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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2000
Commission file number 1-12222
BEDFORD PROPERTY INVESTORS, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND 68-0306514
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
270 Lafayette Circle, Lafayette, CA 94549
(Address of principal executive offices)
Registrant's telephone number, including area code(925) 283-8910
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
Common Stock, par value $0.02 per share New York Stock Exchange
Pacific Exchange
Securities Registered Pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X] The aggregate market value of the voting stock held by
non-affiliates of Registrant as of March 15, 2001 was approximately
$322,358,000. The number of shares of Registrant's Common Stock, par value
$0.02 per share, outstanding as of March 15, 2001 was 17,814,950.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement to be mailed to stockholders in
connection with the Registrant's annual meeting of stockholders, scheduled to
be held on May 17, 2001, are incorporated by reference in Part III of this
report. Except as expressly incorporated by reference, the Registrant's Proxy
Statement shall not be deemed to be part of this report.
When used in this annual report, the words "believes," "anticipates" and similar
expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected, including, but not
limited to, those set forth in the sections entitled "Potential Factors
Affecting Future Operating Results" and "Qualitative and Quantitative
Disclosures About Market Risk" below. Readers are cautioned not to place undue
reliance on these forward-looking statements which speak only as of the date
hereof. The Company undertakes no obligation to publicly release the result of
any revisions to these forward-looking statements which may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
PART I
ITEM 1. BUSINESS
The Company
Bedford Property Investors, Inc. is a self-administered and self-managed equity
REIT engaged in the business of owning, managing, acquiring and developing
industrial and suburban office properties proximate to metropolitan areas in the
western United States. As of December 31, 2000, the Company owned and operated,
either directly or through wholly-owned subsidiaries, 86 properties aggregating
approximately 6.9 million rentable square feet. Of these 86 properties (the
"Properties"), there are 61 industrial (the "Industrial Properties") and 25
suburban office (the "Suburban Office Properties"). As of December 31, 2000,
the Properties were approximately 97% leased to 466 tenants. The Properties are
located in Northern and Southern California, Washington, Arizona, Nevada and
Colorado.
In addition to the Properties, the Company owns one suburban office and four
office-flex development projects totaling 365,045 rentable square feet. During
2000, the Company completed the shell construction and began the initial lease-
up on two of these projects, which were approximately 67% leased as of December
31, 2000.
The Company seeks to grow its asset base through the development of new
industrial and suburban office properties as well as through the acquisition of
industrial and suburban office properties and portfolios of such properties.
The Company's strategy is to operate in suburban markets that are experiencing,
or are expected by the Company to experience, superior economic growth and that
are subject to limitations on the development of similar properties. The
Company believes that employment growth is a reliable indicator of future demand
for both industrial and suburban office space. In addition, the Company
believes that certain supply-side constraints, such as limited availability of
undeveloped land in a market, increase a market's potential for higher than
average rental growth over time. The Company continues to target selected
markets in which the Properties are located as well as selected other markets
in which the Company has expertise.
Business Objective and Growth Plan
Business Objective
The Company's business objective is to increase stockholders' long-term total
return through increases in the dividend and the appreciation in value of the
Common Stock. To achieve this objective, the Company seeks to (i) increase cash
flow by internal growth of rents from its existing Properties, (ii) develop new
industrial and suburban office properties, (iii) acquire quality industrial and
suburban office properties and/or portfolios of such properties, and (iv)
repurchase its common stock.
Internal Growth
The Company seeks to increase cash flow from existing Properties through (i) the
lease-up of vacant space, (ii) the reduction of costs associated with tenant
turnover by retaining existing tenants, (iii) the negotiation of increases in
rental
rates and of contractual periodic rent increases when market conditions permit,
and (iv) the strict containment of operating expenses and capital expenditures.
During 2000, leases for 1,510,323 square feet of space expired with a weighted
average base rental rate of $10.91 per square foot. Approximately 91% of this
space has been re-leased, and the weighted average base rental rate of the new
leases is $13.79 per square foot, an increase of 26.5%. Past performance is not
necessarily indicative of results that will be obtained in the future, and no
assurance can be given in that regard.
