-----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, KooW1lI7YeXGONaCjSSJKVpBdTYDsC6n4dehcLDKXKfos+re4De9uNUXy3xDcVnO JqwWaVtDH0lpweIM3paTNA== 0000908737-02-000289.txt : 20020809 0000908737-02-000289.hdr.sgml : 20020809 20020809160248 ACCESSION NUMBER: 0000908737-02-000289 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020809 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HRPT PROPERTIES TRUST CENTRAL INDEX KEY: 0000803649 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046558834 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09317 FILM NUMBER: 02724924 BUSINESS ADDRESS: STREET 1: 400 CENTRE ST CITY: NEWTON STATE: MA ZIP: 02458 BUSINESS PHONE: 6177968350 MAIL ADDRESS: STREET 1: 400 CENTRE STREET CITY: NEWTON STATE: MA ZIP: 02458 FORMER COMPANY: FORMER CONFORMED NAME: HEALTH & REHABILITATION PROPERTIES TRUST DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: HEALTH & RETIREMENT PROPERTIES TRUST DATE OF NAME CHANGE: 19940811 10-Q 1 hrp10q_2ndq.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to ______________ Commission File Number 1-9317 HRPT PROPERTIES TRUST (Exact name of registrant as specified in its charter) Maryland 04-6558834 (State or other (IRS employer identification no.) jurisdiction of incorporation) 400 Centre Street, Newton, Massachusetts 02458 (Address of principal executive offices) (Zip code) 617-332-3990 (Registrant's telephone number, including area code) 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 [ ] Number of Common Shares outstanding at August 7, 2002: 128,825,247 shares of beneficial interest, $0.01 par value. HRPT PROPERTIES TRUST FORM 10-Q JUNE 30, 2002 INDEX PART I Financial Information Page Item 1. Financial Statements (unaudited) Consolidated Balance Sheets - June 30, 2002 and December 31, 2001 1 Consolidated Statements of Income - Three and Six Months Ended June 30, 2002 and 2001 2 Consolidated Statements of Cash Flows - Six Months Ended June 30, 2002 and 2001 3 Notes to Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 Item 3. Quantitative and Qualitative Disclosures About Market Risk 11 Certain Important Factors 13 PART II Other Information Item 2. Changes in Securities and Use of Proceeds 13 Item 4. Submission of Matters to a Vote of Security Holders 13 Item 6. Exhibits and Report on Form 8-K 14 Signatures 15
HRPT PROPERTIES TRUST CONSOLIDATED BALANCE SHEETS (dollars in thousands, except per share amounts) June 30, December 31, 2002 2001 ------------- ------------ (unaudited) (audited) ASSETS Real estate properties, at cost: Land $ 313,043 $ 302,601 Buildings and improvements 2,401,404 2,289,886 ----------- ----------- 2,714,447 2,592,487 Less accumulated depreciation 250,449 219,140 ----------- ----------- 2,463,998 2,373,347 Equity investments 267,586 273,442 Cash and cash equivalents 13,473 50,555 Restricted cash 3,583 8,582 Rents receivable, net 50,406 46,847 Other assets, net 51,663 52,653 ----------- ----------- $ 2,850,709 $ 2,805,426 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Revolving credit facility $ 23,000 $-- Senior notes payable, net 794,464 757,505 Mortgage notes payable, net 337,773 339,712 Accounts payable and accrued expenses 28,477 32,888 Deferred rents 7,636 7,924 Security deposits 7,809 7,334 Due to affiliates 7,620 3,563 Commitments and contingencies -- -- Shareholders' equity: Preferred shares of beneficial interest, $0.01 par value: 50,000,000 shares authorized, 8,000,000 shares issued and outstanding at June 30, 2002, and December 31, 2001 193,086 193,086 Common shares of beneficial interest, $0.01 par value: 150,000,000 shares authorized, 128,810,247 shares and 128,808,747 shares issued and outstanding at June 30, 2002, and December 31, 2001, respectively 1,288 1,288 Additional paid-in capital 1,945,623 1,945,610 Cumulative net income 951,728 903,752 Cumulative common distributions (1,424,025) (1,372,503) Cumulative preferred distributions (24,194) (14,319) Unrealized holding gains (losses) on investments 424 (414) ----------- ----------- Total shareholders' equity 1,643,930 1,656,500 ----------- ----------- $ 2,850,709 $ 2,805,426 =========== ===========
See accompanying notes 1
HRPT PROPERTIES TRUST CONSOLIDATED STATEMENTS OF INCOME (amounts in thousands, except per share amounts) (unaudited) Three Months Ended June 30, Six Months Ended June 30, --------------------------- -------------------------- 2002 2001 2002 2001 ---------- --------- --------- --------- REVENUES: Rental income $ 99,736 $ 97,092 $ 197,671 $ 193,806 Interest and other income 993 1,554 1,733 4,670 --------- --------- --------- --------- Total revenues 100,729 98,646 199,404 198,476 --------- --------- --------- --------- EXPENSES: Operating expenses 36,278 35,142 71,883 70,177 Interest 20,387 20,929 41,297 45,128 Depreciation and amortization 17,444 16,075 34,665 32,082 General and administrative 4,151 3,640 7,876 7,733 Impairment of assets -- -- -- (3,955) --------- --------- --------- --------- Total expenses 78,260 75,786 155,721 151,165 --------- --------- --------- --------- Income before equity in earnings of equity investments and extraordinary item 22,469 22,860 43,683 47,311 Equity in earnings of equity investments 4,343 3,188 9,058 6,350 Loss on equity transactions of equity investments -- -- (1,421) -- --------- --------- --------- --------- Income before extraordinary item 26,812 26,048 51,320 53,661 Extraordinary item - early extinguishment of debt -- (332) (3,344) (2,149) --------- --------- --------- --------- Net income 26,812 25,716 47,976 51,512 Preferred distributions (4,937) (4,937) (9,875) (6,967) --------- --------- --------- --------- Net income available for common shareholders $ 21,875 $ 20,779 $ 38,101 $ 44,545 ========= ========= ========= ========= Weighted average common shares outstanding 128,810 130,619 128,809 131,103 ========= ========= ========= ========= Basic and diluted earnings per common share: Income before extraordinary item $ 0.17 $ 0.16 $ 0.32 $ 0.36 Extraordinary item - early extinguishment of debt -- -- (0.02) (0.02) --------- --------- --------- --------- Net income $ 0.17 $ 0.16 $ 0.30 $ 0.34 ========= ========= ========= =========
See accompanying notes 2
HRPT PROPERTIES TRUST CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in thousands) (unaudited) Six Months Ended June 30, ------------------------------ 2002 2001 ---------- ----------- Cash flows from operating activities: Net income $ 47,976 $ 51,512 Adjustments to reconcile net income to cash provided by operating activities: Depreciation 31,309 29,563 Amortization 3,356 2,519 Amortization of note discounts 789 738 Impairment of assets -- (3,955) Equity in earnings of equity investments (9,058) (6,350) Loss on equity transactions of equity investments 1,421 -- Distributions from equity investments 13,493 13,286 Extraordinary item 121 2,149 Change in assets and liabilities: Increase in rents receivable and other assets (4,981) (8,295) Decrease in accounts payable and accrued expenses (4,411) (12,164) Decrease in deferred rents (288) (555) Increase in security deposits 475 288 Increase (decrease) in due to affiliates 4,057 (8,723) --------- --------- Cash provided by operating activities 84,259 60,013 --------- --------- Cash flows from investing activities: Real estate acquisitions and improvements (122,586) (17,541) Proceeds from repayment of real estate mortgages receivable -- 9,404 Proceeds from sale of real estate 740 10,444 Decrease in restricted cash 4,999 2,928 --------- --------- Cash (used for) provided by investing activities (116,847) 5,235 --------- --------- Cash flows from financing activities: Repurchase of common shares -- (13,179) Proceeds from issuance of preferred shares -- 193,113 Proceeds from borrowings 452,768 -- Payments on borrowings (395,582) (204,774) Deferred finance costs (283) (6,683) Distributions to common shareholders (51,522) (52,557) Distributions to preferred shareholders (9,875) (4,444) --------- --------- Cash used for financing activities (4,494) (88,524) --------- --------- Decrease in cash and cash equivalents (37,082) (23,276) Cash and cash equivalents at beginning of period 50,555 92,681 --------- --------- Cash and cash equivalents at end of period $ 13,473 $ 69,405 ========= ========= Supplemental cash flow information: Interest paid (including capitalized interest paid of $1,443 and $523, respectively) $ 42,673 $ 47,726
See accompanying notes 3 HRPT PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands, except per share amounts) Note 1. Basis of Presentation The accompanying consolidated financial statements of HRPT Properties Trust and its subsidiaries (the "Company") have been prepared without audit. Certain information and footnote disclosures required by accounting principles generally accepted in the United States for complete financial statements have been condensed or omitted. The Company believes the disclosures made are adequate to make the information presented not misleading. However, the accompanying financial statements should be read in conjunction with the financial statements and notes contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. In the opinion of management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included. All intercompany transactions and balances between HRPT Properties Trust and its subsidiaries have been eliminated. Operating results for interim periods are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior year's financial statements to conform to the current year's presentation. Note 2. Comprehensive Income The following is a reconciliation of net income to comprehensive income for the three and six months ended June 30, 2002 and 2001:
Three Months Ended June 30, Six Months Ended June 30, ------------------------------- ----------------------------- 2002 2001 2002 2001 ------------ --------------- ----------- -------------- Net income $26,812 $25,716 $47,976 $51,512 Other comprehensive income: Unrealized holding gains (losses) on investments (226) 2,328 838 5,059 ------------ --------------- ----------- -------------- Comprehensive income $26,586 $28,044 $48,814 $56,571 ============ =============== =========== ==============
