<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-KA
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 24, 1997
------------------
MERIDIAN INDUSTRIAL TRUST, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-14166 94-3224765
- - --------------------------------------------------------------------------------
(State of Organization) (Commission Number) (IRS Employer I.D. #)
455 Market Street, 17th Floor, San Francisco, California 94105
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (415) 281-3900
----------------
Not Applicable
- - --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
This document contains ___ sequentially numbered pages.
The exhibit index is located on page ____.
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 24, 1997 (the "Closing Date"), Meridian Industrial Trust, Inc.
(the "Company") acquired a portfolio of forty-four industrial buildings
containing an aggregate of approximately 3,538,000 square feet of rentable space
(the "Portfolio Properties"). The Portfolio Properties are located in the
metropolitan areas of Detroit, Michigan (approximately 457,000 sq. ft.),
Houston, Texas (approximately 684,000 sq. ft.), Pompano Beach, Florida
(approximately 219,000 sq. ft.), Dallas, Texas (approximately 569,000 sq. ft.),
Richmond, Virginia (approximately 146,000 sq. ft.), Compton, California
(approximately 1,070,000 sq. ft.), and Ontario, California (approximately
393,000 sq. ft.).
The Company purchased the Portfolio Properties from The Prudential
Insurance Company of America ("Prudential") and two of its affiliates, Pru-Oma
Joint Venture and One Federal Street Joint Venture (Prudential and those two
affiliates are collectively referred to below as the "Sellers"). The aggregate
contract purchase price for the Portfolio Properties was $127,078,526. The
Company also paid approximately $180,000.00 for owner's title insurance policy
premiums, $330,000.00 for transfer and documentary stamp taxes, and $4,000.00
for escrow, recording, and incidental closing fees. In addition, the Company
reimbursed Prudential on the Closing Date for approximately $534,000 of pre-
closing leasing expenses and for approximately $57,000 of Phase I environmental
report costs.
In determining the amount of consideration paid for the Portfolio
Properties, the Company considered such factors as the historical and expected
cash flows of the properties, the nature of the tenancies and terms of the
leases in place, occupancy rates, opportunities for alternative and new
tenancies, current operating costs, physical condition and location, building
design, the anticipated impact of the acquisition on the Company's financial
results, and capitalization rates at which it believed other comparable
properties recently had sold. The Company's analysis focused primarily on the
properties' expected future cash flows, their location (both by market and
within markets), and building design (e.g., such features as clear height, truck
turning radii, and cross docking capabilities).
The Company funded the costs of this acquisition from a combination of (i)
proceeds from borrowings under its unsecured credit facility with a group of
lending banks and (ii) proceeds from the sale of Company common stock to
Prudential and three accounts managed by Prudential. Before the closing, the
Sellers held the Portfolio Properties for the production of
<PAGE>
income as rental property, and the Company considers the Portfolio Properties
suitable for and intends to continue that use. Until the Closing Date, no
material relationship existed between the Sellers and the Company, any Company
affiliate, any Company director or officer, or any associate of any such
director or officer.
In connection with the Company's agreement to acquire the Portfolio
Properties, the Company also contracted with Prudential to purchase five
unimproved parcels of land. Three of these parcels are located in the Ontario,
California, metropolitan area, and the other two are in the metropolitan areas
of Chicago, Illinois, and Detroit, Michigan. The contract price for these five
parcels is $13,720,726.00. The Company's obligation to purchase these parcels,
and any adjustments to the purchase prices thereof, will be established
following determination of the amount of developable land in, and any
restrictions limiting development of, each of those parcels.
In connection with the Company's agreement to acquire the Portfolio
Properties, the Company also contracted with Prudential and One Federal Street
Joint Venture (the "New Orleans/Jacksonville Sellers") to purchase eight
industrial buildings located in the metropolitan area of New Orleans, Louisiana
and five industrial buildings located in the metropolitan area of Jacksonville,
Florida (collectively, the "EastGroup Properties") for a total purchase price of
$49,709,846.00. Pursuant to agreements between the Company, the New
Orleans/Jacksonville Sellers, and EastGroup Properties, L.P. ("EastGroup"), the
Company directed the New Orleans/Jacksonville Sellers to convey the EastGroup
Properties directly to EastGroup on the Closing Date. Accordingly, the Company
did not acquire title to the EastGroup Properties. The purchase price paid by
EastGroup to the New Orleans/Jacksonville Sellers for the EastGroup Properties
was $49,709,846.00 and was financed in part by a loan from the Company to
EastGroup in the amount of $45,000,000.00 (the "EastGroup Loan"). The EastGroup
Loan is secured by the EastGroup Properties, requires monthly, interest-only
payments computed on the basis of an annual rate of 9.25%, and matures on
December 31, 1997. The Company paid approximately $100,000 of Florida mortgage
taxes related to the EastGroup Loan; all other closing costs associated with
EastGroup's acquisition of the EastGroup Properties and with the EastGroup Loan
were paid by either EastGroup or the New Orleans/Jacksonville Sellers. No
material relationship exists between EastGroup and the Company, any Company
affiliate, any Company director or officer, or any associate of any such
director or officer.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The following
financial information is filed as part of this report:
Report of Independent Public Accountants
Combined Statements of Revenues and Certain Expenses for the
Prudential Property Transaction for the Six Months Ended
June 30, 1997 (unaudited) and for the Year Ended
December 31, 1996 with accompanying notes
(b) PRO FORMA FINANCIAL INFORMATION. The following pro forma
financial information is filed as part of this report:
Pro Forma Financial Information (unaudited)
Pro Forma Condensed Consolidated Balance Sheet as of June 30,
1997 (unaudited) with accompanying notes and adjustments
Pro Forma Condensed Consolidated Statement of Operations for
the Six Months Ended June 30, 1997 (unaudited)
Pro Forma Condensed Consolidated Statement of Operations for
the Year Ended December 31, 1996 (unaudited)
Notes to Pro Forma Condensed Consolidated Statement of
Operations for the Six Months Ended June 30, 1997 and Year
Ended December 31, 1996 (unaudited)
Historical As Adjusted Financial Information (unaudited)
Historical As Adjusted Condensed Consolidated Balance Sheet as
of June 30, 1997 (unaudited) with accompanying notes and
adjustments
Historical As Adjusted Condensed Consolidated Statement of
Operations for the Six Months Ended June 30, 1997 (unaudited)
with accompanying notes and adjustments
Historical As Adjusted Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1996 (unaudited)
with accompanying notes and adjustments
(c) Exhibits. The following exhibits are attached to this report:
--------
10.1* Purchase and Sale Agreement (Texas properties)
between The Prudential Insurance Company of America and the
Company dated May 29, 1997, together with the First Amendment
thereto dated July 7, 1997, the Second Amendment thereto dated
July 22, and the Third Amendment thereto dated August 5, 1997.
Filed with the company's Form 10Q for the second quarter of 1997
and incorporated herein by reference.
10.2** Fourth Amendment to Purchase and Sale Agreement
(Texas properties) between The Prudential Insurance Company of
America and the Company dated August 20, 1997, Fifth Amendment to
Purchase and Sale Agreement (Texas properties) between The
Prudential Insurance Company of America and the Company dated
September 5, 1997, and Sixth Amendment to Purchase and Sale
Agreement (Texas properties) between The Prudential Insurance
Company of America and the Company dated September 8, 1997.
