SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20546
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 5, 1997
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-13130 23-7768996
PENNSYLVANIA 1-13132 23-2766549
- --------------------------- ------------- -------------------
State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
65 VALLEY STREAM PARKWAY, SUITE 100
MALVERN, PENNSYLVANIA 19355
- --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 648-1700
ITEM 5: OTHER EVENTS
- -----------------------
Liberty Property Limited Partnership, is a Pennsylvania limited
partnership (the "Operating Partnership"). Liberty Property Trust, a
Maryland real estate investment trust (the "Trust") owns an approximate
90.05% interest in the Operating Partnership (as of December 31, 1996)
(the Trust and the Operating Partnership are collectively referred to as
the "Company"):
The Company acquired one property during the period from February 10,
1997 (the date of the Company's last Current Report on Form 8-K) to
February 28, 1997 (the "Acquisition"). In addition, as of March 5,
1997, the Company had entered into contracts to purchase 39 additional
industrial and office properties which the Company considered probable
of closing (the "Pending Acquisitions"). Certain of the Pending
Acquisitions involve a significant amount of assets as such term is
used in Form 8-K, however, given the pending nature of such
acquisitions, they need not be reported at this time pursuant to Item 2
of Form 8-K. However, pursuant to Rule 3-14 of Regulation S-X, audited
historical financial information concerning certain of the
properties, is provided in Item 7 of this Current Report on Form 8-K.
Additionally, certain pro forma financial information is provided in
Item 7.
The Pending Acquisitions aggregate approximately 2.6 million leasable
square feet for an estimated Total Investment (as defined below) of
approximately $150.1 million, to be paid in a combination of cash,
assumption of debt and the issuance of units of limited partnership in the
Operating Partnership. The purchase of all of the Pending Acquisitions is
subject to various contingencies, including, among others, completion of due
diligence and other customary conditions. Accordingly, there can be no
assurance that the Company will acquire any or all of the Pending Acquisitions
or that the acquisitions will be consummated for the estimated Total
Investment. The "Total Investment" for a property is defined as the
property's purchase price plus closing costs and management's estimate,
as determined at the time of acquisition, of the cost of necessary
building improvements in the case of acquisitions, or land costs and
land and building improvement costs in the case of development projects,
and where appropriate, other development costs and carrying costs
required to reach rent commencement.
The following properties were acquired from unaffiliated parties during
the period from February 10, 1997 (the date of the Company's last
Current Report on Form 8-K) to March 5, 1997 or are probable on March 5,
1997.
Completed Acquisition:
One Walnut Grove, a 66,372 square foot office building in
Horsham, Pennsylvania, on February 20, 1997 for $6.3 million.
-2-
Pending Acquisitions:
Individual Properties
---------------------
6620 Southpoint Drive, a 59,192 square foot office building
in Jacksonville, Florida.
95 Highland Avenue, a 73,000 square foot office building in
Bethlehem, Pennsylvania.
236 Brodhead Road, a 45,097 square foot office building in
Bethlehem, Pennsylvania.
Atrium Building, a 56,937 square foot office building in
High Point, North Carolina.
Portfolio Acquisitions
----------------------
South Carolina Properties
-------------------------
3820 Faber Place, a 39,422 square foot flex building in
Charleston, South Carolina.
3860 Faber Place, a 42,500 square foot flex building in
Charleston, South Carolina.
3875 Faber Place, a 64,113 square foot office building in
Charleston, South Carolina.
4055 Faber Place, a 52,644 square foot office building in
Charleston, South Carolina.
Alcoa Fujikura, a 222,670 square foot industrial building in
Greenville, South Carolina.
440 Knox Abbot Drive, a 50,209 square foot office building in
Cayce, South Carolina.
Perrigo, a 72,000 square foot industrial building in
Greenville, South Carolina.
420 Park Avenue, a 46,127 square foot office building in
Greenville, South Carolina.
Twin Lakes, a 40,000 square foot flex building in Charlotte,
North Carolina.
Crowfield, a 103,684 square foot flex building in
Charleston, South Carolina.
-3-
Northpoint, a 103,684 square foot flex building in
Columbia, South Carolina
Woodfield, a 103,624 square foot industrial building in
Greenville, South Carolina
Stone Safety, a 169,000 square foot industrial building in
Greenville, South Carolina.
Woodland Buildings ABC, an 89,758 square foot three-building
flex project in Tampa, Florida.
