-----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, CBJ6Xr+NgnbqLCE4n0ZTi9sdRIbZs9to8eAYp5rR4H63Bv6OXZGaqTdooS+3TnRL KileQWNSGAcwXp/fB8Q+VA== 0000950134-98-007919.txt : 19981005 0000950134-98-007919.hdr.sgml : 19981005 ACCESSION NUMBER: 0000950134-98-007919 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980730 ITEM INFORMATION: FILED AS OF DATE: 19981002 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT INC CENTRAL INDEX KEY: 0000778437 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 756335572 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-09016 FILM NUMBER: 98720257 BUSINESS ADDRESS: STREET 1: 6210 N BELTLINE RD STREET 2: STE 170 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 9727566000 MAIL ADDRESS: STREET 1: 6220 N BELTLINE ROAD STREET 2: SUITE 205 CITY: IRVING STATE: TX ZIP: 75063 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT DATE OF NAME CHANGE: 19931203 FORMER COMPANY: FORMER CONFORMED NAME: TRAMMELL CROW REAL ESTATE INVESTORS DATE OF NAME CHANGE: 19931203 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO 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 30, 1998 AMERICAN INDUSTRIAL PROPERTIES REIT (Exact Name of Registrant as Specified in its Charter)
TEXAS 1-9016 75-6335572 (State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Incorporation or Organization) Identification Number)
6210 NORTH BELTLINE ROAD, SUITE 170, IRVING, TEXAS 75063 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (972) 756-6000 2 The undersigned Registrant hereby amends its Current Report on Form 8-K dated July 30, 1998, which was filed with the Securities and Exchange Commission on August 5, 1998, to include the financial statements for the Developers Diversified Realty Corporation properties (the "DDR Portfolio" or the "Properties") required by Item 7 (a) and the pro forma financial information required by Item 7 (b). ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements: See Index to Financial Statements and Pro Forma Financial Information appearing on page F-1 of this Form 8-K/A. (b) Pro Forma Financial Information: See Index to Financial Statements and Pro Forma Financial Information appearing on page F-1 of this Form 8-K/A. (c) Exhibits The following exhibit is filed with this report: Exhibit Number Description 23.1 Consent of PricewaterhouseCoopers LLP 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. AMERICAN INDUSTRIAL PROPERTIES REIT By: /s/ CHARLES W. WOLCOTT ----------------------------------------- Charles W. Wolcott President and Chief Executive Officer October 2, 1998 4 INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
FINANCIAL STATEMENTS DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES Report of Independent Accountants...................................................... F-2 Combined Statement of Revenue and Certain Expenses..................................... F-3 Notes to Combined Statement of Revenue and Certain Expenses............................ F-4 PRO FORMA FINANCIAL INFORMATION................................................................. F-6 Pro forma condensed consolidated balance sheet as of June 30, 1998..................... F-8 Pro forma condensed consolidated statements of operations for the year ended December 31, 1997................................................................ F-10 Pro forma condensed consolidated statements of operations for the six months ended June 30, 1998............................................................. F-13
F-1 5 REPORT OF INDEPENDENT ACCOUNTANTS August 31, 1998 To the Board of Trust Managers and Shareholders of American Industrial Properties REIT We have audited the accompanying combined statement of revenue and certain expenses of the Developers Diversified Realty Corporation Properties, described in Note 1, for the year ended December 31, 1997. This historical statement is the responsibility of management. Our responsibility is to express an opinion on this historical statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the historical statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the historical statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the historical statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined historical statement is prepared on the basis described in Note 2, for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission (for inclusion in Form 8-K/A of American Industrial Properties REIT) and is not intended to be a complete presentation of the combined revenues and expenses of the Developers Diversified Realty Corporation Properties. In our opinion, the combined historical statement referred to above presents fairly, in all material respects, the combined revenue and certain expenses of the Developers Diversified Realty Corporation Properties, on the basis described in Note 2, for the year ended December 31, 1997, in conformity with generally accepted accounting principles. /s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP Cleveland, Ohio F-2 6 AMERICAN INDUSTRIAL PROPERTIES REIT DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - -------------------------------------------------------------------------------
