-----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, O+/Pb8y6bqFvv8BwvmhJqGGKidPkdbKyULnkfRms5MglyiVnkjOB6UvRtmBAAeew ZqYsxQO9v5xQAxMsFq3CvQ== 0000912057-00-016565.txt : 20000407 0000912057-00-016565.hdr.sgml : 20000407 ACCESSION NUMBER: 0000912057-00-016565 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000406 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT LAKES REIT CENTRAL INDEX KEY: 0001063393 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 364238056 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-14307 FILM NUMBER: 595243 BUSINESS ADDRESS: STREET 1: 823 COMMERCE DRIVE STREET 2: STE 300 CITY: OAK BROOK STATE: IL ZIP: 60523 BUSINESS PHONE: 6303688470 MAIL ADDRESS: STREET 1: 823 COMMERCE DR STREET 2: STE 300 CITY: OAK BROOK STATE: IL ZIP: 60523 FORMER COMPANY: FORMER CONFORMED NAME: GREAT LAKES MERGER TRUST DATE OF NAME CHANGE: 19980604 10-K/A 1 10-K/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K/A (AMENDMENT NO. 1) (MARK ONE) /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-14307 ------------------------ GREAT LAKES REIT (Exact Name of Registrant as Specified in Its Charter) MARYLAND 36-4238056 (State or Other Jurisdiction of (I.R.S. Employer Identification Incorporation or Organization) Number)
823 COMMERCE DRIVE SUITE 300 OAK BROOK, ILLINOIS 60523 (630) 368-2900 (Address and telephone number of principal executive offices) Securities registered pursuant to Section 12(b) of the Act: COMMON SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE 9 3/4% SERIES A CUMULATIVE REDEEMABLE PREFERRED SHARES OF BENEFICIAL INTEREST, $.01 PAR VALUE PER SHARE (LIQUIDATION PREFERENCE $25.00 PER SHARE) Securities registered pursuant to Section 12(g) of the Act: NONE 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 / / Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. / / As of March 2, 2000, the aggregate market value of common shares of beneficial interest held by non-affiliates of the registrant was $167,348,574. The number of shares of the registrant's common shares of beneficial interest, $.01 par value, outstanding as of March 2, 2000 was 16,298,329. DOCUMENTS INCORPORATED BY REFERENCE: None. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Great Lakes REIT, a Maryland real estate investment trust (the "Company"), hereby amends Items 8 and 14(a) of its Form 10-K for the fiscal year ended December 31, 1999, as filed with the Securities and Exchange Commission on March 23, 2000. This amendment is being filed to correct an error on page F-3. The year identification in the column headings of the consolidated balance sheet are incorrect. The proper headings are 1999 and 1998 for the left and right column, respectively. The Company is filing the corrected financial statements and supplementary data required by Regulation S-X that were included in the original 10-K filing commencing on page F-1 in their entirety. GREAT LAKES REIT INDEX TO FINANCIAL STATEMENTS (ITEM 14(A)) Financial Statements Report of Independent Auditors............................ F-2 Consolidated Balance Sheets as of December 31, 1999 and 1998.................................................... F-3 Consolidated Statements of Income for the years ended December 31, 1999, 1998 and 1997........................ F-4 Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1999, 1998 and 1997.... F-5 Consolidated Statements of Cash Flows for the years ended December 31, 1999, 1998 and 1997........................ F-6 Notes to Consolidated Financial Statements................ F-7 Financial Statement Schedules Schedule III--Real Estate and Accumulated Depreciation as of December 31, 1999.................................... S-1
Schedules, other than as listed above, are omitted for the reason that they are not applicable or equivalent information has been included elsewhere herein. F-1 REPORT OF INDEPENDENT AUDITORS The Board of Trustees and Shareholders Great Lakes REIT We have audited the accompanying consolidated balance sheets of Great Lakes REIT as of December 31, 1999 and 1998 and the related consolidated statements of income, changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. Our audit also included the financial statement schedule listed in the index at Item 14(a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Great Lakes REIT at December 31, 1999 and 1998, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999 in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. Ernst & Young LLP Chicago, Illinois January 26, 2000 F-2 GREAT LAKES REIT CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
DECEMBER 31, ------------------- 1999 1998 -------- -------- ASSETS Properties: Land........................................................ $ 60,983 $ 60,960 Buildings, improvements, and equipment...................... 410,478 388,068 -------- -------- 471,461 449,028 Less accumulated depreciation............................... 33,074 22,166 -------- -------- 438,387 426,862 Cash and cash equivalents................................... 1,518 2,466 Real estate tax escrows..................................... 277 619 Rents receivable............................................ 6,274 5,021 Deferred financing and leasing costs, net of accumulated amortization.............................................. 6,069 6,067 Goodwill, net of accumulated amortization................... 1,210 1,284 Other assets................................................ 1,467 1,370 -------- -------- Total assets................................................ $455,202 $443,689 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Bank loan payable........................................... $107,000 $ 84,291 Mortgage loans payable...................................... 100,113 104,532 Bonds payable............................................... 4,550 4,800 Accounts payable and accrued liabilities.................... 5,947 4,338 Accrued real estate taxes................................... 11,687 11,149 Prepaid rent................................................ 3,936 3,220 Security deposits........................................... 1,084 1,107 -------- -------- Total liabilities........................................... 234,317 213,437 -------- -------- Minority interests.......................................... 951 1,165 -------- -------- Commitments and contingencies Preferred shares of beneficial interest ($0.01 par value, 10,000,000 shares authorized; 1,500,000 9 3/4% Series A Cumulative Redeemable shares, with a $25.00 per share Liquidation Preference, issued and outstanding)........... 37,500 37,500 Common shares of beneficial interest ($0.01 par value, 60,000,000 shares authorized; 17,816,883 and 17,513,578 shares issued in 1999 and 1998, respectively)............. 178 175 Paid-in-capital............................................. 227,907 223,414 Retained earnings (deficit)................................. (5,936) (8,790) Employee share purchase loans............................... (16,335) (11,967) Deferred compensation....................................... (22) (44) Treasury shares, at cost (1,521,785 and 743,184 shares in 1999 and 1998, respectively).............................. (23,358) (11,201) -------- -------- Total shareholders' equity.................................. 219,934 229,087 -------- -------- Total liabilities and shareholders' equity.................. $455,202 $443,689 ======== ========