Woodland Building D, a 52,677 square foot flex building in
Tampa, Florida.
Woodland Building E, a 45,382 square foot flex building in
Tampa, Florida.
Woodland Building F, a 39,155 square foot flex building in
Tampa, Florida.
Woodland Building G, a 39,155 square foot flex building in
Tampa, Florida.
Land - Approximately 800 acres.
Minnesota Properties
--------------------
330 Second Avenue South, a 197,100 square foot office building
in Minneapolis, Minnesota.
Shady Oak Business Center, a 304,073 square foot seven-building
flex project in Eden Prairie, Minnesota.
2905 Northwest Boulevard, an 84,765 square foot flex building
in Plymouth, Minnesota.
2800 Campus Drive, a 64,626 square foot flex building in
Plymouth, Minnesota.
2955 Xenium Lane, a 24,800 square foot flex building in
Plymouth, Minnesota.
9401-9443 Science Center Drive, a 73,898 square foot flex
building in New Hope, Minnesota.
6321-6325 Bury Drive, a 72,965 square foot flex building in
Eden Prairie, Minnesota.
7115-7173 Shady Oak, a 77,925 square foot two-building flex
project in Eden Prairie, Minnesota.
-4-
7660-7716 Golden Triangle Drive, an 88,302 square foot flex
building in Eden Prairie, Minnesota.
7400 Flying Cloud Drive, a 32,137 square foot flex building
in Eden Prairie, Minnesota.
This report also contains pro forma financial information which reflects
the incremental effects of the property acquired between February 10,
1997 and February 28, 1997, together with the 22 properties acquired
during the period from January 1, 1996 to February 10, 1997 which were
described in the Company's Current Reports on Form 8-K dated December
10, 1996 and February 10, 1997, (collectively, the "Acquired
Properties") and for the Pending Acquisitions in the financial
statements of the Trust and the Operating Partnership.
The Acquired Properties were acquired for cash using funds provided by
the Company's financing sources.
Factors considered by the Company in determining the price to be paid
for the properties included their historical and expected cash flow, the
nature of tenants and terms of leases in place, occupancy rates,
opportunities for alternative and new tenancies, current operating costs
and real estate taxes on the properties and anticipated changes therein
under Company ownership, physical condition and locations of the
properties, the anticipated effect to the Company's financial results
(particularly funds from operations), the ability to sustain and
potentially increase its distributions to Company shareholders, and
other factors. The Company took into consideration the capitalization
rates at which it believed other comparable buildings were recently
sold, but determined the price it was willing to pay primarily on
factors discussed above relating to the properties themselves and their
fit into the Company's operations. The Company, after investigation of
the properties, is not aware of any material fact other than those
enumerated above, that would cause the financial information reported
not to be necessarily indicative of future operating results.
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- ------------------------------------------
PAGE
-----
(a) Statement of Operating Revenues and Certain
Operating Expenses for the South Carolina Properties
Report of Independent Auditors........................ 7
Statement of Operating Revenues and Certain
Operating Expenses for the South Carolina
Properties for the year ended December 31, 1996.... 8
Notes to the Statement of Operating Revenues and
Certain Operating Expenses for the South Carolina
Properties for the year ended December 31, 1996.... 9
-5-
(b) Statement of Operating Revenues and Certain
Operating Expenses for the Minnesota Properties
Report of Independent Auditors........................ 12
Statement of Operating Revenues and Certain
Operating Expenses for the Minnesota Properties
for the year ended December 31, 1996............... 13
Notes to the Statement of Operating Revenues and
Certain Operating Expenses for the Minnesota
Properties for the year ended December 31, 1996 ... 14
(c) Pro Forma Financial Information (unaudited)
Liberty Property Trust....................................... 17
Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1996.................................. 18
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1996................... 19
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the year ended
December 31 1996.................................. 20
Liberty Property Limited Partnership......................... 22
Pro Forma Condensed Consolidated Balance Sheet as of
December 31 1996.................................. 23
Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1996.................. 24
Notes to Pro Forma Condensed Consolidated Financial
Statements as of and for the year ended
December 31, 1996................................. 25
(d) Exhibits
23.1 Consent of Independent Auditors................ 28
23.2 Consent of Independent Auditors................ 29
-6-
REPORT OF INDEPENDENT AUDITORS
To The Board of Trustees and Shareholders
Liberty Property Trust
We have audited the accompanying Statement of Operating Revenues and
Certain Operating Expenses of the South Carolina Properties, as defined
in Note 1, for the year ended December 31, 1996. This financial
statement is the responsibility of the management of South Carolina
Properties. Our responsibility is to express an opinion on this
financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles
used and significant estimates made by management as well as evaluating
the overall presentation of the financial statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Operating Revenues and Certain Operating
Expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in
the Current Report on Form 8-K of Liberty Property Trust and Liberty
Property Limited Partnership) and, as described in Note 1, is not
intended to be a complete presentation of South Carolina Properties'
revenues and expenses.