(UNAUDITED) SIX MONTH YEAR ENDED PERIOD ENDED DECEMBER 31, JUNE 30, 1998 1997 ------------- ----------- Revenue: Minimum rents $ 760,059 $1,502,317 Recoveries from tenants 94,478 190,184 Other income 175 855 ---------- ---------- 854,712 1,693,356 ---------- ---------- Certain expenses: Operating and maintenance 48,837 116,669 Real estate taxes 73,189 146,381 ---------- ---------- 122,026 263,050 ---------- ---------- Revenue in excess of certain expenses $ 732,686 $1,430,306 ---------- ----------
The accompanying notes are an integral part of this combined statement of revenue and certain expenses. F-3 7 AMERICAN INDUSTRIAL PROPERTIES REIT DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - ------------------------------------------------------------------------------- 1. OPERATIONS For purposes of the accompanying combined statement of revenue and certain expenses, the Developers Diversified Realty Corporation Properties represent five business centers ("Properties"), which American Industrial Properties REIT (the "Trust") acquired in July 1998. A summary of the Properties is as follows:
Name of Property Location Year Built ---------------- -------- ---------- Heritage VSA Building Twinsburg, OH 1989 Hardline Services Building Aurora, OH 1988 STERIS Building Mentor, OH 1987 Heritage Business Center Twinsburg, OH 1989 Alumax Building Streetsboro, OH 1989
A combined statement of revenue and certain expenses has been presented because the Properties have commonality of ownership, are under common control and management and have been purchased through a single transaction. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying combined statement of revenue and certain expenses has been prepared on the accrual basis of accounting. The accompanying combined financial statement is not representative of the actual operations for the periods presented as certain revenues and expenses, which may not be comparable to the revenues and expenses expected to be earned or incurred by the Trust in the future operations of the Properties, have been excluded. Revenues excluded consist of other revenues unrelated to the continuing operations of the Properties. Expenses excluded consist of depreciation on the building and amortization of leasing commissions. Income Recognition Rental income is recorded on the straight line basis. Concentration of Risk The Properties are concentrated in the Cleveland, Ohio area. The principal competitive factors in this market are price, location, quality of space, and amenities. The Properties represent a small portion of the total similar space in the market and compete with other properties for tenants. For the year ended December 31, 1997, four of the properties were occupied by a single tenant. Base rents derived from the Properties' largest tenants; VSA Inc., STERIS Corporation, Reynolds Metals Company, and Federal Wholesale Company of Pennsylvania, Inc. were 19.9%, 12.2%, 15.1% and 40.9%, respectively, for the year ended December 31, 1997. F-4 8 AMERICAN INDUSTRIAL PROPERTIES REIT DEVELOPERS DIVERSIFIED REALTY CORPORATION PROPERTIES COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - ------------------------------------------------------------------------------- Interim Statements The interim financial data for the six months ended June 30, 1998 is unaudited; however, in the opinion of the Trust, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim period. The results for the period presented are not necessarily indicative of the results for the full year. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. Related Party Transactions Developers Diversified Realty Corporation charged a property management fee to the one property which is occupied by more than one tenant. Management fees approximated $10,000 and $5,000 (unaudited) for the year ended December 31, 1997 and the six months ended June 30, 1998, respectively. 3. ACQUISITION OF PROPERTIES BY THE TRUST On August 3, 1998, the Trust entered into a definitive agreement providing for a strategic investment by Developers Diversified Realty Corporation ("DDRC") in the Trust. Under the terms of the Share Purchase and Merger Agreements, dated to be effective as of July 30, 1998, the Trust issued 1,258,478 common shares in exchange for the Properties previously owned by DDRC. This transaction was valued at approximately $19.5 million. F-5 9 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS) The following Pro Forma Condensed Consolidated Balance Sheet of the Trust as of June 30, 1998 has been prepared as if each of the following transactions had occurred as of June 30, 1998: (i) the acquisition of Norfolk Commerce Park (a 323,731 square foot light industrial project consisting of three buildings in Norfolk, Virginia) ("Norfolk"), (ii) the recently completed sale to Developers Diversified Realty Corporation ("DDR") of 949,147 Common Shares at $15.50 per share, described in the Trust's Current Report on Form 8-K dated July 30, 1998; and (iii) the acquisition of the five properties (as defined in the