-----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, VSx4EIXQdZjpg3Ez9S71wQqB8zfa6inKrNq82yPhX7zvws/jE/6Ln+V1+di76d+F Z0jh+9+lTTAfcHjvYemRxg== 0000912057-95-010962.txt : 19951212 0000912057-95-010962.hdr.sgml : 19951212 ACCESSION NUMBER: 0000912057-95-010962 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951031 FILED AS OF DATE: 19951211 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BRE PROPERTIES INC CENTRAL INDEX KEY: 0000009677 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 941722214 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07993 FILM NUMBER: 95600682 BUSINESS ADDRESS: STREET 1: 1 MONTGOMERY ST STREET 2: TELESIS TWR STE 2500 CITY: SAN FRANCISCO STATE: CA ZIP: 94104 BUSINESS PHONE: 4154456530 FORMER COMPANY: FORMER CONFORMED NAME: BANKAMERICA REALTY INVESTORS DATE OF NAME CHANGE: 19870927 10-Q 1 BRE 10-Q QUARTER ENDED OCTOBER 31, 1995 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1995 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-5305 BRE PROPERTIES, INC. ---------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 94-1722214 ------------------------------- ------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) One Montgomery Street Telesis Tower, Suite 2500 San Francisco, CA 94104-5525 ------------------------------- ------------------------------- (Address of principal office) (Zip Code) Registrant's telephone number, including area code (415) 445-6530 ------------------------------- Inapplicable -------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 __X__ . Number of shares of Class A common stock outstanding as of October 31, 1995 10,970,865 ------------------------------- PART I FINANCIAL INFORMATION Item 1 - FINANCIAL STATEMENTS BRE PROPERTIES, INC. - ------------------------------------------------------------------------------- BALANCE SHEETS (Dollar amounts in thousands) - -------------------------------------------------------------------------------
October 31, 1995 July 31, 1995 (unaudited) --------------------------------- ASSETS Equity investments in real estate $ 370,076 $ 377,175 Less: Accumulated depreciation and amortization (46,730) (47,811) --------- --------- 323,346 329,364 Investments in limited partnerships 1,202 1,181 --------- --------- Real estate portfolio 324,548 330,545 Mortgage loans 7,163 7,409 Allowance for possible losses (1,250) (1,250) --------- --------- 330,461 336,704 Cash and short-term investments 15,232 4,462 Funds in escrow for tax-deferred exchange 3,854 Other assets 8,214 6,720 --------- --------- Total assets $ 357,761 $ 347,886 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable and other liabilities $ 4,091 $ 4,116 Mortgage loans payable 112,519 100,828 --------- --------- Total liabilities 116,610 104,944 --------- --------- Shareholders' equity Class A common stock, $0.01 par value, 50,000,000 shares authorized. Shares issued and outstanding 10,970,865 at October 31,1995 and 10,962,065 at July 31, 1995 109 109 Additional paid-in capital 212,246 212,127 Undistributed net realized gain on sales of properties 28,796 30,706 --------- --------- Total shareholders' equity 241,151 242,942 --------- --------- Total liabilities and shareholders' equity $ 357,761 $ 347,886 --------- --------- --------- ---------
See notes to financial statements. 2 BRE PROPERTIES, INC. - -------------------------------------------------------------------------------- STATEMENTS OF INCOME (unaudited) (Amounts in thousands, except in per share data) - --------------------------------------------------------------------------------
For the Three Months Ended October 31 -------------------- REVENUE 1995 1994 --------- --------- Rental income $16,084 $14,110 Interest on short-term investments 139 242 Interest income on mortgage loans 209 138 Income from limited partnerships 140 82 Other income 143 117 ------- ------- Total revenue 16,715 14,689 ------- ------- EXPENSES Real estate expenses 5,837 4,767 Provision for depreciation and amortization 1,988 1,785 Interest expense 2,075 1,451 General and administrative 915 1,229 ------- ------- Total expenses 10,815 9,232 ------- ------- Income before gain on sales of investments 5,900 5,457 Gain (loss) on sales of investments (899) ------- ------- NET INCOME $ 5,001 $ 5,457 ------- ------- ------- ------- Income per share Primary Income before gain on sales of investments $ .54 $ .50 Gain (loss) on sales of investments (.08) ------- ------- Net income $ .46 $ .50 ------- ------- ------- ------- Dividends declared $ .63 $ .60 ------- ------- ------- ------- Weighted average shares outstanding 10,984 10,932
