<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 1-14166
MERIDIAN INDUSTRIAL TRUST, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 94-3224765
- -------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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
------------------------
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
SHARES OF COMMON STOCK AS OF MAY 1, 1998 : 30,176,648
1
<PAGE>
- --------------------------------------------------------------------------------
PART I: FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the Annual Report on Form 10-K for the
year ended December 31, 1997 and the Quarterly Report on Form 10-Q for the
three months ended March 31, 1997 of Meridian Industrial Trust, Inc. (the
"Company"). These condensed consolidated financial statements have been
prepared in accordance with the instructions of the Securities and Exchange
Commission to Form 10-Q and do not include all the information and footnotes
required by generally accepted accounting principles for complete financial
statements.
In the opinion of the Company's management, all material adjustments of
a normal, recurring nature considered necessary for a fair presentation of
the consolidated results of operations for the interim period have been
included. The consolidated results of operations for the three month period
ended March 31, 1998 are not necessarily indicative of the results that may
be expected for the year ending December 31, 1998.
F-1
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1998 AND DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
<TABLE>
<CAPTION>
1998 1997
(UNAUDITED) (AUDITED)
----------- ----------
<S> <C> <C>
INVESTMENT IN REAL ESTATE ASSETS:
Rental Properties Held for Investment $ 894,382 $ 813,389
Less: Accumulated Depreciation (19,085) (14,374)
----------- ----------
875,297 799,015
Rental Properties Held for Divestiture 7,754 9,492
----------- ----------
883,051 808,507
Investment in Unconsolidated Joint Venture 21,500 21,500
----------- ----------
Total Investment in Real Estate Assets 904,551 830,007
OTHER ASSETS:
Investment in and Advances to Unconsolidated Subsidiaries 21,233 --
Cash and Cash Equivalents 3,339 7,855
Cash Held in Consolidated Limited Partnerships 319 992
Restricted Cash and Cash Held in Escrow 11,279 11,267
Accounts Receivable, Net of Reserves of $366 and $228 at
March 31, 1998 and December 31, 1997, respectively 3,157 3,460
Capitalized Loan Fees, Lease Commissions and Other Assets, Net 17,296 9,931
----------- ----------
TOTAL ASSETS $ 961,174 $ 863,512
----------- ----------
----------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Unsecured Notes, Including Unamortized Debt Premium of $108
and $109 at March 31, 1998 and December 31, 1997, respectively $ 160,108 $ 160,109
Mortgage Loan 66,094 66,094
Unsecured Credit Facility 91,800 20,500
Mortgage Notes Payable, Including Unamortized Debt Premium of $83
and $153 at March 31, 1998 and December 31, 1997, respectively 27,862 10,503
Accrued Dividends Payable 10,705 9,473
Accounts Payable, Prepaid Rent, Tenant Deposits and Other Liabilities 19,985 21,562
----------- ----------
TOTAL LIABILITIES 376,554 288,241
----------- ----------
Minority Interest in Consolidated Limited Partnerships 15,222 5,132
----------- ----------
Commitments and Contingencies
STOCKHOLDERS' EQUITY: -- --
Authorized Shares - 175,000,000 shares of Common Stock and
25,000,000 shares of Preferred Stock authorized, each with par value of
$0.001; 30,166,984 and 30,165,662 shares of Common Stock issued and
outstanding at March 31, 1998 and December 31, 1997, respectively; and
2,272,727 shares of Series B Preferred Stock with a liquidation preference
of $35,000 issued and outstanding at March 31, 1998 and December 31, 1997 32 32
Additional Paid-in Capital 574,589 574,848
Distributions in Excess of Income (5,223) (4,741)
----------- ----------
TOTAL STOCKHOLDERS' EQUITY 569,398 570,139
----------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 961,174 $ 863,512
----------- ----------
----------- ----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-2
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
REVENUES:
Rentals from Real Estate Investments $ 26,260 $ 11,695
Income from Unconsolidated Joint Venture 495 --
Income from Unconsolidated Subsidiaries 187 --
Interest and Other Income 101 157
----------- -----------
TOTAL REVENUES 27,043 11,852
----------- -----------
EXPENSES:
Interest 4,592 1,624
Property Taxes 3,309 1,629
Property Operating 1,999 1,086
General and Administrative 1,889 1,152
Depreciation and Amortization 5,003 2,004
----------- -----------
TOTAL EXPENSES 16,792 7,495
----------- -----------
Income Before Minority Interest 10,251 4,357
Minority Interest in Net (Income) (89) --
----------- -----------
Income Before Gain on Divestiture of Properties 10,162 4,357
Gain on Divestiture of Properties 61 428
----------- -----------
NET INCOME $ 10,223 $ 4,785
----------- -----------
----------- -----------
Net Income $ 10,223 $ 4,785
Less: Preferred Dividends Declared (750) (705)
----------- -----------
NET INCOME ALLOCABLE TO COMMON $ 9,473 $ 4,080
----------- -----------
----------- -----------
BASIC PER SHARE DATA:
NET INCOME ALLOCABLE TO COMMON PER BASIC
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING $ 0.31 $ 0.30
----------- -----------
----------- -----------
DILUTED PER SHARE DATA:
NET INCOME ALLOCABLE TO COMMON PER DILUTED
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING $ 0.31 $ 0.29
----------- -----------
----------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 30,178,469 13,596,370
----------- -----------
----------- -----------
Diluted 30,818,742 14,045,647
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 10,223 $ 4,785
Adjustments to Reconcile Net Income to Cash Provided by
Operating Activities:
Depreciation and Amortization 5,003 2,004
Amortization of Debt Premium (71) --
Amortization of Financing Costs 99 117
Straight Line Rent (937) (402)
Income Allocated to Minority Partners 89 --
Gain on Divestiture of Properties (61) (428)
Increase in Accounts Receivable and Other Assets (970) (820)
Decrease in Accounts Payable, Prepaid Rent,
Tenant Deposits and Other Liabilities (2,098) (1,424)
--------- --------
Net Cash Provided by Operating Activities 11,277 3,832
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Proceeds from Property Sales 1,770 3,227
Decrease in Restricted Cash and Cash Held In Escrow 14 344
Decrease in Cash Held In Consolidated Partnerships 673 --
Investment in and Advances to Unconsolidated Subsidiaries (21,233) --
Investments in Real Estate (52,138) (14,230)
Recurring Building Improvements (890) (54)
Recurring Tenant Improvements (345) (169)
Recurring Leasing Commissions (489) (447)
