SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-2
CURRENT REPORT
-----------------
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 7, 1997
BEACON PROPERTIES CORPORATION
(Exact name of Registrant as specified in its Charter)
Maryland
(State of Incorporation)
1-12926 04-3224258
(Commission File Number) (IRS Employer Id. Number)
50 Rowes Wharf
Boston, Massachusetts 02110
(Address of principal executive offices) (Zip Code)
(617) 330-1400
(Registrant's telephone number, including area code)
Item 7. Financial Statements and Exhibits
(a) Financial Statements Under Rule 3-14 of Regulation S-X
Statement of Excess of Revenues over Specific Operating Expenses of
10880 Wilshire Boulevard for the year ended December 31, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
Centerpointe for the year ended December 31, 1996
Statement of Excess of Revenues over Specific Operating Expenses of
Westbrook Corporate Center for the year ended December 31, 1996
(b) Pro Forma Financial Statements
Pro Forma Condensed Consolidated Balance Sheet as of December 31,
1996 (Unaudited)
Pro Forma Condensed Consolidated Statement of Operations for the Year
Ended December 31, 1996 (Unaudited)
(c) Exhibits
1. Underwriting Agreement among Beacon Properties Corporation,
Beacon Properties, L.P. and Merrill Lynch & Co. dated April 10, 1997.
2.1 Agreement of Purchase and Sale and Joint Escrow Instructions
between 10880 Property Corporation as seller and Beacon Properties,
L.P. as buyer dated March 19, 1997 (a)
2.2 Agreement of Sale dated March 26, 1997 between Joshua Realty
Corporation and Beacon Properties, L.P. (b)
2.3 Contribution Agreement dated March 20, 1997 between Westbrook
Corporate Center Associates, Westbrook Corporate Center IV Associates
Limited Partnership and Westbrook Corporate Center V Associates
Limited Partnership, Illinois limited partnerships which are,
respectively, the sole beneficiaries of the land trusts which own
title to the Real Property and Beacon Properties, L.P. (b)
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
- ----------
(a) To be filed by amendment
(b) Previously filed as part of the Company's Current Report on Form 8-K dated
March 27, 1997.
2
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: April 10, 1997
3
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-1
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of 10880 Wilshire Boulevard in Westwood, California (the
"Property") for the year ended December 31, 1996. This financial statement is
the responsibility of the Property's management. 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income and
expenses which would not be comparable with those resulting from the operations
of the Property after acquisition by Beacon Properties Corporation. The
accompanying financial statement was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of income and expenses described in Note 2) of 10880 Wilshire
Boulevard in Westwood, California, for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 11, 1997
F-2
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Year
Ended
December 31, 1996
-----------------
Revenues:
Base rent $ 8,687,295
Recoveries from tenants 80,246
Parking income, net of management fees 991,828
Other income 314,125
-----------
10,073,494
-----------
Specific operating expenses (Note 2):
Utilities 980,518
Janitorial and cleaning 92,112
Security 331,954
General and administrative 401,004
Management fee 319,183
Repairs and maintenance 1,271,907
Insurance 101,671
Property taxes 1,042,614
Landscaping 76,811
Ground lease 210,000
-----------
4,827,774
-----------
Excess of revenues over specific operating expenses $ 5,245,720
===========
The accompanying notes are an integral part of the financial statement.
F-3
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
10880 Wilshire Boulevard (the "Property") is located in Westwood,
California and consists of one office building encompassing
approximately 534,000 square feet. Beacon Properties Corporation
intends to acquire the entire leasehold interest in the Property.
Rental Revenues
Rental income is recognized on the straight-line method over the terms
of the related leases. The excess of recognized rentals over amounts
due pursuant to lease terms is recorded as accrued rent. The impact of
the straight-line rent adjustment increased revenues by approximately
$1,750,000 for the year ended December 31, 1996.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific
operating expenses is presented on the accrual basis. This statement
has been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, the statement
excludes certain historical income and expenses not comparable to the
operations of the property after acquisition, such as interest income
and amortization.
