-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EakWC4sE20XWvruBWmsvMTEnFOTuF7wHnSD1wvG7ou8293i07u2GCeLE7zAB5idb /TLwSyvCoIqjzxYSG2VEkQ== 0000910079-97-000017.txt : 19970927 0000910079-97-000017.hdr.sgml : 19970927 ACCESSION NUMBER: 0000910079-97-000017 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970630 ITEM INFORMATION: FILED AS OF DATE: 19970919 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEDFORD PROPERTY INVESTORS INC/MD CENTRAL INDEX KEY: 0000910079 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 680306514 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-12222 FILM NUMBER: 97683087 BUSINESS ADDRESS: STREET 1: 270 LAFAYETTE CIRCLE STREET 2: P. O. BOX 1058 CITY: LAFAYETTE STATE: CA ZIP: 94549 BUSINESS PHONE: 510-283-89 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): July 10, 1997 BEDFORD PROPERTY INVESTORS, INC. (Exact name of Registrant as specified in its charter) Maryland 1-12222 68-0306514 (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation) 270 Lafayette Circle, Lafayette, California 94549 (Address of principal executive offices) Registrant telephone number, including area code: (510) 283-8910 The undersigned Registrant hereby amends its Report on Form 8-K, filed July 23, 1997, as follows: Item 5. Other Events On January 15, 1997, Bedford Property Investors, Inc. (the Company) acquired 6500 Kaiser Drive, a 78,611 square foot research and development building located in Fremont, California from AB REO IV, L.L.C. for $7,845,000. On March 12, 1997, the Company acquired Executive Center at South Bank, a seven- building, 140,157 square foot office complex in Phoenix, Arizona, from Robertson Stephens Commercial Property Fund, L.L.C. for $11,900,000. On March 14, 1997, the Company acquired Bedford Fremont Business Center, a five-building, 146,509 square foot service flex/office complex in Fremont, California, from Metropolitan Life Insurance Company for $12,400,000. On May 8, 1997, the Company acquired Spinnaker Court, a 98,500 square foot research and development/manufacturing building located in Fremont, California, from T. G. Exchange, Inc. for $8,400,000. On May 9, 1997, the Company acquired U.S. Bank Centre, a 104,324 square foot, five-story office building in Reno, Nevada, from Duffel Financial and Construction Company for $12,175,000. On May 29, 1997, the Company acquired the 9737 Great Hills Trail Building, a three-story 82,680 square foot suburban office building in Austin, Texas, from R. S. Property Fund I, L.P. for $9,650,000. On June 4, 1997, the Company acquired the Troika Building, a 52,000 square foot office building in Tucson, Arizona, from Metropolitan Life Insurance Company for $3,900,000. On June 19, 1997, the Company acquired 2277 Pine View Way, a 120,480 square foot research and development facility in Petaluma, California, from MIP Properties, Inc. for $8,800,000. On June 27, 1997, the Company acquired Scripps Wateridge Corporate Center, a two-building 123,853 square foot office complex in San Diego, California, from Scripps Wateridge Property Limited Partnership for $17,000,000. The purchase included an adjacent parcel of land on which the Company plans to develop a 25,000 square foot office building. On July 10, 1997, the Company acquired Orillia Office Park, a five-building, 334,255 square foot suburban office complex in Renton, Washington, from David Sabey and Sandra Sabey for $32,500,000. On July 15, 1997, the Company acquired 2601 West Broadway, a 44,244 square foot research and development building in Tempe, Arizona, from First Exchange of Arizona f/b/o Broadway Hi-Tech 84 for $3,420,000. On July 22, 1997, the Company acquired Phoenix Airport Center, a five-building, 213,854 square foot office complex in Phoenix, Arizona, from Sky Harbor Associates, an Arizona joint venture, for $19,100,000. The acquisitions in 1997 were financed with borrowing from the Company's credit facility with Bank of America, except for the purchase of Executive Center at South Bank and Bedford Fremont Business Center which were financed with proceeds from the common stock offering which was completed on February 12, 1997, and the purchase of U.S. Bank Centre which was financed in part through the assumption of an $8,914,000 mortgage and in part with borrowings from the Company's credit facility. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits: The registrant hereby amends Item 7 by deleting sub parts (a) and (b) in their entirety and replacing such sections with: (a) Financial Statements The Historical Summary of Gross Income and Direct Operating Expenses of Orillia Office Park for the year ended December 31, 1996 (see Attachment A) and the Combined Historical Summary of Gross Income and Direct Operating Expenses of Executive Center at South Bank, Bedford Fremont Business Center, U. S. Bank Centre, Scripps Wateridge Corporate Center, and Phoenix Airport Center for the Year Ended December 31, 1996 (see Attachment B). (b) Pro forma Financial Information The pro forma consolidated balance sheet as of June 30, 1997 and pro forma consolidated income statements for the six months ended June 30, 1997 and the year ended December 31, 1996, showing the effect of the acquisitions of Laguna Hills Square, Westech Business Center, 100 View Street, Fourier Avenue, Lenexa land, Lundy Avenue, Phoenix land, Kenyon Center, 115 Mason Circle, 47600 Westinghouse Drive, Napa Valley Corporate Way, Carroll Tech Center, 47633 Westinghouse Drive, Westinghouse land, Vista Buildings 1 and 2, Napa lots 10A and 12J and K, Doherty Avenue, O'Toole Business Center, Panorama Business Center, Signal Systems Building, 6500 Kaiser Drive, Executive Center at South Bank, Bedford Fremont Business Center, Spinnaker Court, U.S. Bank Centre, 9737 Great Hills Trail Building, Troika Building, 2277 Pine View Way, Scripps Wateridge Corporate Center, Orillia Office Park, 2601 West Broadway, and Phoenix Airport Center and the sales of St. Paul East and West, 1000 Town Center and Mariner Court (see Attachment C). (c) Exhibit 23.1 Consent of KPMG Peat Marwick LLP 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, hereunto duly authorized. BEDFORD PROPERTY INVESTORS, INC. By: /s/ Scott R. Whitney Scott R. Whitney Senior Vice President and Chief Financial Officer Date: September 19, 1997 Attachment A Orillia Office Park HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES Year Ended December 31, 1996 CONTENTS Independent Auditors' Report 1 Historical Summary of Gross Income and Direct Operating Expenses 2 Notes to Historical Summary of Gross Income and Direct Operating Expenses 2-3 Independent Auditors' Report The Board of Directors Bedford Property Investors, Inc.: We have audited the accompanying historical summary of gross income and direct operating expenses (the Summary) of Orillia Office Park (the Property) for the year ended December 31, 1996. The Summary is the responsibility of management. Our responsibility is to express an opinion on the Summary 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 Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Summary presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying Summary was prepared to comply with the rules and regulations of the Securities and Exchange Commission and excludes certain expenses, described in note A, that would not be comparable to those resulting from the proposed future operations of the Property. In our opinion, the Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses, exclusive of expenses described in note A, of the Property for the year ended December 31, 1996, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP San Francisco, California August 1, 1997 Orillia Office Park Historical Summary of Gross Income and Direct Operating Expenses Year Ended December 31, 1996 Gross income: Rental income $ 3,593,241 Direct operating expenses: Repairs and maintenance 8,381 Insurance 7,620 Administrative 10,257 26,258 Operating income $ 3,566,983 Notes to Historical Summary of Gross Income and Direct Operating Expenses A. Property and Basis of Accounting The historical summary of gross income and direct operating expenses has been prepared in accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission and relates to the operations of Orillia Office Park (the Property). In accordance with Rule 3-14, direct operating expenses are presented exclusive of depreciation, interest, management fees and income taxes as these expenses would not be comparable to the proposed future operations of the property. Certain property operating expenses, including property taxes, are paid directly by the tenant. Rental income of the Property is recognized on a straight line basis over the term of the related leases. For 1996, rental income on a straight-line basis was equal to contractual income. B. Leases Minimum future rents of the Property as of December 31, 1996 are as follows (in thousands): 1997 $ 3,203 1998 3,125 1999 3,125 2000 3,446 2001 3,510 Thereafter 8,273 $ 24,682 C. Estimated Taxable