Receipt of Note Receivable -- 503
Purchase of Other Assets (4,646) (30)
--------- --------
Net Cash Used in Investing Activities (77,284) (10,856)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments for Capitalized Loan Fees (19) (4)
Principal Payments on Mortgage Notes (39) --
Borrowings on Unsecured Credit Facility 85,800 15,500
Repayment of Borrowings on Unsecured Credit Facility (14,500) (3,500)
Distributions Paid to Stockholders (9,473) (4,648)
Repurchase of Shares, Exercise of Warrants and Offering Costs, Net (278) (40)
--------- --------
Net Cash Provided by Financing Activities 61,491 7,308
--------- --------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (4,516) 284
Cash and Cash Equivalents at Beginning of Period 7,855 2,942
--------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,339 $ 3,226
--------- --------
--------- --------
CASH PAID FOR INTEREST $ 2,309 $ 1,692
--------- --------
--------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
1. ORGANIZATION
Meridian Industrial Trust, Inc. (the "Company") was incorporated in the
state of Maryland on May 18, 1995. The Company is a self-administered and
self-managed real estate investment trust ("REIT") engaged primarily in the
business of owning, acquiring, developing, managing and leasing
income-producing warehouse/distribution and light industrial properties. At
March 31, 1998, the Company's principal asset is its portfolio of 200
warehouse/distribution and light industrial properties and two retail
properties. In addition, at March 31, 1998, the Company had ten properties
under development.
On February 23, 1996, the Company merged with Meridian Point Realty
Trust IV Co., Meridian Point Realty Trust VI Co. and Meridian Point Realty
Trust VII Co. ("Trust IV," "Trust VI" and "Trust VII," respectively;
collectively referred to as the "Merged Trusts"), with the Company as the
surviving entity (that transaction is referred to below as the "Merger").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION The accompanying consolidated financial
statements include the results of the Company, its wholly-owned subsidiaries
and its majority-owned and controlled partnerships. All intercompany
transactions have been eliminated.
(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 assets
and liabilities and the disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
(c) RENTAL PROPERTIES HELD FOR INVESTMENT Investments in rental
properties are stated at cost unless circumstances indicate that cost cannot
be recovered, in which case, the carrying value of the property is reduced to
estimated fair value. Estimated fair value: (i) is based upon the Company's
plans for the continued operation of each property; (ii) is computed using an
estimated sales price, as determined by prevailing market values for
comparable properties and/or the use of capitalization rates multiplied by
annualized rental income based upon the age, construction and use of the
building, and (iii) does not purport, for a specific property, to represent
the current sales price that the Company could obtain from third parties for
such property. The fulfillment of the Company's plans related to each of its
properties is dependent upon, among other things, the presence of economic
conditions which will enable the Company to continue to hold and operate the
properties to yield an acceptable return on the Company's investment. Due to
uncertainties inherent in the valuation process and in the economy,
management can provide no assurances that the actual results of operating and
disposing of the Company's properties will not be materially different than
current expectations.
Rental Properties Held for Investment are depreciated over 35 years
using the straight-line method. Expenditures for maintenance, repairs and
improvements which do not materially prolong the normal useful life of an
asset are charged to operations as incurred. Tenant improvements are
capitalized and amortized under the straight-line method over the term of the
related lease.
Rental Properties Held for Divestiture are stated at the lower of cost
or estimated fair value. Estimated fair value is based upon prevailing
market values for comparable properties or the use of
F-5
<PAGE>
capitalization rates multiplied by annualized rental income based upon the
age, construction and use of building, but does not purport to represent the
current sales price that the Company could obtain from third parties for such
property. No depreciation is recorded on Rental Properties Held for
Divestiture.
(d) CONSTRUCTION IN PROGRESS Costs clearly associated with the
development and construction of a real estate project are capitalized as
construction in progress. In addition, interest, real estate taxes,
insurance and other holding costs are capitalized until the property is
placed in service. For the three months ended March 31, 1998 and 1997,
Interest Expense totaling $796 and $211, respectively, was capitalized for
properties under construction.
(e) CASH AND CASH EQUIVALENTS For the purposes of reporting cash
flows, cash and cash equivalents include cash on hand and short-term
investments with an original maturity of three months or less when purchased.
(f) CAPITALIZED LOAN FEES AND LEASE COMMISSIONS Capitalized Loan Fees
are amortized as interest expense over the term of the related debt. Lease
Commissions are amortized into depreciation and amortization expense on a
straight-line basis over the term of the related lease.
(g) FAIR VALUE OF FINANCIAL INVESTMENTS Statement of Financial
Accounting Standards No. 107, "Accounting for Fair Value of Financial
Instruments," requires disclosure of fair value for all financial
instruments. Based on the borrowing rates currently available to the
Company, the carrying amount of its debt approximates fair value. The
carrying amount of cash and cash equivalents also approximates fair value.
(h) OFFERING COSTS Underwriting commissions, offering costs and other
expenses incurred in connection with stock offerings of the Company's Common
and Preferred Stock have been reflected as a reduction of Stockholders'
Equity.
(i) RENTALS FROM REAL ESTATE INVESTMENTS All leases are classified as
operating leases. The Company recognizes rental income on a straight-line
basis over the term of the lease. Deferred rent receivable, included in
Other Assets, represents the excess of rental revenue on a straight-line
basis over the cash received under the applicable lease provision.
Certain of the Company's leases relating to its properties require
lessees to pay all or a portion of real estate taxes, insurance and operating
expenses ("Expense Recaptures"). Expense Recaptures are recognized as
revenues in the same period the related expenses are incurred by the Company.