10.3* Summary of the Purchase and Sale Agreement
(Cedarpointe, CA) between The Prudential Insurance Company of
America and the Company dated May 29, 1997, together with the
First Amendment thereto dated July 7, 1997, the Second Amendment
thereto dated July 22, and the Third Amendment thereto dated
August 5, 1997.
10.4** Fourth Amendment to Purchase and Sale Agreement
(Cedarpointe, CA) between The Prudential Insurance Company of
America and the Company dated August 20, 1997, Fifth Amendment to
Purchase and Sale Agreement (Cedarpointe, CA) between The
Prudential Insurance Company of America and the Company dated
September 5, 1997, and Sixth Amendment to Purchase and Sale
Agreement (Cedarpointe, CA) between The Prudential Insurance
Company of America and the Company dated September 8, 1997.
10.5* Summary of the Purchase and Sale Agreement (460
Ellis Road-Jacksonville & Centerport) between The Prudential
Insurance Company of America and the Company dated May 29, 1997,
together with the First Amendment thereto dated July 7, 1997, the
Second Amendment thereto dated July 22, and the Third Amendment
thereto dated August 5, 1997.
10.6** Fourth Amendment to Purchase and Sale Agreement
(460 Ellis Road-Jacksonville & Centerport) between The Prudential
Insurance Company of America and the Company dated August 20,
1997, Fifth Amendment to Purchase and Sale Agreement (460 Ellis
Road-Jacksonville & Centerport) between The Prudential Insurance
Company of America and the Company dated September 5, 1997, and
Sixth Amendment to Purchase and Sale Agreement (460 Ellis Road-
Jacksonville & Centerport) between The Prudential Insurance
Company of America and the Company dated September 8, 1997.
<PAGE>
10.7* Summary of the Purchase and Sale Agreement
(Michigan, Louisiana, and Virginia) between The Prudential
Insurance Company of America and the Company dated May 29, 1997,
together with the First Amendment thereto dated July 7, 1997, the
Second Amendment thereto dated July 22, and the Third Amendment
thereto dated August 5, 1997.
10.8** Fourth Amendment to Purchase and Sale Agreement
(Michigan, Louisiana, and Virginia) between The Prudential
Insurance Company of America and the Company dated August 20,
1997, Fifth Amendment to Purchase and Sale Agreement (Michigan,
Louisiana, and Virginia) between The Prudential Insurance Company
of America and the Company dated September 5, 1997, and Sixth
Amendment to Purchase and Sale Agreement (Michigan, Louisiana,
and Virginia) between The Prudential Insurance Company of America
and the Company dated September 8, 1997.
10.9* Summary of the Purchase and Sale Agreement
(Illinois, Michigan & California land) between The Prudential
Insurance Company of America and the Company dated May 29, 1997,
together with the First Amendment thereto dated July 7, 1997, the
Second Amendment thereto dated July 22, and the Third Amendment
thereto dated August 5, 1997.
10.10** Fourth Amendment to Purchase and Sale Agreement
(Illinois, Michigan & California land) between The Prudential
Insurance Company of America and the Company dated August 20,
1997, Fifth Amendment to Purchase and Sale Agreement (Illinois,
Michigan & California) between The Prudential Insurance Company
of America and the Company dated September 5, 1997, and Sixth
Amendment to Purchase and Sale Agreement (Illinois, Michigan &
California) between The Prudential Insurance Company of America
and the Company dated September 22, 1997.
10.11** Summary of Purchase and Sale Agreement between Pru-Oma
Joint Venture and the Company dated May 29, 1997 together with
the First Amendment thereto dated July 7, 1997, the Second
Amendment thereto dated July 22, the Third Amendment thereto
dated August 5, 1997, the Fourth Amendment thereto dated August
20, 1997, the Fifth Amendment thereto dated September 5, 1997,
and the Sixth Amendment thereto dated September 8, 1997
10.12** Summary of Purchase and Sale Agreement between The
Prudential Insurance Company of America and One Federal Street
Joint Venture as sellers and the Company as buyer dated May 29,
1997 together with the First Amendment thereto dated July 7,
1997, the Second Amendment thereto dated July 22, the Third
Amendment thereto dated August 5, 1997, the Fourth Amendment
thereto dated August 20, 1997, the Fifth Amendment thereto dated
September 5, 1997, and the Sixth Amendment thereto dated
September 8, 1997
10.13 ** Agreement regarding Real Property between
EastGroup Properties, L.P. and the Company dated September 22,
1997
10.14 ** Promissory Note in the amount of $18,300,000 dated
September 23, 1997 executed in favor of the Company by EastGroup
Properties, L.P.
10.15 ** Form of Mortgage and Security Agreement executed
by EastGroup Properties, L.P. with respect to the $18,300,000
loan from the Company to EastGroup Properties, L.P.
<PAGE>
10.16 ** Promissory Note in the amount of $26,700,000 dated
September 23, 1997 executed in favor of the Company by EastGroup
Properties, L.P.
10.17 ** Form of Mortgage and Security Agreement executed
by EastGroup Properties, L.P. with respect to the $26,700,000
loan from the Company to EastGroup Properties, L.P.
- - -----------------------------------
* Filed with the Company's Form 10Q for the second quarter of 1997 and
incorporated herein by reference.
** Filed with this report.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
By: MERIDIAN INDUSTRIAL TRUST, INC.
Date: November 12, 1997 By:
------------------------------
Robert A. Dobbin
Secretary
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of Meridian Industrial Trust, Inc.:
We have audited the accompanying combined statement of revenues and certain
expenses for the Prudential Property Transaction as defined in Note 1, for the
year ended December 31, 1996. This statement is the responsibility of the
management of Meridian Industrial Trust, Inc. ("the Company"). Our
responsibility is to express an opinion on this combined statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the statement. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with Rule 3-14 of the Securities and
Exchange Commission's rules and regulations, and is not intended to be a
complete presentation of the revenues and expenses of the Prudential Property
Transaction.
In our opinion, the combined statement referred to above presents fairly,
in all material respects, the revenues and certain expenses of the Prudential
Property Transaction for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ARTHUR ANDERSEN LLP
San Francisco, California
June 30, 1997
F-1
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE PRUDENTIAL PROPERTY TRANSACTION
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31,
JUNE 30, 1997 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
Rental Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,399 $ 21,300
Certain Expenses:
Real Estate Taxes. . . . . . . . . . . . . . . . . . . . . . . . . 1,254 2,493
Property Operating and Maintenance . . . . . . . . . . . . . . . . 1,206 2,741
2,460 5,234
-------- --------
Rental Revenues in Excess of Certain Expenses. . . . . . . . . . . . $ 7,939 $ 16,066
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO THE COMBINED STATEMENTS
OF REVENUES AND CERTAIN EXPENSES
FOR THE PRUDENTIAL PROPERTY TRANSACTION
FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(DOLLARS IN THOUSANDS)
1. PROPERTIES ACQUIRED.
The combined statements of revenues and certain expenses (see "Basis of
Presentation" below) include the combined operations of 29 properties
(comprising 57 warehouse/industrial buildings) and 179 acres of land
(collectively the "Prudential Properties") which will be acquired by Meridian
Industrial Trust, Inc. (the "Company") from The Prudential Insurance Company of
America and certain affiliated entities (collectively, "Prudential"). The
Company and Prudential entered into seven separate purchase and sale agreements
on May 27, 1997 (the "Prudential Property Transaction") that provide for an
estimated closing date of August, 1997.