Combined Statement of Revenue and Certain Expenses included elsewhere herein) (the "Acquired Properties") valued at $19,506 through the merger with a subsidiary of DDR (the "Merger") and issuance of 1,258,471 Common Shares to DDR. The following Pro Forma Condensed Consolidated Statement of Operations of the Trust for the year ended December 31, 1997 has been prepared as if each of the following transactions had occurred as of January 1, 1997: (i) the acquisition of 15 industrial real estate properties; (ii) the sale of 2 industrial real estate properties; (iii) the merger with four publicly traded real estate limited partnerships; (iv) the acquisition of the Spieker Portfolio; (v) the acquisition of North Austin; and (vi) the acquisition, through AIP Operating, L.P., a limited partnership in which the Trust has a 99% controlling ownership interest, of Spring Valley #6 (together with North Austin, the "1998 Acquisitions"), all of which transactions listed in clauses (i) through (vi) are defined and described in Amendment No. 1 to the Current Report on Form 8-K/A of the Trust dated April 30, 1998 and filed with the SEC on July 13, 1998 (the "April 30 Form 8-K/A"), which is incorporated herein by reference; (vii) the acquisition of Norfolk, described above; (viii) the recently completed sale to DDR of 949,147 Common Shares at $15.50 per share, described herein; and (ix) the acquisition of the Acquired Properties, described herein, through the Merger with a subsidiary of DDR and issuance of 1,258,471 Common Shares to DDR. The following Pro Forma Condensed Consolidated Statement of Operations of the Trust for the six months ended June 30, 1998 has been prepared as if each of the following transactions had occurred as of January 1, 1998: (i) the 1998 Acquisitions, described above; (ii) the acquisition of the Spieker Portfolio, described in the April 30 Form 8-K/A; (iii) the acquisition of Norfolk, described above; (iv) the recently completed sale to DDR of 949,147 Common Shares at $15.50 per share, described herein; and (v) the acquisition of the Acquired Properties, described herein, through the Merger with a subsidiary of DDR and issuance of 1,258,471 Common Shares to DDR. The Pro Forma Financial Information of the Trust has been prepared using the purchase method of accounting for the acquisition of the Acquired Properties and other property acquisitions, whereby the assets and liabilities of the properties were adjusted to estimated fair market value, based upon preliminary estimates, which are subject to change as additional information is obtained. The allocations of purchase costs are subject to final determination based upon estimates and other evaluations of fair market value. Therefore, the allocations F-6 10 reflected in the following Pro Forma Financial Information may differ from the amounts ultimately determined. Such Pro Forma Financial Information is based in part upon (i) the Consolidated Financial Statements of the Trust for the year ended December 31, 1997 included in the Trust's Annual Report on Form 10-K for the year ended December 31, 1997; (ii) the Consolidated Financial Statements of the Trust for the six months ended June 30, 1998 included in the Trust's Quarterly Report on Form 10-Q for the quarter ended June 30, 1998; (iii) the Combined Statement of Revenue and Certain Expenses of Developers Diversified Realty Corporation Properties for the year ended December 31, 1997 and the six months ended June 30, 1998 filed with Amendment No. 1 to the Trust's Current Report on Form 8-K, dated July 30, 1998; and (iv) the Pro Forma Financial Information presented in the April 30 Form 8-K/A. The Pro Forma Financial Information is presented for information purposes only and is not necessarily indicative of the financial position or results of operations of the Trust that would have occurred if such transactions had been completed on the dates indicated, nor does it purport to be indicative of future financial position or results of operations. In the opinion of the Trust's management, all material adjustments necessary to reflect the effect of these transactions have been made. F-7 11 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 (IN THOUSANDS) (UNAUDITED)
DDR Trust Recent Recent Pro Historical (A) Transactions (B) Transactions (C) Forma ---------- ------------- ------------ --------- ASSETS Real estate, net $ 320,456 $ 21,244 $ 19,506 (D) $ 361,206 Cash - unrestricted 10,107 -- 14,712 (E) (14,712) (E) 10,107 Cash - restricted 3,926 -- -- 3,926 Other assets, net 7,536 -- -- 7,536 ---------- ------------- ------------ --------- $ 342,025 $ 21,244 $ 19,506 $ 382,775 ========== ============= ============ ========= LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage notes payable $ 189,519 $ -- $ -- $ 189,519 Notes payable to affiliates -- 21,244 (14,712) (E) 6,532 Accrued interest payable 1,098 -- -- 1,098 Accounts payable, accrued expenses and other 6,680 -- 1,711 (D),(E) 8,391 Tenant security deposits 1,414 -- 1,414 ---------- ------------- ------------ --------- 198,711 21,244 (13,001) 206,954 Minority interests 7,268 -- -- 7,268 Shareholders' equity: Shares of beneficial interest ($0.10 par value) 1,124 -- 221 (D),(E) 1,345 Additional paid-in capital 242,415 -- 32,286 (D),(E) 274,701 Less Shares in treasury, at cost (1,888) -- -- (1,888) Accumulated distributions (62,686) -- -- (62,686) Accumulated loss from operations and extraordinary gains (losses) (46,230) -- -- (46,230) Accumulated net realized gain on sales of real estate 3,311 -- -- 3,311 ---------- ------------- ------------ --------- 136,046 -- 32,507 168,553 ---------- ------------- ------------ --------- $ 342,025 $ 21,244 $ 19,506 $ 382,775 ========== ============= ============ =========