For the three months ended March 31, 1998 and 1997, Expense Recaptures of
$3,766 and $1,380, respectively, have been included in Rentals from Real
Estate Investments.
(j) INCOME TAXES The Company has previously elected to be taxed as a
REIT for federal and, where the federal rules are allowed, state income tax
purposes. To continue to qualify for REIT status, the Company must meet a
number of ongoing organizational and operational requirements. If the Company
satisfies those REIT requirements and the Company currently distributes all
of its net taxable income (including net capital gains) to its stockholders,
the Company should generally owe no federal or state income tax. The REIT
provisions of the Internal Revenue Service Code of 1986, as amended,
generally allow a REIT to deduct dividends paid to stockholders. If the
Company fails to qualify as a REIT in any taxable year, it will be subject to
certain state and federal taxes imposed on its income and properties.
As a result of deductions allowed for the dividends paid to stockholders
and the utilization of net operating loss carryovers of the Merged Trusts,
the Company has no federal or state taxable income. Accordingly, no
provisions for federal or state income taxes have been made in the
accompanying consolidated statements of operations for the three months ended
March 31, 1998 and 1997.
(k) EARNINGS PER SHARE During the first quarter of 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
(SFAS) No. 128, "Earnings Per Share." SFAS
F-6
<PAGE>
128 requires the disclosure of basic earnings per share and modifies existing
guidance for computing diluted earnings per share. Under the new standard,
basic earnings per share is computed as net income or loss divided by the
weighted average number of shares of Common Stock outstanding, excluding the
dilutive effects of stock options and other potentially dilutive securities.
SFAS No. 128 is effective for periods ending after December 15, 1997.
Earnings per share for the three months ended March 31, 1997 have been
restated to conform to the new standard. Earnings per share for the three
months ended March 31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net Income - Basic $ 9,473 $ 4,080
Net Income - Diluted 9,473 4,080
Weighted Average Shares Outstanding:
Basic 30,178,469 13,596,370
Stock options 401,089 295,974
Warrants 185,000 153,303
Series B Preferred Stock -- --
Operating Partnership Units 54,184 --
----------- -----------
Diluted 30,818,742 14,045,647
----------- -----------
----------- -----------
Net Income Per Share:
Basic $ 0.31 $ 0.30
Diluted 0.31 0.29
</TABLE>
In connection with the Merger, the Company issued approximately 553,000
warrants to purchase an equal number of shares of the Company's Common Stock
(the "Merger Warrants"). May 23, 1997, was the first day of the exercise
period for the Merger Warrants. Each Merger Warrant entitles the holder to
purchase one share of the Company's Common Stock at the exercise price of
$16.23. The exercise period ends February 23, 1999. As of March 31, 1998,
the Company had issued 43,894 shares pursuant to exercise of the Merger
Warrants.
(l) NEW ACCOUNTING PRONOUNCEMENT In June, 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
(SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS 131 is effective for fiscal years beginning after December
15, 1997. Management has determined that no additional disclosure is required
by SFAS No. 131.
(m) RECLASSIFICATIONS Certain 1997 items have been reclassified to
conform to the 1998 presentation.
3. INVESTMENT IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES
On February 19, 1998, the Company through an unconsolidated subsidiary,
Meridian Refrigerated, Inc. ("MRI"), purchased the real estate, operating
assets, including $15,263 in cash, and business of Arctic Cold Storage, Inc.
("Arctic") for an aggregate purchase price of $36,000. The investment in MRI
is comprised of secured and unsecured notes and non-voting participating
preferred stock. The voting common stock of MRI is owned by certain officers
of the Company and MRI. The Company accounts for its investment in MRI using
the equity method. The outstanding balances on the secured and unsecured
notes totaled $14,400 and $2,604 at March 31, 1998, respectively.
F-7
<PAGE>
MRI is a cold storage distribution and freight consolidation company and
currently operates three refrigerated warehouse facilities located in
California. The Company funded its investment in MRI with borrowings under
the Unsecured Credit Facility.
4. LONG-TERM DEBT
The Company acquired a fixed rate facility (the "Mortgage Loan") in
connection with the Merger. The Mortgage Loan has a principal balance of
$66,094, bears interest at an annual rate of 8.63%, requires interest only
payments until its maturity in 2005 and is secured by a pool of the Company's
properties with a net book value of $138,050 as of March 31, 1998.
Concurrent with the Merger, the Company entered into an unsecured credit
facility (the "Unsecured Credit Facility"). The Unsecured Credit Facility
originally bore interest at LIBOR plus 1.7%, was scheduled to mature in
February 1998, and provided for a maximum borrowing amount of $75,000. On
April 21, 1997, the Unsecured Credit Facility was amended and restated. This
amendment and restatement of the Unsecured Credit Facility provided for (i)
an increase in the borrowing limit from $75,000 to $150,000, (ii) a decrease
in the interest rate spread over LIBOR from 1.7% to 1.4%, and (iii) an
extension of the maturity date to April 3, 2000, from February 26, 1998. The
Company recorded an extraordinary expense of $808 in loan costs in April 1997
in connection with this restructuring.
On September 23, 1997, the Unsecured Credit Facility was further amended
and restated to provide for (i) an increase of the borrowing limit from
$150,000 to $250,000 and (ii) a decrease in the interest rate spread over
LIBOR from 1.4% to 1.3%. At March 31, 1998, the interest rate on the
Unsecured Credit Facility was 6.99%. The Company paid a fee totaling $250 in
connection with this amendment.
On November 20, 1997, the Company completed a private offering of
$160,000 in principal of unsecured senior notes to institutional investors.
The unsecured senior notes were issued in two tranches, $135,000 maturing on
November 20, 2007, bearing an interest rate of 7.25% per annum, and $25,000
maturing on November 20, 2009, bearing an interest rate of 7.30% per annum.
Interest on these notes is payable semiannually. The proceeds were used to
repay borrowings on the Unsecured Credit Facility. In connection with this
transaction, the Company entered into two forward exchange rate contracts
which resulted in a premium totaling $109.
