UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 1-9317
HRPT PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 04-6558834
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
400 Centre Street, Newton, Massachusetts 02458
(Address of principal executive offices) (Zip Code)
617-332-3990
(Registrant's telephone number, including area code)
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 [ ]
Number of Common Shares outstanding at May 10, 2000:
131,935,847 shares of beneficial interest, $0.01 par value.
HRPT PROPERTIES TRUST
FORM 10-Q
MARCH 31, 2000
INDEX
PART I Financial Information Page
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets - March 31, 2000 and December 31,
1999 1
Consolidated Statements of Income - Three Months Ended March 31,
2000 and 1999 2
Consolidated Statements of Cash Flows - Three Months Ended March
31, 2000 and 1999 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
PART II Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 16
HRPT PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share amounts)
March 31, December 31,
2000 1999
------------ -------------
(unaudited) (note 1)
ASSETS
Real estate properties, at cost:
Land $ 354,649 $ 354,173
Buildings and improvements 2,305,333 2,302,171
----------- -----------
2,659,982 2,656,344
Less accumulated depreciation 121,714 106,859
----------- -----------
2,538,268 2,549,485
Real estate mortgages and notes receivable, net 6,866 10,373
Equity investments 306,210 311,113
Cash and cash equivalents 5,214 13,206
Interest and rents receivable 37,925 36,683
Other assets, net 39,898 32,448
----------- -----------
$ 2,934,381 $ 2,953,308
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Bank notes payable $ 139,000 $ 132,000
Senior notes payable, net 957,623 957,586
Mortgage notes payable 55,145 55,441
Convertible subordinated debentures 204,863 204,863
Accounts payable and accrued expenses 42,699 53,851
Deferred rents 7,484 9,005
Security deposits 7,174 7,041
Due to affiliates 14,303 11,054
Shareholders' equity:
Preferred shares of beneficial interest, $0.01 par value:
50,000,000 shares authorized, none issued -- --
Common shares of beneficial interest, $0.01 par value:
150,000,000 shares authorized, 131,934,347 shares and
131,908,126 shares issued and outstanding, respectively 1,319 1,319
Additional paid-in capital 1,971,581 1,971,366
Cumulative net income 705,126 678,676
Distributions (1,163,744) (1,121,533)
Unrealized holding losses on investments (8,192) (7,361)
----------- -----------
Total shareholders' equity 1,506,090 1,522,467
----------- -----------
$ 2,934,381 $ 2,953,308
=========== ===========
See accompanying notes
1
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF INCOME
(amounts in thousands, except per share amounts)
(unaudited)
Three Months Ended March 31,
----------------------------
2000 1999
-------- --------
Revenues:
Rental income $ 99,395 $101,313
Interest and other income 859 3,090
-------- --------
Total revenues 100,254 104,403
-------- --------
Expenses:
Operating expenses 33,827 24,006
Interest 25,098 19,437
Depreciation and amortization 15,874 18,831
General and administrative 4,697 4,841
-------- --------
Total expenses 79,496 67,115
-------- --------
Income before equity in earnings of equity investments
and gain on sale of properties 20,758 37,288
Equity in earnings of equity investments 5,692 2,008
-------- --------
Income before gain on sale of properties 26,450 39,296
Gain on sale of properties, net -- 8,307
-------- --------
Net income $ 26,450 $ 47,603
======== ========
Weighted average shares outstanding 131,921 131,660
======== ========
Basic and diluted earnings per common share:
Income before gain on sale of properties $ 0.20 $ 0.30
======== ========
Net income $ 0.20 $ 0.36
======== ========
See accompanying notes
2
HRPT PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
-------------------------------
2000 1999
---------- -----------
Cash flows from operating activities:
Net income $ 26,450 $ 47,603
Adjustments to reconcile net income to cash provided by operating
activities:
Gain on sale of properties, net -- (8,307)
Equity in earnings of equity investments (5,692) (2,008)