2. BASIS OF PRESENTATION.
The accompanying combined statements of revenues and certain expenses are
not representative of the actual operations of the Prudential Properties for the
periods presented. Certain expenses may not be comparable to the expenses
expected to be incurred by the Company in the proposed operation of the
Prudential Properties; however, the Company is not aware of any material factors
relating to the Prudential Properties that would cause the reported financial
information not to be indicative of future operating results. Expenses reflected
in property operating and maintenance expenses include utilities, insurance,
landscaping and maintenance and repairs. Excluded expenses consist primarily of
interest expense, depreciation and amortization and other costs not directly
related to the future operations of the Prudential Properties. In addition, the
statements exclude capitalizable carrying and other costs related to the
179 acres of land being acquired.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
(a) REVENUE RECOGNITION. All leases are classified as operating leases,
and rental revenue is recognized on a straight-line basis over the terms of the
leases. No individual leases represent greater than 10% of revenues.
(b) 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 reported amounts of revenues and
expenses during the reporting period. Actual results could differ from these
estimates.
4. LEASING ACTIVITY.
The minimum future rental revenues due under non-cancelable operating
leases in effect as of June 30, 1997, for the remainder of 1997 and annually
thereafter are as follows:
YEAR AMOUNT
- - ---- ------
1997 (six months). . . . . . . . . . . . . . $ 9,228
1998 . . . . . . . . . . . . . . . . . . . . 14,286
1999 . . . . . . . . . . . . . . . . . . . . 10,869
2000 . . . . . . . . . . . . . . . . . . . . 8,771
2001 . . . . . . . . . . . . . . . . . . . . 6,175
Thereafter . . . . . . . . . . . . . . . . . 12,104
F-3
<PAGE>
In addition to minimum rental payments, certain tenants pay reimbursements
for their pro rata share of specified operating expenses, which amounted to
$1,514 for the six months ended June 30, 1997 (unaudited), and $3,196 for the
year ended December 31, 1996. Certain leases contain options to renew.
5. RELATED PARTY TRANSACTIONS
During 1996, Prudential utilized PREMISYS, an affiliate of Prudential, as
its property management company. PREMISYS provided accounting and management
services for the Prudential Properties. Total management fees paid were $257 and
$532 for the six months ended June 30, 1997 (unaudited) and year ended
December 31, 1996, respectively, which are reflected within property operating
and maintenance expenses on the accompanying statements of revenues and certain
expenses.
F-4
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA FINANCIAL INFORMATION
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
BACKGROUND
The accompanying unaudited pro forma condensed consolidated balance sheet
as of June 30, 1997 has been prepared to reflect (i) the acquisition of
forty-four industrial buildings from the Prudential Insurance Company of America
("Prudential") and two of its affiliates (the "Prudential Property Transaction")
after the conveyance of thirteen properties as described below, (ii) the sale of
Company common stock to Prudential and three accounts managed by Prudential (the
"Prudential Stock Transaction"), (iii) the acquisition of twenty-two industrial
buildings and a participating mortgage loan secured by seven industrial
buildings from State Street Bank and Trust Company, as Trustee for Ameritech
Pension Trust (the "Ameritech Transaction"), and (iv) the direct conveyance of
eight industrial properties located in the metropolitan area of New Orleans,
Louisiana and five industrial properties located in the metropolitan area of
Jacksonville, Florida (collectively the "EastGroup Properties") to EastGroup
Properties, L.P. ("EastGroup") (the "Property Conveyances Transaction") as if
such transactions had occurred on June 30, 1997. The accompanying unaudited pro
forma condensed consolidated statements of operations have been prepared to
reflect (i) the Prudential Property Transaction, (ii) the Prudential Stock
Transaction, (iii) the Ameritech Transaction, (iv) the Property Conveyances
Transaction, and (v) the amendment of the Company's Unsecured Credit Facility
(the "Unsecured Credit Facility") as if such transactions had occurred on
January 1, 1996.
These unaudited pro forma condensed consolidated statements should be read
in connection with the respective historical as adjusted financial information
and historical financial statements and notes thereto included elsewhere in this
report or incorporated by reference herein. In the opinion of management, the
pro forma condensed consolidated financial information provides for all
adjustments necessary to reflect the effects of the (i) the Prudential Property
Transaction, (ii) the Prudential Stock Transaction, (iii) the Ameritech
Transaction, (iv) the Property Conveyances Transaction, and (v) the amendment of
the Unsecured Credit Facility.
The pro forma condensed consolidated information is unaudited and is not
necessarily indicative of the consolidated results that would have occurred if
the transactions and adjustments reflected therein had been consummated in the
period or on the date presented, or on any particular date in the future, nor
does it purport to represent the financial position, results of operations or
changes in cash flows for future periods.
ACCOUNTING TREATMENT
In accordance with generally accepted accounting principles, the Company
will account for the Prudential Property Transaction and the Ameritech
Transaction acquisitions by the purchase method.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
Property
Historical as Prudential Ameritech Conveyances
Adjusted (1) Portfolio (2) Portfolio (3) (4) Pro forma
------------- ------------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in real estate, net $ 472,220 $ 193,308 $ 147,815 $ (49,710) $ 754,912
Cash and cash equivalents 2,095 - - - 2,095
Restricted cash 1,998 13,721 - - 15,719
Mortgage Note Receivable - - - 45,000 45,000
Other Assets 12,773 - - - 12,773
---------- ---------- ---------- ---------- ----------
$ 489,086 $ 198,308 $ 147,815 $ (4,710) $ 830,499
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
LIABILITIES
Mortgage loans $ 82,508 $ - $ - $ - $ 82,508
Unsecured credit facility 111,920 56,200 - (4,710) 163,410
Other liabilities 12,964 2,108 2,295 - 17,367
---------- ---------- ---------- ---------- ----------
Total Liabilities 207,392 58,308 2,295 (4,710) 263,285
---------- ---------- ---------- ---------- ----------
MINORITY INTEREST 1,130 - - - 1,130
---------- ---------- ---------- ---------- ----------
STOCKHOLDERS' EQUITY
Common stock and preferred stock 18 7 7 - 32
Additional paid-in capital 282,353 139,993 145,513 - 567,859
Distributions in excess of income (1,807) - - - (1,807)
---------- ---------- ---------- ---------- ----------
Total Stockholders' Equity 280,564 140,000 145,520 - 566,084
---------- ---------- ---------- ---------- ----------
$ 489,086 $ 198,308 $ 147,815 $ (4,710) $ 830,499
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(unaudited, dollars in thousands, except share data)
1. Reflects the historical as adjusted condensed consolidated balance sheet of
the Company as of June 30, 1997. See the historical as adjusted condensed
consolidated balance sheet included elsewhere in this report.
2. Reflects the Prudential Property Transaction comprising seven separate
agreements for the purchase of 29 properties comprising 57
warehouse/industrial buildings and five unimproved parcels comprising 179
acres of land under development for a total purchase price $196,200 that,
together with estimated acquisition costs of $2,108, results in total
capitalized costs of $198,308. The contract price for the five unimproved
parcels of land under development total $13,721 and the Company's
obligation to purchase these land parcels was be established following
determination of the amount of developable land in, and any restrictions
limiting development of, each of those parcels. The estimated acquisition
costs include the Company's reimbursement to Prudential for certain costs
incurred by Prudential estimated at $422. The Prudential Property
Transaction purchase price was financed by the issuance of 7,096,513 shares
of the Company's Common Stock valued at $140,000, borrowings on its
Unsecured Credit Facility of approximately $56,200 and accrued costs of
$2,108. The number of shares of Common Stock to be issued by the Company
was calculated on the basis of 96% of the average closing price of the
Company's Common Stock for the five business days prior to the date on
which the Company and Prudential entered into a letter of intent regarding
the Prudential Stock Transaction, resulting in a value per share of
$19.728.