In the opinion of the Company's management, the Company was in
compliance with all loan covenants related to the debt instruments discussed
above at March 31, 1998.
5. MORTGAGE NOTES PAYABLE
On May 13, 1997, the Company purchased a property located in Montebello,
California, subject to a mortgage note payable bearing an interest rate
different from the prevailing market rate at the date of acquisition. This
interest rate differential was recorded as a premium. The new loan amounting
to $10,429 has a maturity date of July 15, 1998 and provides for monthly
principal and interest payments of $96 based on an interest rate of 9.89% per
annum and a 30-year amortization schedule. The premium totaling $324 is
amortized over the term of the note payable using the effective interest
method. At March 31, 1998, this mortgage note payable and debt premium had
outstanding balances of $10,319 and $83, respectively.
The Company, through one of its consolidated partnerships, assumed a
mortgage note in connection with a contribution of a property located in
Orlando, Florida (see Note 9). The new loan has a principal balance of
$3,676 and a maturity date of February 1, 2006. The new loan provides for
monthly principal and interest payments of $28 based on an interest rate of
7.90% per annum and a 25-year amortization schedule. At March 31, 1998, this
mortgage note payable had an outstanding balance of $3,668.
F-8
<PAGE>
On March 20, 1998, the Company, through one of its consolidated
partnerships, assumed two mortgage notes in connection with the acquisition
of three properties located in Las Vegas, Nevada. One mortgage note has a
principal balance of $6,245, matures on July 1, 2011 and provides for monthly
principal and interest payments of $47 based on an interest rate of 7.50% per
annum and a 23-year amortization schedule. The second mortgage note has a
principal balance of $7,547, matures on December 1, 2009 and provides for
monthly principal and interest payments of $63 based on an interest rate of
8.30% per annum and a 22-year amortization schedule.
6. PROPERTY ACQUISITIONS AND DEVELOPMENTS
During the three months ended March 31, 1998, the Company, either
directly or through one of its consolidated partnerships, purchased eight
properties located in California, Nevada and Texas, with an aggregate square
footage of approximately 773,000. The aggregate purchase price for these
properties totaled $43,737. The Company funded a portion of these
acquisitions from cash reserves and funded the majority of the remaining
costs with borrowings under the Unsecured Credit Facility. In addition, the
Company assumed two mortgage notes totaling $13,792. In connection with the
acquisition relating to the consolidated partnership, the Company's minority
partners' contribution is valued at $9,860.
During the three months ended March 31, 1998, the Company, acquired 56
acres of land scheduled for future development for an aggregate purchase
price of $10,848. The costs to develop these parcels are expected to
aggregate to approximately $37,000, to be funded from drawings on the
Unsecured Credit Facility and from cash reserves. These properties, when
complete, will total approximately 968,000 square feet.
At March 31, 1998, the Company, either directly or through consolidated
partnerships, had ten warehouse/distribution properties under development
which will comprise approximately 3,782,000 square feet upon completion. The
aggregate cost for the design and construction of these development projects
is estimated to be approximately $129,481. At March 31, 1998, the Company
had incurred total project costs of approximately $55,748 on these
development projects. The Company anticipates funding the balance of these
development costs from cash reserves and borrowings under the Unsecured
Credit Facility.
In connection with the development activities relating to the
consolidated partnerships, the Company's minority partners contributed land
and other consideration valued at $5,273.
7. PROPERTY DISPOSITION
On February 28, 1998, the Company sold a property located in Tennessee
for a sales price of $1,880. After closing costs, escrow holdback and
pro-rated items which totaled $110, the Company received net proceeds of
$1,770. The net proceeds were used to repay borrowings on the Unsecured
Credit Facility.
F-9
<PAGE>
8. SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING TRANSACTIONS
The following table summarizes non-cash investing and financing
transactions for the three months ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
--------- --------
<S> <C> <C>
Property Acquisitions:
Acquisition Price $ 58,416 $ --
Land for Built-to-Suit Facilities 1,196 9,410
Minority Limited Partners' Capital Contributions (9,860) 1,130
Mortgage Notes Payable Assumed (17,468) --
Accrued Closing Costs and Pro-rated Items (517) 227
Property Dispositions:
Net Basis (1,697) (2,811)
Other Assets Net of Other Liabilities (12) (14)
</TABLE>
9. SUBSEQUENT EVENTS
ACQUISITIONS
Subsequent to March 31, 1998, the Company, either directly, or through
its consolidated partnerships and unconsolidated subsidiaries, acquired seven
properties with an aggregate purchase price of $38,624 located in California,
Ohio and Texas. These acquisition costs were funded through borrowings under
the Unsecured Credit Facility, cash reserves and the assumption of $3,921 in
mortgage notes payable. The properties acquired have square footage totaling
approximately 892,000. In addition, the Company acquired approximately 47
acres of land scheduled for future development for a total purchase price of
$4,178, funded from an escrow account.
DISPOSITIONS
On May 1, 1998, the Company sold a property located in California for a
sales price of $10,200. After closing costs and pro-rated items which
totaled $277 and acceptance of a note receivable of $8,000, the Company
received net cash proceeds of $1,923.
OTHER
Subsequent to March 31, 1998, the Company and a minority partner of one
of its consolidated partnerships, executed an Assignment of Partnership
Interests, whereby the Company, as the managing general partner, exercised
its right to purchase the partnership interest of the minority partner. The
Company purchased the partnership interest for a total purchase price of
$1,089.
Subsequent to March 31, 1998, the minority partners of one of the
Company's consolidated partnerships contributed a property located in
Orlando, Florida with a square footage of 120,000. The minority partner's
contribution totaled $950. With regard to this transaction, the partnership
previously assumed a mortgage note payable in the amount of $3,676 (see Note
5).
Subsequent to March 31, 1998, the Company entered into a property
exchange transaction. This transaction involved the Company's transfer of its
interest in three properties located in Nashville, Tennessee with an exchange
value and book value of $7,977 to the seller in exchange for five properties
owned by the seller located in Memphis, Tennessee with an exchange value of
$8,327. In addition, the Company paid $350 to the seller representing the
difference in the exchange value between the properties and closing costs and
prorated items totaling $203.
