UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 1996
OR
[ ]
TRANSITION REPORT
----------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
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Commission file number 1-12926
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BEACON PROPERTIES CORPORATION
(Exact name of Registrant as specified in its charter)
Maryland 04-3224258
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
50 Rowes Wharf, Boston, Massachusetts 02110
(Address of principal executive offices)
(Zip Code)
(617) 330-1400
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
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
- -
APPLICABLE ONLY TO CORPORATE ISSUERS;
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
27,432,563 Shares of common stock, $.01 par value as of July 22, 1996
BEACON PROPERTIES CORPORATION
FORM 10-Q
INDEX
Page
------
Part I--Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations for the three months ended June 30, 1996 and 1995 4
Consolidated Statements of Operations for the six months ended June 30, 1996 and 1995 5
Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 10-13
Part II--Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
BEACON PROPERTIES CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1996 1995
-------- ------------
(unaudited)
(in thousands)
Assets
Real estate:
Land $ 89,164 $ 43,077
Buildings, improvements and equipment 735,760 428,065
------ ----------
824,924 471,142
Less accumulated depreciation 78,917 66,571
------ ----------
746,007 404,571
Deferred financing and leasing costs, net of accumulated
amortization of $14,273 and $14,509 14,730 9,486
Cash and cash equivalents 32,940 4,501
Restricted cash 5,038 2,764
Accounts receivable 8,279 6,128
Accrued rent 9,074 6,493
Prepaid expenses and other assets 3,201 8,060
Mortgage notes receivable 51,486 34,778
Investments in and note receivable from joint ventures and
corporations 57,082 58,016
------ ----------
Total assets $927,837 $534,797
====== ==========
Liabilities and Stockholders' Equity
Liabilities:
Mortgage notes payable $403,218 $ 70,536
Note payable, Credit Facility -- 130,500
Accounts payable, accrued expenses and other liabilities 24,335 14,022
Investment in joint venture 24,303 23,955
------ ----------
Total liabilities 451,856 239,013
------ ----------
Commitments and contingencies -- --
Minority interest in Operating Partnership 49,051 36,962
------ ----------
Stockholders' equity:
Common stock, $.01 par value, authorized 100,000,000 shares,
issued and outstanding 27,368,263 and 20,215,822 shares 274 202
Additional paid-in capital 443,165 267,727
Cumulative net income 36,259 23,715
Cumulative dividends (52,768) (32,822)
------ ----------
Total stockholders' equity 426,930 258,822
------ ----------
Total liabilities and stockholders' equity $927,837 $534,797
====== ==========
The accompanying notes are an integral part
of these consolidated financial statements.
3
BEACON PROPERTIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months
Ended June 30,
-------------------------------
1996 1995
------------- --------------
(Unaudited and in thousands,
except per share amounts
and shares outstanding)
Revenues:
Rental income $ 33,130 $ 17,357
Management fees 768 472
Recoveries from tenants 3,538 2,243
Mortgage interest income 1,207 611
Other income 2,795 1,441
----------- -------------
41,438 22,124
----------- -------------
Expenses:
Property expenses 7,874 4,290
Real estate taxes 4,313 2,457
General and administrative 3,774 2,330
Mortgage interest expense 7,317 3,614
Interest--amortization of financing costs 623 296
Depreciation and amortization 7,484 4,517
----------- -------------
31,385 17,504
----------- -------------
Income from operations 10,053 4,620
Equity in net income of joint ventures and corporations 582 528
----------- -------------
Income before minority interest and extraordinary items 10,635 5,148
Minority interest in Operating Partnership (1,453) (997)
----------- -------------
Income before extraordinary items 9,182 4,151
Extraordinary items, net of minority interest (1,632) --
----------- -------------
Net Income $ 7,550 $ 4,151
=========== =============
Income per common share before extraordinary items $ 0.34 $ 0.26
Extraordinary items (0.06) --
----------- -------------
Net income per common share $ 0.28 $ 0.26
=========== =============
Weighted average common shares outstanding 27,289,369 15,844,095
=========== =============
The accompanying notes are an integral part
of these consolidated financial statements.