The accompanying notes are an integral part of these financial statements. F-3 GREAT LAKES REIT CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
YEARS ENDED DECEMBER 31 ------------------------------------ 1999 1998 1997 ---------- ---------- ---------- Revenues: Rental................................................... $ 73,822 $ 62,803 $ 36,399 Reimbursements........................................... 20,125 17,141 10,688 Interest and other....................................... 1,484 954 576 ---------- ---------- ---------- Total revenues........................................... 95,431 80,898 47,663 ---------- ---------- ---------- Expenses: Real estate taxes........................................ 15,254 12,634 7,702 Other property operating................................. 24,955 21,018 11,958 General and administrative............................... 4,692 4,958 3,379 Interest................................................. 14,009 12,339 4,308 Depreciation and amortization............................ 15,901 13,092 8,200 ---------- ---------- ---------- Total expenses........................................... 74,811 64,041 35,547 ---------- ---------- ---------- Income before gain on sale of properties................. 20,620 16,857 12,116 Gain on sale of properties, net.......................... 8,076 ---------- ---------- ---------- Income before allocation to minority interests........... 28,696 16,857 12,116 Minority interests....................................... 98 61 11 ---------- ---------- ---------- Net income............................................... 28,598 16,796 12,105 Income allocated to preferred shareholders............... 3,656 163 ---------- ---------- ---------- Net income applicable to common shares................... $ 24,942 $ 16,633 $ 12,105 ========== ========== ========== Earnings per common share--basic......................... $ 1.51 $ 0.99 $ 0.92 ========== ========== ========== Weighted average common shares outstanding--basic........ 16,470,589 16,793,410 13,140,124 ========== ========== ========== Diluted earnings per common share........................ $ 1.51 $ 0.98 $ 0.91 ========== ========== ========== Weighted average common shares outstanding--diluted...... 16,554,163 16,974,311 13,304,540 ========== ========== ==========
The accompanying notes are an integral part of these financial statements. F-4 GREAT LAKES REIT CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY FOR THE YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997 (DOLLARS IN THOUSANDS)
1999 1998 1997 -------- -------- -------- PREFERRED SHARES Balance at beginning of period.............................. $ 37,500 $ 2 Cancellation of preferred shares............................ (2) Proceeds from the sale of preferred shares.................. $ 37,500 -------- -------- -------- Balance at end of period.................................... 37,500 37,500 -------- -------- -------- COMMON SHARES Balance at beginning of period.............................. 175 159 88 Net proceeds from the sale of common shares................. 11 66 Exercise of share options................................... 3 5 4 Issuance of shares for property acquisitions................ 1 -------- -------- -------- Balance at end of period.................................... 178 175 159 -------- -------- -------- PAID-IN CAPITAL Balance at beginning of period.............................. 223,414 196,431 98,096 Net proceeds from the sale of common shares................. 19,660 92,940 Exercise of share options................................... 4,493 7,323 3,860 Issuance of shares for property acquisitions................ 1,535 -------- -------- -------- Balance at end of period.................................... 227,907 223,414 196,431 -------- -------- -------- RETAINED EARNINGS (DEFICIT) Balance at beginning of period.............................. (8,790) (4,501) 177 Net income.................................................. 28,598 16,796 12,105 Distributions/dividends..................................... (25,744) (21,085) (16,783) -------- -------- -------- Balance at end of period.................................... (5,936) (8,790) (4,501) -------- -------- -------- EMPLOYEE SHARE PURCHASE LOANS Balance at beginning of period.............................. (11,967) (4,654) (1,247) Exercise of share options................................... (4,368) (7,313) (3,407) -------- -------- -------- Balance at end of period.................................... (16,335) (11,967) (4,654) -------- -------- -------- DEFERRED COMPENSATION Balance at beginning of period.............................. (44) (73) (251) Amortization of deferred compensation....................... 22 29 178 -------- -------- -------- Balance at end of period.................................... (22) (44) (73) -------- -------- -------- TREASURY SHARES Balance at beginning of period.............................. (11,201) (270) (270) Purchase of treasury shares................................. (12,157) (10,931) -------- -------- -------- Balance at end of period.................................... (23,358) (11,201) (270) -------- -------- -------- Total shareholders' equity.................................. $219,934 $229,087 $187,092 ======== ======== ========
The accompanying notes are an integral part of these financial statements. F-5 GREAT LAKES REIT CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
YEARS ENDED DECEMBER 31, -------------------------------- 1999 1998 1997 -------- --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net income.................................................. $28,598 $ 16,796 $ 12,105 Adjustments to reconcile net income to cash flows from operating activities Depreciation and amortization............................. 15,901 13,092 8,200 Gain on sale of properties, net........................... (8,076) Other non-cash items...................................... 120 90 178 Net changes in assets and liabilities: Rents receivable.......................................... (1,253) (1,742) (1,148) Real estate tax escrows and other assets.................. 245 (312) 421 Accounts payable, accrued expenses and other liabilities............................................. 2,160 1,645 1,151 Accrued real estate taxes................................. 538 3,372 2,354 Payment of deferred leasing costs......................... (2,109) (2,609) (1,832) ------- --------- --------- Net cash provided by operating activities................... 36,124 30,332 21,429 ------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of properties...................................... (28,600) (128,923) (97,758) Additions to buildings, improvements and equipment.......... (13,030) (11,439) (5,999) Proceeds from property sales, net........................... 22,669 Other investing activities.................................. 