Continued
F-4
10880 WILSHIRE BOULEVARD
WESTWOOD, CALIFORNIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES, CONTINUED
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate
tax reimbursement clauses, operating expense reimbursement clauses and
renewal options. Minimum lease payments to be received during the next
five years for noncancelable operating leases in effect at December 31,
1996 are approximately as follows:
Year Ending December 31,
1997 $ 8,614,000
1998 11,333,000
1999 11,770,000
2000 11,288,000
2001 9,438,000
Thereafter 9,427,000
As of December 31, 1996, three tenants occupied approximately 34% of
leasable square feet and represented 16% of total 1996 base revenues.
4. Ground Lease Commitment:
The property is subject to a ground lease expiring in 2068. The lease
provides for minimum rental payments of $210,000 per annum. At
specified dates as provided for in the lease, annual rent payable is
subject to adjustment at the greater of $210,000 or 7% of appraised
market value of the property, as defined.
The lessee has an option to buy out the lease on August 1, 2001 and pay
the lessor for the land at an amount based on fair market value, as
defined.
The future minimum commitments under the ground lease are approximately
as follows:
1997 $ 210,000
1998 210,000
1999 210,000
2000 210,000
2001 210,000
Thereafter 13,895,000
F-5
CENTERPOINTE
FAIRFAX, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-6
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of Centerpointe in Fairfax, Virginia (the "Properties") for
the year ended December 31, 1996. This financial statement is the responsibility
of the Properties' management. 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income and
expenses which would not be comparable with those resulting from the operations
of the Properties after acquisition by Beacon Properties Corporation. The
accompanying financial statement was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of income and expenses described in Note 2) of Centerpointe in
Fairfax, Virginia, for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 18, 1997
F-7
CENTERPOINTE
FAIRFAX, VIRGINIA
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Year
Ended
December 31, 1996
-----------------
Revenues:
Base rent $ 7,293,132
Recoveries from tenants 577,788
Other income 98,827
-----------
7,969,747
-----------
Specific operating expenses (Note 2):
Mortgage interest (Note 4) 1,914,230
Utilities 563,917
Janitorial and cleaning 466,366
Security 106,847
General and administrative 179,771
Repairs and maintenance 505,785
Insurance 37,906
Property taxes 497,166
Landscaping 59,255
-----------
4,331,243
-----------
Excess of revenues over specific operating expenses $ 3,638,504
===========
The accompanying notes are an integral part of the financial statement.
F-8
CENTERPOINTE
FAIRFAX, VIRGINIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
Description of Properties
Centerpointe (the "Properties") is an office portfolio located in
Fairfax, Virginia consisting of two office buildings and encompassing
approximately 427,000 square feet. Beacon Properties Corporation
intends to acquire the entire fee interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms
of the related leases. The excess of recognized rentals over amounts
due pursuant to lease terms is recorded as accrued rent. The impact of
the straight-line rent adjustment increased revenues by approximately
$491,000 for the year ended December 31, 1996.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Basis of Accounting:
The accompanying statement of excess of revenues over specific
operating expenses is presented on the accrual basis. This statement
has been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, the statement
excludes certain historical income and expenses not comparable to the
operations of the property after acquisition, such as interest income,
management fees, and amortization.
Continued
F-9
CENTERPOINTE
FAIRFAX, VIRGINIA
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES, CONTINUED
3. Description of Leasing Arrangements:
The commercial and office space is leased to tenants under leases with
terms that vary in length. Certain of the leases contain real estate
tax reimbursement clauses, operating expense reimbursement clauses and
renewal options. Minimum lease payments to be received during the next
five years for noncancelable operating leases in effect at December 31,
1996 are approximately as follows:
Year Ending December 31,
1997 $ 5,881,000
1998 5,495,000
1999 5,256,000
2000 5,030,000
2001 5,033,000
Thereafter 29,413,000
As of December 31, 1996, one tenant occupied approximately 65% of
leasable square feet and represented 61% of total 1996 base revenues.