See notes to financial statements. 3 BRE PROPERTIES, INC. - -------------------------------------------------------------------------------- STATEMENT OF CASH FLOWS (UNAUDITED) (Dollar amounts in thousands) - --------------------------------------------------------------------------------
For the three months ended October 31 -------------------- 1995 1994 -------- -------- Cash flows from operating activities: Net income $ 5,001 $ 5,457 Non-cash revenues and expenses included in income: Provision for depreciation and amortization 1,988 1,785 Loss on sales of investments 899 Increase in other assets (425) (11) Increase (decrease) in accounts payable and other liabilities (25) 647 Other increase 188 443 -------- -------- CASH FLOWS GENERATED BY OPERATING ACTIVITIES 7,626 8,321 -------- -------- Cash flows from investing activities: Equity investments: Apartments purchased (16,231) Cash invested in apartments acquired through tax-deferred exchange (361) Options payments on apartments being developed (480) Apartment expansion (1,252) Improvements to apartments (196) (86) Space preparations and tenant improvements: Shopping centers (374) (1,172) Light industrial and warehouse (398) Funds in escrow for tax-deferred exchange 3,854 Advances on mortgage loans receivable (1,500) Repayments on mortgage loans receivable 246 44 -------- -------- NET CASH FLOWS GENERATED BY (USED IN) INVESTING ACTIVITIES 2,689 (20,595) -------- -------- Cash flows from financing activities: Mortgage loans payable: New mortgage loans 12,000 Principal payments (309) (278) Capitalized costs of proposed merger (589) Proceeds from grants of restricted shares and exercises of stock options 119 279 Dividends paid (6,912) (6,555) -------- -------- NET CASH FLOWS GENERATED BY (USED IN) FINANCING ACTIVITIES 4,309 (6,554) -------- -------- Increase (decrease) in cash and short-term investments 14,624 (18,828) Balance at beginning of year 4,462 28,938 -------- -------- Balance at end of period $ 19,086 $ 10,110 -------- -------- -------- --------
4 BRE PROPERTIES, INC. - -------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS (unaudited) - -------------------------------------------------------------------------------- October 31, 1995 NOTE A - BASIS OF PRESENTATION - ------------------------------ The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-Q and should be read in conjunction with the company's Annual Report on Form 10-K for the fiscal year ended July 31, 1995, together with the portions of the company's 1995 Annual Report to shareholders incorporated therein by reference. In the opinion of management, all adjustments (consisting of normal recurring adjustments only) have been made which are necessary for a fair statement of the results for the interim period presented herein. Certain reclassifications have been made to the 1994 financial statements to conform to the presentation of the 1995 financial statements. NOTE B - NET INCOME PER SHARE - ----------------------------- Primary net income per share is based upon the average number of shares outstanding during the periods, increased for the assumed exercise of vested, in-the-money stock options. NOTE C - LITIGATION - ------------------- The company, because of the nature of its business, is sometimes subject to various threatened or filed legal claims, including certain environmental actions. While it is not feasible to predict or determine the ultimate outcome of these matters, in the opinion of management, none of these actions, individually or in the aggregate, will have a material effect on the company's results of operations, cash flows, liquidity or financial position. NOTE D - COMMITMENTS - -------------------- BRE has entered into a development and option agreement with Picerne Development Corporation (Picerne), an Arizona corporation, which is a wholly owned subsidiary of Picerne Investment Corporation, a privately held apartment developer headquartered in Rhode Island. Picerne is developing Arcadia Cove, a 432-unit apartment complex in Phoenix, Arizona. The development is being financed through two loans made by Wells Fargo Bank. The two loans are for $4,226,000 (standing loan) and $19,125,000 (construction loan), for a total of $23,351,000. As of October 31, 1995, $10,207,000 was outstanding under the loans. BRE has guaranteed repayment of the loans and has the right to acquire the property at or before completion of construction, which is currently expected in mid-1996. 5 BRE has made, or is committed to make, monthly option payments to Picerne as follows:
(IN THOUSANDS) ------------------------------------------------------------------- December 94 $ 220 February 95 - July 95 $ 60 x 6 months 360 August 95 - December 95 160 x 5 months 800 January 96 - March 96 100 x 3 months 300 April 96 - May 96 20 x 2 months 40 ------ Estimated total option payments $1,720 ------ ------
BRE's estimated total cost for the property, including interest expense and marketing expenses during construction, is $23,900,000. In addition, BRE has committed to purchase Phase II of Newport Landing Apartments, in Glendale, Arizona. BRE purchased the adjacent 240-unit Phase I in September 1995, for $9,235,000. Phase II, also planned for 240 units, is currently being developed, with construction expected to be completed mid-1996. Picerne, which developed Phase I, is also developing Phase II for BRE. The cost for Phase II is projected to be $12,784,000. Subsequent to July 31, 1995, the company committed to purchase an additional 266 units to be built near Portland, Oregon at a price of $16,350,000. Construction is underway, with completion expected in the spring of 1996. BRE will purchase the property following its completion in accordance with plans and specifications. NOTE E - RECENT DEVELOPMENT - --------------------------- On October 11, 1995, BRE entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among BRE, Real Estate Investment Trust of California ("REIT-Cal") and a newly-formed Maryland subsidiary of REIT-Cal ("REIT-Cal Sub"). The Merger Agreement, which has been approved by the Board of Directors and Boards of Trustees of each of the parties, would result in the acquisition of REIT-Cal by BRE through (i) a merger of REIT-Cal with and into REIT-Cal Sub followed by (ii) a merger of REIT-Cal Sub with and into BRE (the "Merger"). Following consummation of the Merger, it is contemplated that BRE would change its state of corporate domicile from Delaware to Maryland. Under the terms of the Merger Agreement, each issued and outstanding share of beneficial interest, without par value, of REIT-Cal would be converted into the right to receive 0.57 (the "Exchange Ratio") of a share of BRE common stock in a tax-free transaction. In the event that either (i) (a) the average closing price per share of BRE common stock as reported by the New York Stock Exchange (the "NYSE") for the ten consecutive trading days ending on (and including) the trading day immediately preceding the date of REIT-Cal's stockholders meeting to consider the Merger (the "BRE Average Price") is less than $28.575, and (b) the difference between the BRE Average Price and the closing price of BRE common stock on the NYSE on 6 September 11, 1995, expressed as a percent of the closing price of BRE common stock on the NYSE on September 11, 1995, is at least 10% greater than the percentage decline in the value of the NAREIT Equity REIT Index over the period from September 11, 1995 to the trading day immediately preceding the date of the REIT-Cal stockholders meeting to consider the Merger, or (ii) the BRE Average Price is less than $28.07, the agreement may be terminated by REIT-Cal unless BRE increases the Exchange Ratio so that the Exchange Ratio as adjusted would equal a fraction the numerator of which is the product of 0.57 times (x) $28.575 in the case of a proposed termination under clause (i) above, or (y) $28.07 in the case of a proposed termination under clause (ii) above, and the denominator of which is the BRE Average Price. Closing of the Merger is contingent upon, among other things, approval of the stockholders of BRE and REIT-Cal. The Merger will be treated as a purchase for accounting purposes. Upon the closing, Frank C. McDowell would continue to serve as President and Chief Executive Officer of BRE. Three executives of REIT-Cal would also be added to BRE management: Jay W. Pauly as Senior Executive Vice President and Chief Operating Officer; LeRoy E. Carlson as Executive Vice President and Chief Financial Officer; and John H. Nunn as Senior Vice President, Property Management. In addition, three directors of REIT-Cal would be appointed to the BRE Board of Directors, increasing BRE's Board from six to nine members. NOTE F - SUBSEQUENT EVENTS - -------------------------- On November 27, 1995, the Directors declared a dividend of $.63 per share, payable December 21, 1995 to shareholders of record December 8, 1995. 