Development
The Company seeks to develop properties in strong markets where (i) demand for
space has caused or is expected to cause occupancy rates to remain high, (ii)
barriers to entry such as scarcity of land or entitlement challenges exist, and
(iii) the project complements the existing portfolio. The Company's management
team has experience in all phases of the development process, including market
analysis, site selection, zoning, design, pre-development leasing, construction
management and permanent financing. Since 2000, the Company has been especially
focused on the development of office tech and flex tech product. These are
multi-tenant buildings designed to meet the needs of a wide range of uses. The
flex tech product anticipates the changing needs of high-growth tenants and
accommodates their need for flexible facility configurations. The Company
evaluates the competitive environment, demand and rent trends, and development
pipelines before embarking on or acquiring each new development project. The
Company is currently in the process of developing properties in Northern and
Southern California and Colorado, and is considering developing additional
properties in the same markets as well as in the Pacific Northwest. The
Company's management team has significant development experience in each of
these markets.
The Company's activities relating to the development of new properties,
including the due diligence process, are conducted on an exclusive basis by
Bedford Acquisitions, Inc. (BAI), a California corporation wholly-owned by Mr.
Bedford. BAI receives fees in amounts equal to the lesser of (i) 1 1/2% of the
gross amount of the aggregate purchase price of property acquisitions and
dispositions, up to 1 1/2% of any loans arranged by BAI, plus 5% of development
project costs, or (ii) an amount equal to (a) the aggregate amount of approved
expenses funded by BAI through the time of such acquisition, disposition, loan
or development minus (b) the aggregate amount of fees previously paid to BAI
pursuant to such arrangement. In no event will the aggregate amount of fees
paid to BAI exceed the aggregate amount of costs funded by BAI. The current
agreement with BAI has a one-year term expiring January 1, 2002.
Acquisitions
The Company seeks to acquire industrial and suburban office properties and/or
portfolios of such properties. The Company believes that (i) the experience of
its management team, (ii) its existing $175 million credit facility, (iii) its
relationships with private and institutional real estate owners, (iv) its strong
relationships with real estate brokers, and (v) its integrated asset management
program enable it to effectively identify and capitalize on acquisition
opportunities. Each acquisition opportunity is reviewed to evaluate whether it
meets the following criteria: (i) potential for higher occupancy levels and/or
rents as well as for lower turnover and/or operating expenses, (ii) ability to
generate returns in excess of the Company's weighted average cost of capital,
taking into account the estimated costs associated with tenant turnover (i.e.,
tenant improvements, leasing commissions and the loss of income due to vacancy),
and (iii) availability for purchase at a price at or below estimated replacement
cost. However, the Company has in the past acquired, and may in the future
acquire, properties which do not meet one or more of these criteria. This may
be particularly true with the acquisition of a portfolio of properties, which
may include individual properties that do not meet one or more of the foregoing
criteria.
Following completion of an initial review of a property, the Company may make
a purchase offer, subject to satisfactory completion of its due diligence
process. The due diligence process enables the Company to refine its original
estimate of a property's potential performance and typically includes a complete
review and analysis of the property's physical structure, systems, environmental
status and projected financial performance. The due diligence also includes an
evaluation of the local market including competitive properties and relevant
economic and demographic information. Mr. Bedford (the Chief Executive
Officer), along with at least one other officer and one other Board member of
the Company, will typically visit each proposed acquisition property before the
purchase is closed. Acquisitions of properties for the Company are conducted
by BAI as noted above.
Share Repurchase
From November 1998 through the early part of 2000, the Company's stock traded
at a discount to its net asset value (estimated based on current cap rate and
earning estimates) as a result of the softening of the REIT capital markets.
With a dividend yield approximately equal to 9% and an average borrowing cost
of 7.24%, the repurchase and retirement of the Company's common stock increases
the stockholders' percentage ownership in the Company and therefore brings
additional value to that ownership.
In July 1998, the Company's board of directors approved a share repurchase
program of 3 million shares which was increased first to 4.5 million shares in
September 1999 and later to 8 million shares in September 2000. Since November
1998, the Company has repurchased and retired 5.7 million shares at an average
price of $17.49 per share.