4. Mortgage Note:
The mortgage note in the amount of $30,000,000, requires interest only
monthly payments of $183,000 through December 1, 1998. Beginning on
January 1, 1999, the note requires monthly installments of principal
and interest of $218,197. The note bears interest at 7.32% and is due
on February 28, 2001. The note is collaterized by the property and
assignment of leases.
Principal payments due on the mortgage note during the next five years
are approximately as follows:
1997 -0-
1998 -0-
1999 437,000
2000 470,000
2001 29,039,000
F-10
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
F-11
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholders of
Beacon Properties Corporation:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of Westbrook Corporate Center in Westchester, Illinois (the
"Properties") for the year ended December 31, 1996. This financial statement is
the responsibility of the Properties' management. 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
As described in Note 2, this financial statement excludes certain income and
expenses which would not be comparable with those resulting from the operations
of the Properties after acquisition by Beacon Properties Corporation. The
accompanying financial statement was prepared for the purpose of complying with
the rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of income and expenses described in Note 2) of Westbrook Corporate
Center in Westchester, Illinois for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Boston, Massachusetts
March 21, 1997
F-12
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Year
Ended
December 31, 1996
-----------------
Revenues:
Base rent $21,029,383
Recoveries from tenants 1,805,660
Other income 135,933
--------------
22,970,976
--------------
Specific operating expenses (Note 2):
Utilities 1,351,852
Janitorial and cleaning 1,176,162
Security 219,080
General and administrative 207,959
Repairs and maintenance 1,306,547
Insurance 140,967
Property taxes 3,112,555
Landscaping 204,898
--------------
7,720,020
--------------
Excess of revenues over specific operating expenses $15,250,956
==============
The accompanying notes are an integral part of the financial statement.
F-13
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
1. Organization and Significant Accounting Policies:
------------------------------------------------
Description of Properties
Westbrook Corporate Center (the "Properties") is an office complex
located in Westchester, Illinois consisting of five interconnected
ten-story office towers encompassing approximately 1,102,000 square
feet. Beacon Properties Corporation intends to acquire the entire fee
interest in the Properties.
Rental Revenues
Rental income is recognized on the straight-line method over the terms
of the related leases. The excess of recognized rentals over amounts
due pursuant to lease terms is recorded as accrued rent. The impact
of the straight-line rent adjustment decreased revenues by
approximately $1,600,000 for the year ended December 31, 1996.
Risks and Uncertainties
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Basis of Accounting:
-------------------
The accompanying statement of excess of revenues over specific
operating expenses is presented on the accrual basis. This statement
has been prepared in accordance with the applicable rules and
regulations of the Securities and Exchange Commission for real estate
properties acquired or to be acquired. Accordingly, the statement
excludes certain historical income and expenses not comparable to the
operations of the property after acquisition, such as interest
income, management fees, depreciation, amortization and interest
expense.
Continued
F-14
WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS
NOTES TO STATEMENT OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES, CONTINUED
3. Description of Leasing Arrangements:
-----------------------------------
The commercial and office space is leased to tenants under leases
with terms that vary in length. Certain of the leases contain real
estate tax reimbursement clauses, operating expense reimbursement
clauses and renewal options. Minimum lease payments to be received
during the next five years for noncancelable operating leases in
effect at December 31, 1996 are approximately as follows:
Year Ending December 31,
------------------------
1997 $ 23,329,000
1998 21,978,000
1999 19,607,000
2000 16,648,000
2001 9,246,000
Thereafter 13,883,000
As of December 31, 1996, one tenant occupied approximately 9% of
leaseable square feet and represented 12% of total 1996 base revenues.
F-15
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma Condensed Consolidated Balance Sheet of
Beacon Properties Corporation (the "Company") as of December 31, 1996, is
presented as if the 10880 Wilshire Boulevard, Centerpointe and Westbrook
Corporate Center properties had been acquired as of December 31, 1996.