Distributions from equity investments 10,445 2,680
Depreciation 14,855 18,217
Amortization 1,019 614
Amortization of bond discounts 37 37
Change in assets and liabilities:
Increase in interest and rents receivable and other assets (10,387) (6,788)
Decrease in accounts payable and accrued expenses (11,152) (265)
Decrease in deferred rents (1,521) (205)
Increase in security deposits 133 52
Increase in due to affiliates 3,464 5,266
--------- ---------
Cash provided by operating activities 27,651 56,896
--------- ---------
Cash flows from investing activities:
Real estate acquisitions and improvements (3,638) (2,814)
Proceeds from repayment of real estate mortgages and notes receivable 3,507 2,618
Proceeds from sale of real estate -- 22,177
Proceeds from repayment of loans to affiliate -- 1,000
--------- ---------
Cash (used for) provided by investing activities (131) 22,981
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings 35,000 131,500
Payments on borrowings (28,296) (141,668)
Deferred finance costs incurred (5) (2,399)
Distributions (42,211) (50,378)
--------- ---------
Cash used for financing activities (35,512) (62,945)
--------- ---------
(Decrease) increase in cash and cash equivalents (7,992) 16,932
Cash and cash equivalents at beginning of period 13,206 15,643
--------- ---------
Cash and cash equivalents at end of period $ 5,214 $ 32,575
========= =========
Supplemental cash flow information:
Interest paid $ 27,504 $ 22,797
========= =========
Non-cash investing activities:
Investment in real estate mortgages receivable $-- $ 60,000
Issuance of common shares -- 4,959
Non-cash financing activities:
Issuance of common shares $ 215 $ 1,313
See accompanying notes
3
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 1. Basis of Presentation
The financial statements of HRPT Properties Trust and its subsidiaries
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for
interim periods are not necessarily indicative of the results that may be
expected for the full year.
Reclassifications have been made to the prior years' financial
statements to conform to the current year's presentation.
Note 2. Comprehensive Income
The following is a reconciliation of net income to comprehensive income
for the three months ended March 31, 2000 and 1999:
Three Months Ended March 31,
-----------------------------
2000 1999
---------- -----------
Net income $ 26,450 $ 47,603
Other comprehensive loss:
Unrealized holding losses on
investments (831) (5,639)
-------- --------
Comprehensive income $ 25,619 $ 41,964
======== ========
Note 3. Shareholders' Equity
During the three months ended March 31, 2000, 26,221 common shares were
issued as the incentive advisory fee for the year ended December 31, 1999.
On April 10, 2000, the Company declared a distribution on its common
shares with respect to the quarter ended March 31, 2000 of $0.32 per share,
which will be distributed on or about May 26, 2000, to shareholders of record as
of April 20, 2000.
Note 4. Equity Investments
At March 31, 2000, the Company had the following equity investments:
Ownership Equity in Equity
Percentage Earnings Investments
----------- --------- -----------
Senior Housing Properties Trust 49.3% $3,727 $197,873
Hospitality Properties Trust 7.1% 1,965 108,337
-------- --------
$5,692 $306,210
======== ========
At March 31, 2000, the Company owned 12,809,237 common shares of Senior
Housing Properties Trust ("SNH") with a carrying value of $197,873 and a fair
value based on quoted market prices, of $131.3 million. At March 31, 2000, the
Company owned four million common shares of Hospitality Properties Trust ("HPT")
with a carrying value of $108,337 and a fair value based on quoted market
prices, of $81,000.
4
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 5. Real Estate Properties, Mortgages and Notes Receivable, net
During the three months ended March 31, 2000, the Company funded $3,638
of improvements to its existing properties, and received scheduled principal
payments of $5 and repayment of a mortgage secured by one property totaling
$3,502.
Note 6. Indebtedness
In April 2000, the Company retired $27.5 million of its outstanding
Remarketed Reset Notes.