During the six months ended June 30, 2002, the Company sold $5,964 of marketable equity securities and realized a gain of $614 that is included in other income on the Company's consolidated statements of income. At June 30, 2002, the Company's remaining investments in marketable equity securities were included in other assets and had a fair value of $6,643 and unrealized holding gains of $424. Note 3. Equity Investments At June 30, 2002, the Company had the following equity investments in Senior Housing Properties Trust ("SNH") and Hospitality Properties Trust ("HPT"):
Equity in Earnings Equity Investments ----------------------------------------------------------------- --------------------------------- Three Months Ended June 30, Six Months Ended June 30, ------------------------------- ------------------------------ June 30, December 31, 2002 2001 2002 2001 2002 2001 ------------- -------------- ------------- ------------- ------------- ---------------- SNH $2,312 $1,239 $5,183 $2,547 $168,418 $171,969 HPT 2,031 1,949 3,875 3,803 99,168 101,473 ------------- -------------- ------------- ------------- ------------- ---------------- $4,343 $3,188 $9,058 $6,350 $267,586 $273,442 ============= ============== ============= ============= ============= ================
4 HRPT PROPERTIES TRUST NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (dollars in thousands, except per share amounts) At June 30, 2002, the Company owned 12,809,238 common shares, or 21.9%, of SNH with a carrying value of $168,418 and a market value, based on quoted market prices, of $201,105, and 4,000,000 common shares, or 6.4%, of HPT with a carrying value of $99,168 and a market value, based on quoted market prices, of $146,000. In February 2002 SNH completed a public offering of common shares. As a result of this transaction, the Company's ownership percentage of SNH was reduced from 29.5% at December 31, 2001, to 21.9% at June 30, 2002, and the Company recognized a loss of $1,421. Note 4. Real Estate Properties During the six months ended June 30, 2002, the Company acquired 12 properties for $103,972 and funded $18,614 of improvements to its existing properties. The Company also sold one property in January 2002 for net cash proceeds of $740. One property with an undepreciated book value of approximately $72,000 as of June 30, 2002, was undergoing an extensive redevelopment during the current quarter which is expected to be substantially complete in October 2002. The entire property has been pre-leased and rent is expected to commence in October 2002. During redevelopment, no rental income or depreciation is being recognized, and redevelopment costs, including interest, are being capitalized. Note 5. Indebtedness On March 26, 2002, the Company redeemed at par plus a premium, all $160,000 of its 6.875% senior notes due in August 2002. This redemption was funded using borrowings under the Company's revolving bank credit facility. In connection with this redemption, the Company recognized an extraordinary loss of $3,344 from the prepayment premium and the write-off of deferred financing fees and a note discount. In April 2002 the Company issued unsecured senior notes totaling $200,000, raising net proceeds of $196,768. These notes bear interest at 6.95%, require semi-annual interest payments and mature in April 2012. The net proceeds from this offering were used to repay amounts outstanding under the Company's revolving bank credit facility. In July 2002 the Company repurchased and retired $21,720 of its $150,000 6.75% senior notes due 2002, at par plus a premium, using cash on hand and borrowings under its revolving bank credit facility. The premium paid plus the write-off of deferred financing fees and the unamortized original issue note discount totaling approximately $118 is expected to be recognized as an extraordinary loss in the period ending September 30, 2002. Note 6. Shareholders' Equity On May 7, 2002, the Company's three independent trustees each were awarded 500 common shares as part of their annual compensation. These shares vested immediately. On July 9, 2002, 15,000 common shares were granted to officers of the Company and employees of the Company's investment manager. One-third of these shares vest immediately and the balance vests over a two-year period. On July 9, 2002, the Company declared a distribution on its common shares with respect to the quarter ended June 30, 2002, of $0.20 per common share, or approximately $25,800, which will be paid on or about August 23, 2002, to shareholders of record on July 25, 2002. On July 9, 2002, the Company announced a distribution on its series A cumulative redeemable preferred shares of $0.6172 per share, or approximately $4,938, which will be paid on or about August 15, 2002, to shareholders of record as of August 1, 2002. 5 HRPT PROPERTIES TRUST Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion presents an analysis of our results of operations for the three and six months ended June 30, 2002 and 2001. This discussion includes references to funds from operations, or FFO. We compute FFO as net income available for common shareholders, adjusted for our pro rata share of FFO of Hospitality Properties Trust ("HPT") and Senior Housing Properties Trust ("SNH"), and excluding depreciation, amortization (except amortization of deferred finance costs), gains on sales of properties and extraordinary and non-recurring items. We consider FFO to be an appropriate measure of performance for a REIT, along with cash flow from operating activities, financing activities and investing activities, because it provides investors with an indication of an equity REIT's operating performance and its ability to incur and service debt, make capital expenditures, pay distributions and fund other cash needs. Our method of computing FFO may not be comparable to FFO reported by other REITs that define the term differently. Our FFO is an important factor considered by our Board of Trustees in determining the amount of our distributions to shareholders. FFO does not represent cash generated by operating activities in accordance with generally accepted accounting principles, or GAAP, and should not be considered an alternative to net income or cash flow from operating activities as a measure of financial performance or liquidity. The following discussion should be read in conjunction with our Annual Report on Form 10-K. Results of Operations Three Months Ended June 30, 2002, Compared to Three Months Ended June 30, 2001 Total revenues for the three months ended June 30, 2002, increased to $100.7 million from $98.6 million for the three months ended June 30, 2001. Rental income increased in 2002 by $2.6 million and interest and other income decreased in 2002 by $561,000, compared to the prior period. Rental income increased primarily as a result of our acquisition of 12 properties in 2002 and two properties in 2001. This increase was partially offset by a decline in rents resulting from a decline in property occupancy during the 2002 period compared to the 2001 period. Also, the 2001 period includes lease termination fees received of $1.7 million compared to $347,000 of lease termination fees received in the 2002 period. Interest and other income decreased primarily as a result of lower cash balances invested in 2002 compared to 2001. Total expenses for the three months ended June 30, 2002, increased to $78.3 million from $75.8 million for the three months ended June 30, 2001, due to the increases in operating, depreciation and amortization and general and administrative expenses in the 2002 period compared to the 2001 period. Operating expenses and depreciation and amortization expenses increased by $1.1 million and $1.4 million, respectively, primarily as a result of the acquisition of properties in 2002 and 2001. Interest expense decreased by $542,000 during the three months ended June 30, 2002, compared to the prior year period. Interest on debt incurred to finance the acquisition of properties during 2002 was more than offset by capitalized interest on debt allocable to a property in redevelopment and lower interest rates. General and administrative expenses increased by $511,000 primarily due to property acquisitions in 2002 and 2001. Equity in earnings of equity investments increased by $1.2 million for the three months ended June 30, 2002, compared to the same period in 2001 due to an increase in earnings from SNH. Net income before preferred distributions was $26.8 million, or $0.21 per common share, for the 2002 period, and $25.7 million, or $0.20 per common share, for the 2001 period. Net income available for common shareholders is net income reduced by preferred distributions and was $21.9 million, or $0.17 per common share, in the 2002 period, compared to $20.8 million, or $0.16 per common share in the 2001 period. The increases in both net income and net income available for common shareholders is due primarily to property acquisitions in 2002 and 2001, the decrease in interest expense and the increase in equity income from our investment in SNH, offset by lower interest income on invested cash balances, early termination revenue received in 2001 and the decrease in rents from lower occupancies in continuing properties. 6 HRPT PROPERTIES TRUST Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) FFO for the three months ended June 30, 2002, was $42.1 million compared to $42.0 million for the 2001 period. A reconciliation of net income to FFO for the three months ended June 30, 2002 and 2001, is as follows:
Three Months Ended June 30, --------------------------------------- 2002 2001 ----------------- ----------------- Income before equity in earnings of equity investments and extraordinary item $22,469 $22,860 Depreciation and non-cash expenses 15,781 14,859 FFO from equity investments 8,802 9,221 Preferred distributions (4,937) (4,937) ----------------- ----------------- FFO $42,115 $42,003 ================= =================
