-----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, QAhfrvziCTM+yulb67YavvhqjR47Fdoml3ZsSQeaGWjR9acYsf+hxkcuMtnuNawy uMhi2eiDXd7HO/aPBOh8gg== 0000903112-98-000649.txt : 19980317 0000903112-98-000649.hdr.sgml : 19980317 ACCESSION NUMBER: 0000903112-98-000649 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980313 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL TRUST CENTRAL INDEX KEY: 0000016387 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 946181186 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-08063 FILM NUMBER: 98564940 BUSINESS ADDRESS: STREET 1: 605 THIRD AVENUE 26TH FLOOR STREET 2: STE 200 CITY: NEW YORK STATE: NY ZIP: 10016 BUSINESS PHONE: 2126550220 MAIL ADDRESS: STREET 1: 605 THIRD AVENUE 26TH FLOOR STREET 2: #200 CITY: NEW YORK STATE: NY ZIP: 10016 FORMER COMPANY: FORMER CONFORMED NAME: CALIFORNIA REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19920703 8-K/A 1 FORM 8-K/A As filed with the Securities and Exchange Commission on March 13, 1998 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) December 31, 1997 CAPITAL TRUST (Exact Name of Registrant as Specified in its Charter) California 1-8063 94-6181186 - ------------------------------------------------------------------------------------------------------------------ (State or other (Commission (I.R.S. Employer jurisdiction of File Number) Identification No.) incorporation) 605 Third Avenue, 26th Floor New York, NY 10016 - ------------------------------------------------------------------------------------------------------------------ (Address of principal executive offices) (Zip Code) (212) 655-0220 - ------------------------------------------------------------------------------------------------------------------ (Registrant's telephone number, including area code) - ------------------------------------------------------------------------------------------------------------------ (Former name or former address, if changed since last report)
-1- ITEM 2. Acquisition or Disposition of Assets Item 2 is hereby amended as follows: On December 31, 1997, the Registrant acquired a $22 million preferred equity interest (the "Preferred Equity Interest") from an affiliate of Credit Suisse First Boston ("CSFB"). The Preferred Equity Interest represents a portion of the preferred equity interest in the limited liability company that owns the approximately 1.1 million square foot office and retail property known as the MGM Plaza which is located at 2501 Colorado Avenue in Santa Monica, California (the "Property"). The purchase was funded with a combination of existing cash (25%) and financing (75%) through a repurchase obligation with an affiliate of CSFB bearing interest at a specified rate above LIBOR. The REPO has a one year term that may be extended every three months by mutual agreement. The Preferred Equity Interest has a mandatory redemption date which is 34 months following the closing of the Preferred Equity Interest acquisition transaction ("Acquisition Closing") and pays dividends at a specified rate over LIBOR until redemption. Early redemption of the Preferred Equity Interest is not permitted during the first four months following the Acquisition Closing. The Preferred Equity Interest is subject to early redemption penalties for the period from the fifth through the 22nd month following the Acquisition Closing and is not subject to any penalties during the last year preceding the mandatory redemption date. In assessing the Property underlying the Preferred Equity Interest, the Registrant considered several material factors, including, but not limited to those described below. With respect to sources of revenue, the Registrant considered: the Property's occupancy rate of approximately 99% as compared to the overall sub-market occupancy rate of approximately 97%; the Property's average annual base rental rate of approximately $23 per occupied square foot as compared to competitive office rental rates in the sub-market of approximately $20-$25 per square foot; and the principal businesses, occupations, and professions of the tenants operating at the Property, including tenants such as Metro Goldwyn Mayer, an office tenant, which occupies approximately 27% of the Property (with a lease expiration date no earlier than 2003, a base rental rate which compares favorably to the marketplace, and three five-year renewal options), Aurora National Life, an office tenant, which occupies approximately 13% of the Property (with a lease expiration date which is no earlier than 2004, a base rental rate which compares favorably to the marketplace, and two five-year extension options), and Symantec, an office tenant, which occupies approximately 10% of the Property (with a lease expiration date no earlier than 2000, a base rental rate which compares favorably to the marketplace, and one five-year extension option). During the next four years, 40 leases representing approximately 379,000 square feet or approximately 35% of the Property will mature. These leases represent approximately $9 million of gross revenue or 39% of the gross annual rent of the Property. With respect to factors relating to expenses, the Registrant considered: the utility rates at the Property for electricity, steam, and water and sewer which are comparable to utility rates for similar properties; the taxes at the Property which were comparable to tax rates for similar properties; maintenance and operating expenses which were in line for similar properties which are operated and maintained in a professional manner; and the expenditures for tenant improvement installations at the Property. After reasonable inquiry, the Registrant is not aware of any material factors relating to the Property underlying the Preferred Equity Interest that would cause the reported financial information herein not to be indicative of future operating results. -2- ITEM 7. Financial Statements, Supplemental Financial Information and Exhibits. (a) Financial Statements of the Property Audited and unaudited financial statements of the Property underlying the Preferred Equity Interest reported in Item 2 herein and in the Registrant's Current Report on Form 8-K, as filed with the Securities and Exchange Commission on January 7, 1998, are included herein in accordance with the instructions to Form 8-K as indicated in the following index to the financial statements.
