PAGE 1
TOTAL NUMBER OF PAGES: 31
THE EXHIBIT INDEX IS ON PAGE: 28
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended July 31, 19941995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-5303
BRE PROPERTIES, INC.
- - ---------------------------------------------------------------------------------------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 94-1722214
- - -------------------------------------- ----------------------------------------------------------------------------- -------------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
NUMBER)
INCORPORATION OR ORGANIZATION) NUMBER)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, California 9410494104-5525
- - -------------------------------------- ----------------------------------------------------------------------------- -----------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(415) 445-6530
- - ---------------------------------------------------------------------------------------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
-TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------- -----------------------------------------
Class A common stock, $.01 par value New York Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X . No .
----- -----
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATION S-K (SECTION(Section 229.405 OF THIS CHAPTER) IS NOT CONTAINED HEREIN, AND
WILL NOT BE CONTAINED, TO THE BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE
PROXY OR INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS
FORM 10-K OR ANY AMENDMENT TO THIS FORM 10-K. [ ]
At September 8, 1994,5, 1995, the aggregate market value of the registrant's shares of
Class A common stock, $.01 par value, held by nonaffiliates of the registrant
was approximately $336,396,000.$346,976,000. At that date 10,925,48310,970,865 shares were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
PortionsExcerpts of the BRE Properties, Inc. Annual Report to Shareholders for the year
ended July 31, 19941995 (the "Annual Report")(Exhibit 13.1 hereto) are incorporated
by reference into Parts I and II of this report.
With the exception of those portions
incorporated by reference, the 1994 Annual Report is not deemed to be filed as
part of this report.
Portions of the definitive Proxy Statement for the Annual Meeting of
Shareholders of BRE Properties, Inc. to be held on November 22, 1994filed within 120 days after the end
of registrant's fiscal year ended July 31, 1995 (the "Proxy Statement")Statement) are
incorporated by reference into Part III of this report.
-2-
- -------------------------------------------------------------------------------
PART I
- -------------------------------------------------------------------------------
ITEM 1. BUSINESS
- ------------------
CORPORATE PROFILE
BRE Properties, Inc. ("BRE" or the "company"), a Delaware corporation, is a
self-administered equity real estate investment trust which primarily owns and
operates apartment communities in the western United States. At July 31, 1995,
BRE had ownership interests in 8,554 garden apartment units (5,235 wholly owned
and 3,319 on land leased to others) in California, Arizona, Washington and
Oregon. On that date, BRE also held ownership interests in four shopping
centers (including two held in partnerships in which the company is a limited
partner) and 11 other properties. Founded in 1970, the company has paid 100
consecutive quarterly dividends to shareholders since it commenced operations.
STRATEGIC FOCUS
The key aspects of the company's strategy include a focus on the acquisition of
multifamily properties; an accelerated, but orderly, disposition of industrial
properties; increased access to the capital markets for financing; and
the proposed internalization of property management. See "Property
Acquisitions and Dispositions", "Capital Resources" and "Employees".
STRUCTURE AND INVESTMENT POLICY
BRE has operated since its July 1970 inception as a real estate investment trust
pursuant to Sections 856-860 of the Internal Revenue Code, as amended. Its
long-range investment policy emphasizes the purchase of fee ownership of both
the land and the improvements, primarily in garden apartment communities and
secondarily in shopping centers, located in the
Western United States. Among other things, this policy is designed to enable
management to monitor developments in local real estate markets and to take an
active role in managing the company's properties and improving their
performance. The policy is subject to ongoing review by the Board of Directors
and may be modified in the future to take into account changes in business or
economic conditions, as circumstances otherwise warrant, if it determines that
such changes are in the best interests of the company and its shareholders.
At July 31, 1994, the company's portfolio of income-producing real estate
(including wholly owned properties, land owned and leased to others and limited
partnership investments in two shopping centers) consisted of 34 properties,
including 17 apartment communities, 4 shopping centers and 13 other
income-producing properties. Of these properties, 26 are located in California,
4 in Washington, 3 in Arizona and one in Oregon. See Items 2 and 7 of this
report for a description of the company's individual investments and of certain
developments during the year with respect to these investments.
The company's current investment profile is different from that of its early
years of operations. Initially, the company was investing in both equities and
mortgage loans on a variety of property types in markets across the country.
Gradually, the company disposed of investments outside of the Western United
States. The company has also shifted its overall investment focus to ownership
of properties, with an emphasis on apartments. The transition in investment
focus has constrained the company's growth in funds from operations and
dividends because initial yields on newly purchased equity investments typically
have been below those of maturing mortgages. It has also had an impact on
investment liquidity, since maturing mortgage loans provide cash which is
immediately available for reinvestment in equity properties. Beyond this
impact, however, management believes there will be significant benefits for
shareholders in the long-term, including improved prospects for growth in funds
from operations and portfolio appreciation.-3-
REVENUES AND OCCUPANCY
The following table shows the percentage of the company's total rental and
partnership revenues contributed by certain classes of properties during the
last three fiscal years and the overall occupancy levels for these classes of
properties at July 31, 1994. During these years,1995.
PERCENT OF REVENUES
-------------------
Overall Occupancy
Type of Property 1995 1994 1993 at July 31, 1995
- ---------------- ---- ---- ---- -----------------
Apartments 77% 71% 63% 95%
Shopping centers 15 16 20 96
Other 8 13 17 54
--- --- --- --
100% 100% 100% 90%
--- --- --- --
--- --- --- --
The Hub Shopping Centerweighted average occupancy is calculated by multiplying the occupancy for
each property by its square footage and dividing by the total square footage in
Fremont, California, accounted for approximately 12% (1994), 14% (1993), and 17%
(1992) ofthe portfolio.
The following properties contributed 10% or more to the company's total rental
and partnership revenues during the Westlake Village Apartments
in Daly City, California, accounted for approximately 10% (1994), 12% (1993),
and 13% (1992), and Sharon Green Apartments in Menlo Park, California, accounted
for approximately 10% (1994), 11% (1993), and 12% (1992).
-3-
Percent of Revenues
-------------------last three fiscal years:
Overall Occupancy
Type of PropertyPERCENT OF REVENUES
-------------------
1995 1994 1993 1992 at July 31, 1994
----------------
---- ---- ----
----------------
The Hub Shopping Center 11% 12% 14%
Westlake Village Apartments 9 10 12
Sharon Green Apartments 8 10 11
-- -- --
28% 32% 37%
-- -- --
-- -- --
PORTFOLIO AT JULY 31, 1995
At July 31, 1995, the company's portfolio of income-producing real estate
included, as a percent of cost, the following investments:
PERCENT PERCENT
------- -------
NUMBER OF NUMBER OF
PROPERTIES COST PROPERTIES COST
--------------------- ----------------------
Apartment Buildings 71 % 63 % 58 % 95 %
Apartments 24 68% California 25 65%
Shopping Centers 16 20 23 92centers 4 15 Arizona 10 19
Other 1311 17 19 54Washington 3 12
Oregon 1 4
--- --- --- ---
100 % 100 % 100 % 88 %TOTAL: 39 100% TOTAL: 39 100%
--- --- --- ---
--- --- --- ---
See Items 2 and 7 of this report for a description of the company's individual
investments and of certain developments during the year with respect to these
investments.
-4-
PROPERTY ACQUISITIONS AND DISPOSITIONS
ACQUISITIONS
- ------------
During fiscal 1995, the company purchased the following garden apartment
communities, all located in Tucson, Arizona:
(DOLLAR AMOUNTS IN THOUSANDS)
PRINCIPAL
AMOUNT
NUMBER OF MORTGAGES INTEREST
NAME OF UNITS COST CASH ASSUMED RATE
- ----------------------- --------- ------ ------- ------------ --------
Camino Seco Village 168 $6,695 $ - (1) $4,238 8.00%
Casas Lindas 144 7,564 7,564 - -
Colonia del Rio 176 8,868 3,558 5,310 8.00
Fountain Plaza 197 4,535 1,384 3,151 7.50
Hacienda del Rio 248 9,296 248 (1) 5,645 6.45
Oracle Village 144 6,046 1,826 4,220 7.80
SpringHill 224 8,666 3,291 5,375 8.00
------ -------- ------- -------
TOTAL 1,301 $51,670 $17,871 $27,939
------ -------- ------- -------
------ -------- ------- -------
(1) The cash investments in Camino Seco Village and Hacienda del Rio do
not include $2,457 and $3,403 respectively, in proceeds from tax-
deferred exchanges for 515 Ellis, in Mountain View, California, and
Marymoor Warehouse, in Redmond, Washington.
Since their acquisition, an additional $131,000 has been invested in these
properties.
The mortgages on Fountain Plaza and Hacienda del Rio are fully amortizing, with
final maturities in 2028. The four other mortgages assumed mature in the fiscal
years 2000 and 2001, with aggregate balloon payments of $17,932,000 due at those
times. Depending on market conditions at maturity, the company may choose, among
other things, to renegotiate the terms with the existing lenders, refinance the
properties with other lenders, sell assets or repay the balloon amounts through
a public offering or private placement of debt or equity securities.
Concurrent with the purchase of these apartment communities, BRE also funded two
mortgage loans (one in November 1994 and the other in July 1995), each for
$1,500,000, aggregating $3,000,000, to entities affiliated with the seller. Each
loan bears interest at 10% for one year. One loan is secured by a second
mortgage on a 254-unit apartment project in Tucson. The second loan is secured
by a first mortgage on two parcels of undeveloped land in Tucson, plus a
personal guarantee from the principals of the borrower. Providing that no event
of default has occurred, the borrowers on each loan may request a one-year
extension, during which time the interest rate rises to 11%, and a second one-
year extension, during which time the interest rate rises to 12%.