Operating Results and Cash to be Made Available by Operations (unaudited) Pro forma cash available from operations and pro forma taxable income for 1996 are shown below. Pro forma taxable operating results are derived by deducting depreciation over 39 years; however, Bedford Property Investors, Inc., as a Real Estate Investment Trust (REIT), intends to pay dividends in amounts that exceed taxable income and, therefore, will pay no taxes. Dividends paid to the REIT shareholders are classified as return of capital, dividend income or capital gains. Revenues $3,593,241 Operating expenses 26,258 Pro forma cash available from operations 3,566,983 Depreciation expense 589,110 Pro forma taxable income $2,977,873 Attachment B Executive Center at South Bank, Bedford Fremont Business Center, U.S. Bank Centre, Scripps Wateridge Corporate Center and Phoenix Airport Center COMBINED HISTORICAL SUMMARY OF GROSS INCOME AND DIRECT OPERATING EXPENSES Year Ended December 31, 1996 CONTENTS Independent Auditors' Report 1 Combined Historical Summary of Gross Income and Direct Operating Expenses 2 Notes to Combined Historical Summary of Gross Income and Direct Operating Expenses 2-3 Independent Auditors' Report The Board of Directors Bedford Property Investors, Inc.: We have audited the accompanying combined historical summary of gross income and direct operating expenses (the Summary) of Executive Center at South Bank, Bedford Fremont Business Center, U.S. Bank Centre, Scripps Wateridge Corporate Center and Phoenix Airport Center (the Properties) for the year ended December 31, 1996. The Summary is the responsibility of management. Our responsibility is to express an opinion on the Summary 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 Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall Summary presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying Summary was prepared to comply with the rules and regulations of the Securities and Exchange Commission and excludes certain expenses, described in note A, that would not be comparable to those resulting from the proposed future operations of the Properties. In our opinion, the Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses, exclusive of expenses described in note A, of the Properties for the year ended December 31, 1996, in conformity with generally accepted accounting principles. KPMG Peat Marwick LLP San Francisco, California August 1, 1997 Executive Center at South Bank, Bedford Fremont Business Center, U.S. Bank Centre, Scripps Wateridge Corporate Center, and Phoenix Airport Center Combined Historical Summary of Gross Income and Direct Operating Expenses Year Ended December 31, 1996 Gross income: Rental income $ 5,912,462 Common are reimbursement 843,436 Other 62,058 6,817,956 Direct operating expenses: Real property tax 642,460 Repairs and maintenance 709,471 Utilities 319,310 Insurance 86,453 Administrative 185,601 Miscellaneous 73,092 2,016,387 Operating income $ 4,801,569 Notes to Combined Historical Summary of Gross Income and Direct Operating Expenses A. Property and Basis of Accounting The combined historical summary of gross income and direct operating expenses has been prepared in accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission and relates to the operations of Executive Center at South Bank, Bedford Fremont Business Center, U.S. Bank Centre, Scripps Wateridge Corporate Center and Phoenix Airport Center (the Properties). In accordance with Rule 3-14, direct operating expenses are presented exclusive of depreciation, interest, management fees and income taxes as these expenses would not be comparable to the proposed future operations of the property. The acquisition of the Properties may result in new valuations for purposes of determining future property tax assessments. Rental income of the Properties is recognized on a straight-line basis over the term of the related leases. For 1996, aggregate rental income on a straight-line basis exceeded contractual rentals by $309,405. B. Leases Minimum future rents of the Properties as of December 31, 1996 are as follows (in thousands): 1997 $ 6,467 1998 6,270 1999 5,746 2000 4,357 2001 2,891 Thereafter 4,315 $ 30,046 The minimum future rents shown above do not include tenants obligations for reimbursement of operating expenses, insurance and real estate taxes. C. Estimated Taxable Operating Results and Cash to be Made Available by Operations (unaudited) Pro forma cash available from operations and pro forma taxable income for 