<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: July 8, 1998
------------
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)
<PAGE>
Pursuant to Rule 12b-15 under the Securities Exchange Act of 1934, the
Registrant hereby amends its Report of Form 8-K dated July 2, 1998 by amending
and restating Items 5 and 7 thereof in its entirety as follows:
ITEM 5. OTHER EVENTS.
On April 2, 1998, Meridian Industrial Trust, Inc. (the "Company") completed
the acquisition of a property located in Ontario, California for total
consideration of $12.3 million. In order to comply with the requirements of
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission
regarding audits of acquisitions which are individually insignificant but
when taken together with other acquisitions are in the aggregate significant,
the Company hereby files the accompanying statements of revenues and certain
expenses of the 5141 E. Santa Ana Property for the year ended December 31,
1997 and for the three months ended March 31, 1998.
In addition, the Company is providing as part of this Report on Form 8-K pro
forma condensed consolidated financial information relating to certain
acquisitions, divestitures and certain other transactions completed through June
30, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION, AND EXHIBITS.
(c) EXHIBITS. The following exhibits are attached to this report:
23.1 Consent of Independent Public Accountants.
99.1 Statements of Revenues and Certain Expenses of the
5141 E. Santa Ana Property for the year ended
December 31, 1997 and the three months ended
March 31, 1998.
99.2 Pro Forma Condensed Consolidated Financial Information.
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.
MERIDIAN INDUSTRIAL TRUST, INC.
Date: July 8, 1998 By:
------------ -----------------------------
Robert A. Dobbin
Secretary
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of
our report dated June 22, 1998 included in this Report on Form 8-K, into the
Company's previously filed Registration Statements File Nos. 333-24579 and
333-57101.
/s/ Arthur Andersen LLP
San Francisco, California
July 8, 1998
<PAGE>
Exhibit 99.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Meridian Industrial Trust, Inc.:
We have audited the accompanying statement of revenues and certain expenses
of the 5141 E. Santa Ana Property, as defined in Note 1, for the year ended
December 31, 1997. This financial statement is the responsibility of the
management of the Company. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared
for the purpose of complying with 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 5141 E. Santa Ana Property.
In our opinion, the financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the
5141 E. Santa Ana Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
San Francisco, California
June 22, 1998
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE 5141 E. SANTA ANA PROPERTY FOR THE YEAR ENDED DECEMBER 31, 1997
AND THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998 Year Ended
(unaudited) December 31, 1997
--------------------------------------
<S> <C> <C>
RENTAL REVENUES $ 311 $ 1,247
CERTAIN EXPENSES:
Real estate taxes 33 135
Property operating and maintenance 11 48
-------- --------
44 183
-------- --------
Revenues in excess of certain expenses $ 267 $ 1,064
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES OF
THE 5141 E. SANTA ANA PROPERTY FOR THE YEAR ENDED DECEMBER 31, 1997
AND THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
(IN THOUSANDS)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PROPERTY ACQUIRED
The accompanying statements of revenues and certain expenses include the
operations (see "Basis of Presentation" below) of the 5141 E. Santa Ana
Property (the "Property"), an industrial property located in Los Angeles,
California acquired by Meridian Industrial Trust, Inc. (the "Company") in
April 2, 1998.
BASIS OF PRESENTATION
The accompanying statements of revenues and certain expenses are not
representative of the actual operations of the Property for the periods
presented. Certain expenses may not be comparable to the expenses expected
to be incurred by the Company in the proposed future operations of the
Property; however, the Company is not aware of any material factors
relating to the Property that would cause the reported financial
information not to be indicative of future operating results.
The property is subject to a single tenant, triple net lease. As a result,
the tenant directly pays all recurring operating expenses including
maintenance, utilities and landscaping, as well as real estate taxes. The
Property pays only insurance and management fees directly. Other excluded
expenses consist primarily of interest expense, depreciation and
amortization, and other costs not directly related to the future operations
of the Property. The Company has reported real estate taxes on a
"grossed-up" basis consistent with the method it uses for its own reporting
purposes.