Note 7. Segment Information
The following is a summary of the Company's reportable segments as of
or for the three months ended March 31, 2000 and 1999:
Three Months Ended March 31, 2000 Three Months Ended March 31, 1999
----------------------------------------- -----------------------------------------
Senior Senior
Housing Office Total Housing Office Total
----------------------------------------- -----------------------------------------
Revenues $ 448 $ 99,748 $ 100,196 $ 26,131 $ 77,661 $ 103,792
Operating expenses -- (33,827) (33,827) -- (24,006) (24,006)
Depreciation -- (14,855) (14,855) (6,296) (11,921) (18,217)
---------------------------------------- -----------------------------------------
Net operating income $ 448 $ 51,066 $ 51,514 $ 19,835 $ 41,734 $ 61,569
======================================== =========================================
Real estate investments $ 6,866 $ 2,659,982 $ 2,666,848 $ 858,128 $ 2,133,073 $ 2,991,201
Real estate acquired
during the year $-- $ 3,638 $ 3,638 $-- $ 2,814 $ 2,814
The following tables reconcile the reported segment information to the
consolidated financial statements for the three months ended March 31, 2000 and
1999:
Three Months Ended March 31,
----------------------------
2000 1999
----------------------------
Revenues:
Total per reportable segment $ 100,196 $ 103,792
Unallocated other income 58 611
--------------------------
Total consolidated revenues $ 100,254 $ 104,403
==========================
Net operating income:
Total per reportable segment $ 51,514 $ 61,569
Unallocated amounts:
Other income 58 611
Interest expense (25,098) (19,437)
Amortization expense (1,019) (614)
General and administrative expenses (4,697) (4,841)
--------------------------
Total consolidated income before equity
in earnings of equity investments
and gain on sale of properties $ 20,758 $ 37,288
==========================
5
HRPT PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 8. Pro Forma Information
On October 12, 1999, the Company spun-off 50.7% of a 100% owned
subsidiary, SNH, to its shareholders (the "Spin-Off"). Also, during 1999, the
Company sold 21 nursing homes for gross proceeds of approximately $96,200. The
following unaudited pro forma consolidated statement of income for the three
months ended March 31, 1999, is presented to reflect the effects of the Spin-Off
and the disposition of nursing home assets during 1999, as if these transactions
had occurred on January 1, 1999. This pro forma information does not purport to
present actual results of operations if these transactions had occurred on such
date or project operating results for any future period.
Pro Forma Unaudited Consolidated Statement of Income
(amounts in thousands, except per share amounts)
Three Months
Ended
March 31, 1999
----------------
Revenues:
Rental income $ 77,366
Interest and other income 1,374
--------
Total revenues 78,740
--------
Expenses:
Operating expenses 24,006
Interest 15,159
Depreciation and amortization 12,685
General and administrative 3,602
--------
Total expenses 55,452
--------
Income before equity in earnings of equity
investments and gain on sale of properties 23,288
Equity in earnings of equity investments 7,974
--------
Income before gain on sale of properties $ 31,262
========
Weighted average shares outstanding 131,660
========
Income before gain on sale of properties per
basic share $ 0.24
========
Pro forma funds from operations, on a diluted basis, were $52.3
million, or $0.37 per share for the three months ended March 31, 1999.
6
HRPT PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Total revenues for the three months ended March 31, 2000, decreased
$4.1 million to $100.3 million from $104.4 million for the three months ended
March 31, 1999. Revenues from our office segment increased $22.1 million and
revenues from our senior housing segment decreased $25.7 million. The increase
in revenues from our office segment is due to office building acquisitions made
subsequent to March 31, 1999. The decrease in revenues from our senior housing
segment is due primarily to the Spin-Off of our former subsidiary, SNH, in
October 1999, and the sale of some senior housing properties in 1999.
For the three months ended March 31, 2000, rental income decreased $1.9
million and interest and other income decreased $2.2 million compared to the
prior period. Rental income decreased primarily because of the Spin-Off of SNH,
offset by acquisitions made subsequent to March 31, 1999. Interest and other
income decreased primarily as a result of the Spin-Off of SNH.
Total expenses for the three months ended March 31, 2000, increased to
$79.5 million from $67.1 million for the three months ended March 31, 1999.
Operating expenses increased by $9.8 million as a result of our increased
investment in office buildings made subsequent to March 31, 1999. Interest
expense increased by $5.7 million as a result of increased borrowings
outstanding during 2000 compared to the prior year period. Depreciation and
amortization, and general and administrative expenses decreased by $3.0 million
and $144,000, respectively, primarily as a result of the Spin-Off of SNH.
Equity in earnings of equity investments increased in 2000 by $3.7
million from the 1999 period due to the Spin-Off of SNH in October 1999.