7 BRE PROPERTIES, INC. - -------------------------------------------------------------------------------- ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - -------------------------------------------------------------------------------- October 31, 1995 LIQUIDITY AND CAPITAL RESOURCES The company's cash and short-term investments totaled $15,232,000 at October 31, 1995, up from $4,462,000 at July 31, 1995. In addition to the $15,232,000 in cash and short-term investments, $3,854,000 was in escrow for completion of a tax-deferred exchange. During the quarter ended October 31, 1995, BRE borrowed, on a non-recourse basis, $12,000,000 secured by the Verandas Apartments in Union City, California. The loan has a 10-year term, with amortization based on 30 years, and a fixed interest rate of 7.3%. The balloon payment at maturity is $10,372,000. Depending on market conditions at maturity, the company may choose, among other things, to renegotiate the terms with the existing lender, refinance the property with another lender or sell assets to repay the balloon amounts. During the quarter BRE completed the tax-deferred exchange of the vacant Pomona Warehouse property in Pomona, California for the 240-unit Phase I of Newport Landing Apartments in Glendale, Arizona. The loss on the disposition of the Pomona Warehouse was $93,000. In addition, $3,854,000 has been placed in escrow as the proceeds from the disposition of the vacant Irvine Spectrum property in Irvine, California. The proceeds are expected to be invested on a tax-deferred basis in one of the several apartment properties that BRE has under contract to purchase. The loss on the disposition of the Irvine Spectrum Property was $806,000 (net of a $13,000 increase to the reported gain on Marymoor Warehouse, sold in November 1994). An additional $374,000 was invested during the quarter in space preparation and tenant improvements at shopping centers. Cash commitments at October 31, 1995 include the December 21, 1995 dividend payment of approximately $6,912,000. In addition, as more fully discussed in Note D of Notes to Financial Statements, BRE plans to acquire Arcadia Cove, a 432-unit apartment community currently under development, the 240-unit second phase of Newport Landing, and 266 units to be built, in the summer of fiscal 1996. The aggregate purchase price for these properties is approximately $53,034,000. (including, in the case of Arcadia Cove, option payments made by the company). These acquisitions may be funded through a combination of tax-deferred exchanges and borrowings under the existing lines of credit. 8 In addition to cash and short-term investments, the company has available bank lines of credit totaling $30,000,000. There were no borrowings under those lines of credit at October 31, 1995. The company expects to use a portion of the lines of credit to fund the cash portion of the purchase price for the apartment acquisitions described above. RESULTS OF OPERATIONS Net income for the quarter ended October 31, 1995 was $5,001,000 ($.46 per share), compared to $5,457,000 ($.50 per share) for the same quarter last year. Funds from operations totaled $7,888,000 for the quarter ended October 31, 1995, up 9% from the same period last year. Funds from operations is defined as net income (computed in accordance with generally accepted accounting principles), excluding gains (or losses) from debt restructuring and sales of property, plus provisions for depreciation, amortization and possible investment losses. Because income-producing properties are typically evaluated without taking into account non-cash charges such as provisions for depreciation, amortization and possible investment losses, management believes that funds from operations is an appropriate supplemental measure of the company's operating performance. At October 31, 1995, overall occupancy levels by class of property were as follows:
Property Type Overall Occupancy ------------------------------------------------------- Apartments 96 % Shopping centers 96 Other 97 -- WEIGHTED AVERAGE 96 % -- --