4
BEACON PROPERTIES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Six Months
Ended June 30,
-------------------------------
1996 1995
------------- --------------
(Unaudited and in thousands,
except per share amounts
and shares outstanding)
Revenues:
Rental income $ 60,051 $ 34,093
Management fees 1,517 936
Recoveries from tenants 6,782 4,813
Mortgage interest income 2,165 611
Other income 4,591 2,472
----------- -------------
75,106 42,925
----------- -------------
Expenses:
Property expenses 14,770 8,531
Real estate taxes 7,831 4,901
General and administrative 7,362 4,570
Mortgage interest expense 13,661 7,977
Interest--amortization of financing costs 1,184 576
Depreciation and amortization 13,346 8,252
----------- -------------
58,154 34,807
----------- -------------
Income from operations 16,952 8,118
Equity in net income of joint ventures and corporations 1,582 1,065
----------- -------------
Income before minority interest and extraordinary items 18,534 9,183
Minority interest in Operating Partnership (2,681) (1,951)
----------- -------------
Income before extraordinary items 15,853 7,232
Extraordinary items, net of minority interest (3,309) --
----------- -------------
Net Income $ 12,544 $ 7,232
=========== =============
Income per common share before extraordinary items $ 0.64 $ 0.51
Extraordinary items (0.13) --
----------- -------------
Net income per common share $ 0.51 $ 0.51
=========== =============
Weighted average common shares outstanding 24,682,042 14,085,977
=========== =============
The accompanying notes are an integral part
of these consolidated financial statements.
5
BEACON PROPERTIES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months
Ended June 30,
-------------------------------
1996 1995
------------- --------------
(unaudited and in thousands)
Cash flows from operating activities:
Net income $ 12,544 $ 7,232
----------- -------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Increase in accrued rent (2,581) (1,609)
Depreciation, amortization and amortization of financing costs 14,530 8,828
Equity in net income of joint ventures and corporations (1,582) (1,065)
Minority interest in Operating Partnership 2,681 1,951
Extraordinary item 3,309 --
Increase in accounts receivable (2,151) (456)
Increase in prepaid expenses and other assets (441) (1,029)
Increase (decrease) in accounts payable and accrued expenses 9,087 (1,002)
----------- -------------
Total adjustments 22,852 5,618
----------- -------------
Net cash provided by operating activities 35,396 12,850
----------- -------------
Cash flows from investing activities:
Property additions (342,276) (15,235)
Payment of deferred leasing costs (2,751) (1,116)
Decrease in prepaid expenses and other assets 3,000 --
Purchase of mortgage notes receivable (16,708) (32,058)
Capital distributions from joint ventures 2,840 1,471
(Increase) decrease in restricted cash (2,274) 1,944
----------- -------------
Net cash used by investing activities (358,169) (44,994)
----------- -------------
Cash flows from financing activities:
Proceeds from additional offerings, net of offering costs 175,024 71,815
Payment of deferred financing costs (5,051) (601)
Borrowings on Credit Facility 75,000 26,000
Payments on Credit Facility (205,500) (58,000)
Borrowings on mortgage notes 593,000 --
Payments on mortgage notes (260,318) (1,295)
Decrease in prepaid expenses and other assets 2,300 --
Distributions paid to minority interest in Operating Partnership (3,297) (3,048)
Dividends paid to stockholders (19,946) (11,064)
----------- -------------
Net cash provided by financing activities 351,212 23,807
----------- -------------
Net increase (decrease) in cash and cash equivalents 28,439 (8,337)
Cash and cash equivalents, beginning of period 4,501 15,097
----------- -------------
Cash and cash equivalents, end of period $ 32,940 $ 6,760
=========== =============
Supplemental disclosures:
Cash paid during the period for interest $ 12,364 $ 7,787
=========== =============
Non cash activities:
Redemption of Operating Partnership units for common stock $ 486 $ 174
=========== =============
Increase in minority interest as a result of acquisition of
properties $ 13,758 $ --
=========== =============
The accompanying notes are an integral part
of these consolidated financial statements.
6
BEACON PROPERTIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
____________
1. Organization and Basis of Presentation:
Organization
Beacon Properties Corporation (the "Company") was incorporated on March
4, 1994 as a Maryland Corporation, and commenced operations effective with
the completion of its Initial Offering (the "IPO") on May 26, 1994. The
Company qualifies as a real estate investment trust under the Internal
Revenue Code of 1986, as amended. The Company was formed to continue and
expand the commercial real estate development, construction, acquisition,
leasing, design and management businesses of The Beacon Group (the
"Predecessor").