Net income decreased to $26.5 million, or $0.20 per basic and diluted
share, for the 2000 period, from $47.6 million, or $0.36 per basic and diluted
share, for the 1999 period. The change in net income is due primarily to the
Spin-Off of SNH and the sale of some senior housing properties in 1999, offset
by office building acquisitions made subsequent to March 31, 1999.
Funds from operations for the three months ended March 31, 2000, were
$46.1 million, or $0.35 per basic share, and $59.7 million, or $0.45 per basic
share, for the 1999 period. Diluted funds from operations for the three months
ended March 31, 2000, were $50.2 million, or $0.35 per diluted share, and $63.7
million, or $0.45 per diluted share, for the 1999 period. Distributions declared
which relate to the three months ended March 31, 2000 and 1999, were $42.2
million, or $0.32 per share, and $50.1 million, or $0.38 per share,
respectively. The decrease in distributions reflects the reduced distributions
paid after the Spin-Off of SNH.
LIQUIDITY AND CAPITAL RESOURCES
Total assets were $2.9 billion at March 31, 2000 compared to $3.0
billion at December 31, 1999.
During the three months ended March 31, 2000, we funded $3.6 million of
improvements to our existing properties, received $5,000 of regularly scheduled
principal payments and received a $3.5 million principal repayment of a mortgage
secured by one property.
7
HRPT PROPERTIES TRUST
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - continued
At March 31, 2000, we owned 12.8 million, or 49.3%, of the common
shares of beneficial interest of SNH with a carrying value of $197.9 million and
a market value of $131.3 million, and 4.0 million, or 7.1%, of the common shares
of beneficial interest of HPT with a carrying value of $108.3 million and a
market value of $81.0 million.
During January and February of 2000, two of SNH's tenants, accounting
for approximately 48% of SNH's revenues, filed for bankruptcy. During March and
April 2000, SNH reached conditional agreements with both tenants calling for the
cancellation and modification of leases and mortgage obligations and the
exchange of certain properties leased to the tenants for cash and other
consideration. Also, the level of annual distributions to be paid by SNH to us
and other SNH shareholders, was reduced from $2.40 per SNH share to $1.20
beginning with the distribution declared by SNH in April 2000. Under both
agreements, SNH will assume operating responsibility for a total of 58
properties. Both of these agreements are subject to final documentation,
approval by the bankruptcy court and other contingencies. Therefore, no
assurance can be given as to if, and when, these transactions will close, or if
all of the terms currently agreed to will be implemented. As a result of these
transactions, SNH may recognize additional gains or losses in the future, which
will be reflected in our consolidated statement of income through our ownership
interest of SNH.
In April 2000, we retired $27.5 million of our Remarketed Reset Notes
due 2009 at their par value using borrowings under our bank credit facility.
At March 31, 2000, we had $5.2 million of cash and cash equivalents, as
well as $139 million outstanding and $361 million available for borrowing under
our bank credit facility. At March 31, 2000, $2.5 billion was available on our
$3 billion effective shelf registration statement.
There can be no assurances that debt or equity financing will be
available to fund future growth, but we do expect that financing will be
available. As of March 31, 2000, our debt as a percentage of total book
capitalization was approximately 47%.
Year 2000
In prior years, we discussed the nature and progress of our plans to
become year 2000 compliant and, in late 1999, we completed our remediation and
testing of systems. As a result of these efforts, we experienced no significant
disruptions in our information and non-information technology systems, and we
believe these systems successfully responded to the year 2000 date change. We
are not aware of any material problems resulting from year 2000 issues by our
systems or the systems of our tenants and vendors, but we will continue to
monitor these systems throughout the year to ensure that any late year 2000
issues that may arise are addressed promptly. Costs incurred to date and
anticipated future costs are not material.