Corporate Strategies
In pursuing its business objectives and growth plans, the Company intends to:
1. Pursue a Market Driven Strategy.
The Company's strategy is to continue to operate in suburban markets which are
experiencing, or are expected by the Company to experience, above average
economic growth, and which are, ideally, subject to supply-side constraints.
The metropolitan areas in which the Company operates have multiple suburban
"cores" and it believes that the potential for growth in these metropolitan
areas is generally greatest in and around these suburban cores. It is the
Company's experience that such suburban cores emerge as jobs move to the suburbs
and typically offer a well-trained and well-educated work force, high quality
of life and, in many cases, a diversified economic base. The Company focuses
on owning, managing, acquiring and developing properties in these suburban
cores. Additionally, the Company seeks out real estate markets that are subject
to supply-side constraints such as limited availability of undeveloped land
and/or geographic, topographic, regulatory and/or infrastructure restrictions.
Such restrictions limit the supply of new commercial space, which, when combined
with a growing employment and population base, enhances the long-term return
potential for an investment in real estate assets.
2. Focus its Efforts in the Western United States.
The Company is currently targeting selected suburban markets in the western
United States. Continued economic improvements in these markets, and related
improvements in the commercial property markets, as well as the level of
investment in industrial or suburban office properties in these markets should
provide the potential for attractive returns through increased occupancy levels,
rents and real estate values. This geographic focus, combined with management's
market experience, contributes to a more thorough understanding of these
industrial and suburban office property markets and allows the Company to
anticipate trends and therefore to better identify investment opportunities.
During 2000, the Company decided to take advantage of the growth opportunities
in the strong markets of the West Coast and exited the slow-velocity markets of
the Mid-West by selling all of its operating properties in Kansas and Texas.
3. Develop and Acquire "Service-Flex, Tech-Flex and Office-Tech" Properties.
Among the Company's targeted properties are service and tech-flex industrial
properties as well as office-tech buildings. These buildings provide for a
wider range of function than that offered by traditional office or industrial
properties and are an efficient facility choice for today's high growth
technology sector firms that have frequently changing space needs. These
properties are divisible into units ranging from approximately 1,500 square feet
to approximately 20,000 square feet in order to accommodate multiple tenants of
various sizes and needs. The buildings, which generally range in size from
8,000 to 80,000 square feet, have a clear height of 12 to 18 feet and are built
using concrete tilt construction with store fronts incorporated in the front
elevation and service doors or continued storefront in the back elevation. The
Company believes that these properties require more management expertise than
other types of industrial properties and that it has developed such expertise.
The Company also believes that many potential buyers do not wish or are not
well-positioned to undertake such active management. As a result, the Company
believes that it often faces fewer competitors for this product and is generally
able to acquire these properties at above average yields.
4. Asset Sales
The Company funds a portion of its development and acquisition activities and
share repurchase program through the sale of selected assets. Such assets
include buildings that have maximized their value or have become obsolete due
to their physical attributes. In addition, the Company has redefined its
geographical focus in the western United States and sold real estate assets that
did not fit this western orientation.
5. Neighborhooding
Neighborhooding describes the expansion in areas where the Company owns existing
properties. This strategy capitalizes on management's expertise and knowledge
of the local market, economy and tenant needs for expansion. It results in
efficiency in property management and therefore enables the Company to acquire
or develop properties at greater yields. The Company utilized this concept in
developing projects and acquiring properties in Fremont, Napa, Petaluma, and San
Diego, California; Phoenix, Arizona; Denver, Colorado; and Federal Way,
Washington.
Transactions and Significant Events During 2000
Development and Acquisitions
Development activity during the year included the continued leasing of
389,000 square feet in six projects located in Arizona, Washington,
and Northern California, which were shell complete during 1999. As of
December 31, 2000, these projects were 94% leased with yields ranging
from 11% to 12%. The Company also completed the shell construction
and partial lease-up of two projects located in Colorado and Northern
California, adding 143,000 square feet to the available inventory. As
of December 31, 2000 these projects were 67% leased. In addition, the
Company commenced the construction of one new project in Northern
California and two new projects in Colorado, which will add
approximately 222,000 rentable square feet to the inventory of
available space in 2001. This new leasable space provides the Company
with a significant opportunity to increase its operating revenue.
