<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: December 4, 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>
ITEM 5. OTHER EVENTS.
On October 30, 1998, Meridian Industrial Trust, Inc. (the "Company") completed
the acquisition of a portfolio of properties located in Ohio, Kentucky and
Florida (the "Pizzuti Portfolio") for total consideration of approximately $32.0
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 Pizzuti Portfolio for the
year ended December 31, 1997 and for the nine months ended September 30, 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 the
date of this report.
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 Pizzuti
Portfolio for the year ended December 31, 1997 and the nine
months ended September 30, 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: December 4, 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 November 20, 1998 included in this Report on Form 8-K, into the
Company's previously filed Registration Statements File Nos. 333-00018,
333-24579, 333-24583 and 333-57101.
/s/ Arthur Andersen LLP
San Francisco, California
December 4, 1998
<PAGE>
EXHIBIT 99.1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Meridian Industrial Trust, Inc.:
We have audited the accompanying combined statement of revenues and certain
expenses of the Pizzuti Portfolio, as defined in Note 1, for the year ended
December 31, 1997. This financial statement is the responsibility of the
management of Meridian Industrial Trust, Inc. 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 combined statement of revenues and certain expenses was
prepared for the purpose of complying with Rule 3-14 of the Securities and
Exchange Commission's rules and regulations and is not intended to be a complete
presentation of the revenues and expenses of the Pizzuti Portfolio.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the revenues and certain expenses of the
Pizzuti Portfolio for the year ended December 31, 1997, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen LLP
San Francisco, California
November 20, 1998
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
COMBINED STATEMENTS OF REVENUE AND
CERTAIN EXPENSES OF THE PIZZUTI PORTFOLIO
FOR THE YEAR ENDED DECEMBER 31, 1997 AND FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
1997 1998
-----------------------
(UNAUDITED)
<S> <C> <C>
RENTAL REVENUE $ 738 $ 1,387
CERTAIN EXPENSES:
Real estate taxes 6 15
Property operating and maintenance 5 17
-----------------------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 727 $ 1,355
-----------------------
-----------------------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES TO COMBINED STATEMENTS OF REVENUE AND
CERTAIN EXPENSES OF THE PIZZUTI PORTFOLIO
DECEMBER 31, 1997 AND SEPTEMBER 30, 1998 (UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
PORTFOLIO ACQUIRED
The accompanying combined statements of revenues and certain expenses include
the operations (see "Basis of Presentation" below) of the Pizzuti Portfolio (the
"Pizzuti Portfolio") acquired by Meridian Industrial Trust, Inc. (the Company)
on October 30, 1998. The Pizzuti Portfolio consists of the following
properties:
- Canal Pointe Development--placed in service on December 1, 1996
- Carrier Corporation--placed in service on March 1, 1998
- Valley Records--placed in service on May 1, 1998
- MicroCenter--placed in service on August 4, 1998
As of October 30, 1998 all of the acquired properties were 100% occupied.
BASIS OF PRESENTATION
The accompanying combined statements of revenues and certain expenses are not
representative of the actual operations of the Pizzuti Portfolio 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 Pizzuti
Portfolio; however, the Company is not aware of any material factors relating to
the Pizzuti Portfolio that would cause the reported financial information not to
be indicative of future operating results.
The properties are all subject to single-tenant, triple-net leases. As a
result, the tenant directly pays all recurring operating expenses, including
insurance, maintenance, utilities, and landscaping. The Pizzuti Portfolio pays
only management fees and real estate taxes. Excluded expenses consist primarily
of interest expense, depreciation and amortization, and other costs not directly
related to the future operations of the Pizzuti Portfolio.
The financial information presented for the nine months ended September 30,
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 combined statements of revenues and
certain expenses of the Pizzuti Portfolio.
REVENUE RECOGNITION
All leases are classified as operating leases, and rental revenue is recognized
over the terms of the leases.
<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 noncancelable operating lease agreements in
effect at October 1, 1998, and annually thereafter are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
-------------------- -----------------
(IN THOUSANDS)
<S> <C>
1998 (3 months) $ 750
1999 3,014
2000 3,056
2001 3,058
2002 3,074
Thereafter 14,667
--------
Total $ 27,619
--------
--------
</TABLE>
All leases are triple-net leases whereby the individual tenants are responsible
for all expenses and obligations relating to the respective property. Certain
leases contain options to renew.