3. Reflects the Ameritech Transaction comprising the purchase of 22 warehouse/
industrial properties and a participating mortgage secured by a
seven-building warehouse industrial project for a total purchase price of
$145,520 that, together with estimated acquisition costs of $2,295 results
in total capitalized costs of $147,815. The Ameritech Transaction purchase
price was financed by the issuance of 7,314,026 shares of the Company's
Common Stock valued at $145,520 and accrued costs of $2,295. The number of
shares of Common Stock to be issued by the Company was determined by
valuing such shares at 96% of the average of the closing prices of the
Company's Common Stock for the 10 business days prior to May 13, 1997 (the
date that the Company and Ameritech entered into a letter of intent
regarding the Ameritech Transaction), resulting in a value per share of
$19.896.
4. Concurrent with the closing of the Prudential Property Transaction, eight
industrial properties located in the metropolitan area of New Orleans,
Louisiana and five industrial properties located in the metropolitan area
of Jacksonville, Florida were directly conveyed in a simultaneous sale by
the Company to EastGroup for a total sales price of $49,710. EastGroup's
consideration for the EastGroup Properties was cash of $4,710 (applied to
paydown the Unsecured Credit Facility) and a mortgage note in favor of
the Company in the amount of $45,000. The mortage note receivable is
secured by the EastGroup Properties, requires monthly, interest-only
payments computed on the basis of an annual interest rate of 9.25%, and
matures on December 31, 1997. The EastGroup Properties were conveyed at
the Company's cost of such properties resulting in no gain or loss upon
sale.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Property Unsecured
Historical As Prudential Ameritech Conveyances Credit Facility
Adjusted (1) Portfolio (2) Portfolio (3) (4) Amendment (5) Pro Forma
----------- ------------ ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental revenues $ 30,974 $ 10,732 $ 6,358 $ (2,786) $ - $ 45,278
Equity in Earnings of
Unconsolidated Joint Venture - - 1,353 - - 1,353
Interest and other income 241 - - 2,081 - 2,322
---------- ---------- ---------- ---------- ---------- ----------
Total Revenue 31,215 10,732 7,711 (705) - 48,953
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Property operating costs 2,464 1,206 546 (269) - 3,947
Real estate taxes 3,977 1,254 746 (287) - 5,690
Interest expense 6,491 1,401 - (159) 55 7,788
General and administrative 2,501 257 194 - - 2,952
Depreciation and amortization 5,433 2,104 1,443 (568) - 8,412
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 20,866 6,222 2,929 (1,283) 55 28,789
---------- ---------- ---------- ---------- ---------- ----------
Income before loss on sale of
properties 10,349 4,510 4,782 578 (55) 20,164
Loss on sale of properties (448) - - - - (448)
---------- ---------- ---------- ---------- ---------- ----------
Income before Extraordinary Item 9,901 4,510 4,782 578 (55) 19,716
Series B preferred dividends (1,409) - - - - (1,409)
---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary items
allocable to common $ 8,492 $ 4,510 $ 4,782 $ 578 $ (55) $ 18,307
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Net income before extraordinary
items per common share $ 0.53 $ 0.64 $ 0.65 $ - $ - $ 0.60
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Weighted average common
shares outstanding (6) 16,020,535 7,096,513 7,314,026 - - 30,431,074
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Property Unsecured
Historical As Prudential Ameritech Conveyances Credit Facility
Adjusted (1) Portfolio (2) Portfolio (3) (4) Amendment (5) Pro Forma
------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental revenues $ 56,858 $ 21,941 $ 12,447 $ (5,919) $ - $ 85,327
Equity in Earnings of
Unconsolidated Joint Venture - - 1,835 - - 1,835
Interest and other income 738 - - 4,162 - 4,900
---------- ---------- ---------- ---------- ---------- ----------
Total Revenue 57,596 21,941 14,282 (1,757) - 92,062
---------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Property operating costs 5,415 2,740 1,045 (661) - 8,539
Real estate taxes 7,164 2,493 1,409 (587) - 10,479
Interest expense 14,044 2,736 - (311) 111 16,580
General and administrative 4,983 514 388 - 5,885
Depreciation and amortization 9,615 4,208 2,888 1,136) - 15,575
---------- ---------- ---------- ---------- ---------- ----------
Total operating expenses 41,221 12,691 5,730 (2,695) 111 57,058
---------- ---------- ---------- ---------- ---------- ----------
Income before gain on sale of
properties and extraordinary items 16,375 9,250 8,552 938 (111) 35,004
Gain on sale of properties 3,313 - - - - 3,313
---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary items 19,688 9,250 8,552 938 (111) 38,317
Series B preferred dividends (2,818) - - - - (2,818)
---------- ---------- ---------- ---------- ---------- ----------
Income before extraordinary items
allocable to common $ 16,870 $ 9,250 $ 8,552 $ 938 $ (111) $ 35,499
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Net income per common share $ 1.06 $ 1.30 $ 1.17 $ - $ - $ 1.17
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
Weighted average common
shares outstanding (6) 15,882,452 7,096,513 7,314,026 - - 30,292,991
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO PRO FORMA
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
AND THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. Reflects the historical as adjusted operations of the Company. See the
historical as adjusted condensed consolidated statements of operations
included elsewhere in this report.
2. Reflects the incremental revenues and expenses resulting from the
Prudential Property Transaction comprising seven separate agreements for
the purchase of 29 properties comprising 57 warehouse/industrial buildings
and 179 acres of land for a total purchase price $196,200 that, together
with estimated acquisition costs of $2,108, results in total capitalized
costs of $198,308. The Prudential Property Transaction purchase price was
be financed by the issuance of 7,096,513 shares of the Company's Common
Stock valued at $140,000, borrowings on its Unsecured Credit Facility of
$56,200 and accrued costs of $2,108. The incremental revenues and expenses
reflect the historical operations attributable to the properties acquired
in connection with the Prudential Property Transaction for the six months
ended June 30, 1997 and year ended December 31, 1996. Such historical
results have been adjusted to reflect straight-line rents, interest expense
and depreciation and amortization as if such transactions had occurred on
January 1, 1996. Of the $198,308 purchase price related to the Prudential
Property Transaction, approximately $147,286 is the depreciable basis
allocated to buildings. Depreciation and amortization of the operating
properties in the Prudential Property Transaction has been calculated on a
straight-line basis using average useful lives of 35 years. The estimated
general and administrative expenses relate to additional payroll and
related costs that the Company expects to incur in the ongoing management
of the properties in the Prudential Property Transaction. The Company's
Unsecured Credit Facility bears variable interest at LIBOR plus 1.40% and
unused facility fees of .25%. An increase or decrease of 0.125% (1 8%) in
LIBOR will result in an annual increase or decrease in Pro Forma interest
expense of approximately $210. Estimated interest expense on pro forma
borrowings on the Company's Unsecured Credit Facility resulting from the
Prudential Property Transaction is based upon average actual LIBOR rates of
5.61% and 5.45%, respectively, for the six months ended June 30, 1997 and
the year ended December 31, 1996, as detailed in the following table.