Six Months Ended June 30, 2002, Compared to Six Months Ended June 30, 2001 Total revenues for the six months ended June 30, 2002, increased to $199.4 million from $198.5 million for the six months ended June 30, 2001. Rental income increased in 2002 by $3.9 million and interest and other income decreased in 2002 by $2.9 million, compared to the prior period. Rental income increased primarily from the acquisition of 12 properties in 2002 and two properties in 2001, offset by decreases resulting from the sale of four properties in 2001, and a decline in property occupancy during the 2002 period from the 2001 period. Interest and other income decreased primarily as a result of lower cash balances invested in 2002 compared to 2001 and lower rates. Total expenses for the six months ended June 30, 2002, increased to $155.7 million from $151.2 million for the six months ended June 30, 2001, due to the reversal of an impairment loss reserve totaling $4.0 million recognized in 2001, increases in operating, depreciation and amortization and general and administrative expenses and a decrease in interest expense. Interest expense decreased by $3.8 million during the six months ended June 30, 2002, compared to the prior year period, primarily as a result of the repayment of debt during the first quarter of 2001. Also, during the 2002 period interest accrued with respect to debt allocable to a property being redeveloped was capitalized. Operating expenses, depreciation and amortization and general and administrative expenses increased by $1.7 million, $2.6 million, and $143,000, respectively. All three of these expense categories increased primarily due to property acquisitions in 2002 and 2001. Equity in earnings of equity investments increased by $2.7 million for the six months ended June 30, 2002, compared to the same period in 2001 due to an increase in earnings from SNH. A loss on equity transaction of equity investments of $1.4 million was also recognized from the issuance of common shares by SNH during February 2002 at a price below our per share carrying value. Net income before preferred distributions decreased to $48.0 million, or $0.37 per common share, for the 2002 period, from $51.5 million, or $0.39 per common share, for the 2001 period. The decrease is due primarily to the reversal of an impairment loss reserve in 2001, lower interest income on invested cash balances, the extraordinary loss recognized from the prepayment of debt in 2002, assets sold during 2001, the decrease in property occupancy and the loss recognized from the issuance of common shares by SNH, offset by the decrease in interest expense in 2001, property acquisitions in 2002 and 2001 and the increase in equity income from our investment in SNH. Net income available for common shareholders is net income reduced by preferred distributions and was $38.1 million, or $0.30 per common share, in the 2002 period, compared to $44.5 million, or $0.34 per common share in the 2001 period. The decrease reflects the foregoing factors and the partial distribution paid during the prior period on our preferred shares which were issued on February 22, 2001. 7 HRPT PROPERTIES TRUST Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) FFO for the six months ended June 30, 2002, was $82.6 million compared to $84.3 million for the 2001 period. A reconciliation of net income to FFO for the six months ended June 30, 2002 and 2001, is as follows:
Six Months Ended June 30, --------------------------------------- 2002 2001 ----------------- ----------------- Income before equity in earnings of equity investments and extraordinary item $43,683 $47,311 Depreciation and non-cash expenses 31,341 29,747 Impairment of assets reversal -- (3,955) FFO from equity investments 17,480 18,169 Preferred distributions (9,875) (6,967) ----------------- ----------------- FFO $82,629 $84,305 ================= =================
Liquidity and Capital Resources Our Operating Liquidity and Resources Our principal sources of funds for current expenses and for distributions to shareholders are our operations, primarily rents from our properties. Rents are generally received from our non-government tenants monthly in advance, and from our government tenants monthly in arrears. This flow of funds has historically been sufficient for us to pay day-to-day operating expenses, interest and distributions. To maintain our status as a real estate investment trust ("REIT") under the Internal Revenue Code, we must meet certain requirements, including the distribution of a substantial portion of our taxable income to our shareholders. As a REIT, we do not expect to pay federal income taxes on our income. We believe that our operating cash flow will be sufficient to meet our operating expenses, interest and distribution payments for the foreseeable future. Our Investment and Financing Liquidity and Resources We have a $425 million unsecured revolving credit facility with a group of commercial banks, which includes a feature that allows it to be expanded, in certain circumstances, by up to $200 million. We use this credit facility to fund acquisitions and improvements and to accommodate occasional cash needs which may result from timing differences between the receipt of rents and our desire to make distributions or our need to pay operating expenses. Borrowings under this credit facility bear interest at LIBOR plus a premium and mature in April 2005. Funds may be drawn, repaid and redrawn until maturity and no principal payment is due until maturity. At June 30, 2002, $23 million was outstanding and $402 million was available for borrowing under our revolving bank credit facility. At June 30, 2002, we had cash and cash equivalents of $13.5 million. We expect to use existing cash balances, borrowings under our credit facility and net proceeds of offerings of equity or debt securities to fund future property acquisitions. As of August 7, 2002, we had outstanding commitments aggregating approximately $101.8 million to acquire office buildings. The acquisition of these office buildings is subject to various closing conditions customary in real estate transactions and no assurances can be given as to when or if these office buildings will be acquired. Principal payments due during the next five years required under all of our debt obligations as of June 30, 2002, are $152.6 million in 2002, $5.6 million in 2003, $9.9 million in 2004, $130.1 million in 2005, $7.7 million in 2006 and $865.1 million thereafter. 8 HRPT PROPERTIES TRUST Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) To the extent we borrow on the credit facility and, as the maturity dates of our credit facility and term debts approach over the longer term, we will explore various alternatives for the repayment of amounts due. Such alternatives in the short-term and long-term may include borrowings under our revolving credit facility, incurring additional long-term debt and issuing new equity securities. An effective shelf registration statement allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities. At June 30, 2002, we have $2.1 billion available on our effective $3 billion shelf registration statement. Although there can be no assurance that we will consummate any additional debt or equity offerings or other financings, we believe we will have access to various types of financing in the future, including debt or equity securities offerings, with which to finance future acquisitions and to pay our debt and other obligations. Total assets were $2.9 billion at June 30, 2002, and $2.8 billion at December 31, 2001. During the six months ended June 30, 2002, we purchased 12 properties for $104.0 million and funded $18.6 million of improvements to our existing properties. These amounts were funded with a combination of cash on hand and borrowings under our revolving bank credit facility. At June 30, 2002, we owned 12.8 million, or 21.9%, of the common shares of beneficial interest of SNH with a carrying value of $168.4 million and a market value of $201.1 million, and 4.0 million, or 6.4%, of the common shares of beneficial interest of HPT with a carrying value of $99.2 million and a market value of $146.0 million. On August 7, 2002, the market values of our SNH and HPT shares were $151.5 million and $129.1 million, respectively. During February 2002 we called for redemption all of our outstanding $160 million 6.875% Senior Notes due August 2002. This redemption occurred on March 26, 2002, and was funded with borrowings on our revolving bank credit facility. We recognized an extraordinary loss in 2002 of $3.3 million resulting from the prepayment premium and the write-off of deferred financing fees and a note discount. In April 2002 we issued unsecured senior notes totaling $200 million, raising net proceeds of $196.8 million. These notes bear interest at 6.95%, require semi-annual interest payments and mature in April 2012. The net proceeds from this offering were used to repay amounts outstanding under our revolving bank credit facility. In July 2002 we repurchased and retired $21.7 million of our $150 million 6.75% senior notes due 2002, at par plus a premium, using cash on hand and borrowings under our revolving bank credit facility. The premium paid plus the write-off of deferred financing fees and the unamortized original issue note discount totaling approximately $118,000 is expected to be recognized as an extraordinary loss in the period ending September 30, 2002. On July 3, 2002, we filed an application with the Securities and Exchange Commission to permit the sale of some of our shareholdings in our former subsidiaries, SNH and HPT, as well as new shares of ours to a new mutual fund to be organized by a subsidiary of REIT Management & Research LLC, the investment manager to us, SNH and HPT. The SEC review process for this application is expected to take several months. The decision as to whether to proceed with the fund creation and the sale of shares to the fund will depend upon market conditions if and after the application is approved, particularly the market price of our shares and of HPT and SNH shares and the uses of sales proceeds available to us at that time. If this application is approved and the fund is formed, we may have a new, cost-effective option to sell our shareholdings in these former subsidiaries and our own shares in a manner which is not likely to materially effect the trading prices of the shares. We continue to view our shareholdings of HPT and SNH as income producing long-term investments. 