-5-
During the year ended July 31, 1995, construction was completed of a 116-unit
expansion of the tenant at200-unit Scottsdale Cove Apartments in Scottsdale, Arizona,
bringing the 358,000 square foot warehouse/ distribution
facility in Pomona, California discontinued business and vacatedtotal number of units to 316. The total cost of the premises.
BRE pursued legal remedies and collected all rents due onexpansion was
$6,139,000, $1,688,000 of which was invested during the lease throughyear ended July 1994, plus31,
1995.
DISPOSITIONS
- ------------
As the costscompany has increased its ownership of correcting deferred maintenance, and an adjusted
allowance for rent due after July 1994. A rehabilitation programapartment communities during
the past several years, it has been
completed, including a new roof, exterior painting and interior work, and the
property is now being marketed to prospective tenants.
Twogradually reduced its portfolio of light
industrial buildings are currently vacant:and office properties. BRE sold two such properties during fiscal
1995, Marymoor Warehouse, located in Redmond, Washington, and 515 Ellis,
located in Mountain View, California, recording gross gains on sales of
$1,389,000 and $1,244,000, respectively. Both of these transactions were
structured as tax-deferred exchanges, with the sales proceeds of $5,860,000
reinvested in the Hacienda del Rio and Camino Seco Village Apartments,
respectively.
One light industrial property, Irvine Spectrum (50,000 square feet in Irvine,
California), has been vacant since June 1994, and
515 Ellis (29,0001994. Negotiations are underway to sell
this property during fiscal 1996, although no assurance can be given that the
sale will be consummated. In September 1995, the company completed the sale of
Pomona Warehouse (358,000 square feet in Mountain View,Pomona, California) haswhich had been
vacant since JuneDecember 1993. A lease has been signedThe proceeds were used for a tax-deferred exchange
into the Mountain View building. One
previous vacancy was eliminated during the year with the signing of a six-year
lease240-unit apartment community Newport Landing Phase I, purchased for
the entire 64,000 square foot Fremont 3 Building$9,235,000, in Fremont,
California.
Another tenant leased, for five years, 66% of the 86,000 square foot 525
Almanor Building in Sunnyvale, California. New leases or lease extensions
were also reached with tenants at sixPhoenix, Arizona.
There are nine other light industrial buildings. Of
the company's nine fully occupied light-industrial, warehouse/distribution and office properties, three have multiple tenants, each with one tenant occupying
more than 50%totaling 520,000
square feet, in the portfolio. Going forward, BRE intends to continue the
orderly disposition process of these properties and redeploy the net rental space, and six have single tenants.proceeds to
acquire additional multifamily properties.
CAPITAL RESOURCES
The company's investments in income-producing properties may be made subject to
mortgage financing or to other indebtedness secured by a prior lien against
the property.financing. At present, eightJuly 31, 1995, fourteen of the company's wholly owned
properties arewere subject to mortgage financing.financing, compared to eight such properties
at July 31, 1994 and six at July 31, 1993. In addition, BRE is a limited
partner in two partnerships that are subject to mortgage financing arranged by
the general partner. The company and the general partner may refinance existing
indebtedness if more favorable financing is available, and they may also incur
new indebtedness, or increase the amount of existing indebtedness, secured
through mortgage financing. The extent to which the company and the general
partner may mortgage or otherwise finance investments depends upon such factors
as the nature of the investment, the cost and availability of borrowed funds and
the general economic climate.
The company has obtained funds from a variety of sources, including non-recourse
mortgage loans and the sale of equity. In fiscal 1993, the company raised
approximately $55 million through a public offering of 1,500,000 shares of
common stock and approximately $36,442,000 in new funds through mortgage
financing on equity investments. In fiscal 1994, approximately $19,718,000 in
new funds was raised through such mortgage financing. -4-In fiscal 1995, BRE
-6-
assumed $27,939,000 of mortgage debt on six newly acquired apartment properties
in Tucson, Arizona. To further increase its access to capital markets, the
company plans to seek shareholder authorization of a new class of preferred
stock.
In addition, since its inception, the company has had unsecured lines of credit
from one or more commercial banks. These credit lines have had a one-year term
and were available for short-term working capital needs,Currently, there are two such as financing new
tenant improvements at existing properties. Theunsecured lines
of credit, totaled
$10,000,000 at July 31, 1993. During the quarter ended January 31, 1994, the
company negotiated increases in theeach with a two-year term. The two credit lines of credit tototal $30,000,000 lengthened
the term to two years and
reached agreement with the banks that the proceeds
could be usedare available to make real estate equity investments.investments and to provide working capital.
There were no borrowings outstanding under these lines of credit during the
fiscal year ended July 31, 1994.1995. The company pays annual commitment fees totaling $127,500 annually for
thethese lines of credit, and borrowingcredit. Borrowing costs are based on BRE's choice of a spread
over the interbank offered rate or the prime rate. The company is currently
negotiating an increase in the size of its lines of credit and an extension of
their two-year maturities.
The company may continue to borrow from time to time to fund commitments,
although there is no assurance at any given time that borrowed funds will be
available or that the terms and conditions of such borrowings will be
acceptable. For additional information regarding the company's long-term debt,
see Note D inof Notes to the Financial Statements included in the 19941995 Annual
Report, incorporated herein by reference. The growth and profitable operation
of the company depend in large part upon the availability and cost of borrowed
funds, as discussed above. In addition, the success of the company depends,
among other factors, upon general business and economic conditions, construction
costs, income-taxincome tax laws, increases or decreases in operating expenses,
governmental regulations, population trends, zoning laws, legislation and the
ability of the company to keep its properties leased at profitable levels. The
company's properties compete for tenants primarily on the basis of location,
rent charged, services provided, and the design and condition of improvements;
and its properties encounter competition from similar properties located in
their market areas. In many of these market areas, there is an oversupply of
available space and competition for tenants has been, and continues to be,
intense. In addition, vacancy and rental rates at certain of the company's
properties have been adversely affected by the downturn in the national economy.
A prolonged economic downturn could have a material adverse
effect on the company's operations and financial condition.
PROPERTY ACQUISITIONS
During fiscal 1994, the company purchased the following garden apartment
communities:
MIRA MESA (Cimmaron, Hacienda and Westpark), September 1993 and WINCHESTER,
March 1994: These properties include 616 units in four adjacent apartment
communities in San Diego, California, as follows:
-5--7-
Name Constructed Units Number of buildings Acres of Land
- - ---- ----------- ----- ------------------- ---------------
MIRA MESA
Cimmaron 1986 184 23-eightplex 5.60
Hacienda 1985 192 24-eightplex 5.75
Westpark 1985 96 12-eightplex 3.00
WINCHESTER 1987 144 18-eightplex 5.23
---
Total 616
---
---
The Mira Mesa and Winchester communities contain a mix of one- and two-bedroom
units with monthly asking rents of $595-$725. All units have frost-free
refrigerators, gas ranges and water heaters, central thermostat controlled
forced air gas heating, wall unit air-conditioning in the living rooms, patios
or decks with storage and cable television. Recreational facilities include
outdoor heated swimming pools and spas. Central laundry rooms are provided for
residents. The properties have been mapped for condominiums, although there are
no present plans to pursue any condominium conversions.
The purchase price for Mira Mesa was $24,371,000 in cash. In February 1994,
the company obtained a first mortgage loan secured by Mira Mesa in the amount
of $13,600,000. The interest rate is 7%, with an 11-year maturity and
amortization based on 25 years. Winchester was purchased in March 1994 for
$7,400,000 in cash.
TERRA NOVA VILLAS, March 1994 - Located in Chula Vista, California, seven miles
south of downtown San Diego, the Terra Nova Villas apartment community was
purchased for $14,575,000, subject to $9,240,000 of fixed-rate (5.57%) bond
financing. The bond financing matures in March 1995. Depending on market
conditions at that time, BRE may repay the bonds in cash, renegotiate the terms
of the bonds or refinance the property with another lender. Terra Nova Villas
was constructed in 1985 and consists of 18 two-story buildings on 12.8 acres of
land with monthly asking rents of $680-$815. All units have frost-free
refrigerators, self-cleaning ovens, central air conditioning and heating, patios
or decks and cable television hook-ups. Buildings have central gas water
heaters. A separate clubhouse building contains leasing offices, a lounge and
exercise room. The property offers a pool, spa, play area and two laundry
rooms.
In addition to these properties, which are complete and income-producing, in
October 1993, BRE purchased seven acres of undeveloped land adjacent to the
Scottsdale Cove Apartments in Scottsdale, Arizona, on which 116 units are
currently being constructed. This addition will expand the total units in the
Scottsdale Cove to 316. The estimated total cost is $6,165,000, of which
$4,451,000 had been disbursed through July 31, 1994, including $143,000 of
capitalized interest expense. A total of 32 units have been completed, of which
11 were occupied at July 31, 1994. All units are expected to be completed by
October 1994.
-6-
PROPERTY DISPOSITIONS
Two separate sales were completed in the 1994 fiscal year: The James Center
Office Building in Bellevue, Washington, and Eastside Industrial Park in
Redmond, Washington. A modest gain was recognized on the sale of these
properties. The sales prices aggregated $9,800,000, and the cash proceeds are
now available to be invested in other properties.