In March 1996, the Company sold 7,036,000 shares of common stock, $.01
par value, to the public at $26.25 per share. The proceeds of the offering,
net of offering costs, were approximately $173.8 million. The Company
contributed the net proceeds of the additional offering to Beacon Properties,
L.P. (the "Operating Partnership") in exchange for 7,036,000 units.
Basis of Presentation
The financial statements of the Company are consolidated and include all
the accounts of the Company, its majority owned Operating Partnership and
subsidiaries. All significant intercompany balances and transactions have
been eliminated.
The accompanying financial statements are unaudited; however, they have
been prepared in accordance with generally accepted accounting principles for
interim financial information and in conjunction with the rules and
regulations of the Securities and Exchange Commission. Accordingly, they do
not include all of the disclosures required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting solely of normal recurring matters) necessary for
a fair presentation of the financial statements for these interim periods
have been included. The results for the six months ended June 30, 1996 are
not necessarily indicative of the results to be obtained for the full fiscal
year. These financial statements should be read in conjunction with the
December 31, 1995 audited financial statements and notes thereto of the
Company, included in its annual report on Form 10-K for the fiscal year ended
December 31, 1995. Certain reclassifications have been made to previously
reported amounts to conform with current reporting.
2. Equity Investments in Real Estate:
The Company reports its share of income and losses based on its ownership
interest in the respective equity investments. Losses in excess of
investments are not recorded where the Company has not guaranteed nor intends
to provide any future financial support. The following summarized information
has been presented for the property joint ventures and property corporations
for which the Company has recorded its share of the earnings for the six
months ended June 30, 1996.
7
BEACON PROPERTIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
____________
One Post 75-101
Office Polk & Federal
Square Taylor Street
----------- ------ ---------
(in thousands)
Balance sheets at June 30, 1996
Real estate, net $ 41,041 $92,715 $157,039
Cash 1,782 227 10,817
Other assets 10,499 2,050 2,155
--------- ---- -------
$ 53,322 $94,992 $170,011
========= ==== =======
Mortgage notes payable $ 93,999 $ -- $ 90,000
Other liabilities 1,119 566 4,224
Equity (deficiency) (41,796) 94,426 75,787
--------- ---- -------
$ 53,322 $94,992 $170,011
========= ==== =======
Summary of operations for the six months
ended June 30, 1996
Revenues $ 11,107 $10,691 $ 12,947
Other income 211 429 728
--------- ---- -------
Total revenues 11,318 11,120 13,675
--------- ---- -------
Operating expenses 4,574 3,365 5,289
Mortgage interest expense 3,463 -- 3,489
Depreciation and amortization 1,834 1,727 2,254
--------- ---- -------
Total expenses 9,871 5,092 11,032
--------- ---- -------
Net income $ 1,447 $ 6,028 $ 2,643
========= ==== =======
Share of properties:
Depreciation and amortization $ 686 $ 173 $ 1,135
Interest--amortization of financing costs 420 -- 29
3. Mortgage Notes Payable:
On January 9, 1996, the Company closed on a $55 million, 7.23% mortgage
loan with a 7 year term, and used the net proceeds to pay down the Credit
Facility. The collateral for the mortgage loan is the Wellesley Office Park,
Buildings 1-8.
On February 12, 1996, the Company closed on a $60 million, 7.23% mortgage
loan with a 7 year term, and used the net proceeds to pay down the Credit
Facility. The collateral for the mortgage loan is the Center Plaza property.
On February 15, 1996, the Company financed the acquisition of Perimeter
Center, in part, through a $260 million loan from PaineWebber Real Estate
Securities Inc. (the "PaineWebber Acquisition Loan"). In March 1996, the
Company repaid the PaineWebber Acquisition Loan using proceeds from the March
1996 offering and a $218 million loan provided by Metropolitan Life Insurance
Company (the "MetLife Mortgage Loan"). The MetLife Mortgage Loan bears
interest at 7.08% with a term of 10 years.
An extraordinary item of $1.8 million, net of minority interest, was
recorded in connection with the write-off of fees and costs to acquire the
PaineWebber Acquisition Loan which was repaid in March 1996 approximately
three years prior to its maturity.