8
HRPT PROPERTIES TRUST
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market changes in interest rates. We manage our
exposure to this market risk through our monitoring of available financing
alternatives. Our strategy to manage exposure to changes in interest rates is
unchanged from December 31, 1999. Furthermore, we do not foresee any significant
changes in our exposure to fluctuations in interest rates or in how this
exposure is managed in the near future. At March 31, 2000, our total outstanding
fixed rate debt consisted of the following:
Amount Coupon Maturity
Unsecured senior notes:
$40.0 million 7.25% 2001
160.0 million 6.875% 2002
150.0 million 6.75% 2002
164.9 million 7.50% 2003
100.0 million 6.7% 2005
90.0 million 7.875% 2009
65.0 million 8.375% 2011
143.0 million 8.5% 2013
Secured notes:
$3.5 million 9.12% 2004
11.1 million 8.40% 2007
17.6 million 7.02% 2008
12.2 million 8.00% 2008
10.7 million 7.66% 2009
No principal repayments are due under the unsecured senior notes until
maturity. If, at maturity, the unsecured senior notes were to be refinanced at
interest rates which are 1/2 percentage point higher than shown above, our per
annum interest cost would increase by approximately $4.6 million. The secured
notes are secured by 11 of our office properties and require principal and
interest payments through maturity.
The market prices, if any, of each of our fixed rate obligations as of
March 31, 2000, are sensitive to changes in interest rates. Typically, if market
rates of interest increase, the current market price of a fixed rate obligation
will decrease. Conversely, if market rates of interest decrease, the current
market price of a fixed rate obligation will typically increase. Based on the
balances outstanding at March 31, 2000, and discounted cash flow analyses, a
hypothetical immediate one percentage point change in interest rates would
change the fair value of our fixed rate debt obligations by approximately $39.2
million.
Each of our obligations for borrowed money has provisions that allow us
to make repayments earlier than the stated maturity date. In some cases, we are
not allowed to make early repayment prior to a cutoff date and in other cases we
are allowed to make prepayments only at a premium to face value. In any event,
these prepayment rights may afford us the opportunity to mitigate the risk of
refinancing at maturity at higher rates by refinancing at lower rates prior to
maturity.
At March 31, 2000, we had a $500 million unsecured bank credit facility
and unsecured Remarketed Reset Notes (the "Reset Notes") that were subject to
floating interest rates. Because these debt instruments are at a floating rate,
changes in interest rates will not affect their value. However, changes in
interest rates will affect our operating results. For example, the interest rate
payable on our outstanding Reset Notes of $250 million at March 31, 2000, was
7.28% per annum. An immediate 10% change in that interest rate, or 73 basis
points, would increase or decrease our costs by $1.8 million, or $0.01 per share
per year (dollars in thousands):
Impact of Changes in Interest Rates
----------------------------------------------
Total Interest
Interest Rate Outstanding Expense Per
Per Year Debt Year
------------- ----------- -------------
At March 31, 2000 7.28% $250,000 $18,200
10% reduction 6.55% 250,000 16,375
10% increase 8.01% 250,000 20,025
9
HRPT PROPERTIES TRUST
Item 3. Quantitative and Qualitative Disclosures About Market Risk - continued
The foregoing table presents a so called "shock" analysis which assumes
that the interest rate change by 10% is in effect for a whole year. If interest
rates were to change gradually over one year the impact would be less.
We borrow in U.S. dollars and our current borrowings under our bank
credit facility and our Reset Notes are subject to interest at LIBOR plus a
premium. Accordingly, we are vulnerable to changes in U.S. dollar based short
term rates, specifically LIBOR.
During the past few months, short-term U.S. dollar based interest rates
have tended to rise. We are unable to predict the direction or amount of
interest rate changes during the next year. We have decided not to purchase an
interest rate cap or other hedge to protect against future rate increases, but
we may enter such agreements in the future. Also, we may incur additional debt
at floating or fixed rates, which would increase our exposure to market changes
in interest rates.
10
Part II Other Information
Item 1. Legal Proceedings
In April 2000, the arbitration panel issued an award in the arbitration
proceeding described in Item 3 of the Company's Annual Report on Form 10-K,
which arose following the Company's commencement in 1995 of an action in Florida
state court to collect on a secured indemnity agreement from a former tenant and
mortgagor, together with certain related parties. In its award, the arbitration
panel dismissed all claims against the Company and awarded the Company $3.2
million in connection with the Company's indemnity claims. The Company has
applied to the United States District Court for an order confirming the award.