The Company also acquired three parcels of vacant land in Napa and
Ontario, California, aggregating 21 acres for a total investment of
approximately five million dollars. These parcels of land are
adjacent to existing Properties. The Company is in the preliminary
planning stage to develop industrial or office properties on each of
these parcels.
During the year, the Company acquired a 165,000 square foot three-
building single-story office complex in Denver, Colorado for $21.5
million. The property is 97% leased and has a first year going-in
yield of 9.42%.
Sell Selected Assets
During the year, the Company sold 20 Properties, including 15
Industrial Properties and 5 Suburban Office Properties, aggregating
1.2 million rentable square feet for $135,576,000. In addition, the
Company sold one 1.43 acre parcel of land for $160,000. These sales
produced gain totaling $38,171,000.
The disposition of one Suburban Office Property was structured as a
like-kind exchange to defer approximately $12 million of taxable gain.
The cash proceeds from other sales were used to fund the repurchases
of the Company's common stock and pay down debt.
Use of Information Technology
The Company's management has made a significant commitment to employ
information technology in all the day-to-day operations of the firm.
A number of steps have been taken during the last two years to
digitize internal practices and eliminate redundancies. These steps
include the creation of a management information system designed to
facilitate real-time dissemination of operating results to field
offices. This system provides the framework for timely operations
reviews with each Regional Manager, the focus of which are market
opportunities and the action steps necessary to take advantage of
them. In addition, all basic business functions have been, or are
being, digitized to simplify practices, reduce paper-flow, and enhance
productivity.
The Company's Markets
The Properties are located in select markets proximate to metropolitan
areas in Northern and Southern California, Washington, Arizona, Nevada
and Colorado. From 1994 through the early part of 1998 most of these
markets were recovering from the economic recession of the early
1990s. During this recovery, these markets were characterized by
strong demand for commercial property without significant increases in
supply. As the current economic expansion matures, job growth in
several of the Company's markets has slowed. Additions to the
commercial real estate stock have not been excessive, however,
compared to previous cycles, and most of the markets in which the
Company operates remain healthy. Accordingly, the Company expects
commercial property values to remain in equilibrium during this period
of slowing economic growth. Occupancy levels and rents will not be as
robust as during the earlier recovery phase, but considering the
absence of overbuilding in most markets, they should remain buoyant.
In particular, the Company believes that continuing economic growth in
the San Francisco Bay Area (where 32% of the square footage of the
Company's Properties are located) and Seattle (where 15% of the square
footage of the Company's Properties are located) will result in strong
returns on its properties in these markets during the coming year.
These markets are particularly attractive as a result of the excellent
quality of life they offer. Environmental concerns, as well as
topographic and other barriers to entry, have effectively limited
significant additions to real estate stock. The 2001 edition of
Emerging Trends in Real Estate, a publication of
PricewaterhouseCoopers and Lend Lease Real Estate Investments, ranked
San Francisco (for the fifth consecutive year) and Seattle, as the
number one and number six investment markets in the United States,
respectively.
Operating Performance
For the year ended December 31, 2000, the Company reported income
before gain on sales and extraordinary item of $29,916,000, on rental
revenues of $97,518,000, compared with income before gain on sale and
extraordinary item of $32,410,000, on rental revenues of $90,527,000
for the year ended December 31, 1999. Gain on sale of real estate
investments for the year ended December 31, 2000 was $38,171,000
compared with gain on sale of real estate investments of $7,743,000
for the year ended December 31, 1999. The Company's Funds From
Operations ("FFO": see definition under "Selected Financial Data") for
the year ended December 31, 2000 was $43,864,000 as compared to
$45,554,000 for the year ended December 31, 1999. The decrease in
income before gain on sale and extraordinary item and the decrease in
FFO for the year ended December 31, 2000, when compared with income
before gain on sale and extraordinary item and FFO for the year ended
December 31, 1999, are due to the increased borrowings under the
Company's line of credit which were used to partially fund the
repurchases of the Company's common stock in 1999. With the share
repurchase program, FFO was spread over fewer shares, resulting in the
growth of the "per share" amount.