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
June 30, 1997 December 31, 1996
------------- -----------------
<S> <C> <C>
Unsecured Credit Facility borrowings of $56,200 resulting
from the Prudential Property Transaction at a LIBOR plus
1.4% (7.01% during 1997 and 6.85% during 1996), net of
reduced unused facility fees of .25%. . . . . . . . . . . . . . . . $ 1,898 $ 3,709
Less interest capitalized on the portion of the capitalized
costs allocated to land under development amounting to
$13,721 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (497) (973)
-------- --------
Net interest attributable to the Prudential Property
Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,401 $ 2,736
-------- --------
-------- --------
</TABLE>
<PAGE>
3. Reflects the incremental revenues and expenses resulting from the Ameritech
Transaction comprising the purchase of 22 warehouse/industrial properties
and a participating mortgage secured by a seven-building industrial project
for a total purchase price of $145,520 that, together with estimated
acquisition costs of $2,295 results in total capitalized costs of $147,815.
The Ameritech Transaction purchase price was financed by the issuance of
7,314,026 shares of the Company's Common Stock valued at $145,520 and
accrued costs of $2,295. The incremental revenues and expenses reflect the
historical operations attributable to the properties acquired in connection
with the Ameritech Transaction for the six months ended June 30, 1997 and
year ended December 31, 1996. Such historical results have been adjusted to
reflect straight-line rents, interest expense and depreciation and
amortization as if such transactions had occurred on January 1, 1996. Of
the $147,815 purchase price related to the Ameritech Transaction,
approximately $118,252 is the depreciable basis allocated to buildings.
Depreciation and amortization of the properties in the Ameritech
Transaction has been calculated on a straight-line basis using average
useful asset lives of 35 years. The estimated general and administrative
expenses relate to additional payroll and related costs that the Company
expects to incur in the ongoing management of the properties in the
Ameritech Transaction.
4. Concurrent with the closing of the Prudential Property Transaction, eight
industrial properties located in the metropolitan area of New Orleans,
Louisiana and five industrial properties located in the metropolitan area
of Jacksonville, Florida were directly conveyed in a simultaneous sale by
the Company to EastGroup for a total sales price of $49,710. EastGroup's
consideration for the EastGroup Properties was cash of $4,710 (applied to
paydown the Unsecured Credit Facility) and a mortgage note in favor of
the Company in the amount of $45,000. The mortage note recievable is
secured by the EastGroup Properties, requires monthly, interest-only
payments computed on the basis of an annual interest rate of 9.25%, and
matures on December 31, 1997. The pro forma adjustments for the Property
Conveyances Transaction reflect the elimination of the operating results
of the EastGroup Properties, a reduction in interest expense reflecting
the paydown of the Unsecured Credit Facility using the cash proceeds from
the sale and recognition of the interest income on the mortgage note
receivable from EastGroup.
5. Reflects the net increase in interest expense associated with the September
23, 1997 amendment and restatement of the Unsecured Credit Facility which
provided for the following: (i) an increase of the borrowing limit from
$150,000 to $250,000 (resulting in increased amortization of loan
commitment fees amounting to $108 and $216 for the six months ended June
30, 1997 and year ended December 31, 1996, respectively) and (ii) a
decrease in the interest rate spread over LIBOR from 1.40% to 1.30%
(resulting in reduced interest expense amounting to $53 and $105 for the
six months ended June 30, 1997 and year ended December 31, 1996,
respectively).
6. Per share amounts reflect approximately 1,915,820 shares to be issued for
the Portfolio Acquisitions, and the dilutive effects of stock options
granted by the Company to its directors and officers pursuant to its stock
plan, warrants issued in connection with the Merger and shares to be issued
pursuant to a stock option agreement with one of its stockholders,
aggregating to 501,039 and 371,069 additional shares of common stock for
the six months ended June 30, 1997 and year ended December 31, 1996,
respectively.
7. Pro Forma taxable income for the twelve months ended June 30, 1997 is
approximately $33 million.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
HISTORICAL AS ADJUSTED FINANCIAL INFORMATION
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
BACKGROUND
The accompanying unaudited historical as adjusted condensed consolidated
balance sheet as of June 30, 1997 has been prepared to reflect (i) the
post-June 30, 1997 acquisition of three operating properties and development of
properties under construction, (ii) the completed acquisition in 1997 of a
portfolio comprising seven warehouse/industrial properties and the acquisition
of another portfolio comprising five warehouse/industrial (collectively referred
to as the "Portfolio Acquisitions"), as if such transactions had occurred on
June 30, 1997.
The historical as adjusted condensed consolidated statement of operations
information for the six months ended June 30, 1997 has been prepared to reflect
(i) the incremental effect of the nine individual properties acquired during
1997 (the "1997 Individual Acquired Properties"), (ii) the incremental effect of
the Portfolio Acquisitions, (iii) the incremental effect of properties sold
during 1997 (the "1997 Property Sales"), and (iv) the April 1997 restructuring
(the "April 1997 Restructing") of the Company's revolving bank credit agreement
(the "Unsecured Credit Facility"), as if such transactions had occurred on
January 1, 1996.
The historical as adjusted condensed consolidated statement of operations
for the year ended December 31, 1996 has been prepared to reflect (i) the
incremental effect of the 1997 Individual Acquired Properties and properties
acquired by the Company during 1996 (collectively, the "1996 and 1997 Acquired
Properties"); (ii) the incremental effect of the Portfolio Acquisitions,
(iii) the incremental effect of the 1997 Property Sales and those properties
sold by the Company during 1996 (collectively, the "1996 and 1997 Property
Sales"); (iv) the incremental effect of debt paydowns during 1996 with the
proceeds from the Company's two 1996 Common Stock offerings (the "1996
Offerings"); (v) the April 1997 Restructuring; (vi) the respective historical
results of the three companies (the "Merged Trusts") that were merged into the
Company on February 23, 1996 (the "Merger") and the acquisition of certain net
assets (the assets acquired and the transaction are referred to herein as the
"Trust '83 Properties" and the "Asset Purchase", respectively) that occurred
concurrent with the Merger for the period from January 1, 1996 to February 23,
1996 (i.e., prior to the Merger and Asset Purchase); and (vii) the respective
effects of the Merger and the retirement of certain indebtedness concurrent with
the Merger using the net proceeds from the issuance of the Company's preferred
stock and the availability of the Unsecured Credit Facility (referred to
collectively as the "Refinancing") on the historical results of the Merged
Trusts and the Trust '83 Properties for the period from January 1, 1996 to
February 23, 1996; to reflect the post-Merger activities of the Company as if
such transactions had occurred on January 1, 1996. The Merger, Asset Purchase
and Refinancing each closed concurrently on February 23, 1996.
These unaudited historical as adjusted condensed consolidated statements
should be read in connection with the respective historical financial statements
and notes thereto included elsewhere in this report. In the opinion of
management, the historical as adjusted condensed consolidated financial
information provides for all adjustments necessary to reflect the effects of the
Merger, Asset Purchase, Refinancing, the 1996 and 1997 Acquired Properties, the
1996 and 1997 Property Sales, the 1996 Offerings, and the April 1997
Restructuring.