The final outcome of this confirmation process, and the ability of the Company
to realize on its award, are not known at this time, and if opposed, a
confirmation may be subject to appeal. The previously disclosed related cases
filed against the Company and others by creditors or assignees of the former
tenant remain pending, and the outcome of those proceedings cannot be predicted.
Item 2. Changes in Securities
On February 17, 2000, the Company issued 26,221 common shares as an
incentive fee of approximately $215,000 for services rendered during 1999, based
upon a per common share price of $8.1932. These restricted securities were
issued pursuant to the exemption from registration provided under Section 4(2)
of the Securities Act.
Item 5. Other Information
The Company's Board of Trustees has amended and restated the Company's
Bylaws. The following is a summary of certain provisions of the Bylaws, as
amended. Because it is a summary, it does not contain all of the information
which may be important to a shareholder or other investor. For more information,
the Company refers to the full text of its amended and restated Bylaws which are
being filed as an exhibit to this Quarterly Report on Form 10-Q.
o The Company has elected to be subject to Section 3-804(b) and (c) and
Section 3-805 of Title 3, Subtitle 8 of the Maryland General Corporation
Law. Those sections:
o provide that the number of trustees may be fixed only by a vote of the
Board of Trustees;
o provide that vacancies on the Board of Trustees may be filled only by
the affirmative vote of a majority of the remaining trustees in
office, even if the remaining trustees do not constitute a quorum, and
o provide that special meetings of shareholders may be called only by
the written request of a majority of all the votes entitled to be cast
at the meeting.
o The amended Bylaws provide that nomination of persons for election to the
Board of Trustees at an annual meeting of shareholders and business to be
transacted by the shareholders at an annual meeting of shareholders may be
properly brought before the meeting only (1) pursuant to the Company's
notice of meeting, (2) by or at the direction of the Board of Trustees, or
(3) by any shareholder who is a shareholder of record both at the time of
giving of the advance notice described below and at the time of the annual
meeting, who is entitled to vote at the meeting and who complies with the
advance notice and other applicable terms and provisions set forth in the
Bylaws. No business may be transacted at a special meeting of shareholders
except as specifically designated in the notice of the meeting. Nominations
of persons for election to the Board of Trustees at a special meeting of
shareholders at which trustees are to be elected may be made only (1)
pursuant to the Company's notice of meeting; (2) by or at the direction of
the Board of Trustees, or (3) by any shareholder who is a shareholder of
record both at the time of giving of the advance notice described below and
at the time of the special meeting, who is entitled to vote at the meeting
and who complies with the advance notice and other applicable terms and
provisions set forth in the Bylaws.
o The amended Bylaws require a shareholder who is nominating a person for
election to the Board of Trustees at an annual meeting or proposing
business to be transacted at an annual meeting to give notice of such
nomination or proposal to the secretary of the Company at the principal
executive offices of the Company not later than the close of business on
the 90th day nor earlier than the close of business on the 120th day prior
to
11
the first anniversary of the date of mailing of the notice for the
preceding year's annual meeting. If the date of mailing of the notice for
the annual meeting is advanced or delayed by more than 30 days from the
anniversary date of the date of mailing of the notice for the preceding
year's annual meeting, notice by the shareholder to be timely must be so
delivered not earlier than the close of business on the 120th day prior to
the date of mailing of the notice for such annual meeting and not later
than the close of business on the later of: (1) the 90th day prior to the
date of mailing of the notice for such annual meeting or (2) the 10th day
following the day on which public announcement of the date of mailing of
the notice for such meeting is first made by the Company. The public
announcement of a postponement of the mailing of the notice for such annual
meeting or of an adjournment or postponement of an annual meeting to a
later date or time will not commence a new time period for the giving of a
shareholder's notice. If the number of Trustees to be elected to the Board
of Trustees is increased and there is no public announcement by the Company
of such action or specifying the size of the increased Board of Trustees at
least one hundred (100) days prior to the first anniversary of the date of
mailing of notice for the preceding year's annual meeting, a shareholder's
notice also shall be considered timely, but only with respect to nominees
for any new positions created by such increase, if the notice is delivered
to the secretary at the Company's principal executive offices not later
than the close of business on the 10th day immediately following the day on
which such public announcement first is made by the Company.