Additionally, the Company's proposed, 7,000,000 share, common stock offering
($32.125 per share) and related repayment of the Credit Facility had occurred as
of December 31, 1996.
The pro forma Condensed Consolidated Statements of Operations for the
year ended December 31, 1996 is presented as if the acquisition of the
Properties acquired from January 1, 1996 to December 31, 1996 (as more fully
described below), the closing of the MetLife Mortgage loan, the Company's common
stock offerings from January 1, 1996 to December 31, 1996 (as more fully
described below) and the Company's proposed common stock offering had occurred
as of January 1, 1996. Furthermore, the Company qualified as a REIT, distributed
all of its taxable income and, therefore, incurred no income tax expense during
the period.
In management's opinion, all adjustments necessary to reflect the above
discussed transactions have been made. The unaudited pro forma Condensed
Consolidated Balance Sheet and Statement of Operations are not necessarily
indicative of what actual results of operations of the Company would have been
for the period, nor does it purport to represent the Company's results of
operations for future periods.
Acquisitions included in pro forma:
Rentable Year Built/ Date of
Property Name Location Sq Ft Renovated Acquisition
- -----------------------------------------------------------------------------------------------------------------
1996 Acquisitions
Perimeter Center Atlanta, GA 3,302,000 1970-1989 02/15/96
New York Life Portfolio Chicago, IL and Washington, D.C. 1,012,000 1984-1986 08/16/96
Fairfax County Portfolio McLean, VA and Herndon, VA 550,000 1981-1988 09/05/96
Rosslyn Virginia Portfolio Rosslyn, VA 666,000 1974-1980 10/18/96
New England Executive Park Burlington, MA 817,000 1970-1985 11/15/96
245 First Street Cambridge, MA 263,000 1985-1986 11/21/96
10960 Wilshire Boulevard Westwood, CA 544,000 1971-1992 11/21/96
Shoreline Technology Park Mountain View, CA 727,000 1985-1991 12/20/96
Lake Marriott Business Park Santa Clara, CA 400,000 1981 12/20/96
Presidents Plaza Chicago, IL 791,000 1980-1982 12/27/96
1997 Pending Acquisitions
10880 Wilshire Boulevard Westwood, CA 531,000 1970 Pending
Centerpointe Fairfax, VA 409,000 1986-1990 Pending
Westbrook Corporate Center Westchester, IL 1,106,000 1985-1996 Pending
F-16
Purchase Price (in thousands)
----------------------------------------
Property Name Seller Cash Debt O.P.Units Total
- -----------------------------------------------------------------------------------------------------------------------------------
1996 Acquisitions
Perimeter Center Metropolitan Life Insurance Company $322,200 $13,800(2) $336,000
New York Life Portfolio New York Life Insurance Company 150,000 150,000
Fairfax County Portfolio Greensboro Associates, John Marshall
Associates Limited Partnership and
Woodland-Northridge I Limited Partnership $55,400 21,600(2) 77,000
Rosslyn Virginia Portfolio LaSalle Fund II 99,050 99,050
New England Executive Park New England Executive Park Limited Partnership
et al 75,000 75,000
245 First Street Riverview Building Combined Limited Partnership 45,000 45,000
10960 Wilshire Boulevard 10960 Property Corporation 133,000 133,000
Shoreline Technology Park Teachers Insurance and Annuity Association (TIAA) 139,080 139,080
Lake Marriott Business Park Teachers Insurance and Annuity Association (TIAA) 43,920 43,920
Presidents Plaza Metropolitan Life Insurance Company 38,000 39,000(2) 77,000
1997 Pending Acquisitions
10880 Wilshire Boulevard 10880 Property Corporation 102,000 102,000
Centerpointe Joshua Realty Corporation 25,000 30,000 55,000
Westbrook Corporate Center Westbrook Corporate Center Associates, 26,100 106,000 50,000(3) 182,100
Westbrook Corporate Center IV Associates
Limited Partnership and Westbrook Corporate
Center V Associates Limited Partnership
(1) The Company holds approximately 52% of the common stock of a private
REIT which owns this property. The total purchase price was $156 million
consisting of $66 million in cash and proceeds from a $90 million first mortgage
loan. The Company accounts for this investment under the equity method of
accounting.