In our opinion, the Statement of Operating Revenues and Certain
Operating Expenses referred to above presents fairly, in all material
respects, the Operating Revenues and Certain Operating Expenses
described in Note 1 of the South Carolina Properties, for the year ended
December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ FEGLEY & ASSOCIATES
Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES
January 28, 1997
-7-
COMBINED STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE SOUTH CAROLINA PROPERTIES
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
YEAR ENDED
DECEMBER 31,
1996
------------
Operating revenues:
Rental $ 5,642
Operating expense reimbursement 1,379
------------
Total operating revenues 7,021
------------
Certain operating expenses
Rental property expenses 1,173
Real estate taxes 820
------------
Total certain operating expenses 1,993
------------
Operating revenues in excess of certain
operating expenses $ 5,028
============
The accompanying notes are an integral part of this statement.
-8-
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE SOUTH CAROLINA PROPERTIES
FOR THE YEAR ENDED DECEMBER 31, 1996
1. Summary of Significant Accounting Policies
- ----------------------------------------------
The Statement of Operating Revenues and Certain Operating Expenses (see
"Basis of Presentation" below) includes the operations of eighteen
properties acquired by Liberty Property Limited Partnership (the
"Operating Partnership") during the period from February 28, 1997
through April 30, 1997, (the "South Carolina Properties"), as described
below. Liberty Property Trust (the "Company") owns an approximate
90.05% partners' interest in the Operating Partnership (as of December
31, 1996) (the Trust and the Operating Partnership are collectively
referred to as the "Company").
SOUTH CAROLINA PROPERTIES
- -------------------------
PROPERTY NAME LOCATION DESCRIPTION
- -------------------------- -------------------- --------------------
3820 Faber Place Charleston, SC One, one-story flex
building
39,422 square feet
3860 Faber Place Charleston, SC One, one-story flex
building
42,500 square feet
3875 Faber Place Charleston, SC One, three-story
flex building
64,113 square feet
4055 Faber Place Charleston, SC One, one-story flex
building
52,644 square feet
Alcoa Fujikura Greenville, SC One, one-story in-
dustrial building
222,670 square feet
440 Knox Abbott Drive
(Park Place) Cayce, SC One, five-story
office building
50,209 square feet
Perrigo Greenville, SC One, one-story in-
dustrial building
72,000 square feet
-9-
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE SOUTH CAROLINA PROPERTIES
FOR THE YEAR ENDED DECEMBER 31, 1996
1. Summary of Significant Accounting Policies (continued)
- ---------------------------------------------------------
PROPERTY NAME LOCATION DESCRIPTION
- -------------------------- -------------------- --------------------
420 Park Avenue Greenville, SC One, three-story
office building
46,127 square feet
Twin Lakes Charlotte, NC One, one-story
flex building
40,000 square feet
Crowfield Charleston, SC One, one-story
flex building
103,684 square feet
Northpoint Columbia, SC One, one-story
flex building
103,684 square feet
Woodfield Greenville, SC One, one-story in-
dustrial building
103,624 square feet
Stone Safety Greenville, SC One, one-story in-
dustrial building
169,000 square feet
Woodland Buildings ABC Tampa, FL Three one-story flex
buildings
89,758 square feet
Woodland Building D Tampa, FL One, one-story flex
building
52,526 square feet
Woodland Building E Tampa, FL One, one-story flex
building
45,382 square feet
Woodland Building F Tampa, FL One, one-story flex
building
39,155 square feet
Woodland Building G Tampa, FL One, one-story flex
building
39,155 square feet
Land Various locations Approximately 800 acres
-10-
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE SOUTH CAROLINA PROPERTIES
FOR THE YEAR ENDED DECEMBER 31, 1996
1. Summary of Significant Accounting Policies (continued)
- ---------------------------------------------------------
USE OF ESTIMATES
- ----------------
Generally accepted accounting principles required management to make
estimates and assumptions in preparing financial statements. Those
estimates and assumptions affect the reported revenues and expenses.