F-8 12 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1998 (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS) (UNAUDITED) (A) Represents the historical financial position of the Trust as of June 30, 1998. (B) Represents adjustments for the acquisition of Norfolk. The acquisition was financed with borrowings on the Trust's demand note with DDR (the "DDR Note"). The DDR Note bears interest at 10.25%. (C) Represents adjustments for the recently completed transactions with DDR, including the sale to DDR of 949,147 Common Shares at $15.50 per share and the acquisition of the Acquired Properties. (D) Represents adjustments for the acquisition of the Acquired Properties valued at $19,506 through the Merger with a subsidiary of DDR and the issuance of 1,258,471 Common Shares, net of estimated costs of issuance of $975, which have been accrued. (E) Represents adjustments for the sale to DDR of 949,147 Common Shares at $15.50 per share, net of estimated costs of issuance of $736, which have been accrued. The cash proceeds were applied to the DDR Note. F-9 13 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Pro forma DDR Total from Recent Recent Pro Forma 8-K/A (A) Transactions (B) Transactions (C) Total ------------- ------------- -------------- ----------- INCOME Rents and tenant reimbursements $ 41,239 $ 3,120 $ 1,693 (E)$ 46,052 Interest and other income 500 0 0 500 ------------- ------------- -------------- ----------- 41,739 3,120 1,693 46,552 ------------- ------------- -------------- ----------- EXPENSES Property operating expenses 15,262 1,117 263 (E) 16,642 Depreciation and amortization 7,605 462 430 (E) 8,497 Interest expense 15,462 -- -- 2,178 (D) (1,508) (F) 16,132 General and administrative 3,964 -- -- 3,964 ------------- ------------- -------------- ----------- Total expenses 42,293 3,757 (815) 45,235 ------------- ------------- -------------- ----------- Gain (loss) from operations before minority interest (554) (637) 2,508 1,317 Minority interest 208 -- 0 208 ------------- ------------- -------------- ----------- Income (loss) from operations $ (346) $ (637) $ 2,508 $ 1,525 ============= ============= ============== =========== Income (loss) from operations per share: Basic and diluted $ (0.03) $ 0.11 ============= =========== Weighted average number of Common Shares outstanding 11,193 2,208 13,401 (G) ============= ============== ============
F-10 14 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE DATA) (UNAUDITED) (A) Reference is made to the April 30 Form 8-K/A, which is incorporated by reference, for the source of the Trust's pro forma statement of operations for the year ended December 31, 1997, which gives pro forma effect to the following transactions as if the transactions had occurred on January 1, 1997: (i) the acquisition of 15 industrial real estate properties; (ii) the sale of two industrial real estate properties; (iii) the merger with four publicly traded real estate limited partnerships; (iv) the acquisition of the Spieker Portfolio; (v) the acquisition of North Austin; and (vi) the acquisition, through AIP Operating, L. P., a limited partnership in which the Trust has a 99% controlling ownership interest, of Spring Valley #6. (B) Represents adjustments for acquisition of Norfolk, based on historical operating results. Depreciation is based on the allocation of the purchase price, with buildings depreciated using the straight-line method over a 40 year period. (C) Represents adjustments for the recently completed transactions with DDR, including the sale to DDR of 949,147 Common Shares at $15.50 per share and the acquisition of the Acquired Properties. (D) Represents adjustment for interest expense related to Norfolk on the DDR Note at the interest rate of 10.25%. (E) Represents adjustments for the acquisition of the Acquired Properties through the Merger, based on historical operating results. Depreciation is based on the allocation of the value of the properties, with buildings depreciated using the straight-line method over a 40 year period. (F) Represents adjustment for the reduction in interest expense related to Norfolk resulting from the application of $14,712 of cash received from DDR to the DDR Note at the interest rate of 10.25%. (G) The pro forma weighted average shares outstanding - basic represents (i) 11,193,416 Pro Forma Common Shares outstanding for the year ended December 31,1997 (reference is made to the April 30 Form 8-K/A, which is incorporated by reference); and (ii) 1,258,471 Common Shares issued to DDR in the Merger and 949,147 Common Shares sold to DDR. Not included in the weighted average shares outstanding - diluted are outstanding options to acquire Common Shares which have an exercise price greater than the average market price F-11 15 per Common Share during the period and, therefore, their effect would be antidilutive; nor are partnership units in the operating partnerships included in the weighted average shares outstanding - diluted as their effect would be antidilutive. F-12 16 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