1,310 (300) ------- --------- --------- Net cash used by investing activities....................... (18,961) (139,052) (104,057) ------- --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from sale of common and preferred shares........... 60,000 101,603 Payment of share offering costs............................. (2,829) (8,599) Proceeds from exercise of share options..................... 128 15 457 Proceeds from bank and mortgage loans payable............... 38,774 264,035 100,425 Distributions / dividends paid.............................. (25,602) (20,922) (16,783) Distributions to minority interests......................... (56) (96) Purchase of minority interests.............................. (256) Purchase of treasury shares................................. (12,157) (10,931) Payment of bank and mortgage loans and bonds................ (18,655) (177,945) (94,428) Payment of deferred financing costs......................... (287) (1,578) (298) ------- --------- --------- Net cash provided by (used in) financing activities......... (18,111) 109,749 82,377 ------- --------- --------- Net increase (decrease) in cash and cash equivalents........ (948) 1,029 (251) Cash and cash equivalents, beginning of year................ 2,466 1,437 1,688 ------- --------- --------- Cash and cash equivalents, end of year...................... $ 1,518 $ 2,466 $ 1,437 ======= ========= ========= Supplemental disclosure of cash flow: Interest paid............................................... $13,937 $ 12,165 $ 4,136 ======= ========= ========= Non-cash financing transactions: Employee share purchase loans............................... $ 4,368 $ 7,313 $ 3,407 ======= ========= ========= Mortgage assumed by purchaser of property................... $ 2,079 ======= ========= ========= Increase in preferred dividends payable..................... $ 142 $ 163 ======= ========= ========= Issuance of shares and units to acquire properties.......... $ 887 $ 1,536 ======= ========= ========= Mortgages assumed to acquire properties..................... $ 12,435 $ 2,989 ======= ========= =========
The accompanying notes are an integral part of these financial statements. F-6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NATURE OF ACTIVITIES Great Lakes REIT, a Maryland real estate investment trust, (the "Company"), was formed in 1992 to invest in income-producing real property. The principal business of the Company is the ownership, management, leasing, renovation and acquisition of suburban office and light industrial properties primarily located in the Midwest. At December 31, 1999, the Company owned and operated 36 properties primarily located in suburban areas of Chicago, Detroit, Milwaukee, Denver, Cincinnati, Columbus and Minneapolis. The Company leases office and light industrial space to over 500 tenants in a variety of businesses. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and controlled partnership. Intercompany accounts and transactions have been eliminated in consolidation. PROPERTIES Costs incurred for the acquisition, development, construction and improvement of properties are capitalized. Certain costs of yet-to-be acquired properties, including deposits and professional fees, are capitalized as other assets. These costs are subsequently capitalized as property acquisition costs or charged to expense when it becomes apparent that acquisition of a particular property is not probable. Maintenance and repairs are charged to expense when incurred. Depreciation of buildings is computed using the straight-line method over the estimated useful lives of the assets, generally 40 years. Depreciation of tenant improvements is computed using the straight-line method over the shorter of the lease term or useful life. For the years ended December 31, 1999, 1998 and 1997, depreciation expense amounted to $13,877, $11,453 and $6,463, respectively. The Company recognizes impairment losses for its properties when indicators of impairment are present and a property's expected undiscounted cash flows are not sufficient to recover the property's carrying amount. DEFERRED COSTS Deferred costs consist principally of financing fees and leasing commissions that are amortized over the terms of the respective agreements. REVENUE RECOGNITION Minimum rentals are recognized on a straight-line basis over the term of the related leases. Deferred rents receivable at December 31, 1999 and 1998 were $4,917 and $4,437, respectively. Additional rents from expense reimbursements for common area maintenance expenses and real estate taxes are recognized in the period in which the related expenses are incurred. F-7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CASH EQUIVALENTS The Company considers all highly liquid investments purchased with a maturity of three months or less to be cash equivalents. At December 31, 1999 and 1998, the Company had $1,336 and $2,449, respectively, in a money market fund. INCOME TAXES The Company has elected to be treated as a real estate investment trust ("REIT") under the applicable provisions of the Internal Revenue Code of 1986, as amended. In order to qualify as a REIT, the Company is required to distribute to shareholders at least 95% of its taxable income and to meet certain asset and income tests as well as certain other requirements. Accordingly, no provision for income taxes has been reflected in the consolidated financial statements. As of December 31, 1999, properties, rents receivable, goodwill and prepaid rent have a federal income tax basis of approximately $438,981, $1,358, $-0- and $-0-, respectively. SHARE OPTIONS The Company has elected to follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25), in accounting for its options on common shares. Under APB 25, no compensation expense is recognized because the exercise price of the Company's employee share options equals or exceeds the market price of the underlying shares at the date of grant. INTEREST RATE CAP AGREEMENT The Company purchased an interest rate cap agreement to hedge its exposure to increases in interest costs under its variable rate debt. The one-time premium paid by the Company is included in deferred financing costs and is amortized over the term of the agreement using the straight-line method. Net amounts paid or received under the agreement are recognized as an adjustment to interest expense when such amounts are incurred or earned. The Company is exposed to credit loss in the event of non-performance by counterparties under the agreement, but the Company does not expect non-performance by any of these counterparties. The amount of such exposure is generally limited to the amount of any payments due but not yet received from the counterparty. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. RECLASSIFICATIONS Certain accounts in 1998 and 1997 have been reclassified to conform with the 1999 presentation. Such reclassifications did not effect the results of operations. F-8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 2. DEFERRED COSTS Deferred costs consisted of the following at December 31, 1999 and 1998:
1999 1998 -------- -------- Deferred financing costs.................................... $2,990 $3,017 Deferred leasing costs...................................... 7,659 6,499 ------ ------ 10,649 9,516 Less accumulated amortization............................... 4,580 3,449 ------ ------ $6,069 $6,067 ====== ======
During the years ended December 31, 1999, 1998 and 1997, amortization of financing costs was $526, $574 and $1,099, respectively, and amortization of leasing costs was $1,424, $990 and $563, respectively. 3. LONG-TERM DEBT Mortgage loans payable aggregated $100,113 and $104,532 at December 31, 1999 and 1998, respectively. The mortgage loans payable require monthly payments of principal and interest. Interest rates at December 31, 1999, ranged from 6.83% to 8.95%. The Company has obtained a bank letter of credit to secure repayment of the bonds payable in a face amount of approximately $4,600. The Company has guaranteed repayment of the letter of credit to the issuing bank as well as granted the issuing bank a first mortgage on the property. The interest rate on the bonds (5.4% per annum at December 31, 1999) is reset weekly by the bond placement agent. The Company has a $150,000 unsecured bank credit facility with a maturity date of April 2001. The unsecured credit facility bears interest at LIBOR plus 1.0% to 1.3% depending on overall company leverage (7.4875% at December 31, 1999). In June 1999, the Company entered into an interest rate cap agreement with a major financial institution whereby the Company has limited the LIBOR interest rate on $50,000 of its variable rate debt to no more than 6% per annum until June 2001. The cost of this agreement to the Company was $209 and is being amortized to expense over the period of the agreement (24 months). The following is a summary of principal maturities of mortgage loans, bank loan and bonds payable:
YEAR ENDING DECEMBER 31, AMOUNT - ------------------------ -------- 2000........................................................ $ 2,764 2001........................................................ $109,970 2002........................................................ $ 3,191 2003........................................................ $ 14,236 2004........................................................ $ 5,855 Thereafter.................................................. $ 75,647
At December 31, 1999, properties with a carrying amount of approximately $137,836 were pledged as collateral under the various debt agreements. F-9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 4. SHARE OPTIONS The Company has a share option plan that provides for the granting of options on common shares to non-employee trustees. At December 31, 1999, options on 80,590 shares were available for future grant. In 1997, the Company adopted the 1997 Equity and Performance Incentive Plan (the "1997 Plan") which superseded the Company's prior plan. The 1997 Plan provides that 2,250,000 common shares of beneficial interest were reserved for issuance to Company employees. At December 31, 1999, options on 296,700 shares were available for future grant under the 1997 Plan. For options granted in 1999, 1998 and 1997, the exercise prices at the dates of grant were equal to or greater than the fair value of the Company's shares. A summary of the Company's share option activity and related information for the years ended December 31, 1999, 1998 and 1997 is as follows:
WTD. AVG. EXERCISE SHARES PRICE PER SHARE --------- ------------------ Outstanding at 1/1/97............................. 601,628 $11.69 Granted........................................... 1,343,000 $16.52 Exercised......................................... 370,725 $11.30 --------- Outstanding at 1/1/98............................. 1,573,903 $15.91 Granted........................................... 289,900 $16.21 Exercised......................................... 472,358 $15.78 Cancelled......................................... 3,000 $16.00 --------- Outstanding at 1/1/99............................. 1,388,445 $16.03 Granted........................................... 301,400 $14.89 Exercised......................................... 303,305 $14.84 Cancelled......................................... 11,500 $16.31 --------- Outstanding at 12/31/99........................... 1,375,040 $16.04 Exercisable at 12/31/97........................... 779,847 $15.29 Exercisable at 12/31/98........................... 1,104,010 $15.84 Exercisable at 12/31/99........................... 929,795 $16.33
The weighted average fair value of options granted is as follows:
WHERE THE SHARE PRICE WHERE THE SHARE PRICE IS EQUALS THE EXERCISE PRICE LESS THAN THE EXERCISE PRICE ------------------------- ---------------------------- 1999.................................. $1.17 1998.................................. $3.08 1997.................................. $3.18 $1.43
Pro forma information regarding net income and earnings per share is required by FASB Statement 123 "Accounting for Stock-Based Compensation," and has been determined as if the Company had accounted for its employee share options under the fair value method of that Statement. The fair value for F-10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 4. SHARE OPTIONS (CONTINUED) these options was estimated at the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
RISK-FREE DIVIDEND VOLATILITY WEIGHTED AVERAGE INTEREST RATE YIELDS FACTORS EXPECTED LIFE ------------- ------------ ---------- ---------------- 1999....................................... 6.50% 9.1%-9.4% 0.212% 5 years 1998....................................... 5.00% 7.88%-8.11% 0.394% 5 years 1997....................................... 5.75% 6.17%-7.5% 0.341% 3 years
The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's employee share options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee share options. The effects on 1999 and 1998 pro forma net income and pro forma earnings per common share, both basic and diluted, of amortizing to expense the estimated fair value of share options are not necessarily representative of the effects on net income to be reported in future years due to such things as the vesting period of the share options, and the potential for issuance of additional share options in future years. For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. The Company's unaudited pro forma information follows for the years ended December 31, 1999 and 1998:
1999 1998 -------- -------- Pro forma net income...................................... $24,447 $15,902 Pro forma basic earnings per common share................. $ 1.48 $ .95 Pro forma diluted earnings per common share............... $ 1.48 $ .94