BASIS OF PRESENTATION
- ---------------------
The Combined Statement of Operating Revenues and Certain Operating
Expenses is presented in conformity with Rule 3-14 of the Securities and
Exchange Commission. Accordingly, depreciation, interest and income
taxes are not presented. The Company is not aware of any factors
relating to the South Carolina Properties that would cause the reported
financial information not to be indicative of future operating results.
General company overhead has not been allocated to South Carolina
Properties.
REVENUE RECOGNITION
- -------------------
Base rental income attributable to leases is recorded on a straight line
basis over the term of the lease. The leases also typically provide for
tenant reimbursement of common area maintenance and other operating
expenses which are included in the accompanying Statement of Operating
Revenue and Certain Operating Expenses as operating expense
reimbursements.
2. MINIMUM FUTURE RENTALS
- ---------------------------
Future minimum rental payments due from tenants of the South Carolina
Properties under non-cancellable operating leases as of December 31,
1996 are as follows (in thousands):
1997 $ 5,096
1998 4,586
1999 3,801
2000 3,040
2001 2,360
Thereafter 9,866
-------
Total $28,749
=======
-11-
REPORT OF INDEPENDENT AUDITORS
To The Board of Trustees and Shareholders
Liberty Property Trust
We have audited the accompanying Statement of Operating Revenues and
Certain Operating Expenses of the Minnesota Properties, as defined in
Note 1, for the year ended December 31, 1996. This financial statement
is the responsibility of the management of the Minnesota Properties.
Our responsibility is to express an opinion on this financial statement
based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statement. An audit also includes assessing the accounting principles
used and significant estimates made by management as well as evaluating
the overall presentation of the financial statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Operating Revenues and Certain Operating
Expenses was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in
the Current Report on Form 8-K of Liberty Property Trust and Liberty
Property Limited Partnership) and, as described in Note 1, is not
intended to be a complete presentation of the Minnesota Properties'
revenues and expenses.
In our opinion, the Statement of Operating Revenues and Certain
Operating Expenses referred to above presents fairly, in all material
respects, the Operating Revenues and Certain Operating Expenses
described in Note 1 of the Minnesota Properties, for the year ended
December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ FEGLEY & ASSOCIATES
Plymouth Meeting, Pennsylvania FEGLEY & ASSOCIATES
February 24, 1997
-12-
COMBINED STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE MINNESOTA PROPERTIES
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS)
YEAR ENDED
DECEMBER 31,
1996
------------
Operating revenues:
Rental $ 6,417
Operating expense reimbursement 3,897
------------
Total operating revenues 10,314
------------
Certain operating expenses
Rental property expenses 1,648
Real estate taxes 2,370
------------
Total certain operating expenses 4,018
------------
Operating revenues in excess of certain
operating expenses $ 6,296
============
The accompanying notes are an integral part of this statement.
-13-
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE MINNESOTA PROPERTIES
FOR YEAR ENDED DECEMBER 31, 1996
1. Summary of Significant Accounting Policies
- ----------------------------------------------
The Statement of Operating Revenues and Certain Operating Expenses (see
"Basis of Presentation" below) includes the operations of ten projects
(seventeen properties) to be acquired by Liberty Property Limited
Partnership (the "Operating Partnership") during the period from
February 28, 1997 through April 30, 1997, (the "Minnesota Properties"),
as described below. Liberty Property Trust (the "Company") owns an
approximate 90.05% partners' interest in the Operating Partnership (as
of December 31, 1996) (the Trust and the Operating Partnership are
collectively referred to as the "Company").