The financial information presented for the three months ended March 31,
1998 is not audited. In the opinion of management, the unaudited financial
information contains all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the statements of revenues
and certain expenses for the Property.
REVENUE RECOGNITION
The lease is classified as an operating lease, and rental revenues is
recognized on a straight-line basis over the term of the lease.
<PAGE>
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.
Actual results may differ from these estimates.
2. LEASING ACTIVITY:
Future minimum rental revenues under the noncancellable operating lease
agreement in effect at April 1, 1998 and annually thereafter are as
follows (in thousands):
<TABLE>
<CAPTION>
YEAR ENDING DEC. 31 AMOUNT
--------------------------------- -------------------
<S> <C>
1998 (9 months) $ 834
1999 1,112
2000 1,112
2001 1,112
2002 1,112
2003 741
</TABLE>
No expenses were reimbursed to the Property since the tenant has paid all
expenses directly.
<PAGE>
EXHIBIT 99.2
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
BACKGROUND
The accompanying unaudited pro forma condensed consolidated balance
sheet as of March 31, 1998 has been prepared to reflect (i) the acquisition
costs of properties acquired by Meridian Industrial Trust, Inc. (the
"Company") from April 1, 1998 to June 30, 1998 which were funded from draws
made on its Unsecured Credit Facility, (ii) the divestiture of properties
from April 1, 1998 to June 30, 1998, (iii) the completion of a public
offering of 2,000,000 shares of 8.75% Series D Cumulative Redeemable
Preferred Stock which was consummated by the Company on June 30, 1998
("Preferred Stock Offering"), and (iv) the paydown of the Unsecured Credit
Facility using the net proceeds from the Divestitures and Preferred Stock
Offering, as if such transactions and adjustments had occurred on March 31,
1998.
The accompanying unaudited pro forma condensed consolidated statements of
operations for the three months ended March 31, 1998 and for the year ended
December 31, 1997 have been prepared to reflect (i) the incremental effect of
properties acquired from January 1, 1998 to June 30, 1998 ("Acquisitions"), (ii)
the incremental effect of properties divested from January 1, 1998 to June 30,
1998 ("Divestitures") and the paydown of the Unsecured Credit Facility using the
net proceeds received, and (iii) the incremental effect of the Preferred Stock
Offering and the paydown of the Unsecured Credit Facility using the net proceeds
received, as if such transactions and adjustments had occurred on January 1,
1997. In addition, the accompanying pro forma condensed consolidated statement
of operations for the year ended December 31, 1997 reflects acquisitions,
divestitures and certain other transactions as further described in the
accompanying footnotes.
These unaudited pro forma condensed consolidated statements should be read
in connection with the respective historical financial information and notes
thereto contained in the Company's Quarterly Report on Form 10-Q for the three
months ended March 31, 1998 and Annual Report on Form 10-K for the year ended
December 31, 1997. In the opinion of management, the pro forma condensed
consolidated financial information provides for all adjustments necessary to
reflect the effects of the Acquisitions, Divestitures, Preferred Stock Offering,
and the paydown of the Unsecured Credit Facility.
The pro forma condensed consolidated statements and notes thereto are
unaudited and are not necessarily indicative of the actual 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.