1996 are shown below. Pro forma taxable operating results are derived by deducting depreciation over 39 years; however, Bedford Property Investors, Inc., as a Real Estate Investment Trust (REIT), intends to pay dividends in amounts that exceed taxable income and, therefore, will pay no taxes. Dividends paid to the REIT shareholders are classified as return of capital, dividend income or capital gains. Revenues (1) $6,508,551 Operating expenses 2,016,387 Pro forma cash available from operations 4,492,164 Depreciation expense 1,322,463 Pro forma taxable income $ 3,169,701 (1) Excludes $309,405 which represents the excess of aggregate straight-line rents over rental income on a contractual basis. Attachment C The pro forma financial information is presented for illustrative purposes only and is not necessarily indicative of operating results or financial position that would have been achieved if the transactions described in the footnotes had been consummated as of the beginning of the periods presented, nor are they necessarily indicative of the future operating results or financial position of the Company. These statements should be read in conjunction with the financial statements and accompanying notes included in the Company's Forms 10-K and 10-Q. BEDFORD PROPERTY INVESTORS, INC. PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 (Unaudited) (in thousands, except share and per share amounts) Consolidated Properties Properties Consolidated Historical Acquired (1) Sold (2) Pro Forma ASSETS: Real estate investments: Industrial buildings $201,326 $ 3,475 $ - $204,801 Office buildings 96,164 52,394 - 148,558 Operating properties held for sale 20,767 - (14,486) 6,281 Industrial properties under development 10,304 - - 10,304 328,561 55,869 (14,486) 369,944 Less accumulated depreciation 7,126 - (1,199) 5,927 321,435 55,869 (13,287) 364,017 Cash 1,075 - - 1,075 Other assets 10,180 - (888) 9,292 $332,690 $ 55,869 $(14,175) $374,384 LIABILITIES AND STOCKHOLDERS' EQUITY: Bank loan payable $ 58,350 $ 54,937 $(25,144) $ 88,143 Mortgage loans payable 60,584 - - 60,584 Accounts payable and accrued expenses 4,531 922 386 5,839 Dividend and distributions payable 4,163 - - 4,163 Other liabilities 3,525 10 (205) 3,330 Total liabilities 131,153 55,869 (24,963) 162,059 Redeemable preferred stock: Series A convertible preferred stock, par value $0.01 per share; authorized 10,000,000 shares; issued and outstanding 8,333,334 shares; aggregate redemption amount $50,000; aggregate liquidation preference $52,500. 50,000 - - 50,000 Minority interest in consolidated partnership 1,497 - - 1,497 Common stock and other stockholders' equity: Common stock, par value $0.02 per share; authorized 50,000,000 shares; issued and outstanding 11,155,950 shares 223 223 Additional paid-in capital 223,454 223,454 Accumulated losses and distributions in excess of net income (73,637) - 10,788 (62,849) Total common stock and other stockholders' equity 150,040 - 10,788 160,828 Total liabilities and stockholders' equity $332,690 $ 55,869 $(14,175) $374,384
See accompanying notes to pro forma financial statements. BEDFORD PROPERTY INVESTORS, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 (Unaudited) (in thousands, except share and per share amounts) Consolidated Properties Properties Pro Forma Pro Forma Historical Acquired (3) Sold (4) Adjustments Consolidated Property operations: Rental income $19,683 $5,476 $(1,960) $23,199 Rental expenses: Operating expenses 3,023 789 (582) 3,230 Real estate taxes 1,715 444 (131) 2,028 Depreciation and amortization 2,374 895 (227) 3,042 Income from property operations 12,571 3,348 (1,020) 14,899 General and administrative expenses (1,117) - - (1,117) Interest income 144 - - 144 Interest expense (3,032) - - (2,790) (5) (5,822) Income before minority interest and gain on sale 8,566 3,348 (1,020) (2,790) 8,104 Gain on sale of real estate investments - - 10,595 10,595 Minority interest (51) - - - (51) Net income $ 8,515 $3,348 $ 9,575 (2,790) $18,648 Net income applicable to common stockholders* $ 6,265 $3,348 $ 9,575 (2,790) $16,398 Primary earnings per common and common equivalent share $ 0.61 $ 1.45 Primary weighted average number of common and common equivalent shares 10,243,123 11,330,584 (6) Earnings per common share - assuming full dilution $ 0.59 $ 1.19 Weighted average number of common shares - assuming full dilution 14,546,136 15,633,597 (6)
