tax-deferred, like-kind exchange involving one of the
industrial buildings acquired in 1997.
On January 9, 1998, the Operating Partnership acquired a 2,477,000 square
foot, 24 building portfolio and approximately five acres of land subject
to ground leases in Miami, Florida. Aggregate acquisition consideration
of approximately $175,000,000, including closing costs and acquisition
expenses, consisted of the issuance of $28,310,000 of Common Units, the
assumption of $78,033,000 of mortgage indebtedness, the assumption of
certain other liabilities in excess of certain other assets of
approximately $4,224,000, and cash of approximately $64,433,000 funded
through Credit Facility borrowings. In connection with the acquisition,
the Operating Partnership has also agreed, subject to customary closing
conditions, to acquire a 90,000 square foot building under development
for approximately $5,100,000 and approximately eight acres of adjacent
undeveloped land for approximately $4,000,000.
As discussed above, in 1996, the Operating Partnership acquired the
business operations of NWI and Lichtin and initial property portfolios of
31 industrial and suburban office buildings totaling 2,513,000 square
feet, 82 net usable acres of undeveloped land and options to acquire 177
acres of undeveloped land for aggregate acquisition consideration of
$171,135,000. Acquisition consideration was comprised of the assumption
of mortgage indebtedness of $89,535,000, the issuance of $55,209,000 of
Common Units and $26,391,000 of cash, including amounts necessary to fund
the assumption and repayment of other indebtedness, closing costs and
acquisition expenses, all funded through Credit Facility borrowings.
F-15
<PAGE>
The Operating Partnership's consolidated results of operations have
included the operating results of NWI and Lichtin from their effective
acquisition dates. The unaudited pro forma information below presents the
consolidated results of operations as if the initial phases of the NWI
and Lichtin acquisitions had occurred at the beginning of the respective
years presented. The unaudited pro forma information is not necessarily
indicative of the results of operations of the Operating Partnership had
the acquisitions occurred at the beginning of the periods presented, nor
is it necessarily indicative of future results.
1996 1995
------------------------------------------------------------------------
Revenues $ 70,954 $ 49,478
Net income 14,360 9,362
Net income per Common Unit -
basic $ 0.89 $ 0.74
Net income per Common Unit -
diluted 0.89 0.73
------------------------------------------------------------------------
Also in 1996, the Operating Partnership acquired 15 industrial and
suburban office buildings totaling approximately 761,000 square feet
located in Atlanta, Georgia for an aggregate price of $40,102,000,
including closing costs and acquisition expenses. The acquisitions were
funded through Credit Facility borrowings.
In 1995, the Operating Partnership acquired 49 industrial buildings
totaling 2,564,000 square feet for an aggregate price of $110,141,000,
including closing costs and acquisition expenses. These acquisitions were
funded through Credit Facility borrowings and through the assumption of
existing mortgage indebtedness of $39,511,000. Four of the acquired
buildings totaling 190,000 square feet are located in Orlando, Florida,
and the other buildings are located in Atlanta, Georgia. In connection
with two of the property acquisitions, the Operating Partnership entered
into agreements with the sellers to jointly develop additional industrial
buildings, as market conditions warrant, on adjacent land controlled by
the sellers (see Note 5).
8. PARTNERS' CAPITAL
Preferred Units
In October 1997, the Operating Partnership issued 6,000,000 units of its
8% Series A Cumulative Redeemable Preferred Units (the "Series A
Preferred Units") to the Company and received net proceeds of
$144,625,000. The Series A Preferred Units have a liquidation preference
of $25.00 per unit and are redeemable at the option of the Operating
Partnership on or after October 10, 2002, at a redemption price of $25.00
per unit. The proceeds were used to reduce the Operating Partnership's
outstanding Credit Facility borrowings. The terms of the Series A
Preferred Units are structured to parallel the terms of the Company's
6,000,000 shares of 8% Series A Preferred Stock, which were also issued
in October 1997.
F-16
<PAGE>
Common Units
In 1997, 1996 and 1995, the Operating Partnership issued Common Units to
the Company totaling 3,584,000, 2,573,333, and 3,450,000, and received
net proceeds of $106,568,000, $68,532,000, and $72,800,000, respectively.
In February 1998, the Operating Partnership issued Common Units to the
Company totaling 1,073,000 and received net proceeds of $33,101,000. The
cash contributions discussed above result from the contribution by the
Company of the net proceeds from the sale of Company common stock in the
public equity markets. Additionally, in 1997 and 1996, the Operating
Partnership issued Common Units to the Company totaling 36,000 and 35,000
and received net proceeds of $723,000 and $747,000, respectively,
resulting from the issuance of Company common stock under the Company's
incentive stock and dividend reinvestment plans. The proceeds were used
to reduce Credit Facility borrowings or to repay mortgage indebtedness.
In 1997, restricted shares of common stock valued at $1,183,000 were
granted to certain Company officers and employees as an incentive for
future service and continued financial performance of the Company. Of the
total of 35,331 shares granted, 34,331 vest ratably over a four year
period provided the Company achieves 10% annual growth in per share funds
from operations, a REIT industry measure of operating performance, for
each year of the four year vesting period. The remaining 1,000 shares
vest ratably over a four year period. The $1,183,000 value of the
restricted shares is included in partners' capital offset by the amount
of the unamortized deferred compensation expense ($895,000 at December
31, 1997). Compensation expense is recognized ratably over the vesting
periods.
Distributions
For the years detailed below, distributions paid to the Operating
Partnership's Common Unitholders and distributions accrued on the
Operating Partnership's Series A Preferred Units were as follows (in
thousands, except per unit amounts):
<TABLE>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Units
Distributions $ 35,103 $ 21,968 $ 15,403
Distributions per unit $ 1.72 $ 1.60 $ 1.50
Series A Preferred Units
Distributions(1) $ 2,720 $ -- $ --
Distributions per unit(1) $ 0.45 $ -- $ --
</TABLE>
(1) In 1997, Series A Preferred Units distributions totaling $720,000 or
$0.12 per unit were paid and $2,000,000 or $0.33 per unit were
accrued.
In January 1998, the Operating Partnership paid distributions to Common
Unitholders of $10,720,000 or $0.465 per unit relating to fourth quarter
1997 operating results. In January 1998, the Operating Partnership also
paid distributions on its Series A Preferred Unitholders of $3,000,000 or
$0.50 per unit.
F-17
<PAGE>
Net Income Per Common Unit
The Operating Partnership adopted the provisions of SFAS 128 in the year
ended December 31, 1997. Reconciliations of income available to Common
Unitholders and weighted average Common Units used in the Operating
Partnership's basic and diluted net income per Common Unit computations
are detailed below (in thousands, except per unit data):
<TABLE>
1997 1996 1995
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computation of Net Income Per Common Unit
Net income available to Common
Unitholders - basic and diluted $ 26,474 $ 15,809 $ 11,107
- -------------------------------------------------------------------------------------------------------------------
Weighted average Common Units - basic 21,380 14,280 10,760
Dilutive securities -
Stock options 200 106 72
- -------------------------------------------------------------------------------------------------------------------
Weighted average Common Units - diluted 21,580 14,386 10,832
- -------------------------------------------------------------------------------------------------------------------
Net Income Per Common Unit Data
Basic $ 1.24 $ 1.11 $ 1.03
Diluted 1.23 1.10 1.03
</TABLE>
Basic net income per Common Unit for the periods presented were computed
by dividing income available to Common Unitholders by the weighted
average number of Common Units outstanding during the year. Diluted net
income per Common Unit were computed based on the dilutive effect of the
Company's stock options outstanding.
Previously reported net income per Common Unit under prior accounting
standards were equal to basic net income per Common Unit under SFAS 128.
9. LEASING ACTIVITY
Future minimum rents due under noncancelable operating leases with
tenants at December 31, 1997, were as follows (in thousands):
Year Amount
-----------------------------------------------------------------------
1998 $ 89,967
1999 76,677
2000 58,568
2001 45,235
2002 31,122
2003 and thereafter 73,304
- -----------------------------------------------------------------------
$ 374,873
- -----------------------------------------------------------------------
10. RELATED-PARTY TRANSACTIONS
At December 31, 1997 and 1996, receivables included $463,000 and
$465,000, respectively, due from the Service Companies and their
subsidiaries, relating to accrued interest (payable annually) on the
notes due from the Service Companies and their subsidiaries. At December
31, 1997 and 1996, accounts payable and accrued expenses included
$703,000 and $154,000, respectively, due to the Service Companies and
their subsidiaries.
F-18
<PAGE>
The Service Companies also provide development, construction, landscape
and leasing services to affiliated partnerships and joint ventures. In
1997, 1996 and 1995, total revenues for such services to related parties
of the Service Companies were as follows (in thousands):
<TABLE>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Construction and development fees $ 390 $ 678 $ 418
Landscape 327 271 423
Commissions 398 94 169
- ----------------------------------------------------------------------------------------------------------
$ 1,115 $ 1,043 $ 1,010
- ----------------------------------------------------------------------------------------------------------
</TABLE>
11. INCENTIVE STOCK PLAN
The Company has an Incentive Stock Plan (the "Plan") under which shares
of the Company's common stock have been reserved for the issuance of
options and restricted stock. Common shares totaling 1,000,000 have been
reserved for issuance under the Plan. Participants in the Plan may be
officers and employees of the Company, the Service Companies or
designated affiliates, as well as Company directors. The exercise price
of all options under the Plan is not less than the fair market value of
the Company's common stock on the date of grant and such options may be
exercised for periods up to ten years. Upon the exercise of stock options
issued under the Plan, the Company contributes the net proceeds realized
to the Operating Partnership in exchange for Common Units (see Note 1).
As discussed in Note 2, the Operating Partnership accounts for
stock-based compensation under APB Opinion 25. The additional disclosures
required by SFAS 123 are discussed and detailed below.
Under SFAS 123, the fair value of stock options granted in 1997, 1996 and
1995 has been estimated using a binomial option pricing model with the
following weighted average assumptions for grants in 1997, 1996 and 1995,
respectively: risk free interest rates of 5.5%, 5.7% and 5.8%, expected
option lives of five years for options granted in each year, expected
volatility of 16.6% in 1997 and 16.5% in 1996 and 1995, and expected
dividend yields of 5.1% in 1997, 5.7% in 1996 and 6.2% in 1995. Using
these assumptions, the estimated fair value of options granted in 1997,
1996 and 1995 was $373,000, $945,000 and $175,000, respectively, and such
amounts would be included in compensation expense over the vesting period
of the options. Pro forma net income, net income available to Common
Unitholders and net income per Common Unit in 1997, 1996 and 1995,
assuming the Operating Partnership had accounted for the Plan under SFAS
123 were as follows (in thousands, except per share amounts):
F-19
<PAGE>
<TABLE>
1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income
As reported $ 29,194 $ 15,809 $ 11,107
Pro forma 28,899 15,216 11,042
Net income available to Common
Unitholders
As reported 26,474 15,809 11,107
Pro forma 26,179 15,216 11,042
Net income per Common Unit
As reported - basic $ 1.24 $ 1.11 $ 1.03
Pro forma - basic 1.22 1.07 1.03
As reported - diluted 1.23 1.10 1.03
Pro forma - diluted 1.21 1.06 1.02
</TABLE>
As the provisions of SFAS 123 have not been applied to options granted
prior to January 1, 1995, the resulting pro forma annual compensation
cost may not be representative of that expected in future years.
A summary of stock option activity under the Plan is presented in the
table and narrative below (share amounts in thousands):
<TABLE>
1997 1996 1995
---------------------- ---------------------- -----------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding,
beginning of year 753 $ 23.06 503 $ 19.90 443 $ 19.28
Granted 91 32.40 283 28.22 65 24.11
Exercised (34) 19.38 (33) 19.25 -- --
Forfeited (3) 23.32 -- -- (5) 19.25
- -------------------------------------------------------------------------------------------------------------------
Options outstanding,
end of year 807 $ 24.26 753 $ 23.06 503 $ 19.90
- -------------------------------------------------------------------------------------------------------------------
Options exercisable,
end of year 632 552 52
- -------------------------------------------------------------------------------------------------------------------
Weighted average per
share fair value
of options granted $4.10 $3.34 $2.69
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
At December 31, 1997, options for 570,000 shares were outstanding having
exercise prices ranging from $19.25 to $26.00, with a weighted average
exercise price of $21.43 and a weighted average remaining life of 7.2
years, of which 479,000 options were exercisable with a weighted average
exercise price of $20.56. Options for 237,000 shares were also
outstanding having exercise prices ranging from $28.38 to $33.75, with a
weighted average exercise price of $31.08 and a weighted average
remaining life of 9.2 years, of which 153,000 options were exercisable
with a weighted average exercise price of $30.54.
F-20
<PAGE>
12. EMPLOYEE BENEFIT PLAN
The Operating Partnership and the Service Companies ("Plan Sponsors")
sponsor a 401(k) retirement savings plan covering substantially all
employees meeting certain age and service requirements. Employees may
contribute up to the lesser of 20% of their annual compensation or the
annual statutory limit ($9,500 in 1997) to the plan. Plan Sponsors'
contributions are made on a discretionary basis up to a maximum of 100%
of the employees' contributions (currently 50% of the employee's
contribution up to 4% of an employee's annual compensation). Total Plan
Sponsor contributions were $168,000, $88,000, and $76,000 in 1997, 1996,
and 1995, respectively.
13. COMMITMENTS AND CONTINGENCIES
The Operating Partnership has entered into agreements, subject to the
completion of due diligence and customary closing conditions, for the
future acquisition of land and buildings totaling approximately
$42,698,000, including land and building commitments of approximately
$27,455,000 from NWI and Lichtin and approximately $9,100,000 entered
into as part of the Miami, Florida acquisition transaction in January
1998 (see Note 7). Of this total, $25,403,000 represents committed land
acquisitions and $17,295,000 represents committed building acquisitions.
Letters of credit were issued on behalf of the Operating Partnership
totaling $1,766,000 in support of certain development and land
acquisition arrangements and totaling $5,346,000 in support of financing
arrangements at December 31, 1997.
The Operating Partnership is subject to various legal proceedings and
claims that arise in the ordinary course of business. While the
resolution of these matters cannot be predicted with certainty,
management believes that the final outcome of such matters will not have
a material adverse effect on the Operating Partnership's financial
position or results of operations.
14. SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid, net of amounts capitalized (see Note 4), totaled
$17,958,000, $11,265,000 and $7,892,000 in 1997, 1996 and 1995,
respectively.
Significant noncash investing and financing activities were as follows:
1. The Operating Partnership's 1997 property acquisition, development
and investment activity included the settlement of real estate loans
of $7,376,000, the assumption of indebtedness of $64,869,000, and the
issuance of Common Units valued at $31,876,000. Additionally, in
1997, restricted common stock was issued by the Company at an
aggregate value of $1,183,000.
2. The Operating Partnership's 1996 acquisitions of NWI and Lichtin
included the assumption of indebtedness of $104,628,000 and the
issuance of Common Units valued at $55,209,000.
3. The Operating Partnership's 1995 property acquisitions included the
assumption of indebtedness of $39,511,000 and the application of
notes receivable and deposits of $3,540,000.
F-21
<PAGE>
15. FINANCIAL INSTRUMENTS
Based on interest rates and other pertinent information available to the
Operating Partnership at December 31, 1997, the Operating Partnership
estimates that the carrying values of cash and cash equivalents, notes
receivable from the Service Companies and their subsidiaries, real estate
loans, other receivables, mortgage notes payable, other liabilities and
Credit Facility borrowings approximate their fair values when compared to
instruments of similar type, terms and maturity.
The estimated fair value of the Operating Partnership's interest rate
swap and treasury rate guarantee hedge arrangements (see Note 4),
determined based on quoted market prices for similar financial
instruments, were approximately $1,055,000 and $3,210,000, respectively,
less than the Operating Partnership's carrying value at December 31,
1997. Under current accounting principles and as discussed in Note 2, the
difference between the fair value and carrying amount of the arrangements
are not currently recognized in the Operating Partnership's consolidated
financial statements. The Operating Partnership monitors the credit
quality of the counterparties to its interest rate swap and treasury rate
guarantee hedge arrangements and does not anticipate nonperformance from
such parties.
Disclosure about fair value of financial instruments is based on
pertinent information available to management as of December 31, 1997.
Although management is not aware of any factors that would significantly
affect the fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date.
16. FINANCIAL INFORMATION OF GENERAL PARTNER
As discussed in Note 1, Weeks GP Holdings, Inc., a Georgia corporation,
("Weeks GP Holdings") is the sole general partner of the Operating
Partnership and holds a 1.0% interest in the Operating Partnership as of
December 31, 1997. Weeks GP Holdings is a wholly owned subsidiary of
Weeks Corporation, a publicly traded real estate investment trust. Under
the terms of the limited partnership agreement of the Operating
Partnership, Weeks Corporation has guaranteed the performance of Weeks GP
Holdings with respect to any general partner duties and obligations
arising under the limited partnership agreement. The consolidated balance
sheet of Weeks GP Holdings detailed below includes the accounts of the
Operating Partnership and reflects Weeks GP Holdings' 1.0% partnership
interest in shareholders' equity. The 99.0% limited partnership interests
are reflected as interests of limited partners in the Operating
Partnership in the accompanying balance sheet. The interests of the
limited partners in the Operating Partnership includes the 74.9% limited
partnership interests of Weeks LP Holdings, Inc., also a wholly owned
subsidiary of Weeks Corporation (see Note 1). The limited partners of the
Operating Partnership should note that they do not have any ownership
interest in Weeks GP Holdings.
F-22
<PAGE>
The consolidated balance sheet of Weeks GP Holdings as of December 31,
1997, is presented for information purposes only and should be read in
conjunction with the accompanying notes to the consolidated financial
statements of the Operating Partnership included herein.