9 HRPT PROPERTIES TRUST Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Debt Covenants Our principal unsecured debt obligations at June 30, 2002, are our unsecured revolving credit facility and our $798 million of public debt. Our public debt is governed by indentures. These indentures and our credit facility agreement contain a number of financial ratio covenants which generally restrict our ability to incur debts, including debts secured by mortgages on our properties in excess of calculated amounts, require us to maintain a minimum net worth, as defined, restrict our ability to make distributions under certain circumstances and require us to maintain other ratios, as defined. At June 30, 2002, we were in compliance with all of our covenants under our indentures and our credit agreement. In addition to our principal unsecured debt obligations, we have $350.0 million of mortgage notes outstanding at June 30, 2002. Our mortgage notes are secured by 25 of our properties. None of our indentures, our revolving bank credit facility or our mortgage notes contain provisions for acceleration which could be triggered by our debt ratings. However, under our credit agreement, our senior debt rating is used to determine the fees and interest rate applied to borrowings. Our public debt indentures contain cross default provisions to any other debts equal to or in excess of $20 million. Similarly, a default on any of our public indentures would constitute a default under our credit agreement. As of June 30, 2002, we have no commercial paper, derivatives, swaps, hedges, guarantees or joint ventures. None of our debt documentation requires us to provide collateral security in the event of a ratings downgrade. We have no "off balance sheet" arrangements. 10 HRPT PROPERTIES TRUST Item 3. Quantitative and Qualitative Disclosures About Market Risk We are exposed to market changes in interest rates. We manage our exposure to this market risk through our monitoring of available financing alternatives. Our strategy to manage exposure to changes in interest rates is unchanged since December 31, 2001. Other than as described below, we do not foresee any significant changes in our exposure to fluctuations in interest rates or in how we plan to manage this exposure in the near future. At June 30, 2002, our outstanding fixed rate debt totaled $1.1 billion and consisted of the following notes: Amount Coupon Maturity Unsecured senior notes: $150.0 million 6.75% 2002 $100.0 million 6.70% 2005 $90.0 million 7.875% 2009 $30.0 million 8.875% 2010 $20.0 million 8.625% 2010 $65.0 million 8.375% 2011 $200.0 million 6.95% 2012 $143.0 million 8.50% 2013 -------------- $798.0 million Secured notes: $3.4 million 9.12% 2004 $10.6 million 8.40% 2007 $17.2 million 7.02% 2008 $9.7 million 8.00% 2008 $8.7 million 7.66% 2009 $256.4 million 6.814% 2011 $44.0 million 6.794% 2029 ---------------- $350.0 million No principal repayments are due on the unsecured senior notes until maturity. Because these notes bear interest at fixed rates, changes in market interest rates during the term of this debt will not affect our operating results. However, if all of the unsecured senior notes and secured notes were to be refinanced at interest rates which are one percentage point higher than shown above, our per annum interest cost would increase by approximately $11.5 million. The secured notes are secured by 25 of our office properties located in 12 office complexes and require principal and interest payments through maturity. The market prices of each of our fixed rate obligations as of June 30, 2002, are sensitive to changes in interest rates. Typically, if market rates of interest increase, the current market price of a fixed rate obligation will decrease. Conversely, if market rates of interest decrease, the current market price of a fixed rate obligation will typically increase. Based on the balances outstanding at June 30, 2002, and discounted cash flow analyses, a hypothetical immediate one percentage point change in interest rates would change the fair value of our fixed rate debt obligations by approximately $62.6 million. Each of our fixed rate obligations for borrowed money has provisions that allow us to make repayments earlier than the stated maturity date. In some cases, we are not allowed to make early repayment prior to a cutoff date and in other cases we are allowed to make prepayments only at a premium to face value. These prepayment rights may afford us the opportunity to mitigate the risk of refinancing at maturity at higher rates by refinancing prior to maturity. 11 HRPT PROPERTIES TRUST Item 3. Quantitative and Qualitative Disclosures About Market Risk (continued) Our unsecured revolving bank credit facility bears interest at floating rates and matures in 2005. At June 30, 2002, there was $23 million outstanding and $402 million available for borrowing under our revolving bank credit facility. Because our revolving bank credit facility bears interest at floating rates, changes in interest rates will not affect its value; however, changes in interest rates will affect our operating results. For example, the interest rate payable at June 30, 2002, was 2.6%. An immediate 10% change in that rate, or approximately 30 basis points, would increase or decrease our costs by $69,000, or $0.0005 per common share: Impact of Changes in Interest Rates ---------------------------------------------------- Total Interest Interest Rate Outstanding Expense Per Year Debt Per Year ------------- -------------- ---------------- (dollars in thousands) At June 30, 2002 2.6% $23,000 $598 10% reduction 2.3% $23,000 $529 10% increase 2.9% $23,000 $667 The foregoing table presents a so called "shock" analysis which assumes that the interest rate change by 10% would be in effect for a whole year. If interest rates were to change gradually over one year, the impact would be less. We borrow in U.S. dollars and borrowings under our bank credit facility are subject to interest at LIBOR plus a premium. Accordingly, we are vulnerable to changes in U.S. dollar based short term rates, specifically LIBOR. We are unable to predict the direction or amount of interest rate changes during the next year. As of June 30, 2002, we had $23 million outstanding under our revolving bank credit facility and we did not have any interest rate cap or other hedge agreements to protect against future rate increases, but we may enter such agreements in the future. In July 2002 we repurchased and retired $21.7 million of our $150 million 6.75% senior notes due in December 2002. A total of $128.3 million of these notes remains outstanding as of August 7, 2002, and will most likely be refinanced with other debt. A one percent increase or decrease from our current interest rate on these senior notes will change our interest expense by $1.3 million per year. Because these senior notes mature in December 2002, the effect of a change in interest rates on our interest expense for 2002 will be less. Also, we may incur additional debt at floating or fixed rates, which would increase our exposure to market changes in interest rates. 12 HRPT PROPERTIES TRUST CERTAIN IMPORTANT FACTORS THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THESE FORWARD LOOKING STATEMENTS APPEAR IN A NUMBER OF PLACES IN THIS foRM 10-Q AND INCLUDE REFERENCES TO PROPERTY ACQUISITIONS, DEBT and equity FINANCING POSSIBILITIES, INCLUDING THE REPAYMENT OF DEBT, future interest rate hedges, accounting estimates AND OTHER MATTERS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR CURRENT BELIEFS AND EXPECTATIONS, BUT THEY ARE NOT GUARANTEED AND THEY MAY NOT OCCUR. FOR EXAMPLE, WE MAY BE UNABLE to buy properties at acceptable prices or TO CONCLUDE DEBT and equity FINANCINGS ON ACCEPTABLE TERMS. ALSO, THE FACT THAT THE COMPANY HAS FILED AN APPLICATION WITH THE SECURITIES AND EXCHANGE COMMISSION ("SEC") TO SELL ITS SHARES AND ITS SHAREHOLDINGS OF HPT AND SNH TO A FUND DOES NOT MEAN THAT SUCH SALES WILL OCCUR; THE SEC MAY NOT APPROVE THIS APPLICATION OR THE COMPANY MAY DECIDE NOT TO PROCEED WITH THIS SALE BECAUSE IT CONSIDERS THE MARKET PRICES OF THE SHARES TOO LOW, BECAUSE WE DO NOT HAVE AN ATTRACTIVE USE OF PROCEEDS OR FOR OTHER REASONS. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE UPON FORWARD LOOKING STATEMENTS. THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING THE COMPANY, DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HRPT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. Part II Other Information Item 2. Changes in Securities and Use of Proceeds On May 7, 2002, pursuant to the Company's 1992 Incentive Share Award Plan, each of the Company's three independent trustees received a grant of 500 common shares valued at $8.85 per common share, the closing price of the common shares on the New York Stock Exchange on May 7, 2002. The grants were made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. On July 9, 2002, the Company granted 15,000 common shares pursuant to the Company's Incentive Share Award Plan to officers and certain employees of the Company's investment manager, REIT Management & Research LLC, valued at $8.68 per common share, the closing price of the common shares on the New York Stock Exchange on July 9, 2002. The grants were made pursuant to the exemption from registration contained in Section 4(2) of the Securities Act of 1933, as amended. Item 4. Submission of Matters to a Vote of Security Holders At the Company's Annual Shareholders Meeting on May 7, 2002, Barry M. Portnoy and Frederick N. Zeytoonjian were re-elected to serve as trustees for a term of three years. There were 110,873,010 and 113,652,577 shares voted in favor of and 4,914,233 and 2,134,666 shares withheld from voting for the re-election of Mr. Portnoy and Mr. Zeytoonjian, respectively. Gerard M. Martin, Reverend Justinian Manning and Patrick F. Donelan continue to serve as trustees for terms ending in 2003, 2003 and 2004, respectively. 