The Company has a limited purpose employee loan program whereby employees may borrow a portion of the cost of exercising options on common shares held by the employee. Such loans bear interest at the Company's cost of funds which is payable quarterly, are recourse to the employees, have a term of five years provided the employee remains employed by the Company, and are secured by a pledge of the common shares acquired by the employee through this program. As of December 31, 1999, employees had acquired approximately 1,119,000 common shares through this program with outstanding loan amounts of $16,335 due the Company. Such amount is reflected as a reduction of shareholders' equity until the loans are repaid. 5. SHARE OFFERINGS In December 1998, the Company sold 1.5 million shares of 9 3/4% Series A Cumulative Redeemable Preferred Shares of Beneficial Interest. Net proceeds of approximately $36,200 were used to repay a portion of its unsecured credit facility. In April 1998, the Company sold 1,184,211 common shares to a newly formed unit investment trust. Net proceeds of approximately $21,000 were used to repay a portion of its unsecured credit facility. F-11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 5. SHARE OFFERINGS (CONTINUED) In May 1997, the Company closed the initial public offering of its common shares. The Company sold 6.55 million common shares at the price of $15.50 per share, including shares issued upon exercise of the underwriters' over allotment option. Net proceeds to the Company were approximately $93,000, substantially all of which was used to repay its bank lines of credit and other indebtedness including certain mortgage debt on the Company's properties. In February 1997, the Company issued 118,134 common shares with a total value at issuance of $1,536 in connection with the acquisition of the Markham, Illinois and Elgin, Illinois properties. 6. LEASES The Company leases office and industrial properties to tenants under noncancellable operating leases that expire at various dates through 2010. The lease agreements typically provide for a specific monthly payment plus reimbursement of certain operating expenses. The following is a summary of minimum future rental revenue under noncancellable operating leases:
YEAR ENDING DECEMBER 31, AMOUNT - ------------------------ -------- 2000........................................................ $ 69,122 2001........................................................ 55,645 2002........................................................ 44,009 2003........................................................ 27,879 2004........................................................ 14,921 Thereafter.................................................. 24,228 -------- $235,804 ========
Minimum future rentals do not include amounts that are received from tenants as a reimbursement of property operating expenses. 7. DISTRIBUTIONS The Company declared periodic distributions of $22,088, $20,922 and $16,783, to common shareholders of record during the calendar years 1999, 1998 and 1997, respectively. The Company has determined the common shareholders' treatment for Federal income tax purposes to be as follows:
1999 1998 1997 -------- -------- -------- Ordinary income.................................. $17,947 $18,217 $14,848 Unrecaptured Section 1250 gain................... 529 20% rate capital gains........................... 3,612 Return of capital................................ 2,705 1,935 ------- ------- ------- Total............................................ $22,088 $20,922 $16,783 ======= ======= =======
The Company paid dividends to preferred shareholders of record in 1999 of $3,514, all of which represented ordinary income for Federal income tax purposes to the preferred shareholders. F-12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 8. PROPERTY ACQUISITIONS The following properties were acquired in 1999 and 1998 and the results of their operations are included in the consolidated statements of income from their respective dates of acquisition.
TOTAL ACQUISITION PRICE ------------------- LOCATION DATE ACQUIRED 1999 1998 - -------- ------------- -------- -------- Burlington Office Center 305, 315, 325 E. Eisenhower Pkwy. Ann Arbor, MI............................................... 5/11/99 $19,632 One Riverwood Place N17 W. 24222 Riverwood Dr. Pewaukee, WI................................................ 12/1/99 8,968 175 S. Third St. Columbus, OH................................................ 1/7/98 $21,949 Milwaukee Center 111 E. Kilbourn Ave. Milwaukee, WI............................................... 4/15/98 46,794 116 Inverness Dr. East Englewood, CO............................................... 5/22/98 20,967 183 Inverness Dr. West Englewood, CO............................................... 5/22/98 20,168 Court International I 2550 University Ave. West St. Paul, MN................................................ 7/30/98 9,772 3030 Warrenville Rd. Lisle, IL................................................... 9/1/98 18,087 191 Waukegan Rd. Northfield, IL.............................................. 9/24/98 4,508
F-13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 9. PROPERTY DISPOSITIONS The Company sold five properties in 1999 as follows:
MORTGAGE DATE OF CONTRACT GAIN (LOSS) ASSUMED PROPERTY SALE PRICE ON SALE BY PURCHASER - -------- -------- -------- ----------- ------------ 1675 Holmes Rd. Elgin, IL.......................................... 4/21/99 $ 4,700 $ 658 $2,079 2800 River Rd. Des Plaines, IL.................................... 6/30/99 $ 8,050 $2,982 1251 Plum Grove Rd. Schaumburg, IL..................................... 6/30/99 $ 3,550 $1,875 565 Lakeview Pkwy. Vernon Hills, IL................................... 8/25/99 $ 8,800 $3,190 16601 S. Kedzie Ave. Markham, IL........................................ 12/10/99 $ 513 ($ 629) ------- ------ ------ Totals $25,613 $8,076 $2,079 ======= ====== ======
The sales proceeds of the Elgin, Illinois property were reinvested in Burlington Office Center, Ann Arbor, Michigan in a tax-deferred exchange. The sales proceeds of the 565 Lakeview Parkway, Vernon Hills, Illinois property were reinvested in One Riverwood Place, Pewaukee, Wisconsin in a tax-deferred exchange. 10. SEGMENT INFORMATION The Company has three reportable segments distinguished by property type. The property types are office, with 89% (as measured by square feet at December 31, 1999) of the Company's overall portfolio, office/service center (11%), and industrial (0%, the Company sold its only industrial property in 1999), and are principally located in the Midwest. As of December 31, 1999, the properties were leased to more than 500 tenants, no single tenant accounted for more than 5% of the aggregate annualized base rent of the Company's portfolio and only 20 tenants individually represented more than 1% of such aggregate annualized base rent. The Company evaluates performance and allocates resources based on property revenues (rental and reimbursement income) less property operating expenses and real estate taxes to arrive at net operating income--a widely recognized industry measure of a property's performance. F-14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 10. SEGMENT INFORMATION (CONTINUED) Following is a summary report of segment information for the years ended December 31, 1999, 1998 and 1997.