F-1
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
PREFERRED
STOCK
HISTORICAL (1) ACQUISITIONS (2) DIVESTITURES (3) OFFERING (4) PRO FORMA
--------------- ----------------- ----------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment in real estate assets, net $ 904,551 $ 56,448 $ (13,913) $ - $ 947,086
Investments in and advances to
unconsolidated subsidiaries 21,233 23,825 - - 45,058
Cash and cash equivalents 3,658 (350) - - 3,308
Restricted cash and cash held in escrow 11,279 (4,228) - - 7,051
Accounts receivable, net 3,157 - - - 3,157
Capitalized loan fees and other assets 17,296 747 7,841 - 25,884
---------------- -----------------------------------------------------------------------
Total Assets $ 961,174 $ 76,442 $ (6,072) $ - $ 1,031,544
---------------- -----------------------------------------------------------------------
---------------- -----------------------------------------------------------------------
LIABILITIES
Unsecured notes, net $ 160,108 $ - $ - $ - $ 160,108
Mortgage loan 66,094 - - - 66,094
Unsecured credit facility 91,800 64,789 (1,923) (48,125) 106,541
Mortgage notes payable, net 27,862 3,921 - - 31,783
Other liabilities 30,690 6,279 (6,302) - 30,667
---------------- -------------------- ------------------- -------------- -----------
Total Liabilities 376,554 74,989 (8,225) (48,125) 395,193
---------------- -------------------- ------------------- -------------- -----------
Minority interest in consolidated
limited partnerships 15,222 1,453 - - 16,675
---------------- -------------------- ------------------- -------------- -----------
STOCKHOLDERS' EQUITY
Common and preferred stock 32 - - 2 34
Additional paid-in capital 574,589 - - 48,123 622,712
Distributions in excess of income (5,223) - 2,153 - (3,070)
---------------- -------------------- ------------------- -------------- -----------
Total Stockholders' Equity 569,398 - 2,153 48,125 619,676
---------------- -------------------- ------------------- -------------- -----------
Total Liabilities and Stockholders'
Equity $ 961,174 $ 76,442 $ (6,072) $ - $ 1,031,544
---------------- -------------------- ------------------- -------------- -----------
---------------- -------------------- ------------------- -------------- -----------
</TABLE>
F-2
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES AND ADJUSTMENTS TO
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
(1) Reflects the historical condensed consolidated balance sheet of the Company
as of March 31, 1998.
(2) Reflects the acquisition of fourteen properties by the Company either
directly or through one of its consolidated partnerships which were
consummated from April 1, 1998 to June 30, 1998. Five of the properties
were acquired through a property for property swap transaction. The
properties acquired were funded with: (i) funds released from an escrow
account amounting to $4,228, (ii) draws on its Unsecured Credit Facility,
(iii) the assumption of a mortgage note payable in the principal amount of
$3,921, and (iv) cash on hand. In connection with the acquisition of
properties relating to the consolidated partnerships, the Company's
minority partners contribution amounted to $2,090. The Company also bought
out a minority partner in a partnership who had a capital balance of $637.
In addition, the Company through an unconsolidated subsidiary, Meridian
Refrigerated, Inc. ("MRI"), purchased in June 1998 all the stock of a
company that owned three cold storage facilities located in Texas and
Florida. The Company provided MRI with additional funding aggregating
to $23,825 comprising secured and unsecured notes receivable totaling
$15,358 and $3,167, respectively, and non-voting participating preferred
stock. The Company owns all of the non-voting participating preferred
stock of MRI and accounts for its investment using the equity method. The
additional investment in MRI by the Company was funded with a draw on its
Unsecured Credit Facility.
(3) Reflects the divestiture of four properties subsequent to April 1, 1998.
The San Carlos property located in California was sold for $10,200, of
which $8,000 was received in the form of a note receivable. The note
receivable earns interest at 8.5% per annum, matures on May 1, 2007, and
requires interest only payments. After closing costs and pro rated items,
the net cash proceeds amounting to $1,923 were used to paydown borrowings
on the Unsecured Credit Facility.
Three properties located in Memphis, Tennessee with net book values of
$6,149 were divested in conjunction with a property for property swap
transaction subsequent to April 1, 1998.
(4) Reflects the completion by the Company of a public offering of 2,000,000
shares of Series D Preferred Stock at an offering price of $25.00 per
share resulting in gross proceeds of $50,000. The Series D Preferred
Stock has an aggregate liquidation preference of $50,000 and accrues
dividends at a rate of 8.75% per annum based upon the liquidation
preference. In connection with the Series D Preferred Stock Offering,
the Company incurred costs of $1,875. The net cash proceeds of $48,125
were used to paydown borrowings on the Unsecured Credit Facility.