13 HRPT PROPERTIES TRUST Item 6. Exhibits and Report on Form 8-K (a) Exhibits: 10.1 Supplemental Indenture No. 10 dated as of April 10, 2002, between HRPT Properties Trust and State Street Bank & Trust Company, including form of 6.95% Senior Notes due 2012. 12.1 Computation of Ratio of Earnings to Fixed Charges 12.2 Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Distributions 99.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Report on Form 8-K: 1. Current Report on Form 8-K, dated April 4, 2002, relating to the issuance of $200,000,000 6.95% Senior Notes due 2012, and filing as exhibits, (a) Purchase Agreement, dated as of April 4, 2002, between HRPT Properties Trust and First Union Securities, Inc. pertaining to $200,000,000 in aggregate principal amount of 6.95% Senior Notes due 2012, (b) Form of Supplemental Indenture No. 10 dated as of April 10, 2002, between HRPT Properties Trust and State Street Bank and Trust Company, including form of 6.95% Senior Notes due 2012, (c) Opinion of Sullivan & Worcester LLP re: tax matters, and (d) Consent of Sullivan & Worcester LLP. 14 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, thereunto duly authorized. HRPT PROPERTIES TRUST By: /s/ John A. Mannix John A. Mannix President and Chief Operating Officer Dated: August 9, 2002 By: /s/ John C. Popeo John C. Popeo Treasurer and Chief Financial Officer Dated: August 9, 2002 15 EX-10.1 3 ex10-1.txt SUPPLEMENTAL INDENTURE NO. 10 by and between HRPT PROPERTIES TRUST and STATE STREET BANK AND TRUST COMPANY as of April 10, 2002 SUPPLEMENTAL TO THE INDENTURE DATED AS OF JULY 9, 1997 ------------------------------------ HRPT PROPERTIES TRUST 6.95% Senior Notes due 2012 This SUPPLEMENTAL INDENTURE NO. 10 (this "Supplemental Indenture") made and entered into as of April 10, 2002 between HRPT PROPERTIES TRUST, a Maryland real estate investment trust (the "Company"), and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company, as Trustee (the "Trustee"), WITNESSETH THAT: WHEREAS, the Company and the Trustee have executed and delivered an Indenture, dated as of July 9, 1997 (the "Indenture"), relating to the Company's issuance, from time to time, of various series of debt securities; and WHEREAS, the Company has determined to issue debt securities known as its 6.95% Senior Notes due 2012; and WHEREAS, the Indenture provides that certain terms and conditions for each series of debt securities issued by the Company thereunder may be set forth in an indenture supplemental to the Indenture; NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH: ARTICLE 1 DEFINED TERMS Section 1.1 The following definitions supplement, and, to the extent inconsistent with, replace the definitions in Section 101 of the Indenture: "Acquired Debt" means Debt of a Person (i) existing at the time such Person becomes a Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case, other than Debt incurred in connection with, or in contemplation of, such Person becoming a Subsidiary or such acquisition. Acquired Debt shall be deemed to be incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Subsidiary. "Annual Debt Service" as of any date means the maximum amount which is expensed in any 12-month period for interest on Debt of the Company and its Subsidiaries. "Business Day" means any day other than a Saturday or Sunday or a day on which banking institutions in the City of New York or in the city in which the Corporate Trust Office of the Trustee is located, are required or authorized to close. "Capital Stock" means, with respect to any Person, any capital stock (including preferred stock), shares, interests, participation or other ownership interests (however designated) of such Person and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options to purchase any thereof. "Consolidated Income Available for Debt Service" for any period means Earnings from Operations of the Company and its Subsidiaries plus amounts which have been deducted, and -2- minus amounts which have been added, for the following (without duplication): (i) interest on Debt of the Company and its Subsidiaries, (ii) provision for taxes of the Company and its Subsidiaries based on income, (iii) amortization of debt discount and deferred financing costs, (iv) provisions for gains and losses on properties and property, depreciation and amortization, (v) the effect of any noncash charge resulting from a change in accounting principles in determining Earnings from Operations for such period and (vi) amortization of deferred charges. "Debt" of the Company or any Subsidiary means, without duplication, any indebtedness of the Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed money or evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness for borrowed money secured by any Encumbrance existing on property owned by the Company or any Subsidiary, to the extent of the lesser of (x) the amount of indebtedness so secured and (y) the fair market value of the property subject to such Encumbrance, (iii) the reimbursement obligations, contingent or otherwise, in connection with any letters of credit actually issued (other than letters of credit issued to provide credit enhancement or support with respect to other indebtedness of the Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts representing the balance deferred and unpaid of the purchase price of any property or services, except any such balance that constitutes an accrued expense or trade payable, or all conditional sale obligations or obligations under any title retention agreement, (iv) the principal amount of all obligations of the Company or any Subsidiary with respect to redemption, repayment or other repurchase of any Disqualified Stock, or (v) any lease of property by the Company or any Subsidiary as lessee which is reflected on the Company's consolidated balance sheet as a capitalized lease in accordance with GAAP, to the extent, in the case of items of indebtedness under (i) through (iii) above, that any such items (other than letters of credit) would appear as a liability on the Company's consolidated balance sheet in accordance with GAAP, and also includes, to the extent not otherwise included, any obligation by the Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), Debt of another Person (other than the Company or any Subsidiary) (it being understood that Debt shall be deemed to be incurred by the Company or any Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof). "Disqualified Stock" means, with respect to any Person, any Capital Stock of such Person which by the terms of such Capital Stock (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise (i) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than Capital Stock which is redeemable solely in exchange for common stock or shares), (ii) is convertible into or exchangeable or exercisable for Debt or Disqualified Stock, or (iii) is redeemable at the option of the holder thereof, in whole or in part (other than Capital Stock which is redeemable solely in exchange for common stock or shares), in each case on or prior to the stated maturity of the Notes. "Earnings from Operations" for any period means net earnings excluding gains and losses on sales of investments, extraordinary items and property valuation losses, as reflected in the financial statements of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. "Encumbrance" means any mortgage, lien, charge, pledge or security interest of any kind. -3- "Make-Whole Amount" means, in connection with any optional redemption or accelerated payment of any notes prior to January 1, 2012, the excess, if any, of (i) the aggregate present value as of the date of such redemption or accelerated payment of each dollar of principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption or accelerated payment) that would have been payable in respect of such dollar if such redemption or accelerated payment had been made on January 1, 2012, determined by discounting, on a semiannual basis, such principal and interest at the Reinvestment Rate (determined on the third Business Day preceding the date such notice of redemption is given or declaration of acceleration is made) from the respective dates on which such principal and interest would have been payable if such redemption or accelerated payment had been made on January 1, 2012, over (ii) the aggregate principal amount of the Notes being redeemed or paid. In the case of any redemption or accelerated payment of notes on or after January 1, 2012, the Make-Whole Amount means zero. For purposes of this Supplemental Indenture and the Notes, references in the Indenture to the payment of the principal (and premium, if any) and interest on the Notes shall be deemed to include the payment of the Make-Whole Amount, if any, due upon redemption with respect to the Notes. The Make-Whole Amount shall be calculated by the Company and set forth in an Officer's Certificate delivered to the Trustee, and the Trustee shall be entitled to rely on said Officer's Certificate. "Notes" means the Company's 6.95% Senior Notes due 2012, issued under this Supplemental Indenture and the Indenture, as amended or supplemented from time to time. "Reinvestment Rate" means a rate per annum equal to the sum of 0.50% (fifty one-hundredths of one percent) plus the yield on treasury securities at constant maturity under the heading "Week Ending" published in the Statistical Release under the caption "Treasury Constant Maturities" for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity (which, in the case of maturities