1999 1998 1997 -------- -------- -------- Revenues Office........................................ $ 86,223 $ 70,755 $ 39,581 Office/service center......................... 6,908 6,972 5,939 Industrial.................................... 172 342 644 Deferred rental revenues...................... 757 1,875 923 Interest and other............................ 1,371 954 576 -------- -------- -------- Total....................................... $ 95,431 $ 80,898 $ 47,663 ======== ======== ======== Net operating income Office........................................ $ 48,443 $ 39,512 $ 21,839 Office/service center......................... 4,511 4,703 4,167 Industrial.................................... 140 202 498 -------- -------- -------- Total....................................... $ 53,094 $ 44,417 $ 26,504 ======== ======== ======== Depreciation and amortization Office........................................ $ 14,008 $ 11,263 $ 6,155 Office/service center......................... 1,329 1,105 1,048 Industrial.................................... 33 88 132 Other......................................... 531 636 865 -------- -------- -------- Total....................................... $ 15,901 $ 13,092 $ 8,200 ======== ======== ========
F-15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 10. SEGMENT INFORMATION (CONTINUED)
1999 1998 1997 -------- -------- -------- Interest expense Office........................................ $ 12,454 $ 10,902 $ 3,226 Office/service center......................... 1,485 1,218 799 Industrial.................................... 70 219 283 -------- -------- -------- Total....................................... $ 14,009 $ 12,339 $ 4,308 ======== ======== ========
AS OF DECEMBER 31, ------------------- 1999 1998 -------- -------- Assets Office.................................................. $411,738 $394,607 Office/service center................................... 30,635 31,841 Industrial.............................................. 3,949 Other................................................... 12,829 13,292 -------- -------- Total................................................. $455,202 $443,689 ======== ========
YEARS ENDED DECEMBER 31, ------------------------------ 1999 1998 1997 -------- -------- -------- Additions to properties Office...................................................... $40,476 $152,790 $ 97,458 Office/service center....................................... 885 760 6,917 Industrial.................................................. 36 36 3,838 Other....................................................... 45 84 69 ------- -------- -------- Total....................................................... $41,442 $153,670 $108,282 ======= ======== ======== Income before gain on sale of properties Office...................................................... $21,981 $ 17,347 $ 12,458 Office/service center....................................... 1,697 2,380 2,320 Industrial.................................................. 37 (105) 83 Deferred rental revenue..................................... 757 1,875 923 Interest and other income................................... 1,371 954 576 General and administrative.................................. (4,692) (4,958) (3,379) Other depreciation.......................................... (531) (636) (865) ------- -------- -------- Income before gains on sales of properties.................. $20,620 $ 16,857 $ 12,116 ======= ======== ========
F-16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 11. EARNINGS PER SHARE The following table sets forth the computation of basic and diluted earnings per common share:
1999 1998 1997 ---------- ---------- ---------- Numerator: Net income applicable to common shareholders............. $ 24,942 $ 16,633 $ 12,105 ---------- ---------- ---------- Numerator for basic earnings per common share............ 24,942 16,633 12,105 Minority interests....................................... 98 61 11 ---------- ---------- ---------- Numerator for diluted earnings per common share.......... $ 25,040 $ 16,694 $ 12,116 ========== ========== ========== Denominator: Denominator for basic earnings per common share Weighted average shares.................................. 16,470,589 16,793,410 13,140,124 Effect of dilutive securities: Convertible operating partnership units.................. 56,348 72,497 24,050 Employee share options................................... 27,226 108,404 140,366 ---------- ---------- ---------- Denominator for diluted earnings per common share........ 16,554,163 16,974,311 13,304,540 ========== ========== ========== Basic earnings per common share.......................... $ 1.51 $ 0.99 $ 0.92 ========== ========== ========== Diluted earnings per common share........................ $ 1.51 $ 0.98 $ 0.91 ========== ========== ==========
12. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company discloses information concerning the fair value of financial instruments for which it is practical to estimate such fair values. The carrying amounts reported for cash and cash equivalents in the accompanying consolidated balance sheets approximated its fair value. The fair market value of mortgages payable at December 31, 1999 was $93,458 assuming a market interest rate of 8.25%. The carrying amount of mortgages payable at December 31, 1998 approximated fair value. The carrying amounts of bonds payable and bank loan payable approximated fair value at December 31, 1999 and 1998. The interest rate cap agreement (Note 3) had a fair value of $406 at December 31, 1999. 13. QUARTERLY FINANCIAL DATA (UNAUDITED)
3/31/99 6/30/99 9/30/99 12/31/99 -------- -------- -------- -------- Revenues................................................ $22,738 $23,924 $24,279 $24,490 Net income.............................................. $ 3,899 $ 8,867 $ 7,625 $ 4,551 Basic earnings per common share......................... $ 0.24 $ 0.54 $ 0.46 $ 0.27 Diluted earnings per common share....................... $ 0.23 $ 0.54 $ 0.46 $ 0.28
3/31/98 6/30/98 9/30/98 12/31/98 -------- -------- -------- -------- Revenues................................................ $16,803 $19,490 $21,459 $23,146 Net income.............................................. $ 3,968 $ 4,161 $ 4,248 $ 4,256 Basic earnings per common share......................... $ 0.25 $ 0.24 $ 0.25 $ 0.25 Diluted earnings per common share....................... $ 0.25 $ 0.24 $ 0.24 $ 0.25
F-17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 14. PRO FORMA INFORMATION (UNAUDITED) The following unaudited pro forma summary presents information as if the Company's property acquisitions, property dispositions and sales of common and preferred shares through December 31, 1998 had occurred at the beginning of that year. The pro forma information is provided for informational purposes only. It is based on historical information and does not necessarily reflect the actual results that would have occurred nor is it necessarily indicative of future results of operations of the Company.