F-3
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Preferred
Stock
Historical (1) Acquisitions (2) Divestitures (3) Offering (4) Pro Forma
-------------- ---------------- ---------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Rental and other revenue $ 26,755 $ 2,814 $ (707) $ - $ 28,862
Income from unconsolidated subsidiaries 187 613 - - 800
Interest income and other 101 - 170 - 271
-------------- ---------------- ---------------- ------------ -----------
Total revenue 27,043 3,427 (537) - 29,933
-------------- ---------------- ---------------- ------------ -----------
OPERATING EXPENSES:
Interest 4,592 2,214 (54) (843) 5,909
Property taxes 3,309 328 (85) - 3,552
Property operating 1,999 239 (66) - 2,172
General and administrative 1,889 - - - 1,889
Depreciation and amortization 5,003 518 (108) - 5,413
-------------- ---------------- ---------------- ------------ -----------
Total operating expenses 16,792 3,299 (313) (843) 18,935
-------------- ---------------- ---------------- ------------ -----------
Income before minority interest 10,251 128 (224) 843 10,998
Minority interest in net (income) (89) (158) - - (247)
-------------- ---------------- ---------------- ------------ -----------
Income before gain on $ 10,162 $ (30) $ (224) $ 843 $ 10,751
divestiture of properties -------------- ---------------- ---------------- ------------ -----------
-------------- ---------------- ---------------- ------------ -----------
Income before gain on $ 10,162 $ 10,751
divestiture of properties
Less: Series D preferred stock dividends - (1,094)
-------------- -----------
Income before gain on
divestiture of properties allocable to
Series B preferred and common 10,162 9,657
Less: Series B preferred stock
dividends (5) (750) -
-------------- -----------
Income before gain on
divestiture of properties allocable to
common $ 9,412 $ 9,657
-------------- -----------
-------------- -----------
Basic per share data: (5)
Income before gain on
divestiture of properties allocable to
common per basic weighted average common
share outstanding $ 0.31 $ 0.30
-------------- -----------
-------------- -----------
Diluted per share data: (5)
Income before gain on
divestiture of properties allocable to
common per diluted weighted average common
share outstanding $ 0.31 $ 0.29
-------------- -----------
-------------- -----------
Weighted average common shares outstanding: (5)
Basic 30,178,469 32,451,196
-------------- -----------
-------------- -----------
Diluted 30,818,742 33,091,469
-------------- -----------
-------------- -----------
</TABLE>
F-4
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES AND ADJUSTMENTS TO
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
(1) Represents the historical condensed consolidated results of operations for
the three months ended March 31, 1998.
(2) Reflects the incremental effect (i.e. as if such activities had occurred or
been completed on January 1, 1997) of acquisitions by the Company either
directly or through one of its consolidated partnerships. Eight of the
properties were acquired during the three months ended March 31, 1998. The
incremental depreciation and amortization is based upon estimated useful
lives of 35 years.
The following table sets forth the revenues and expenses of the
Acquisitions for the period from January 1, 1998 to the
earlier of the date of acquisition or March 31, 1998:
<TABLE>
<CAPTION>
Minority
Property Interest in
Rental Property Operating Net
Property Market Revenue Taxes Expenses (Income)
-------- ------ ------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
5141 East Santa Ana LA Basin, CA $ 311 $ 33 $ 11 $ --
15450 E. Salt Lake Ave. LA Basin, CA 71 17 5 --
Foothills Ranch and
Rancho Santa Margarita
Properties (total of 4
properties) LA Basin, CA 148 25 3 --
7050 Alan
Schwartzwalder Columbus, OH 83 1 5 --
624 Krona Drive Dallas, TX 65 10 10 --
Property Swap
Transaction (total of
5 properties) Memphis, TN 629 73 65 --
25 Otis Street New Jersey/I-95 151 14 18 --
2300 Principal Row Orlando, FL 126 12 12 --
MDN/JSC II
L.P. Properties Las Vegas, NV
(total of 7 properties) and Dallas, TX 1,230 143 110 (158)
------- -------- --------- --------
Total $ 2,814 $ 328 $ 239 $ (158)
------- -------- --------- --------
------- -------- --------- --------
</TABLE>
The Acquisitions were funded with: (i) funds released from an escrow
account amounting to $4,228, (ii) draws on its Unsecured Credit Facility,
(iii) the assumption of mortgage notes payable in the principal amount of
$21,389, and (iv) cash on hand.