THE MINNESOTA PROPERTIES
- ------------------------
PROPERTY NAME LOCATION DESCRIPTION
- -------------------------- -------------------- --------------------
330 Second Avenue South Minneapolis, MN One, eight-story
office building
197,100 square feet
Shady Oak Business Center Eden Prairie, MN Seven, one-story
flex buildings
304,073 square feet
2905 Northeast Boulevard Plymouth, MN One, one-story flex
building
84,765 square feet
2800 Campus Drive Plymouth, MN One, one-story flex
building
64,626 square feet
2955 Xenium Lane Plymouth, MN One, one-story flex
building
24,800 square feet
9401-9443 Science Cntr Dr. New Hope, MN One, one-story flex
building
73,898 square feet
6321-6325 Bury Drive Eden Prairie, MN One, one-story flex
building
72,965 square feet
-14-
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE MINNESOTA PROPERTIES
FOR YEAR ENDED DECEMBER 31, 1996
1. Summary of Significant Accounting Policies (continued)
- ---------------------------------------------------------
PROPERTY NAME LOCATION DESCRIPTION
- -------------------------- -------------------- --------------------
7115-7173 Shady Oak Place Eden Prairie, MN Two, one-story
flex buildings
77,925 square feet
7660-7716 Golden
Triangle Drive Eden Prairie, MN One, one-story flex
building
88,302 square feet
7400 Flying Cloud Drive Eden Prairie, MN One, one-story in-
dustrial building
32,137 square feet
USE OF ESTIMATES
- ----------------
Generally accepted accounting principles required management to make
estimates and assumptions in preparing financial statements. Those
estimates and assumptions affect the reported revenues and expenses.
BASIS OF PRESENTATION
- ---------------------
The Combined Statement of Operating Revenues and Certain Operating
Expenses is presented in conformity with Rule 3-14 of the Securities and
Exchange Commission. Accordingly, depreciation, interest and income
taxes are not presented. The Company is not aware of any factors
relating to the Minnesota Properties that would cause the reported
financial information not to be indicative of future operating results.
General company overhead has not been allocated to the Minnesota
Properties.
REVENUE RECOGNITION
- -------------------
Base rental income attributable to leases is recorded on a straight line
basis over the term of the lease. The leases also typically provide for
tenant reimbursement of common area maintenance and other operating
expenses which are included in the accompanying Statement of Operating
Revenue and Certain Operating Expenses as operating expense
reimbursements.
-15-
NOTES TO THE STATEMENT OF OPERATING REVENUES AND
CERTAIN OPERATING EXPENSES FOR THE MINNESOTA PROPERTIES
FOR YEAR ENDED DECEMBER 31, 1996
2. MINIMUM FUTURE RENTALS
- ---------------------------
Future minimum rental payments due from tenants of the Minnesota
Properties under non-cancellable operating leases as of December 31,
1996 are as follows (in thousands):
1997 $ 5,804
1998 4,418
1999 3,321
2000 2,474
2001 1,688
Thereafter 983
--------
Total $ 18,688
========
-16-
LIBERTY PROPERTY TRUST
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
December 31, 1996 reflects the incremental effect of the Acquired
Properties and the Pending Acquisitions described in Item 5 as if the
acquisitions occurring after December 31, 1996 or probable of occurring
had occurred on December 31, 1996. The accompanying unaudited, pro
forma consolidated statement of operations for the year ended December
31, 1996 reflect the incremental effect of the Acquired Properties and
the Pending Acquisitions, as if such acquisitions had occurred on
January 1, 1996. These statements should be read in conjunction with
respective consolidated financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December
31, 1996. In the opinion of management, the unaudited, pro forma
consolidated financial information provides for all adjustments
necessary to reflect the effects of the Acquired Properties and the
Pending Acquisitions.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Acquired Properties and the Pending Acquisitions had been in effect on
the date indicated, nor does it purport to represent the financial
position, results of operations or cash flows for future periods.
-18-
LIBERTY PROPERTY TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED, IN THOUSANDS)
LIBERTY
ACQUIRED PROPERTY
HISTORICAL PROPERTIES TRUST
<F1> <F2> CONSOLIDATED
---------- ----------- ------------
ASSETS:
Net real estate $1,059,562 $ 176,745 $ 1,236,307
Cash and cash equivalents 19,612 - 19,612
Deferred financing and
leasing costs, net 27,013 - 27,013
Other assets 46,425 - 46,425
---------- ----------- -----------
Total assets $1,152,612 $ 176,745 $ 1,329,357
========== =========== ===========
LIABILITIES:
Mortgage loans $ 240,803 $ 70,255 <F3> $ 311,058
Subordinated debentures 171,214 - 171,214
Lines of credit 266,692 75,000 <F3> 341,692
Other liabilities 56,876 - 56,876
---------- ----------- -----------
Total liabilities 735,585 145,255 880,840
---------- ----------- -----------
MINORITY INTEREST 41,495 16,897 <F3> 58,392
---------- ----------- -----------
SHAREHOLDERS' EQUITY:
Common shares 31 - 31
Additional paid-in capital 370,813 14,593 <F3> 385,406
Unearned compensation (1,408) - (1,408)
Retained earnings 6,096 - 6,096
---------- ----------- -----------
Total shareholders'
equity 375,532 14,593 390,125
---------- ----------- -----------
Total liabilities and
shareholders' equity $1,152,612 $ 176,745 $ 1,329,357
========== =========== ===========
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated financial statement.