(2) The Company issued Operating Partnership Units in the amount of
540,059 for Perimeter Center ($25.55 per unit), 833,820 for the Fairfax County
Portfolio ($25.90 per unit) and 1,171,500 for Presidents Plaza ($33.29 per
unit). These Units were valued based on the average trading price of Beacon
Properties Corporation's Common Stock for the applicable period (20 to 30 days)
prior to closing as prescribed in the purchase and sale agreements.
(3) The Company expects to issue approximately 1,556,420 Operating
Partnership Units in connection with the purchase of Westbrook Corporate Center.
The number of units was estimated based on a valuation of $32.125 per unit. The
actual number of units will be based on the average price of Beacon Properties
Corporation's common stock for the 10 days prior to 2 days preceding the
closing of this property.
Common Stock Offerings included in pro forma:
Price Per Gross Net
Year Month Shares Share Proceeds Proceeds
- ---- ----- ------ ----- -------- --------
(in thousands)
1996 March 7,036,000 26.25 184,695 173,800
1996 August 5,750,000 25.75 148,063 139,400
1996 November 13,723,000 30.75 421,982 398,900
1996 December 1,132,400 33.47 37,896 37,800
1997 April 7,000,000 32.125 224,875 211,382
F-17
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
December 31, 1996
(Unaudited)
Pro Forma Adjustments
-------------------------------------------------------
Beacon
Properties 10880 Westbrook Proposed
Corporation Wilshire Corporate 1997 Pro Forma
Historical Boulevard Centerpointe Center Stock Offering Consolidated
----------- --------- ------------ --------- -------------- ------------
(dollars in thousands)
ASSETS
Real estate, net $1,593,995 $102,000 $55,000 $182,100 $1,933,095
Deferred financing and leasing costs, net 17,321 17,321
Cash and cash equivalents 36,086 (102,000) (25,000) (26,100) $137,014 20,000
Mortgage notes receivable 51,491 51,491
Other assets 28,366 28,366
Investments in and advance to joint
ventures and corporations 52,153 52,153
---------- -------- ------- -------- -------- ----------
Total assets $1,779,412 $ -- $30,000 $156,000 $137,014 $2,102,426
========== ======== ======= ======== ======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $452,212 $30,000(A) $106,000(B) $588,212
Note payable, Credit Facility 153,000 $(74,368)(D) 78,632
Other liabilities 41,764 41,764
Investment in joint venture 24,735 24,735
--------- -------- ------- -------- -------- ----------
Total liabilities 671,711 30,000 106,000 (74,368) 733,343
Minority interest in Operating Partnership 108,551 50,000(C) 158,551
Stockholders' equity 999,150 211,382(E) 1,210,532
--------- -------- ------- -------- -------- ----------
Total liabilities and stockholders' equity $1,779,412 $ -- $30,000 $156,000 $137,014 $2,102,426
========== ======== ======= ======== ======== ==========
Notes:
(A) Mortgage debt due on February 28, 2002 with interest only through December
1999 at 7.32% and principal amortized over a 25 year period thereafter. This
mortgage will be assumed in connection with the purchase of Centerpointe.
(B) Mortgage debt is expected to have a 10 year term with interest at 8.03% and
principal amortized over a 26 year period and is expected to be assumed in
connection with the purchase of Westbrook Corporate Center.
(C) The seller of Westbrook will be issued $50,000,000 of Operating Partnership
Units expected to consist of 1,556,420 units valued at $32.125 each. The
valuation is based on the average trading price of Beacon Properties
Corporation common stock for the 10 days prior to 2 days preceding the
closing of the property.
(D) Expected repayment of Credit Facility.