EMPLOYEES
As of July 31, 1994,1995, the company had 1921 employees. The company also has engaged
89 independent property management firms to manage 1726 of its apartment and multi-tenantmulti-
tenant commercial properties.
On June 5, 1995 , Arthur G. von Thaden, formerly president and chief executive
officer, became Chairman. Frank C. McDowell was named president and chief
executive officer. See "Executive Officers of the Registrant" of this report for
information regarding Mr. McDowell's experience.
To achieve the company's goal of becoming a fully integrated real estate
operating company, it intends to take steps to internalize the property
management function during fiscal 1996. These steps may include the creation
of an internal property management organization staffed by existing and newly
hired employees, on the acquisition of a multifamily portfolio accompanied by
existing property management capabilities. Currently, BRE's asset management
staff directs the operations of the properties, employing third parties to
carry out day-to-day property management activities.
EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------
The following persons were executive officers of the company as of
September 1, 1995:
Age at
Name September 1, 1995 Position(s)
- ---------------------------------------------------------------------------------------------
Frank C. McDowell 47 President, Chief Executive Officer and Director
Arthur G. von Thaden 63 Chairman and Director
Byron M. Fox 56 Executive Vice President
Ronald P. Wargo 51 Senior Vice President
Howard E. Mason, Jr. 62 Senior Vice President, Finance
Ellen G. Breslauer 47 Secretary and Treasurer
- ---------------------------------------------------------------------------------------------
Mr. McDowell was appointed to his current position on June 5, 1995, at which
time Mr. von Thaden, who had been President and Chief Executive Officer,
became chairman. Mr. Fox and Mr. Wargo were appointed to their positions in
October of 1992. All of the other executive officers have held their
respective positions since September 30, 1987. Set forth below is information
regarding the business experience of each of the executive officers:
From 1992 to 1995, Mr. McDowell was Chief Executive Officer and Chairman of
Cardinal Realty Services, Inc. ("Cardinal"), a Columbus, Ohio-based
apartment management company and owner of multifamily housing. At December
31, 1994, Cardinal ranked as the nation's 19th largest owner of apartments
and as the 15th largest apartment management company. From 1988 to 1992,
Mr. McDowell was Senior Vice President,
-8-
Head of Real Estate of First Interstate Bank of Texas. Mr. McDowell holds
a Bachelor of Science Degree and a Masters of Business Administration
Degree, both from the University of Texas, Austin.
Mr. von Thaden served as Chief Executive Officer of the company and its
former advisor from inception in 1970. Mr. von Thaden became a Director in
1981. Mr. von Thaden holds a Bachelor of Arts Degree from Trinity College.
Mr. Fox was employed by BRE and appointed Senior Vice President in
December 1987. From 1977 to 1987, he was Vice President and General Manager
of Dillingham Investment Corporation, a Hawaii land-investment firm. Mr.
Fox holds a Bachelor of Arts Degree from Colgate University and a Master
of Business Administration Degree from Harvard Business School.
Mr. Wargo, employed in 1978, was appointed Senior Vice President in charge
of Asset Management in 1992. He holds the Certified Property Manager (CPM)
designation awarded by the Institute of Real Estate Management. Mr. Wargo
holds a Bachelor of Science Degree from LaSalle College and a Master of
Business Administration Degree from Columbia University.
Mr. Mason was Senior Vice President, Finance from October 1980, and has
been chief financial and accounting officer from inception in 1970. He is
a Certified Public Accountant and served as Controller for Henry Doelger
Builder, Inc. from 1965 to 1970. Mr. Mason holds a Bachelor of Arts Degree
from Menlo College and a Master of Business Administration Degree from
San Francisco State University.
Ms. Breslauer was appointed Secretary in September 1987 after becoming
Treasurer in 1981. She was employed by the company in 1971 and is a
Certified Public Accountant. A Phi Beta Kappa graduate, Ms. Breslauer
holds a Bachelor of Arts Degree and a Master of Business Administration
from the University of California, Berkeley.
There is no family relationship among any of the company's executive
officers or Directors.
POTENTIAL ENVIRONMENTAL RISKS
Investments in real property create a potential for environmental liability on
the part of the owner of, or any mortgage lender on, such real property. If
hazardous substances are discovered on or emanating from any of the company's
properties, the owner or operator of the property (including the company) may be
held strictly liable for all costs and liabilities relating to such hazardous
substances. The company's current policy is to obtain a Phase I environmental
study on each property it seeks to acquire and to proceed accordingly. The
company currently carries no insurance for environmental liabilities, although
policies in effect in earlier years may in some cases provide coverage for
environmental liabilities which may have occurred during the earlier policy
periods.
515 ELLIS STREET-9-
RECENT DEVELOPMENT
On October 11, 1995, BRE entered into an Agreement and Plan of Merger (the
"Merger Agreement") by and among BRE, Real Estate Investment Trust of
California ("REIT-Cal") and a newly-formed Maryland subsidiary of REIT-Cal
("REIT-Cal Sub"). The companyMerger Agreement, which has conducted an investigationbeen approved by the Board
of possible hazardous materials
contaminationDirectors and Boards of Trustees of each of the soilparties, would result in
the acquisition of REIT-Cal by BRE through (i) a merger of REIT-Cal with and
groundwater at its light industrial property at
515 Ellis Street, Mountain View, Californiainto REIT-Cal Sub followed by (ii) a merger of REIT-Cal Sub with and into BRE
(the "Ellis Street Property""Merger"). This
investigation was conducted in connection with an inquiry by the Environmental
Protection Agency ("EPA") into groundwater contamination found at certain
third-party sites (the "MEW Sites") now listed on the National Priorities List
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"). Based on data made available to the company, management
believes that the hazardous materials contamination emanating from the MEW Sites
has resulted in contaminationFollowing consummation of the groundwater underlyingMerger, it is contemplated
that BRE would change its Ellis Street
Property. Although the Ellis Street Property is not a MEW Site, the company,
along with several other entities, has been named as a Potentially Responsible
Party for remedial costs with respectstate of corporate domicile from Delaware to
the MEW Sites in order to permit the
EPA to determine whether the company might have any liability for contributing
to the MEW Sites contamination.
The company's investigation did not reveal significant soil contamination at the
Ellis Street Property due to on-site hazardous materials handling practices.
However, if the Ellis Street Property is found to have contributed to the
contamination emanating from the MEW Sites, the company could be jointly and
severally responsible for remedial costs.
-7-
At the date of this Annual Report on Form 10-K, certain entities have entered
into a consent decree with the EPA for remediation of the contamination
emanating from the MEW Sites, and certain other entities have been ordered by
the EPA to participate in the remediation. The remediation includes a regional
groundwater extraction and treatment system which is expected to be installed
and maintained by these parties. The company is not included in either the
consent decree or order to participate in the remediation, and neither the EPA
or any other party has requested that the company contribute to the MEW Sites
cleanup.
Although the ultimate outcome of environmental matters is subject to
uncertainties and no assurances can be given, based on its investigation
conducted to date, management does not believe that the contamination arising
from the MEW Sites will have a material adverse effect on the company's
financial condition and results of operations. The cost of the land and
improvements at the Ellis Street property, at July 31, 1994, was $1,049,000,
before deduction of accumulated depreciation.
MARYMOOR WAREHOUSE
The company has also conducted an investigation of possible contamination due to
on-site handling practices at its Marymoor warehouse property located in
Redmond, Washington. The investigation has shown the existence of petroleum
hydrocarbon contamination in the soil at the property. As a result, the tenant
at the property has conducted certain excavation and remediation activities.
Additional testing is presently being conducted to confirm no further
remediation is required. The company estimates the costs of this additional
testing to be in the range of $10,000; however, if further remediation is
required, the costs would be greater, perhaps substantially. The cost of the
Marymoor land and improvements, at July 31, 1994, was $2,358,000, before
deduction of accumulated depreciation.
The company believes that, underMaryland.
Under the terms of the tenant's lease,Merger Agreement, each issued and outstanding share of
beneficial interest, without par value, of REIT-Cal would be converted into
the tenant is
responsible for undertaking any remediation or removalright to receive 0.57 (the "Exchange Ratio") of contamination, if any,
causeda share of BRE common
stock in a tax-free transaction. In the event that either (i) (a) the
average closing price per share of the BRE common stock as reported by the
tenant. AlthoughNew York Stock Exchange (the "NYSE") for the ultimate outcome of environmental matters is
subject to uncertainties and no assurances can be given, basedten consecutive trading days
ending on its
investigations conducted to date, management believes that(and including) the contamination at
the Marymoor property will not have a material adverse effect on the company's
financial condition and results of operations, regardless of whether the tenant
agrees to undertake any necessary remediation.
525 ALMANOR
The former tenant at the company's light industrial property at 525 Almanor,
Sunnyvale, California ("525 Almanor") has been named in an action for
contribution to the costs of groundwater remediation at certain sites now listed
on the National Priorities List under CERCLA. The company has been advised that
the California Regional Water Quality Control Board is considering a prospective
order naming the former tenant as primarily liable with respect to one area of
the contamination and the company, along with certain other property owners in
the area, as secondarily liable for such contamination. As oftrading day immediately preceding the date of
this
report,REIT-Cal's stockholders meeting to consider the company has not been namedMerger (the "BRE Average
Price") is less than $28.575, and (b) the difference between the BRE Average
Price and the closing price of the BRE common stock on the NYSE on September
11, 1995, expressed as a percent of the closing price of the BRE common
stock on the NYSE on September 11, 1995, is at least 10% greater than the
percentage decline in the order, although the company has
notified its former tenant that, under
-8-
the termsvalue of the tenant's lease,NAREIT Equity REIT Index over the
tenantperiod from September 11, 1995 to the trading day immediately preceding the
date of the REIT-Cal stockholders meeting to consider the Merger, or (ii) the
BRE Average Price is responsible for conducting any
remediation or removal of contamination causedless than $28.07, the agreement may be terminated by
REIT-Cal unless BRE increases the tenant. However, there
can be no assuranceExchange Ratio so that the company ultimately will not have some liability
with respect to this site. The costExchange Ratio
as adjusted would equal a fraction the numerator of which is the product of
0.57 times (x) $28.575 in the case of a proposed termination under clause (i)
above, or (y) $28.07 in the case of a proposed termination under clause (ii)
above, and the denominator of which is the BRE Average Price.