The adjustments to the pro forma interest expense for the three months
ended March 31, 1998 are based upon the Company's pro forma debt balance
as of March 31, 1998 as follows:
<TABLE>
<S> <C>
Unsecured notes:
Balance of $135,000 bearing interest at 7.25% $ 2,447
Balance of $25,000 bearing interest at 7.30% 456
Mortgage loan, balance of $66,094 bearing interest at 8.63% 1,426
Unsecured credit facility, balance of $106,541 bearing
interest at 7.01% 1,867
Mortgage notes payable based upon an average interest
rate of 7.57% 602
Unused commitment fee based on unadjusted pro forma
debt balance on the Unsecured Credit Facility of $143,459 90
Amortization of loan fees 74
Agency fee 13
Capitalized interest, based on average historical construction
in process of $60,770 at an effective interest rate of 7.33% (1,066)
Pro forma interest expense for the three months ended ----------
March 31, 1998 $ 5,909
----------
----------
</TABLE>
F-5
<PAGE>
The estimated incremental income from unconsolidated subsidiaries was based
on (i) pro forma equity losses from MRI totaling $26, (ii) secured loans
extended to MRI totaling $29,758 ($14,400 in February and $15,358 in June)
accruing interest at 9% per annum, and (iii) unsecured loans extended to
MRI totaling $5,567 ($2,400 in February and $3,167 in June) accruing
interest at 10% per annum. The incremental interest income accrued by the
Company on the secured and unsecured loans extended to MRI amounted to $525
and $114, respectively.
(3) Reflects the divestiture of two properties in February and May,
respectively, and three properties, through a property for property swap
transaction which occurred in June. The net proceeds from the sales
aggregated to $3,693 and were used to repay borrowings under the Unsecured
Credit Facility. In connection with the sale of the San Carlos property,
the Company received a note receivable in the principal amount of $8,000.
The note receivable accrues interest at 8.5% per annum, requires monthly
payments of interest only, and matures on May 1, 2007.
(4) Reflects the incremental effect of the Company's Preferred Stock Offering
of 2,000,000 shares of Series D Preferred Stock. The net proceeds of
approximately $48,125 were used to repay pro forma borrowings on the
Company's Unsecured Facility. The estimated interest reduction was based
upon an assumed rate of 7.01% per annum.
(5) Basic earnings per share is computed as net income or loss allocable to
common divided by the weighted average number of shares of Common Stock
outstanding, excluding the dilutive effects of stock options and other
potentially dilutive securities.
Dilutive earnings per share is computed as net income or loss allocable to
common divided by the weighted average number of shares of Common Stock
outstanding, plus the dilutive effect of stock options and other
potentially dilutive securities.
The Company understands that the holders of the Series B Preferred Stock
intend to convert their shares into Common Stock. Accordingly, the pro
forma financial statements assume the conversion of all of the outstanding
2,272,727 shares of Series B Preferred Stock into Common Stock on a
one-for-one basis. The dividends to the Series B Preferred stockholders
were therefore eliminated in the calculation of net income allocable to
common in the pro forma condensed consolidated financial statements.
(6) Pro forma taxable income for the twelve months ended March 31, 1998 is
approximately $43,840.