corresponding to the principal and interest due on the notes at their maturity, shall be deemed to be January 1, 2012), as of the payment date of the principal being redeemed or paid. If no maturity exactly corresponds to such maturity, yields for the two published maturities most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. For purposes of calculating the Reinvestment Rate, the most recent Statistical Release published prior to the date of determination of the Make-Whole Amount shall be used. "Secured Debt" means Debt secured by any mortgage, lien, charge, pledge or security interest of any kind. "Statistical Release" means the statistical release designated "H.15(519)" or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on actively traded United States government securities adjusted to constant maturities or, if such statistical release is not published at the time of any determination under this Supplemental Indenture, then any publicly available source of similar market data which shall be designated by the Company. "Subsidiary" means any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests of which are owned, -4- directly or indirectly, by the Company or one or more other Subsidiaries of the Company. For the purposes of this definition, "voting equity securities" means equity securities having voting power for the election of directors, whether at all times or only so long as no senior class of security has such voting power by reason of any contingency. "Total Assets" as of any date means the sum of (i) the Undepreciated Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries determined in accordance with GAAP (but excluding accounts receivable and intangibles). "Total Unencumbered Assets" means the sum of (i) those Undepreciated Real Estate Assets not subject to an Encumbrance for borrowed money and (ii) all other assets of the Company and its Subsidiaries not subject to an Encumbrance for borrowed money determined in accordance with GAAP (but excluding accounts receivable and intangibles). "Undepreciated Real Estate Assets" as of any date means the cost (original cost plus capital improvements) of real estate assets of the Company and its Subsidiaries on such date, before depreciation and amortization, determined on a consolidated basis in accordance with GAAP. "Unsecured Debt" means Debt which is not secured by any of the properties of the Company or any Subsidiary. ARTICLE 2 TERMS OF THE NOTES Section 2.1 Pursuant to Section 301 of the Indenture, the Notes shall have the following terms and conditions: (a) Title; Aggregate Principal Amount; Form of Notes. The Notes shall be Registered Securities under the Indenture and shall be known as the Company's "6.95% Senior Notes due 2012." The Notes will be limited to an aggregate principal amount of $200,000,000, subject to the right of the Company to reopen such series for issuances of additional securities of such series and except as provided in this Section and in Section 306 of the Indenture. The Notes (together with the Trustee's certificate of authentication) shall be substantially in the form of Exhibit A hereto, which is hereby incorporated in and made a part of this Supplemental Indenture. The Notes will be issued in the form of one or more registered global securities without coupons ("Global Notes") that will be deposited with, or on behalf of, The Depository Trust Company ("DTC"), and registered in the name of DTC's nominee, Cede & Co. Except under the circumstance described below, the Notes will not be issuable in definitive form. Unless and until it is exchanged in whole or in part for the individual notes represented thereby, a Global Note may not be transferred except as a whole by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or by DTC or any nominee of DTC to a successor depositary or any nominee of such successor. So long as DTC or its nominee is the registered owner of a Global Note, DTC or such nominee, as the case may be, will be considered the sole owner or holder of the Notes represented -5- by such Global Note for all purposes under this Supplemental Indenture. Except as described below, owners of beneficial interest in Notes evidenced by a Global Note will not be entitled to have any of the individual Notes represented by such Global Note registered in their names, will not receive or be entitled to receive physical delivery of any such Notes in definitive form and will not be considered the owners or holders thereof under the Indenture or this Supplemental Indenture. If DTC is at any time unwilling, unable or ineligible to continue as depositary and a successor depositary is not appointed by the Company within 90 days, the Company will issue individual Notes in exchange for the Global Note or Global Notes representing such Notes. In addition, the Company may at any time and in its sole discretion, subject to certain limitations set forth in the Indenture, determine not to have any of such Notes represented by one or more Global Notes and, in such event, will issue individual Notes in exchange for the Global Note or Global Notes representing the Notes. Individual Notes so issued will be issued in denominations of $1,000 and integral multiples thereof. (b) Interest and Interest Rate. The Notes will bear interest at a rate of 6.95% per annum, from April 10, 2002 (or, in the case of Notes issued upon the reopening of this series of Notes, from the date designated by the Company in connection with such reopening) or from the immediately preceding Interest Payment Date to which interest has been paid or duly provided for, payable semiannually on each April 1 and October 1, commencing October 1, 2002 (each of which shall be an "Interest Payment Date"), to the Persons in whose names the Notes are registered in the Security Register at the close of business on the day falling 14 calendar days (whether or not a Business Day) next preceding such Interest Payment Date (each, a "Regular Record Date"). (c) Principal Repayment; Currency. The stated maturity of the Notes is April 1, 2012, provided, however, the Notes may be earlier redeemed at the option of the Company as provided in paragraph (d) below. The principal of each Note payable on its maturity date shall be paid against presentation and surrender thereof at the Corporate Trust Office of the Trustee, located initially at Two Avenue de Lafayette, Boston, Massachusetts 02111, in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public or private debts. The Company will not pay Additional Amounts (as defined in the Indenture) on the Notes. (d) Redemption at the Option of the Company; Acceleration. The Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice to each Holder of Notes to be redeemed at its address appearing in the Security Register, at a price equal to the sum of (i) the principal amount of the Notes being redeemed, plus accrued and unpaid interest to but excluding the applicable Redemption Date, plus (ii) the Make-Whole Amount, if any. If the notes are redeemed on or after January 1, 2012, the redemption price will not include the Make-Whole Amount. Upon the acceleration of the Notes in accordance with Section 502 of the Indenture, if such acceleration occurs prior to January 1, 2012, the principal amount of the Notes, plus accrued and unpaid interest thereon and the Make-Whole Amount shall become due and payable immediately. (e) Notices. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Company shall be directed to it at 400 Centre Street, Newton, -6- Massachusetts 02458, Attention: President; notices to the Trustee shall be directed to it at Two Avenue de Lafayette, Boston, Massachusetts 02111, Attention: Corporate Trust Department, Re: HRPT Properties Trust 6.95 % Senior Notes due 2012; or as to either party, at such other address as shall be designated by such party in a written notice to the other party. (f) Global Note Legend. Each Global Note shall bear the following legend on the face thereof: UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. (g) Applicability of Discharge, Defeasance and Covenant Defeasance Provisions. The Discharge, Defeasance and Covenant Defeasance provisions in Article Fourteen of the Indenture will apply to the Notes. ARTICLE 3 ADDITIONAL COVENANTS Section 3.1 In addition to the covenants of the Company set forth in Article Ten of the Indenture, for the benefit of the holders of the Notes: (a) Limitations on Incurrence of Debt. (i) The Company will not, and will not permit any Subsidiary to, incur any Debt if, immediately after giving effect to the incurrence of such additional Debt and the application of the proceeds thereof, the aggregate principal amount of all outstanding Debt of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater than 60% of the sum ("Adjusted Total Assets") of (without duplication) (A) the Total Assets of the Company and its Subsidiaries as of the end of the calendar quarter covered in the Company's Annual Report on Form 10-K, or the Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Securities and Exchange Commission (or, if such filing is not permitted under the Securities Exchange Act of 1934, as amended, with the Trustee) prior to the incurrence of such additional Debt and (B) the purchase price of any real estate assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent that such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by the Company or any -7- Subsidiary since the end of such calendar quarter, including those proceeds obtained in connection with the incurrence of such additional Debt. (ii) In addition to the foregoing limitations on the incurrence of Debt, the Company will not, and will not permit any Subsidiary to, incur any Secured Debt if, immediately after giving effect to the incurrence of such additional Secured Debt and the application of the proceeds thereof, the aggregate principal amount of all outstanding Secured Debt of the Company and its Subsidiaries on a consolidated basis is greater than 40% of Adjusted Total Assets. (iii) In addition to the