<TABLE>
(In thousands, except share data)
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
Assets
Real estate assets
Land $ 106,196
Buildings and improvements 627,309
Accumulated depreciation (61,548)
- -------------------------------------------------------------------------------------------------------------------
Operating real estate assets 671,957
Developments in progress 100,433
Land held for future development 22,562
- -------------------------------------------------------------------------------------------------------------------
Net real estate assets 794,952
Real estate loans 12,952
Cash and cash equivalents 5,421
Receivables 7,031
Deferred costs, net 13,087
Investments in and notes receivable from
unconsolidated entities 11,782
Other assets 7,136
- -------------------------------------------------------------------------------------------------------------------
$ 852,361
- -------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholder's Equity
Mortgage notes payable $ 192,595
Credit facility borrowings 82,920
Accounts payable and accrued expenses 14,578
Other liabilities 4,876
- -------------------------------------------------------------------------------------------------------------------
Total liabilities 294,969
Interest of Limited Partners in Operating Partnership 553,318
- -------------------------------------------------------------------------------------------------------------------
Commitments and Contingencies (Note 13)
Shareholder's equity
Common stock, $.01 par value, 1,000 shares authorized,
100 shares issued and outstanding at December 31, 1997 --
Additional paid-in capital 4,074
Retained earnings --
- -------------------------------------------------------------------------------------------------------------------
Total shareholder's equity 4,074
- -------------------------------------------------------------------------------------------------------------------
$ 852,361
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
F-23
<PAGE>
17. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Selected quarterly financial information for 1997 and 1996 was as follows
(in thousands, except per share amounts):
<TABLE>
- -------------------------------------------------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1997
Revenue $ 19,899 $ 21,439 $ 24,279 $ 26,403
Net income 5,058 6,698 7,451 9,987
Net income available to
Common Unitholders 5,058 6,698 7,451 7,267
Net income per Common Unit - basic $ 0.27 $ 0.32 $ 0.33 $ 0.32
Net income per Common Unit - diluted 0.27 0.32 0.32 0.31
1996
Revenue $ 12,129 $ 12,379 $ 13,555 $ 15,820
Net income 3,814 3,805 3,731 4,459
Net income available to
Common Unitholders 3,814 3,805 3,731 4,459
Net income per Common Unit - basic $ 0.28 $ 0.28 $ 0.27 $ 0.28
Net income per Common Unit - diluted 0.28 0.28 0.27 0.28
</TABLE>
F-24
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 1 OF 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- Cost --------------------------
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
ATLANTA, GEORGIA
Northeast/I-85 Submarket
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GWINNETT PARK
1 1750 Beaver Ruin S $ 633 $ 4,082 $ - $ 633 $ 4,082 $ 4,715 $ 35 1997
2 4258 Communications Dr. D (a) 8 725 317 29 1,021 1,050 606 1981
3 4261 Communications Dr. D 254 1,446 43 254 1,489 1,743 168 1981 1994
4 4291 Communications Dr. D (a) 4 327 126 16 441 457 236 1981
5 1826 Doan Way D (b) 18 1,167 226 18 1,393 1,411 542 1984
6 1857 Doan Way D 23 6 - 23 6 29 2 1970
7 1650 International Blvd. D (a) 69 994 93 69 1,087 1,156 440 1984
8 4245 International Blvd. D (a) 192 2,913 3,053 192 5,966 6,158 1,309 1985
9 4250 International Blvd. D 193 1,542 288 216 1,807 2,023 646 1986
10 4295 International Blvd. D (a) 58 1,058 112 58 1,170 1,228 430 1984
11 4320 International Blvd. D (a) 44 710 212 44 922 966 380 1984
12 4350 International Blvd. D (a) 78 938 540 78 1,478 1,556 773 1982
13 4355 International Blvd. D (f) 233 811 261 233 1,072 1,305 201 1983 1994
14 4405-A International Blvd. S 97 957 874 97 1,831 1,928 913 1984
15 4405-B International Blvd. S 118 1,152 1,310 118 2,462 2,580 1,553 1984
16 4405-C International Blvd. S 21 422 183 21 605 626 278 1984
17 1828 Meca Way D (b) 16 487 594 16 1,081 1,097 619 1975
18 1858 Meca Way D (a) 20 931 13 27 937 964 367 1975
19 4317 Park Dr. D 671 1,414 235 671 1,649 2,320 614 1985
20 4357 Park Dr. D (g) 12 865 271 12 1,136 1,148 574 1979
21 4366 Park Dr. O 6 406 288 22 678 700 398 1981
22 4386 Park Dr. D 17 758 - 17 758 775 304 1973
23 4436 Park Dr. D 18 195 276 18 471 489 209 1968
24 4437 Park Dr. D (a) 21 659 401 21 1,060 1,081 531 1978
25 4467 Park Dr. D (b) 6 537 257 6 794 800 212 1978
26 4476 Park Dr. D (b) 14 372 7 14 379 393 125 1977
27 4487 Park Dr. D (b) 6 1,048 1,180 6 2,228 2,234 1,435 1978
28 1835 Shackleford Cr. O (a) 29 2,780 427 29 3,207 3,236 763 1990
29 1854 Shackleford Ct. O 52 4,085 1,541 52 5,626 5,678 1,972 1985
30 4274 Shackleford Rd. D (a) 27 614 905 27 1,519 1,546 1,144 1974
31 4275 Shackleford Rd. O (i) 8 1,173 477 12 1,646 1,658 684 1985
32 4344 Shackelford Rd. D 286 984 31 286 1,015 1,301 137 1975 1994
33 4355 Shackleford Rd. D (a) 7 886 606 7 1,492 1,499 751 1972
34 4364 Shackleford Rd. D (a) 9 40 50 9 90 99 57 1973
35 4366 Shackleford Rd. D 20 420 854 26 1,268 1,294 767 1981
36 4388 Shackleford Rd. D (a) 33 1,181 229 43 1,400 1,443 225 1981
37 4400 Shackleford Rd. D 14 315 30 18 341 359 77 1981
38 4444 Shackleford Rd. D (a) 31 731 1,121 31 1,852 1,883 1,274 1979
- ------------------------------------------------------------------------------------------------------------------------
Total $3,366 $40,131 $17,431 $3,469 $57,459 $60,928 $21,751
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
SCHEDULE III PAGE 2 OF 11
Gross Amount at Which
Initial Costs Carried at Close of Period
--------------- ----------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Horizon
39 90 Horizon Dr. D (b) $ 120 $ 659 $ 70 $ 120 $ 729 $ 849 $ 142 1992
40 225 Horizon Dr. B (b) 121 1,423 782 121 2,205 2,326 836 1990
41 300 Horizon Dr. B 798 4,455 59 798 4,514 5,312 453 1994
42 2775 Horizon
Ridge Ct. B 732 5,906 - 732 5,906 6,638 257 1996
43 2780 Horizon
Ridge Ct. B 826 4,949 - 826 4,949 5,775 141 1997
44 2800 Vista
Ridge Dr. B 443 5,463 73 443 5,536 5,979 381 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $3,040 $22,855 $ 984 $3,040 $23,839 $26,879 $2,210
- ------------------------------------------------------------------------------------------------------------------------------------
Northwoods
45 2915 Courtyards
Circle D $ 268 $ 1,793 $ 92 $ 268 $ 1,885 $ 2,153 $ 166 1986 1995
46 2925 Courtyards
Dr. D 333 2,618 6 333 2,624 2,957 191 1986 1995
47 2975 Courtyards
Circle D 144 997 10 144 1,007 1,151 73 1986 1995
48 2995 Courtyards
Circle D 109 677 8 109 685 794 50 1986 1995
49 2725 Northwoods
Pkwy. D 440 2,231 11 440 2,242 2,682 123 1984 1996
50 2755 Northwoods
Pkwy. D 249 2,201 - 249 2,201 2,450 121 1986 1996
51 2775 Northwoods
Pkwy. D 322 1,976 50 322 2,026 2,348 120 1986 1996
52 2850 Northwoods
Pkwy. D 562 3,961 46 562 4,007 4,569 292 1988 1995
53 3040 Northwoods
Pkwy. D 298 1,510 - 298 1,510 1,808 84 1984 1996
54 3044 Northwoods
Circle D 167 730 27 167 757 924 55 1984 1995
55 3055 Northwoods
Pkwy. D 213 916 34 213 950 1,163 62 1985 1996
56 3075 Northwoods
Pkwy. S 374 2,750 4 374 2,754 3,128 152 1985 1996
57 3080 Northwoods
Circle O 387 2,215 37 387 2,252 2,639 155 1952 1996
58 3100 Northwoods
Pkwy. S 393 2,177 - 393 2,177 2,570 120 1985 1996
59 3155 Northwoods
Pkwy. S 331 1,808 - 331 1,808 2,139 100 1985 1996
60 3175 Northwoods
Pkwy. S 250 1,644 - 250 1,644 1,894 91 1985 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,840 $30,204 $ 325 $4,840 $30,529 $35,369 $1,955
- ------------------------------------------------------------------------------------------------------------------------------------
Gwinnett Pavilion
61 1480 Beaver
Ruin Rd. R $ 248 $ 982 $ 482 $ 248 $ 1,464 $ 1,712 $ 495 1989
62 1505 Pavilion
Place D (a) 448 1,149 1,188 448 2,337 2,785 1,129 1988
63 3883 Steve
Reynolds Blvd D (b) 612 3,101 94 612 3,195 3,807 694 1990
64 3890 Steve
Reynolds Blvd D (b) 519 1,746 19 519 1,765 2,284 352 1991
65 3905 Steve
Reynolds Blvd D 697 2,108 1 697 2,109 2,806 120 1995
66 3950 Steve
Reynolds Blvd B (a) 684 1,701 23 684 1,724 2,408 294 1992
67 4020 Steve
Reynolds Blvd D 417 1,868 - 417 1,868 2,285 53 1997
68 4025 Steve
Reynolds Blvd D 461 2,252 6 461 2,258 2,719 203 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,086 $14,907 $1,813 $4,086 $16,720 $20,806 $3,340
- ------------------------------------------------------------------------------------------------------------------------------------
Berkeley Lake Distribution Center
69 3130 North
Berkeley Lake B $ 675 $ 4,455 $ - $ 675 $ 4,455 $ 5,130 $ 126 1996
70 3280 Summit
Ridge Pkwy. B 485 4,277 $ - 485 4,277 4,762 56 1997
71 3290 Summit
Ridge Pkwy. B 257 2,255 $ - 257 2,255 2,512 64 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,417 $10,987 $ $1,417 $10,987 $12,404 $ 246
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-2
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 3 OF 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- ------------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
Peachtree Corners Distribution
72 5401 Buford Hwy. B $ 294 $1,865 $ 114 $ 294 $ 1,979 $ 2,273 $ 163 1987 1995
73 5403 Buford Hwy. B 420 2,737 9 420 2,746 3,166 204 1987 1995
74 5405 Buford Hwy. B 217 1,546 29 217 1,575 1,792 121 1989 1995
75 5409 Buford Hwy. B 364 2,675 17 364 2,692 3,056 197 1989 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,295 $8,823 $ 169 $1,295 $ 8,992 $10,287 $ 685
- -----------------------------------------------------------------------------------------------------------------------------------
Pinebrook
76 2625 Pinemeadow Ct. B $ 813 $3,216 - $ 813 $ 3,216 $ 4,029 $ 360 1994
77 2660 Pinemeadow Ct. B 450 2,587 - 450 2,587 3,037 99 1996
78 2450 Satellite Blvd. B 866 3,461 3 866 3,464 4,330 403 1994 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $2,129 $9,264 $ 3 $2,129 $ 9,267 $11,396 $ 862
- -----------------------------------------------------------------------------------------------------------------------------------
Northbrook
79 1000 Northbrook Pkwy. B (a) $ 363 $1,980 $ 857 $ 363 $ 2,837 $ 3,200 $1,250 1986
80 675 Old Peachtree Rd. B (e) 434 2,385 23 434 2,408 2,842 683 1988
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 797 $4,365 $ 880 $ 797 $ 5,245 $ 6,042 $1,933
- -----------------------------------------------------------------------------------------------------------------------------------
Druid Chase
81 2801 Buford Hwy. O $ 794 $3,505 $1,865 $ 794 $ 5,370 $ 6,164 $1,714 1977 1989
82 1190 West Druid
Hills Dr. O 689 2,722 915 689 3,637 4,326 1,094 1980 1989
83 2071 North Druid
Hills Rd. R 98 65 21 98 86 184 36 1968
84 6 West Druid
Hills Dr. O 473 2,980 654 473 3,634 4,107 913 1968 1989
- ------------------------------------------------------------------------------------------------------------------------------------
Total $2,054 $9,272 $3,455 $2,054 $12,727 $14,781 $3,757
- -----------------------------------------------------------------------------------------------------------------------------------
Meadowbrook
85 2450 Meadowbrook
Pkwy. D $ 716 $2,419 $ 20 $ 716 $ 2,439 $ 3,155 $ 293 1989 1994
86 2475 Meadowbrook
Pkwy. D 529 1,567 559 529 2,126 2,655 817 1986
87 2500 Meadowbrook
Pkwy. D (a) 411 1,103 789 411 1,892 2,303 883 1987
88 2505 Meadowbrook
Pkwy. D 307 1,228 419 307 1,647 1,954 360 1990
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,963 $6,317 $1,787 $1,963 $ 8,104 $10,067 $2,353
- -----------------------------------------------------------------------------------------------------------------------------------
Crestwood Pointe
89 3805 Crestwood
Parkway O $ 877 $8,772 - $ 877 $ 8,772 $ 9,649 $ 134 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 877 $8,772 $ - $ 877 $ 8,772 $ 9,649 $ 134
- -----------------------------------------------------------------------------------------------------------------------------------
Park Creek
90 2825 Breckinridge
Blvd. S $ 317 $2,366 $ 25 $ 317 $ 2,391 $ 2,708 $ 139 1986 1996
91 2875 Breckinridge
Blvd. S 476 3,496 32 476 3,528 4,004 205 1986 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 793 $5,862 $ 57 $ 793 $ 5,919 $ 6,712 $ 344
- -----------------------------------------------------------------------------------------------------------------------------------
River Green
92 3450 River
Green Ct. D $ 194 $ 892 $ 12 $ 194 $ 904 $ 1,098 $ 63 1989 1995
93 4800 River
Green Pkwy. D 152 1,150 14 152 1,164 1,316 82 1989 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 346 $2,042 $ 26 $ 346 $ 2,068 $ 2,414 $ 145
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-3
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 4 OF 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- --------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Other Northeast/I-85
94 1705 Belle
Meade Ct. D $ 277 $ 953 $ 3 $ 277 $ 956 $ 1,233 $ 114 1988 1994
95 4125 Buford Hwy. B 778 3,823 28 778 3,851 4,629 283 1995
96 6525-27 Jimmy
Carter Blvd. D 509 3,131 27 509 3,158 3,667 174 1983 1996
97 3171 McCall Dr. D 112 385 6 112 391 503 46 1967 1994
98 7250 McGinnis
Ferry Rd. D 498 3,712 7 498 3,719 4,217 203 1996
99 5300 Peachtree
Industrial Blvd R 434 1,493 - 434 1,493 1,927 179 1966 1994
100 5755 Peachtree
Industrial Blvd O 800 4,020 - 800 4,020 4,820 47 1997
101 5765 Peachtree
Industrial Blvd D 521 3,248 - 521 3,248 3,769 37 1997
102 5775 Peachtree
Industrial Blvd D 521 2,382 - 521 2,382 2,903 29 1997
103 4280 Northeast
Expressway B 534 1,838 2 534 1,840 2,374 221 1962 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,984 $24,985 $ 73 $4,984 $25,058 $30,042 $1,333
- -----------------------------------------------------------------------------------------------------------------------------------
North Central Submarket
- -----------------------------------------------------------------------------------------------------------------------------------
Northmeadow
104 11835 Alpharetta
Hwy. O $ 524 $1,396 $142 $ 524 $1,538 $ 2,062 $ 148 1994
105 1100 Northmeadow
Pkwy. S 552 3,178 59 552 3,237 3,789 270 1989 1995
106 1125 Northmeadow
Pkwy. D 320 2,222 9 320 2,231 2,551 186 1987 1995
107 1150 Northmeadow
Pkwy. D 464 2,963 - 464 2,963 3,427 242 1988 1995
108 1175 Northmeadow
Pkwy. D 328 3,068 54 328 3,122 3,450 288 1987 1995
109 1225 Northmeadow
Pkwy. S 336 3,286 - 336 3,286 3,622 269 1989 1995
110 1250 Northmeadow
Pkwy. D 312 2,328 4 312 2,332 2,644 192 1989 1995
111 1325 Northmeadow
Pkwy. S 472 4,491 75 472 4,566 5,038 397 1990 1995
112 1335 Northmeadow
Pkwy. S 946 6,347 - 946 6,347 7,293 - 1997
113 1350 Northmeadow
Pkwy. D 672 2,556 12 672 2,568 3,240 227 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $4,926 $31,835 $355 $4,926 $ 32,190 $37,116 $2,219
- ------------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Hembree Crest
114 11415 Old
Roswell Rd. B $ 648 $1,947 $ 47 $ 648 $1,994 $ 2,642 $ 185 1991 1995
115 11800 Wills Rd. D 304 1,570 108 304 1,678 1,982 160 1987 1995
116 11810 Wills Rd. D 296 2,180 2 296 2,182 2,478 178 1989 1995
117 11820 Wills Rd. D 488 3,793 72 488 3,865 4,353 318 1987 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,736 $9,490 $229 $1,736 $9,719 $11,455 $ 841
- ------------------------------------------------------------------------------------------------------------------------------------
Mansell Commons
118 993 Mansell Rd. D $ 136 $ 919 $ 47 $136 $ 966 $ 1,102 $ 85 1987 1995
119 995 Mansell Rd. D 80 714 25 80 739 819 66 1987 1995
120 997 Mansell Rd. D 72 612 7 72 619 691 52 1987 1995
121 999 Mansell Rd. D 104 816 1 104 817 921 67 1987 1995
122 1003 Mansell Rd. D 136 881 1 136 882 1,018 73 1990 1995
123 1005 Mansell Rd. D 72 714 15 72 729 801 64 1990 1995
124 1007 Mansell Rd. D 168 1,592 26 168 1,618 1,786 145 1990 1995
125 1009 Mansell Rd. S 264 1,620 4 264 1,624 1,888 132 1986 1995
126 1011 Mansell Rd. S 256 1,647 8 256 1,655 1,911 137 1984 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,288 $9,515 $134 $1,288 $9,649 $10,937 $ 821
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-4
<PAGE>
<TABLE>
Schedule III Page 5 of 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- --------------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Hembree Park
127 105 Hembree
Park Dr. D $ 288 $ 2,067 $ 73 $ 288 $ 2,140 $ 2,428 $ 174 1988 1995
128 150 Hembree
Park Dr. D 641 2,015 208 825 2,039 2,864 181 1985 1995
129 200 Hembree
Park Dr. D 160 1,978 11 160 1,989 2,149 162 1985 1995
130 645 Hembree
Pkwy. D 248 1,997 54 248 2,051 2,299 183 1986 1995
131 655 Hembree
Pkwy. D 248 1,997 42 248 2,039 2,287 197 1986 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,585 $10,054 $388 $1,769 $10,258 $12,027 $ 897
- ------------------------------------------------------------------------------------------------------------------------------------
Northwinds
132 2555 Northwinds
Pkwy. O $1,813 $6,012 $ - $1,813 $6,012 $7,825 $ 106 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $1,813 $6,012 $ - $1,813 $6,012 $7,825 $ 106
- ------------------------------------------------------------------------------------------------------------------------------------
Other North Central
Properties
133 10745 Westside
Pkwy. O $ 925 $3,513 $ 71 $ 925 $3,584 $4,509 $ 307 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 925 $3,513 $ 71 $ 925 $3,584 $4,509 $ 307
- ------------------------------------------------------------------------------------------------------------------------------------
Airport/South Atlanta
Submarket
- ------------------------------------------------------------------------------------------------------------------------------------
Southridge
134 5025 Derick
Jones Rd. D $ 647 $ 3,598 $ - $ 647 $ 3,598 $ 4,245 $ 45 1997
135 5099 Southridge
Pkwy. D (c) 306 1,053 119 306 1,172 1,478 149 1990 1994
136 5136 Southridge
Pkwy. D (c) 480 1,653 69 480 1,722 2,202 214 1990 1994
137 5139 Southridge
Pkwy. D (c) 465 1,601 14 465 1,615 2,080 195 1991 1994
138 5149 Southridge
Pkwy. D (c) 17 3,384 - 817 3,384 4,201 225 1990 1994
139 5156 Southridge
Pkwy. D (c) 676 2,330 10 676 2,340 3,016 279 1992 1994
140 5169 Southridge
Pkwy. D 431 2,468 11 431 2,479 2,910 179 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $3,822 $16,087 $223 $3,822 $16,310 $20,132 $1,286
- ------------------------------------------------------------------------------------------------------------------------------------
Sullivan International
141 703 Sullivan Rd. D $ 225 $ 781 $217 $ 225 $ 998 $ 1,223 $ 97 1990 1994
142 721 Sullivan Rd. D 242 834 40 242 874 1,116 104 1991 1994
143 727 Sullivan Rd. D 260 898 13 260 911 1,171 114 1988 1994
144 739 Sullivan Rd. D 226 778 12 226 790 1,016 94 1989 1994
- ------------------------------------------------------------------------------------------------------------------------------------
Total $ 953 $3,291 $282 $ 953 $3,573 $4,526 $ 409
- ------------------------------------------------------------------------------------------------------------------------------------
Other Airport/South
Atlanta
Properties
145 105 Kings Mill Rd. B (a )$ 457 $4,951 $ - $ 457 $4,951 $5,408 $414 1995
Total $ 457 $4,951 $ - $ 457 $4,951 $5,408 $414
- -----------------------------------------------------------------------------------------------------------------------------------
Northwest/I-75 Submarket
- -----------------------------------------------------------------------------------------------------------------------------------
Townpoint
146 3240 Town Point Dr D $1,092 $4,199 $ - $1,092 $4,199 $ 5,291 $ 42 1997
147 3330 West Town
Point Dr D 551 1,551 375 551 1,926 2,477 224 1994
148 3350 West Town
Point Dr D 434 2,214 - 434 2,214 2,648 137 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Total $2,077 $7,964 $375 $2,077 $8,339 $10,416 $403
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-5
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 6 OF 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Gross Amount at which
Initial Costs Carried at Close of Period
--------------- ----------------------
Cost
Building Capitalized Building Accumu-
Related and Subsequent and lated Year Year
Market/ Property Encum- Improve- to Improve- Deprecia- Developed Acquired
Business Park/Property Type/(1)/ brances Land ments Acquisition Land ments Total tion /(2)/ /(3)/
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwest Business Center
149 1331-37-41-51
Capital Circle S $ 558 $ 4,443 $ 44 $ 558 $ 4,487 $ 5,045 $ 250 1985 1996
150 1335 Capital
Circle S 416 1,704 5 416 1,709 2,125 94 1985 1996
151 2250 Northwest
Pkwy. D 320 2,223 - 320 2,223 2,543 47 1982 1997
152 2252 Northwest
Pkwy. S 92 759 - 92 759 851 15 1982 1997
153 2254 Northwest
Pkwy. S 175 1,442 - 175 1,442 1,617 29 1982 1997
154 2256 Northwest
Pkwy. S 85 702 - 85 702 787 14 1982 1997
155 2258 Northwest
Pkwy. S 47 388 - 47 388 435 8 1982 1997
156 2260 Northwest
Pkwy. S 294 2,436 - 294 2,436 2,730 50 1982 1997
157 2262 Northwest
Pkwy. S 161 1,333 - 161 1,333 1,494 27 1982 1997
158 2264 Northwest
Pkwy. D 353 2,104 - 353 2,104 2,457 48 1982 1997
- ----------------------------------------------------------------------------------------------------------------------------------
Total $2,501 $17,534 $ 49 $2,501 $17,583 $20,084 $ 582
- ----------------------------------------------------------------------------------------------------------------------------------
Franklin Forest
159 805 Franklin Ct. D $ 313 $ 1,638 - $ 313 $ 1,638 $ 1,951 $ 35 1983 1997
160 810 Franklin Ct. S 255 1,414 - 255 1,414 1,669 28 1983 1997
161 811 Livingston Ct. S 193 1,089 - 193 1,089 1,282 23 1983 1997
162 821 Livinston Ct. S 145 803 - 145 803 948 17 1983 1997
163 825 Franklin Ct. D 358 2,261 - 358 2,261 2,619 52 1983 1997
164 830 Franklin Ct. S 133 741 - 133 741 874 15 1983 1997
165 835 Franklin Ct. D 393 2,461 - 393 2,461 2,854 53 1983 1997
166 840 Franklin Ct. D 242 1,855 - 242 1,855 2,097 38 1983 1997
167 841 Livingston Ct. D 275 1,855 - 275 1,855 2,130 38 1983 1997
- ----------------------------------------------------------------------------------------------------------------------------------
Total $2,307 $14,117 - $2,307 $14,117 $16,424 $ 299
- ----------------------------------------------------------------------------------------------------------------------------------
Other Northwest/
I-75 Properties
168 240 Northpoint Pkwy. B $ 822 $ 4,912 - $ 822 $ 4,912 $ 5,734 $ 267 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 822 $ 4,912 - $ 822 $ 4,912 $ 5,734 $ 267
- ----------------------------------------------------------------------------------------------------------------------------------
Stone Mountain Submarket
- ----------------------------------------------------------------------------------------------------------------------------------
Parknorth
169 675 Parknorth Blvd. D $ 611 $ 2,743 - $ 611 $ 2,743 $ 3,354 $ 264 1990 1995
170 696 Parknorth Blvd. D (h) 532 2,748 4 532 2,752 3,284 240 1986 1995
171 715 Parknorth Blvd. D 375 2,118 2 375 2,120 2,495 185 1989 1995
172 735 Parknorth Blvd. D (h) 709 3,155 55 709 3,210 3,919 296 1989 1995
173 736 Parknorth Blvd. S 627 1,023 - 627 1,023 1,650 90 1992 1995
174 780 Parknorth Blvd. D (h) 328 1,847 45 328 1,892 2,220 165 1988 1995
175 808 Parknorth Blvd. S 162 608 - 162 608 770 54 1986 1995
176 815 Parknorth Blvd. S 249 983 4 249 987 1,236 86 1989 1995
- ----------------------------------------------------------------------------------------------------------------------------------
Total $3,593 $15,225 $110 $3,593 $15,335 $18,928 $1,380
- ----------------------------------------------------------------------------------------------------------------------------------