F-6
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Unadjusted Pro
Forma Preferred Stock
Operations (1) Acquisitions (2) Divestitures (3) Offering (4) Pro Forma
-------------- ---------------- ---------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES:
Rental and other revenue $ 100,672 $ 11,244 $ (2,872) $ - $ 109,044
Income from unconsolidated subsidiaries - 3,223 - - 3,223
Interest income and other 2,014 - 680 - 2,694
-------------- ---------------- ---------------- --------------- ----------
Total revenue 102,686 14,467 (2,192) - 114,961
-------------- ---------------- ---------------- --------------- ----------
OPERATING EXPENSES:
Interest 19,843 7,738 (271) (3,528) 23,782
Property taxes 11,898 1,283 (238) - 12,943
Property operating 9,032 879 (348) - 9,563
General and administrative 6,212 - - - 6,212
Depreciation and amortization 18,492 2,246 (432) - 20,306
-------------- ---------------- ---------------- --------------- ----------
Total operating expenses 65,477 12,146 (1,289) (3,528) 72,806
-------------- ---------------- ---------------- --------------- ----------
Income before minority interest 37,209 2,321 (903) 3,528 42,155
Minority interest in net (income) (30) (630) - - (660)
-------------- ---------------- ---------------- --------------- ----------
Income before gain (loss) on
divestiture of properties
and extraordinary item $ 37,179 $ 1,691 $ (903) $ 3,528 $ 41,495
-------------- ---------------- ---------------- --------------- ----------
-------------- ---------------- ---------------- --------------- ----------
Income before gain (loss) on
divestiture of properties
and extraordinary item $ 37,179 $ 41,495
Less Series D preferred stock dividends - (4,375)
-------------- ----------
Income before gain (loss) on
divestiture of properties
and extraordinary item allocable to
Series B preferred and common 37,179 37,120
Less Series B preferred stock dividends (5) (2,818) -
-------------- ----------
Income before gain (loss) on
divestiture of properties
and extraordinary item allocable to
common $ 34,361 $ 37,120
-------------- ----------
-------------- ----------
Basic per share data: (5)
Income before gain (loss) on
divestiture of properties
and extraordinary item allocable to
common per basic weighted average common
share outstanding $ 1.14 $ 1.14
-------------- ----------
-------------- ----------
Diluted per share data: (5)
Income before gain (loss) on
divestiture of properties
and extraordinary item allocable to common
per diluted weighted average common
share outstanding $ 1.12 $ 1.13
-------------- ----------
-------------- ----------
Weighted average common shares outstanding: (5)
Basic 30,165,662 32,438,389
-------------- ----------
-------------- ----------
Diluted 30,638,817 32,911,544
-------------- ----------
-------------- ----------
</TABLE>
F-7
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES AND ADJUSTMENTS TO
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
(1) The following table sets forth the incremental effects on the Company's
historical revenues and expenses for the year ended December 31, 1997
resulting from pro forma adjustments made to the Company's historical
results of operations for the year ended December 31, 1997 to reflect
(i) the incremental effect of completed property acquisitions by the
Company either directly or through one of its consolidated partnerships
during 1997; (ii) the incremental effect of properties divested by the
Company in 1997, (iii) the second amendment of the Unsecured Credit
Facility resulting in the reduction in the interest rate to LIBOR plus
1.3%; and (iv) the completion in November 1997 of a private offering of
$160,000 in principal of unsecured senior notes, as if such transactions
and adjustments had occurred on January 1, 1997.
<TABLE>
<CAPTION>
PROPERTY
ACQUISITIONS UNADJUSTED
1997 AND UNSECURED PROPERTY 1997
HISTORICAL SENIOR NOTES DIVESTITURES PRO FORMA
(A) (B) (C) OPERATIONS
---------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
REVENUES:
Rental and other
revenue $64,136 $37,244 $(708) $100,672
Interest income
and other 2,014 -- -- 2,014
---------- ------------ ------------ ----------
Total revenue 66,150 37,244 (708) 102,686
---------- ------------ ------------ ----------
OPERATING EXPENSES:
Interest 11,022 9,642 (821) 19,843
Property taxes 8,194 3,809 (105) 11,898
Property operating 5,540 3,665 (173) 9,032
General and
administrative 6,212 -- -- 6,212
Depreciation and
amortization 11,194 7,412 (114) 18,492
---------- ------------ ------------ ----------
Total operating
expenses 42,162 24,528 (1,213) 65,477
---------- ------------ ------------ ----------
NET INCOME BEFORE
MINORITY INTEREST $23,988 $12,716 $ 505 $ 37,209
---------- ------------ ------------ ----------
---------- ------------ ------------ ----------
</TABLE>
(A) On a historical basis, the Company's net income allocable to common was
$19,870. Basic and diluted earnings per share was $1.12 and $1.09,
respectively, based on weighted average common shares outstanding of
17,791,304 and 18,264,459, respectively.