<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 September 30, 1998 has been prepared to reflect the acquisition costs of
properties acquired by Meridian Industrial Trust, Inc. (the "Company") from
October 1, 1998 to December 4, 1998. These acquisitions were funded from draws
made on the Company's unsecured credit facility (the "Unsecured Credit
Facility") and an additional borrowing under a mortgage note payable.
The accompanying unaudited pro forma condensed consolidated statements of
operations for the nine months ended September 30, 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 December 4, 1998 ("Acquisitions"),
(ii) the incremental effect of properties divested from January 1, 1998 to
December 4, 1998 ("Divestitures") and (iii) adjustments to interest expense
resulting from the paydown of the Unsecured Credit Facility using the net
proceeds received from a preferred stock offering in June, 1998 and a direct
placement of 850,000 shares of the Company's Common Stock (collectively, the
"Stock Offerings"), additional borrowings on the Unsecured Credit Facility to
fund the acquisitions referred to above and the additional borrowing under a
mortgage note payable 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 nine
months ended September 30, 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, Stock Offerings,
additions to, and the paydown of, the Unsecured Credit Facility and an
additional borrowing under a mortgage note payable.
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 SEPTEMBER 30, 1998
(UNAUDITED, IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL (1) ACQUISITIONS (2) DIVESTITURES (3) PRO FORMA
<S> <C> <C> <C> <C>
ASSETS
Investment in real estate assets, net $ 1,077,794 $ 72,984 $ - $ 1,150,778
Investments in and advances to
unconsolidated subsidiaries 45,907 - - 45,907
Cash and cash equivalents 3,535 - - 3,535
Restricted cash and cash held in escrow 10,912 - - 10,912
Accounts and notes receivable, net 14,989 - - 14,989
Capitalized loan fees and other assets 24,490 - - 24,490
----------------- -------------------------------------------------------------
Total Assets $ 1,177,627 $ 72,984 $ - $ 1,250,611
----------------- -------------------------------------------------------------
----------------- -------------------------------------------------------------
LIABILITIES
Unsecured notes, net $ 160,102 $ - $ - $ 160,102
Mortgage loan 66,094 - - 66,094
Unsecured credit facility 235,300 56,848 - 292,148
Mortgage notes payable, net 21,218 16,000 - 37,218
Other liabilities 49,871 136 - 50,007
----------------- ------------------ ------------------ --------------
Total Liabilities 532,585 72,984 - 605,569
----------------- ------------------ ------------------ --------------
Minority interest in consolidated
limited partnerships 17,605 - - 17,605
----------------- ------------------ ------------------ --------------
STOCKHOLDERS' EQUITY
Common and preferred stock 35 - - 35
Additional paid-in capital 642,041 - - 642,041
Distributions in excess of income (14,639) - - (14,639)
----------------- ------------------ ------------------ --------------
Total Stockholders' Equity 627,437 - - 627,437
----------------- ------------------ ------------------ --------------
Total Liabilities and Stockholders'
Equity $ 1,177,627 $ 72,984 $ - $ 1,250,611
----------------- -------------------------------------------------------------
----------------- -------------------------------------------------------------
</TABLE>
F-2
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES AND ADJUSTMENTS TO
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
(1) Reflects the historical condensed consolidated balance sheet of the Company
as of September 30, 1998.
(2) Reflects the acquisition of eight properties by the Company either directly
or through one of its consolidated partnerships during the period from
October 1, 1998 to December 4, 1998. Six of the properties are operating
properties and two are land acquisitions for future development. The
properties acquired were funded with (i) draws on the Company's Unsecured
Credit Facility, and (ii) an additional borrowing under a mortgage note
payable in the principal amount of $16,000, bearing interest at a fixed
rate of 6.74%, due in 2008.
(3) There were no property divestitures during the period from October 1, 1998
to December 4, 1998.