The historical as adjusted condensed consolidated financial information is
unaudited and is not necessarily indicative of the consolidated results that
would have occurred if the transactions reflected therein had been consummated
in the period presented, or on any particular date in the future, nor does it
purport to represent the financial position, results of operations or changes in
cash flows for future periods.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
HISTORICAL AS ADJUSTED CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(UNAUDITED, DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Individual
Property Portfolio
Historical Acquisitions and Acquisitions Historical As
(1) Development (2) (3) Adjusted
----------- ---------------- ------------ --------------
<S> <C> <C> <C> <C>
ASSETS
Investments in real estate, net $ 382,170 $ 25,045 $ 65,005 $ 472,220
Cash and cash equivalents 2,095 - - 2,095
Restricted cash 1,998 - - 1,998
Other Assets 12,773 - - 12,773
---------- ----------- ---------- -----------
$ 399,036 $ 25,045 $ 65,005 $ 489,086
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
LIABILITIES
Mortgage loans $ 82,508 $ - $ - $ 82,508
Unsecured credit facility 60,500 25,000 26,420 111,920
Other liabilities 12,919 45 - 12,964
---------- ----------- ---------- -----------
Total Liabilities 155,927 25,045 26,420 207,392
---------- ----------- ---------- -----------
MINORITY INTEREST 1,130 - - 1,130
---------- ----------- ---------- -----------
STOCKHOLDERS' EQUITY
Common stock and preferred stock 16 - 2 18
Additional paid-in capital 243,770 - 38,583 282,353
Distributions in excess of income (1,807) - - (1,807)
---------- ----------- ---------- -----------
Total Stockholders' Equity 241,979 - 38,585 280,564
---------- ----------- ---------- -----------
$ 399,036 $ 25,045 $ 65,005 $ 489,086
---------- ----------- ---------- -----------
---------- ----------- ---------- -----------
</TABLE>
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO HISTORICAL AS ADJUSTED
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(unaudited, dollars in thousands, except share data)
1. Reflects the historical condensed consolidated balance sheet of the Company
as of June 30, 1997.
2. Reflects the post-June 30, 1997 purchase of three operating properties at
an aggregate cost of approximately $19,514. The purchase of these three
operating properties was funded with draws on the Company's Unsecured
Credit Facility of approximately $19,469, together with accrued costs of
approximately $45.
Also, reflects the development and construction costs incurred by the
Company subsequent to June 30, 1997 of approximately $5,531 in connection
with development of properties under construction. Costs associated with
these development properties under construction were funded with borrowings
on the Company's Unsecured Credit Facility.
3. Reflects the Portfolio Acquisitions comprising the purchase of two
portfolios consisting of seven warehouse/industrial properties and five
warehouse/industrial properties, respectively. The total purchase price
of $64,430 for the Portfolio Acquisitions together with estimated closing
costs of $575 results in total capitalized costs of $65,005. The
Portfolio Acquisitions purchase price will be financed by the issuance of
approximately 1,915,820 shares of the Company's Common Stock valued at
$38,585, with the balance of the purchase price and acquisition costs
funded by borrowings on the Company's Unsecured Credit Facility in the
amount of $26,420. The number of shares of Common Stock to be issued by
the Company is based upon a negotiated value per share of $20.14. The
Portfolio Acquisitions not subject to the approval of the Company's
stockholders.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
HISTORICAL AS ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Individual
Property Portfolio Property April 1997
Historical Acquisitions Acquisitions Dispositions Restructuring Historical As
MIT (1) (2) (3) (4) (5) Adjusted
---------- ------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental revenues $ 24,564 $ 3,250 $ 3,795 (635) $ - $ 30,974
Interest and other income 304 - - (63) - 241
----------- -------- -------- ---------- ---------- -----------
Total Revenue 24,868 3,250 3,795 (698) - 31,215
----------- -------- -------- ---------- ---------- -----------
OPERATING EXPENSES
Property operating costs 2,042 352 268 (198) - 2,464
Real estate taxes 3,393 350 352 (118) - 3,977
Interest expense 3,784 2,269 950 (290) (222) 6,491
General and administrative 2,501 - - - - 2,501
Depreciation and amortization 4,216 588 743 (114) - 5,433
----------- -------- -------- ---------- ---------- -----------
Total operating expenses 15,936 3,559 2,313 (720) (222) 20,866
----------- -------- -------- ---------- ---------- -----------
Income before gain on sale of properties 8,932 (309) 1,482 22 222 10,349
Loss on sale of properties (448) - - - - (448)
----------- -------- -------- ---------- ---------- -----------
Income before Extraordinary Item 8,484 (309) 1,482 22 222 9,901
Series B preferred dividends (1,409) - - - - (1,409)
----------- -------- -------- ---------- ---------- -----------
Income before extraordinary items
allocable to common $ 7,075 $ (309) $ 1,482 $ 22 $ 222 $ 8,492
----------- -------- -------- ---------- ---------- -----------
----------- -------- -------- ---------- ---------- -----------
Income before extraordinary items per
common share $ 0.50 $ 0.77 $ 0.53
----------- -------- -----------
----------- -------- -----------
Weighted average common
shares outstanding 14,104,715 16,020,535
----------- -----------
----------- -----------
</TABLE>
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO HISTORICAL AS ADJUSTED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. Reflects the historical condensed consolidated statement of operations of
Company for the six months ended June 30, 1997.
2. Reflects the incremental effect on the Company's operations of the 1997
Individual Acquired Properties comprising nine properties that the Company
acquired during 1997 as if the properties had been acquired January 1,
1996. Also, reflects the capitalization of interest on the Development
Properties. Depreciation expense on the 1997 Acquired Properties has been
calculated on a straight-line basis using average useful lives of 35 years.
The incremental effect on revenues from the 1997 Individual Acquired
Properties reflects the incremental revenues from property purchases
consummated during 1997 comprising the historical operating results of four
property acquisitions, as well as five additional properties purchased
during the period, each of which have been adjusted for the straight-line
rent effect as if such properties had been acquired by the Company on
January 1, 1996. The 1997 Acquired Properties and the development of
properties under construction were funded by the assumption of two separate
mortgage loans in combined principal amount of $16,414 and a weighted
average interest rate of 8.02%, with the balance funded by draws on the
Unsecured Credit Facility. A summary of the interest adjustment components
relating to the 1997 Acquired Properties and development of properties
under construction is as follows:
Mortgages assumed in combined principal amount of $16,414 and
a weighted average interest rate of 8.02%. . . . . . . . . . $ 614
Unsecured Credit Facility borrowings at a pre-restructuring
rate of LIBOR plus 1.7% or 7.19%, net of reduced unused
facility fees of .25%. . . . . . . . . . . . . . . . . . . . 1.655
-------
Total adjustment. . . . . . . . . . . . . . . . . . . . . . . $2,269
-------
-------
3. Reflects the incremental revenues and expenses resulting from the
Portfolio Acquisitions comprising the purchase of seven
warehouse/industrial properties and of two part folios consisting of five
warehouse/industrial properties, respectively. The total purchase price
of $64,430 for the Portfolio Acquisitions together with estimated closing
costs of $575 results in total capitalized costs of $65,005. The
Portfolio Acquisitions purchase price will be financed by the issuance of
approximately 1,915,820 shares of the Company's Common Stock valued at
$38,585, with the balance of the purchase price and acquisition costs
funded by borrowings on the Company's Unsecured Credit Facility in the
amount of $26,420. Depreciation and amortization of the properties in the
Portfolio Acquisitions has been calculated on a straight line basis and
is based upon estimated asset lives of 35 years and a depreciable basis
of approximately $52,004. Estimated interest expense on as adjusted
borrowings on the Company's Unsecured Credit Facility resulting from the
Portfolio Acquisitions is based upon variable interest at LIBOR plus
1.70% or 7.15% (average actual LIBOR rates of 5.49% for the six months
ended June 30, 1997) and amounts to approximately $950. An increase or
decrease of 0.125% ( 1 8%) in LIBOR will result in a six month increase
or decrease in historical as adjusted interest expense of approximately
$70.