(B) In 1997, the Company entered into five separate agreements with
different institutional sellers and acquired a total of 95 industrial
properties and a secured participating mortgage loan. The purchase
price aggregated to $360,803, including a participating loan which was
purchased for $21,500. The portfolio acquisitions were funded with
(i) the issuance of 16,277,554 shares of the Company's Common Stock,
(ii) borrowings on its Unsecured Credit Facility, and (iii) cash on
hand.
F-8
<PAGE>
In addition to the portfolio acquisitions, during 1997, the Company
purchased thirteen properties. The aggregate purchase price for these
properties totaled $90,401. The acquisitions were funded with
(i) borrowings on its Unsecured Credit Facility, (ii) assumption of
mortgage notes totaling $16,153, (iii) proceeds from the issuance of
414,508 shares of the Company's Common Stock at an offering price of
$24.125 per share, and (iv) cash on hand.
During 1997, the Company issued unsecured senior notes 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. The proceeds from the unsecured
senior notes were used to repay the above borrowings made on the
Unsecured Credit Facility to fund property acquisitions.
The adjustments to the unadjusted 1997 pro forma interest expense are based
upon the Company's unadjusted pro forma debt balance as of December 31, 1997 as
follows:
<TABLE>
<S> <C>
Unsecured notes:
Balance of $135,000 bearing interest at 7.25% $ 9,788
Balance of $25,000 bearing interest at 7.30% 1,825
Mortgage loan, balance of $66,094 bearing interest at 8.63% 5,703
Unsecured credit facility, balance of $20,500 bearing
interest at 7.33% 1,503
Mortgage notes payable based upon an average interest
rate of 8.12% 1,200
Unused commitment fee based on unadjusted pro forma
debt balance on the Unsecured Credit Facility of $20,500 574
Amortization of loan fees 295
Agency fee 50
Capitalized interest, based on historical construction
in process of $14,935 at an effective interest rate of 7.33% (1,095)
---------
Unadjusted 1997 pro forma interest expense $ 19,843
---------
---------
</TABLE>
(C) During 1997, the Company sold five properties for an aggregate sales
price of $11,833. After closing costs and pro-rated items which totaled
$638, the Company received net proceeds from the property sales
aggregating to $11,195 which were used to repay borrowings on the
Unsecured Credit Facility.
(2) Reflects the incremental effect (i.e. as if such activities had occurred or
been completed on January 1, 1997) of completed property acquisitions by the
Company during 1998, either directly or through one of its consolidated
partnerships. The incremental depreciation and amortization is based upon
estimated useful lives of 35 years.