* Reflects reduction for quarterly dividends of $1,125 on the $50,000 Series A convertible preferred stock. See accompanying notes to pro forma financial statements. BEDFORD PROPERTY INVESTORS, INC. PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996 (Unaudited) (in thousands, except share and per share amounts) Consolidated Properties Properties Pro Forma Pro Forma Historical Acquired (7) Sold (8) Adjustments Consolidated Property operations: Rental income $27,541 $22,610 $(5,354) - $44,797 Rental expenses: Operating expenses 5,352 3,067 (1,603) - 6,816 Real estate taxes 2,595 2,096 (605) - 4,086 Depreciation and amortization 3,030 3,342 (611) - 5,761 Income from property operations 16,564 14,105 (2,535) - 28,134 General and administrative expenses (1,752) - - - (1,752) Interest income 150 - - - 150 Interest expense (4,347) - - (8,185) (9) (12,532) Income before minority interest and gain on sale 10,615 14,105 (2,535) (8,185) 14,000 Gain on sale of real estate investments 406 - 10,255 - 10,661 Minority interest - - - (106) (10) (106) Net income $11,021 $14,105 $ 7,720 $ (8,291) $24,555 Net income applicable to common stockholders $ 6,516 * $14,105 $ 7,720 $ (8,291) $20,050 Primary earnings per common and common equivalent share $ 1.18 ** $ 1.79 Primary weighted average number of common and common equivalent shares 5,531,438 ** 11,175,123 (11) Earnings per common share - assuming full dilution $ 1.13 ** $ 1.59 Weighted average number of common shares - assuming full dilution 9,765,303 ** 15,513,100 (11)
* Reflects dividends and distributions of $4,505. ** Reflects the one-for-two reverse stock split effective March 29, 1996. See accompanying notes to pro forma financial statements. BEDFORD PROPERTY INVESTORS, INC. NOTES TO PRO FORMA FINANCIAL STATEMENTS PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 (1) The unaudited pro forma consolidated balance sheet reflects the acquisition of (i) Orillia Office Park located in Renton, Washington, (ii) 2601 West Broadway located in Tempe, Arizona, and (iii) Phoenix Airport Center located in Phoenix, Arizona as if such acquisitions had occurred on June 30, 1997. The Company acquired Orillia Office Park on July 10, 1997, 2601 West Broadway on July 15, 1997, and Phoenix Airport Center on July 22, 1997. The combining balance sheet for these acquisitions as of June 30, 1997 is as follows (in thousands): Phoenix Orillia 2601 West Airport Office Park Broadway Center Total Assets: Real estate investment: Industrial buildings $ - $3,475 $ - $ 3,475 Office buildings 32,996 - 19,398 52,394 $32,996 $3,475 $19,398 $ 55,869 Liabilities and stockholders' equity: Bank loan payable $32,508 $3,394 $19,035 $ 54,937 Accounts payable and accrued expenses 488 77 357 922 Other liabilities - 4 6 10 Total liabilities $32,996 $3,475 $19,398 $ 55,869
Consolidated pro forma real estate investments as of June 30, 1997 include capitalized fees of $825,300 paid by the Company to Bedford Acquisitions, Inc. (BAI or Bedford Acquisitions), a corporation wholly owned by Mr. Bedford, in connection with the Company's acquisition of Orillia Office Park, 2601 West Broadway and Phoenix Airport Center. (2) The unaudited pro forma consolidated balance sheet reflects the sale of 1000 Town Center and Mariner Court as if such transaction had occurred on June 30, 1997. The Company sold these properties on July 31, 1997. The proceeds of the sale, net of a sale commission of $386,500 payable to BAI, were used to pay down the credit facility. PROFORMA CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1997 (3) The unaudited pro forma consolidated statement of income reflects the property acquisitions through July 31, 1997 as if they had occurred on January 1, 1997. The Company acquired (i) 6500 Kaiser Drive on January 15, 1997, (ii) Executive Center at South Bank on March 12, 1997, (iii) Bedford Fremont Business Center on March 14, 1997, (iv) Spinnaker Court on May 8, 1997, (v) U.S. Bank Centre on May 9, 1997, (vi) Great Hills Trail Building on May 29, 1997, (vii) Troika Building on June 4, 1997, (viii) 2277 Pine View Way on June 19, 1997, (ix) Scripps Wateridge Corporate Center on June 27, 1997, (x) Orillia Office Park on July 10, 1997, (xi) 2601 West Broadway on July 15, 1997, and (xii) Phoenix Airport Center on July 22, 1997. The combining historical statement of income for the period from January 1, 1997 through the date of acquisition for the properties acquired from January 1 through June 30, 1997 is as follows (in thousands): Bedford Fremont Great Subtotal 6500 Kaiser Exec. Center Business Spinnaker U. S. Bank Hills Trail carried Drive South Bank Center Court Centre Building forward Rental income $30 $295 $324 $352 $634 $311 $1,946 Rental expenses: Operating expenses 3 66 52 40 166 31 358 Real estate taxes 6 29 28 46 37 61 207 Depreciation and amortization - 26 33 44 76 65 244 Income from property operations $21 $174 $211 $222 $355 $154 $1,137