F-3
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical (1) Acquisitions Divestitures (3) Other (4) Pro Forma
---------------- --------------- ----------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Rentals from real estate investments $ 85,726 $ 6,949 $ (2,815) $ - $ 89,860
Income from unconsolidated JV 1,485 - - - 1,485
Income from unconsolidated subsidiaries 1,534 864 - - 2,398
Interest and other income 994 121 224 - 1,339
--------------- -------------- --------------- ---------- -----------
Total revenue 89,739 7,934 (2,591) - 95,082
--------------- -------------- --------------- ---------- -----------
OPERATING EXPENSES:
Interest 17,344 - - 663 18,007
Property taxes 10,900 766 (288) - 11,378
Property operating 6,579 457 (411) - 6,625
General and administrative 6,015 - - - 6,015
Depreciation and amortization 16,729 1,706 (414) - 18,021
--------------- -------------- --------------- ---------- -----------
Total operating expenses 57,567 2,929 (1,113) 663 60,046
--------------- -------------- --------------- ---------- -----------
Income before minority interest 32,172 5,005 (1,478) (663) 35,036
Minority interest in net (income) (423) (473) - - (896)
--------------- -------------- --------------- ---------- -----------
NET INCOME (8) $ 31,749 $ 4,532 $ (1,478) $ (663) $ 34,140
--------------- -------------- --------------- ---------- -----------
--------------- -------------- --------------- ---------- -----------
Net income $ 31,749 $ 34,140
Less: Series B preferred stock dividends (5) (1,821) (1,607)
Less: Series D preferred stock dividends (6) (1,106) (3,281)
--------------- -----------
NET INCOME ALLOCABLE TO COMMON $ 28,822 $ 29,252
--------------- -----------
--------------- -----------
BASIC PER SHARE DATA:
NET INCOME ALLOCABLE TO COMMON PER BASIC
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING (7) $ 0.94 $ 0.92
--------------- -----------
--------------- -----------
DILUTED PER SHARE DATA:
NET INCOME ALLOCABLE TO COMMON PER DILUTED
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING (7) $ 0.93 $ 0.91
--------------- -----------
--------------- -----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 30,622,741 31,674,027
--------------- -----------
--------------- -----------
Diluted 31,079,886 32,131,172
--------------- -----------
--------------- -----------
</TABLE>
F-4
<PAGE>
MERIDIAN INDUSTRIAL TRUST, INC.
NOTES AND ADJUSTMENTS TO
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED, IN THOUSANDS, EXCEPT SHARE DATA)
(1) Represents the historical condensed consolidated results of operations for
the nine months ended September 30, 1998. Included in the historical
consolidated results of operations were the following completed
developments which the Company either placed in service or acquired from
the seller upon completion of the development project during the nine
months ended September 30, 1998:
<TABLE>
<CAPTION>
Book Value
Before Property
Development Date Placed Accumulated Rental Operating
Property in Service Depreciation Revenue Property Tax Expenses
-------- ---------- ------------ ------- ------------ --------
<S> <C> <C> <C> <C> <C>
Enterprise B June 6, 1998 $ 4,632 $ 213 $ 25 $ 16
Enterprise C June 8, 1998 6,557 348 38 6
Gateway One June 30, 1998 19,251 549 51 --
2235 Spiegel Drive July 24, 1998 19,270 356 8 3
Carowinds Aug. 5, 1998 21,822 560 -- --
4000 Miler Circle Sept. 3, 1998 19,099 173 20 --
--------- ------- ------ -----
Total $ 90,631 $ 2,199 $ 142 $ 25
--------- ------- ------ -----
--------- ------- ------ -----
</TABLE>
(2) Reflects the incremental effect (i.e. as if such Acquisitions had occurred
or been completed on January 1, 1997) of the Acquisitions made by the
Company either directly or through one of its consolidated partnerships
during the period from January 1, 1998 to December 4, 1998. Thirty-four of
the properties were acquired during the nine months ended September 30,
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 September 30, 1998:
<TABLE>
<CAPTION>
Property Minority
Rental Interest Operating Interest in
Property Market Revenue Income Property Tax Expenses Net Income
-------- ------ ------- ------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
25 Otis Street New Jersey $ 287 $ -- $ 27 $ 34 $ --
2300 Principal
Row Orlando 133 -- 13 13 --
624 Krona Drive Dallas 60 -- 10 7 --
Foothills Ranch
(2 Properties) LA Basin 121 -- 16 3 --
22831 Avenida
Empressa LA Basin -- -- 10 -- --
29962 Avenida de
las Banderas LA Basin -- -- -- -- --
7050 Alan
Schwartzwalder Columbus 101 -- 2 6 --
15450 E. Salt
Lake Avenue LA Basin 97 -- 23 9 --
</TABLE>
F-5
<PAGE>
<TABLE>
<CAPTION>
Property Minority
Rental Interest Operating Interest in
Property Market Revenue Income Property Tax Expenses Net Income
-------- ------ ------- ------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Security Capital
Swap (5
Properties) Memphis 870 -- 100 90 --
701 Malaga LA Basin 157 -- 73 60 --
20191 Windrow
Drive LA Basin -- -- 20 -- --
Romeo Portfolio
(2 Properties) Chicago 593 -- 71 40 --
8399 Zionsville
Road Indianapolis 270 -- 48 -- --
5141 E. Santa Ana LA Basin 314 -- 33 11 --
Jackson Shaw II Dallas and
(7 Properties) Las Vegas 1,337 121 152 110 473
Oates Portfolio (3
Properties) SF Bay Area 1,222 -- 153 57 --
Pizzuti Portfolio Columbus,
(4 Properties) Kentucky and
Florida 1,387 -- 15 17 --
------- ----- ----- ----- -----
Total $ 6,949 $ 121 $ 766 $ 457 $ 473
------- ----- ----- ----- -----
------- ----- ----- ----- -----
</TABLE>
The Acquisitions were funded with: (i) funds released from an escrow
account amounting to $4,228, (ii) draws on the Unsecured Credit Facility,
(iii) the assumption of mortgage notes payable in the principal amount of
$16,153, (iv) an additional borrowing under a mortgage note payable in the
principal amount of $16,000, and (v) cash on hand.