-18-
LIBERTY PROPERTY TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
LIBERTY
PRO PROPERTY
HISTORICAL ACQUISITIONS FORMA TRUST
<F1> <F4> ADJUSTMENTS CONSOLIDATED
---------- ----------- ------------ ------------
REVENUE
Rental $ 112,841 $ 24,071 $ 1,165 <F5> $ 138,077
Operation expense reim-
bursement 35,886 10,856 351 <F5> 47,093
Management fees 1,340 - - 1,340
Interest and other 4,198 - - 4,198
---------- --------- -------- ---------
Total revenue 154,265 34,927 1,516 190,708
---------- --------- -------- ---------
OPERATING EXPENSES
Rental property expenses 29,624 7,500 - 37,124
Real estate taxes 11,229 5,119 - 16,348
General and administrative 8,023 - 650 <F6> 8,673
Depreciation and amorti-
zation 28,203 - 6,373 <F7> 34,576
---------- --------- -------- ---------
Total operating expenses 77,079 12,619 7,023 96,721
---------- --------- -------- ---------
Operating income 77,186 22,308 (5,507) 93,987
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 38,528 - 15,635 <F8> 54,163
---------- --------- -------- ---------
Income (loss) before
minority interest $ 37,631 $ 22,308 $(21,142) 38,797
Minority interest 3,891 - 1,160 <F9> 5,051
---------- --------- -------- ---------
Net income (loss) $ 33,740 $ 22,308 $(22,302) $ 33,746 <F10>
========== ========= ======== =========
Net income per common
share - primary $ 1.14
=========
Weighted average number
of common shares out-
standing 29,678
=========
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
-19-
LIBERTY PROPERTY TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited, dollars in thousands)
<F1> Reflects historical operations of the company as of December 31,
1996 and for the year ended December 31, 1996.
<F2> Reflects the total investment of the properties acquired
subsequent to December 31, 1996 or probable of acquisition as of the
date hereof, as required in order to reflect operations for these
acquisitions for the year.
COST
PROPERTY ACQUISITION DATE (IN MILLIONS)
- ---------------------------------- ---------------- -------------
Completed Acquisitions:
650-660 East Swedesford Road February 10, 1997 $ 19,230
One Walnut Grove February 20, 1997 7,403
Pending Acquisitions 150,112
--------
Total $176,745
========
<F3> Reflects the use of $75,000 from the lines of credit, $70,255 from
mortgage loans and the issuance of units to finance the original
purchase price of property acquisitions which have been completed or are
probable of completion on the date hereof. Also reflects the accretion
to shareholders which has been reflected as an addition to paid in
capital.
<F4> Reflects the addition of revenues and certain expenses of all
properties acquired subsequent to December 31, 1996 or probable of
acquisition as of the date hereof, including the Pending Acquisitions,
and the addition of incremental revenues and expenses for the 1996
Acquisitions, as required in order to reflect operations for these
acquisitions for a full year as follows:
PENDING
ACQUISITIONS
AND COMPLETED
1996 ACQUISITIONS
ACQUISITIONS IN 1997 TOTAL
------------ ------------- --------
REVENUE
Rental $ 8,204 $ 15,867 $ 24,071
Operating expense reimbursement 3,392 7,464 10,856
------- -------- --------
Total revenue 11,596 23,331 34,927
-20-
OPERATING EXPENSES
Rental 2,200 5,300 7,500
Real estate taxes 1,340 3,779 5,119
-------- -------- --------
Total operating expenses 3,540 9,079 12,619
-------- -------- --------
Operating income $ 8,056 $ 14,252 $ 22,308
======== ======== ========
<F5> Reflects incremental income for significant leases signed
subsequent to acquisition for the following properties:
Rental Operating Expense
Income Reimbursement
------ ----------------
One Walnut Grove $ 774 $ 351
Portion of the Minnesota Portfolio:
7 Woodfield Spec 100 -
Woodland Building G 291 -
------ -----
$1,165 $ 351
<F6> Reflects incremental increase in general and administrative
expense from the purchase of the South Carolina Properties' and
Minnesota Properties' portfolios.