Closing of the 525 Almanor landMerger is contingent upon, among other things, approval of the
stockholders of BRE and improvements,
at July 31, 1994, was $4,245,000, before deductionREIT-Cal. The Merger will be treated as a purchase
for accounting purposes. Upon the closing, Frank C. McDowell would continue
to serve as President and Chief Executive Officer of accumulated depreciation.BRE. Three executives
of REIT-Cal would also be added to BRE management: Jay W. Pauly as Senior
Executive Vice President and Chief Operating Officer; LeRoy Carlson as
Executive Vice President and Chief Financial Officer; and John H. Nunn as
Senior Vice President, Property Management. In addition, three directors of
REIT-Cal would be appointed to the BRE Board of Directors, increasing BRE's
Board from six to nine members.
10
ITEM 2. PROPERTIES
Information concerning the company's property portfolio is contained on pages
14-16 of the 1994 Annual Report, which information is hereby incorporated by
reference. See also- ------ ----------
GENERAL
In addition to the information set forth in this Item 2, information on the
company's portfolio is set forth in Schedules XIIII and XIIIV under Item 14 (d)14(d) of
this report. The company carries earthquake insurance on all of its properties.
The annual aggregate limits (after payment of deductibles) for flood and
earthquake coverage are $5,000,000 (in California) and $10,000,000 (outside of
California).
Apartments
As reflected in the following chart, during the five fiscal years ended July
31, 1995,apartments have increased as a percentage of the company's portfolio
of income producing properties and revenues:
1995 1994 1993 1992 1991
------------------------------------------------
Percentage of portfolio at cost 68% 62% 53% 41% 38%
Revenues generated 77% 70% 63% 58% 54%
In addition, revenue from apartments in the portfolio for all of fiscal 1995 and
1994 increased $943,000 (3%) in 1995 from the prior year. Since their real
estate expenses also declined, their net operating income rose more than 6%.
The following table shows certain operating information for the company's
apartment investments owned at July 31, 1995.
-11-
BRE PROPERTIES, INC.
Wholly owned apartments owned at July 31, 1995
Operating Information
1995 Average Monthly
Rental Rates
Average --------------------
Approximate Unit Size Per Average
Number Rentable Area (Square Per Square Economic
Property of units (Square Feet) Feet) Unit Foot Occupancy (1)
- --------------------------------------------------------------------------------------------
SAN FRANCISCO BAY AREA,
CALIFORNIA
Sharon Green 296 321,944 1,088 $1,496 $1.38 96.2%
Verandas 282 199,152 706 815 1.15 95.6
- -------------------------------------------------------------------------------------------
SUBTOTAL 578 521,096 902 $1,164 $1.27 95.9%
- -------------------------------------------------------------------------------------------
SAN DIEGO, CALIFORNIA
Cimmaron 184 146,472 796 $672 $0.84 93.8%
Hacienda 192 148,624 774 649 0.84 95.0
Montanosa 472 352,248 746 764 1.02 94.1
Terra Nova Villas 232 185,440 799 674 0.84 91.4
Westpark 96 71,760 748 655 0.88 94.7
Winchester 144 112,744 783 672 0.86 96.2
- -------------------------------------------------------------------------------------------
SUBTOTAL 1,320 1,017,288 771 $665 $0.87 95.6%
- -------------------------------------------------------------------------------------------
TUCSON, ARIZONA
Camino Seco Village (2) 168 150,892 898 -- -- --
Casas Lindas 144 150,080 1,042 $838 $0.63 93.2%
Colonia del Rio 176 177,760 1,010 696 0.52 88.2
Fountain Plaza 197 107,294 545 377 0.52 92.5
Hacienda del Rio 248 152,504 615 417 0.51 97.9
Oracle Village 144 129,336 898 600 0.50 96.5
SpringHill 224 175,520 784 559 0.54 95.3
- -------------------------------------------------------------------------------------------
SUBTOTAL 1,301 1,043,386 802 $575 $0.52 95.8%
- -------------------------------------------------------------------------------------------
SEATTLE AREA, WASHINGTON
Citywalk 102 90,672 889 $719 $0.81 96.7%
Parkwood 240 256,256 1,068 776 0.73 93.0
Shadowbrook 352 274,504 780 659 0.84 92.1
- -------------------------------------------------------------------------------------------
SUBTOTAL 694 621,432 895 $706 $0.80 92.5%
- -------------------------------------------------------------------------------------------
SACRAMENTO, CALIFORNIA
Selby Ranch 400 396,442 991 $821 $0.83 89.7%
- -------------------------------------------------------------------------------------------
PORTLAND, OREGON
Brookdale Glen 354 271,040 766 $610 $0.80 93.5%
- -------------------------------------------------------------------------------------------
SCOTTSDALE, ARIZONA
Scottsdale Cove (3) 316 300,009 949 $755 $0.80 85.1%
- -------------------------------------------------------------------------------------------
ORANGE COUNTY, CALIFORNIA
Village Green 272 175,508 645 $633 $0.98 92.7%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
TOTAL PORTFOLIO 5,235 4,346,201 830 $724 $0.81 93.9%
- -------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------
(1) Average economic occupancy is defined as gross potential rent less vacancy
losses, divided by gross potential rent for the period, expressed as a
percentage.
(2) Camino Seco Village- Acquired July 28, 1995
(3) Scottsdale Cove- Expanded by 116 units during fiscal 1995, with
stabilization of occupancy achieved in February 1995.
-12-
OTHER PROPERTIES
A majority of the company's commercial properties (i.e., properties other than
apartments) are leased to tenants under long-term operating leases. For
additional information regarding these leases, see Note B of Notes to the
Financial Statements included in the 19941995 Annual Report, incorporated herein by
reference. At July 31, 1994,1995, the company had approximately 123119 separate leases
with approximately 121116 tenants in its commercial properties. Substantially all these
leasesSee "Certain
Significant Properties" for a discussion of The Hub Shopping Center, which has
the majority of the company's total number of tenants.
Of the company's eight fully occupied light-industrial, warehouse/distribution
and office properties, two have multiple tenants, each with one tenant occupying
more than 50% of the net rental space, and six have single tenants. During the
year, one tenant came to the end of its lease term in 31% of Westridge (52,000
square feet in San Diego, California). A different tenant occupies the remaining
69% of the property.
As discussed in "Dispositions", one light industrial property, Irvine Spectrum
(50,000 square feet in Irvine, California) has been vacant since June 1994.
Negotiations are net leases, which requireunderway to sell this property during fiscal 1996, although no
assurance can be given that the tenant to reimbursesale will be consummated.
In September 1995, the company completed the sale of Pomona Warehouse (358,000
square feet in Pomona, California) which had been vacant since December 1993.
The proceeds were used for among other things, property- and casualty-insurance. In addition, BRE carries
earthquake insurance on all its properties. The annual aggregate limits for
Flood and Earthquake are $5,000,000 (in California) and $10,000,000 (outside of
California).
The company'sa tax-deferred exchange into the 240-unit apartment
communities generally command rental ratescommunity Newport Landing Phase I, in the mid to
upper range of the rental market. At July 31, 1994, monthly asking rents for
the company's apartment units ranged from $545 at Brookdale Glen in Portland,
Oregon, to $2,050 at Sharon Green in Menlo Park, California.Phoenix, Arizona.
HEADQUARTERS
The company maintains its corporate headquarters at One Montgomery Street,
Suite 2500, Telesis Tower, San Francisco, California. A sublease with Wells
Fargo Bank, for an eleven-year term, is for 10,142 rentable square feet at
annual per square foot rents which began at $23 and rise to $34 in the tenth
year. The lease term ends December 17, 1998.
CERTAIN SIGNIFICANT PROPERTIES
General
For the fiscal year ended July 31, 1994,1995, one property had a book value equal to
10% or more of total assets or gross revenue equal to 10% or more of aggregate
gross revenue: The Hub Shopping Center in Fremont, California.
-9-
THE HUB SHOPPING CENTER
The occupancy rates at the following dates are shown below:
YEAR ENDED JULY 31,
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ----
The Hub Shopping Center 89% 93% 91%95% 89% 90%93% 91% 89%
-13-
The average effective annual rentals per square foot at the following dates are
shown below:
YEAR ENDED JULY 31,
1995 1994 1993 1992 1991
1990
---- ---- ---- ---- ---------- ------ ------ ----- ------
The Hub Shopping Center * $ 10.70 $ 10.43 $ 10.36 $ 10.49 $ 10.36
(* Excludes$11.15 $10.70 $10.43 $10.36 $10.49
(Excludes Safeway ground lease covering 49,000 square feet of improvements,
at a current annual base rent of $85,000, plus a percentage rent based on
gross sales).
Depreciation expense is calculated on The Hub Shopping Center, using the straight-line method and a 30 year
life for the original buildings for both financial and tax reporting.