(E) The Company expects to sell 7,000,000 shares of common stock at $32.125
per share.
Proceeds of Offering $224,875
Expenses of Offering (6.0%) 13,493
--------
$211,382
========
F-18
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
Beacon October &
Properties New York Life November
Corporation Perimeter and Fairfax Va. 1996
Historical Center (A) Portfolios(B) Acquisitions(G)
----------- ---------- --------------- ---------------
(dollars in thousands except per share amounts and shares outstanding)
Revenue:
Rental income $147,825 $6,420(A) $19,098 $38,886
Management fees 3,005
Recoveries from tenants 16,719 304 3,788 3,674
Mortgage interest income 4,970
Other income 11,272 208 845 3,012
-------- ------ ------ -------
Total revenue 183,791 6,932 23,731 45,572
-------- ------ ------ -------
Expenses:
Property expenses 37,211 1,562 4,875 11,716
Real estate taxes 18,124 591 1,708 3,991
General and administrative 19,331 378 812 1,700
Mortgage interest expense 30,300 1,895(C) 2,954(F)
Interest - amortization of financing costs 2,084 15(D)
Depreciation and amortization 33,184 1,196(E) 4,374(E) 9,105(E)
-------- ------ ------ -------
Total expenses 140,234 5,637 14,723 26,512
-------- ------ ------ -------
Income from operations 43,557 1,295 9,008 19,060
Equity in net income of joint ventures and corporation 4,989
-------- ------ ------ -------
Income from continuing operations 48,546 1,295 9,008 19,060
Discontinued operations - Construction Company:
Loss from operations (2,609)
Loss on sale (249)
-------- ------ ------ -------
Income before minority interest 45,688 1,295 9,008 19,060
Minority interest in Operating Partnership (5,988)
-------- ------ ------ -------
Net income before extraordinary items $39,700 $1,295 $9,008 $19,060
======== ====== ====== =======
F-19
BEACON PROPERTIES CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
December
1996 Pending Pro Forma Pro Forma
Acquisitions(H) Acquisitions(I) Adjustments Consolidated
--------------- --------------- ----------- ------------
(dollars in thousands except per share amounts and shares outstanding)
Revenue:
Rental income 26,858 40,486 $279,573
Management fees 3,005
Recoveries from tenants 6,099 2,464 33,048
Mortgage interest income 611(K) 5,581
Other income 470 1,541 17,348
------- ------ ------- --------
Total revenue 33,427 44,491 611 338,555
------- ------ ------- --------
Expenses:
Property expenses 4,509 9,206 69,078
Real estate taxes 5,036 4,653 34,103
General and administrative 1,250 1,108 250(L) 24,830
Mortgage interest expense 10,380(J) 3,106(M) 48,634
Interest - amortization of financing costs 2,099
Depreciation and amortization 6,555(E) 10,513(E) 64,927
------- ------ ------- --------
Total expenses 17,350 35,860 3,356 243,671
------- ------ ------- --------
Income from operations 16,077 8,631 (2,745) 94,884
Equity in net income of joint ventures and corporation 4,989(1)
------- ------ ------- --------
Income from continuing operations 16,077 8,631 (2,745) 99,873
Discontinued operations - Construction Company:
Loss from operations (2,609)
Loss on sale (249)
------- ------ ------- --------
Income before minority interest 16,077 8,631 (2,745) 97,015
Minority interest in Operating Partnership (6,080)(N) (12,068)
------- ------ ------- --------
Net income before extraordinary items $16,077 $8,631 ($8,825) $84,947(2)
======= ====== ======= ========
Common shares outstanding 55,116,480
Net income per common share $1.54
(1) Includes depreciation and amortization $4,033
(2) Company share of Operating Partnership is 87.56%
See accompanying notes to pro forma condensed consolidated statement of
operations.
F-20
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(A) Results of operations of Perimeter Center for the period ended February 14,
1996.