Chattahoochee Submarket
- ----------------------------------------------------------------------------------------------------------------------------------
Chattahoochee
177 1670 DeFoors Ave. D $ 82 $ 660 $943 $ 82 $ 1,603 $ 1,685 $ 809 1960 1989
- ----------------------------------------------------------------------------------------------------------------------------------
Total $ 82 $ 660 $943 $ 82 $ 1,603 $ 1,685 $ 809
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-6
<PAGE>
<TABLE>
<CAPTION>
Schedule III Page 7 of 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Initial Costs
-------------------------- Cost Capitalized
Property Related Building and Subsequent
Market/Business Park/Property Type (1) Encumbrances Land Improvements to Acquisition
- ------------------------------------------------------------------------------------------------------------
NASHVILLE, TENNESSEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Airpark Business Center
178 400 Airpark Center Dr. S (m)(n) $ 419 $ 1,679 $ 18
179 500 Airpark Center Dr. D (m)(n) 923 3,697 -
180 600 Airpark Center Dr. D (m)(n) 729 2,918 50
181 700 Airpark Center Dr. D (m)(n) 801 3,286 -
182 800 Airpark Center Dr. D (o) 924 3,701 -
183 900 Airpark Center Dr. D (o) 798 3,193 -
184 1000 Airpark Center Dr. D 1,300 7,367 -
185 1400 Donelson Pike S (m)(n) 1,276 5,108 -
186 1410 Donelson Pike S (m)(n) 1,411 5,696 60
187 1411-1449 Donelson Pike B 1,308 7,412 -
188 1413 Donelson Pike B (p) 549 2,196 -
189 1420 Donelson Pike S (m)(n) 1,331 5,346 96
190 5270 Harding Place B (p) 535 2,143 -
- ------------------------------------------------------------------------------------------------------------
Total $12,304 $53,742 $224
- ------------------------------------------------------------------------------------------------------------
Aspen Grove Business Center
191 277 Mallory Station Road D $ 936 $ 5,324 $ -
- ------------------------------------------------------------------------------------------------------------
Total $ 936 $ 5,324 $ -
- ------------------------------------------------------------------------------------------------------------
Brentwood South Business Center
192 7104 Crossroad Blvd. D (j) $ 1,065 $ 4,272 $ 11
193 7106 Crossroad Blvd. D (j) 1,065 4,266 7
194 7108 Crossroad Blvd. D (j) 848 3,396 5
195 119 Seaboard Lane D (k) 569 2,280 -
196 121 Seaboard Lane D (l) 445 1,784 -
197 123 Seaboard Lane D (l) 489 1,956 -
- ------------------------------------------------------------------------------------------------------------
Total $ 4,481 $17,954 $ 23
- ------------------------------------------------------------------------------------------------------------
Four Forty Business Center
198 735 Melrose Ave. B $ 938 $ 5,318 $ -
- ------------------------------------------------------------------------------------------------------------
Total $ 938 $ 5,318 $ -
- ------------------------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NORTH CAROLINA
Perimeter Park
199 100 Perimeter Park Rd. S (z) $ 477 $ 3,030 $ -
200 200 Perimeter Park Rd. S 567 3,048 -
201 300 Perimeter Park Rd. S (z) 567 3,047 -
202 400 Perimeter Park Rd. S (aa) 486 4,051 -
203 500 Perimeter Park Rd. S (z) 522 4,051 -
204 800 Perimeter Park Rd. S (bb) 405 3,048 -
205 900 Perimeter Park Rd. S (q) 629 3,568 -
206 1000 Perimeter Park Rd. S (z) 405 2,667 -
- ------------------------------------------------------------------------------------------------------------
Total $ 4,058 $26,510 $ -
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Gross Amount at which
Carried at Close of Period
---------------------------------------------
Building and
Market/Business Park/Property Land Improvements Total
- -----------------------------------------------------------------------------------------
NASHVILLE, TENNESSEE
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Airpark Business Center
178 400 Airpark Center Dr. $ 419 $ 1,697 $ 2,116
179 500 Airpark Center Dr. 923 3,697 4,620
180 600 Airpark Center Dr. 729 2,968 3,697
181 700 Airpark Center Dr. 801 3,286 4,087
182 800 Airpark Center Dr. 924 3,701 4,625
183 900 Airpark Center Dr. 798 3,193 3,991
184 1000 Airpark Center Dr. 1,300 7,367 8,667
185 1400 Donelson Pike 1,276 5,108 6,384
186 1410 Donelson Pike 1,411 5,756 7,167
187 1411-1449 Donelson Pike 1,308 7,412 8,720
188 1413 Donelson Pike 549 2,196 2,745
189 1420 Donelson Pike 1,331 5,442 6,773
190 5270 Harding Place 535 2,143 2,678
- -----------------------------------------------------------------------------------------
Total $12,304 $53,966 $66,270
- -----------------------------------------------------------------------------------------
Aspen Grove Business Center
191 277 Mallory Station Road $ 936 $ 5,324 $ 6,260
- -----------------------------------------------------------------------------------------
Total $ 936 $ 5,324 $ 6,260
- -----------------------------------------------------------------------------------------
Brentwood South Business Center
192 7104 Crossroad Blvd. $ 1,065 $ 4,283 $ 5,348
193 7106 Crossroad Blvd. 1,065 4,273 5,338
194 7108 Crossroad Blvd. 848 3,401 4,249
195 119 Seaboard Lane 569 2,280 2,849
196 121 Seaboard Lane 445 1,784 2,229
197 123 Seaboard Lane 489 1,956 2,445
- -----------------------------------------------------------------------------------------
Total $ 4,481 $17,977 $22,458
- -----------------------------------------------------------------------------------------
Four Forty Business Center
198 735 Melrose Ave. $ 938 $ 5,318 $ 6,256
- -----------------------------------------------------------------------------------------
Total $ 938 $ 5,318 $ 6,256
- -----------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NORTH CAROLINA
Perimeter Park
199 100 Perimeter Park Rd. $ 477 $ 3,030 $ 3,507
200 200 Perimeter Park Rd. 567 3,048 3,615
201 300 Perimeter Park Rd. 567 3,047 3,614
202 400 Perimeter Park Rd. 486 4,051 4,537
203 500 Perimeter Park Rd. 522 4,051 4,573
204 800 Perimeter Park Rd. 405 3,048 3,453
205 900 Perimeter Park Rd. 629 3,568 4,197
206 1000 Perimeter Park Rd. 405 2,667 3,072
- -----------------------------------------------------------------------------------------
Total $ 4,058 $26,510 $30,568
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Accumulated Year Year
Market/Business Park/Property Depreciation Developed (2) Acquired (3)
- ------------------------------------------------------------------------------------------
NASHVILLE, TENNESSEE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Airpark Business Center
178 400 Airpark Center Dr. $ 78 1989 1996
179 500 Airpark Center Dr. 173 1988 1996
180 600 Airpark Center Dr. 142 1990 1996
181 700 Airpark Center Dr. 152 1992 1996
182 800 Airpark Center Dr. 173 1995 1996
183 900 Airpark Center Dr. 149 1995 1996
184 1000 Airpark Center Dr. 24 1997 1997
185 1400 Donelson Pike 238 1986 1996
186 1410 Donelson Pike 279 1986 1996
187 1411-1449 Donelson Pike 22 1996 1997
188 1413 Donelson Pike 103 1996 1996
189 1420 Donelson Pike 265 1985 1996
190 5270 Harding Place 100 1996 1996
- ------------------------------------------------------------------------------------------
Total $1,898
- ------------------------------------------------------------------------------------------
Aspen Grove Business Center
191 277 Mallory Station Road $ 137 1996 1997
- ------------------------------------------------------------------------------------------
Total $ 137
- ------------------------------------------------------------------------------------------
Brentwood South Business Center
192 7104 Crossroad Blvd. $ 205 1987 1996
193 7106 Crossroad Blvd. 201 1987 1996
194 7108 Crossroad Blvd. 159 1989 1996
195 119 Seaboard Lane 106 1990 1996
196 121 Seaboard Lane 84 1990 1996
197 123 Seaboard Lane 92 1990 1996
- ------------------------------------------------------------------------------------------
Total $ 847
- ------------------------------------------------------------------------------------------
Four Forty Business Center
198 735 Melrose Ave. $ 143 1997 1997
- ------------------------------------------------------------------------------------------
Total $ 143
- ------------------------------------------------------------------------------------------
RESEARCH TRIANGLE, NORTH CAROLINA
Perimeter Park
199 100 Perimeter Park Rd. $ 53 1987 1997
200 200 Perimeter Park Rd. 52 1987 1997
201 300 Perimeter Park Rd. 53 1986 1997
202 400 Perimeter Park Rd. 70 1984 1997
203 500 Perimeter Park Rd. 71 1985 1997
204 800 Perimeter Park Rd. 53 1984 1997
205 900 Perimeter Park Rd. 184 1982 1996
206 1000 Perimeter Park Rd. 47 1982 1997
- ------------------------------------------------------------------------------------------
Total $ 583
- ------------------------------------------------------------------------------------------
</TABLE>
S-7
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 8 OF 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
(Dollars in Thousands)
Initial Costs
-------------------------- Cost Capitalized
Property Related Building and Subsequent
Market/Business Park/Property Type (1) Encumbrances Land Improvements to Acquisition
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Perimeter Park West
207 1100 Perimeter Park West S $ 777 $ 4,588 $ -
208 1400 Perimeter Park West O (r) 666 3,777 17
209 1500 Perimeter Park West O 1,148 6,511 -
210 1600 Perimeter Park West O (v) 1,463 8,296 -
211 1800 Perimeter Park West O (v) 907 5,140 -
212 2000 Perimeter Park West O 788 4,466 -
- ------------------------------------------------------------------------------------------------------------------
Total $5,749 $32,778 $ 17
- ------------------------------------------------------------------------------------------------------------------
Enterprise Center
213 2600 Perimeter Park Dr. S $ 975 $ 5,529 $ -
214 507 Airport Blvd. S (v) 1,336 7,578 -
215 5151 McCrimmon Pkwy. S 1,318 7,474 -
- ------------------------------------------------------------------------------------------------------------------
Total $3,629 $20,581 $ -
- ------------------------------------------------------------------------------------------------------------------
Metro Center
216 2800 Perimeter Park Dr. D (u) $ 777 $ 4,405 $ 96
217 2900 Perimeter Park Dr. D (u) 235 1,330 -
218 3000 Perimeter Park Dr. D (u) 482 2,733 13
- ------------------------------------------------------------------------------------------------------------------
Total $1,494 $ 8,468 $109
- ------------------------------------------------------------------------------------------------------------------
Woodlake Center
219 100 Innovation Ave. D (t) $ 633 $ 3,590 $ -
220 101 Innovation Ave. D 615 3,488 -
- ------------------------------------------------------------------------------------------------------------------
Total $1,248 $ 7,078 $ -
- ------------------------------------------------------------------------------------------------------------------
Research Triangle Industrial Center
221 409-A Airport Blvd. D (y) $ 296 $ 2,037 $ -
222 409-B Airport Blvd. D (y) 175 1,203 -
223 409-C Airport Blvd. D (y) 185 1,304 -
- ------------------------------------------------------------------------------------------------------------------
Total $ 656 $ 4,544 $ -
- ------------------------------------------------------------------------------------------------------------------
Interchange Plaza
224 5520 Capital Center Dr. O (s) $ 842 $ 4,772 $ -
225 801 Jones Franklin Rd. O (x) 1,351 7,660 3
- ------------------------------------------------------------------------------------------------------------------
Total $2,193 $12,432 $ 3
- ------------------------------------------------------------------------------------------------------------------
Other Raleigh Properties
226 6501 Weston Pkwy. O (w) $1,775 $10,064 $ 5
- ------------------------------------------------------------------------------------------------------------------
Total $1,775 $10,064 $ 5
- ------------------------------------------------------------------------------------------------------------------
Orlando, Florida
ParkSouth Distribution
227 2490 Principal Row B $ 493 $ 3,284 $ -
228 2500 Principal Row B 565 3,915 70
229 9600 Parksouth Ct. B 649 3,836 -
- ------------------------------------------------------------------------------------------------------------------
Total $1,707 $11,035 $ 70
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Gross Amount at which
Carried at Close of Period
-----------------------------
Building and
Market/Business Park/Property Land Improvements Total
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Perimeter Park West
207 1100 Perimeter Park West $ 777 $ 4,588 $ 5,365
208 1400 Perimeter Park West 666 3,794 4,460
209 1500 Perimeter Park West 1,148 6,511 7,659
210 1600 Perimeter Park West 1,463 8,296 9,759
211 1800 Perimeter Park West 907 5,140 6,047
212 2000 Perimeter Park West 788 4,466 5,254
- ------------------------------------------------------------------------------------
Total $5,749 $32,795 $38,544
- ------------------------------------------------------------------------------------
Enterprise Center
213 2600 Perimeter Park Dr. $ 975 $ 5,529 $ 6,504
214 507 Airport Blvd. 1,336 7,578 8,914
215 5151 McCrimmon Pkwy. 1,318 7,474 8,792
- ------------------------------------------------------------------------------------
Total $3,629 $20,581 $24,210
- ------------------------------------------------------------------------------------
Metro Center
216 2800 Perimeter Park Dr. $ 777 $ 4,501 $ 5,278
217 2900 Perimeter Park Dr. 235 1,330 1,565
218 3000 Perimeter Park Dr. 482 2,746 3,228
- ------------------------------------------------------------------------------------
Total $1,494 $ 8,577 $10,071
- ------------------------------------------------------------------------------------
Woodlake Center
219 100 Innovation Ave. $ 633 $ 3,590 $ 4,223
220 101 Innovation Ave. 615 3,488 4,103
- ------------------------------------------------------------------------------------
Total $1,248 $ 7,078 $ 8,326
- ------------------------------------------------------------------------------------
Research Triangle Industrial Center
221 409-A Airport Blvd. $ 296 $ 2,037 $ 2,333
222 409-B Airport Blvd. 175 1,203 1,378
223 409-C Airport Blvd. 185 1,304 1,489
- ------------------------------------------------------------------------------------
Total $ 656 $ 4,544 $ 5,200
- ------------------------------------------------------------------------------------
Interchange Plaza
224 5520 Capital Center Dr. $ 842 $ 4,772 $ 5,614
225 801 Jones Franklin Rd. 1,351 7,663 9,014
- ------------------------------------------------------------------------------------
Total $2,193 $12,435 $14,628
- ------------------------------------------------------------------------------------
Other Raleigh Properties
226 6501 Weston Pkwy. $1,775 $10,069 $11,844
- ------------------------------------------------------------------------------------
Total $1,775 $10,069 $11,844
- ------------------------------------------------------------------------------------
Orlando, Florida
ParkSouth Distribution
227 2490 Principal Row $ 493 $ 3,284 $ 3,777
228 2500 Principal Row 565 3,985 4,550
229 9600 Parksouth Ct. 649 3,836 4,485
- ------------------------------------------------------------------------------------
Total $1,707 $11,105 $12,812
- ------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Accumulated Year Year
Market/Business Park/Property Depreciation Developed (2) Acquired (3)
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Perimeter Park West
207 1100 Perimeter Park West $ 71 1990 1997
208 1400 Perimeter Park West 197 1991 1996
209 1500 Perimeter Park West 335 1996 1996
210 1600 Perimeter Park West 427 1994 1996
211 1800 Perimeter Park West 266 1994 1996
212 2000 Perimeter Park West 41 1997 1997
- ------------------------------------------------------------------------------------------
Total $1,337
- ------------------------------------------------------------------------------------------
Enterprise Center
213 2600 Perimeter Park Dr. $ 45 1997 1997
214 507 Airport Blvd. 389 1993 1996
215 5151 McCrimmon Pkwy. 384 1995 1996
- ------------------------------------------------------------------------------------------
Total $ 818
- ------------------------------------------------------------------------------------------
Metro Center
216 2800 Perimeter Park Dr. $ 238 1992 1996
217 2900 Perimeter Park Dr. 68 1990 1996
218 3000 Perimeter Park Dr. 141 1989 1996
- ------------------------------------------------------------------------------------------
Total $ 447
- ------------------------------------------------------------------------------------------
Woodlake Center
219 100 Innovation Ave. $ 185 1994 1996
220 101 Innovation Ave. 34 1997 1997
- ------------------------------------------------------------------------------------------
Total $ 219
- ------------------------------------------------------------------------------------------
Research Triangle Industrial Center
221 409-A Airport Blvd. $ 73 1982 1997
222 409-B Airport Blvd. 43 1983 1997
223 409-C Airport Blvd. 46 1986 1997
- ------------------------------------------------------------------------------------------
Total $ 162
- ------------------------------------------------------------------------------------------
Interchange Plaza
224 5520 Capital Center Dr. $ 246 1993 1996
225 801 Jones Franklin Rd. 394 1995 1996
- ------------------------------------------------------------------------------------------
Total $ 640
- ------------------------------------------------------------------------------------------
Other Raleigh Properties
226 6501 Weston Pkwy. $ 517 1996 1996
- ------------------------------------------------------------------------------------------
Total $ 517
- ------------------------------------------------------------------------------------------
Orlando, Florida
ParkSouth Distribution
227 2490 Principal Row $ 22 1997
228 2500 Principal Row 143 1996
229 9600 Parksouth Ct. 42 1997
- ------------------------------------------------------------------------------------------
Total $ 207
- ------------------------------------------------------------------------------------------
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
SCHEDULE III PAGE 9 OF 11
GROSS AMOUNT AT WHICH
INITIAL COSTS CARRIED AT CLOSE OF PERIOD
--------------------- COST CAPITALIZED ----------------------------------
MARKET/BUSINESS PROPERTY RELATED BUILDING AND SUBSEQUENT BUILDING AND
PARK/PROPERTY TYPE/(1)/ ENCUMBRANCES LAND IMPROVEMENTS TO ACQUISITION LAND IMPROVEMENTS
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
AIRPORT COMMERCE CENTER
230 1629 Prime Court D $ 281 $ 2,129 $ - $ 281 $ 2,129
231 1630 Prime Court D 323 1,650 - 323 1,650
232 8249 Parkline Blvd. D 214 1,661 - 214 1,661
233 8351 Parkline Blvd. D (d) 212 1,785 - 212 1,785
234 8500 Parkline Blvd. D (d) 691 3,200 126 691 3,326
235 8501 Parkline Blvd. D (d) 169 1,212 8 169 1,220
236 8549 Parkline Blvd. D (d) 149 1,231 - 149 1,231
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 2,039 $ 12,868 $ 134 $ 2,039 $ 13,002
- -----------------------------------------------------------------------------------------------------------------------
TECHNOLOGY PARK - ORLANDO
237 100 Technology Park S $ 421 $ 2,580 $ - $ 421 $ 2,580
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 421 $ 2,580 $ - $ 421 $ 2,580
- -----------------------------------------------------------------------------------------------------------------------
SPARTANBURG, SOUTH CAROLINA
HILLSIDE
238 170 Parkway West B $ 223 $ 2,539 $ - $ 223 $ 2,539
239 190 Parkway West B 276 2,350 - 276 2,350
240 285 Parkway West B 619 4,243 - 619 4,243
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 1,118 $ 9,132 $ - $ 1,118 $ 9,132
- -----------------------------------------------------------------------------------------------------------------------
JACKSONVILLE, FLORIDA
JACKSONVILLE INTERNATIONAL TRADEPORT
241 13340 International Pkwy B $ 289 $ 2,495 $ - $ 289 $ 2,495
- -----------------------------------------------------------------------------------------------------------------------
TOTAL $ 289 $ 2,495 $ - $ 289 $ 2,495
- -----------------------------------------------------------------------------------------------------------------------
LAND HELD FOR FUTURE
DEVELOPMENT 4,524 $ 21,029 $ - $ 1,533 $ 22,562 $ -
------------------------------------------------------------------------------------
PROPERTY TOTALS $188,661 (cc) $126,938 $596,849 $ 32,280 $128,758 $627,309
------------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------
MARKET/BUSINESS ACCUMULATED YEAR YEAR
PARK/PROPERTY TOTAL DEPRECIATION DEVELOPED/(2)/ ACQUIRED/(3)/
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIRPORT COMMERCE CENTER
230 1629 Prime Court $ 2,410 $ 6 1997
231 1630 Prime Court 1,973 80 1996
232 8249 Parkline Blvd. 1,875 105 1996
233 8351 Parkline Blvd. 1,997 170 1994 1995
234 8500 Parkline Blvd. 4,017 347 1986 1995
235 8501 Parkline Blvd. 1,389 117 1991 1995
236 8549 Parkline Blvd. 1,380 118 1992 1995
- -------------------------------------------------------------------------------------------------
TOTAL $ 15,041 $ 943
- -------------------------------------------------------------------------------------------------
TECHNOLOGY PARK - ORLANDO
237 100 Technology Park $ 3,001 $ 57 1986 1997
- -------------------------------------------------------------------------------------------------
TOTAL $ 3,001 $ 57
- -------------------------------------------------------------------------------------------------
SPARTANBURG, SOUTH CAROLINA
HILLSIDE
238 170 Parkway West $ 2,762 $ 99 1995
239 190 Parkway West 2,626 56 1997
240 285 Parkway West 4,862 333 1994
- -------------------------------------------------------------------------------------------------
TOTAL $ 10,250 $ 488
- -------------------------------------------------------------------------------------------------
JACKSONVILLE, FLORIDA
JACKSONVILLE INTERNATIONAL TRADEPORT
241 13340 International Pkwy $ 2,784 $ 17 1997 1997
- -------------------------------------------------------------------------------------------------
TOTAL $ 2,784 $ 17
- -------------------------------------------------------------------------------------------------
LAND HELD FOR FUTURE
DEVELOPMENT $ 22,562 $ -
------------------------------------------------------------
PROPERTY TOTALS $ 756,067 (dd)(ee) $61,548
------------------------------------------------------------
</TABLE>
S-9
<PAGE>
SCHEDULE III PAGE 10 OF 11
<TABLE>
<CAPTION>
FOOTNOTES TO SCHEDULE III
<S> <C>
(1) D = business distribution; B = bulk warehouse; S = business service; O = office; R = retail.
(2) The year of development means the year in which shell construction was completed.
(3) For properties acquired by the Operating Partnership, including properties previously developed and sold by the Operating
Partnership, the year of acquisition means the year in which an ownership interest in the property was acquired or is
expected to be acquired, unless otherwise noted.
(a) These properties are collectively encumbered by a mortgage of $ 38,000.
(b) These properties are collectively encumbered by a mortgage of $ 10,300.
(c) These properties are collectively encumbered by a mortgage of $ 6,857.
(d) These properties are collectively encumbered by a mortgage of $ 5,200.
(e) These properties are collectively encumbered by a mortgage of $ 3,365.
(f) These properties are collectively encumbered by a mortgage of $ 1,764.
(g) These properties are collectively encumbered by a mortgage of $ 1,228.
(h) These properties are collectively encumbered by a mortgage of $ 5,140.
(i) These properties are collectively encumbered by a mortgage of $ 657.
(j) These properties are collectively encumbered by a mortgage of $ 6,988.