F-10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
(DOLLARS IN THOUSANDS, UNLESS INDICATED OTHERWISE)
INTRODUCTION
The Company is a self-administered and self-managed real estate
operating company engaged primarily in the business of owning, acquiring,
developing, managing and leasing income-producing warehouse/distribution and
light industrial properties. At March 31, 1998, the Company's principal
asset was its portfolio of 200 warehouse/distribution and light industrial
properties and two retail properties. As of March 31, 1998 and 1997, the
Company's properties were 95% and 96% occupied, respectively.
The following discussion should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31, 1997,
the Company's Quarterly Report on Form 10-Q for the three months ended March
31, 1997 and the Condensed Consolidated Balance Sheets, Condensed
Consolidated Statements of Operations and Condensed Consolidated Statements
of Cash Flows and the notes thereto included in pages 2 through 10 of this
report. Unless otherwise defined in this report, or unless the context
otherwise requires, the capitalized words or phrases used in this section
either (i) describe accounting terms that are used as line items in such
financial statements, or (ii) have the meanings ascribed to them in such
financial statements and the notes thereto.
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
The Company intends to finance property acquisitions, development,
expansions and renovations using a combination of cash flow from operations
and bank and institutional debt financing, supplemented with private or
public debt or equity placements. Where intermediate or long-term debt
financing is employed, the Company generally seeks to obtain fixed interest
rates or enter into agreements intended to cap the effective interest rate on
floating rate debt. The Company intends to operate with a ratio of
debt-to-total market capitalization that generally will not exceed 50%.
Total market capitalization is defined as the sum of total indebtedness and
the market value of the Company's outstanding Common Stock, after giving
effect to the conversion of the Company's 2,272,727 outstanding shares of
Series B Preferred Stock. At March 31, 1998, the Company's debt-to-total
market capitalization rate was 30.8%.
SOURCES OF LIQUIDITY
The Company's main sources of liquidity are: (i) cash flows from
operating activities, (ii) cash reserves, (iii) borrowings under the
Unsecured Credit Facility, (iv) proceeds from private or public equity or
debt placements, and (v) proceeds from the sale of properties. A summary of
the Company's historical cash flows for the three months ended March 31,
1998, are as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash flows provided by (used in):
Operating activities $ 11,277
Investing activities (77,284)
Financing activities 61,491
</TABLE>
In addition to cash flows and net income, management and industry
analysts generally consider Funds From Operations to be one additional
measure of the performance of an equity REIT because, together with net
income and cash flows, Funds From Operations provides investors with an
additional basis to evaluate the ability of the Company to incur and service
debt and to fund acquisitions and other capital expenditures. However, Funds
From Operations does not measure whether cash flow is sufficient to fund all
of the Company's cash
F-11
<PAGE>
needs including principal amortization, capital improvements and
distributions to stockholders. Funds From Operations also does not represent
cash generated from operating, investing or financing activities as
determined in accordance with generally accepted accounting principles.
Funds From Operations should not be considered as an alternative to net
income as an indicator of the Company's operating performance or as an
alternative to cash flow as a measure of liquidity. Funds From Operations is
defined by the National Association of Real Estate Investment Trusts
("NAREIT") as net income or loss (computed in accordance with generally
accepted accounting principles), excluding gains or losses from debt
restructuring and sales of properties, plus depreciation and amortization of
real estate assets, and after adjustment for unconsolidated partnerships and
joint ventures. The Company calculates Funds From Operations as defined by
NAREIT and as interpreted in the White Paper (i.e. the Company does not add
back amortization of deferred financing costs and depreciation of non-rental
real estate assets to net income). In addition, other real estate companies
may calculate Funds From Operations differently than the Company. A
reconciliation of Funds From Operations to net income for the three months
ended March 31, 1998 and 1997 is summarized below:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
1998 1997
--------- --------
<S> <C> <C>
Net Income $ 10,223 $ 4,785
Reconciling Items:
Depreciation and Amortization of
Real Estate Assets 4,987 1,986
(Gain) on Divestiture of Properties (61) (428)
Convertible Minority Interest In
Net Income 44 --
--------- --------
Funds From Operations $ 15,193 $ 6,343
--------- --------
--------- --------
</TABLE>
At March 31, 1998, the Company had approximately $3,339 in unrestricted
cash and cash equivalents.
At March 31, 1998, the outstanding balance on the Mortgage Loan was
$66,094. The Mortgage Loan bears interest at the annual rate of 8.63% and
requires interest only payments until its maturity in 2005.
During the three months ended March 31, 1998, the Company borrowed
$85,800 under its Unsecured Credit Facility to fund property acquisitions and
developments.
At March 31, 1998, the outstanding balances on the Company's unsecured
notes and corresponding premium were $160,000 and $108, respectively. The
unsecured senior notes were issued in two tranches, $135,000 maturing on
November 20, 2007, bearing an interest rate of 7.25% per annum, and $25,000
maturing on November 20, 2009, bearing an interest rate of 7.30% per annum.
Interest on these notes is payable semiannually.
On May 13, 1997, the Company purchased a property located in Montebello,
California, subject to a mortgage note payable and corresponding premium
totaling $10,429 and $324, respectively, at acquisition. The loan has a
maturity date of July 15, 1998 and provides for monthly principal and
interest payments of $96 based on an interest rate of 9.89% per annum and a
30-year amortization schedule. At March 31, 1998, this mortgage note payable
and debt premium had outstanding balances of $10,319 and $83, respectively.
The Company, through one of its consolidated partnerships, assumed a
mortgage note in connection with a contribution of a property located in
Orlando, Florida (see Note 5 of the Notes to Condensed Consolidated Financial
Statements). The new loan has a principal balance of $3,676 and a maturity
date of February 1, 2006. The new loan provides for monthly principal and
interest payments of $28 based on an interest rate of 7.90% per annum and a
25-year amortization schedule. At March 31, 1998, this mortgage note payable
had an outstanding balance of $3,668.