Also reflects estimated incremental income from unconsolidated subsidiaries
based on (i) pro forma equity income from Meridian Refrigerated, Inc.
("MRI") totaling $156, (ii) secured loans extended to MRI totaling $29,758
($14,400 in February, 1998 and $15,358 in June, 1998) accruing interest at
9% per annum, and (iii) unsecured loans extended to MRI totaling $5,567
($2,400 in February, 1998 and $3,167 in June, 1998) 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 $576 and $132,
respectively.
The Company extended a loan to a minority limited partner aggregating to
$6,000. The note receivable is secured by the limited partner's
partnership units, bears interest at the one-month LIBOR rate plus 2.75%
(8.28% at December 3, 1998) with interest payable monthly, and matures
on March 20, 2001.
Included in the Pizzuti Portfolio are three completed developments that
were placed in service by the seller during the nine months ended
September 30, 1998:
<TABLE>
<CAPTION>
Book Value
Before Property
Development Date Placed Accumulated Rental Operating
Property in Service Depreciation Revenue Property Tax Expenses
-------- ---------- ------------ ------- ------------ --------
<S> <C> <C> <C> <C> <C>
2000 Park Oaks Ave. March 1, 1998 $ 6,251 $ 312 $ 2 $ 12
7111 Trade Port Drive May 1, 1998 9,476 379 2 3
2701 Charter Street Aug. 4, 1998 8,020 127 1 2
-------- ----- ---- -----
Total $ 23,747 $ 818 $ 5 $ 17
-------- ----- ---- -----
-------- ----- ---- -----
</TABLE>
F-6
<PAGE>
(3) Reflects the divestiture of seven properties during 1998, three of which
were through a property-for-property swap transaction. The net proceeds
from the remaining divestitures aggregated to $23,297 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) The adjustments to the pro forma interest expense for the nine months ended
September 30, 1998 are based upon the Company's pro forma debt balance as
of September 30, 1998 as follows:
<TABLE>
<S> <C>
Unsecured notes:
Balance of $135,000 bearing interest at 7.25% $ 7,341
Balance of $25,000 bearing interest at 7.30% 1,369
Mortgage loan, balance of $66,094 bearing interest at 8.63% 4,277
Unsecured credit facility, balance of $292,148 bearing interest at
LIBOR + 1.2% (6.73% at December 3, 1998) 14,746
Mortgage notes payable bearing interest at rates ranging from
6.74% to 8.30% 2,042
Unused commitment fee based on unadjusted pro forma debt
balance on the Unsecured Credit Facility of $57,852 65
Amortization of loan fees 880
Agency fee 38
Capitalized interest, based on average historical construction
in process of $185,043 at an effective interest rate of 6.73% (12,751)
------------
Pro forma interest expense for the nine months ended
September 30, 1998 $ 18,007
------------
------------
</TABLE>
(5) Pro forma Series B Preferred Stock dividends are based upon 1,623,376
shares outstanding on September 30, 1998, paying dividends at an annual
rate of $1.32 per share. 649,351 shares of Series B Preferred Stock were
converted into Common Stock on a one-for-one basis in July, 1998.