(k) These properties are collectively encumbered by a mortgage of $ 2,153
(l) These properties are collectively encumbered by a mortgage of $ 2,605.
(m) These properties are collectively encumbered by a mortgage of $ 12,015.
(n) These properties are collectively encumbered by a mortgage of $ 1,922.
(o) These properties are collectively encumbered by a mortgage of $ 8,710.
(p) These properties are collectively encumbered by a mortgage of $ 6,826.
(q) These properties are collectively encumbered by a mortgage of $ 2,866.
(r) These properties are collectively encumbered by a mortgage of $ 2,675.
(s) These properties are collectively encumbered by a mortgage of $ 2,890.
(t) These properties are collectively encumbered by a mortgage of $ 2,463.
(u) These properties are collectively encumbered by a mortgage of $ 6,705.
(v) These properties are collectively encumbered by a mortgage of $ 15,800.
(w) These properties are collectively encumbered by a mortgage of $ 7,560.
(x) These properties are collectively encumbered by a mortgage of $ 5,718.
(y) These properties are collectively encumbered by a mortgage of $ 3,641.
(z) These properties are collectively encumbered by a mortgage of $ 12,897.
(aa) These properties are collectively encumbered by a mortgage of $ 4,135.
(bb) These properties are collectively encumbered by a mortgage of $ 3,057.
(cc) Total related encumbrances include all mortgage notes payable in the accompanying financial statements, except a mortgage of
$3,934 which is secured by the property at 1950 Vaughn Road which underlies a direct financing lease discussed in note 2 to
the consolidated financial statements.
(dd) The aggregate cost for federal income tax purposes was approximately $642,000.
(ee) Excludes developments in progress of $100,433.
</TABLE>
S-10
<PAGE>
SCHEDULE III Page 11 of 11
WEEKS REALTY, L.P.
REAL ESTATE ASSETS AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1997
Depreciation of the Operating Partnership's real estate assets is
calculated over the following estimated useful lives on a straight-line
basis:
. Buildings -- 35 Years
. Tenant Improvements -- life of the lease
A summary of activity for real estate assets and accumulated depreciation
for the years ended December 31, 1997, 1996 and 1995, were as follows (in
thousands):
<TABLE>
<CAPTION>
1997 1996 1995
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Real Estate Assets
Balance, beginning of period $ 592,841 $ 319,763 $ 162,709
Additions 137,566 71,418 46,913
Building acquisitions/(a)/ 129,884 201,660 110,141
Sales of property (2,456) -- --
Property retirements (1,335) -- --
--------------------------------------------------------------------------------------------------------------
Balance, end of period $ 856,500 $ 592,841 $ 319,763
==============================================================================================================
Accumulated Depreciation
Balance, beginning of period $ 41,469 $ 29,889 $ 22,959
Depreciation expense 21,586 11,580 6,930
Sales of property (182) -- --
Property retirements (1,325) -- --
--------------------------------------------------------------------------------------------------------------
Balance, end of period $ 61,548 $ 41,469 $ 29,889
==============================================================================================================
</TABLE>
(a) See Note 14 to the Operating Partnership's consolidated financial
statements, included herein on page F-21 for a summary of certain
noncash consideration utilized in the Operating Partnership's building
acquisitions.
S-11
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- --------------------------------------------------------------------------------
2.1* Agreement of Merger by and between NWI Warehouse Group, LLC and
Weeks Realty, L.P., dated November 1, 1996.
2.2* Contribution Agreement for Development Properties between Weeks
Realty, L.P., and NWI Warehouse Group, L.P., dated November 1,
1996.
2.3* Contribution Agreement for Aspen Grove Land between Weeks Realty,
L.P., and NWI Warehouse Group, L.P., dated November 1, 1996.
2.4* Contribution Agreement for I-440 Land between Weeks Realty, L.P.,
and NWI Warehouse Group, L.P., dated November 1, 1996.
2.5* Contribution Agreement for NWI Operating Business by and between
Weeks Realty, L.P. and NWI Warehouse Group, L.P., dated November
1, 1996.
2.6* Contribution Agreement for Buckley Operating Business by and
between Weeks Realty, L.P. and Buckley & Company Real Estate,
Inc., dated November 1, 1996.
2.7* Contribution Agreement for Briley Land between Weeks Realty, L.P.
and NWI Warehouse Group, L.P., dated November 1, 1996.
2.8** Contribution Agreement by and between Harold S. Lichtin and Weeks
Realty, L.P., dated December 31, 1996.
2.9** Contribution Agreement for Northern Telecom Properties, among the
Contributors identified therein (the "Contributors") and Weeks
Realty, L.P. doing business as Weeks Realty Limited Partnership,
dated December 31, 1996.
2.10** Contribution Agreement (Perimeter Park West Land) among Harold S.
Lichtin, Marie Antoinette Robertson, and Perimeter Park West
Associates, and Weeks Realty, L.P. doing business as Weeks Realty
Limited Partnership, dated December 31, 1996.
2.11** Contribution Agreement for Completed Properties Lichtin Portfolio
among the Contributors and Weeks Realty, L.P. doing business as
Weeks Realty Limited Partnership, dated December 31, 1996.
2.12** Contribution Agreement for Development Properties and Regency
Forrest Land among the Contributors and Weeks Realty, L.P. doing
business as Weeks Realty Limited Partnership, dated December 31,
1996.
2.13**** Beacon Centre Contribution Agreement dated January 2, 1998 by and
between Armando Codina, Codina West Dade Development Corporation,
Codina Family Investments, Ltd., The Benenson Capital Company,
Raha Associated, Inc., Laurence Tisch, Preston Tisch, Raha
Associates II, Inc., Codina West Dade Development Corporation No.
5, and Weeks Realty, L.P., and Weeks Corporation.
4.1* Second Amended and Restated Agreement of Limited Partnership of
Weeks Realty, L.P., dated October 30, 1996.
4.2* First Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among NWI
Warehouse Group, L.P., Buckley & Company Real Estate, Inc. and
Weeks GP Holdings, Inc., dated November 1, 1996.
4.3** Second Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. by and among Harold S.
Lichtin, Noel A. Lichtin, Marie Antoinette Robertson, Amy R.
Ehrman, Roland G. Robertson and Perimeter Park West Associates
Limited Partnership, Weeks GP Holdings, Inc. and Weeks
Corporation, dated December 31, 1996.
4.4++ Third Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated January 31, 1997.
<PAGE>
4.5 Fourth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated August 1, 1997.
4.6++++ Fifth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated October 7, 1997.
4.7 Sixth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated October 27, 1997.
4.8 Seventh Amendment to Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P., dated December 30,
1997, but effective as of August 1, 1997.
4.9**** Eighth Amendment to the Second Amended and Restated Agreement of
Limited Partnership of Weeks Realty, L.P. dated January 9, 1998.
4.10***** Indenture among Weeks Realty, L.P. and State Street Bank and Trust
Company, as Trustee.
10.1*** Employment Agreements between Weeks Realty, L.P. and A. Ray Weeks,
Jr., Thomas D. Senkbeil and Forrest W. Robinson, respectively.
10.2*** Employment Agreements between Weeks Realty Services, Inc. and A.
Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W. Robinson,
respectively.
10.3*** Employment Agreements between Weeks Construction Services, Inc.
and A. Ray Weeks, Jr. and Forrest W. Robinson, respectively.
10.4*** Noncompetition Agreements among the Company, Weeks Realty, L.P.,
Weeks Realty Services, Inc., Weeks Construction Services, Inc. and
each of A. Ray Weeks, Jr., Thomas D. Senkbeil and Forrest W.
Robinson.
10.5+ Credit Agreement dated September 25, 1996, by and among Wachovia
Bank of Georgia, N.A., as agent bank for Wachovia Bank of Georgia,
N.A., First Union National Bank of Georgia, Commerzbank A.G. and
Mellon Bank, N.A. as lenders, Weeks Realty, L.P., Weeks
Construction Services, Inc., Weeks Realty Services, Inc., Weeks
Development Partnership and Weeks Financing Limited Partnership,
as borrowers, and Weeks Corporation and Weeks Realty, L.P., as
guarantors.
10.6+* Park North Purchase and Sale Agreement between Copley Properties
Inc., Parknorth Associates, Parknorth Associates II, Parknorth
Associates III and Weeks Realty, L.P., dated March 28, 1995.
10.7# Purchase and Sale Agreement by and among North Meadow Associates
Joint Venture, ASC North Fulton Associates Joint Venture and Weeks
Realty, L.P., dated July 7, 1995.
10.8## Noncompetition Agreement between Weeks Corporation, Weeks Realty,
L.P., Weeks Realty Services, Inc. and Weeks Construction Services,
Inc. and David P. Stockert, dated June 26, 1995.
10.9## Agreement of Purchase and Sale between Premprop-Northwoods 6
Partnership, Premprop-Northwoods 18-22 Partnership, and Premprop-
Northwoods 23 Partnership and Weeks Realty, L.P. dated November 6,
1995. The Exhibits and Schedules to this Agreement are listed in,
but not filed with, this exhibit. Such Exhibits and Schedules
have been omitted for purposes of this filing, but will be
furnished to the Commission supplementary upon request.
10.10### Real Estate Purchase and Sale Agreement by and between Principal
Mutual Life Insurance Company and Weeks Realty, L.P., dated May
28, 1996.
10.11* Noncompetition Agreement by and among NWI Warehouse Group, L.P.,
Weeks Corporation, Weeks Realty, L.P., Weeks Realty Services,
Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc.,
Weeks LP Holdings, Inc., and their respective successors, dated
November 1, 1996.
<PAGE>
10.12* Noncompetition Agreement by and among John W. Nelley, Jr., Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc.,
Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks
LP Holdings, Inc., and any other entity under the common control
of Weeks Corporation, and their respective successors, dated
November 1, 1996.
10.13* Noncompetition Agreement by and among Albert W. Buckley, Jr.,
Weeks Corporation, Weeks Realty, L.P., Weeks Realty Services,
Inc., Weeks Construction Services, Inc., Weeks GP Holdings, Inc.,
Weeks LP Holdings, Inc., and any other entity under the common
control of Weeks Corporation, and their respective successors,
dated November 1, 1996.
10.14** Noncompetition Agreement by and between Harold S. Lichtin, Weeks
Corporation, Weeks Realty, L.P., Weeks Realty Services, Inc.,
Weeks Construction Services, Inc., Weeks GP Holdings, Inc., Weeks
LP Holdings, Inc., and any other entity under the common control
of Weeks Corporation, and their respective successors, dated
December 31, 1996.
10.15+++ First Amendment to Credit Agreement dated September 1, 1997 by and
among Wachovia Bank of Georgia, N.A., as agent bank for Wachovia
Bank of Georgia, N.A., First Union National Bank of Georgia,
Commerzbank A.G. and Mellon Bank, as lenders, Weeks Realty, L.P.,
Weeks Construction Services, Inc., Weeks Realty Services, Inc.,
Weeks Development Partnership and Weeks Financing Limited
Partnership, as borrowers, and Weeks Corporation, Weeks GP
Holdings, Inc., Weeks LP Holdings, Inc., and Weeks Realty, L.P.,
as guarantors.
10.16 Consulting Agreement by and between Harold S. Lichtin and Weeks
Corporation, dated December 30, 1997, effective October 1, 1997.
10.17 Settlement Agreement and Mutual Release by and among Weeks
Corporation, the affiliates and related companies of Weeks
Corporation identified therein, and Harold S. Lichtin, dated
December 30, 1997, effective October 1, 1997.
10.18#### Securities Purchase Agreement among Codina Group, Inc., Armando
Codina, St. Joe Corporation and Weeks Realty Services, Inc. dated
as of February 24, 1998.
10.19#### Shareholders' Agreement among Codina Group, Inc., Armando Codina,
St. Joe Corporation and Weeks Realty Services, Inc. dated as of
February 24, 1998.
11.1 Computation of earnings per Common Unit.
21.1 List of subsidiaries of the Registrant.
23.1 Consent of Arthur Andersen LLP regarding Weeks Realty, L.P.'s S-3,
file No. 333-32755.
27.1 Financial Data Schedule for the year ended December 31, 1997.
27.2 Financial Data Schedule for the year ended December 31, 1996, as
restated for the implementation of SFAS 128.
27.3 Financial Data Schedule for the nine months ended September 30,
1997, as restated for the implementation of SFAS 128.
* Filed as an exhibit to the Company's Current Report on Form 8-K dated
November 1, 1996.
** Filed as an exhibit to the Company's Current Report on Form 8-K dated
December 31, 1996.
*** Filed as an exhibit to the Company's Annual Report on Form 10-K for
the year ended December 31, 1994.
**** Filed as an exhibit to the Company's Current Report on Form 8-K dated
January 9, 1998.
***** Filed as an exhibit to the Company's Registration Statement on Form 8-A
dated March 17, 1998.
# Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 31, 1995.
## Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995.
### Filed as an exhibit to the Company's Current Report on Form 8-K dated
August 9, 1996.
#### Filed as an exhibit to the Company's Current Report on Form 8-K dated
March 17, 1998.
+ Filed as an exhibit to the Company's Quarterly Report on Form 10-Q for
the quarterly period ended September 30, 1996.
+* Filed as an exhibit to the Company's Current Report on Form 8-K dated
July 12, 1995.
++ Filed as an exhibit to the Company's Current Report on Form 8-K dated
May 7, 1997.
+++ Filed as an exhibit to the Operating Partnership's Quarterly Report on
Form 10-Q for the quarterly period ended September 30, 1997.
++++ Filed as an exhibit to the Company's Current Report on Form 8-K
dated October 7, 1997.
<PAGE>
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WEEKS REALTY, L.P.
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF WEEKS REALTY, L.P. (the "Fourth Amendment"), dated as of August
1, 1997, is entered into by Weeks GP Holdings, Inc., as general partner (the
"General Partner") of Weeks Realty, L.P. (the "Partnership"), for itself and on
behalf of the Limited Partners of the Partnership.
RECITALS
--------
WHEREAS, on the date hereof, Harold S. Lichtin Family Limited Partnership,
a North Carolina limited partnership (the "Family Partnership"), has acquired
119,293 Partnership Units from Perimeter Park West Associates Limited
Partnership, a North Carolina limited partnership; 15,380 Partnership Units from
Regency Forest, LLC, a North Carolina limited liability company; 243,217
Partnership Units from Harold S. Lichtin, an individual resident of North
Carolina; and 1,228 Partnership Units from Noel A. Lichtin, an individual
resident of North Carolina;
WHEREAS, the Family Partnership has agreed pursuant to that certain
Agreement of Substitution dated as of the date hereof to be bound by all of the
terms, conditions and other provisions of the Second Amended and Restated
Agreement of Limited Partnership of the Partnership, as amended (the
"Partnership Agreement"); and
WHEREAS, pursuant to the Partnership Agreement (including, without
limitation, Section 9.2 and Section 15.7(b)(ii) thereof), the General Partner is
authorized (without the consent of any Limited Partner) to admit such
substituted Limited Partners to the Partnership as are determined by the General
Partner to be appropriate.
NOW THEREFORE, in consideration of the premises and for good and valuable
consideration, the General Partner hereby amends the Partnership Agreement to
add the Family Partnership as a substituted Limited Partner of the Partnership
on the terms and conditions set forth in the Partnership Agreement. The
Percentage Interests of all of the Partners have been revised and are as set
forth on Exhibit A attached hereto.
---------
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Partnership Agreement. Except as modified
herein, all covenants, terms and conditions of the Partnership Agreement shall
remain in full force and effect, which covenants, terms and conditions the
General Partner hereby ratifies and affirms.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Fourth Amendment as
of the 1st day of August, 1997.
WEEKS GP HOLDINGS, INC.
By:
--------------------------------------
Name:
Title:
<PAGE>
Exhibit A
---------
PARTNERSHIP UNITS/PERCENTAGE INTERESTS
All Partners
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----------- -------------------
<S> <C> <C>
Weeks GP Holdings, Inc. 237,503 1.041%
Weeks LP Holdings, Inc. 17,446,123 76.434%
NWI Warehouse Group, L.P. 1,833,749 8.034%
A. Ray Weeks, Jr. 614,079 2.690%
John P. Weeks 239,791 1.051%
Marsha L. Weeks 228,047 0.999%
Trust U/W/1/ 212,663 0.932%
Patricia L. Weeks 206,607 0.905%
Deborah Weeks Felker 198,339 0.869%
Trust B/2/ 187,492 0.821%
Weeks Horizon Corp. 116,012 0.508%
Oakdale Land Management, Inc. 110,493 0.484%
Weeks Hillside Corp. 78,145 0.342%
Thomas D. Senkbeil 52,817 0.231%
Weeks Southridge Corp. 42,993 0.188%
Forrest W. Robinson 28,877 0.127%
Harry T. Weeks 27,535 0.121%
Louis C. Robinson 20,016 0.088%
Buckley & Company Real Estate, Inc. 20,000 0.088%
HV, Inc. 17,074 0.075%
Clyde H. Duckett 5,627 0.025%
John C. Atwell 5,627 0.025%
Robert G. Cutlip 5,138 0.023%
Klay W. Simpson 4,110 0.018%
Helen B. Weeks 163,048 0.714%
Mark W. Flowers 1,541 0.007%
</TABLE>
- -----------
/1/ A. R. Weeks, Jr., as Trustee U/W of Alvin Ray Weeks dated March 1, 1983,
f/b/o Marsha Lee Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia
Louise Weeks and John Phillip Weeks.
/2/ Harry T. Weeks, A. R. Weeks, Jr., and Martha Patterson Weeks as Trustees
under Trust Agreement dated 10/27/76, as amended, f/b/o Marsha Lee Weeks,
A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise Weeks and John
Phillip Weeks.
<PAGE>
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----------- -------------------
<S> <C> <C>
Weeks Management Corp. 1,142 0.005%
RTF Management Corp. 257 0.001%
Marie Antoinette Robertson 267,132 1.170%
Harold S. Lichtin 20,024 0.088%
Perimeter Park West Associates
Limited Partnership 64,689 0.283%
Amy R. Ehrman 2,053 0.009%
Roland G. Robertson 2,053 0.009%
Roderick Duncan 2,928 0.013%
Timothy Nicholls 1,757 0.008%
James McCabe 39 0.000%
Anne Broaddus 1,561 0.007%
Regency Forest LLC 15,380 0.067%
Harold S. Lichtin Family Limited Partnership 342,569 1.501%
---------- --------
Total 22,825,030 100.000%
========== ========
</TABLE>
- -----------
<PAGE>
SIXTH AMENDMENT
TO THE
SECOND AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF
WEEKS REALTY, L.P.
THIS SIXTH AMENDMENT TO THE SECOND AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF WEEKS REALTY, L.P. (the "Amendment") is entered into as
of the 27th day of October, 1997, by and among WEEKS GP HOLDINGS, INC., a
Georgia corporation (the "General Partner"), WEEKS CORPORATION, a Georgia
corporation (the "Company"), and GB PARTNERS, LTD., a Florida limited
partnership (the "Contributor").
RECITALS
--------
Weeks Realty, L.P. (the "Partnership") is a Georgia limited partnership.
The General Partner is the sole general partner of the Partnership and is a
wholly owned subsidiary of the Company. The partnership agreement of the
Partnership is that certain Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P., dated as of October 30, 1996, as amended by
the First Amendment to the Partnership Agreement dated November 1, 1996, the
Second Amendment to the Partnership Agreement dated December 31, 1996, the Third
Amendment to the Partnership Agreement dated January 31, 1997, the Fourth
Amendment to the Partnership Agreement dated August 1, 1997 and the Fifth
Amendment to the Partnership Agreement dated October 7, 1997 (the "Partnership
Agreement"). Capitalized terms used herein without definition shall have the
meanings ascribed to them in the Partnership Agreement.
Pursuant to the agreements and instruments listed or referred to on Exhibit
A hereto (the ("Transaction Documents"), and the transactions effected by the
Transaction Documents, effective as of the date hereof the Contributor has
<PAGE>
contributed, directly or indirectly, certain properties to the capital of the
Partnership.
Pursuant to that certain contribution agreement executed on the date hereof
by and among the Contributor, the Partnership and certain other parties
identified therein (the "Contribution Agreement"), the Partnership will
contribute such properties, through one or more steps, to an entity controlled,
directly or indirectly, by the Partnership.
Pursuant to the Partnership Agreement (including, without limitation,
Section 9.3 and Section 15.7(b)(ii) thereof), the General Partner is authorized
(without the consent of any Limited Partner) to admit additional Limited
Partners to the Partnership for such Capital Contributions as are determined by
the General Partner to be appropriate, and to amend the Partnership Agreement to
reflect such admissions.
The General Partner wishes to amend the Partnership Agreement as set forth
herein to reflect the admission of the Contributor as a Limited Partner of the
Partnership, and the Contributor wishes to enter into this Amendment to
memorialize its agreement as to certain matters relating to its becoming a
Limited Partner of the Partnership.
AGREEMENT
---------
In consideration of the circumstances referred to in the Recitals, the
consummation of the transactions effected pursuant to the Transaction Documents,
the mutual covenants and agreements contained herein, and other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
1. Admission. The Contributor is hereby admitted to the Partnership as a
---------
Limited Partner, effective as of the date hereof, and the Contributor hereby
-2-
<PAGE>
agrees to be bound by the Partnership Agreement, including, but not limited to,
the transfer restrictions contained in Article IX thereof.
2. Capital Contributions. The Contributor has made, as of the date
---------------------
hereof, the Capital Contribution set forth on Exhibit B hereto. The agreed to
gross fair market values of any property other than money contributed by the
Contributor, which shall be such property's initial Gross Asset Value, are shown
on Exhibit B.
3. Initial Partnership Units; Rights.
---------------------------------
(a) The Partnership Units attributable to the Partnership Interest of
the Contributor, effective upon its admission as a Limited Partner at the
date hereof, are as set forth on Exhibit B hereto, and the Partnership
Agreement is hereby amended to reflect the Contributor having such
Partnership Units.
(b) The Partnership does hereby grant to the Contributor, and the
Contributor does hereby accept, the right, but not the obligation (herein
such rights being sometimes referred to as the "Rights"), to require the
Partnership to redeem all or a portion of the Partnership Units issued to
it pursuant to the Transaction Documents, on the terms and subject to the
conditions and restrictions contained in Exhibit D hereto. The Rights are
governed solely by this Amendment and Exhibit D hereto, and the Contributor
shall have no rights with respect to the "Rights" provided for in Section
11.1 and Exhibit B-1 to the Partnership Agreement. The Rights granted
hereunder may be exercised by the Contributor, on the terms and subject to
the conditions and restrictions contained in Exhibit D hereto, upon
delivery to the Partnership of a Conversion Exercise Notice, in the form of
Schedule 1 attached to Exhibit D, which notice shall specify the
Partnership Units with respect to which the Rights are being exercised.