4. Reflects the elimination of the effects on the Company's operations from
the 1997 Property Sales. The 1997 Property Sales result in a net loss on
sale of $448 and comprise five property sales. The 1997 Property Sales
result in net proceeds to the Company of $11,368 which are reflected as
paydowns on the Unsecured Credit Facility, resulting in a reduction in
interest expense on the Unsecured Credit Facility of $290.
<PAGE>
5. Reflects the net reduction in interest as a result of the April 1997
Restructuring. The April 1997 Restructuring provided for: (i) an increase
of the borrowing limit to $150,000 (previously $75,000), (ii) a decrease in
the interest rate spread over LIBOR to 1.40% (previously LIBOR plus 1.70%),
and (iii) an extension of the maturity date to April 3, 2000 (previously
February 26, 1998). In connection with the April 1997 Restructuring, the
Company recognized an extraordinary loss of approximately $808 comprising
(i) the write-off of previously deferred financing fees related to the old
facility of approximately $283 and (ii) fees paid to the lenders of
approximately $525. In addition, the Company incurred and recorded as
deferred financing fees other financing costs relating to the April 1997
Restructuring of approximately $200. The net reduction in interest expense
for the six months ended June 30, 1997 as a result of the April 1997
Restructuring comprises the following:
Reduction of interest rate from LIBOR plus 1.70% to LIBOR
plus 1.40% (based upon historical as adjusted outstanding
principal of $111,920) . . . . . . . . . . . . . . . . . . . $(168)
Reduction in loan fee amortization due to write-off of
previously capitalized loan fees . . . . . . . . . . . . . . (182)
Amortization of loan fees on restructured facility. . . . . . 34
Increase in unused facility fees due to increase borrowing
limit to $150,000. . . . . . . . . . . . . . . . . . . . . . 94
------
Net reduction . . . . . . . . . . . . . . . . . . . . . . . . $(222)
------
------
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
HISTORICAL AS ADJUSTED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
January 1, 1996 to February 23, 1996
------------------------------------------------
Historical As
Merged Trusts Merger Adjusted Post-Merger
Historical Transactions Merged Historical Individual
Combined (1) (2) Trusts MIT (3) Acquisitions (4)
------------- ------------ ------------- ---------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental revenues $ 4,997 $ 785 $ 5,782 $ 34,465 $ 14,748
Interest and other income 161 1 162 576 -
--------- -------- -------- --------- ---------
Total Revenue 5,158 786 5,944 35,041 14,748
--------- -------- -------- --------- ---------
OPERATING EXPENSES
Property operating costs 912 (92) 820 3,821 1,227
Real estate taxes 812 79 891 4,769 1,560
Interest expense 1,506 (375) 1,131 6,065 12,809
General and administrative 1,162 (452) 710 4,273 -
Depreciation and amortization 1,308 (624) 684 4,952 3,162
--------- -------- -------- --------- ---------
Total operating expenses 5,700 (1,464) 4,236 23,880 18,758
--------- -------- -------- --------- ---------
Income (loss) before gain on sale of properties
and extraordinary items (542) 2,250 1,708 11,161 (4,010)
Gain on sale of properties - - - 3,313 -
--------- -------- -------- --------- ---------
Income (loss) before extraordinary items (542) 2,250 1,708 14,474 (4,010)
Series B preferred dividends - (406) (406) (2,412) -
--------- -------- -------- --------- ---------
Income (loss) before extraordinary items
allocable to common $ (542) $ 1,844 $ 1,302 $ 12,062 $ (4,010)
--------- -------- -------- --------- ---------
--------- -------- -------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Post-Merger
Portfolio Post-Merger 1996 April 1997 Historical
Acquisitions Dispostions Offerings Restructuring As Adjusted
(5) (6) (7) (8) MIT
------------ ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C>
REVENUES
Rental revenues $ 7,464 $ (5,601) $ - $ - $ 56,858
Interest and other income - - - - 738
-------- --------- -------- ------ ----------
Total Revenue 7,464 (5,601) - - 57,596
-------- --------- -------- ------ ----------
OPERATING EXPENSES
Property operating costs 563 (1,016) - - 5,415
Real estate taxes 699 (755) - - 7,164
Interest expense 1,889 (2,773) (4,713) (364) 14,044
General and administrative - - - - 4,983
Depreciation and amortization 1,486 (669) - - 9,615
-------- --------- -------- ------ ----------
Total operating expenses 4,637 (5,213) (4,713) (364) 41,221
-------- --------- -------- ------ ----------
Income (loss) before gain on sale of
properties and extraordinary items 2,827 (388) 4,713 364 16,375
Gain on sale of properties - - - - 3,313
-------- --------- -------- ------ ----------
Income (loss) before extraordinary items 2,827 (388) 4,713 364 19,688
Series B preferred dividends - - - - (2,818)
-------- --------- -------- ------ ----------
Income (loss) before extraordinary items
allocable to common $ 2,827 $ (388) $ 4,713 $ 364 $ 16,870
-------- --------- -------- ------ ----------
-------- --------- -------- ------ ----------
Net income per common share $ 1.06
----------
----------
Weighted average common
shares outstanding 15,882,452
----------
----------
</TABLE>
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO HISTORICAL AS ADJUSTED
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR YEAR ENDED DECEMBER 31, 1996
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. Reflects the historical operations of the Merged Trusts for the period from
January 1, 1996 to the Merger date of February 23, 1996.
2. Reflects adjustments relating to the Merger, Asset Purchase, and
Refinancing comprising (i) adjustments for the historical operations of the
Trust '83 Properties for the period from January 1, 1996 to the Merger date
of February 23, 1996; (ii) the incremental effects of purchase accounting
as a result of the Merger, together with certain cost adjustments, which
result in a decrease in the historical expenses of the Merged Trusts
comprising: (a) a reduction of depreciation expense of $832 resulting from
a reduction in the historical basis of the investment in real estate
relating to the purchase accounting to record the Merger (Historical As
Adjusted Merged Trusts depreciation expense has been calculated on a
straight line basis using average useful lives of 35 years) and (b) a
decrease in general and administrative expenses of $760 comprising a
decrease in general and administrative expenses allocated to property
operating costs of $308 and a decrease in corporate office costs of $452
(the reduction reflects a decrease in personnel costs, including salaries
and benefits and a reduction in other administrative expenses, including
accounting, legal and occupancy costs); and (iii) the pay down and
retirement of $59,983 of the Company's debt using certain proceeds from
(a) the $35,000 issuance of the Company's preferred stock completed
concurrent with the Asset Purchase and (b) $26,505 in borrowings on the
Company's Unsecured Credit Facility as detailed below:
<TABLE>
<CAPTION>
Merger Asset Purchase Refinancing
Adjustments Adjustments Adjustments Total
----------- ----------- ----------- -----
<S> <C> <C> <C> <C>
Revenues. . . . . . . . . . . . . . $ 0 $ 786 $ 0 $ 786
------- ----- ----- -------
Property operations . . . . . . . . (308) 216 0 (92)
Real estate taxes . . . . . . . . . 0 79 0 79
Interest expense. . . . . . . . . . 0 234 (609) (375)
General and administrative. . . . . (452) 0 0 (452)
Depreciation and amortization . . . (832) 208 0 (624)
------- ----- ----- -------
Total operating expenses. . . . . . (1,592) 737 (609) (1,464)
------- ----- ----- -------
Net income, before dividends. . . . 1,592 49 609 2,250
Series B preferred dividends. . . . 0 0 (406) (406)
------- ----- ----- -------
Net Income. . . . . . . . . . . . . $ 1,592 $ 49 $ 203 $ 1,844
------- ----- ----- -------
------- ----- ----- -------
</TABLE>
3. Represents the historical condensed consolidated statement of operations of
the Company for the year ended December 31, 1996. Prior to February 23,
1996, the Company had no operations other than interest on its investments
and general and administrative expenses.