The weighted average occupancy is calculated by multiplying the occupancy for each property by its square footage and dividing by the total square footage in the portfolio. REVENUE Rental income rose 14% for the October 31, 1995 quarter from the comparable period last year. Apartments acquired since August 1, 1994 (and therefore owned less than two years) generated gross rents of $2,185,000 for the quarter while apartments owned for two or more years contributed $498,000 in higher revenue (up 5%). Interest income on short-term investments decreased $103,000 from the comparable quarter last year as a result of lower average invested balances as cash was used to purchase apartments. 9 EXPENSES Operating expenses of equity investments increased 22% from the year earlier period, primarily due to expenses on the new apartment acquisitions. General and administrative expenses were $915,000 for the quarter ended October 31, 1995, down $314,000 (26%) from $1,229,000 for the comparable quarter last year, which had included $437,000 of legal costs paid in connection with litigation. During the fourth quarter, ended July 31, 1995, BRE successfully recovered $363,000 of this $437,000 from various insurance carriers. Excluding this litigation-related expense, general and administrative expenses rose for the quarter ended October 31, 1995 as a result of higher salaries and employee benefits due to a larger staff. As more fully discussed in Note E of Notes to Financial Statements, on October 11, 1995, BRE entered into the Merger Agreement with REIT-Cal. Through October 31, 1995, BRE has paid investment banking, legal, accounting and other costs related to the Merger aggregating $565,000. This amount has been capitalized in anticipation of the Merger. Included in the $565,000 is $222,000 which had originally been expensed during the fiscal year ended July 31, 1995. This $222,000 was credited against general and administrative expenses during the quarter ended October 31, 1995. Commencing August 1, 1995, BRE began allocating a portion of its salaries, employee benefits and other personnel costs to the real estate expense of the properties in the portfolio. While this reclassification does not change the company's net income or funds from operations, such an allocation reduces reported general and administrative expenses and increases real estate expense by an equal amount. Management believes that this allocation is consistent with industry practices and will provide a better matching of the revenue generated by the properties and the expenses required to generate that revenue. The amounts reclassified from general and administrative expenses to real estate expenses were $400,000 and $345,000 for the quarters ended October 31, 1995 and 1994, respectively. Interest expense was up $624,000 from the comparable quarter last year. This increase reflected new mortgage loans, assumed since August 1, 1994, on Camino Seco Village, Colonia del Rio, Fountain Plaza, Hacienda del Rio, SpringHill and Verandas Apartments. The principal of these loans totaled approximately $27,939,000. GAIN (LOSS) ON SALES No gain on sales of investments was recorded during the quarter ended October 31, 1995. The company has recorded in its financial statements gains totaling $62,307,000 which have been deferred for tax purposes since the company's 1970 inception through October 31, 1995. The losses on the previously discussed sales of Pomona Warehouse and Irvine Spectrum aggregated $899,000 for the quarter ended October 31, 1995. 10 DIVIDENDS The $.63 per share dividend for the quarter ended October 31, 1995, was approximately 88% of funds from operations. Dividends totaled $6,912,000, compared to reportable net income of $5,001,000. Reportable net income is after deduction of $1,988,000 of depreciation expense (a non-cash charge) and $899,000 of loss on sales of investments. The dividend exceeded reportable net income. 11 BRE PROPERTIES, INC. PART II - OTHER INFORMATION Item 5. OTHER INFORMATION During the quarter, Standard & Poor's withdrew its "A" implied senior credit rating on BRE, following the announcement of the proposed Merger with non-rated Real Estate Investment Trust of California. BRE has no existing indebtedness subject to credit ratings. Should BRE seek a rating in the future, the indebtedness subject to the rating will be evaluated in accordance with then-existing credit standards. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits The following exhibits are submitted herewith: 10.1 Amended and Restated Non-Employee Director Stock Option Plan dated October 2, 1995. 11. Computation of Earnings Per Share (b) Reports on Form 8-K. The company filed a Current Report on Form 8-K dated October 11, 1995 reporting, under Item 5 of such form, the execution of an Agreement and Plan of Merger with Real Estate Investment Trust of California. The transactions contemplated by the Agreement and Plan of Merger are subject to completion of various terms and conditions, including approval by the shareholders of both companies. 12 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. BRE PROPERTIES, INC. (Registrant) Date December 11, 1995 /s/ Howard E. Mason, Jr. --------------------- --------------------------- Howard E. Mason, Jr. Senior Vice President, Finance Date December 11, 1995 /s/ Ellen G. Breslauer --------------------- --------------------------- Ellen G. Breslauer Secretary and Treasurer 13 EXHIBIT INDEX Number Description - ------ ----------- 10.1 Amended and Restated Non-Employee Director Stock Option Plan dated October 2, 1995 11 Computation of Earnings per Share 14 EX-10.1 2 AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR SOP BRE PROPERTIES, INC. AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN October 2, 1995 1. PURPOSE OF THE PLAN. The purpose of the Non-Employee Director Stock Option Plan (the "Plan") is to attract and retain the services of experienced and knowledgeable non-employee directors, to encourage them to devote their utmost effort and skill to the advancement and betterment of the company, and to permit them to participate in the ownership of the company through stock compensation in lieu of cash compensation. This plan, upon approval by the shareholders of the company as provided in Section 10, supersedes the Company's 1994 Non-Employee Director Stock Plan. 2. DEFINITIONS. As used in the Plan and the related Option agreements, the following terms will have the meanings stated below: (a) "Board" means the Board of Directors of the company. (b) "company" means BRE Properties, Inc., a Delaware corporation. (c) "Code" means the Internal Revenue Code of 1986, as amended. (d) "Committee" means the Board or its Compensation Committee appointed by the Board to administer the Plan. (e) "Exchange Act" means the Securities Exchange Act of 1934. (f) The "Fair Market Value" of a Share on any date means the closing price per Share on the New York Stock Exchange for that day (or, if no Shares were publicly traded on that Exchange on that date, the next preceding day that Shares were so traded on that Exchange). (g) "Non-Employee Director" means a present or future member of the Board who is not otherwise an employee of the Company. (h) "Option" means an option to purchase Shares. (i) "Optionee" means the holder of an Option. (j) "Option Price" means the price to be paid for Shares upon exercise of an Option. (k) "Shares" means shares of Class A common stock, $.01 par value, of the company. (l) "Subsidiary" means any corporation in which the company owns, directly or indirectly, stock possessing more than 50 percent of the total combined voting power of all classes of stock. 3. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee shall have the power to interpret the Plan and prescribe, amend and rescind rules and regulations relating to it. 4. PARTICIPATION IN THE PLAN. (a) ANNUAL STOCK OPTIONS FOR 12,500 SHARES IN LIEU OF DIRECTOR FEES. Non-Employee Directors shall receive the following Options in lieu of fees for serving on the Board or attending meetings of the Board or its committees. (i) INITIAL GRANTS. Effective October 16, 1995, an initial grant of Options for 12,500 Shares shall be made to (i) each person who on that date is a Non-Employee Director and (ii) Gregory M. Simon, Roger P. Kuppinger and William E. Borsari, who are proposed to become Non-Employee Directors upon consummation of the proposed merger of the company with the Real Estate Investment Trust of California. (ii) GRANTS TO FUTURE NON-EMPLOYEE DIRECTORS. Any person who hereafter becomes a Non-Employee Director shall automatically receive an Option for 12,500 shares effective as of the date of their appointment or election to the Board. (iii) SUBSEQUENT ANNUAL GRANTS. In addition to the option grants provided for in