Once delivered, the Conversion Exercise Notice shall be irrevocable,
subject to compliance by the General Partner and the Partnership with the
terms of the Rights.
-3-
<PAGE>
4. Restated Percentage Interests. After giving effect to the admission
-----------------------------
of the Contributor as a Limited Partner at the date hereof, the Percentage
Interests of all of the Partners have been revised and are as reflected on
Exhibit C hereto, and the Partnership Agreement is hereby amended accordingly.
5. [INTENTIONALLY OMITTED.]
6. Adjustments to Partnership Units. The parties acknowledge that the
--------------------------------
Transaction Documents provide for adjustments to the Partnership Units of the
Contributor in certain circumstances, and further provide that the Contributor
Partnership Interest and Units, and the resulting restated Percentage Interests
of all of the Partners, may not be capable of determination at the time a
Capital Contribution is made after the date hereof. At the times of adjustment
and final determination provided for in the Transaction Documents, the General
Partner shall supplement this Amendment by executing and attaching hereto either
additional supplements to Exhibits B and C, or amended and restated versions of
prior supplements to Exhibits B and C, as applicable. Such supplements shall be
in accordance with the terms of the Transaction Documents. The Partnership
Agreement shall be deemed to be amended as reflected in each such supplement to
this Amendment.
7. Proration of Distributions. Notwithstanding any contrary provision of
--------------------------
the Partnership Agreement, including, without limitation, Section 6.2 thereof,
the Contributor agrees that the distribution of Net Operating Cash Flow made for
the calendar quarter in which the Units are issued shall be equal to the amount
of Net Operating Cash Flow otherwise distributable with respect to such under
the terms of the Partnership Agreement, multiplied by a fraction, the numerator
of which is the number of calendar days beginning on the date of issuance of the
Units and ending on the last day of such calendar quarter and the denominator of
which is the total number of days in the calendar quarter in which the Units are
issued.
-4-
<PAGE>
8. Representations and Warranties.
------------------------------
(a) Contributor's Representations. The Contributor hereby reaffirms
-----------------------------
and makes to each of the Partnership and the General Partner those
representations and warranties contained in Section 16 of the Contribution
Agreement. In addition, the Contributor hereby represents and warrants to
the Partnership and the General Partner that (i) such Contributor is
acquiring the Partnership Units for such Contributor's own account and not
with a view to, or for sale in connection with, the "distribution," as such
term is used in Section 2(11) of the Securities Act of 1933, as amended
(the "Securities Act"), of any of the Partnership Units in violation of the
Securities Act; (ii) such Contributor is an "accredited investor," as that
term is defined in Rule 501(a) of Regulation D promulgated under the
Securities Act; (iii) such Contributor understands that the Partnership
Units have not been registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act
which depends upon, among other things, the nature of the investment intent
and the accuracy of such Contributor's representations as expressed herein;
(iv) such Contributor has had an opportunity to discuss the Partnership's
business, management and financial affairs with the Partnership's
management and the opportunity to review the Partnership's financial
records; (v) such Contributor understands and acknowledges that no public
market now exists for any of the Partnership Units and that there can be no
assurance that a public market will ever exist for the Partnership Units;
and (vi) such Contributor has such knowledge and experience in financial
and business matters, or has been adequately advised by such Contributor's
financial representatives, that such Contributor is capable of evaluating
the merits and risks of the purchase of the Partnership Units pursuant to
this Agreement and of protecting such Contributor's interests in connection
herewith.
(b) No Liens. The Contributor represents and warrants to the
--------
Partnership and the General Partner that at the date hereof none of the
Partnership Units issued or issuable to the Contributor pursuant to the
Transaction Documents, and none of the shares of Common Stock that may be
-5-
<PAGE>
acquired by the Contributor upon exercise of Rights, is subject to any
Lien, other than the security interest created by paragraph 11 hereof.
(c) Definition. All of the representations, warranties, covenants and
----------
agreements of the Contributor referred to in this paragraph 8 are referred
to collectively as the "Representations and Warranties."
(d) General Partner Representations. The General Partner represents
-------------------------------
and warrants to the Contributor as follows:
(i) Organization. The General Partner is duly incorporated,
------------
validly existing and in good standing under the laws of the State of
Georgia.
(ii) Due Authorization; Binding Agreement. The execution,
------------------------------------
delivery and performance of this Amendment by the General Partner have
been duly and validly authorized by all necessary action of the
General Partner and the Partnership. This Amendment has been duly
executed and delivered by the General Partner and constitutes a legal,
valid and binding obligation of the General Partner and the
Partnership, enforceable against the General Partner and the
Partnership in accordance with the terms hereof.
(iii) Consents and Approvals. No consent, waiver, approval or
----------------------
authorization of, or filing, registration or qualification with, or
notice to, any governmental unit or any other Person is required to be
made, obtained or given by the General Partner in connection with the
execution, delivery and performance of this Amendment, other than
consents, waivers, approvals or authorizations that have been obtained
prior to the date hereof.
-6-
<PAGE>
(iv) Partnership Units. The Partnership Units issued pursuant
-----------------
to the Transaction Documents are duly authorized and, when issued in
accordance with the Transaction Documents, will be duly issued, fully
paid and nonassessable and will be unencumbered except for the
security interest created by paragraph 11 hereof.
9. Survival of Representations and Warranties. All of the
------------------------------------------
Representations and Warranties shall survive the consummation of the
transactions contemplated by the Transaction Documents; provided, however, that
no claim for a breach of any Representation or Warranty may be maintained by the
Partnership, the Company or the General Partner unless the Partnership, the
Company or the General Partner shall have delivered a written notice ("Notice of
Breach") specifying the details of such claimed breach to the Contributor or
before the first anniversary of the date hereof (the "Survival Period").
10. Indemnification.
---------------
(a) The Contributor indemnifies and holds harmless the Partnership,
the Company and the General Partner against and from all liabilities,
demands, claims, actions or causes of action, assessments, losses, fines,
penalties, costs, damages and expenses (including, without limitation,
reasonable attorneys' and accountants' fees and expenses actually incurred)
sustained or incurred by the Partnership, the Company or the General
Partner as a result of or arising out of any inaccuracy in or breach of a
Representation or Warranty.
(b) The Partnership, the Company and the General Partner shall not be
entitled to indemnification hereunder unless a Notice of Breach has been
delivered by the Partnership, the Company or the General Partner to the
Contributor.
(c) If a claim for indemnification is asserted by the Partnership, the
Company or the General Partner against the Contributor, the Contributor
shall have the right, at its own expense, to participate in the defense of
-7-
<PAGE>
any claim, action or proceeding asserted against the Partnership, the
Company or the General Partner that resulted in the claim for
indemnification, and if such right is exercised, the parties shall
cooperate in the defense of such action or proceeding.
(d) Indemnification of the Partnership, the Company and the General
Partner pursuant to this paragraph 10 shall be the exclusive remedy of the
Partnership, the Company and the General Partner for any breach of any
Representation or Warranty contained in this Amendment. Nothing contained
herein shall limit any remedy the Partnership (or any affiliate of the
Partnership including, without limitation, any affiliate of the Partnership
as determined with respect to the voting or economic control held by or in
the Partnership) may have under the Transaction Documents, including,
without limitation, the remedy of specific performance for any failure by
the Contributor to contribute a property or otherwise limit any remedy the
Partnership, the Company or the General Partner may have for any commission
of fraud made by the Contributor.
11. Security and Remedies.
---------------------
(a) The Contributor hereby grants to the Partnership a lien upon and a
continuing security interest in the Partnership Units issued to it pursuant
to the Transaction Documents and the shares of Common Stock acquired by it
upon exercise of Rights with respect to such Partnership Units (the
"Collateral"), which shall be security for the indemnification obligations
of the Contributor under paragraph 10 hereof. Except as otherwise provided
in this Amendment, the indemnification obligations of the Contributor
hereunder with respect to breaches of Representations and Warranties shall
be payable out of the Contributor's entire Collateral; provided, however,
that the Contributor may satisfy all or any part of such indemnification
obligation of the Contributor in cash if the Contributor so elects. Any
Transfer by the Contributor of its Collateral shall be subject to the lien
and security interest granted hereby.
-8-
<PAGE>
(b) In the event the General Partner asserts that the Contributor has
an indemnification obligation to the Partnership, the Company or the
General Partner under paragraph 10 hereof, the General Partner shall
deliver written notice (the "Indemnification Notice") to the Contributor
describing in reasonable detail the circumstances giving rise to such
obligation and the amount thereof. If, within thirty (30) days after the
receipt of an Indemnification Notice, the Contributor delivers written
notice to the General Partner indicating that the Contributor disputes the
circumstances giving rise to or the amount of such claimed indemnification
obligation, the General Partner may submit such matter for binding
arbitration in accordance with the provisions of Article XIV of the
Partnership Agreement by delivering a Demand Notice to the Contributor
pursuant to such Article XIV. If, after receiving timely notice of a
dispute hereunder from the Contributor, the General Partner fails to so
submit the matter for arbitration within twenty (20) days after receipt of
such notice from the Contributor, then the Contributor shall be relieved of
the claimed indemnification obligation described in the Indemnification
Notice. In the event the Contributor (i) receives an Indemnification
Notice and fails to timely deliver notice to the General Partner of its
dispute as to the indemnification obligation and fails to make payment
within thirty (30) days after delivery of an Indemnification Notice or (ii)
has an indemnification obligation to the Partnership or the General Partner
under paragraph 10 hereof as determined pursuant to Article XIV of the
Partnership Agreement, and does not satisfy such obligation within ten (10)
days after the decision rendered in the arbitration, then, in either event,
the Partnership shall have any and all remedies of a secured creditor under
the Uniform Commercial Code, and, in addition thereto, at the election of
the Partnership, the Partnership shall, to the extent permitted by law, be
deemed, without the payment of any further consideration or the taking of
any further action required by the Contributor, to have acquired from the
Contributor such portion of the Collateral as shall be equal in value
(based, in the case of Partnership Units, on the Current Per Share Market
Price as computed as of the date immediately preceding such deemed
acquisition of the number of shares of Common Stock for which such
Partnership Units could be redeemed if the General Partner assumed the
-9-
<PAGE>
redemption obligation and elected to pay the Redemption Price (as defined
in Exhibit D) in shares of Common Stock (assuming the ownership limits in
the Articles of Incorporation would not prohibit the issuance of any such
shares of Common Stock to the Contributor), and, in the case of shares of
Common Stock, on the Current Per Share Common Stock Price computed as of
the date immediately preceding such deemed acquisition) to the amount
recoverable from the Contributor under paragraph 10 hereof. In the event
the Partnership shall have acquired from the Contributor any Collateral
pursuant to this paragraph 11, the General Partner shall deliver written
notice to the Contributor within ten (10) days thereafter identifying the
specific Collateral acquired and, if such Collateral consists of
Partnership Units, the Percentage Interest of the Contributor following
such acquisition. Unless and until the Partnership shall have acquired
from the Contributor any Collateral pursuant to this paragraph 11, the
Contributor shall retain all rights with respect to the Collateral not
expressly limited herein or in the Partnership Agreement, including,
without limitation, rights to distributions provided for in the Partnership
Agreement and rights to dividends on shares of Common Stock. Contributor
hereby agrees to take any and all actions and to execute and deliver any
and all documents or instruments necessary to perfect the security interest
created by this Amendment, including delivering the certificates
representing the Partnership Units or shares of Common Stock to the General
Partner.
(c) On the first day immediately following the expiration of the
Survival Period as defined in paragraph 9 hereof (or, if a Notice of Breach
has been delivered to the Contributor prior to such date, then on the first
day immediately following the resolution of such Notice of Breach) the
Contributor will be relieved of the restrictions on transferability
provided for by this Amendment (except that the transfer restrictions
contained in the Partnership Agreement shall continue) and the security
interest in the Collateral shall terminate without further action, and the
Partnership, at the request of the Contributor, shall promptly execute and
deliver any document or instrument reasonably requested by the Contributor
to evidence such termination.
-10-
<PAGE>
12. Recourse. Notwithstanding anything contained in this Amendment or in
--------
the Partnership Agreement to the contrary, the recourse of the General Partner ,
the Company or the Partnership under paragraph 10 hereof with respect to
breaches of Representations and Warranties of the Contributor shall not be
limited to such Contributor's Collateral.
13. Restriction on Transfer. In connection with the security interest
-----------------------
granted by the Contributor under paragraph 11 hereof, the Contributor agrees
that any shares of Common Stock and any portion of such Contributor's
Partnership Interest included in the Collateral shall not be Transferred without
the consent of the General Partner; provided, however, that the Contributor may
Transfer all or any portion of such shares of Common Stock or Partnership
Interest to an Affiliate of such person (so long as such Affiliate remains an
Affiliate of such person), subject to the prior security interest granted in
paragraph 11 hereof and to the restrictions contained in Article IX of the
Partnership Agreement. Upon exercise of the Rights with respect to any
Partnership Units included in the Contributor's Collateral, the Partnership, in
perfection of the security interest herein granted, shall retain the
certificate(s) representing the portion of the Common Stock issued upon such
exercise that is included in such Collateral. If any portion of the Partnership
Interest of the Contributor included in such Contributor's Collateral is
represented by certificates, the Partnership shall retain such certificates in
perfection of the security interest herein granted. On the first day
immediately following the expiration of the Survival Period as defined in
paragraph 9 hereof (or, if a Notice of Breach has been delivered to the
Contributor prior to such date, then on the first day immediately following the
resolution of such Notice of Breach) the Contributor will be relieved of the
restrictions on transferability provided for by this paragraph 13 without
further action, and the Partnership, at the request of the Contributor, shall
promptly execute and deliver any document or instrument reasonably requested by
the Contributor to evidence such termination.
14. Miscellaneous. This Amendment shall be governed by and construed in
-------------
conformity with the laws of the State of Georgia. For the purposes of the
notice provisions of the Partnership Agreement, the address of the Contributor
is as set forth on the signature page hereof. Except as expressly amended
hereby, the Partnership Agreement shall remain in full force and effect. This
-11-
<PAGE>
Amendment and all the terms and provisions hereof shall be binding upon and
shall inure to the benefit of the parties, and their legal representatives,
heirs, successors and permitted assigns.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Amendment
as of the date first above written.
WEEKS REALTY, L.P., a Georgia limited
partnership
By: Weeks GP Holdings, Inc., a Georgia
corporation, its Sole General Partner
By:
--------------------------------------
Name:
Title:
GB PARTNERS, LTD., a Florida limited
partnership
By:
--------------------------------------
Name:
Title:
Address:
Solely to evidence its agreement to its undertakings
in Exhibit D hereto:
WEEKS CORPORATION
By:
---------------------------------------
Name:
Title:
-13-
<PAGE>
Exhibit A
---------
TRANSACTION DOCUMENTS
-14-
<PAGE>
Exhibit B
---------
CAPITAL CONTRIBUTION:
- --------------------
GB Partners, Ltd. Capital Contribution: All assets, properties and businesses
transferred from GB Partners, Ltd. at
October 27, 1997 to the Partnership
pursuant to the Transaction Documents
(as defined in the foregoing Amendment)
GROSS FAIR MARKET VALUE OF PROPERTY CONTRIBUTIONS:
- -------------------------------------------------
Gross Fair Market Value of all
property other than money included in
GB Partners, Ltd. Contribution: $250,000.00
NO. OF UNITS: 7,633
- ------------
-15-
<PAGE>
Exhibit C
---------
PARTNERSHIP UNITS/PERCENTAGE INTERESTS
All Partners
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----- -------------------
<S> <C> <C>
Weeks GP Holdings, Inc. 237,503 1.037%
Weeks LP Holdings, Inc. 17,464,548 76.236%
NWI Warehouse Group, L.P. 1,833,749 8.005%
A. Ray Weeks, Jr. 614,079 2.681%
John P. Weeks 239,791 1.047%
Marsha L. Weeks 228,047 0.995%
Trust U/W/1/ 212,663 0.928%
Patricia L. Weeks 206,607 0.902%
Deborah Weeks Felker 198,339 0.866%
Trust B/2/ 187,492 0.818%
Weeks Horizon Corp. 116,012 0.506%
Oakdale Land Management, Inc. 110,493 0.482%
Weeks Hillside Corp. 78,145 0.341%
Thomas D. Senkbeil 52,817 0.231%
Weeks Southridge Corp. 42,993 0.188%
Forrest W. Robinson 28,877 0.126%
Harry T. Weeks 27,535 0.120%
Louis C. Robinson 20,016 0.087%
Buckley & Company Real Estate, Inc. 20,000 0.087%
HV, Inc. 17,074 0.075%
Clyde H. Duckett 5,627 0.025%
John C. Atwell 5,627 0.025%
Robert G. Cutlip 5,138 0.022%
Klay W. Simpson 4,110 0.018%
Helen B. Weeks 163,048 0.712%
Mark W. Flowers 1,541 0.007%
- ---------------------
</TABLE>
/1/ A. R. Weeks, Jr., as Trustee U/W of Alvin Ray Weeks dated March 1, 1983,
f/b/o Marsha Lee Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise
Weeks and John Phillip Weeks.
/2/ Harry T. Weeks, A. R. Weeks, Jr., and Martha Patterson Weeks as Trustees
under Trust Agreement dated 10/27/76, as amended, f/b/o Marsha Lee Weeks, A. R.
Weeks, Jr., Deborah Weeks Felker, Patricia Louise Weeks and John Phillip Weeks.
C-1
<PAGE>
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ----- -------------------
<S> <C> <C>
Weeks Management Corp. 1,142 0.005%
RTF Management Corp. 257 0.001%
Marie Antoinette Robertson 267,419 1.167%
Harold S. Lichtin 28,154 0.123%
Noel A. Lichtin 153 0.001%
Perimeter Park West Associates
Limited Partnership 128,797 0.562%
Amy R. Ehrman 2,053 0.009%
Roland G. Robertson 2,053 0.009%
Roderick Duncan 2,928 0.013%
Timothy Nicholls 1,757 0.008%
James McCabe 39 0.000%
Anne Broaddus 1,561 0.007%
Harold S. Lichtin Family Limited
Partnership 342,569 1.495%
GB Partners, Ltd. 7,633 0.033%
---------- --------
Total 22,908,386 100.000%
========== ========
</TABLE>
C-2
<PAGE>
Exhibit D
---------
RIGHTS TERMS
------------
The Rights granted by the Partnership to the Contributor (referred to in this
Exhibit as "Limited Partners"), pursuant to paragraph 3(b) of the foregoing
Amendment shall be subject to the following terms and conditions:
1.
Definitions. Capitalized terms used in this Exhibit without definition shall
- -----------
have the meanings given to them in the Partnership Agreement or the foregoing
Amendment, as applicable, and the following terms and phrases shall, for
purposes of this Exhibit D, the Partnership Agreement and the foregoing
Amendment, have the meanings set forth below:
"Cash Purchase Price" shall have the meaning set forth in Paragraph 4 hereof.
-------------------
"Closing Notice" shall mean the written notice to be given by the General
--------------
Partner to the Exercising Partner(s) in response to the receipt by the General
Partner of a Conversion Exercise Notice from such Exercising Partner(s). The
form of the Closing Notice is attached hereto as Schedule 2.
"Computation Date" shall mean the date on which a Conversion Exercise Notice is
----------------
delivered to the General Partner.
"Conversion Exercise Notice" shall have the meaning set forth in Paragraph 2
--------------------------
hereof.
"Conversion Factor" shall mean 100%, provided that such factor shall be adjusted
-----------------
in accordance with the provisions of paragraph 10 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, or
------------
any successor statute.
"Exercising Partners" shall have the meaning set forth in Paragraph 2 hereof.
-------------------
"Offered Partnership Units" shall mean the Partnership Units of the Exercising
-------------------------
Partner(s) identified in a Conversion Exercise Notice that, pursuant to the
exercise of Rights, must be redeemed by the Partnership or acquired by the
General Partner and/or Weeks LP Holdings under the terms hereof.
"Redemption Price" shall mean the Cash Purchase Price or the Stock Purchase
----------------
Price.
"Rights" shall have the meaning set forth in paragraph 3(b) of the foregoing
------
Amendment.
<PAGE>
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
--------------
successor statute.
"Stock Purchase Price" shall have the meaning set forth in Paragraph 4 hereof.
--------------------
2.
Delivery of Conversion Exercise Notices. Any one or more Limited Partners
- ---------------------------------------
("Exercising Partners") may, subject to the limitations set forth herein,
deliver to the General Partner written notice (the "Conversion Exercise Notice")
pursuant to which such Exercising Partners elect to exercise the Rights. The
form of Conversion Exercise Notice is attached hereto as Schedule 1.
3.
Limitations on Exercise of Rights; Deemed Exercise. No Conversion Exercise
- --------------------------------------------------
Notice, with respect to any Unit may be delivered to the General Partner by a
Limited Partner until the later of (i) the first anniversary of the date of each
such issuance, or (ii) the date on which either (A) there is a registration
statement effective under the Securities Act with respect to the issuance of any
shares of Common Stock that could be issued to such Limited Partner pursuant to
such exercise of Rights and with respect to any resale by such Limited Partner
of any of such shares of Common Stock, or (B) in the opinion of counsel to
Weeks, shares of Common Stock that could be issued to such Limited Partner
pursuant to such exercise of Rights may be issued without registration under the
Securities Act.
A Limited Partner may not exercise the Rights for less than one thousand (1,000)
Partnership Units or, if such Limited Partner holds less than one thousand
(1,000) Partnership Units, all of the Partnership Units held by such Limited
Partner.
Neither the General Partner nor the Partnership shall have any obligation or
authority to redeem or purchase Offered Partnership Units to the extent that
issuance of shares of Common Stock in payment of the Stock Purchase Price for
any part of the Offered Partnership Units would result (i) in the violation of
the General Ownership Limit (as such term is defined in the Articles of
Incorporation), (ii) would cause Weeks to fail the stock ownership test of
Section 856(a)(6) of the Code, or (iii) would otherwise cause Weeks to fail to
qualify as a REIT; provided that in any such case, the General Partner or the
Partnership shall purchase for cash those offered Partnership Units which may
not be redeemed with shares of Common Stock. Each Exercising Partner shall
provide to the General Partner such information as the General Partner may
request regarding such Exercising Partner's actual and constructive ownership of
Common Stock (and of individuals, and entities related to such Exercising
Partner) in order for the General Partner to determine, in its sole discretion,
whether a purchase or redemption of the Offered Partnership Units for shares of
Common Stock would result in a violation of such restrictions.