Total properties Subtotal Scripps acquired from brought Troika 2277 Pine Wateridge Jan. 1 through forward Building View Way Corp. Ctr. June 30, 1997 Rental income $1,946 $291 $309 $149 $2,695 Rental expenses: Operating expenses 358 44 27 53 482 Real estate taxes 207 51 29 39 326 Depreciation and amortization 244 24 66 129 463 Income from property operations $1,137 $172 $187 $(72) $1,424
The combining historical statement of income for the first six months of 1997 for properties acquired after June 30, 1997 and the statement summarizing all the acquisitions are as follows (in thousands): Total Total properties Orillia Phoenix properties acquired from Total Office 2601 West Airport acquired after Jan. 1 through properties Park Broadway Center June 30, 1997 June 30, 1997 acquired Rental income $1,796 $108 $877 $2,781 $2,695 $5,476 Rental expenses: Operating expenses 49 20 238 307 482 789 Real estate taxes - 24 94 118 326 444 Depreciation and amortization 255 26 151 432 463 895 Income from property operations $1,492 $38 $394 $1,924 $1,424 $3,348
The pro forma amounts are generally based on historical data. Depreciation and amortization expense is calculated on a pro forma basis, based on acquisition costs. Incremental costs of managing the acquired properties are reflected in the property operating expenses. (4) The unaudited pro forma consolidated statement of income reflects the elimination of the actual results of the operations of 1000 Town Center and Mariner Court from January 1 through June 30, 1997. The statement also reflects the gain on the sale as if the sale had occurred on January 1, 1997. The Company sold 1000 Town Center and Mariner Court on July 31, 1997. (5) The unaudited pro forma consolidated statement of income reflects the effects of the sale of 4,600,000 shares of common stock at $17.375 per share and the assumption of the mortgage loan of $8,914,000 as if they had occurred on January 1, 1997. Net proceeds from the common stock sale and the sale of 1000 Town Center and Mariner Court; borrowings of $42,000,000 on the credit facility; and the assumption of the $8,914,000 mortgage were utilized to finance the Company's acquisition of real estate investments during the first six months of 1997. The sale of 4,600,000 shares of common stock was completed on February 12, 1997. The acquisition of U.S. Bank Centre was financed with borrowings from the credit facility and the assumption of the $8,914,000 mortgage on May 9, 1997. The pro forma consolidated interest expense consists of the amortization of loan fees (including fees incurred for the amendment and expansion of the credit facility to $150,000,000) and interest expense incurred on borrowings on the credit facility and the mortgage loans. (6) The weighted average number of shares outstanding shown on the proforma consolidated statement of income reflects the sale of 4,600,000 shares of common stock as if it had occurred on January 1, 1997. PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1996 (7) The unaudited pro forma consolidated statement of income reflects the property acquisitions in 1996 as if they had occurred on January 1, 1996. The Company acquired (i) Laguna Hills Square on March 27, 1996, (ii) Westech Business Center on April 15, 1996, (iii) 100 View Street on May 3, 1996, (iv) Fourier Avenue on May 30, 1996, (v) Lenexa land on June 5, 1996 (vi) Lundy Avenue on July 9, 1996, (vii) Phoenix land on July 31, 1996, (viii) Kenyon Center, 115 Mason Circle and 47600 Westinghouse Drive on September 5, 1996, (ix) Napa Valley Corporate Way on September 19, 1996, (x) Carroll Tech Center on October 7, 1996, (xi) 47633 Westinghouse Drive and Westinghouse land on October 15, 1996, (xii) Vista Buildings 1 and 2 on October 17, 1996, (xiii) Napa lots 10A and 12J and K on December 10, 1996, (xiv) Doherty Avenue on December 17, 1996, (xv) O'Toole Business Center and Panorama Business Center on December 18, 1996, and (xvi) Signal Systems Building on December 31, 1996. The combining historical statement of income for the period from January 1, 1996 through the date of acquisition for these properties is as follows (in thousands): Westech Subtotal Laguna Hills Business 100 View Fourier Lenexa Lundy carried Square Center Street Avenue Land Avenue forward Rental income . . . . . . . . $ 294 $374 $306 $434 $ - $274 $1,682 Rental expenses Operating expenses . . . . 74 63 83 21 - 34 275 Real estate taxes. . . . . 9 28 17 33 3 29 119 Depreciation and amortization 20 33 23 65 - 24 165 Income from property operations $ 191 $250 $183 $315 $ (3) $187 $1,123