REPORTABLE REAL ESTATE
(000 omitted except in realty tax rate)
REPORTABLE REAL ESTATE DEPRECIATION LIFE CLAIMED TAXES FOR THE
FEDERAL EXPENSE FOR THE FOR TAX YEAR
TAX BASIS YEAR ENDED DEPRECIATION ENDING REALTY TAX
7/31/9495 (1) 7/31/9495 PURPOSES 6/30/94 RATE(3)
-----------95(3) RATE (4)
-------- ------- -------- ------- --------------
The Hub Shopping Center$30,145 $ 29,164 $ 1,0651,093 30 years $ 424 1.0727 %409 1.067%
for original
building (2)
(1) The federal tax basis is after deduction of accumulated depreciation, as
computed for tax purposes.
(2) Leasing commissions on leases with a term of five years or more are
amortized over the lease term.
(3) BRE receives reimbursement from tenants for approximately 80% of the real
estate taxes.
(4) The realty tax rate is the amount which, when multiplied by the assessed
value of a property, generates the real estate taxes due.
The Hub Shopping Center has 7675 tenants and 490,000 square feet of gross leasable
space on 37.4 acres of land. Including a retail store owned and operated by
Montgomery Ward, the center totals 659,000 square feet of gross leasable area.
The open air regional shopping center is located in Fremont, California, 40
miles southeast of San Francisco and 10 miles northeast of San Jose.
The company purchased The Hub in 1973 for $10,858,000 and has subsequently
expanded and remodeled it significantly. Occupancy, 93% at July 31, 1993,
dropped to 89% at July 31, 1994. The past several years have been
characterized by the leasing of larger spaces to more promotional credit
tenants, including Office Max, Fashion Bug, and Michael's Arts & Crafts. During fiscal 1994, BRE leased an
8,400 square foot store toCrafts, Trader
Joe's, which operates 62 specialty food
markets, and a 9,600 square foot store to Country Harvest Buffet. TheseBuffet, Old Navy Clothing Co., Taco Bell and other new leases are expected to bring occupancy to 95% by October 1994.
-10-
McDonalds.
The Hub competes for retail tenants and customer traffic with numerous other
shopping centers and discount stores (including superstores) in the area.
Because large retail tenants generally draw shoppers to a center, they are
typically able to negotiate lower per square-footsquare foot rents than occupants of
smaller spaces.
-14-
The following table sets forth certain information regarding the six anchor
tenants. Home Express and Safeway are the only tenants occupying 10% or more of
the rentable square footage at The Hub.
CURRENT
TENANT AND SQUARE LEASE MONTHLY
PRINCIPAL BUSINESS FOOTAGE EXPIRATION RENEWAL OPTIONS BASE RENT
- - ------------------ ------- ---------- --------------- --------------------
Home Express Housewares 50,000 1/31/97 Two 5-year options $25,000
Housewares
Safeway
Groceries 48,858 10/31/04 Four 5-year options 7,071*8,001*
Groceries
General Cinema
8-Screen Theater 36,437 12/31/07 Two 5-year options 43,269
8-Screen Theater
Ross Dress for Less Clothing 29,050 1/31/95 Two05 One 5-year options 9,321option 10,626
Clothing
Longs DrugsDrug Store 26,584 2/28/03 Two 10-year options 4,167
Office Max Office/Business
Products 19,600 12/14/01 Two 5-year options 19,167
Office/Business Products
* Ground lease only. The tenant owns the improvements.
-11-
As of July 31, 1994, the1995, The Hub's lease expirations for the next 10 years are
summarized as follows:
Total Percentage
Number of Square of Gross
Tenants Footage Annual RentTOTAL PERCENTAGE
NUMBER OF SQUARE OF GROSS
TENANTS FOOTAGE ANNUAL RENT
------- ------- -----------
19951996 11 22,000 6.2 %
199634,000 4%
1997 12 80,000 18
1998 7 15,000 5
1999 5 17,000 6
2000 6 60,000 13
2001 4 18,000 6
2002 6 31,000 9 30,000 9.3
1997 10 76,000 16.9
1998 10 21,000 8.6
1999 4 13,000 4.8
2000 3 38,000 6.1
2001 2 14,000 3.4
2002 4 27,000 7.9
2003 5 38,000 5.76
2004 4 42,000 9.19
2005 4 54,000 4
-15-
ITEM 3. LEGAL PROCEEDINGS
None.- ---------------------------
The company is defending various claims and legal actions that arise from its
normal course of business, including certain environmental actions. While it is
not feasible to predict or determine the ultimate outcome of these matters, in
the opinion of management, none of these actions, individually or in the
aggregate, will have a material effect on the company's results of operations,
cash flows, liquidity or financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
- ------------------------------------------------------------
No matter was submitted to a vote of the shareholders during the fourth
quarter of the fiscal year covered by this report.
-12--16-
EXECUTIVE OFFICERS OF THE REGISTRANT
The following persons were executive officers of the company as of
September 1, 1994:
Age at
Name September 1, 1994 Position(s)
- - -------------------------------------------------------------------------------------------------
Arthur G. von Thaden 62 President, Chief Executive Officer and Director
Byron M. Fox 55 Executive Vice President
Ronald P. Wargo 50 Senior Vice President
Howard E. Mason, Jr. 61 Senior Vice President, Finance
Ellen G. Breslauer 46 Secretary and Treasurer
- - -------------------------------------------------------------------------------------------------
Mr. Fox and Mr. Wargo were appointed to their current positions in October
of 1992. All of the other executive officers have held their respective
positions since September 30, 1987. Set forth below is information
regarding the business experience of each of the executive officers:
Mr. von Thaden was elected a Director of BankAmerica Realty Investors in
1981. From 1970 to 1987, he was Chief Executive Officer of BankAmerica
Realty Services, Inc. ("BARSI"), the former advisor to the company.
Mr. Fox was employed by BRE and appointed Senior Vice President in December
1987. From 1977 to 1987, he was Vice President and General Manager of
Dillingham Investment Corporation, a Hawaii land-investment firm.
Mr. Wargo was employed by BARSI in 1978, and was appointed Senior Vice
President in charge of Asset Management in 1992. He holds the Certified
Property Manager (CPM) designation awarded by the Institute of Real Estate
Management.
Mr. Mason was Senior Vice President, Finance of BARSI from October 1980,
and was its chief financial and accounting officer from its inception in
1970. He is a Certified Public Accountant and served as Controller for
Henry Doelger Builder, Inc. from 1965 to 1970.
Ms. Breslauer was elected Secretary in September 1987 after serving from
March 1981 as Treasurer of BARSI, where she had been employed since 1971.
She is a Certified Public Accountant.
There is no family relationship among any of the company's executive
officers or Directors.
-13-
- --------------------------------------------------------------------------------
PART II
- -------------------------------------------------------------------------------
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
The shares of the company's Class A common stock are traded on the New
York Stock Exchange under the symbol BRE. Information concerning the
high and low closing prices for the shares and dividends paid is
contained on page 31 of the 19941995 Annual Report under the caption
"Market Price Range and Dividends Paid Per Share," which information is
incorporated herein by reference.reference to excerpts of the Annual Report. As
of July 31, 1994,1995, there were approximately 3,8733,608 recordholders of the
company's shares of Class A common stock.
ITEM 6. SELECTED FINANCIAL DATA
Reference is made to the information contained on page 2726 of the 19941995
Annual Report for the Selected Financial Data required by this Item,
which information is incorporated herein by reference.reference to excerpts of
the Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Reference is made to the information contained on pages 28-3027-30 of the
19941995 Annual Report for
Management'sunder the caption "Management's Discussion and
Analysis of Financial Condition and Results from Operations,Operations", which
information is incorporated herein by reference.reference to excerpts of the
Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Reference is made to the financial statements contained on pages 18-2516-24
of the 19941995 Annual Report, for the
Financial Statements, which financial statements are incorporated
herein by reference.reference to excerpts of the Annual Report. See also Item 14
of this report for information concerning financial statements and
schedules filed with this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
-14--17-
- --------------------------------------------------------------------------------
PART III
- -------------------------------------------------------------------------------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a) EXECUTIVE OFFICERS. See "Executive Officers of the Registrant"
in Part I of this report.
(b) DIRECTORS. The information required by this Item is hereby
incorporated by reference to the company's Proxy Statement under
the heading "Election of Directors" and the caption "Compliance
with Section 16(a) of the Securities and Exchange Act of 1934"
filed with the Securities and Exchange Commission.
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item is hereby incorporated herein by
reference to the Proxy Statement under the captions "Executive
Compensation and Other Information", and "Compensation Committee Report
on Executive Compensation of Executive Officers."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by this Item is hereby incorporated herein by
reference to the Proxy Statement under the headings "Election of
Directors" and "Principal Shareholders."
ItemITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
-15-Reference is made to the information contained in Note H of Notes to
Financial Statements, on page 23 of the 1995 Annual Report under the
caption "Transactions with Related Parties", which information is
incorporated herein by reference to excerpts of the Annual Report.
-18-
PART III
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a)(1) and (2) The responses to these subsections of Item 14 are
submitted as a separate section of this report.