8
BEACON PROPERTIES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
____________
4. Note Payable, Credit Facility:
In June 1996, the Company substantially modified the terms of the Credit
Facility. Additionally, in July 1996, the maximum loan amount available under
the Credit Facility was increased to $300 million. The new Credit Facility
matures in June 1999. Outstanding balances under the Credit Facility bear
interest, at the Company's option, at either (i) the higher of (x) Bank of
Boston's base interest rate and (y) one-half of one percent (1/2%) above the
overnight federal funds effective rate or (ii) the Eurodollar rate plus 175
basis points. The Company has an interest rate protection agreement through
May 1997 with Bank of Boston with respect to $135 million of the Credit
Facility, which provides for offsetting payments to the Company in the event
that 90-day LIBOR exceeds 9.47% per annum. Effective May 1997 through May
1999, the Company has an interest rate protection agreement with Bank of
Boston with respect to $137.5 million of the Credit Facility, which provides
for offsetting payments to the Company in the event that 90-day LIBOR exceeds
8.75% per annum.
As a result of the substantial modification of the terms of the Credit
Facility, the Company recorded an extraordinary item of $1.5 million, net of
minority interest, in connection with write-off of fees and costs to acquire
the old Credit Facility.
5. Commitments and Contingencies:
In June 1996, the Company exercised an option to acquire a portfolio of
three office buildings and a parcel of land located in Fairfax County,
Virginia (the "Fairfax County Portfolio") for $77 million. The purchase of
the portfolio is subject to due diligence and certain other conditions.
In July 1996, the Company entered into a purchase and sale agreement to
acquire the New York Life Portfolio located in suburban Chicago, Illinois for
$150 million. The purchase of the portfolio is subject to due diligence and
certain other conditions.
6. Pro Forma Results (unaudited):
The following unaudited pro forma operating results for the Company have
been prepared as if the 1995 and 1996 stock offerings and the 1995 and 1996
property acquisitions had occurred on January 1, 1995. Unaudited pro forma
financial information is presented for informational purposes only and may
not be indicative of what the actual results of operations of the Company
would have been had the events occurred as of January 1, 1995, nor does it
purport to represent the results of operations for future periods.
Six Months ended June 30, 1996 and 1995: 1996 1995
-------------------------------------------------- -- ----
Revenue $82,649 $78,287
Income before extraordinary items 18,295 18,465
Net income per share before extraordinary items $ .67 $ .67
7. Subsequent Events:
The Company declared a dividend of $.4625 per common share payable on
August 23, 1996 to stockholders of record on August 14, 1996.
On July 23, 1996, the Company filed a prospectus supplement to its Form
S-3 Registration Statement (No. 333-02544) with the Securities and Exchange
Commission pursuant to which it proposes to offer 5,000,000 shares of common
stock (excluding the underwriters' over-allotment option).
9
BEACON PROPERTIES CORPORATION
PART I--ITEM 2
______
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
This form 10-Q contains forward looking statements within the meaning of
Section 27A of the Securities Act of 1993 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially
from those set forth in the forward-looking statements. Certain factors that
might cause such a difference include the following: Real estate investment
considerations, such as the effect of economic and other conditions in the
market area on cash flows and values, the need to renew leases or relet space
upon the expiration of current leases, and the ability of a property to
generate revenues sufficient to meet debt service payments and other
operating expenses; and risks associated with borrowing, such as the
possibility that the Company will not have sufficient funds available to make
principal payments on outstanding debt, outstanding debt may be refinanced at
higher interest rates or otherwise on terms less favorable to the Company and
interest rates under the Credit Facility may increase.
The following discussion and analysis of the financial condition and
results of operations should be read in conjunction with the accompanying
financial statements and notes thereto.
Results of Operations
Comparison of Three and Six Months Ended June 30, 1996 and June 30, 1995
Net income for the three and six months ended June 30, 1996 was $7.6 and
$12.5 million, respectively, compared with net income of $4.2 and $7.2
million for the corresponding periods in 1995. The increase in net income was
primarily the result of the operating results contributed by the properties
and interests in properties acquired throughout 1995 and 1996 partially
offset by extraordinary items recorded in 1996.
The Company's proportionate share of weighted average square feet of
office properties increased by 85% from 4.0 million square feet for the six
months ended June 30, 1995 compared to 7.4 million square feet for the
corresponding period in 1996. The Company recorded extraordinary items
totaling $3.3 million, net of minority interest, in 1996. An extraordinary
item of $1.8 million, net of minority interest, was recorded in connection
with the write-off of fees and costs to acquire the PaineWebber Acquisition
Loan which was repaid in March 1996 approximately three years prior to its
maturity. An extraordinary item of $1.5 million, net of minority interest,
was recorded in connection with write-off of fees and costs to acquire the
old Credit Facility which was substantially modified in June 1996.