foregoing limitations on the incurrence of Debt, the Company will not, and will not permit any Subsidiary to, incur any Debt if the ratio of Consolidated Income Available for Debt Service to the Annual Debt Service for the four consecutive fiscal quarters most recently ended prior to the date on which such additional Debt is to be incurred shall have been less than 1.5 to 1.0, on a pro forma basis after giving effect thereto and to the application of the proceeds therefrom, and calculated on the assumption that (A) such Debt and any other Debt incurred by the Company and its Subsidiaries since the first day of such four-quarter period and the application of the proceeds therefrom, including to refinance other Debt, had occurred at the beginning of such period; (B) the repayment or retirement of any other Debt by the Company and its Subsidiaries since the first date of such four-quarter period had been repaid or retired at the beginning of such period (except that, in making such computation, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period); (C) in the case of Acquired Debt or Debt incurred in connection with any acquisition since the first day of such four-quarter period, the related acquisition had occurred as of the first day of such period with appropriate adjustments with respect to such acquisition being included in such pro forma calculation; and (D) in the case of any acquisition or disposition by the Company or its Subsidiaries of any asset or group of assets since the first day of such four-quarter period, whether by merger, stock purchase or sale, or asset purchase or sale, such acquisition or disposition or any related repayment of Debt had occurred as of the first day of such period with the appropriate adjustments with respect to such acquisition or disposition being included in such pro forma calculation. If the Debt giving rise to the need to make the foregoing calculation or any other Debt incurred after the first day of the relevant four-quarter period bears interest at a floating rate then, for purposes of calculating the Annual Debt Service, the interest rate on such Debt shall be computed on a pro forma basis as if the average interest rate which would have been in effect during the entire such four-quarter period had been the applicable rate for the entire such period. (b) Maintenance of Total Unencumbered Assets. The Company and its Subsidiaries will maintain at all times Total Unencumbered Assets of not less than 200% of the aggregate outstanding principal amount of the Unsecured Debt of the Company and its Subsidiaries on a consolidated basis. -8- ARTICLE 4 ADDITIONAL EVENTS OF DEFAULT Section 4.1. For purposes of this Supplemental Indenture and the Notes, in addition to the Events of Default set forth in Section 501 of the Indenture, it shall also constitute an "Event of Default" if a default under any bond, debenture, note or other evidence of indebtedness of the Company (including a default with respect to any other series of securities), or under any mortgage, indenture or other instrument of the Company under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or for which the Company is directly responsible or liable as obligor or guarantor) having an aggregate principal amount outstanding of at least $20,000,000, whether such indebtedness now exists or shall hereafter be incurred or created, which default shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged, or such acceleration having been rescinded or annulled, within a period of ten days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Notes, a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder. Section 4.2. Notwithstanding any provisions to the contrary in the Indenture, upon any acceleration of the Notes under Section 502 of the Indenture, the amount immediately due and payable in respect of the Notes shall equal the Outstanding principal amount thereof, plus accrued interest, plus, if such acceleration occurs prior to January 1, 2012, the Make-Whole Amount. ARTICLE 5 EFFECTIVENESS This Supplemental Indenture shall be effective for all purposes as of the date and time this Supplemental Indenture has been executed and delivered by the Company and the Trustee in accordance with Article Nine of the Indenture. As supplemented hereby, the Indenture is hereby confirmed as being in full force and effect. ARTICLE 6 MISCELLANEOUS Section 6.1 In the event any provision of this Supplemental Indenture shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof or any provision of the Indenture. Section 6.2 To the extent that any terms of this Supplemental Indenture or the Notes are inconsistent with the terms of the Indenture, the terms of this Supplemental Indenture or the Notes shall govern and supersede such inconsistent terms. -9- Section 6.3 This Supplemental Indenture shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts. Section 6.4 This Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument. -10- IN WITNESS WHEREOF, the Company and the Trustee have caused this Supplemental Indenture to be executed as an instrument under seal in their respective corporate names as of the date first above written. HRPT PROPERTIES TRUST By: /s/ John C. Popeo Name: John C. Popeo Title: Chief Financial Officer, Treasurer and Secretary STATE STREET BANK AND TRUST COMPANY, as Trustee By: /s/ Jacklyn Thompson Name: Jacklyn Thompson Title: Assistant Vice President EXHIBIT A FORM OF NOTE [Face of Note] 6.95% Senior Note due 2012 No. ______ $_________ HRPT PROPERTIES TRUST promises to pay to ______________________________________ or registered assigns, the principal sum of _____________________________________ on April 1, 2012, subject to the terms set forth on the reverse of this Note and the terms of the Indenture referred to therein. Interest Payment Dates: each April 1 and October 1, commencing October 1, 2002. Record Dates: the day falling 14 calendar days prior to any Interest Payment Date. CUSIP No.: HRPT PROPERTIES TRUST By:____________________________ Name: Title: Attest:____________________________ [SEAL] CERTIFICATE OF AUTHENTICATION Dated: This is one of the Notes referred to in the within-mentioned Indenture: STATE STREET BANK AND TRUST COMPANY, as Trustee By:______________________________ Authorized Officer A-1 [THE FOLLOWING CONSTITUTES THE REVERSE OF THE SECURITY] HRPT PROPERTIES TRUST 6.95% Senior Note due 2012 Capitalized terms used herein have the meanings assigned to them in the Indenture (as defined below) unless otherwise indicated. 1. Interest. HRPT Properties Trust, a Maryland real estate investment trust (the "Company"), promises to pay interest on the principal amount of this Note at the rate and in the manner specified below. The Company shall pay in cash interest on the principal amount of this Note at the rate per annum of 6.95%. The Company will pay interest semi-annually in arrears on each April 1 and October 1, commencing on October 1, 2002, or, if any such day is not a Business Day (as defined in the Indenture), on the next succeeding Business Day (each an "Interest Payment Date"), to Holders of record on the day falling 14 calendar days immediately preceding such Interest Payment Date (whether or not a Business Day). Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months. Interest shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from April 10, 2002. 2. Method of Payment. The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company, however, may pay principal, premium, if any, and interest by check payable in such money. It may mail an interest check to a Holder's registered address. 3. Indenture. The Company issued the Notes under an Indenture, dated as of July 9, 1997, and a Supplemental Indenture No. 10 thereto, dated as of April 10, 2002 (collectively, the "Indenture"), between the Company and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 as in effect on the date of the Indenture. The Notes are subject to all such terms, and Holders of the Notes are referred to the Indenture and such Act for a statement of such terms. The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes. The Notes are unsecured general obligations of the Company limited to $200,000,000 in aggregate principal amount, except as otherwise provided in the Indenture. 4. Optional Redemption. The Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days' notice, at a redemption price equal to the sum of (i) the principal amount of the Notes being redeemed, plus accrued and unpaid interest to but excluding the applicable Redemption Date and (ii) the Make-Whole Amount, if any. If the Notes are redeemed on or after January 1, 2012, the redemption price will not include the Make-Whole Amount. A-2 As used herein the term "Make-Whole Amount" means, in connection with any optional redemption or accelerated payment of any notes prior to January 1, 2012, the excess, if any, of (i) the aggregate present value as of the date of such redemption or accelerated payment of each dollar of principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption or accelerated payment) that would have been payable in respect of such dollar if such redemption or accelerated payment had been made on January 1, 2012, determined by discounting, on a semiannual basis, such principal and interest at the Reinvestment Rate (determined on the third Business Day preceding the date such notice of redemption is given or declaration of acceleration is made) from the respective dates on which such principal and interest would have been payable if such redemption or accelerated payment had been made on January 1, 2012, over (ii) the aggregate principal amount of the Notes being redeemed or paid. In the case of any redemption or accelerated payment of notes on or after January 1, 2012, the Make-Whole Amount means zero. For purposes of the Indenture and the Notes, references in the Indenture to the payment of the principal (and premium, if any) and interest on the Notes shall be deemed to include the payment of the Make-Whole Amount, if any, due