(6) Reflects the incremental effect of the Company's Preferred Stock Offering
of 2,000,000 shares of Series D Preferred Stock, paying dividends at an
annual rate of $2.1875 per share. The net proceeds of approximately
$48,125 were used to repay borrowings on the Company's Unsecured Credit
Facility.
(7) 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.
Diluted 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.
(8) Pro forma taxable income for the nine months ended September 30, 1998 was
approximately $31,171.
F-7
<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 Acquisitions Divestitures
Operations (1) (2) (3) Other (4) Pro Forma
---------------- --------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Rentals from real estate investments $ 100,672 $ 15,346 $ (5,643) $ - $ 110,375
Income from unconsolidated subsidiaries - 3,223 - - 3,223
Interest and other income 2,014 497 680 - 3,191
-------------- -------------- -------------- -------------- --------------
Total revenue 102,686 19,066 (4,963) - 116,789
-------------- -------------- -------------- -------------- --------------
OPERATING EXPENSES:
Interest 19,843 207 20,050
Property taxes 11,898 1,850 (490) - 13,258
Property operating 9,032 1,096 (740) - 9,388
General and administrative 6,212 - - - 6,212
Depreciation and amortization 18,492 4,087 (795) - 21,784
-------------- -------------- -------------- -------------- --------------
Total operating expenses 65,477 7,033 (2,025) 207 70,692
-------------- -------------- -------------- -------------- --------------
Income before minority interest 37,209 12,033 (2,938) (207) 46,097
Minority interest in net (income) (30) (630) - - (660)
-------------- -------------- -------------- -------------- --------------
NET INCOME (8) $ 37,179 $ 11,403 $ (2,938) $ (207) $ 45,437
-------------- -------------- -------------- -------------- --------------
-------------- -------------- -------------- -------------- --------------
Net income $ 37,179 $ 45,437
Less: Series B preferred stock dividends (5) (2,818) (2,143)
Less: Series D preferred stock dividends (6) - (4,375)
-------------- --------------
NET INCOME ALLOCABLE TO COMMON $ 34,361 $ 38,919
-------------- --------------
-------------- --------------
BASIC PER SHARE DATA:
NET INCOME ALLOCABLE TO COMMON PER BASIC
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING (7) $ 1.14 $ 1.23
-------------- --------------
-------------- --------------
DILUTED PER SHARE DATA:
NET INCOME ALLOCABLE TO COMMON PER DILUTED
WEIGHTED AVERAGE COMMON SHARE OUTSTANDING (7) $ 1.12 $ 1.21
-------------- --------------
-------------- --------------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 30,165,662 31,674,027
-------------- --------------
-------------- --------------
Diluted 30,638,817 32,131,172
-------------- --------------
-------------- --------------
</TABLE>
F-8
<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 Unaudited
1997 and Unsecured Property 1997
Historical Senior Notes Divestitures Pro Forma
(A) (B) (C) Operations
------------- ----------------- -------------- ----------------
<S> <C> <C> <C> <C>
REVENUES:
Rental from real
estate investments $ 64,136 $ 37,244 $ (708) $ 100,672
Interest and other
income 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 an historical basis, the Company's net income allocable to common was
$19,870. Basic and diluted earnings per share were $1.12 and $1.09,
respectively, based on weighted average common shares outstanding of
17,791,304 and 18,264,459, respectively.
F-9
<PAGE>
Included in the 1997 historical results of operations were the following
completed developments which the Company either placed in service or acquired
from the seller upon completion of the development project during the year
ended December 31, 1997:
<TABLE>
<CAPTION>
Book Value
Before Property
Development Date Placed Accumulated Rental Property Operating
Project in Service Depreciation Revenue Tax Expenses
------- ---------- ------------ ------- --- --------
<S> <C> <C> <C> <C> <C>
80th Avenue April 30, 1997 $ 9,305 $ 736 $ 114 $ 9
Highlands Parkway July 1, 1997 7,821 903 14 368
2200 Cedars Road Aug. 14, 1997 6,054 249 34 6
Enterprise A Sept. 17, 1997 5,147 181 4 6
2200 Consulate
Parkway Oct. 8, 1997 9,509 230 26 15
Skylab Road Nov. 7, 1997 9,572 84 -- --
2190 Hanson Way Dec. 23, 1997 7,128 17 1 --
--------- ------- ------ ------
Total $ 54,536 $ 2,400 $ 193 $ 404
--------- ------- ------ ------
--------- ------- ------ ------
</TABLE>
(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.