860-870 Subtotal 47600 Napa Valley Subtotal brought Phoenix Kenyon 115 Mason Westinghouse Corporate carried forward Land Center Circle Drive Way forward Rental income . . . . . . . . $1,682 $ - $788 $142 $119 $399 $3,130 Rental expenses Operating expenses 275 - 26 21 14 61 397 Real estate taxes. . . . . 119 6 - 14 10 74 223 Depreciation and amortization 165 - 107 13 16 52 353 Income from property operations $1,123 $ (6) $655 $ 94 $ 79 $212 $2,157
47633 Subtotal Carroll Westing- Westing- Vista Napa Subtotal brought Tech house house Buildings Lots 10A and carried forward Center Drive Land 1 and 2 12J & K forward Rental income . . . . . . . . $3,130 $ 823 $498 $ - $415 $ - $4,866 Rental expenses Operating expenses 397 79 15 - 11 - 502 Real estate taxes. . . . . 223 60 42 12 - 114 451 Depreciation and amortization 353 84 57 - 70 - 564 Income from property operations $2,157 $ 600 $384 $ (12) $334 $ (114) $3,349
Total Subtotal O'Toole Panorama Signal Properties brought Doherty Business Business Systems Acquired forward Avenue Center Center Building in 1996 Rental income . . . . . . . . $4,866 $521 $1,090 $699 $1,003 $8,179 Rental expenses Operating expenses 502 33 153 147 57 892 Real estate taxes. . . . . 451 55 91 113 99 809 Depreciation and amortization 564 69 124 67 161 985 Income from property operations $3,349 $364 $ 722 $372 $ 686 $5,493
The unaudited pro forma consolidated statement of income reflects the property acquisitions through July 31, 1997 as if they had occurred on January 1, 1996. The Company acquired (i) 6500 Kaiser Drive on January 15, 1997, (ii) Executive Center at South Bank on March 12, 1997, (iii) Bedford Fremont Business Center on March 14, 1997, (iv) Spinnaker Court on May 8, 1997, (v) U.S. Bank Centre on May 9, 1997, (vi) Great Hills Trail Building on May 29, 1997, (vii) Troika Building on June 4, 1997, (viii) 2277 Pine View Way on June 19, 1997, (ix) Scripps Wateridge Corporate Center on June 27, 1997, (x) Orillia Office Park on July 10, 1997, (xi) 2601 West Broadway on July 15, 1997, and (xii) Phoenix Airport Corporate Center on July 22, 1997. The combining historical statement of income for the twelve months of 1996 for these properties is as follows (in thousands): Bedford Great 6500 Executive Fremont U.S. Hills Subtotal Kaiser Center at Business Spinnaker Bank Trail carried Drive South Bank Center Court Centre Building forward Rental income . . . . . . . . $713 $1,417 $1,553 $994 $1,792 $757 $7,226 Rental expenses Operating expenses 66 320 251 113 471 75 1,296 Real estate taxes. . . . . 138 138 132 129 105 149 791 Depreciation and amortization 143 159 200 133 228 156 1,019 Income from property operations $366 $ 800 $ 970 $619 $ 988 $377 $4,120
Scripps Subtotal Wateridge Orillia Subtotal brought Troika 2277 Pine Corporate Office carried forward Building View Way Center Park forward Rental income . . . . . . . . $7,226 $680 $659 $ 303 $3,593 $12,461 Rental expenses Operating expenses 1,296 101 58 107 98 1,660 Real estate taxes. . . . . 791 118 62 79 - 1,050 Depreciation and amortization 1,019 59 157 258 511 2,004 Income from property operations $4,120 $402 $382 $(141) $2,984 $ 7,747
Total properties Subtotal Phoenix acquired from brought 2601 West Airport January 1, 1997 forward Broadway Center through July 31, 1997 Rental income . . . . . . . . $12,461 $217 $1,753 $14,431 Rental expenses Operating expenses 1,660 40 475 2,175 Real estate taxes. . . . . 1,050 49 188 1,287 Depreciation and amortization 2,004 52 301 2,357 Income from property operations $ 7,747 $ 76 $ 789 $ 8,612 The statement summarizing the operating results for the twelve months of 1996 for all of the above acquisitions is as follows (in thousands):