Rental income for the three and six months ended June 30, 1996 was $33.1
and $60.1 million, respectively, compared to $17.4 and $34.1 million for the
corresponding periods in 1995. The properties acquired in 1995 100 William
Street, Westlakes Two, 2 Oliver -147 Milk Street and Ten Canal Park (the
"1995 Acquisitions") and Perimeter Center, acquired in February 1996,
contributed $15.4 and $24.4 million of this increase for the three and six
month periods, respectively. The remaining balance was attributable to an
increase in occupancy and rental rates as well as the re-leasing of the
Crosby Corporate Center as part of the redevelopment of the property.
The impact of the straight-line adjustment increased consolidated rental
income for the Company $2.6 million and $1.6 million and increased its share
of equity in net income of property joint ventures and corporations by $0.1
million and $0.1 million for the six months ended June 30, 1996 and 1995,
respectively.
Management fees for the three and six months ended June 30, 1996 were
$0.8 and $1.5 million, respectively, compared to $0.5 and $0.9 million for
the corresponding periods in 1995. The increase in both periods was primarily
the result of the management contract for 75-101 Federal Street, a property
in which the Company purchased an approximate 52% interest in September 1995.
Recoveries from tenants for the three and six months ended June 30, 1996
were $3.5 and $6.8 million, respectively, compared to $2.2 and $4.8 million
for the corresponding periods in 1995. The 1995 Acquisitions and Perimeter
Center contributed $0.8 and $1.4 million of this increase for the three and
six month periods, respectively. The remaining balance of the increase for
both periods was primarily due to an increase in reimbursable operating
expenses.
10
BEACON PROPERTIES CORPORATION
PART I--ITEM 2
______
Mortgage interest income for the three and six months ended June 30, 1996
was $1.2 and $2.2 million, respectively, compared to $0.6 million for both
corresponding periods in 1995. The increase is the result of the acquisition of
the remaining portions of the Rowes Wharf debt from July 1995 through June 1996.
Other income for the three and six months ended June 30, 1996 was $2.8
and $4.6 million, respectively, compared to $1.4 and $2.5 million for the
corresponding periods in 1995. The 1995 Acquisitions and Perimeter Center
accounted for $1.0 and $1.5 million of the increase for the three and six
months periods, respectively. The remaining balance of the increase for both
periods was primarily due to an increase in interest income earned on the
excess proceeds from the March 1996 offering.
Property expenses for the three and six months ended June 30, 1996 was
$7.9 and $14.8 million, respectively, compared to $4.3 and $8.5 million for
the corresponding periods in 1995. The 1995 Acquisitions and Perimeter Center
accounted for $3.5 million and $5.5 million of the increase for the three and
six month periods, respectively. The remaining balance of the increase is
primarily due to an increase in seasonal costs associated with the winter of
1996 as well as an increase in building operating costs as a result of
increased occupancy at the properties.
Real estate taxes for the three and six months ended June 30, 1996 was
$4.3 and $7.8 million, respectively, compared to $2.5 and $4.9 million for
the corresponding periods in 1995. The 1995 Acquisitions and Perimeter Center
accounted for $1.7 million and $2.8 million of the increase for the three and
six month periods, respectively.
General and administrative expenses, which includes costs incurred at the
properties, for the three and six months ended June 30, 1996 were $3.8 and
$7.4 million, respectively, compared to $2.3 and $4.6 million for the
corresponding periods in 1995. General and administrative expenses as a
percentage of total revenue decreased from 10.7% to 9.9% from 1995 to 1996.
The 1995 Acquisitions and Perimeter Center accounted for $1.1 million and
$1.7 million of the increase for the three and six month periods,
respectively. The remaining balance of the increase was primarily due to an
increase in management and administration costs associated with the growth in
the Company's portfolio of properties.
Mortgage interest expense for the three and six months ended June 30,
1996 was $7.3 and $13.7 million, respectively, compared to $3.6 and $8.0
million for the corresponding periods in 1995. The increase in both periods
was primarily the result of debt incurred in connection with the acquisition
of Perimeter Center.