Index to Financial Statements Page Report of Independent Auditors................................................................... F1 Statement of Revenue and Certain Expenses for the year ended December 31, 1996 and the nine months ended September 30, 1997 (unaudited).................................... F2 Notes to Statement of Revenues and Certain Expenses............................................... F3
-3- SIGNATURES 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. CAPITAL TRUST (Registrant) Date: March 13, 1998 By: /s/ Edward L. Shugrue III ------------------------------- Name: Edward L. Shugrue III Title: Chief Financial Officer -4- Report of Independent Auditors Capital Trust We have audited the accompanying statement of revenue and certain expenses of MGM Plaza (the Property) for the year ended December 31, 1996. This statement of revenue and certain expenses is the responsibility of the management of MGM Plaza. Our responsibility is to express an opinion on the statement of revenue and certain expenses based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of revenue and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. I believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenue and certain operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission. Certain expenses (described in Note 1) that would not be comparable to those resulting from the proposed future operations of the Property are excluded and the statement is not intended to be a complete presentation of the revenue and expenses of the Property. In our opinion, the statement of revenue and certain expenses of MGM Plaza presents fairly, in all material respects, the revenue and certain operating expenses of MGM Plaza for the year ended December 31, 1996, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Los Angeles, California February 6, 1998 F-1 MGM Plaza Statement of Revenue and Certain Expenses (In Thousands)
For the nine Year ended months ended December 31, September 30, 1996 1997 ----------------------- ----------------------- (unaudited) Revenues: Rental $ 23,963 $ 18,480 Tenant reimbursements 9,136 6,857 Parking, net of expenses 3,771 2,929 ----------------------- ----------------------- Total revenue 36,870 28,266 Certain expenses: Property operating and maintenance 8,860 7,058 Real estate taxes 1,908 1,855 Insurance 1,273 915 ----------------------- ----------------------- Total certain expenses 12,041 9,828 Excess of revenue over certain expenses $ 24,829 $ 18,438 ======================= =======================
See accompanying notes. F-2 MGM Plaza Notes to the Statement of Revenue and Certain Expenses December 31, 1996 1. Organization and Basis of Presentation The accompanying statement of revenues and certain expenses include the accounts of a commercial office complex in Santa Monica, California known as the MGM Plaza (the Property), which is owned by a private general partnership (the Partnership). The accompanying statement has been prepared to comply with rules and regulations of the Securities and Exchange Commission. The accompanying statement is not representative of the actual operations for the period presented, as certain expenses that may not be comparable to the expenses expected to be incurred by the Partnership in the future operations of the Property have been excluded. Excluded expenses consist of interest, deprecation and amortization, leasing costs, and property general and administrative costs not directly comparable to the future operation of the Property. The period presented for the nine months ended September 30, 1997 is unaudited. In the opinion of management, the information presented reflects all adjustments necessary for a fair presentation of the results of the interim period and all such adjustments are of a normal, recurring nature. 2. Summary of Significant Accounting Policies Revenue Recognition Rental revenue is recognized on a straight-line basis over the terms of the related leases. Use of Estimates The preparation of the statement of revenues and certain expenses in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenue and certain expenses during the reporting periods. Actual results could differ from those estimates. F-3 MGM Plaza Notes to the Statement of Revenue and Certain Expenses (continued) 3. Property Rentals Future minimum rental revenues under noncancelable operating leases as of December 31, 1996 are as follows: 1997 $ 26,915,000 1998 21,910,000 1999 26,966,000 2000 23,208,000 2001 17,507,000 Thereafter 26,952,000 ----------------------- $ 143,458,000 ======================= These amounts do not include percentage rentals that may be received under certain leases on the basis of tenant sales in excess of stipulated minimums. F-4 -----END PRIVACY-ENHANCED MESSAGE-----