In addition to the portfolio acquisitions, during 1997, the Company
purchased 13 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 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% (888)
----------
Unadjusted 1997 pro forma interest expense $ 20,050
----------
----------
</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.
F-10
<PAGE>
(2) Reflects the incremental effect (i.e. as if such Acquisitions had occurred
or been completed on January 1, 1997) of the Acquisitions made by the
Company either directly or through one of its consolidated partnerships
during the period from January 1, 1998 to December 4, 1998. Thirty-four of
the properties were acquired during the nine months ended September 30,
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 year ended December 31, 1997:
<TABLE>
<CAPTION>
Property Minority
Rental Interest Operating Interest in
Property Market Revenue Income Property Tax Expenses Net Income
-------- ------ ------- ------ ------------ -------- ----------
<S> <C> <C> <C> <C> <C> <C>
25 Otis Street New Jersey $ 605 $ -- $ 57 $ 73 $ --
2300 Principal Row Orlando 505 -- 50 48 --
624 Krona Dr. Dallas 292 -- 50 36 --
Foothills Ranch (2
Properties) LA Basin 904 -- 125 25 --
22831 Avenida
Empressa LA Basin -- -- 73 -- --
29962 Avenida de
las Banderas LA Basin -- -- -- -- --
7050 Alan
Schwartzwalder Columbus 333 -- 5 20 --
15450 E. Salt Lake
Avenue LA Basin 283 -- 67 25 --
Security Capital
Swap (5
Properties) Memphis 2,516 -- 291 262 --
701 Malaga LA Basin 249 -- 116 94 --
20191 Windrow Drive LA Basin -- -- 29 -- --
Romeo Portfolio (2
Properties) Chicago 909 -- 109 61 --
8399 Zionsville
Road Indianapolis 542 98 -- --
5141 E. Santa Ana LA Basin 1,247 -- 135 48 --
Jackson Shaw II (7 Dallas and
Properties) Las Vegas 4,541 497 430 343 630
Oates Portfolio (3
Properties) SF Bay Area 1,682 -- 209 56 --
Pizzuti Portfolio (4 Columbus,
Properties) Kentucky and
Florida 738 -- 6 5 --
------- ----- ------ ------ -----
Total $15,346 $ 497 $1,850 $1,096 $ 630
------- ----- ------ ------ -----
------- ----- ------ ------ -----
</TABLE>
F-11
<PAGE>
The Acquisitions were funded with: (i) funds released from an escrow
account amounting to $4,228, (ii) draws on the Unsecured Credit Facility,
(iii) the assumption of mortgage notes payable in the principal amount of
$16,153, (iv) an additional borrowing under a mortgage note payable in the
principal amount of $16,000, and (v) cash on hand.
Also reflects estimated incremental income from an 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.
The Company extended a loan to a minority limited partner aggregating to
$6,000. The note receivable is secured by the limited partner's
partnership units, bears interest at the one-month LIBOR rate plus 2.75%
(8.28% at December 3, 1998) with interest payable monthly, and matures
on March 20, 2001.
(3) Reflects the divestiture of seven properties during 1998, three of which
were through a property-for-property swap transaction. The net proceeds
from the remaining divestitures aggregated to $23,297 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) 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
September 30, 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 $292,148 bearing interest at 6.73% 19,662
Mortgage notes payable bearing interest at rates ranging from 6.74% to 8.30% 2,723
Unused commitment fee based on unadjusted pro forma debt balance on the
Unsecured Credit Facility of $57,852 87
Amortization of loan fees 1,173
Agency fee 50
Capitalized interest, based on historical construction in process of $221,246
at an effective interest rate of 6.73% (20,961)
----------
Pro forma interest expense for the year ended December 31, 1997 $ 20,050
----------
----------
</TABLE>
(5) Pro forma Series B Preferred Stock dividends are based upon 1,623,376
shares outstanding on September 30, 1998, paying dividends at an annual
rate of $1.32 per share. 649,351 shares of Series B Preferred Stock were
converted into Common Stock on a one-for-one basis in July, 1998.
(6) Reflects the incremental effect of the Company's Preferred Stock Offering
of 2,000,000 shares of Series D Preferred Stock, paying dividends at an
annual rate of $2.1875 per share. The net proceeds of approximately
$48,125 were used to repay borrowings on the Company's Unsecured Credit
Facility.
(7) 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.
Diluted 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.
(8) Pro forma taxable income for the year ended December 31, 1997 was
approximately $25,390.
F-12