subparagraphs (i) and (ii) above, each Non-Employee Director shall automatically receive an additional Option for 12,500 shares on each anniversary date of the date of grant of the Option received pursuant to subparagraphs (i) or (ii) above. (b) CHAIRMAN OF THE BOARD RETAINER. Options granted hereunder to the Chairman of the Board shall be in addition to, and not in lieu of, any separate cash retainer otherwise payable to the Chairman for serving in his capacity as such. (c) ANNUAL INCENTIVE GRANTS. In addition to the Options granted pursuant to paragraph (a) above, each Non-Employee Director shall receive an additional Option 2 for 2,500 shares following any fiscal year of the company beginning on or after January 1, 1996 that the growth in the company's funds from operations per share from the prior year, as determined by reference to the company's annual financial statements, is at or above the 80th percentile of the ten largest publicly-traded multi-family Real Estate Investment Trusts based on total assets. The grant date for Options granted pursuant to this paragraph (c) shall be the date, following publication of the company's annual financial statement, that the reference information for the comparison REITs first becomes available. 5. SHARES SUBJECT TO PLAN. The maximum number of Shares which may be issued pursuant to Options under the Plan shall be 400,000, subject to adjustment in accordance with Section 8. In the event that any outstanding Option shall expire or terminate for any reason, the Shares allocable to the unused portion of that Option may again be available for additional Options under the Plan. 6. TRANSFERABILITY. Except as permitted by the Committee in accordance with the rules and regulations promulgated under the Exchange Act with respect to any exemption from the short-swing profit provisions of Section 16(b) of that Act, Options granted under the Plan shall not be transferable by the holder other than by will or the laws of descent and distribution and shall be exercisable during the holder's lifetime only by the holder or the holder's guardian or legal representative. 7. TERMS AND CONDITIONS OF OPTIONS. The Options granted hereunder will not be "incentive stock options" under Section 422 of the Code. Each Option Agreement shall state the number of Shares subject to the Option, the Option Price, the Option period, the method of exercise, the manner of payment, any restrictions on transfer, and such other terms and conditions as the Committee shall determine consistent with the Plan and the following: (a) OPTION PRICE. The price to be paid for Shares upon the exercise of an Option shall be 100% of the Fair Market Value of the Shares on the date the Option is granted. (b) EXPIRATION OF OPTION. No Option shall be exercisable after the expiration of ten years from the date of grant. (c) PAYMENT OF OPTION PRICE. Upon exercise of an Option, the Option Price for the Shares to which the exercise relates shall be paid in full in cash. (d) VESTING OF OPTIONS. Each Option granted hereunder shall become exercisable in full on the first anniversary of the grant date, provided the Optionee is a Non-Employee Director on that date. 3 (e) TERMINATION OF DIRECTOR STATUS. Termination of an Optionee's status as a director of the company shall not affect the ability of the Optionee or the Optionee's estate to exercise until the expiration date thereof any Options which have vested prior to the termination date. (f) RIGHTS AS SHAREHOLDER. No Optionee shall have rights as a shareholder with respect to Shares acquired under the Plan unless and until the certificates for such Shares are delivered to him or her. 8. CAPITAL ADJUSTMENTS. The aggregate number of Shares with respect to which Options may be granted hereunder, the number of Shares thereof covered by each outstanding Option and the purchase price per Share shall be proportionately adjusted for changes in the capitalization of the company resulting from a recapitalization, reorganization, merger, consolidation, exchange of shares, stock dividend, stock split, reverse stock split, or other subdivision or consolidation of shares or the like. No fractional shares shall be issued, and any fractional shares resulting from the adjustments contemplated by this subparagraph shall be eliminated from the respective Option. 