<F7> Reflects incremental depreciation of the Acquired Properties and
the Pending Acquisitions based on asset lives of 40 years.
<F8> Reflects an incremental increase in interest expense from the
assumed borrowings of $75,000 on the lines of credit and $70,255 on the
mortgage debt, to fund the purchase of the Acquired Properties and
Pending Acquisitions.
<F9> Reflects the allocation of the pro forma adjustment to minority
interest based upon pro forma minority interest in the Operating
Partnership of approximately 13.02%.
<F10> The Company's pro forma taxable income for the year ended
December 31, 1996 is approximately $33,400 which has been calculated as
pro forma income from operations of approximately $33,746 plus GAAP
depreciation and amortization of $34,576 less tax basis depreciation and
amortization and other tax differences of approximately $33,922.
-21-
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA FINANCIAL INFORMATION (UNAUDITED)
The unaudited, pro forma condensed consolidated balance sheet as of
December 31, 1996 reflects the incremental effect of the Acquired
Properties and the Pending Acquisitions described in Item 5 as if the
acquisitions occurring or probable of occurring after December 31, 1996
had occurred on December 31, 1996. The accompanying unaudited, pro
forma consolidated statement of operations for the year ended December
31, 1996 reflects the incremental effect of the Acquired Properties and
the Pending Acquisitions, as if such acquisitions had occurred on
January 1, 1996. These statements should be read in conjunction with
respective consolidated financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended December
31, 1996. In the opinion of management, the unaudited, pro forma
consolidated financial information provides for all adjustments
necessary to reflect the effects of the Acquired Properties and the
Pending Acquisitions.
These pro forma statements may not necessarily be indicative of the
results that would have actually occurred if the acquisition of the
Acquired Properties and the Pending Acquisitions had been in effect on
the date indicated, nor does it purport to represent the financial
position, results of operations or cash flows for future periods.
-22-
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED, IN THOUSANDS)
LIBERTY
PROPERTY
ACQUIRED LIMITED
HISTORICAL PROPERTIES PARTNERSHIP
<F1> <F2> CONSOLIDATED
---------- ----------- ------------
ASSETS:
Net real estate $1,059,562 $ 176,745 $ 1,236,307
Cash and cash equivalents 19,612 - 19,612
Deferred financing and
leasing costs, net 27,013 - 27,013
Other assets 46,425 - 46,425
---------- ----------- -----------
Total assets $1,152,612 $ 176,745 $ 1,329,357
========== =========== ===========
LIABILITIES:
Mortgage loans $ 240,803 $ 70,255 <F3> $ 311,058
Subordinated debentures 171,214 - 171,214
Lines of credit 266,692 75,000 <F3> 341,692
Other liabilities 56,876 - 56,876
---------- ----------- -----------
Total liabilities 735,585 145,255 880,840
---------- ----------- -----------
OWNERS' EQUITY:
General partner's equity 375,532 14,593 <F3> 390,125
Limited partners' equity 41,495 16,897 <F3> 58,392
---------- ----------- -----------
Total owners' equity 417,027 31,490 448,517
---------- ----------- -----------
Total liabilities and
owners' equity $1,152,612 $ 176,745 $ 1,329,357
========== =========== ===========
The accompanying notes are an integral part of this unaudited, pro forma
condensed consolidated financial statement.
-23-
LIBERTY PROPERTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED AND IN THOUSANDS)
LIBERTY
PRO PROPERTY
HISTORICAL ACQUISITIONS FORMA TRUST
<F1> <F4> ACQUISITIONS CONSOLIDATED
---------- ------------ ------------ ------------
REVENUE
Rental $ 112,841 $ 24,071 $ 1,165 <F5> $ 138,077
Operation expense reim-
bursement 35,886 10,856 351 <F5> 47,093
Management fees 1,340 - - 1,340
Interest and other 4,198 - - 4,198
---------- ----------- ----------- ---------
Total revenue 154,265 34,927 1,516 190,708
---------- ----------- ----------- ---------
OPERATING EXPENSES
Rental property expenses 29,624 7,500 - 37,124
Real estate taxes 11,229 5,119 - 16,348
General and administrative 8,023 - 650 <F6> 8,673
Depreciation and amorti-
zation 28,203 - 6,373 <F7> 34,576
---------- ----------- ------------ ---------
Total operating expenses 77,079 12,619 7,023 96,721
---------- ----------- ------------ ---------
Operating income 77,186 22,308 (5,507) 93,987
Premium on debenture con-
version 1,027 - - 1,027
Interest expense 38,528 - 15,635 <F8> 54,163
---------- ----------- ------------ ---------
Net income (loss) $ 37,631 $ 22,308 $ (21,142) $ 38,797<F10>
========== =========== ============ =========
Net income (loss)
allocated to general
partner $ 33,740 $ 19,403 $ (19,397) $ 33,746
Net income (loss)
allocated to limited
partners 3,891 2,905 (1,745) 5,051 <F9>
========== =========== ============ =========
The accompanying notes are an integral part of this unaudited, proforma
consolidated financial statement.