If, after complying with all applicable provisions of the Partnership Agreement,
any Person with an ownership interest in any of the Contributor becomes the
owner of any Partnership Units previously owned by the any of the Contributor,
-2-
<PAGE>
such Person may exercise the Rights granted with respect to such Partnership
Units in accordance with the terms hereof.
4.
Computation of Redemption Price/Form of Payment. The Redemption Price payable
- -----------------------------------------------
by the Partnership to each Exercising Partner for the Offered Partnership Units
shall be payable, at the election of the General Partner, by the delivery by the
Partnership of the Redemption Price. Notwithstanding the foregoing, at the
election of the General Partner, the Redemption Price may be the Stock Purchase
Price for part of the Offered Partnership Units and the Cash Purchase Price for
the remainder of the Offered Partnership Units. The "Stock Purchase Price"
shall mean the number of shares of Common Stock equal to the product, expressed
as a whole number, of (i) the number of Offered Partnership Units, multiplied by
(ii) the Conversion Factor. The "Cash Purchase Price" shall mean an amount of
cash (in immediately available funds) equal to (i) the number of shares of
Common Stock that would be issued to the Exercising Partner if the Stock
Purchase Price were paid for such Offered Partnership Units, multiplied by (ii)
the Current Per Share Market Price computed as of the Computation Date. To the
extent the Partnership elects to pay the Stock Purchase Price, it shall obtain
the necessary shares of Common Stock in exchange for the issuance of additional
Partnership Interests to the General Partner, Weeks LP Holdings, or any
combination thereof, as determined by the General Partner in its sole
discretion, and the General Partner and/or Weeks LP Holdings shall obtain the
necessary shares of Common Stock in exchange for the issuance of additional
capital stock to Weeks.
5.
Closing; Delivery of Closing Notice. The closing of the redemption of Offered
- -----------------------------------
Partnership Units shall, unless otherwise mutually agreed, be held at the
principal office of the Partnership, as follows:
(a) Within ten (10) days after the receipt by the Partnership of the Conversion
Exercise Notice, the Partnership shall deliver a Closing Notice to the
Exercising Partner(s). The Closing Notice shall state a date for the closing of
the redemption of the Offered Partnership Units, which date shall not be later
than the later of (i) twenty (20) days after the receipt by the Partnership of
the Conversion Exercise Notice (forty-five (45) days as to the Offered
Partnership Units for which the Cash Purchase Price will be paid), and (ii) the
first (1st) business day after the expiration or termination of the waiting
period applicable to each Exercising Partner, if any, under the Hart-Scott Act.
(b) If applicable, the Closing Notice shall (i) specify the Partnership's
election to pay the Cash Purchase Price for some or all of the Offered
Partnership Units and (ii) set forth the computation of the Cash Purchase Price
to be paid by the Partnership to such Exercising Partner(s). The Cash Purchase
Price shall be paid by wire transfer of immediately available funds to such
account of the Exercising Partner as is designated in the Conversion Exercise
Notice.
-3-
<PAGE>
6.
Assumption by the General Partner and/or Weeks LP Holdings. Notwithstanding
- ----------------------------------------------------------
anything in this Exhibit D to the contrary, the General Partner, Weeks LP
Holdings or any combination thereof (an "Assumer" or, collectively, the
"Assumers") may, in the sole and absolute discretion of the General Partner,
assume directly and satisfy the exercise of a Right by paying the Electing
Partner the Redemption Price. In such event, the Assumers shall acquire the
Offered Partnership Units and shall be treated for all purposes of this
Agreement as the owner of such Partnership Units, which shall be held by the
Assumers in their respective existing capacities as general partner or Limited
Partners, as the case may be. In the event the General Partner shall exercise
the Assumers' right to satisfy a Right in the manner described in this Paragraph
6, the Partnership shall have no obligation to pay any amount to the Exercising
Partner with respect to such Exercising Partner's exercise of a Right; provided,
however, that the Partnership shall remain liable to the Exercising Partner to
the extent that any such Exercising Partner's Right is not fully satisfied; and
each of the Exercising Partner, the Partnership, and the Assumers shall treat
the transaction between the Assumers and the Exercising Partner as a sale of the
Exercising Partner's Partnership Units to the Assumers for federal income tax
purposes. To the extent the Assumers elect to pay the Stock Purchase Price,
they shall obtain the necessary shares of Common Stock in exchange for the
issuance of additional capital stock to Weeks. Each Exercising Partner agrees to
execute such documents as the General Partner may reasonably require in
connection with the issuance of Common Stock upon exercise of a Right.
7.
Closing Deliveries. At the closing, payment of the Redemption Price shall be
- ------------------
accompanied by proper instruments of transfer and assignment for the Offered
Partnership Units and by the delivery of (i) representations and warranties of
(A) the Exercising Partner with respect to its due authority to sell all of the
right, title and interest in and to the Offered Partnership Units and with
respect to the status of the Offered Partnership Units being sold, free and
clear of all Liens, and (B) the Partnership or the Assumers, as applicable, with
respect to due authority for the redemption or purchase of such Offered
Partnership Units, and (ii) to the extent that shares of Common Stock are issued
in payment of the Stock Purchase Price, (A) an opinion of counsel for Weeks,
reasonably satisfactory to the Exercising Partner(s), to the effect that such
shares of Common Stock have been duly authorized, are validly issued, fully-paid
and nonassessable, and (b) a stock certificate or certificates evidencing the
Common Stock to be issued and registered in the name of the Exercising
Partner(s) or its (their) designee.
8.
Covenants of Weeks. To facilitate the Partnership's and the Assumers' ability
- ------------------
to fully perform their obligations hereunder, Weeks covenants and agrees as
follows:
(a) At all times during the pendency of the Rights, Weeks shall reserve for
issuance such number of shares of Common Stock as may be necessary to enable
Weeks to issue shares of Common Stock in full payment of the Stock Purchase
-4-
<PAGE>
Price in regard to all Partnership Units that are from time to time outstanding
and with respect to which Rights exist.
(b) During the pendency of the Rights, the Limited Partners shall receive in a
timely manner all communications transmitted from time to time by Weeks to its
shareholders generally.
9.
Limited Partners' Covenants. Each Limited Partner covenants and agrees that all
- ---------------------------
Offered Partnership Units tendered in accordance with the exercise of Rights
shall be delivered free and clear of all Liens. Should any Liens exist or arise
with respect to such Offered Partnership Units, neither the Assumers nor the
Partnership shall be under any obligation to redeem or acquire the same unless,
in connection therewith, the General Partner has elected to pay a portion of the
Redemption Price in the form of the Cash Purchase Price in circumstances in
which such Cash Purchase Price will be sufficient to cause such existing Lien to
be discharged in full upon application of all or a part of the Cash Purchase
Price. The Partnership and the Assumers are expressly authorized to apply such
portion of the Cash Purchase Price as may be necessary to discharge such Lien in
full. Each Limited Partner further agrees that, in the event any state or local
property transfer tax is payable as a result of the transfer of its Offered
Partnership Units to the Partnership or the Assumers, such Limited Partner shall
assume and pay such transfer tax.
10.
Antidilution Provisions
- -----------------------
(a) The Conversion Factor shall be subject to adjustment from time to time
effective upon the occurrence of the following events and shall be expressed as
a percentage, calculated to the nearest one-thousandth of one percent (.001%):
(i) In case Weeks shall pay or make a dividend or other distribution on any
class of stock of Weeks in shares of Common Stock, the Conversion Factor in
effect at the opening of business on the day following the date fixed for the
determination of shareholders entitled to receive such dividend or other
distribution shall be increased in proportion to the increase in outstanding
shares of Common Stock resulting from such dividend or other distribution, such
increase to become effective immediately after the opening of business on the
day following the record date fixed for such dividend or other distribution.
(ii) In case outstanding shares of Common Stock shall be subdivided into a
greater number of shares, the Conversion Factor in effect at the opening of
business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely, in case the
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Conversion Factor in effect at the opening of business on the day
following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
-5-
<PAGE>
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
(iii) In case Weeks shall issue rights, options or warrants to all holders of
its shares of Common Stock entitling them to subscribe for or purchase Common
Stock or other securities convertible into shares of Common Stock at a price per
share less than the Current Per Share Market Price as of the day before the "ex
date" with respect to the issuance or distribution, each Limited Partner holding
Rights shall be entitled to receive such number of such rights, options or
warrants, as the case may be, as he would have been entitled to receive had he
exercised all of his then existing Rights immediately prior to the record date
for such issuance by Weeks. The term "ex date" shall mean the first date on
which shares of Common Stock trade regular way without the right to receive such
issuance or distribution.
(c) In case the shares of Common Stock shall be changed into the same or a
different number of shares of any class or classes of stock, whether by capital
reorganization, reclassification, or otherwise (other than subdivision or
combination of shares described in subparagraph (a) (ii) of this Paragraph),
then and in each such event the Limited Partners holding Rights shall have the
right thereafter to exercise their Rights for the kind and amount of shares and
other securities and property that would have been received upon such
reorganization, reclassification or other change by holders of the number of
shares of Common Stock with respect to which such Rights could have been
exercised immediately prior to such reorganization, reclassification or change.
(d) The General Partner may, but shall not be required to, make such adjustments
to the number of shares of Common Stock issuable upon exercise of Rights, in
addition to those required by this Paragraph 10, as the General Partner
considers to be advisable in order that any event treated for federal income tax
purposes as a dividend of stock or stock rights shall not be taxable to the
recipients. The General Partner shall have the power to resolve any ambiguity
or correct any error in the adjustments made pursuant to this Paragraph and its
actions in so doing shall be final and conclusive, absent manifest error by the
General Partner in taking such action.
11.
Fractions of Shares. No fractional shares of Common Stock shall be issued upon
- -------------------
exercise of Rights. If Rights shall be exercised with respect to more than one
Offered Partnership Unit at one time by the same Exercising Partner, the number
of full shares of Common Stock comprising the Stock Purchase Price (or the cash
equivalent amount thereof to the extent the Cash Purchase Price is paid) shall
be computed on the basis of the aggregate number of Offered Partnership Units.
Instead of any fractional share of Common Stock that would otherwise be issuable
upon exercise of Rights, the Partnership or the Assumers shall pay a cash
adjustment in respect of such fraction in an amount equal to the Cash Purchase
Price computed hereunder for such fraction of a share.
-6-
<PAGE>
12.
Notice of Adjustments of Conversion Factor. Whenever the Conversion Factor is
- ------------------------------------------
adjusted as herein provided:
(a) the General Partner shall compute the adjusted Conversion Factor in
accordance with Paragraph 10 hereof and shall prepare a certificate signed by
the chief financial officer or the Treasurer of the General Partner setting
forth the adjusted Conversion Factor and showing in reasonable detail the facts
upon which such adjustment is based; and
(b) notice stating that the Conversion Factor has been adjusted and setting
forth the adjusted Conversion Factor shall forthwith be mailed by the General
Partner to all holders of Rights at their last addresses on record under this
Agreement.
13.
Notice of Certain Corporate Actions.
- -----------------------------------
In case:
(a) Weeks shall declare a dividend (or any other distribution) on its Common
Stock payable otherwise than in cash; or
(b) Weeks shall authorize the granting to the holders of its Common Stock of
rights, options or warrants to subscribe for or purchase any shares of stock of
any class or of any other rights; or
(c) of any reclassification of the shares of Common Stock (other than a
subdivision or combination of its outstanding Common Stock, or of any
consolidation, merger or share exchange to which Weeks is a party and for which
approval of any shareholders of Weeks is required), or of the sale or transfer
of all or substantially all of the assets of Weeks; or
(d) of the voluntary or involuntary dissolution, liquidation or winding up of
Weeks;
then the General Partner shall cause to be mailed to all holders of Rights at
their last addresses on record under this Agreement, at least 20 days (or 12
days in any case specified in clause (a) or (b) above) prior to the applicable
record date hereinafter specified, a notice stating (i) the date on which a
record is to be taken for the purpose of such dividend, distribution, rights,
options or warrants, or, if a record is not to be taken, the date as of which
the holders of shares of Common Stock of record to be entitled to such dividend,
distribution, rights, options or warrants are to be determined, or (ii) the date
on which such reclassification, consolidation, merger, share exchange, sale,
transfer, dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders of shares of
Common Stock of record shall be entitled to exchange their shares for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, share exchange, sale, transfer, dissolution, liquidation
or winding up.
-7-
<PAGE>
14.
Provisions in Case of Consolidation, Merger or Sale of Assets.
- -------------------------------------------------------------
In case of any consolidation of Weeks with, or merger of Weeks into, any other
Person, any merger or consolidation of another Person into Weeks (other than a
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock), any acquisition of the
outstanding Common Stock by share exchange, or any sale or transfer of all or
substantially all of the assets of Weeks, the Person formed by such
consolidation or resulting from such merger or that acquires the outstanding
Common Stock or such assets of Weeks as the case may be, shall execute and
deliver to each holder of Rights an agreement providing that such holder shall
have the right thereafter, during the period such rights shall be exercisable
(which shall be at least as long as the period for which the Rights can be
exercised under the other provisions of this Agreement), to exercise the Rights
for the kind and amount of securities, cash and other property receivable upon
such consolidation, merger, share exchange, sale or transfer by a holder of the
number of shares of Common Stock for which the Rights might have been exercised
immediately prior to such consolidation, merger, share exchange, sale or
transfer, assuming both that (a) such holder of shares of Common Stock is not a
Person with which Weeks consolidated or into which Weeks merged or that merged
into Weeks, or that acquired the outstanding Common Stock by share exchange, or
to which such sale or transfer was made, as the case may be (a "Constituent
Person"), or an Affiliate of a Constituent Person, and that (b) such holder does
not exercise his right of election, if any, as to the kind or amount of
securities, cash or other property receivable upon such consolidation, merger,
share exchange, sale or transfer (provided that if the kind or amount of
--------
securities, cash and other property receivable upon such consolidation, merger,
share exchange, sale or transfer is not the same for each share of Common Stock
in respect of which such right of election, if any, is not exercised ("non-
electing Share"), then for the purpose of this Paragraph 14, the kind and amount
of securities, cash and other property receivable upon such consolidation,
merger, share exchange, sale or transfer by each non-electing Share shall be
deemed to be the kind and amount so receivable per non-electing Share by a
plurality of the non-electing Shares). Such agreement shall provide for
adjustments that, for events subsequent to the effective date of such agreement,
shall be as nearly equivalent as may be practicable to the adjustments provided
for in this Exhibit D.
The above provisions of this Paragraph 14 shall similarly apply to successive
consolidations, mergers, sales or transfers.
-8-
<PAGE>
SCHEDULE 1
CONVERSION EXERCISE NOTICE
--------------------------
To: Weeks Realty, L.P.
Reference is made to that certain Sixth Amendment (the "Amendment") to
the Second Amended and Restated Agreement of Limited Partnership of Weeks
Realty, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meanings set forth in Amendment. Pursuant to Exhibit D to the
Amendment, the undersigned, being a limited partner of the Partnership (an
"Exercising Partner"), hereby elects to exercise its Rights as to the number of
Offered Partnership Units specified opposite its name below:
Number of Offered
Exercising Limited Partner
--------------------------
Partnership Units
-----------------
---------------------------------------
Signature of Exercising Limited Partner
Date:
---------------------------------
<PAGE>
SCHEDULE 2
CLOSING NOTICE
--------------
To: Exercising Limited Partner(s)
Reference is made to that certain Sixth Amendment (the "Amendment") to
the Second Amended and Restated Agreement of Limited Partnership of Weeks
Realty, L.P. (the "Partnership"). Capitalized terms used but not defined herein
shall have the meaning set forth in Amendment. The closing of the redemption of
the Offered Partnership Units shall occur at _______, ________, Georgia, on
___________. Pursuant to Exhibit D to the Amendment, the Partnership hereby
notifies the Exercising Partner(s) that it has elected to pay the Cash Purchase
Price to the Exercising Partner(s) for the number of Offered Partnership Units
set forth below, and that the computation of the Cash Purchase Price is set
forth on an attachment hereto
NUMBER OF OFFERED CASH PURCHASE
EXERCISING PARTNER(S) PARTNERSHIP UNITS PRICE
- --------------------- ----------------- -------------
WEEKS REALTY, L.P.
By: Weeks GP Holdings, Inc., General Partner
By:
---------------------------
Title:
--------------------
Date:
--------------------------------
<PAGE>
SEVENTH AMENDMENT TO
SECOND AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF
WEEKS REALTY, L.P.
THIS SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF WEEKS REALTY, L.P. (the "Fourth Amendment"), dated as of December
30, 1997, and effective as of August 1, 1997, is entered into by Weeks GP
Holdings, Inc., as general partner (the "General Partner") of Weeks Realty, L.P.
(the "Partnership"), for itself and on behalf of the Limited Partners of the
Partnership.
RECITALS
--------
WHEREAS, on August 1, 1997, Harold S. Lichtin Family Limited Partnership, a
North Carolina limited partnership (the "Family Partnership"), acquired 119,293
Partnership Units from Perimeter Park West Associates Limited Partnership, a
North Carolina limited partnership ("PPW"); 15,380 Partnership Units from
Regency Forest, LLC, a North Carolina limited liability company ("Regency
Forest"); 243,217 Partnership Units from Harold S. Lichtin, an individual
resident of North Carolina; and 1,228 Partnership Units from Noel A. Lichtin, an
individual resident of North Carolina;
WHEREAS, the Family Partnership agreed pursuant to that certain Agreement
of Substitution dated as of August 1, 1997 to be bound by all of the terms,
conditions and other provisions of the Second Amended and Restated Agreement of
Limited Partnership of the Partnership, as amended (the "Partnership
Agreement");
WHEREAS, it has come to the attention of the General Partner, Regency
Forest and PPW that due to a scrivener's error, 15,380 Units owned by Regency
Forest and 21,169 Units owned by PPW were inadvertently transferred to the
Family Partnership;
WHEREAS, the General Partner, Regency Forest and PPW have consistently
operated as if the inadvertent transfers had not taken place for all internal
purposes, including without limitation, any allocations or distributions; and
WHEREAS, the General Partner, Regency Forest and PPW desire to correct and
amend the foregoing scrivener's error and to attach hereto a true, correct and
complete copy of the Percentage Interests of all of the Partners as of August 1,
1997.
NOW THEREFORE, in consideration of the premises and for good and valuable
consideration, the General Partner hereby attaches hereto as Exhibit A a
---------
schedule which sets forth the Percentage Interests of all of the Partners as of
August 1, 1997.
<PAGE>
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Partnership Agreement. Except as modified
herein, all covenants, terms and conditions of the Partnership Agreement shall
remain in full force and effect, which covenants, terms and conditions the
General Partner hereby ratifies and affirms.
<PAGE>
IN WITNESS WHEREOF, the undersigned has executed this Seventh Amendment as
of the December ___, 1997, effective as of August 1, 1997.
WEEKS GP HOLDINGS, INC.
By:_______________________________
Name:
Title:
<PAGE>
Exhibit A
---------
PARTNERSHIP UNITS/PERCENTAGE INTERESTS
All Partners
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ---------- --------------------
<S> <C> <C>
Weeks GP Holdings, Inc. 237,503 1.041%
Weeks LP Holdings, Inc. 17,446,123 6.434%
NWI Warehouse Group, L.P. 1,833,749 8.034%
A. Ray Weeks, Jr. 614,079 2.690%
John P. Weeks 239,791 1.051%
Marsha L. Weeks 228,047 0.999%
Trust U/W/1/ 212,663 0.932%
Patricia L. Weeks 206,607 0.905%
Deborah Weeks Felker 198,339 0.869%
Trust B/2/ 187,492 0.821%
Weeks Horizon Corp. 116,012 0.508%
Oakdale Land Management, Inc. 110,493 0.484%
Weeks Hillside Corp. 78,145 0.342%
Thomas D. Senkbeil 52,817 0.231%
Weeks Southridge Corp. 42,993 0.188%
Forrest W. Robinson 28,877 0.127%
Harry T. Weeks 27,535 0.121%
Louis C. Robinson 20,016 0.088%
Buckley & Company Real Estate, Inc. 20,000 0.088%
HV, Inc. 17,074 0.075%
Clyde H. Duckett 5,627 0.025%
John C. Atwell 5,627 0.025%
Robert G. Cutlip 5,138 0.023%
Klay W. Simpson 4,110 0.018%
Helen B. Weeks 163,048 0.714%
Mark W. Flowers 1,541 0.007%
- ------------
</TABLE>
/1/ A. R. Weeks, Jr., as Trustee U/W of Alvin Ray Weeks dated March 1, 1983,
f/b/o Marsha Lee Weeks, A. R. Weeks, Jr., Deborah Weeks Felker, Patricia Louise
Weeks and John Phillip Weeks.
/2/ Harry T. Weeks, A. R. Weeks, Jr., and Martha Patterson Weeks as Trustees
under Trust Agreement dated 10/27/76, as amended, f/b/o Marsha Lee Weeks, A. R.
Weeks, Jr., Deborah Weeks Felker, Patricia Louise Weeks and John Phillip Weeks.
<PAGE>
<TABLE>
<CAPTION>
Partner Units Percentage Interest
- ------- ---------- -------------------
<S> <C> <C>
Weeks Management Corp. 1,142 0.005%
RTF Management Corp. 257 0.001%
Marie Antoinette Robertson 267,132 1.170%
Harold S. Lichtin 20,024 0.088%
Perimeter Park West Associates
Limited Partnership 64,689 0.283%
Amy R. Ehrman 2,053 0.009%
Roland G. Robertson 2,053 0.009%
Roderick Duncan 2,928 0.013%
Timothy Nicholls 1,757 0.008%
James McCabe 39 0.000%
Anne Broaddus 1,561 0.007%
Regency Forest LLC 15,380 0.067%
Harold S. Lichtin Family Limited Partnership 342,569 1.501%
---------- -------
Total 22,825,030 100.000%
========== =======
</TABLE>
<PAGE>
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT (this "Agreement"), is made and entered into
on this 30th day of December, 1997, effective as of October 1, 1997, by and
between HAROLD S. LICHTIN, an individual resident of the State of North Carolina
(the "Consultant"), and WEEKS CORPORATION, a Georgia corporation (the
"Company");
W I T N E S S E T H:
--------------------
WHEREAS, the Company desires to hire Consultant as a consultant, and
Consultant desires to be hired as a consultant by the Company, on the terms and
conditions contained in this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement,
intending to be legally bound, hereby agree as follows:
(S) 1.