Total Total Properties Properties Acquired Total Acquired from Jan. 1, 1997 Properties in 1996 to July 31, 1997 Acquired Rental income . . . . . . . . . . . . $8,179 $14,431 $22,610 Rental expenses: Operating expenses . . . . . . . . 892 2,175 3,067 Real estate taxes. . . . . . . . . 809 1,287 2,096 Depreciation and amortization 985 2,357 3,342 Income from property operations $5,493 $ 8,612 $14,105 The pro forma amounts are generally based on historical data. Depreciation and amortization expense is calculated on a pro forma basis, based on acquisition costs. Incremental costs of managing the acquired properties are reflected in the property operating expenses. (8) The unaudited pro forma consolidated statement of income reflects the elimination of the actual results of operations of St. Paul East and West from January 1, 1996 through the date of sale. The statement reflects the elimination of the actual results of operations of 1000 Town Center and Mariner Court from January 1, 1996 to December 31, 1996. The statement also reflects the loss on the sale of St. Paul East and West, and gain on the sale of 1000 Town Center and Mariner Court as if the sales had occurred on January 1, 1996. The Company sold St. Paul East and West on December 31, 1996 and 1000 Town Center and Mariner Court on July 31, 1997. The combining historical statement of income from January 1, 1996 through the date of sale for St. Paul East and West and for 1996 for 1000 Town Center and Mariner Court is as follows (in thousands):
St. Paul 1000 Mariner East and West Town Center Court Total Rental income . . . . . . . . . . . . $1,462 $2,057 $1,835 $5,354 Rental expenses: Operating expenses . . . . . . . . 301 645 657 1,603 Real estate taxes. . . . . . . . . 341 176 88 605 Depreciation and amortization 84 361 166 611 Income from property operations . . . $ 736 $ 875 $ 924 $2,535
(9) The unaudited pro forma consolidated statement of income reflects the effects of the sale of 3,350,000 shares of common stock at $13.00 per share, the mortgage loan financings of $60,764,000 and the sale of the 4,600,000 shares of common stock at $17.375 per share as if they had occurred on January 1, 1996. Net proceeds from the sale of common stock; proceeds from the sales of St. Paul East and West, 1000 Town Center and Mariner Court; the mortgage loan financings; and borrowings of $45,000,000 on the credit facility were utilized to finance the Company's acquisitions of real estate investments during 1996 and 1997. The sales of the 3,350,000 shares and 4,600,000 shares of common stock were completed on April 24, 1996 and February 12, 1997, respectively; the mortgage loan financing from Prudential Insurance Company of America was completed on May 31, 1996; and the mortgage loan financing from Union Bank was completed on December 31, 1996. The acquisition of Doherty Avenue was financed with a $1,850,000 mortgage loan and the issuance of partnership units convertible to 108,495 shares of common stock. The acquisition of U.S. Bank Centre was financed with borrowings on the credit facility and the assumption of an $8,914,000 mortgage in May 1997. The pro forma consolidated interest expense consists of the amortization of loan fees incurred for the amendment and expansion of the credit facility to $150,000,000, amortization of loan fees incurred to secure the mortgage loans, and interest expense incurred on the mortgage loans and borrowings on the credit facility. (10) Minority interest shown on the pro forma consolidated statement of income reflects the income allocated to the owners of the partnership units as if the units had been issued on January 1, 1996. The units were issued on December 17, 1996 in connection with the acquisition of Doherty Avenue. (11) The weighted average number of shares outstanding shown on the pro forma consolidated statement of income reflects the sale of 3,350,000 shares and 4,600,000 shares of common stock as if the sales had occurred on January 1, 1996. Exhibit 23.1 Consent of Independent Certified Public Accountants The Board of Directors Bedford Property Investors, Inc.: We consent to the incorporation by reference in the registration statements (No. 333- and 333- ) on Form S-3 and the related prospectuses of Bedford Property Investors, Inc. of our reports dated August 1, 1997 with respect to the historical summary of gross income and direct operating expenses of Orillia Office Park for the year ended December 31, 1996 and the combined historical summary of gross income and direct operating expenses of Executive Center at South Bank, Bedford Fremont Business Center, U. S. Bank Centre, Scripps Wateridge Corporate Center and Phoenix Airport Center for the year ended December 31, 1996, which reports appear in the Form 8-K/A of Bedford Property Investors, Inc. filed on September 19, 1997. KPMG, Peat Marwick LLP San Francisco, California September 19, 1997 -----END PRIVACY-ENHANCED MESSAGE-----