-24-
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited, dollars in thousands)
<F1> Reflects historical financial information of the Company as of
December 31, 1996 and for the year ended December 31, 1996.
<F2> Reflects the total investment of the properties acquired
subsequent to December 31, 1996.
PROPERTY ACQUISITION DATE COST
- ---------------------------------- ---------------- ----------
Completed Acquisitions:
650-660 East Swedesford Road February 10, 1997 $ 19,230
One Walnut Grove February 21, 1997 7,403
Pending Acquisitions 150,112
--------
Total $176,745
========
<F3> Reflects the use of $75,000 from the lines of credit, $70,255 from
mortgage loans and the issuance of units to finance the original
purchase price of property acquisitions which have been completed or are
probable of completion on the date hereof. Also reflects the accretion
to the general partner which has been reflected as an increase to
general partner's equity.
<F4> Reflects the addition of revenues and certain expenses of all
properties acquired subsequent to December 31, 1996 or probable of
acquisition as of the date hereof, including the Pending Acquisitions,
and the addition of incremental revenues and expenses for the 1996
Acquisitions, as required in order to reflect operations for these
acquisitions for a full year as follows:
PENDING
ACQUISITIONS
AND COMPLETED
1996 ACQUISITIONS
ACQUISITIONS IN 1997 TOTAL
------------ ------------- --------
REVENUE
Rental $ 8,204 $ 15,867 $ 24,071
Operating expense reimbursement 3,392 7,464 10,856
------- -------- --------
Total revenue 11,596 23,331 34,927
-25-
OPERATING EXPENSES
Rental 2,200 5,300 7,500
Real estate taxes 1,340 3,779 5,119
-------- -------- --------
Total operating expenses 3,540 9,079 12,619
-------- -------- --------
Operating income $ 8,056 $ 14,252 $ 22,308
======== ======== ========
<F5> Reflects incremental income and operating expense reimbursement
for significant leases subsequent to acquisition for the following
properties:
Rental Operating Expense
Income Reimbursement
------ ----------------
One Walnut Grove $ 774 $ 351
Portion of the Minnesota Portfolio:
7 Woodfield Spec 100 -
Woodland Building G 291 -
------ -----
$1,165 $ 351
<F6> Reflects incremental increase in general and administrative
expense from the purchase of the South Carolina Properties' and
Minnesota Properties' portfolios.
<F7> Reflects incremental depreciation of the Acquired Properties and
the Pending Acquisitions based on asset lives of 40 years.
<F8> Reflects an incremental increase in interest expense from the
assumed borrowings of $75,000 million on the lines of credit and $70,255
on the mortgage debt, to fund the purchase of the Acquired Properties
and Pending Acquisitions.
<F9> Reflects the allocation of the pro forma adjustment to the net
income allocated to the limited partners based upon pro forma ownership
in the Operating Partnership of approximately 13.02%.
<F10> The Company's pro forma taxable income for the year ended
December 31, 1996 is approximately $47,916 which has been calculated as
pro forma income from operations of approximately $38,797 plus GAAP
depreciation and amortization of $34,576 less tax basis depreciation and
amortization and other tax differences of approximately $25,457.
-26-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
each Registrant has duly caused this Report to be signed on its behalf
by the undersigned hereunto duly authorized.
LIBERTY PROPERTY TRUST
Dated: March 5, 1997 BY: /s/ WILLARD G. ROUSE III
----------------------------------------
NAME: Willard G. Rouse III
TITLE: Chief Executive Officer
LIBERTY PROPERTY LIMITED PARTNERSHIP
BY: LIBERTY PROPERTY TRUST,
SOLE GENERAL PARTNER
Dated: March 5, 1997 BY: /s/ WILLARD G. ROUSE III
----------------------------------------
NAME: Willard G. Rouse III
TITLE: Chief Executive Officer
-27-