Engagement
----------
1.1. Engagement. Subject to the terms of this Agreement, the Company
----------
hereby engages Consultant as a consultant, and Consultant hereby accepts such
engagement as a part-time consultant with the Company. During the term of
Consultant's engagement under this Agreement, Consultant shall stand ready and
shall furnish to the Company, by telephone or in person, upon reasonable notice
and at reasonable times, services of an advisory or consulting nature with
respect to its business and affairs, including training, advising and assisting
Robert G. Cutlip (or such other individual as the Company may designate) with
respect to the day-to-day operations of the Company's activities in the Raleigh-
Durham-Chapel Hill area of North Carolina (the "Research Triangle"), assisting
and advising the Company with respect to certain strategic initiatives, not
limited to the Research Triangle, and making such internal and external
announcements as shall reasonably be requested by the Company. Notwithstanding
the foregoing, Consultant shall not be required to render services hereunder
during reasonable vacation periods or times of illness, disability or other
incapacity.
1.2. Appointment to the Board of Directors. During the term of this
-------------------------------------
Agreement, Consultant shall be nominated for election as a member of the Board
of Directors of the Company, Weeks GP Holdings, Inc. and Weeks LP Holdings,
Inc.; provided, however, the Company shall not be obligated to nominate
Consultant for election as a member of the Board of Directors of the foregoing
<PAGE>
entities if a change of control shall have occurred with respect to the Company.
In the event a change of control in the Company occurs and Consultant is not
nominated for election as member of the foregoing Boards of Directors, (i) the
lock-up periods applicable to Consultant set forth in each of the Registration
Rights and Lock-Up Agreements dated December 31, 1996 by and among Consultant,
the Company and the other parties therein identified shall expire immediately
and (ii) the conversion rights applicable to Consultant set forth in Exhibit D
to the Second Amendment to the Second Amended and Restated Agreement of Limited
Partnership of Weeks Realty, L.P. dated December 31, 1996 shall become
exercisable immediately.
1.3. License to Use "Lichtin" Name. Until October 1, 1998,
-----------------------------
Consultant hereby grants to the Company a royalty-free, non-exclusive license to
use, including a right to sublicense to affiliates of the Company, the names
"Lichtin", "Lichtin Properties", and any derivations thereof for the sole
purpose of (i) promoting the leasing and marketing of the Company's office,
warehouse, and research and development space in and around Wake County, North
Carolina and the Research Triangle area and (ii) the Company's property
management services; provided, however, if Consultant ceases to be engaged by
the Company because of a For Cause Termination (as provided for in Section
3.2(b) hereof), the term of the license granted in this Section 1.3 shall
continue so long as Consultant is bound by the terms of that certain
Noncompetition Agreement by and between Consultant and the Company (as therein
defined) dated December 31, 1996, as amended. The Company acknowledges and
agrees that Consultant is the sole and exclusive owner of the right to use the
name "Lichtin", "Lichtin Properties", and the derivations thereof and logos
embodying such names and all of the good will associated therewith and that the
same shall remain at all times the sole and exclusive property of Consultant.
All use by the Company of the names "Lichtin", "Lichtin Properties", and the
derivations thereof, and any logos in connection therewith shall be deemed to
inure exclusively to the benefit of Consultant. To the extent that any rights
in or to the name or any logo used in connection therewith or any aspect thereof
are deemed to accrue to the Company, the Company hereby irrevocably assigns any
and all such rights, at such time as they may be deemed to accrue, including any
and all related good will, to Consultant. The Company further agrees that it
will not apply to, register, use or claim any rights in the name or any aspects
thereof (including the good will related thereto) except to the limited extent
provided herein.
1.4 Independent Contractor. In rendering services hereunder,
----------------------
Consultant shall be acting as an independent contractor. This Agreement is not
an employment agreement and Consultant is not and will not become by performance
of services hereunder an employee of the Company.
-2-
<PAGE>
(S) 2.
Consulting Fee; Expenses
------------------------
2.1. Base Consulting Fee. Commencing on the Effective Date (as
-------------------
defined in (S) 3.1), the Company shall pay Consultant a consulting fee equal to
$65,000 per annum (which amount shall be pro-rated for the remainder of 1997)
and commencing on January 1, 1998, the Company shall pay Consultant during the
remaining term of Consultant's engagement under this Agreement a consulting fee
equal to $190,000 per annum (the "Base Compensation"). Consultant's Base
Compensation shall not be reduced below $65,000 before January 1, 1998 or below
$190,000 on or after January 1, 1998. The Base Compensation shall be paid to
Consultant in accordance with the payroll procedures in effect from time to time
with respect to executive officers of the Company.
2.2. Expenses. Consultant shall be reimbursed for all reasonable
--------
business-related expenses incurred by Consultant at the request of or on behalf
of the Company.
2.3. Participation in Employee Benefit Plans. During the term of
---------------------------------------
Consultant's engagement under this Agreement, Consultant shall be entitled to
participate in such medical, dental, disability, hospitalization, life
insurance, profit sharing, and other benefit plans as the Company shall maintain
from time to time for the benefit of executive officers of the Company, on the
terms and subject to the conditions set forth in such plans; provided, however,
Consultant shall not be entitled to participate in any incentive compensation
plans maintained by the Company or any of its affiliates. Consultant
acknowledges and agrees that Consultant is not entitled to any incentive
compensation from the Company or its affiliates for 1997 or any prior period.
2.4. Automobile Allowance. Commencing on the Effective Date, during
--------------------
the term of Consultant's engagement under this Agreement, the Company shall pay
Consultant an automobile allowance of $600.00 per month.
(S) 3.
Term of Engagement
------------------
3.1. Term of Engagement. Unless earlier terminated in accordance
------------------
with (S) 3.2, the engagement of Consultant under this Agreement shall commence
as of the date that this Agreement is executed (the "Effective Date") and shall
continue up to December 31, 1999. Thereafter, Consultant's engagement under this
Agreement shall be extended for such period, if any, as agreed to in writing by
Consultant and the Company.
-3-
<PAGE>
3.2. Termination. Consultant's engagement under this Agreement may
-----------
be terminated
(a) by the Company upon the death or total disability of Consultant
(total disability meaning the inability of Consultant to perform his normal
required services under this Agreement for a period of six consecutive
months during the term of this Agreement by reason of Consultant's mental
or physical disability, as reasonably determined by the Board of Directors
or other governing body of the Company) (which shall be referred to
individually and collectively as a "Disability Termination"); or
(b) by the Company for "cause," which shall exist only upon the
occurrence of one or more of the following: (i) Consultant is convicted of,
pleads guilty to, or confesses to any felony or any act of fraud,
misappropriation or embezzlement to the material damage or prejudice of the
Company or any affiliate of the Company, as determined by the Board of
Directors or other governing body of the Company in good faith, or (ii)
Consultant engages in a fraudulent act relating to the business of the
Company or any affiliate of the Company, as determined by the Board of
Directors or other governing body of the Company in good faith (which shall
be referred to individually and collectively as a "For Cause Termination");
or
(c) by the Company for any reason other than a For Cause Termination
or a Disability Termination (which shall be referred to as a "No Cause
Termination"); or
(d) by Consultant voluntarily for any reason other than an Employee-
Initiated Termination (as defined in (S) 3.2(e)) after giving 30 days prior
written notice to the Company (which shall be referred to as a "Voluntary
Termination"); or
(e) by Consultant for "cause", which shall exist if the Company fails
to cure within ten days after receiving written notice from Consultant of
the occurrence of any of the following: (i) Consultant fails to be
nominated by the Company for reelection during the term of this Agreement
as a member of the Board of Directors of the Company, the Board of
Directors of Weeks GP Holdings, Inc., and the Board of Directors of Weeks
LP Holdings, Inc., subject to the proviso and the conditions contained in
Section 1.2 hereof, (ii) there is a decrease in Consultant's Base
Compensation, or (iii) there is a material decrease in the value of
Consultant's benefits package provided by the Company (as described in (S)
4.2(iii)) without his consent (which shall be referred to as an "Employee-
Initiated Termination").
(S) 4.
Results of Termination
----------------------
4.1. Termination As Result of Voluntary Termination or For Cause
-----------------------------------------------------------
Termination. If Consultant's engagement under this Agreement is terminated as a
- -----------
result of a Voluntary Termination or a For Cause Termination, Consultant shall
-4-
<PAGE>
not thereafter be entitled to receive any Base Compensation or benefits for
periods following such termination; provided, however, that Consultant shall be
entitled to receive any Base Compensation and expense reimbursements that may be
owed to Consultant but are unpaid as of the date on which Consultant's
engagement is terminated.
4.2. Termination As Result of No Cause Termination or Employee-
---------------------------------------------------------
Initiated Termination. If Consultant's engagement under this Agreement is
- ---------------------
terminated as a result of a No Cause Termination or an Employee-Initiated
Termination, Consultant shall be entitled to receive (i) any Base Compensation
and expense reimbursements that may be owed to Consultant but are unpaid as of
the date on which Consultant's engagement is terminated, (ii) additional
compensation equal to the total Base Compensation Consultant would have received
(assuming the Base Compensation as in effect on the date of such termination;
provided, however, if the date of such termination is prior to January 1, 1998,
for purposes of computing such additional compensation, the Base Compensation in
effect for periods beginning on or after January 1, 1998 shall be $190,000) for
the period from the date of termination up to, but not including, December 31,
1999, or, if later, through the remainder of his term of engagement under any
extension of this Agreement, and (iii) continuation of the benefits (e.g.,
medical insurance and life insurance) at the same premium cost to Consultant,
and at the same coverage levels as in effect on the date of such termination for
the period from the date of termination up to, but not including, December 31,
1999, or, if later, through the remainder of his term of engagement under any
extension of this Agreement, and at the end of such period, Consultant shall be
entitled to elect continued medical coverage in accordance with the coverage
continuation provisions of Sections 601 et seq. of the Employee Retirement
Income Security Act of 1974, as amended. The compensation referred to in (i)
and (ii) above shall be paid, in equal installments, at the same times
Consultant would have received Base Compensation payments had he remained a
consultant, unless the Company elects to make such payments (without discount
for early payment) sooner. The compensation referred to in (i), (ii), and (iii)
above shall constitute the sole and exclusive remaining compensation due to
Consultant hereunder.
4.3. Termination as a Result of a Disability Termination Event. If
---------------------------------------------------------
Consultant's engagement under this Agreement is terminated as a result of a
Disability Termination, (i) Consultant shall be entitled to receive any Base
Compensation that may be owed to Consultant but is unpaid as of the date on
which Consultant's engagement is terminated, and (ii) Consultant (or at his
death, his designated beneficiary, if any, or if none, his surviving spouse or,
if none, his estate) shall continue to receive Consultant's Base Compensation
for the month in which such termination occurs and for the following six months.
If payment of Base Compensation is to be made to Consultant's estate, such
payment shall be made as soon as practical after Consultant's death in a single
lump sum (without discount for early payment) equal to the total amount of Base
Compensation payable to the estate.
4.4. Other Employee Benefit Plans and Arrangements. The benefits, if
---------------------------------------------
any, payable to or on behalf of Consultant upon his termination of engagement
from the Company under any other employee benefit plans and arrangements not
specifically provided for herein shall be governed by the terms and conditions
for benefit payments set forth in such plans and arrangements.
-5-
<PAGE>
(S) 5.
Miscellaneous
-------------
5.1. Allocation of Income. Consultant hereby acknowledges that the
--------------------
Company and its related affiliates may allocate certain portions of Consultant's
compensation among the Company and its affiliates. Consultant agrees to such
allocation and acknowledges that for purposes of this Agreement, Consultant will
be deemed to be engaged by, and to perform services for, the entity to which
such compensation is allocated.
5.2. Binding Effect. This Agreement shall inure to the benefit of
--------------
and shall be binding upon Consultant and his executor, administrator, heirs,
personal representative and assigns, and the Company and its successors and
assigns; provided, however, that Consultant shall not be entitled to assign or
delegate any of his rights or obligations hereunder without the prior written
consent of Company.
5.3. Construction of Agreement. No provision of this Agreement or
-------------------------
any related document shall be construed against or interpreted to the
disadvantage of any party hereto by any court or other governmental or judicial
authority by reason of such party having or being deemed to have structured or
drafted such provision.
5.4. Arbitration of Disputes. If a dispute arises between the
-----------------------
parties, then the parties agree that their respective representatives shall meet
and consult in good faith and attempt to settle the dispute, within thirty (30)
days of written notice thereof, as a condition precedent to the initiation of
arbitration proceedings as set forth below.
Any dispute, controversy, or claim arising out of or relating to this
Agreement, the breach, termination or invalidity thereof, or Consultant's
engagement, including claims of tortious interference or other tort or statutory
claims, and including without limitation any dispute concerning the scope of
this arbitration clause, shall be settled by arbitration in accordance with the
Employment Dispute Arbitration Rules of the American Arbitrators Association
then in effect. The judgment on the award rendered by the arbitrator may be
entered in any court having jurisdiction thereof. The arbitration under this
Agreement shall be held in Raleigh, North Carolina, or at such other place as
may be selected by mutual agreement of the parties.
The arbitrator shall be mutually acceptable to the parties, or failing
agreement, selected pursuant to the Employment Dispute Arbitration Rules of the
American Arbitrators Association. The parties intend that the arbitrator shall
be independent and impartial. To this end, the arbitrator shall disclose to the
parties any professional, family, or social relationships, past or present, with
any party or counsel.
Strict rules of evidence shall not apply in any arbitration conducted
pursuant to this Agreement. The parties may offer such evidence as they desire
and the arbitrator shall accept such evidence as the arbitrator deems relevant
-6-
<PAGE>
to the issues and accord it such weight as the arbitrator deems appropriate.
The arbitrator shall have the discretion to order a prehearing exchange of
information by the parties, including without limitation, production of
requested documents, exchange of summaries of testimony of proposed witnesses,
and examination by deposition of parties. No party shall be allowed, however,
to take more than one deposition of the opposing party and no deposition shall
last longer than six (6) hours. All disputes regarding discovery shall be
decided by the arbitrator.
The arbitrator award shall be in writing and shall specify the factual and
legal bases for the award. In rendering the award, the arbitrator shall
determine the respective rights and obligations of the parties according to the
laws of the State of North Carolina or, if applicable, federal law. The
arbitrator shall have the authority to award any remedy or relief that a federal
or state court within the State of North Carolina could order or grant.
Any provisional remedy that would be available from a court of law shall be
available from the arbitrator to the parties, pending the arbitrator's
determination of the merits of the parties' dispute. This shall include orders
of attachment, temporary restraining orders, injunctions, and appointment of a
receiver. If the arbitrator issues such an order, either party may immediately
apply to a court of competent jurisdiction for enforcement of the order, even
though the arbitrator may not have rendered a final award.
All fees and expenses of the arbitration, including the fees of the
arbitrator and the expense of each parties' counsel, experts, witnesses and
preparation and presentation of proofs, shall be paid by Company.
Unless legally required to do so, neither party may disclose the existence,
content, or results of any arbitration under this Agreement without the prior
written consent of the other party, nor may the arbitrator disclose any such
information without the consent of both parties. This provision shall apply to
all aspects of the arbitration proceeding, including without limitation,
discovery, testimony, other evidence, briefs, and the award.
It is the specific intent of the parties that this arbitration clause be
governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et. seq. ("FAA");
however, if this cause is unenforceable for any reason under the FAA, then the
parties intend that it be governed by the provisions of the Uniform Arbitration
Act, N.C. Gen. Stat. (S)(S) 1-567.1 through 1-567.20.
Both Consultant and Company represent and warrant they have read the
foregoing Section 5.3, that they have had an opportunity to consult with and
receive advice from legal counsel regarding the foregoing Section 5.3, and that
they hereby forever waive all rights to assert that this Section 5.3 was the
result of duress, coercion, or mistake of law or fact.
_____ _____ (Initial of both parties in each space).
-7-
<PAGE>
5.5. Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of North Carolina, not
including the choice of law rules thereof.
5.6. Survival of Agreements. All covenants and agreements made
----------------------
herein shall survive the execution and delivery of this Agreement and the
termination of Consultant's engagement hereunder for any reason.
5.7. Headings. The section and paragraph headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
5.8. Notices. All notices, requests, consents and other
-------
communications hereunder shall be in writing and shall be deemed to be given
when delivered personally or mailed first class, registered or certified mail,
postage prepaid, in either case, addressed as follows:
(a) If to Consultant:
Mr. Harold S. Lichtin
1023 Cowper Drive
Raleigh, North Carolina 27608
with a copy to:
Mr. Alan H. Peterson
Kennedy Covington Lobdell & Hickman, L.L.P.
Two Hannover Square
434 Fayetteville Street Mall, Suite 1900
Raleigh, North Carolina 27602-1070
(b) If to the Company, addressed to:
Weeks Corporation
4497 Park Drive
Norcross, Georgia 30093
Attention: Chief Executive Officer
with a copy to:
Mr. William B. Fryer
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
-8-
<PAGE>
5.9. Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original, but all of
which together shall constitute one and the same instrument.
5.10. Entire Agreement. This Agreement constitutes the
----------------
entire agreement of the parties with respect to the subject matter hereof and
upon the Effective Date will supersede and replace all prior agreements, written
and oral, between the parties hereto or with respect to the subject matter
hereof, including without limitation, the Employment Agreement by and between
Consultant and the Company dated December 31, 1996. Each of the Company and
Consultant hereby acknowledges and agrees that simultaneously with the execution
and delivery of this Agreement, the Employment Agreement by and between
Consultant and the Company dated December 31, 1996 shall be terminated and
thereafter deemed null, void and without further force or effect. This Agreement
may be modified only by a written instrument signed by each of the parties
hereto.
5.11. No Violation with Other Agreements. Nothing in
----------------------------------
this Agreement shall be deemed to interfere with or be in violation of any other
obligation of Consultant that may exist under other agreements to which
Consultant is a party; provided, however, that such other agreements do not
otherwise violate Section 1.1 hereof.
5.12. Amendment; Waiver. Except as otherwise expressly
-----------------
provided in this Agreement, no amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly
executed by each of the parties hereto. Any waiver by any party or consent by
any party to any variation from any provision of this Agreement shall be valid
only if in writing and only in the specific instance in which it is given, and
such waiver or consent shall not be construed as a waiver of any other provision
or as a consent with respect to any similar instance or circumstance.
5.13. Severability. If fulfillment of any provision of
------------
this Agreement, at the time such fulfillment shall be due, shall
transcend the limit of validity prescribed by law, then the
obligation to be fulfilled shall be reduced to the limit of such
validity; and if any clause or provision contained in this
Agreement operates or would operate to invalidate this Agreement,
in whole in part, then such clause or provision only shall be held
ineffective to the extent of such invalidity, as though not herein
contained, and the remainder of this Agreement shall remain
operative and in full force and effect.
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
WEEKS CORPORATION
By:
--------------------------------
Title:
-----------------------------
CONSULTANT
----------------------------------
Harold S. Lichtin
<PAGE>
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
---------------------------------------
This Release, entered into and delivered by Weeks Corporation, a Georgia
corporation, and its affiliated and related companies listed in Attachment I
(all of the foregoing are hereinafter collectively referred to as "Releasees"),
on the one hand, and Harold S. Lichtin, a North Carolina resident (hereinafter
referred to as "Employee"), on the other hand, as of December 30, 1997,
effective as of October 1, 1997.
W I T N E S S E T H:
-------------------
For and in consideration of the covenants and agreements set forth in this
Release and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties to this Release agree as follows:
COVENANTS OF RELEASEES:
- ----------------------
1. Consulting Agreement. Releasees agree to execute and enter into a
--------------------
consulting agreement with Employee on such terms and conditions as are set forth
in the Consulting Agreement (the "Consulting Agreement") attached hereto as
Exhibit A.
- ---------
2. Stock Options. Releasees agree that the options granted to Employee as
-------------
of December 31, 1996, to purchase 40,000 shares of Weeks Corporation common
stock shall remain fully vested and exercisable for so long as Employee
continues to serve as a member of the Board of Directors of Weeks Corporation
and shall be governed by such terms and conditions as are set forth in the
Amended and Restated Option Certificate attached hereto as Exhibit B.
---------
3. References and Announcements. The parties agree that neither party
----------------------------
shall defame, disparage, or malign the other. The parties agree to direct all
requests for references concerning Employee to Mr. A. Ray Weeks, Jr.
4. Non-Employee Director Compensation. Releasees agree that if Employee
----------------------------------
shall cease to be engaged by Weeks Corporation pursuant to the Consulting
Agreement and Employee is still a member of the Board of Directors of Weeks
Corporation, Employee shall be entitled to continue to receive the same
compensation which is made available to other non-employee directors of Weeks
Corporation during the remainder of his service on the Board of Directors of
Weeks Corporation.
5. Release and Covenant Not to Assert Claims. Releasees for themselves,
-----------------------------------------
their subsidiaries, affiliates, successors in interest and assigns do hereby
unconditionally, absolutely and irrevocably waive, release and forever discharge
and covenant not to sue (or request arbitration in any court or other tribunal)
the Employee from any and all claims, demands, actions, causes of action of any
kind or nature, whether past or present, known or unknown, arising up to the
date of this Release from or in any way related to Employee's employment,
<PAGE>
termination of employment or in any other way involving Employee, except any
fraudulent or "wilful misconduct" by Employee; provided, however, that Releasees
do not release Employee from any claims, demands, actions, causes of action of
any kind or nature, whether past or present, known or unknown, contingent or
incurred, arising up to or after the date of this Release under those agreements
set forth on Attachment II; and, provided further, that Employee does not waive
any of his defenses to the foregoing claims, demands or actions. For purposes
of this Release, "wilful misconduct" shall mean any volitional, intentional or
deliberate actions taken by Employee which involve illegality, violation of law,
discrimination, moral turpitude or other similar actions.
COVENANTS OF EMPLOYEE:
- ---------------------
6. Resignation. Employee agrees that he has voluntarily resigned as of
-----------
the date hereof ("Resignation Date") as an officer and employee of Releasees, as
a member of the Investment Committee of Weeks Corporation and as a member of the
Chairman's Office of Weeks Corporation.