o The amended Bylaws require a shareholder who is nominating a person for
election to the Board of Trustees at a special meeting at which trustees
are to be elected to give notice of such nomination to the secretary of the
Company at its principal executive offices not earlier than the close of
business on the 120th day prior to such special meeting and not later than
the close of business on the later of (1) the 90th day prior to such
special meeting or (2) the 10th day following the day on which public
announcement is first made of the date of the special meeting and of the
nominees proposed by the Trustees to be elected at such meeting. The public
announcement of a postponement or adjournment of a special meeting to a
later date or time will not commence a new time period for the giving of a
shareholder's notice as described above.
o The amended Bylaws provide that a shareholder's notice of a nomination for
election to the Board of Trustees or of a proposal of business to be
transacted at a shareholders meeting must be in writing and must include:
o as to each person whom the shareholder proposes to nominate for
election or reelection as a Trustee, (1) the person's name, age,
business address and residence address, (2) the class and number of
shares of beneficial interest of the Company that are beneficially
owned or owned of record by such person and (3) all other information
relating to such person that is required to be disclosed in
solicitations of proxies for election of Trustees in an election
contest, or is otherwise required, in each case pursuant to Regulation
14A or any successor provision under the Securities Exchange Act of
1934, including such person's written consent to being named in the
proxy statement as a nominee and to serving as a Trustee if elected;
o as to any business that the shareholder proposes to bring before the
meeting, a description of the business desired to be brought before
the meeting, the reasons for conducting such business at the meeting
and any interest of such shareholder in such business (including any
anticipated benefit to the shareholder therefrom) and of each
beneficial owner, if any, on whose behalf the proposal is made; and
o as to the shareholder giving the notice and each beneficial owner, if
any, on whose behalf the nomination or proposal is made, (1) the name
and address of such shareholder, as they appear on the Company's share
ledger and current name and address, if different, of any such
beneficial owner and (2) the class and number of shares of the Company
which are owned beneficially and of record by such shareholder and any
such beneficial owner.
o The amended Bylaws provide that, at the same time as or prior to the
submission to the Board of Trustees of any shareholder proposal of business
to be conducted at an annual or special meeting of the shareholders that,
if approved or implemented, would cause the Company to be in breach of a
covenant under any existing or proposed debt instrument or agreement with
any lender, the proponent shareholder must submit to the secretary of the
Company at the principal executive offices of the Company evidence
satisfactory to the Board of Trustees of the lender's willingness to waive
the breach or a plan for repayment of affected indebtedness which is
satisfactory to the Board of Trustees and which specifically identifies the
source of funds to be used in the repayment and presents evidence
satisfactory to the Board of Trustees that the identified funds could be
applied by the Company to the repayment.
12
o The amended Bylaws provide that, at the same time as or prior to the
submission to the Board of Trustees of any shareholder proposal of business
to be conducted at an annual or special meeting of the shareholders that,
if approved, could not be implemented by the Company without notifying or
obtaining the consent or approval of any regulatory body, the proponent
shareholder must submit to the secretary of the Company at the principal
executive offices of the Company evidence satisfactory to the Board of
Trustees that any and all required notices, consents or approvals have been
given or obtained or a plan, satisfactory to the Board of Trustees, for
making the requisite notices or obtaining the requisite consents or
approvals, as applicable, prior to the implementation of the proposal.
o The amended Bylaws provide that the Company is not required to include in
its proxy statement a shareholder nomination of persons for election to the
Board of Trustees or a shareholder proposal of business to be brought
before an annual or special meeting of shareholders, unless the proponent
shareholder has complied with (1) all applicable requirements of state and
federal law and the rules and regulations thereunder, including Rule 14a-8
or any successor provision under the Securities Exchange Act of 1934, and
(2) the advance notice and the other applicable procedures and requirements
set forth in the Bylaws. This Bylaw provision does not affect any right of
the Company to omit a shareholder proposal from the Company's proxy
statement under the Securities Exchange Act of 1934, including nominations
of persons for election to the Board of Trustees and business to be brought
before the shareholders at an annual or special meeting of shareholders.