The following table sets forth the revenues and expenses of the Acquisitions
for the year ended December 31, 1997:
<TABLE>
<CAPTION>
Minority
Property Interest in
Rental Property Operating Net
Property Market Revenue Taxes Expenses (Income)
- ------------------------- ---------------- ------- -------- --------- -----------
<S> <C> <C> <C> <C> <C>
5141 East Santa Ana LA Basin, CA $ 1,247 $ 135 $ 48 $ --
15450 E. Salt Lake Ave. LA Basin, CA 283 67 25 --
Foothills Ranch and
Rancho Santa Margarita
properties (total of 4
properties) LA Basin, CA 922 198 25 --
7050 Alan Columbus, OH 333 5 20 --
Schwartzwalder
624 Krona Drive Dallas, TX 292 50 36 --
Property Swap
Transaction (total of
5 properties) Memphis, TN 2,516 291 261 --
25 Otis Street New Jersey/I-95 605 57 73 --
2300 Principal Row Orlando, FL 505 50 48 --
MDN/JSC II
L.P. Properties Las Vegas, NV
(total of 7 properties) and Dallas, TX 4,541 430 343 (630)
------- -------- --------- -----------
Total $11,244 $1,283 $879 $(630)
------- -------- --------- -----------
------- -------- --------- -----------
</TABLE>
F-9
<PAGE>
The Acquisitions were funded with: (i) draws on its Unsecured Credit
Facility, (ii) the assumption of a mortgage notes payable in the
principal amount of $21,389, (iii) funds released from an escrow account
amounting to $4,228 and (iv) cash on hand.
The adjustments to the pro forma interest expense for the year ended
December 31, 1997 are based upon the Company's pro forma debt balance
as of March 31, 1998 as follows:
<TABLE>
<S> <C>
Unsecured notes:
Balance of $135,000 bearing interest at 7.25% $ 9,788
Balance of $25,000 bearing interest at 7.30% 1,825
Mortgage loan, balance of $66,094 bearing interest at 8.63% 5,703
Unsecured credit facility, balance of $106,541 bearing
interest at 7.33% 7,809
Mortgage notes payable based upon an average interest
rate of 7.57% 2,407
Unused commitment fee based on unadjusted pro forma
debt balance on the Unsecured Credit Facility of $143,459 359
Amortization of loan fees 295
Agency fee 50
Capitalized interest, based on historical construction
in process of $60,770 at an effective interest rate of 7.33% (4,454)
---------
Pro forma interest expense for the year ended Dec. 31, 1997 $ 23,782
---------
---------
</TABLE>
The estimated incremental income from unconsolidated subsidiary was based
on (i) pro forma equity losses from MRI totaling $57, (ii) secured loans
extended to MRI totaling $29,758 accruing interest at 9% per annum, and
(iii) unsecured loans extended to MRI totaling $5,567 accruing interest
at 10% per annum. The incremental interest income accrued by the Company
on the secured and unsecured loans extended to MRI amounted to $2,708 and
$572, respectively.
(3) Reflects the divestiture of five properties during 1998, three of which
were through a property for property swap transaction. The net proceeds
from the sales aggregated to $3,693 and were used to repay borrowings
under the Unsecured Credit Facility. In connection with the sale of
the San Carlos property, the Company received a note receivable in the
principal amount of $8,000. The note receivable accrues interest at 8.5%
per annum, requires monthly payments of interest only, and matures on
May 1, 2007. No gain or loss on divestiture was recognized in connection
with the property swap transaction.
(4) Reflects the incremental effect of the Company's Preferred Stock Offering
of 2,000,000 shares of Series D Preferred Stock. The net proceeds of
approximately $48,125 were used to repay pro forma borrowings on the
Company's Unsecured Facility. The estimated interest reduction was based
upon an assumed rate of 7.33% per annum.
(5) Basic earnings per share is computed as net income or loss allocable to
common divided by the weighted average number of shares of Common Stock
outstanding, excluding the dilutive effects of stock options and other
potentially dilutive securities.
Dilutive earnings per share is computed as net income or loss allocable
to Series B preferred and common divided by the weighted average number
of shares of Common Stock outstanding, plus the dilutive effect of stock
options and other potentially dilutive securities.
The Company understands that the holders of the Series B Preferred Stock
intend to convert their shares into Common Stock. Accordingly, the pro
forma financial statements assume the conversion of all of the outstanding
2,272,727 shares of Series B Preferred Stock into Common Stock on a
one-for-one basis. The dividends to the Series B Preferred stockholders were
therefore eliminated in the calculation of net income allocable to common
in the pro forma condensed consolidated financial statements.
(6) Pro forma taxable income for the year ended December 31, 1997 is
approximately $37,845.
F-10