Increase in Dividends on Common Stock
In September 2000, the Company announced a 7% increase in its
quarterly Common Stock dividend from $0.42 to $0.45 per share, or
$1.80 on an annualized basis. The higher dividend rate commenced with
the Company's dividend for the third quarter of 2000. The dividends
declared for the four quarters in 2000 totaled $1.74, a 12% increase
compared with the dividends declared for the four quarters in 1999.
Credit Facility
In June 1998, the Company amended and restated its secured revolving
line of credit facility led by Bank of America. Under the facility,
which matures June 2001, the Company can borrow up to $175 million on
a secured basis. The facility contains an unsecured sub-line of $50
million. The secured loans bear interest at a floating rate equal to
either the lender's published "reference rate" or LIBOR plus a margin
ranging from 1.10% to 1.35% depending on the Company's leverage level.
The unsecured loans bear interest at either the lender's published
"reference rate" or LIBOR plus a margin of 1.50%. At December 31,
2000, the facility, which was all secured, had an outstanding balance
of $77,320,000, with an interest rate of LIBOR plus 1.35%. The
Company was in compliance with the covenants and requirements of its
revolving credit facility throughout 2000.
Currently the Company is in the process of renewing the credit
facility with its existing bank group.
Mortgage Loans Payable
In May 1999, the Company obtained a total of $108 million of new first
mortgage financing from Teachers Insurance and Annuity Association of
America (TIAA). The financing consists of a $43.45 million 10-year
loan, a $37.2 million 8-year loan, and a $27.35 million 6-year loan,
all with interest at a fixed rate of 7.17%.
In November 1999, the Company secured an additional $22.15 million
mortgage loan from TIAA. The loan has a 7-year term with interest at
a fixed rate of 7.95%.
In December 1999, the Company secured a $4.6 million mortgage loan
from Union Bank. The loan has a 5-year term with interest at a
variable rate of LIBOR plus 2.50%. Proceeds of the mortgage loans
were used to pay down the outstanding balance of the Company's $175
million line of credit.
In July 2000, the Company secured $30.89 million of new first mortgage
financing from Security Life of Denver Insurance Company. The
financing consists of two cross-collateralized five-year loans, each
bearing interest at a floating rate of 30-day LIBOR plus 140 basis
points with a provision to convert to a fixed rate and extend the term
within the first three years. Proceeds of the mortgage loans were
used to pay down the outstanding balance of the Company's credit
facility.
Dividends
The Company has made regular quarterly distributions to the holders of
the Common Stock in each quarter since the second quarter of 1993,
having increased the dividend thirteen times since that time from
$0.10 per share in the second quarter of 1993 to $0.45 per share in
the fourth quarter of 2000. In March 2001, the Company declared a
dividend distribution for the first quarter 2001 to its stockholders
in the amount of $0.45 per share of Common Stock, payable 15 days
after the quarter-end.
Tenants
Based on rentable square feet, as of December 31, 2000, the Suburban
Office Properties and Industrial Properties were approximately 97%
occupied by a total of 466 tenants, of which 111 were Suburban Office
Property tenants and 355 were Industrial Property tenants. The
Company's tenants include local, regional, national and international
companies engaged in a wide variety of businesses.
Financing
The Company expects cash flow from operations to be sufficient to pay
operating expenses, real estate taxes, general and administrative
expenses, and interest on indebtedness and to make distributions to
stockholders required to maintain the Company's REIT qualification.
The Company expects to fund the cost of acquisitions, capital
expenditures, costs associated with lease renewals and reletting of
space, repayment of indebtedness, and development of properties from
(i) cash flow from operations, (ii) borrowings under the credit
facility and, if available, other indebtedness (which may include
indebtedness assumed in acquisitions), and (iii) the sale of certain
real estate investments.
The Company does not anticipate that cash flow from operations will be
sufficient to enable it to repay amounts then outstanding under the
credit facility when it becomes due in 2001. The Company expects to
make such payment by renewing the credit facility with its existing
bank group.