Rental income-historical $6,128
Pro forma straight-line rent adjustment 292
------
Pro forma rental income $6,420
======
(B) Results of operations of the Fairfax County Portfolio and the New York Life
Portfolio for the periods ended September 4, 1996 and August 15, 1996,
respectively.
Fairfax New York
County Life
Portfolio Portfolio Total
-------------------------------------------
Revenue:
Rental income-historical $7,284 $11,048 $18,332
Pro forma straight-line rent adjustment 377 389 766
-------------------------------------------
Pro forma rental income 7,661 11,437 19,098
Management fees
Recoveries from tenants 542 3,247 3,788
Mortgage interest income
Other income 72 773 845
-------------------------------------------
Total revenue 8,274 15,457 23,731
-------------------------------------------
Expenses:
Property expenses 1,581 3,294 4,875
Real estate taxes 364 1,345 1,708
General and administrative 80 732 812
Mortgage interest expense (F) 2,954 2,954
Interest - amortization of financing costs
Depreciation and amortization (E) 1,568 2,806 4,374
-------------------------------------------
Total expenses 6,546 8,177 14,723
-------------------------------------------
Income from operations $1,728 $ 7,280 $ 9,008
===========================================
(C) Net interest expense associated with the MetLife Mortgage Loan in the
amount of $218 million based on a 7.08% interest rate for the period
ended prior to March 15, 1996.
(D) Amortization of the costs of obtaining the permanent financing at $1.2
million over 10 years.
F-21
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(E) Detail of depreciation expense by property is presented as follows:
Basis Life Depreciation
----- ---- ------------
Perimeter Center $287,130 30 yrs $1,196
======
Fairfax County Portfolio $69,300 30 yrs $1,568
The New York Life Portfolio 135,000 30 yrs 2,806
------
$4,374
======
October & November 1996 Acquisitions:
-------------------------------------
Rosslyn, Virginia Portfolio 89,145 30 yrs $2,352
New England Executive Park 67,500 30 yrs 1,969
245 First Street 40,500 30 yrs 1,209
10960 Wilshire Boulevard 119,700 30 yrs 3,574
------
$9,105
======
December 1996 Acquisitions:
---------------------------
Lake Marriott Business Park 31,110 30 yrs $1,008
Shoreline Technology Park 100,650 30 yrs 3,263
Presidents Plaza 69,250 30 yrs 2,284
------
$6,555
======
Pending Acquisitions:
----------------------
10880 Wilshire Boulevard 102,000 30 yrs $3,400
Centerpointe 49,500 30 yrs 1,650
Westbrook Corporate Center 163,890 30 yrs 5,463
------
$10,513
======
(F)Fairfax County Portfolio interest expense on debt assumed for period prior to
acquisition:
Principal Rate Expense
--------- ---- -------
JOHN MARSHALL $21,068 8.38% $1,197
EJ RANDOLPH (1) 18,016 7.78% 951
NORTHRIDGE 16,306 7.28% 806
------- ------
$55,390 $2,954
======= ======
(1) Paid off by Credit Facility proceeds at closing.
F-22
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(G) Results of operations of the Rosslyn, Virginia Portfolio, New England
Executive Park, 245 First Street and 10960 Wilshire Boulevard for the period
prior acquisition.
Rosslyn New England 10960
Virginia Executive Wilshire
Portfolio Park 245 First St. Blvd. Total
---------------------------------------------------------------------
Revenue:
Rental income-historical $11,640 $11,766 $4,552 $9,650 $37,608
Pro forma straight-line rent adjustment 361 283 510 124 1,278
---------------------------------------------------------------------
Pro forma rental income 12,001 12,049 5,062 9,774 38,886
Management fees
Recoveries from tenants 528 1,113 1,776 257 3,674
Mortgage interest income
Other income 1,066 533 1,413 3,012
---------------------------------------------------------------------
Total revenue 13,595 13,162 7,371 11,444 45,572
---------------------------------------------------------------------
Expenses:
Property expenses 2,611 4,958 1,020 3,126 11,716
Real estate taxes 747 1,421 913 910 3,991
General and administrative 575 471 81 572 1,700
Mortgage interest expense
Interest - amortization of financing costs
Depreciation and amortization (E) 2,352 1,969 1,209 3,574 9,105
---------------------------------------------------------------------
Total expenses 6,286 8,819 3,223 8,183 26,512
---------------------------------------------------------------------
Income from operations $ 7,308 $ 4,343 $4,148 $ 3,262 $19,060
=====================================================================
(H) Results of operations of Lake Marriott Business Park, Shoreline Technology
Park and Presidents Plaza for the period prior to acquisition.