(a)(3) ListLIST OF EXHIBITS
2.1 Agreement and Plan of Exhibits
-----------------------Merger (1)
3.1 Restated Certificate of IncorporationIncorporation(2)
3.2 By-Laws (1)(3)
4.1 Rights Agreement, dated as of August 14, 1989, between the company and
Chemical Trust Company of California, as successor rights agent to Bank of
America N.T. & S.A. (2)(4)
10.1 1984 Stock Option Plan, as amended to date (3)(5)
10.2 1992 Employee Stock Option Plan, (3)as amended and restated to date
10.3 1994 Non-Employee Director Stock Plan
10.4 1992 Payroll Investment Plan (3)
10.4(5)
10.5 Form of Indemnification Agreement (4)
10.5(6)
10.6 Employment agreement with Arthur G. von Thaden (5)
10.6(7)
10.7 Agreement for Continuing Services with Arthur G. von Thaden
10.8 Employment agreement with Frank C. McDowell
10.9 Supplemental Executive Retirement Benefit agreement with Arthur G. von
Thaden (5)
10.7(7)
10.10 Supplemental Executive Retirement Benefit agreement with Howard E. Mason,
Jr. (5)
10.8(7)
10.11 BRE Properties, Inc. Retirement Plan (5)
10.9(7)
10.12 BRE Properties, Inc. Supplemental ERISA Retirement Plan
10.13 Sublease with Wells Fargo Bank on 10,142 square feet at Suite 2500, One
Montgomery Street, San Francisco, California (5)
10.10(7)
10.14 Form of deferred compensation agreement with Eugene P. Carver (2)
11 Computation of earnings per share
1313.1 BRE Properties, Inc. 1994excerpts of the 1995 Annual Report
21 Subsidiaries of the registrant 24(2)
23.1 Consent of Ernst & Young LLP
27 Financial Data ScheduleSchedules
- - ---------------------------------------------
-19-
(1) Incorporated by reference to the company's current report on Form 8-K
dated October 11, 1995.
(2) Incorporated by reference to the company's 1994 Annual Report on Form 10-
K filed with the Securities and Exchange Commission on October 13, 1994.
(3) Incorporated by reference to S-3 Registration Statement (No. 33-58802)
filed with the Securities and Exchange Commission on February 26, 1993,
as amended.
(2)(4) Incorporated by reference to Exhibit 4.1 to the company's current report
on Form 8-K dated August 14, 1989.
-16-
(3)(5) Incorporated by reference to the company's 1992 Annual Report on Form 10-K10-
K filed with the Securities and Exchange Commission on October 19, 1992.
(4)(6) Incorporated by reference to S-4 Registration Statement (No. 33-9014)
filed with the Securities and Exchange Commission on September 25, 1986,
as amended.
(5)(7) Incorporated by reference to the company's 1988 Annual Report on Form 10-K10-
K filed with the Securities and Exchange Commission on October 24, 1988.
- - ---------------------------------------------
(b) The exhibits listed in Item (a)(3) above are submitted as a
separate section of this reportreport.
(c) The financial statement schedules listed in response to Item
(a)(1) and (2) are submitted as a separate section of this
report.
-17--20-
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, there untothereunto duly authorized.
BRE PROPERTIES, INC.
Dated October 11, 199424, 1995 /s/ Arthur G. von Thaden
---------------- -------------------------
Arthur G. von ThadenFrank C. McDowell
---------------------
Frank C. McDowell
President
Pursuant to the requirements of the Securities and Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:
Signature Title Date
- - --------- ----- ----
/s/ Arthur G. von Thaden
- - -------------------------Frank C. McDowell President and Director October 11, 1994
(Arthur G. von Thaden)24, 1995
- ------------------------ (Principal Executive Officer)
----------------(Frank C. McDowell)
/s/ Howard E. Mason, Jr. - - ------------------------- Senior Vice President, Finance October 11, 199424, 1995
- ------------------------ (Principal Financial and Accounting
(Howard E. Mason, Jr.) (Principal Financial ----------------
and Accounting Officer)
/s/ C. Preston Butcher Director October 11, 1994
-24, 1995
- ------------------------
----------------
(C. Preston Butcher)
/s/ Eugene P. Carver Chairman and Director October 11, 1994
- - ------------------------ ----------------
(Eugene P. Carver)
/s/ L. Michael Foley Director October 11, 199424, 1995
- - ------------------------ ----------------
(L. Michael Foley)
/s/John McMahan Director October 11, 199424, 1995
- - ------------------------ ----------------
(John McMahan)
/s/ Malcolm R. Riley Director October 11, 1994
-24, 1995
- ------------------------
----------------
(Malcolm R. Riley)
/s/ Arthur G. von Thaden Chairman and Director October 24, 1995
- ------------------------
(Arthur G. von Thaden)
All of the Directors
-18--21-
ANNUAL REPORT ON FORM 10-K
ITEM 14 (a)(1) AND (2) AND 14 (d)
LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
and
FINANCIAL STATEMENT SCHEDULES
YEAR ENDED JULY 31, 19941995
BRE PROPERTIES, INC.
SAN FRANCISCO, CALIFORNIA
-19--22-
Form 10-K - Item 14 (a)(1) and (2) and 14(d)
List of Financial Statements and Financial Statement Schedules
Financial Statements:
The following financial statements of BRE Properties, Inc. (the "company") are
incorporated by reference in Item 8 to the specified portionsexcerpts of the BRE
Properties, Inc. Annual Report to Shareholders for the year ended July 31, 1994.1995.
Balance Sheets - July 31, 19941995 and July 31, 19931994 - page 1816
Statements of Income - Years ended July 31, 1995, 1994 July 31,and 1993 and
July 31, 1992 - page 1917
Statements of Cash Flows - Years ended July 31, 1995, 1994 July 31,and 1993 and
July 31, 1992 - page
2018
Statements of Shareholders' Equity - Years ended July 31, 1995, 1994 July 31,and
1993
and July 31, 1992 - page 2119
Notes to Financial Statements - pages 22-2520-24
Financial Statements Schedules
The following financial statement schedules are included in Item 14(d):
Schedule X Supplementary income statement informationII Valuation and qualifying accounts
Schedule XIIII Real estate and accumulated depreciation
Schedule XIIIV Mortgage loans on real estate
All other schedules (I II, III, IV, V, VI, VII, VIII, IX, XIII and XIV)V) for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not required
under the related instructions or are inapplicable, and, therefore, have been
omitted.
-20--23-
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
Shareholders and Directors
BRE Properties, Inc.
We have audited the financial statements and related schedules of BRE
Properties, Inc. listed in Item 14 (a)(1) and (2) of the Annual Report on Form
10-K of BRE Properties, Inc. for the year ended July 31, 1994.1995. These financial
statements and related schedules are the responsibility of the company's
management. Our responsibility is to express an opinion on these financial
statements and related schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements and related schedules.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BRE Properties, Inc., at
July 31, 19941995 and 1993,1994, and the results of its operations and cash flows for
each of the three years in the period ended July 31, 19941995 in conformity with
generally accepted accounting principles. Further, it is our opinion that the
schedules referred to above present fairly, in all material respects, the
information set forth therein in compliance with the applicable accounting
regulations of the Securities and Exchange Commission.
Ernst & Young LLP
San Francisco, California
August 29, 1994
-21-28, 1995
-24-
BRE PROPERTIES, INC.
SCHEDULE XII - SUPPLEMENTARY INCOME STATEMENT INFORMATIONVALUATION AND QUALIFYING ACCOUNTS
July 31, 19941995
(000) OMITTED
The activity in the allowance for possible investment losses for the three years
ended July 31, 1995 is summarized as follows:
- - ---------------------------------------------------------------------------
COL. A COL. B (1)
- - ---------------------------------------------------------------------------
ITEM Charged to Costs and Expenses
- - ---------------------------------------------------------------------------1995 1994 1993
-------- -------- --------
Year ended July 31, 1994:
Maintenance and repairs $4,966,000
Real estate and personal property taxes 3,043,000
Year ended July 31, 1993:
Maintenance and repairs 4,015,000
Real estate and personal property taxes 2,266,000
Year ended July 31, 1992:
Maintenance and repairs 2,771,000
Real estate and personal property taxes 1,762,000
(1) Amounts for the other costs and expenses items called for
Balance at beginning of year $1,000 $1,000 $1,000
Plus: Charges to income 2,000
Less: Reductions in this Schedule
are not presented because such amounts are less than 1%carrying value of total revenues.investments
(1,750)
-------- -------- --------
Balance at end of year $1,250 $1,000 $1,000
-------- -------- --------
-------- -------- --------
-22--25-
BRE PROPERTIES, INC.