Interest--amortization of financing costs for the three and six months
ended June 30, 1996 was $0.6 and $1.2 million, respectively, compared to $0.3
and $0.6 million for the corresponding periods in 1995. The increase in both
periods was primarily the result of the amortization of financing costs
associated with the Credit Facility, the mortgage debt on Wellesley Buildings
1-8, Center Plaza and Perimeter Center.
Depreciation and amortization for the three and six months ended June 30,
1996 was $7.5 and $13.3 million, respectively, compared to $4.5 and $8.3
million for the corresponding periods in 1995. The 1995 Acquisitions and
Perimeter Center accounted for $3.0 million and $4.8 million of the increase
for the three and six month periods, respectively.
Equity in net income of joint ventures and corporations for the three and
six months ended June 30, 1996 was $0.6 and $1.6 million, respectively,
compared to $0.5 and $1.1 million for the corresponding periods in 1995. The
increase in both periods was primarily the result of the acquisition of the
equity investment in 75-101 Federal Street in September 1995 offset by equity
in net loss from Beacon Construction Company, Inc..
The minority interest in the Operating Partnership represents the portion
of the Operating Partnership which is not owned by the Company.
11
BEACON PROPERTIES CORPORATION
PART I--ITEM 2
______
As of June 30, 1996, the Company owned or had an interest in 58 income
producing commercial properties. The percent leased calculation includes all
signed leases executed as of June 30, 1996.
Rentable Percent
Square Feet Leased
------------ ---------
Consolidated Properties:
Center Plaza 649,359 93
150 Federal Street 530,279 100
Russia Wharf 314,596 100
2 Oliver-147 Milk Street 271,000 95
175 Federal Street 203,349 89
South Station 148,591 100
Wellesley Office Park Buildings 1-8 599,334 90
Crosby Corporate Center 336,000 88
Westwood Business Centre 160,400 99
One Canal Park 100,300 94
Westlakes Office Park Buildings 1, 2, 3 and 5 443,592 94
Ten Canal Park 110,000 88
Perimeter Center 3,302,136 97
---------- -------
Total Consolidated Properties 7,168,936 95
---------- -------
Joint Venture Properties:
One Post Office Square 764,129 99
Rowes Wharf 344,326 99
Polk and Taylor Buildings 890,000 100
75-101 Federal Street 812,000 94
---------- -------
Total Joint Venture Properties 2,810,455 98
---------- -------
Total Consolidated and Joint Venture Properties 9,979,391 96
---------- -------
Liquidity and Capital Resources
Cash and cash equivalents were $32.9 million at June 30, 1996 compared to
$4.5 million at December 31, 1995. The increase was primarily the result of
proceeds from the March 1996 offering in excess of the equity requirements
for Perimeter Center offset by the acquisition of the Rowes Wharf debt and
the redevelopment of the Crosby Corporate Center.
Investing Activities
On February 15, 1996, the Company acquired a 3.3 million square foot, 32
building portfolio in suburban Atlanta, Georgia for approximately $336
million.
During the second quarter of 1996, the Company and Prime Property Fund,
the Company's partner in Rowes Wharf, acquired the remaining portion of the
property's mortgage debt that had been held by a bank lending group.
Financing Activities
On January 9, 1996, the Company closed on a $55 million mortgage loan,
and used the net proceeds to pay down the Credit Facility. The collateral for
the mortgage loan is the Wellesley Office Park, Buildings 1-8.
On February 9, 1996, the Company closed on a $60 million mortgage loan,
and used the net proceeds to pay down the Credit Facility. The collateral for
the mortgage loan is the Center Plaza property.
On February 15, 1996, the Company acquired Perimeter Center using the
$260 million PaineWebber Acquisition Loan, the issuance of approximately
$13.8 million of Units in the Operating Partnership with the balance funded
from the Credit Facility.
12
BEACON PROPERTIES CORPORATION
PART I--ITEM 2
______
In March 1996, the Company sold 7,036,000 shares of common stock, $.01
par value, to the public at $26.25 per share. The proceeds of the offering,
net of offering costs, were approximately $173.8 million. The net proceeds of
the offering were used to repay a portion of the PaineWebber Acquisition
Loan.
On March 15, 1996, the Company closed on the $218 million MetLife Mortgage
Loan. The proceeds of the MetLife Mortgage Loan were used to repay the remaining
portion of the PaineWebber Acquisition Loan and the outstanding balance of the
Credit Facility.