7. Release and Covenant Not to Assert Claims. Employee hereby
-----------------------------------------
knowingly and voluntarily releases and forever discharges and covenants not to
sue (or request arbitration in any court or other tribunal) each and all of the
Releasees, including all officers, directors, employees, agents, and attorneys,
including those listed on Attachment I to this Release (also referred to in this
Release as "Releasees"), collectively and severally, from any and all charges,
claims, allegations, causes of action and liability whatsoever, which might or
could have been filed in any state or federal court or with any administrative
agency or commission, whether known or unknown, suspected or unsuspected,
including any claim arising under the Age Discrimination in Employment Act of
1967 ("ADEA"), 29 U.S.C. (S)621, et seq., the Employee Retirement Income
------
Security Act of 1974, as amended, and any other federal or state statute or
regulation, for any and all legal and equitable remedies, relief, and results,
including but not limited to salary, benefits, allowances, back pay, front pay,
liquidated damages, punitive damages, compensatory damages, tort damages,
contract damages, interest, restitution, attorneys' fees, expenses, costs,
declaratory judgments, injunctive relief, hiring, employment, reemployment,
recall, and reinstatement; provided, however, that Employee does not release
Releasees from any claims, demands, actions, causes of action of any kind or
nature, whether past or present, known or unknown, contingent or incurred,
arising up to or after the date of this Release (i) under those agreements set
forth on Attachment II, and (ii) under the 401(k) Plan maintained by Releasees;
and, provided further, that Releasees do not waive any of their defenses to the
foregoing claims, demands and actions. Employee also does not hereby waive any
rights or claims under the ADEA that may arise after the date this Release is
executed. In the event Employee institutes or is a party to any charge, claim,
allegation or cause of action with respect to a released claim, the same will be
dismissed immediately upon presentation of this Release.
8. Joint and Several Release. Employee understands and agrees that the
-------------------------
term "Releasees" as used in this Release shall be deemed to mean and have
reference collectively, separately, and severally to each and all of the
entities and persons defined as Releasees.
9. Release of Claims. Employee understands and agrees that this Release
-----------------
-2-
<PAGE>
constitutes a complete, final, and binding settlement, release and covenant not
to sue with respect to all claims he has against Releasees, including but not
limited to all claims arising out of any oral or written contracts, agreements,
partnerships, joint ventures, or employment relationships, currently in force,
contemplated, or concluded between Employee and Releasees (including any
officers, directors or employees of Releasees); provided, however, that Employee
does not release Releasees from any claims, demands, actions, causes of action
of any kind or nature, whether past or present, known or unknown, contingent or
incurred, arising up to or after the date of this Release under those agreements
set forth on Attachment II; and, provided further, that Releasees do not waive
any of their defenses to the foregoing claims, demands and actions.
10. No Coercion. Employee acknowledges he has had an opportunity to
-----------
consult with his own attorney, and Employee acknowledges and agrees that he
executed this Release knowingly and voluntarily and not as the result of duress,
coercion, or mistake of law or fact.
11. Covenant Not to Assist Others Pursuing Claims. Employee covenants
---------------------------------------------
that he will not affirmatively counsel or assist others in the prosecution of
claims against Releasees (which have been released pursuant to the terms of this
Release) whether on behalf of himself or others; although Employee may provide
truthful testimony in response to a valid subpoena.
12. ADEA Waiver. Employee hereby acknowledges and represents that he has
-----------
had the opportunity to take a period of at least twenty-one (21) days to
consider the terms of this Release; Releasees have advised Employee in writing
to consult with an attorney prior to executing this Release; Employee has had an
opportunity to seek the advice of an attorney of his choosing prior to executing
this Release; and Employee has received good and valuable consideration to which
he is otherwise not entitled in exchange for his execution of this Release,
including, without limitation, the agreements and accommodations provided for in
Sections 1 and 2 of this Release.
13. Revocation Period. Employee and Releasees hereby acknowledge that
-----------------
Employee may revoke this Release within seven (7) days from the date of the
execution of this Release, and that this Release shall not become effective or
enforceable until the eighth day after the Release has been executed, or January
6, 1997 ("Effective Date"). In the event Employee chooses to exercise his
option to revoke this Release, Employee shall deliver a written revocation
notice to A. Ray Weeks, Jr., Weeks Corporation, 4497 Park Drive, Norcross,
Georgia 30093 (Fax No. 770/717-3310) which must be received no later than 5:00
pm. on the day before the Effective Date.
14. All Claims Waived. Employee understands and agrees that the
-----------------
agreements and accommodations provided for in Sections 1 and 2 of this Release
include and encompass therein any and all claims with respect to attorneys'
fees, costs, and expenses for or by any and all attorneys who have represented
him, with whom he has consulted, or who have done anything in connection with
the subject matter of this Release or any and all claims released herein.
-3-
<PAGE>
15. Agreement to Cooperate. Employee agrees that he will provide
----------------------
reasonable cooperation to and assist Releasees as reasonably requested so long
as he is receiving payments pursuant to the Consulting Agreement regarding
business matters as to which he has knowledge, including providing timely
assistance in response to questions regarding projects and matters in which he
was involved and documents and reports he created.
16. Understanding; Consultation with Attorney. Employee hereby covenants
-----------------------------------------
and agrees that he has read and fully understands the contents and the effect of
this Release. Employee warrants and agrees that he has had an opportunity to
seek the advice of his own attorney as to such content and effect and to have
the terms of the Release explained to him by an attorney. Employee accepts each
and all of the terms, provisions, and conditions of this Release, and does so
voluntarily and with full knowledge and understanding of the contents, nature,
and effect of this Release.
MUTUAL COVENANTS:
- ----------------
17. Amendments to Noncompetition Agreement. Each of Employee and the
--------------------------------------
Releasees which are parties to that certain Noncompetition Agreement dated as of
December 31, 1996 (the "Noncompetition Agreement"), a copy of which is attached
hereto as Exhibit C, hereby agree to the following amendments and modifications
---------
to the Noncompetition Agreement:
(a) Each and every reference in the Noncompetition Agreement to
"Executive" is hereby deleted and replaced with "Consultant".
(b) Section 1 of the Noncompetition Agreement is hereby amended by
adding the following definition immediately after the defined term
"Company":
"Consulting Agreement" shall mean the Consulting Agreement, of even
date herewith, between Consultant and Weeks Corporation.
(c) Section 1 of the Noncompetition Agreement is hereby amended by
deleting the definition of "Managerial Responsibilities" in its entirety
and replacing it with the following:
"Managerial Responsibilities" means managerial and supervisory
responsibilities and duties of the kind contemplated by the Consulting
Agreement, the Employment Agreement or otherwise substantially similar
to those that Consultant has performed for the Company at any time
during his employment by the Company or, in the event that
Consultant's engagement by the Company is terminated, within two years
immediately prior thereto.
(d) Section 1 of the Noncompetition Agreement is hereby amended by
deleting the definition of "Restricted Period" in its entirety and
replacing it with the following:
-4-
<PAGE>
"Restricted Period" means from the Effective Date until the later of
(a) December 31, 1999 or (b) one year following the end of
Consultant's engagement by the Company, subject to the provisions of
Section 4 hereof.
(e) Section 3(d) of the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
(d) At the termination of Consultant's engagement under the
Consulting Agreement, Consultant shall return to the Company all
documentation and other tangible materials in his possession
containing the Company's Trade Secrets or Confidential Information.
(f) Section 4 of the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
4. Adjustments to Restricted Period. If Consultant's engagement
--------------------------------
under the Consulting Agreement is terminated and such termination is a
No Cause Termination or an Employee-Initiated Termination (as defined
in the Consulting Agreement), the Restricted Period shall continue
until what would have been (absent such termination) the end of
Consultant's then current term of engagement under such Consulting
Agreement.
(g) Section 6 of the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
6. Restrictions In Addition to Consulting Agreement. Consultant
------------------------------------------------
acknowledges that the restrictions, prohibitions and other provisions
hereof shall be in addition to and not in substitution of the
restrictions, prohibitions and other provisions of the Consulting
Agreement, as such agreement shall be amended and supplemented from
time to time.
(h) Section 9 of the Noncompetition Agreement is hereby amended by
adding the following provision immediately after Section 9(j):
(k) Each of the parties hereto agrees that each and every
reference in this Agreement to "employment by the Company" shall be
deemed to include within its coverage both employment by the Company
pursuant to the Employment Agreement and engagement by the Company
pursuant to the Consulting Agreement.
(i) Schedule A to the Noncompetition Agreement is hereby amended by
deleting it in its entirety and replacing it with the following:
-5-
<PAGE>
Consultant will be permitted to continue to (i) serve as an officer
and director of Lichtin, Inc., the general partner of the Harold S.
Lichtin Family Limited Partnership, the purposes for which are limited
to investment activities, (ii) serve as an officer and director of
First Class Child Development Center, Inc., and (iii) develop an
approximately 40,000 square foot office building on the site located
on Edwards Mill Road, Raleigh, North Carolina.
18. Waiver Valid Notwithstanding Discovery of New Facts. Employee and
---------------------------------------------------
Releasees further acknowledge that they may hereafter discover facts different
from or in addition to those which they now know or believe to be true with
respect to the potential claims released by each other and they agree that, in
such event, this Release shall nevertheless be and remain effective in all
respects, notwithstanding such different or additional facts, or the discovery
thereof.
19. Agreement to Hold Harmless. Employee and Releasees agree and covenant
--------------------------
that, in the event this Release is breached by either party, the breaching party
agrees to hold the nonbreaching party harmless, subject, in each case, to the
arbitration provisions contained in Section 26 hereof.
20. No Liability and Confidentiality. Employee and Releasees acknowledge
--------------------------------
and recognize that the terms set forth in this Release are based on their mutual
desire to resolve certain claims, contentions, and causes of action without the
time and expense of contested litigation and the terms of this Release are in no
way an admission or implication of any wrongdoing by either party. Accordingly,
Employee and Releasees agree not to disclose any information whatsoever
regarding either the substance or existence of any claims governed by the
Release, or to disclose the existence or terms of the Release to anyone,
including but not limited to any news media, other than his immediate family and
legal and tax advisors, unless compelled to do so by a valid subpoena or
government tax audit. Releasees further agree to provide Employee with copies
of all press releases or other public announcements made with respect to
Employee's termination of employment. If Employee or Releasees are subpoenaed
or audited regarding this Release or Employee's employment with any of the
Releasees, Employee and Releasees agree to give the other immediate written
notice of the same. Employee shall provide such written notice to A. R. Weeks,
Jr., or his successor.
21. Construction. Each party has reviewed this Release, and, accordingly,
------------
agrees that the normal rule of construction to the effect that any ambiguities
are to be resolved against the drafting party will not be employed in any
interpretation of this Release.
22. Choice of Law and Jurisdiction. The parties mutually agree and
------------------------------
stipulate that this Release, and other documents incorporated by reference
herein, including their validity and interpretation, shall be governed by the
law of North Carolina.
23. Attorneys' Fees and Costs. Except as expressly provided in this
-------------------------
Release, each party will bear his or its own attorneys' fees and costs.
-6-
<PAGE>
24. Severability. In the event any provision of this Release should
------------
be held to be unenforceable, each and all of the other provisions of this
Release shall remain in full force and effect.
25. No Assignment. Employee represents and warrants that he has not
-------------
heretofore assigned or transferred or purported to assign or transfer to any
person or entity not a signatory to this Release any claim or matter herein
released, disclaimed, discharged or terminated. In the event of such assignment
or transfer of any claims or other matters herein released, discharged,
terminated or disclaimed herein, Employee agrees to indemnify and hold harmless
Releasees from and against any liability or loss, and for any cost or expense,
including attorneys' fees, or judgment or settlement arising out of or
occasioned by any such assignment or transfer.
26. Arbitration. If a dispute arises between the parties, then the parties
-----------
agree that their respective representatives shall meet and consult in good faith
and attempt to settle the dispute, within thirty (30) days of written notice
thereof, as a condition precedent to the initiation of arbitration proceedings
as set forth below.
Any dispute, controversy, or claim arising out of or relating to this
Release or the breach, termination or invalidity thereof, including claims of
tortious interference or other tort or statutory claims, and including without
limitation any dispute concerning the scope of this arbitration clause, shall be
settled by arbitration in accordance with the Employment Dispute Arbitration
Rules of the American Arbitrators Association then in effect. The judgment on
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. The arbitration under this Release shall be held in
Raleigh, North Carolina, or at such other place as may be selected by mutual
agreement of the parties.
The arbitrator shall be mutually acceptable to the parties, or failing
agreement, selected pursuant to the Employment Dispute Arbitration Rules of the
American Arbitrators Association. The parties intend that the arbitrator shall
be independent and impartial. To this end, the arbitrator shall disclose to the
parties any professional, family, or social relationships, past or present, with
any party or counsel.
Strict rules of evidence shall not apply in any arbitration conducted
pursuant to this Release. The parties may offer such evidence as they desire
and the arbitrator shall accept such evidence as the arbitrator deems relevant
to the issues and accord it such weight as the arbitrator deems appropriate.
The arbitrator shall have the discretion to order a prehearing exchange of
information by the parties, including without limitation, production of
requested documents, exchange of summaries of testimony of proposed witnesses,
and examination by deposition of parties. No party shall be allowed, however,
to take more than one deposition of the opposing party and no deposition shall
last longer than six (6) hours. All disputes regarding discovery shall be
decided by the arbitrator.
The arbitrator award shall be in writing and shall specify the factual and
legal bases for the award. In rendering the award, the arbitrator shall
determine the respective rights and obligations of the parties according to the
laws of the State of North Carolina or, if applicable, federal law. The
arbitrator shall have the authority to award any remedy or relief that a federal
-7-
<PAGE>
or state court within the State of North Carolina could order or grant.
Any provisional remedy that would be available from a court of law shall be
available from the arbitrator to the parties, pending the arbitrator's
determination of the merits of the parties' dispute. This shall include orders
of attachment, temporary restraining orders, injunctions, and appointment of a
receiver. If the arbitrator issues such an order, either party may immediately
apply to a court of competent jurisdiction for enforcement of the order, even
though the arbitrator may not have rendered a final award.
All fees and expenses of the arbitration, including the fees of the
arbitrator and the expense of each parties' counsel, experts, witnesses and
preparation and presentation of proofs, shall be paid by Releasees.
Unless legally required to do so, neither party may disclose the existence,
content, or results of any arbitration under this Release without the prior
written consent of the other party, nor may the arbitrator disclose any such
information without the consent of both parties. This provision shall apply to
all aspects of the arbitration proceeding, including without limitation,
discovery, testimony, other evidence, briefs, and the award.
It is the specific intent of the parties that this arbitration clause be
governed by the Federal Arbitration Act, 9 U.S.C. Section 1 et. seq. ("FAA");
however, if this cause is unenforceable for any reason under the FAA, then the
parties intend that it be governed by the provisions of the Uniform Arbitration
Act, N.C. Gen. Stat. (SS) 1-567.1 through 1-567.20.
Both Employee and Releasees represent and warrant they have read the
foregoing Section 26, that they have had an opportunity to consult with and
receive advice from legal counsel regarding the foregoing Section 26, and that
they hereby forever waive all rights to assert that this Section 26 was the
result of duress, coercion, or mistake of law or fact.
_____ _____ (Initial of both parties in each space).
27. Whole Agreement. This Release and the Attachments and Exhibits
---------------
annexed hereto constitute a single integrated contract expressing the entire
agreement of the parties hereto. There are no agreements, written or oral,
express or implied, between the parties hereto, concerning the subject matter
hereof, except the agreements set forth in this Release. Employee hereby agrees
that he has not relied on any representations, promises, or agreements of any
kind made to Employee in connection with this Release except those expressly set
forth in this Release.
-8-
<PAGE>
GIVEN under my hand and seal on this ______ day of December, 1997.
----------------------------------------
HAROLD S. LICHTIN
WEEKS CORPORATION
By:
-------------------------------------
Name:
Title:
SOLELY TO EVIDENCE ITS AGREEMENT
TO SECTION 17 HEREOF:
WEEKS REALTY, L.P., a Georgia limited
partnership authorized to do business in
the State of North Carolina as Weeks
Realty Limited Partnership
By: Weeks GP Holdings, Inc.,
General Partner
By:
---------------------------------
Name:
Title:
WEEKS REALTY SERVICES, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
WEEKS CONSTRUCTION SERVICES, INC.
By:
-------------------------------------
Name:
Title:
WEEKS LP HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
WEEKS GP HOLDINGS, INC.
By:
-------------------------------------
Name:
Title:
<PAGE>
VERIFICATION
------------
Before me, the undersigned Notary Public, personally appeared HAROLD S.
LICHTIN, who being known to me to be the said Employee and who by me being first
duly sworn, deposes and says under oath that he has read the aforesaid Release;
he is hereby signing such Release in my presence; and he has acknowledged to me
before signing the same that he fully understands the terms, provisions, and
conditions of such Release and voluntarily agrees and accepts such terms,
provisions, and conditions.
Sworn to and subscribed before me, this ___ day of December, 1997.
Sworn to and subscribed before me
this ___ day of December, 1997.
Notary Public
My commission expires:__________________
<PAGE>
ATTACHMENT I
Entities
- --------
Weeks Corporation
Weeks GP Holdings, Inc.
Weeks LP Holdings, Inc.
Weeks Realty, L.P.
Weeks Construction Services, Inc.
Weeks Realty Services, Inc.
Weeks Development Partnership
Weeks Financing Limited Partnership
Weeks Tradeport Limited Partnership
Weeks Special Purpose, LLC
Weeks SPV Financing, LLC
Weeks NC Financing Limited Partnership
Weeks Highland Oaks Limited Partnership
Weeks/Skyland Joint Venture, L.P.
<PAGE>
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER COMMON UNIT
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
(In thousands, except per unit data) 1997 1996 1995
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Computation of Net Income Per Common Unit
Net income available to Common
Unitholders - basic and diluted $ 26,474 $ 15,809 $ 11,107
------------------------------------------------------------------------------------------------------------
Weighted average Common Units - basic 21,380 14,280 10,760
Dilutive securities -
Stock options 200 106 72
------------------------------------------------------------------------------------------------------------
Weighted average Common Units - diluted 21,580 14,386 10,832
------------------------------------------------------------------------------------------------------------
Net Income Per Common Unit
Basic $ 1.24 $ 1.11 $ 1.03
Diluted 1.23 1.10 1.03
============================================================================================================
</TABLE>
<PAGE>
EXHIBIT 21.1
SUBSIDIARIES OF THE REGISTRANT
DECEMBER 31, 1997
The financial statements of the following entities were consolidated with
those of the Registrant in the consolidated financial statements of the
Registrant incorporated herein as of December 31, 1997:
. Weeks Special Purpose LLC, a Georgia limited liability company. The
Operating Partnership owns 100% of the member interests.
. Weeks SPV Financing LLC, a Georgia limited liability company. Weeks
Special Purpose LLC owns 100% of the member interests.
. North Point Limited Partnership No. 1, a Florida limited
partnership. The Operating Partnership owns an 85% partnership
interest and Weeks Development Partnership owns a 15% partnership
interest.
. Weeks Financing Limited Partnership, a Georgia limited partnership.
The Operating Partnership owns a 99% partnership interest and
Weeks Realty Services, Inc. owns a 1% partnership interest.
. Weeks NC Financing Limited Partnership, a Georgia limited
partnership. The Operating Partnership directly owns a 99%
partnership interest and indirectly owns a 1% partnership interest
through its ownership of Weeks Special Purpose LLC and Weeks SPV
Financing LLC.
<PAGE>
The Operating Partnership accounted for the following entities on the
equity method, at December 31, 1997.
. Weeks Realty Services Inc., a Georgia corporation.
The Operating Partnership owns 100% of the non-voting common
stock and 1% of the voting common stock.
. Weeks Construction Services Inc., a Georgia corporation.
The Operating Partnership owns 100% of the non-voting common
stock and 1% of the voting common stock.
. Weeks Development Partnership, a Georgia partnership.
Weeks Construction Services, Inc. and Weeks Realty Services, Inc.
own 100% of the partnership interests.
. Sugarloaf Holdings One, LLC, a Georgia limited liability company.
The Operating Partnership owns a 50% member interest.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated February 27, 1998 and to all references to our
Firm, included in this Form 10-K, into Weeks Realty, L.P.'s previously filed
Registration Statement on Form S-3 (File No. 333-32755).
ARTHUR ANDERSEN LLP
Atlanta, Georgia
March 27, 1998
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 5,421
<SECURITIES> 0
<RECEIVABLES> 7,031
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 794,952
<DEPRECIATION> 61,548
<TOTAL-ASSETS> 852,361
<CURRENT-LIABILITIES> 0
<BONDS> 275,515
0
0
<COMMON> 0
<OTHER-SE> 377,146
<TOTAL-LIABILITY-AND-EQUITY> 852,361
<SALES> 0
<TOTAL-REVENUES> 92,020
<CGS> 0
<TOTAL-COSTS> 66,533
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,900
<INCOME-PRETAX> 29,194
<INCOME-TAX> 0
<INCOME-CONTINUING> 29,194
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,194
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.23
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
AMOUNTS HAVE BEEN RESTATED TO REFLECT REVISED NET INCOME PER UNIT AMOUNTS
RESULTING FROM THE IMPLEMENTATION OF SFAS 128.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 260
<SECURITIES> 0
<RECEIVABLES> 5,850
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 551,372
<DEPRECIATION> 41,469
<TOTAL-ASSETS> 591,849
<CURRENT-LIABILITIES> 0
<BONDS> 296,975
0
0
<COMMON> 0
<OTHER-SE> 132,808
<TOTAL-LIABILITY-AND-EQUITY> 591,849
<SALES> 0
<TOTAL-REVENUES> 53,883
<CGS> 0
<TOTAL-COSTS> 39,906
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,779
<INCOME-PRETAX> 15,809
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,809
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,809
<EPS-PRIMARY> 1.11
<EPS-DILUTED> 1.10
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
AMOUNTS HAVE BEEN RESTATED TO REFLECT REVISED NET INCOME PER UNIT AMOUNTS
RESULTING FROM THE IMPLEMENTATION OF SFAS 128.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 476
<SECURITIES> 0
<RECEIVABLES> 6,327
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 702,610
<DEPRECIATION> 56,639
<TOTAL-ASSETS> 763,130
<CURRENT-LIABILITIES> 0
<BONDS> 340,785
0
0
<COMMON> 0
<OTHER-SE> 231,536
<TOTAL-LIABILITY-AND-EQUITY> 763,130
<SALES> 0
<TOTAL-REVENUES> 65,616
<CGS> 0
<TOTAL-COSTS> 45,153
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,341
<INCOME-PRETAX> 19,206
<INCOME-TAX> 0
<INCOME-CONTINUING> 19,206
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,206
<EPS-PRIMARY> .92
<EPS-DILUTED> .91
</TABLE>