SCHEDULE XIIII - REAL ESTATE AND ACCUMULATED DEPRECIATION
JULY 31, 1994
(000 OMITTED)1995
(000) OMITTED
INITIAL COST TO COMPANYInitial Cost to Company
-----------------------
COST
BUILDINGS CAPITALIZED DEPRECI-
AND SUBSEQUENT ABLE
DATES ACQUIRED/ IMPROVE- TO LIVES-
NAME LOCATION CONSTRUCTED LAND MENTS ACQUISITION YEARS
-Cost
Capitalized
Dates Acquired/ Buildings and Subsequent to
Name Location Constructed Land Improvements Acquisitions
- ---- -------- --------------- ---- ------ ----------- ------------------- -------------
Apartments
Montanosa San Diego, California 1992/1989-1990 $ 6,005 $ 24,065 $ 128 401989-90 $6,005 $24,065 $169
Mira Mesa San Diego, California 19931993/ 4,869 19,493 130 40133
(Cimmaron, Hacienda, Westpark) 1985-1987
Selby Ranch Sacramento, California 1986/1971-19741971-74 2,660 18,340 230 40231
Parkwood Mill Creek, Washington 1989/1989 3,947 15,811 33 4034
Scottsdale Cove Scottsdale, Arizona 1991-94/ 3,243 14,468 19
1992-94
Shadowbrook Redmond, Washington 1987/1986 3,1953,605 12,709 488 40131
The Verandas Union City, California 1993/1989 3,233 12,932 62 4063
Terra Nova Villas Chula Vista, California 1994/1985 2,925 11,699 28 4052
Brookdale Glen Portland, Oregon 1993/1985 2,797 11,188 40
Scottsdale Cove Scottsdale,58
Hacienda del Rio Tucson, Arizona 1991/1992 2,385 9,186 15 40
Expansion, under development 1993/1994 858 3,5931994/1983 1,859 7,437 28
Colonia del Rio Tucson, Arizona 1994/1985 1,774 7,094 20
Spring Hill Tucson, Arizona 1994/1987 1,733 6,933 26
Casas Lindas Tucson, Arizona 1994/1987 1,513 6,051 17
Westlake Village Daly City, California 1972/1951-71 7,425
Winchester San Diego, California 1994/1987 1,482 5,928 21 40
Westlake Village Daly City, California 1972/1951-1971 7,425
Sharon Green Menlo Park, California 1971/1970 1,250 5,770 201 45205
Camino Seco Village Tucson, Arizona 1995/1984 1,335 5,360
Oracle Village Tucson, Arizona 1994/1983 1,209 4,837 17
Citywalk Seattle, Washington 1988/1988 1,123 4,276 4010
Fountain Plaza Tucson, Arizona 1994/1975 907 3,628 23
Village Green La Habra, California 1972/1971 372 2,763 45 40115
Villa Serra Cupertino, California 1973/1970 900
------- -------- -------
Subtotal-Apartments 45,426 157,753 1,381
------- -------- -------
Shopping Centers---------- ---------- ----------
SUBTOTAL-APARTMENTS 56,166 200,782 1,351
---------- ---------- ----------
The Hub Fremont, California 1973/1961-19871961-87 5,494 5,822 28,509 30-4030,509
El Camino Woodland Hills, California 1971/1970 1,500 10,037 2,762 40
------- -------- -------
Subtotal-Shopping Centers3,697
---------- ---------- ----------
SUBTOTAL-SHOPPING CENTERS 6,994 15,859 31,271
------- -------- -------
34,206
---------- ---------- ----------
GROSS AMOUNT AT WHICH CARRIED AT JULYGross Amount at Which Carried at July 31, 19941995
----------------------------------------------
BUILDINGS ACCUMU-
AND LATED
IMPROVE- DEPRECI- ENCUM-
NAME LOCATION LAND MENTS TOTAL ATION BRANCES
-Buildings
Depreciable and Accumulated
Name Lives- Year Land Improvement Total Depreciation Encumbrances
- ---- ------------------- ---- -------------------- ----- -------- ------------------- ------------
Apartments
Montanosa San Diego, California $ 6,005 $ 24,193 $ 30,198 $ 955 $17,26840 $6,005 $24,234 $30,239 $1,561 $17,105
Mira Mesa San Diego, California40 4,869 19,623 24,492 407 13,51719,626 24,495 897 13,303
(Cimmaron, Hacienda, Westpark)
Selby Ranch Sacramento, California40 2,660 18,570 21,230 3,803 12,95418,571 21,231 4,265 12,763
Parkwood Mill Creek, Washington40 3,947 15,844 19,791 1,87715,845 19,792 2,272
Scottsdale Cove 40 3,243 14,487 17,730 859
Shadowbrook Redmond, Washington40 3,605 12,787 16,392 2,27112,840 16,445 2,594
The Verandas Union City, California40 3,233 12,994 16,227 40512,995 16,228 730
Terra Nova Villas Chula Vista, California40 2,925 11,727 14,652 97 9,18211,751 14,676 391 9,240
Brookdale Glen Portland, Oregon40 2,797 11,188 13,985 373
Scottsdale Cove Scottsdale, Arizona 2,385 9,201 11,586 526
Expansion, under development 858 3,593 4,451
Winchester San Diego, California 1,482 5,949 7,431 5011,246 14,043 654
Hacienda del Rio 40 1,859 7,465 9,324 139 5,608
Colonia del Rio 40 1,774 7,114 8,888 147 5,273
Spring Hill 40 1,733 6,959 8,692 144 5,337
Casas Lindas 40 1,513 6,068 7,581 152
Westlake Village Daly City, California 7,425 7,425 *
Winchester 40 1,482 5,928 7,410 198
Sharon Green Menlo Park, California45 1,250 5,971 7,221 2,785 19,6495,975 7,225 2,935 19,372
Camino Seco 40 1,335 5,360 6,695 4,234
Oracle Village 40 1,209 4,854 6,063 101 4,188
Citywalk Seattle, Washington40 1,123 4,276 5,399 6764,286 5,409 783
Fountain Plaza 40 907 3,651 4,558 68 3,136
Village Green La Habra, California45 372 2,808 3,180 1,5252,878 3,250 1,595
Villa Serra Cupertino, California 900 900 **
------- -------- -------- ------- -------
Subtotal-Apartments 45,836 158,724 204,560 15,750 72,570
------- -------- -------- ------- -------
Shopping Centers--------- --------- ---------- ---------- ----------
SUBTOTAL-APARTMENTS 56,166 202,133 258,299 20,485 99,559
--------- --------- ---------- ---------- ----------
The Hub Fremont, California30-40 5,494 34,331 39,825 10,66136,331 41,825 11,680
El Camino Woodland Hills, California40 1,500 12,799 14,299 1,776 1,374
------- -------- -------- ------- -------
Subtotal-Shopping Centers13,734 15,234 2,130 1,269
--------- --------- ---------- ---------- ----------
SUBTOTAL-SHOPPING CENTERS 6,994 47,130 54,124 12,437 1,374
------- -------- -------- ------- -------50,065 57,059 13,810 1,269
--------- --------- ---------- ---------- ----------
-23-* Subordinated land lease
** Nonsubordinated land lease
-26-
BRE PROPERTIES, INC.
SCHEDULE XIIII - REAL ESTATE AND ACCUMULATED DEPRECIATION
(Continued)
JULY 31, 1994
(000 OMITTED)1995
(000) OMITTED
INITIAL COST TO COMPANYInitial Cost to Company
-----------------------
COST
BUILDINGS CAPITALIZED DEPRECI-
AND SUBSEQUENT ABLE
DATES ACQUIRED/ IMPROVE- TO LIVES-
NAME LOCATION CONSTRUCTED LAND MENTS ACQUISITION YEARS
- -Cost
Capitalized
Dates Acquired/ Buildings and Subsequent to
Name Location Constructed Land Improvements Acquisitions
---- -------- -------------------------- ---- ------ ----------- ------------------ ------------
Other income-producing property
Pomona Warehouse Pomona, California 1986/1981 $4,077 $7,429
Sorrento Technology San Diego, California 1989/1985 4,046 5,520 $700
LSI Logic Fremont, California 1982/1982-84 1,323 2,458 2,105
Fremont 3 Fremont, California 1982/1982-84 1,128 2,096 2,529
Westridge San Diego, California 1985/1984 1,072 4,300 108
Irvine Spectrum Irvine, California 1985/1984 1,459 3,983 63
Oak Creek II Milipitas, California 1984/1980 552 4,048 238
525 Almanor Sunnyvale, California 1971/1967-92 300 1,475 2,417
Peppertree Hayward, California 1981/1981 539 2,000 1,336
Oak Creek I Milipitas, California 1984/1980 379 2,780 73
Santa Clara Office Mountain View, California 1972/1971 233 703 348
-------- --------- --------
SUBTOTAL- OTHER 15,108 36,792 9,917
-------- --------- --------
TOTAL $78,268 $253,433 $45,474
------- -------- -------
------- -------- -------
Gross Amount at Which Carried at July 31, 1995
----------------------------------------------
Buildings
Depreciable and Accumulated
Name Lives- Years Land Improvements Total Depreciation Encumbrances
---- ------------ ---- ------------ ----- ------------ ------------
Other income-producing property
Pomona Warehouse Pomona, California 1986/1981 $ 4,077 $ 8,354 $ 767 40 $4,077 $7,429 $11,506 $2,204
Sorrento Technology San Diego, California 1989/198540 4,046 5,520 470 406,220 10,266 1,011
LSI Logic Fremont, California 1982/1982-198435 1,323 2,458 2,105 354,563 5,886 1,614
Fremont 3 Fremont, California 1987/198735 1,128 2,096 2,615 404,625 5,753 1,540
Westridge San Diego, California 1982/1982-198435 1,072 4,300 106 354,408 5,480 1,071
Irvine Spectrum Irvine, California 1985/1984 1,460 3,983 40 1,459 4,046 5,505 804
Oak Creek II Milpitas, California 1984/198035 552 4,048 312 354,286 4,838 1,283
525 Almanor Sunnyvale, California 1971/1967-199245 300 1,475 2,470 453,892 4,192 1,160
Peppertree Hayward, California 1981/198135 539 2,000 1,336 353,336 3,875 1,350
Oak Creek I Milpitas, California 1984/1980 379 2,780 73 35
Marymoor Redmond, Washington 1984/1980 418 1,808 132 35
Santa Clara County Mountain View, California 1972/1971 233 703 348 45
515 Ellis Mountain View, California 1973/1972 183 517 349 45
------- -------- -------
Subtotal - Other 15,710 40,042 11,083 45
------- -------- -------
Total $68,130 $213,654 $43,735
------- -------- -------
------- -------- -------
GROSS AMOUNT AT WHICH CARRIED AT JULY 31, 1994
----------------------------------------------
BUILDINGS ACCUMU-
AND LATED
IMPROVE- DEPRECI- ENCUM-
NAME LOCATION LAND MENTS TOTAL ATION BRANCES
- - ---- -------- ---- --------- ----- -------- -------
Other income-producing property
Pomona Warehouse Pomona, California $ 4,077 $ 9,121 $ 13,198 $ 1,946
Sorrento
Technology San Diego, California 4,046 5,990 10,036 816
LSI Logic Fremont, California 1,323 4,563 5,886 1,481
Fremont 3 Fremont, California 1,128 4,711 5,839 1,410
Westridge San Diego, California 1,072 4,406 5,478 961
Irvine Spectrum Irvine, California 1,460 3,983 5,443 703
Oak Creek II Milpitas, California 552 4,360 4,912 1,170
525 Almanor Sunnyvale, California 300 3,945 4,245 976
Peppertree Hayward, California 539 3,336 3,875 1,259
Oak Creek I Milpitas, California 379 2,853 3,232 803
Marymoor Redmond, Washington 418 1,940 2,358 545884
Santa Clara County Mountain View, CaliforniaOffice 45 233 1,051 1,284 544
515 Ellis Mountain View, California 183 866 1,049 463
-------595
-------- -------- -------
Subtotal - Other 15,710 51,125 66,835 13,077
------- -------- --------
-------
Total $68,540 $256,979 $325,519 $41,264 $73,944
-------SUBTOTAL- OTHER 15,108 46,709 61,817 13,516
-------- -------- ------- -------
------- -------- -------- ------- -------
* Subordinated land lease
** Nonsubordinated land lease--------
TOTAL $78,268 $298,907 $377,175 $47,811 $100,828
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
See Note A of Notes to Financial Statements for information related to lives on
which depreciation is computed, and Note E of Notes to Financial Statements
for
additional information concerning encumbrances at July 31, 1994.