F-12
<PAGE>
On March 20, 1998, the Company, through one of its consolidated
partnerships, assumed two mortgage notes in connection with the acquisition
of three properties located in Las Vegas, Nevada. One mortgage note has a
principal balance of $6,245, matures on July 1, 2011 and provides for monthly
principal and interest payments of $47 based on an interest rate of 7.50% per
annum and a 23-year amortization schedule. The second mortgage note has a
principal balance of $7,547, matures on December 1, 2009 and provides for
monthly principal and interest payments of $63 based on an interest rate of
8.30% per annum and a 22-year amortization schedule.
The Company currently has a policy of incurring debt only if, upon such
incurrence, the Company's debt-to-total market capitalization would be 50% or
less. However, the Company's organizational documents do not contain any
limitation on the amount of indebtedness the Company may incur. Accordingly,
the Board could alter or eliminate this policy and would do so if, for
example, it were necessary in order for the Company to continue to qualify as
a REIT. If this policy were changed, the Company could become more highly
leveraged, resulting in an increase in debt service that could adversely
affect the cash available for distribution to stockholders and could increase
the risk of default on the Company's indebtedness.
In addition to the variable interest rate contracts on the Unsecured
Credit Facility, the Company may incur indebtedness in the future that bears
interest at a variable rate or it may be required to refinance its debt at
higher rates. As a result, increases in interest rates could increase the
Company's interest expense, which could adversely affect the Company's
ability to pay distributions to stockholders.
In connection with the Merger, the Company issued approximately 553,000
warrants to purchase an equal number of shares of the Company's Common Stock
(the "Merger Warrants"). May 23, 1997, was the first day of the exercise
period for the Merger Warrants. Each Merger Warrant entitles the holder to
purchase one share of the Company's Common Stock at the exercise price of
$16.23. The exercise period ends February 23, 1999. As of March 31, 1998,
the Company had issued 43,894 shares pursuant to exercise of the Merger
Warrants.
In addition, the Company issued a warrant to purchase 184,900 shares of
the Company's Common Stock at an exercise price of $14.60 per share. The
warrant is exercisable in whole or in part at any time from May 23, 1997 to
February 23, 1999. No shares of Common Stock have been issued pursuant to
this warrant as of March 31, 1998.
On February 28, 1998, the Company sold a property located in Tennessee
for a sales price of $1,880. After closing costs, escrow holdback and
pro-rated items which totaled $110, the Company received net proceeds of
$1,770.
Subsequent to March 31, 1998, the Company sold a property located in
California for a sales price of $10,200. After closing costs and pro-rated
items which totaled $277 and acceptance of a note receivable of $8,000, the
Company received net cash proceeds of $1,923.
USES OF LIQUIDITY
The Company's principal applications of its cash resources are: (i)
funding of property acquisitions and developments; (ii) payments of capital
improvements and leasing costs; (iii) payment of distributions to its
stockholders; (iv) payment of property operating costs including property
expenses, property taxes, general and administrative expenses, and interest
expense; and (v) principal payments on debt.
The Company anticipates during 1998 that it will have sufficient cash
flows to fund: (i) its operating needs, (ii) capital improvements on its
properties, and (iii) the proposed distributions to its common and preferred
stockholders. Planned capital improvements on the Company's properties
consist of tenant improvements and other expenditures necessary to lease and
maintain the properties.
F-13
<PAGE>
During the three months ended March 31, 1998, the Company declared
dividends to holders of its Common Stock and Series B Preferred Stock in the
amounts of $9,955 and $750, respectively, or $0.33 and $0.33 per share,
respectively.
During the three months ended March 31, 1998, the Company repaid
borrowings on its Unsecured Credit Facility totaling $14,500.
DEVELOPMENT PROJECTS
During the three months ended March 31, 1998, the Company, acquired 56
acres of land scheduled for future development for an aggregate purchase
price of $10,848. The costs to develop these parcels are expected to
aggregate to approximately $37,000, to be funded from drawings on the
Unsecured Credit Facility and from cash reserves. These properties, when
complete, will total approximately 968,000 square feet.
At March 31, 1998, the Company, either directly or through consolidated
partnerships, had ten warehouse/distribution properties under development
which will comprise approximately 3,782,000 square feet upon completion. The
aggregate cost for the design and construction of these development projects
is estimated to be approximately $129,481. At March 31, 1998, the Company
had incurred total project costs of approximately $55,748 on these
development projects. The Company anticipates funding the balance of these
development costs from cash reserves and borrowings under the Unsecured
Credit Facility.
In connection with the development activities relating to the
consolidated partnerships, the Company's minority partners contributed land
and other consideration valued at $5,273.
PROPERTY ACQUISITIONS
During the three months ended March 31, 1998, the Company, either
directly or through one of its consolidated partnerships, purchased eight
properties located in California, Nevada and Texas, with an aggregate square
footage of approximately 773,000. The aggregate purchase price for these
properties totaled $43,737. The Company funded a portion of these
acquisitions from cash reserves and funded the majority of the remaining
costs with borrowings under the Unsecured Credit Facility. In addition, the
Company assumed two mortgage notes totaling $13,792. In connection with the
acquisition relating to the consolidated partnership, the Company's minority
partners' contribution is valued at $9,860.
INVESTMENTS IN AND ADVANCES TO UNCONSOLIDATED SUBSIDIARIES
On February 19, 1998, the Company through an unconsolidated subsidiary,
Meridian Refrigerated, Inc. ("MRI"), purchased the real estate, operating
assets, including $15,263 in cash, and business of Arctic Cold Storage, Inc.
("Arctic") for an aggregate purchase price of $36,000. The investment in MRI
is comprised of secured and unsecured notes and non-voting participating
preferred stock. The voting common stock of MRI is owned by certain officers
of the Company and MRI. The Company accounts for its investment in MRI using
the equity method. The outstanding balances on the secured and unsecured
notes totaled $14,400 and $2,604 at March 31, 1998, respectively.