Shoreline Lake Marriott
Technology Business Presidents
Park Park Plaza Total
--------------------------------------------------------
Revenue:
Rental income-historical $12,942 $3,824 $9,244 $26,010
Pro forma straight-line rent adjustment 237 611 848
--------------------------------------------------------
Pro forma rental income 12,942 4,061 9,855 26,858
Management fees
Recoveries from tenants 1,068 996 4,035 6,099
Mortgage interest income
Other income 470 470
--------------------------------------------------------
Total revenue 14,010 5,057 14,359 33,427
--------------------------------------------------------
Expenses:
Property expenses 105 718 3,685 4,509
Real estate taxes 1,068 395 3,572 5,036
General and administrative 71 8 1,171 1,250
Mortgage interest expense
Interest - amortization of financing costs
Depreciation and amortization (E) 3,263 1,008 2,284 6,555
--------------------------------------------------------
Total expenses 4,508 2,130 10,712 17,350
--------------------------------------------------------
Income from operations $ 9,503 $2,927 $3,647 $16,077
========================================================
F-23
BEACON PROPERTIES CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1996
(Unaudited)
(I)Results of operations of 10880 Wilshire Boulevard, Centerpointe and Westbrook
Corporate Center for the year 1996.
10880 Westbrook
Wilshire Corporate
Boulevard Centerpointe Center Total
-------------------------------------------------------
Revenue:
Rental income-historical $8,687 $7,293 $21,029 $37,009
Pro forma straight-line rent adjustment 399 300 2,778 3,477
-------------------------------------------------------
Pro forma rental income 9,086 7,593 23,807 40,486
Management fees
Recoveries from tenants 80 578 1,806 2,464
Mortgage interest income
Other income 1,306 99 136 1,541
-------------------------------------------------------
Total revenue 10,472 8,270 25,749 44,491
-------------------------------------------------------
Expenses:
Property expenses 3,066 1,740 4,400 9,206
Real estate taxes 1,043 497 3,113 4,653
General and administrative 720 180 208 1,108
Mortgage interest expense 1,914(J) 8,466(J) 10,380
Interest - amortization of financing costs
Depreciation and amortization (E) 3,400 1,650 5,463 10,513
-------------------------------------------------------
Total expenses 8,229 5,981 21,650 35,860
-------------------------------------------------------
Income from operations $2,243 $2,289 $ 4,099 $ 8,631
=======================================================
(J) Interest expense on mortgage debt assumed:
Centerpointe - historical 1996 expense.
Westbrook Corporate Center - based on a principal balance of $106,000 with
interest calculated at 8.03%.
(K) Interest income related to the acquisition of the Rowes Wharf mortgage.
(L) Additional general and administrative expense attributable to acquisitions.
(M) Credit Facility Interest expense:
Pro Forma Credit Facility balance $78,632
Average Credit Facility rate through December 31, 1996 7.78%
-------
Pro Forma Credit Facility interest expense full year 6,118
Less historical 1996 Credit Facility interest expense 3,294
-------
Pro Forma adjustment 2,824
--------
Mortgage Interest:
Pro Forma Mortgage Interest on Centerpointe Full Year
based on principal balance of $30,000 with interest at
7.32% 2,196
Less: Historical 1996 Expense 1,914
-------
282
-------
Grand Total $3,106
=======
(N) Reflects decrease for minority interest (12.44%) in Operating Partnership.
F-24