The Company declared a dividend of $.4625 per common share payable on
August 23, 1996 to stockholders of record on August 14, 1996.
Capitalization
At June 30, 1996, the Company's total consolidated debt was approximately
$403.2 million, and its total consolidated debt plus its proportionate share
of total unconsolidated debt (other than the Rowes Wharf property debt) was
approximately $496.6 million. The Company's current outstanding consolidated
debt consists of approximately $403.2 million of fixed rate mortgage
indebtedness with an weighted average rate of 7.09%, collateralized by
properties owned 100% by the Company. The Company's proportionate share of
its current total unconsolidated debt (excluding the Rowes Wharf property
debt) consists of approximately $47.0 million on the One Post Office Square
Property (in which the Company has a 50% general partner interest) and
approximately $46.4 million on the 75-101 Federal Street property (in which
the Company owns approximately 52% of the common stock of a private REIT that
owns the property).The weighted average rate of the Company's unconsolidated
debt is 7.47%. The weighted average rate of the Company's consolidated and
unconsolidated debt is 7.17%.
Based on the Company's total market capitalization of $1,307.4 million at
June 30, 1996 (at the June 30, 1996 closing stock price of $25.625 and
including the 4,268,608 Units of minority interest in the Operating
Partnership), the Company's consolidated debt plus its proportionate share of
total unconsolidated debt (other than the Rowes Wharf property debt)
represented approximately 38% of its total market capitalization.
Short and Long Term Liquidity
The Company has considered its short-term liquidity needs and the
adequacy of Funds from Operations and other expected liquidity sources to
meet these needs. The Company believes that its principal short-term
liquidity needs are to fund normal recurring expenses, debt service
requirements and the minimum distribution required to maintain the Company's
REIT qualifications under the Internal Revenue Code. The Company believes
that these needs will be fully funded from cash flows provided by operating
activities.
The Company expects to meet long-term liquidity requirements for the
costs of development, property acquisitions, scheduled debt maturities, major
renovations, expansions and other non-recurring capital improvements through
long-term secured and unsecured indebtedness and the issuance of additional
Operating Partnership units and equity securities. The Company may finance
the redevelopment or acquisition of additional properties by using its Credit
Facility.
13
BEACON PROPERTIES CORPORATION
PART II
____________
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of stockholders on May 22, 1996.
The stockholders voted to elect Graham O. Harrison and Edwin N. Sidman to
serve as Class II Directors of the Company until 1999. 24,608,336 votes
were cast for, and 145,601 votes were withheld from the election of Graham
O. Harrison. 24,582,333 votes were cast for, and 171,604 votes were
withheld from the election of Edwin N. Sidman. Norman B. Leventhal and
Scott M. Sperling will continue to serve as Class III Directors until
their present terms expire in 1997 and their successors are duly elected,
and Alan M. Leventhal, William F. McCall, Jr. and Steven Shulman will
continue to serve as Class II Directors until their present terms expire
in 1998 and their successors are duly elected.
The stockholders also voted to approve the amendment to the Company's
1994 Stock Option and Incentive Plan to, among other things, increase the
number of shares of the Company's common stock, $.01 par value per share,
subject to issuance under the Plan by 1,621,485 shares, such that the
total number of shares of common stock subject to the Plan equals 10% of
the number of currently outstanding shares of common stock. 16,209,278
votes were cast in favor of this proposal, 3,988,823 were cast against
it, 154,605 abstained, and 4,401,231 no votes.
The stockholders also voted to ratify the Board of Directors' selection
of Coopers & Lybrand, L.L.P. as the Company's independent auditors for
the fiscal year ending December 31, 1996. 24,699,770 votes were cast in
favor of this proposal, 22,034 were cast against it, and 32,131
abstained.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.1 Restated Revolving Credit Agreement among Beacon Properties,
L.P., Beacon Properties Corporation and The First National Bank of
Boston, dated June 27, 1996.
10.2 Amendment No. 1 To the Restated Revolving Credit Agreement among
Beacon Properties, L.P., Beacon Properties Corporation and The First
National Bank of Boston, dated July 18, 1996.
27.1 Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the
three-month period covered by this report.
14
BEACON PROPERTIES CORPORATION
SIGNATURE
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.
BEACON PROPERTIES CORPORATION
/s/ Robert J. Perriello
------------------------------------
Robert J. Perriello,
Senior Vice President,
and Chief Financial Officer
Date: July 23, 1996
15