MRI is a cold storage distribution and freight consolidation company and
currently operates three refrigerated warehouse facilities located in
California. The Company funded its investment in MRI with borrowings under
the Unsecured Credit Facility.
EVENTS SUBSEQUENT TO MARCH 31, 1998
Subsequent to March 31, 1998, the Company, either directly, or through
its consolidated partnerships and unconsolidated subsidiaries, acquired seven
properties with an aggregate purchase price of $38,624
F-14
<PAGE>
located in California, Ohio and Texas. These acquisition costs were funded
through borrowings under the Unsecured Credit Facility, cash reserves and the
assumption of $3,921 in mortgage notes payable. The properties acquired have
square footage totaling approximately 892,000. In addition, the Company
acquired approximately 47 acres of land scheduled for future development for
a total purchase price of $4,178, funded from an escrow account.
Subsequent to March 31, 1998, the Company and a minority partner of one
of its consolidated partnerships, executed an Assignment of Partnership
Interests, whereby the Company, as the managing general partner, exercised
its right to purchase the partnership interest of the minority partner. The
Company purchased the partnership interest for a total purchase price of
$1,089.
Subsequent to March 31, 1998, the Company entered into a property
exchange transaction. This transaction involved the Company's transfer of its
interest in three properties located in Nashville, Tennessee with an exchange
value and book value of $7,977 to the seller in exchange for five properties
owned by the seller located in Memphis, Tennessee with an exchange value of
$8,327. In addition, the Company paid $350 to the seller representing the
difference in the exchange value between the properties and closing costs and
prorated items totaling $203.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Rentals from Real Estate Investments for the three months ended March
31, 1998 and 1997 totaled $26,260 and $11,695, respectively. The increase of
$14,565 was primarily due to (i) properties acquired during 1997 and 1998
("Property Acquisitions") which increased rental revenues by $13,638 and (ii)
the rental revenues generated by the build-to-suit properties placed in
service during 1997 ("Completed Build-to-Suits") totaling $1,303. These
increases were partially offset by properties divested during 1997 and 1998
("Property Divestitures") which reduced rental revenues by $388.
Income from Unconsolidated Joint Venture totaled $495 for the three
months ended March 31, 1998 resulting from interest income on the $21,500
participating mortgage loan purchased by the Company in 1997 in connection
with the property-for-stock transaction with Ameritech Pension Trust.
Income from Unconsolidated Subsidiaries totaled $187 for the three
months ended March 31, 1998 resulting primarily from interest income on MRI's
secured and unsecured notes payable to the Company (see Note 3 of the Notes
to Condensed Consolidated Financial Statements).
Compared to the first quarter of 1997, Interest Expense increased by
$2,968 to $4,592 during the three months ended March 31, 1998. The increase
was primarily due to interest expense on the Company's completion of a
private offering of $160,000 in principal of unsecured senior notes to
institutional investors in November 1997.
Compared to the first quarter of 1997, Property Taxes increased by
$1,680 to $3,309 during the three months ended March 31, 1998. The increase
was primarily due to (i) Property Taxes attributable to the Property
Acquisitions totaling $1,608 and (ii) Property Taxes for the Completed
Build-to-Suits totaling $106. These increases were partially offset by
Property Divestitures which reduced Property Taxes by $63.
Compared to the first quarter of 1997, Property Operating Expenses
increased by $913 to $1,999 during the three months ended March 31, 1998.
The increase was primarily due to (i) Property Operating Expenses
attributable to the Property Acquisitions totaling $1,010 and (ii) Property
Operating Expenses for the Completed Build-to-Suits totaling $238. These
increases were partially offset by Property Divestitures, which reduced
Property Operating Expenses by $78.
General and Administrative Expenses totaled $1,889 and $1,152 for the
three months ended March 31, 1998 and 1997, respectively. The increase of
$737 is primarily due to (i) an increase in personnel and
F-15
<PAGE>
administrative costs of $443 arising from the growth of the Company, (ii) an
increase of $132 in costs relating to terminated property deals and (iii) an
increase of $118 in accounting and legal fees resulting from increased
property portfolio.
Compared to the first quarter of 1997, Depreciation and Amortization
Expense increased by $2,999 to $5,003 during the three months ended March 31,
1998. The increase was primarily due to (i) Depreciation Expense
attributable to the Property Acquisitions totaling $2,659 and (ii)
Depreciation Expense for the Completed Build-to-Suits totaling $257. These
increases were partially offset by Property Divestitures, which reduced
Depreciation and Amortization Expenses by $64.
The Gain on Divestiture of Properties totaling $61 for the three months
ended March 31, 1998 was due to the divestiture of 4013 Premier property
located in Tennessee.
The Gain on Divestiture of Properties totaling $428 for the three months
ended March 31, 1997 was primarily attributable to the divestiture of
Birmingham I and Birmingham II properties located in Alabama.
F-16
<PAGE>
- --------------------------------------------------------------------------------
PART II: OTHER INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the Company
or any corporation or partnership in which the Company has an interest is
a party or to which any of the assets of the Company or any such entity is
subject.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS:
10.1(1) Employment letter signed by Brian R. Barringer dated
January 26, 1998.
27.1(1) Financial Data Schedule.
(b) REPORTS ON FORM 8-K:
The following reports on Form 8-K were filed during the quarter ended
March 31, 1998:
Current Report on Form 8-K dated February 18, 1998 reporting
Supplemental Financial Information (this Form 8-K was filed on
February 23, 1998).
Current Report on Form 8-K dated March 16, 1998 reporting the
Adoption of the Shareholders Rights Plan (this Form 8-K was filed on
March 16, 1998).
- --------------------------------------
(1) Filed with this report.
F-17
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of 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.
MERIDIAN INDUSTRIAL TRUST, INC.
Dated: May 15, 1998 By: /s/ Allen J. Anderson
------------------------------------
Allen J. Anderson
Chairman and Chief Executive Officer
(Principal Executive Officer)
Dated: May 15, 1998 By: /s/ Milton K. Reeder
------------------------------------
Milton K. Reeder
President and Chief Financial Officer
(Principal Financial Officer)
F-18
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
(corresponding to the Sequentially
Exhibit Table of Item Numbered
601 of Regulation S-K) Description Page
- ---------------------- ----------- ----
<C> <S> <C>
10.1 Employment letter signed by Brian R. Barringer dated
January 26, 1998.