9. EXCHANGE ACT SECTION 16. Transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 or its successor under the Exchange Act. To the extent any provision of the Plan or action by the Plan administrators fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee. 10. DURATION OF THE PLAN. This Amended and Restated Plan shall be deemed effective on October 2, 1995, if no later than October 1, 1996 the Plan has been approved by the affirmative vote of a majority of the outstanding shares of voting stock of the company present and voting in person or by proxy at a duly held shareholder meeting. The Plan shall terminate on October 1, 2005, but may be sooner terminated by the Board at any time. Expiration or termination of the Plan will not affect any Options then outstanding. 11. AMENDMENT OF THE PLAN. The Board may amend or terminate the Plan at any time; PROVIDED, HOWEVER, that the Plan may not be amended more than once every six months, except to the extent permitted by Rule 16b-3 or to comply with changes in the Code, or the rules and regulations thereunder, and provided further that no such amendment shall, without the approval of the holders of a majority of the outstanding shares of voting stock of the company present and voting at a duly held shareholder meeting, (i) increase the maximum number of Shares which may be purchased pursuant to the Plan, (ii) change the purchase price, (iii) change the Option period or increase the time limitation on the grant of Options under the Plan, or (iv) materially modify the Plan in any manner which requires shareholder approval under Rule 16b-3 or its successor under the Exchange Act. 4 EX-11 3 COMPUTATION OF NET EARNINGS PER SHARE BRE PROPERTIES, INC. - -------------------------------------------------------------------------------- EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE - -------------------------------------------------------------------------------- STATEMENT OF EARNINGS PER SHARE Average shares outstanding are computed by adding the shares outstanding at each month end and dividing that result by the number of months elapsed in the year-to-date period.
For the three months ended October 31 -------------------------- Computation: 1995 1994 ---- ---- Shares outstanding at beginning of year 10,962,065 10,916,483 Averaged for dates of grants or exercises: Exercisable, in-the-money, stock options 15,168 8,736 Restricted shares granted, less forfeitures 2,100 6,750 Exercise of stock options 4,500 ---------- ---------- Average shares outstanding 10,983,833 10,931,969 ---------- ---------- ---------- ---------- Net income before gain (loss) on sales of investments $5,900,285 $5,457,158 ---------- ---------- ---------- ---------- Computation $ .54 $.50 ---------- ---------- ---------- ---------- Net gain (loss) on sales of investments $ (899,258) -- ---------- ---------- ---------- ---------- Computation $(.08) -- ---------- ---------- ---------- ---------- PRIMARY EARNINGS PER SHARE $ .46 $.50 ---------- ---------- ---------- ----------
15 BRE PROPERTIES, INC. - -------------------------------------------------------------------------------- EXHIBIT 11 - COMPUTATION OF EARNINGS PER SHARE (Continued) - --------------------------------------------------------------------------------
For the three Months Ended October 31 -------------------------- FULLY DILUTED EARNINGS PER SHARE 1995 1994 ---- ---- Shares outstanding at end of period 10,970,865 10,925,493 Exercisable, in-the-money stock options 15,168 8,736 ---------- ---------- Total Shares 10,986,033 10,934,229 ---------- ---------- ---------- ---------- Income before gain on sales of investments $5,900,285 $5,457,158 ---------- ---------- ---------- ---------- As computed $ .54 $.50 ---------- ---------- ---------- ---------- Net gain (loss) on sales of investments $ (899,258) -- ---------- ---------- ---------- ---------- As computed $(.08) -- ---------- ---------- ---------- ---------- Fully diluted earnings per share $ .46 $.50 ---------- ---------- ---------- ----------
16 EX-27 4 EXH 27 FDS
5 1,000 3-MOS JUL-31-1995 AUG-01-1995 OCT-31-1995 19,086 0 15,377 (1,250) 0 33,213 371,278 (46,730) 357,761 4,091 112,519 109 0 0 241,042 357,761 16,715 16,715 5,837 5,837 2,903 0 2,075 5,900 0 5,900 0 (899) 0 5,001 0.46 0.46 Rental and other revenue Real estate expense Includes $1,988 of depreciation expense, a non-cash charge Net gain (loss) on sales of investments
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