upon redemption with respect to the Notes. The Make-Whole Amount shall be calculated by the Company and set forth in an Officer's Certificate delivered to the Trustee, and the Trustee shall be entitled to rely on said Officer's Certificate. As used herein the term "Reinvestment Rate" means a rate per annum equal to the sum of 0.50% (fifty one-hundredths of one percent) plus the yield on treasury securities at constant maturity under the heading "Week Ending" published in the Statistical Release (as defined herein) under the caption "Treasury Constant Maturities" for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity (which, in the case of maturities corresponding to the principal and interest due on the notes at their maturity, shall be deemed to be January 1, 2012), as of the payment date of the principal being redeemed or paid. If no maturity exactly corresponds to such maturity, yields for the two published maturities most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month. For purposes of calculating the Reinvestment Rate, the most recent Statistical Release published prior to the date of determination of the Make-Whole Amount shall be used. As used herein the term "Statistical Release" means the statistical release designated "H.15(519)" or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on actively traded United States government securities adjusted to constant maturities or, if such statistical release is not published at the time of any determination under the Supplemental Indenture, then any publicly available source of similar market data which shall be designated by the Company. 5. Mandatory Redemption. The Company shall not be required to make sinking fund or redemption payments with respect to the Notes. 6. Notice of Redemption. Notice of redemption shall be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at its registered address. Notes may be redeemed in part but only in whole multiples of $1,000, unless A-3 all of the Notes held by a Holder are to be redeemed. On and after the redemption date, interest ceases to accrue on Notes or portions of them called for redemption. 7. Denominations, Transfer, Exchange. The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Security Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Security Registrar need not exchange or register the transfer of any Note or portion of a Note selected for redemption. Also, it need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes, or during the period between a record date and the corresponding Interest Payment Date. 8. Defaults and Remedies. In case an Event of Default (as defined in the Indenture) with respect to the Notes shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the provisions provided in the Indenture. 9. Actions of Holders. The Indenture contains provisions permitting the holders of not less than a majority of the aggregate principal amount of the outstanding Notes, subject to certain exceptions as provided in the Indenture, on behalf of the holders of all such Notes at a meeting duly called and held as provided in the Indenture, to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided in the Indenture to be made, given or taken by the holders of the Notes, including without limitation, waiving (a) compliance by the Company with certain provisions of the Indenture, and (b) certain past defaults under the Indenture and their consequences. Any resolution passed or decision taken at any meeting of the holders of the Notes in accordance with the provisions of the Indenture shall be conclusive and binding upon such holders and upon all future holders of this Note and other Notes issued upon the registration of transfer hereof or in exchange heretofore or in lieu hereof 10. Persons Deemed Owners. The Company, the Trustee, and any agent of the Company or the Trustee may deem and treat the Person in whose name this Note is registered on the Security Register as its absolute owner for all purposes. 11. Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent. 12. Governing Law. THE INTERNAL LAW OF THE COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES. 13. No Personal Liability. THE AMENDED AND RESTATED DECLARATION OF TRUST OF THE COMPANY, DATED JULY 1, 1994, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED IN THE OFFICE OF THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HRPT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT A-4 INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY. ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. The Company will furnish to any Holder upon written request and without charge a copy of the Indenture. Request may be made to: HRPT Properties Trust 400 Centre Street Newton, MA 02458 Telecopier No.: (617) 332-2261 Attention: President or such other address as the Company may specify pursuant to the Indenture. A-5 ASSIGNMENT FORM To assign this Note, fill in the form below: [I] [We] assign and transfer this Note to ______________________________________ __________________________ [Print or type assignee's name, address and zip code] ________________________________ [Insert assignee's soc. sec. or tax I.D. no.] and irrevocably appoint_________________________________________________________ to transfer this Note on the books of the Company. The agent may substitute another to act for him. Date: _______________ Your Signature: ____________________________ [Sign exactly as your name appears on the face of this Note] Signature Guarantee: - ------------------------------------------- [The signature must be guaranteed by an officer of a participant in a recognized signature guarantee program. Notarized or witnessed signatures are not acceptable.] A-6 EX-12.1 4 ex12-1.txt
Exhibit 12.1 HRPT PROPERTIES TRUST COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (Interest Only) (dollars in thousands) Six Months Ended June 30, Year Ended December 31, --------------------------- ---------------------------------------------------------------- 2002 2001 2001 2000 1999 1998 1997 --------------------------- ---------------------------------------------------------------- Earnings: Income before equity in earnings (loss) of equity investments and extraordinary item $ 43,683 $ 47,311 $ 89,659 $ 110,086 $ 116,638 $ 136,756 $ 97,230 Fixed charges 44,602 47,191 91,305 104,337 91,420 66,612 38,703 Distributions from equity investments 13,493 13,286 26,651 30,294 18,606 10,320 9,640 Capitalized interest (1,443) (523) (787) (1,680) (1,488) (447) (165) --------------------------- ---------------------------------------------------------------- Adjusted Earnings $ 100,335 $ 107,265 $ 206,828 $ 243,037 $ 225,176 $ 213,241 $ 145,408 =========================== ================================================================ Fixed Charges: Interest expense $ 41,297 $ 45,128 $ 87,075 $ 100,074 $ 87,470 $ 64,326 $ 36,766 Amortization of deferred financing costs 1,862 1,540 3,443 2,583 2,462 1,839 1,772 Capitalized interest 1,443 523 787 1,680 1,488 447 165 --------------------------- ---------------------------------------------------------------- Total Fixed Charges $ 44,602 $ 47,191 $ 91,305 $ 104,337 $ 91,420 $ 66,612 $ 38,703 =========================== ================================================================ Ratio of Earnings to Fixed Charges 2.2x 2.3x 2.3x 2.3x 2.5x 3.2x 3.8x =========================== ================================================================
EX-12.2 5 ex12-2.txt
Exhibit 12.2 HRPT PROPERTIES TRUST COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED DISTRIBUTIONS (dollars in thousands) Six Months Ended June 30, Year Ended December 31, --------------------------- ---------------------------------------------------------------- 2002 2001 2001 2000 1999 1998 1997 --------------------------- ---------------------------------------------------------------- Earnings: Income before equity in earnings (loss) of equity investments and extraordinary item $ 43,683 $ 47,311 $ 89,659 $ 110,086 $ 116,638 $ 136,756 $ 97,230 Fixed charges before preferred distributions 44,602 47,191 91,305 104,337 91,420 66,612 38,703 Distributions from equity investments 13,493 13,286 26,651 30,294 18,606 10,320 9,640 Capitalized interest (1,443) (523) (787) (1,680) (1,488) (447) (165) --------- --------- --------- --------- --------- --------- --------- Adjusted Earnings $ 100,335 $ 107,265 $ 206,828 $ 243,037 $ 225,176 $ 213,241 $ 145,408 ========= ========= ========= ========= ========= ========= ========= Fixed Charges: Interest expense $ 41,297 $ 45,128 $ 87,075 $ 100,074 $ 87,470 $ 64,326 $ 36,766 Amortization of deferred financing costs 1,862 1,540 3,443 2,583 2,462 1,839 1,772 Capitalized interest 1,443 523 787 1,680 1,488 447 165 Preferred distributions 9,875 6,967 16,842 -- -- -- -- --------- --------- --------- --------- --------- --------- --------- Total Fixed Charges $ 54,477 $ 54,158 $ 108,147 $ 104,337 $ 91,420 $ 66,612 $ 38,703 ========= ========= ========= ========= ========= ========= ========= Ratio of Earnings to Combined Fixed Charges and Preferred Distributions 1.8x 2.0x 1.9x 2.3x 2.5x 3.2x 3.8x ========= ========= ========= ========= ========= ========= =========
EX-99.1 6 ex99-1.txt EXHIBIT 99.1 Certification Required by 18 U.S.C. Sec. 1350 (Section 906 of the Sarbanes - Oxley Act of 2002) ------------------------------------------------ In connection with the filing by HRPT Properties Trust (the "Company") of the Quarterly Report on Form 10-Q for the period ending June 30, 2002 (the "Report"), each of the undersigned hereby certifies, to the best of his knowledge: 1. The Report fully complies with the requirements of Section 13(a) and 15(d) of the Securities Exchange Act of 1934. And 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Barry M. Portnoy /s/ John A. Mannix Barry M. Portnoy John A. Mannix Managing Trustee President and Chief Operating Officer /s/ Gerard M. Martin /s/ John C. Popeo Gerard M. Martin John C. Popeo Managing Trustee Treasurer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----