27.1 Financial data schedule.
</TABLE>
<PAGE>
[LETTERHEAD]
CONFIDENTIAL
January 21, 1998
Mr. Brian Barringer
12 Baker Street
West Roxbury, MA 02132
Dear Brian:
We are pleased to hereby extend to you a revised offer of employment with
Meridian Industrial Trust, Inc. ("MIT") under the terms of employment described
below. This letter agreement is intended to set forth our agreement regarding
the terms of your employment with MIT and, when executed by you and returned to
us, will constitute a binding agreement between you and MIT.
MIT agrees to employ you in the position of Vice President Acquisitions,
Eastern Region. You will report directly to Dennis Higgs, Executive Vice
President. You agree to perform such services and to perform them in such job
position and during such hours as are designated for you by MIT. You agree to at
all times abide by the policies, procedures and directions of MIT.
MIT agrees to pay you a starting annual base salary of $125,000 and a signing
bonus of $20,000 (payable within 15 days of employment). MIT may adjust that
salary from time to time in its sole discretion in view of changes in your job
duties and responsibilities, your job performance, the company's financial
performance, and other similar business factors.
You understand and agree that your employment with MIT is "at will." This means
that either you or MIT may terminate your employment with MIT at any time, for
any reason, with or without cause.
Your benefits with MIT include Medical, Dental, Life, Accidental Death and
Dismemberment and Long Term Disability insurance. Premiums for employee medical
and dental coverage are paid at 100%; dependent care coverage is available for
medical, dental and life insurance benefits.
Upon fulfilling eligibility requirements, you will be entitled to participate in
the MIT 401(k) Plan. Details and enrollment information will be provided to
you.
<PAGE>
Mr. Brian Barringer
January 21, 1998
Page 2
Your annual vacation is fifteen business days.
You may earn up to $125,000 (100%) maximum annual cash bonus contingent upon
achieving acquisition goals and objectives. In the event those goals and
objectives are exceeded, a bonus in excess of 100% will be recommended to the
Compensation Committee of the Board of Directors.
You will be granted 50,000 Meridian Industrial Trust, Inc. (MDN) common stock
options. The options will be priced at the fair market value of Meridian
Industrial Trust, Inc. common shares on the date that the Compensation Committee
of the Board of Directors approves the stock option grant. Vesting in the
options will occur at an even rate over a period of five (5) years and will be
subject to the terms of the Incentive Stock Option Agreement for Employees.
As a result of the training and knowledge you receive from MIT and the
relationship of trust and confidence between the parties, you will come into
possession of certain confidential information pertaining to MIT's business and
operations. "Confidential information" includes all information pertaining to
MIT or its clients, customers, suppliers, agents, or vendors which has actual or
potential economic value, is not generally known to the public, and which could
not be discovered by the general public through the exercise of ordinary
diligence. Such information includes, but is not limited to, documents and
information regarding personnel, products, customers, pricing, terms of sale,
research and development, finances, business plans, customer lists, business
opportunities, marketing strategy, and any similar items relating to the
business of MIT.
You agree that you will not, either during your employment with MIT or
thereafter, disclose any confidential information to any third party, except
with the express approval of MIT's President, or his designee.
Upon the cessation of your employment, you agree to immediately surrender and
deliver to MIT all company property, including without limitation all documents,
records, materials, equipment, drawings, and other data, whether maintained in
computerized form or otherwise, pertaining to any trade secrets or other
confidential or proprietary information.
This letter agreement constitutes the sole and entire agreement between the
parties concerning your employment and supersedes any and all other agreement
between you and MIT, whether oral or written, implied or express. You
acknowledge that while your salary, benefits, job title and job duties may
change from time to time without a written modification of this letter
agreement, any such changes will not affect the validity of this letter
agreement or the termination provisions contained in this agreement. Any
modification to this letter agreement will be effective only if it is a written
modification that expressly refers to this letter agreement and is signed by you
and an authorized representative of MIT.
If any provision of this letter agreement is held void or unenforceable for any
reason, that provision shall be severed from the agreement, and all remaining
provisions shall be valid and fully enforceable.
<PAGE>
Mr. Brian Barringer
January 21, 1998
Page 3
This letter agreement shall be construed, applied, and interpreted in accordance
with the laws of the state of California.
Your date of employment with MIT will be determined pending further discussion.
We ask that you indicate your acceptance of this offer on or before January 26th
by signing in the space provided below and returning an original signed copy of
this letter prior to that date.
We look forward to your employment with MIT.
Sincerely,
MERIDIAN INDUSTRIAL TRUST, INC.
By: /s/ Dennis D. Higgs
-------------------------------------
Dennis Higgs
Executive Vice President, Real Estate
The undersigned accepts and agrees to the foregoing terms and conditions.
/s/ Brian R. Barringer Dated: 1/26 , 1998
- ------------------------------------------ ------------
(Employees Signature)
Brian R. Barringer
- ------------------------------------------
(Please Print Name)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,658,000
<SECURITIES> 0
<RECEIVABLES> 3,523,000
<ALLOWANCES> (366,000)
<INVENTORY> 0
<CURRENT-ASSETS> 18,094,000
<PP&E> 923,636,000
<DEPRECIATION> (19,085,000)
<TOTAL-ASSETS> 961,174,000
<CURRENT-LIABILITIES> 41,009,000
<BONDS> 335,545,000
0
2,000
<COMMON> 30,000
<OTHER-SE> 569,366,000
<TOTAL-LIABILITY-AND-EQUITY> 961,174,000
<SALES> 0
<TOTAL-REVENUES> 27,043,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 12,200,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,592,000
<INCOME-PRETAX> 10,223,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,223,000
<EPS-PRIMARY> 0.31
<EPS-DILUTED> 0.31
</TABLE>