-24-1995.
-27-
BRE PROPERTIES INC.
SCHEDULE XIIII - REAL ESTATE AND ACCUMULATED DEPRECIATION
JULY 31, 19941995
(000 OMITTED)
The activity in equity investments and related accumulated depreciation for the three years
ended July 31, 19941995 is summarized as follows:
EQUITY INVESTMENTS1995 1994 1993
1992
-------- -------- ----------------- --------- ---------
EQUITY INVESTMENTS
Balance at beginning of year $325,519 $282,012 $220,577 $212,926
Plus: Cash expenditures 23,515 45,712 33,535 4,42231,979
Acquisition through tax-deferred exchanges:
Mortgage loan 17,500
Acquisition through tax-deferred exchangesValue of property exchanged 5,860 11,000
9,774Cash 248 1,556
Assumption of bond and mortgage debt 27,939 9,240
Less: PropertiesCost of properties disposed of through tax-deferred exchanges (4,156) (600) (4,946)
Properties sold (11,445)
(1,599)Reduction in carrying value (1,750)
-------- -------- --------
Balance at end of year $377,175 $325,519 $282,012 $220,577
-------- -------- --------
-------- -------- --------
ACCUMULATED DEPRECIATION
Balance at beginning of year $ 37,563 $ 32,270 $ 28,728$41,264 $37,563 $32,270
Plus: Provision during the year through charges to income 7,658 6,674 5,453 4,629
Less: Fully amortized leasing commissions on expired leases (74) (112) (160) (116)
Accumulated depreciation on exchanged properties (971)(1,037)
Accumulated depreciation on properties sold (2,861)
------- ------- -------
Balance at end of year $47,811 $41,264 $37,563
------- ------- -------
------- ------- -------
Approximate aggregate cost for federal income tax purposes $314,868 $265,735 $222,229
-------- -------- --------
-------- -------- --------
-28-
BRE PROPERTIES, INC.
SCHEDULE IV- MORTGAGE LOANS ON REAL ESTATE
July 31, 1995
(000) OMITTED
Carrying
Periodic Carrying Amount Subject to
Final Payment Amount of Delinquent Principal
Description Interest Rate Maturity Date Terms Mortgages or Interest
----------- ------------- ------------- -------- --------- --------------------
Office Building
---------------
Washington 12% 1996 A $3,400
Apartments
----------
Arizona 10 1995 B 1,500
Land
----
Arizona 10 1996 B 1,500
Condominium
-----------
Tennessee 8-10 2007-2008 C 904
Other 105
----- ------
$7,409 None
------
------
A Interest only is payable monthly. Principal is due at final maturity.
B Interest only is payable monthly. Principal is due at final maturity.
Provided that no event of default has occurred, the borrowers on each loan
may request a one-year extension, during which time the interest rate rises
to 11%, and a second one-year extension, during which time the interest rate
rises to 12%.
C Principal and interest are payable monthly in level amounts
-29-
BRE PROPERTIES, INC.
SCHEDULE IV- MORTGAGE LOANS ON REAL ESTATE
July 31, 1995
(000) OMITTED
The activity in mortgage loans for the three years ended July 31, 1995 is
summarized as follows:
1995 1994 1993
-------- -------- --------
Balance at beginning of year
$4,516 $4,386 $5,254
Plus: Fundings 3,100
Less: Repayments (207) (320) (418)
-------- -------- --------
Balance at end of year $41,264 $ 37,563 $ 32,270
-----------$7,409 $4,516 $4,836
-------- -------- --------
-------- -------- --------
Aggregate carrying amount of mortgage loans extended or renewed $3,400 $3,400 $3,400
-------- -------- --------
-------- -------- --------
Approximate aggregate cost for federal income tax purposes $265,735 $222,229 $171,126$7,409 $4,516 $4,836
-------- -------- --------
-------- -------- --------
-25-
BRE PROPERTIES, INC.
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE
JULY 31, 1994
(000 OMITTED)
CARRYING
FINAL PERIODIC CARRYING AMOUNT SUBJECT TO
INTEREST MATURITY PAYMENT AMOUNT OF DELINQUENT PRINCIPAL
DESCRIPTION RATE DATE TERMS MORTGAGES OR INTEREST
- - ----------- -------- -------- ------- --------- --------------------
OFFICE BUILDING
Washington 11% 1995 A $3,400
CONDOMINIUM
Tennessee 8-10 2007-2008 B 1,108
OTHER 8
------
$4,516 None
------
------
A Interest only is payable monthly. Principal is due at final maturity.
B Principal and interest are payable monthly in level amounts. Loans are
fully amortizing.
-26-
BRE PROPERTIES, INC.
SCHEDULE XII - MORTGAGE LOANS ON REAL ESTATE
July 31, 1994
(000 OMITTED)
The activity in mortgage loans for the three years ended July 31, 1994 is
summarized as follows:
1994 1993 1992
-------- -------- --------
Balance at beginning of year $4,836 $5,254 $5,500
Less: Repayments (320) (418) (246)
--- --- ---
Balance at end of year $4,516 $4,836 $5,254
----- ----- -----
----- ----- -----
Aggregate carrying amount of mortgage loans extended or renewed $3,400 $3,400 $3,400
----- ----- -----
----- ----- -----
Approximate aggregate cost for federal income tax purposes $4,516 $4,836 $5,254
----- ----- -----
----- ----- -----
-27-
ANNUAL REPORT ON FORM 10-K
EXHIBIT INDEX
YEAR ENDED JULY 31, 1994
BRE PROPERTIES, INC.
SAN FRANCISCO, CALIFORNIA
3.1 Restated Certificate of Incorporation
3.2 By-Laws(1)
4.1 Rights Agreement, dated as of August 14, 1989, between the company and
Chemical Trust Company of California, as successor rights agent to Bank
of America N.T. & S.A.(2)
10.1 1984 Stock Option Plan, as amended to date(3)
10.2 1992 Employee Stock Option Plan(3)
10.3 1992 Payroll Investment Plan(3)
10.4 Form of Indemnification Agreement(4)
10.5 Employment agreement with Arthur G. von Thaden(5)
10.6 Supplemental Executive Retirement Benefit agreement with Arthur G. von
Thaden(5)
10.7 Supplemental Executive Retirement Benefit agreement with Howard E. Mason,
Jr.(5)
10.8 BRE Properties, Inc. Retirement Plan(5)
10.9 Sublease with Wells Fargo Bank on 10,142 square feet at Suite 2500, One
Montgomery Street, San Francisco, California(5)
10.10 Form of deferred compensation agreement with Eugene P. Carver
11 Computation of earnings per share
13 BRE Properties, Inc. 1994 Annual Report
21 Subsidiaries of the registrant
24 Consent of Ernst & Young LLP
27 Financial Data Schedule
____________________
(1) Incorporated by reference to S-3 Registration Statement (No. 33-58802)
filed with the Securities and Exchange Commission on February 26, 1993, as
amended.
-28-
(2) Incorporated by reference to Exhibit 4.1 to the company's current report on
Form 8-K dated August 14, 1989.
(3) Incorporated by reference to the company's 1992 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on October 19, 1992.
(4) Incorporated by reference to S-4 Registration Statement (No. 33-9014) filed
with the Securities and Exchange Commission on September 25, 1986, as
amended
(5) Incorporated by reference to the company's 1988 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on October 24, 1988.
(6) The company is not a party to any instrument with respect to long-term debt
for which securities authorized thereunder exceed 10% of the total assets
of the company. Copies of instruments with respect to long-term debt of
lesser amounts will be provided to the Commission upon request.
____________________
-29--30-