1998 -------- Total revenue............................................... $89,068 Net income applicable to common shares...................... $15,757 Basic earnings per common share............................. $ 0.94 Diluted earnings per common share........................... $ 0.93
F-18 SCHEDULE III REAL ESTATE AND ACCUMULATED DEPRECIATION
GROSS AMOUNT AT WHICH COSTS CAPITALIZED CARRIED AT DECEMBER 31, INITIAL COST TO THE COMPANY SUBSEQUENT TO ACQUISITION 1999 --------------------------------------- -------------------------- ------------------------ (000'S OMITTED) (000'S OMITTED) (000'S OMITTED) BUILDINGS & BUILDINGS & BUILDINGS & ENCUMBRANCE LAND IMPROVEMENTS LAND IMPROVEMENTS LAND IMPROVEMENTS ------------ -------- ------------- --------- -------------- -------- ------------- 1900 East Golf Rd. Schaumburg, IL $ 3,800 $ 20,212 $ 1,922 $ 3,800 $ 22,134 1750 East Golf Rd. Schaumburg, IL $ 2,300 $ 17,607 $ 524 $ 2,300 $ 18,131 160-185 Hansen Court Wood Dale, IL $ 2,100 $ 3,210 $ 1,639 $ 2,100 $ 4,849 3455, 3550, 3555 Salt Creek Lane Arlington Heights, IL $ 850 $ 4,333 $ 339 $ 850 $ 4,672 601 Campus Dr. Arlington Heights, IL (B) $ 900 $ 2,264 $ 1,014 $ 900 $ 3,278 1011 Touhy Ave. Des Plaines, IL $ 720 $ 3,932 $ 2,966 $ 720 $ 6,898 1660 Feehanville Dr. Mount Prospect, IL $ 1,100 $ 4,304 $ 615 $ 1,100 $ 4,919 175 Hawthorn Pkwy. Vernon Hills, IL (B) $ 1,600 $ 4,721 $ 1,213 $ 1,600 $ 5,934 Two Marriott Dr. Lincolnshire, IL (B) $ 610 $ 2,230 $ 177 $ 610 $ 2,407 3400 Dundee Rd. Northbrook, IL (B) $ 607 $ 3,476 $ 913 $ 607 $ 4,389 3010 & 3020 Wood Creek Dr. Downers Grove, IL (B) $ 2,385 $ 6,988 $ 442 $ 2,385 $ 7,430 823 Commerce Dr. Oak Brook, IL $ 500 $ 1,262 $ 3,264 $ 500 $ 4,526 3030 Warrenville Rd. Lisle, IL $ 4,300 $ 13,787 $ 323 $ 4,300 $ 14,110 191 Waukegan Rd. Northfield, IL $ 1,220 $ 3,288 $ 264 $ 1,220 $ 3,552 11270 W. Park Place Milwaukee, WI (B) $ 940 $ 14,734 $ 725 $ 940 $ 15,459 11925 W. Lake Park Dr. Milwaukee, WI (B) $ 319 $ 1,819 $ 241 $ 319 $ 2,060 2514 S. 102nd St. & 10150 W. National Ave. West Allis, WI (B) $ 975 $ 7,020 $ 680 $ 975 $ 7,700 150, 175, 250 Patrick Blvd. Brookfield, WI $ 3,078 $ 2,600 $ 3,967 $ 715 $ 2,600 $ 4,682 375 Bishop's Way Brookfield, WI $ 600 $ 4,361 $ 352 $ 600 $ 4,713 111 East Kilbourn Ave. Milwaukee, WI $ 2,176 $ 44,618 $ 1,903 $ 2,176 $ 46,521 N17 W24222 Riverwood Dr. Pewaukee, WI $ 771 $ 8,197 $ 268 $ 771 $ 8,465 2550 University Ave. West St. Paul, MN $ 1,280 $ 22,820 $ 449 $ 1,280 $ 23,269 2221 University Ave. SE Minneapolis, MN $ 4,550 $ 1,100 $ 7,090 $ 170 $ 1,100 $ 7,260 777 East Eisenhower Pkwy. Ann Arbor, MI $ 4,000 $ 12,664 $ 5,887 $ 4,000 $ 18,551 32255 Northwestern Highway Farmington Hills, MI $11,745 $ 3,700 $ 20,802 $ 1,542 $ 3,700 $ 22,344 1301 W. Long Lake Rd. Troy, MI (B) $ 2,500 $ 13,600 $ 1,160 $ 2,500 $ 14,760 No. 40 OakHollow Southfield, MI (B) $ 1,250 $ 6,063 $ 466 $ 1,250 $ 6,529 24800 Denso Dr. Southfield, MI (B) $ 1,400 $ 4,547 $ 882 $ 1,400 $ 5,429 305, 315, 325 E. Eisenhower Pkwy. Ann Arbor, MI $ 3,200 $ 16,432 $ 255 $ 3,200 $ 16,687 655 Metro Place South Dublin, OH $ 1,470 $ 18,188 $ 1,040 $ 1,470 $ 19,228 4860-5000 Blazer Memorial Pkwy. Dublin, OH $ 1,340 $ 7,042 $ 646 $ 1,340 $ 7,688 425 Metro Place North Dublin, OH $ 620 $ 6,666 $ 662 $ 620 $ 7,328 175 South Third St. Columbus, OH Lease $ 21,949 $ 678 Lease $ 22,627 30 Merchant St. Springdale, OH $ 650 $ 5,496 $ 1,148 $ 650 $ 6,644 116 Inverness Dr. East Englewood, CO $12,110 $ 3,100 $ 17,867 $ 564 $ 3,100 $ 18,431 183 Inverness Dr. West Englewood, CO $ 4,000 $ 16,168 $ 194 $ 4,000 $ 16,362 ------- ------- -------- ------- ------- -------- Totals......................... $31,483 $60,983 $373,724 $36,242 $60,983 $409,966 ======= ======= ======== ======= ======= ======== ACCUMULATED DATE METHOD OF TOTAL DEPRECIATION ACQUIRED DEPRECIATION -------- ------------ -------- ------------ 1900 East Golf Rd. Schaumburg, IL $ 25,934 $ 1,933 Dec-96 (A) 1750 East Golf Rd. Schaumburg, IL $ 20,431 $ 1,152 Sep-97 (A) 160-185 Hansen Court Wood Dale, IL $ 6,949 $ 1,143 Jan-94 (A) 3455, 3550, 3555 Salt Creek Lane Arlington Heights, IL $ 5,522 $ 284 Oct-97 (A) 601 Campus Dr. Arlington Heights, IL $ 4,178 $ 978 May-93 (A) 1011 Touhy Ave. Des Plaines, IL $ 7,618 $ 1,374 Dec-93 (A) 1660 Feehanville Dr. Mount Prospect, IL $ 6,019 $ 706 Aug-95 (A) 175 Hawthorn Pkwy. Vernon Hills, IL $ 7,534 $ 1,407 Sep-94 (A) Two Marriott Dr. Lincolnshire, IL $ 3,017 $ 196 Jul-96 (A) 3400 Dundee Rd. Northbrook, IL $ 4,996 $ 901 Oct-93 (A) 3010 & 3020 Wood Creek Dr. Downers Grove, IL $ 9,815 $ 620 Nov-96 (A) 823 Commerce Dr. Oak Brook, IL $ 5,026 $ 934 Nov-95 (A) 3030 Warrenville Rd. Lisle, IL $ 18,410 $ 512 Sep-98 (A) 191 Waukegan Rd. Northfield, IL $ 4,772 $ 109 Sep-98 (A) 11270 W. Park Place Milwaukee, WI $ 16,399 $ 1,863 Sep-95 (A) 11925 W. Lake Park Dr. Milwaukee, WI $ 2,379 $ 446 Jun-93 (A) 2514 S. 102nd St. & 10150 W. National Ave. West Allis, WI $ 8,675 $ 731 Nov-96 (A) 150, 175, 250 Patrick Blvd. Brookfield, WI $ 7,282 $ 975 Jun-94 (A) 375 Bishop's Way Brookfield, WI $ 5,313 $ 339 Apr-97 (A) 111 East Kilbourn Ave. Milwaukee, WI $ 48,697 $ 2,020 Apr-98 (A) N17 W24222 Riverwood Dr. Pewaukee, WI $ 9,236 $ 15 Dec-99 (A) 2550 University Ave. West St. Paul, MN $ 24,549 $ 1,443 Dec-96 (A) 2221 University Ave. SE Minneapolis, MN $ 8,360 $ 840 May-95 (A) 777 East Eisenhower Pkwy. Ann Arbor, MI $ 22,551 $ 781 Dec-97 (A) 32255 Northwestern Highway Farmington Hills, MI $ 26,044 $ 1,324 Dec-97 (A) 1301 W. Long Lake Rd. Troy, MI $ 17,260 $ 1,497 Nov-96 (A) No. 40 OakHollow Southfield, MI $ 7,779 $ 611 Dec-96 (A) 24800 Denso Dr. Southfield, MI $ 6,829 $ 1,044 Aug-95 (A) 305, 315, 325 E. Eisenhower Pkwy. Ann Arbor, MI $ 19,887 $ 274 May-99 (A) 655 Metro Place South Dublin, OH $ 20,698 $ 1,308 Sep-97 (A) 4860-5000 Blazer Memorial Pkwy. Dublin, OH $ 9,028 $ 639 Sep-96 (A) 425 Metro Place North Dublin, OH $ 7,948 $ 518 Sep-97 (A) 175 South Third St. Columbus, OH $ 22,627 $ 1,145 Jan-98 (A) 30 Merchant St. Springdale, OH $ 7,294 $ 1,238 Apr-96 (A) 116 Inverness Dr. East Englewood, CO $ 21,531 $ 808 May-98 (A) 183 Inverness Dr. West Englewood, CO $ 20,362 $ 664 May-98 (A) -------- ------- Totals......................... $470,949 $32,772 ======== =======
- ------------------------ (A) Depreciation of buildings is computed over approximately a 40 year life on a straight-line basis. Tenant improvements are depreciated over the shorter of the estimated useful life of the improvements or the term of the lease. (B) These properties are pledged as security for a mortgage loan with an outstanding principal amount of $73,180 at December 31, 1999. (C) At December 31, 1999, the aggregate cost of land, buildings and improvements for Federal income tax purposes was approximately $461,572. S-1 Real Estate Owned:
1999 1998 1997 -------- -------- -------- Balance beginning of year............................. $448,557 $297,010 $189,114 Property acquisitions................................. 28,600 142,245 102,283 Additions............................................. 11,978 11,341 5,613 Disposals............................................. 18,186 2,039 -------- -------- -------- Balance end of year................................... $470,949 $448,557 $297,010 ======== ======== ========
Accumulated Depreciation:
1999 1998 1997 -------- -------- -------- Balance beginning of year............................. $ 21,951 $ 11,314 $ 5,240 Depreciation expense.................................. 13,799 11,371 6,074 Disposals............................................. 2,978 734 -------- -------- -------- Balance end of year................................... $ 32,772 $ 21,951 $ 11,314 ======== ======== ========
S-2 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 1 to the Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, on April 5, 2000. GREAT LAKES REIT By: /s/ RICHARD L. RASLEY ----------------------------------------- Richard L. Rasley EXECUTIVE VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on April 5, 2000.
TITLE ---------------------------------------------- * Chairman of the Board of Trustees and Chief ------------------------------------------- Executive Officer (Principal Executive Richard A. May Officer) * ------------------------------------------- President, Chief Operating Officer and Trustee Patrick R. Hunt * Chief Financial Officer and Treasurer ------------------------------------------- (Principal Financial Officer and Principal James Hicks Accounting Officer) * ------------------------------------------- Trustee James J. Brinkerhoff * ------------------------------------------- Trustee Daniel E. Josephs * ------------------------------------------- Trustee Daniel P. Kearney * ------------------------------------------- Trustee Edward Lowenthal * ------------------------------------------- Trustee Donald E. Phillips * The undersigned by signing his name hereunto has hereby signed this Amendment No. 1 to Annual Report on Form 10-K on behalf of the above-named trustees and officers, on April 5, 2000, pursuant to a power of attorney executed by each such officer and trustee and previously filed with the Securities and Exchange Commission.
By: /s/ RICHARD L. RASLEY ----------------------------------------- Richard L. Rasley
-----END PRIVACY-ENHANCED MESSAGE-----