DDR Trust Recent Recent Pro Forma Historical (A) Transactions (B) Transactions (C) Total -------------- ----------------- ---------------- --------------- INCOME Rents and tenant reimbursements $ 19,403 $ 5,086 $ 855 (E) $ 25,344 Interest and other income 398 27 -- 425 -------------- ----------------- ---------------- --------------- 19,801 5,113 855 25,769 -------------- ----------------- ---------------- --------------- EXPENSES Property operating expenses 6,039 1,651 122 (E) 7,812 Depreciation and amortization 3,553 664 215 (E) 4,432 Interest expense 6,142 1,335 -- 1,089 (D) (754) (F) 7,812 General and administrative 1,749 55 -- 1,804 -------------- ----------------- ---------------- --------------- Total expenses 17,483 4,794 (417) 21,860 -------------- ----------------- ---------------- --------------- Gain (loss) from operations before minority interest 2,318 319 1,272 3,909 Minority interest (119) -- -- (119) -------------- ----------------- ---------------- --------------- Income (loss) from operations $ 2,199 $ 319 $ 1,272 $ 3,790 ============== ================= ================ =============== Income (loss) from operations per share: Basic and diluted $ 0.20 $ 0.29 ============== =============== Weighted average number of Common Shares outstanding - basic 10,849 2,208 13,057 (G) ============== ================ =============== Weighted average number of Common Shares outstanding - diluted 10,862 2,208 13,070 (G) ============== ================ ===============
F-13 17 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS) (UNAUDITED) (A) Represents the historical results of operations of the Trust for the six months ended June 30, 1998. Certain reclassifications have been made to the historical statements of operations of the Trust to conform to the pro forma financial information presentation. (B) Represents adjustments for the 1998 Acquisitions, the acquisition of the Spieker Portfolio and the acquisition of Norfolk based on historical operating results. Depreciation is based on the allocation of the purchase price, with buildings depreciated using the straight-line method over a 40 year period. Interest expense is based on the borrowings incurred at the related interest rates, which range from 7.28% (fixed rate under mortgage notes payable) to 7.43% (the average 30-day LIBOR rate plus 1.75% during the six months ended June 30, 1998). (C) Represents adjustments for the recently completed transactions with DDR, including the sale to DDR of 949,147 Common Shares at $15.50 per share and the acquisition of the Acquired Properties. (D) Represents adjustment for interest on the DDR Note necessary to fund the purchase of Norfolk at the related interest rate of 10.25%. (E) Represents adjustments for the acquisition of the Acquired Properties through the Merger, based on historical operating results. Depreciation is based on the allocation of the value of the properties, with buildings depreciated using the straight-line method over a 40 year period. (F) Represents adjustment for the reduction in interest expense related to Norfolk resulting from the application of $14,712 cash received from DDR for the sale of 949,147 Common Shares to the DDR Note at the interest rate of 10.25%. (G) The pro forma weighted average shares outstanding - basic represents (i) 10,849,035 Common Shares outstanding at June 30, 1998; and (ii) 1,258,471 Common Shares issued to DDR in the Merger and 949,147 Common Shares sold to DDR. Not included in the weighted average shares outstanding - diluted are outstanding options to acquire Common Shares which have an exercise price greater than the average market price per Common Share during the period and, therefore, their effect would be antidilutive; nor are partnership units in the operating partnerships included in the weighted average shares outstanding - diluted as their effective would be antidilutive. F-14 18 INDEX TO EXHIBITS Exhibit Number Description 23.1 Consent of PricewaterhouseCoopers LLP EX-23.1 2 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (No. 333-46699), Form S-3 (No. 333-48555) and Form S-3 (No. 333-52879) of American Industrial Properties REIT of our report dated August 31, 1998 relating to the statement of revenue and certain expenses of The Developers Diversified Realty Corporation Properties which appear in the Current Report on Form 8-K/A of American Industrial Properties REIT dated July 30, 1998. /s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP Cleveland, Ohio October 2, 1998 -----END PRIVACY-ENHANCED MESSAGE-----