<PAGE>
4. Reflects the incremental effect on the Company's operations of the 1996 and
1997 Individual Acquired Properties comprising eight separate property
purchases in 1996 and nine separate property purchases in 1997.
Depreciation expense on the 1996 and 1997 Individual Acquired Properties
has been calculated on a straight-line basis using average useful lives of
35 years. The incremental effect on revenues from the 1996 and 1997
Individual Acquired Properties (the "Post-Merger Individual Acquisitions")
reflects incremental revenues from property purchases consummated during
1996 and 1997 comprising the historical operating results of four property
acquisitions, as well as thirteen additional properties purchased during
the period, each of which have been adjusted for the straight-line rent
effect as if such properties had been acquired by the Company on January 1,
1996. The 1996 and 1997 Individual Acquired Properties and the Company's
development activities were funded by the assumption of two separate
mortgage loans in combined principal amount of $16,414 and a weighted
average interest rate of 8.02%, with the balance funded by draws on the
Unsecured Credit Facility. A summary of the interest adjustment components
relating to the 1996 and 1997 Acquired Properties and development
activities is as follows:
Mortgages assumed in combined principal amount of $16,414 and
a weighted average interest rate of 8.02% . . . . . . . . . . . $1,321
Unsecured Credit Facility borrowings at a pre-restructuring
rate of LIBOR plus 1.7% or 7.19%, net of reduced unused
facility fees of .25% . . . . . . . . . . . . . . . . . . . . . 12,422
Less interest capitalized on development activities . . . . . . . (934)
-------
Total adjustment. . . . . . . . . . . . . . . . . . . . . . . . . $12,809
-------
-------
5. Reflects the incremental revenues and expenses resulting from the Portfolio
Acquisitions comprising the purchase of seven warehouse/industrial
properties and five warehouse/industrial properties, respectively. The
total purchase price of $64,430 for the Portfolio Acquisitions together
with estimated closing costs of $575 results in total capitalized costs of
$65,005. The Portfolio Acquisitions purchase price will be financed by the
issuance of approximately 1,195,820 shares of the Company's Common Stock
valued at $38,585, with the balance of the purchase price and acquisition
costs funded by borrowings on the Company's Unsecured Credit Facility in
the amount of $26,420. Depreciation and amortization of the properties in
the Portfolio Acquisitions has been calculated on a straight-line basis and
is based upon estimated assets lives of 35 years and a depreciable basis of
approximately $52,004. Estimated interest expense on as adjusted borrowings
on the Company's Unsecured Credit Facility resulting from the Portfolio
Acquisitions is based upon variable interest at LIBOR plus 1.70% or 7.15%
(average actual LIBOR rates of 5.45% for the year ended December 31, 1996)
and amounts to approximately $1,889. An increase or decrease of 0.125%
(1/8%) in LIBOR will result in an annual increase or decrease in historical
as adjusted interest expense of approximately $140.
6. Reflects the elimination of the effects on the Company's operations from
the 1996 and 1997 Property Sales. Property sales in 1996 comprised 14
properties which, after closing costs, escrow holdback, early release of
funds and pro-rated items totaling $1,975, resulted in net proceeds to the
Company totaling $31,447 which were used to pay down borrowings on the
Unsecured Credit Facility. The Company recorded a gain on sale of $3,313 in
connection with the property sales occurring in 1996. The 1997 Property
Sales result in a net loss on sale of $448 and comprise five property sales
during the six months ended June 30, 1997. The 1997 Property Sales result
in net proceeds to the Company of $11,368 which are reflected as paydowns
on the Unsecured Credit Facility. The 1996 and 1997 Property Sales result
in adjustment to the 1996 historical interest expense of $2,773 as a result
of reduced principal outstanding on the Unsecured Credit Facility.
<PAGE>
7. Reflects the total reduction to the historically reported interest expense
of the Merged Trusts and the Company as a result of the 1996 Offerings
comprising (i) the incremental effect of the Company's issuance of
1,500,000 shares of Common Stock that closed on April 3, 1996 (the "April
Offering") providing net proceeds of approximately $23,200 that, together
with cash on hand were used to repay as adjusted borrowings on the
Company's Unsecured Credit Facility of approximately $26,505, and (ii) the
incremental effect of the Company's issuance of 3,910,000 shares of Common
Stock (3,400,000 shares initially issued on November 25, 1996 and 510,000
shares issued on December 23, 1996, collectively referred to as the "Second
Offering"), resulting in net proceeds of $67,480 applied to repay as
adjusted borrowing on the Unsecured Credit Facility. The estimated interest
reduction total of $4,713 is based upon the pre-restructuring interest rate
of LIBOR plus 1.7% (7.15%), unused credit facility fees of .25%, and
reflects interest reduction attributable to the April Offering as $482 and
the Second Offering as $4,231, respectively.
8. Reflects the net reduction in interest as a result of the April 1997
Restructuring. The April 1997 Restructuring provided for: (i) an increase
of the borrowing limit to $150,000 (previously $75,000), (ii) a decrease in
the interest rate spread over LIBOR to 1.40% (previously LIBOR plus 1.70%),
and (iii) an extension of the maturity date to April 3, 2000 (previously
February 26, 1998). In connection with the April 1997 Restructuring, the
Company recognized an extraordinary loss of approximately $808 comprising
(i) the write-off of previously deferred financing fees related to the old
facility of approximately $283 and (ii) fees paid to the lenders of
approximately $525. In addition, the Company incurred and recorded as
deferred financing fees other financing costs relating to the April 1997
Restructuring of approximately $200. The net reduction in interest expense
for the year ended December 31, 1996 as a result of the April 1997
Restructuring comprises the following:
Reduction of interest rate from LIBOR plus 1.70% to LIBOR
plus 1.40% (based upon historical as adjusted outstanding
principal of $111,920). . . . . . . . . . . . . . . . . . . . . $(336)
Reduction in loan fee amortization due to write-off of
previously capitalized loan fees. . . . . . . . . . . . . . . . (283)
Amortization of loan fees on restructured facility. . . . . . . . 67
Increase in unused facility fees due to increase borrowing
limit to $150,000 . . . . . . . . . . . . . . . . . . . . . . . 188
-----
Net reduction . . . . . . . . . . . . . . . . . . . . . . . . . . $(364)
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