o The amended Bylaws include provisions to clarify the organization and
conduct of meetings of shareholders. These include, among other things,
that
o meetings of shareholders will be conducted by an individual appointed
by the Trustees to be chairperson of the meeting or, in the absence of
such appointment or the absence of the appointed individual, by
specified officers of the Company or, in the absence of such officers,
a chairperson chosen by the shareholders by the vote of holders of
shares of beneficial interest representing a majority of the votes
cast by shareholders present in person or represented by proxy;
o the order of business and all other matters of procedure at any
meeting of shareholders will be determined by the chairperson of the
meeting;
o the chairperson of the meeting may prescribe such rules, regulations
and procedures and take such actions as, in the discretion of such
chairperson, are appropriate for the proper conduct of the meeting,
including, without limitation: (1) restricting admission to the time
set for the commencement of the meeting; (2) limiting attendance at
the meeting to shareholders of record of the Company, their duly
authorized proxies or other such persons as the chairperson of the
meeting may determine; (3) limiting participation at the meeting on
any matter to shareholders of record of the Company entitled to vote
on such matter, their duly authorized proxies or other such persons as
the chairperson of the meeting may determine; (4) limiting the time
allotted to questions or comments by participants; (5) maintaining
order and security at the meeting; (6) removing any shareholder or
other person who refuses to comply with meeting procedures, rules or
guidelines as set forth by the chairperson of the meeting; and (7)
recessing or adjourning the meeting to a later date and time and place
announced at the meeting; and
o unless otherwise determined by the chairperson of the meeting,
meetings of shareholders are not required to be held in accordance
with the rules of parliamentary procedure or any established rules of
order.
As stated in the Company's proxy statement dated March 23, 2000
relating to the annual meeting of shareholders held on May 9, 2000, shareholder
proposals intended to be presented at the Company's 2001 Annual Meeting of
Shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934
must be received by the Company at its principal executive offices not later
than November 24, 2000.
Under the amended Bylaws, in order to be considered "timely" within the
meaning of Rule 14a-4(c) under the Securities Exchange Act of 1934, notice of a
shareholder proposal intended for presentation at the Company's 2001 Annual
Meeting of Shareholders made outside of Rule 14a-8 under the Securities Exchange
Act of 1934 must be received by the Company no later than December 26, 2000 and
no earlier than November 24, 2000, rather than respective dates which were
specified in the Company's proxy statement dated March 23, 2000, and must be
made in accordance with the provisions, requirements and procedures set forth in
the Company's amended Bylaws.
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Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1 Articles Supplementary of the Company. (filed herewith)
3.2 Amended and Restated Bylaws of the Company. (filed herewith)
27. Financial Data Schedule. (filed herewith)
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Company during the three
months ended March 31, 2000.
14
HRPT PROPERTIES TRUST
CERTAIN IMPORTANT FACTORS
This Quarterly Report on Form 10-Q contains statements which constitute
forward looking statements within the meaning of the Securities Exchange Act of
1934, as amended. Those statements appear in a number of places in this Form
10-Q and include statements regarding our intent, belief or expectations with
respect to the declaration or payment of distributions, policies and plans
regarding financings and other matters. Readers are cautioned that any forward
looking statements are not guaranteed, and that actual results may differ
materially from those contained in the forward looking statements as a result of
various factors. Such factors include without limitation changes in financing
terms, our ability or inability to complete acquisitions and financing
transactions, results of operations of our properties and general changes in
economic conditions not presently contemplated. The information contained in
this Form 10-Q and our Annual Report on Form 10-K for the year ended December
31, 1999, including the information under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations", identifies other
important factors that could cause differences.
THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING THE COMPANY,
DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND
TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HRPT PROPERTIES
TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES,
BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER,
EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY,
JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL
PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF
THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.
15
SIGNATURES
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, thereunto duly authorized.
HRPT PROPERTIES TRUST
By: /s/ John A. Mannix
John A. Mannix
President and Chief Operating Officer
Dated: May 12, 2000
By: /s/ John C. Popeo
John C. Popeo
Treasurer and Chief Financial Officer
Dated: May 12, 2000
16