Insurance
The Company carries commercial general liability coverage with primary
limits of $1 million per occurrence and $2 million in the aggregate,
as well as a $40 million umbrella liability policy. This coverage
protects the Company against liability claims as well as the cost of
defense. The Company carries property insurance on a replacement
value basis covering both the cost of direct physical damage and the
loss of rental income. Separate flood and earthquake insurance is
provided with an annual aggregate limit of $10 million subject to a
deductible of 5-10% of total insurable value per building with respect
to the earthquake coverage. Additional flood and earthquake coverage
with an aggregate limit of $20 million is provided for property
located in California. The Company also carries director and officer
liability insurance with an aggregate limit of $10 million, and a
fidelity bond in the amount of $1 million. This coverage protects the
Company's directors and officers against liability claims as well as
the cost of defense.
Competition, Regulation, and Other Factors
The success of the Company depends upon, among other factors, general
economic conditions and trends, including real estate trends, interest
rates, government regulations and legislation, income tax laws and
zoning laws.
The Company's real estate investments are located in markets in which
they face significant competition for the rental revenues they
generate. Many of the Company's investments, particularly the office
buildings, are located in markets in which there is a significant
supply of available space, resulting in intense competition for
tenants and low rents.
Government Regulations
The Company's properties are subject to various federal, state and
local regulatory requirements such as local building codes and other
similar regulations. The Company believes its properties are
currently in substantial compliance with all applicable regulatory
requirements, although expenditures at its properties may be required
to comply with changes in these laws. No material expenditures are
contemplated at this time in order to comply with any such laws or
regulations.
Under various federal, state and local laws, ordinances and
regulations, an owner or operator of real estate is liable for the
costs of removal or remediation of certain hazardous or toxic
substances released on, above, under, or in such property. Such laws
often impose such liability without regard to whether the owner knew
of, or was responsible for, the presence of such hazardous or toxic
substances. The costs of such removal or remediation could be
substantial.
Additionally, the presence of such substances or the failure to
properly remediate such substances may adversely affect the owner's
ability to borrow using such real estate as collateral.
The Company believes that it is in compliance in all material respects
with all federal, state and local laws regarding hazardous or toxic
substances, and the Company has not been notified by any governmental
authority of any non-compliance or other claim in connection with any
of its present or former properties. Accordingly, the Company does
not currently anticipate that compliance with federal, state and local
environmental protection regulations will have any material adverse
impact on the financial position, results of operations or liquidity
of the Company. There can be no assurance, however, that future
discoveries or events at the Company's properties, or changes to
current environmental regulations, will not result in such a material
adverse impact.
Other Information
The Company currently employs 33 full time employees. The Company is
not dependent upon a single tenant or a limited number of tenants.
ITEM 2. PROPERTIES
Real Estate Summary
As of December 31, 2000, the Company's real estate investments were
diversified by property type as follows (dollars in thousands):
Number of Percent
Properties Cost of Total
Industrial buildings 60 $ 305,857 47%
Office buildings 27 310,882 48%
Operating properties held for sale 2 5,226 1%
Properties under development 5 13,702 2%
Land held for development 9 11,721 2%
Total 103 $ 647,388 100%
As of December 31, 2000, the Company's real estate investments were
diversified by geographic region as follows:
Number of Investment % of Total
Properties Amount Investment
Industrial buildings
Northern California 31 $155,023 24
Arizona 16 76,560 12
Southern California 11 61,015 9
Greater Seattle Area 2 13,259 2
Total industrial buildings 60 305,857 47
Office buildings
Northern California 5 27,984 4
Arizona 6 39,802 6
Southern California 4 31,215 5
Colorado 5 81,384 13
Greater Seattle Area 6 117,591 18
Nevada 1 12,906 2
Total office buildings 27 310,882 48
Operating properties held for sale
Colorado 2 5,226 *
Total operating properties held for sale 2 5,226 1
Properties under development
Northern California 1 983 *
Colorado 4 12,719 2
Total properties under development 5 13,702 2
Land held for development
Northern California 3 3,844 *
Southern California 2 3,971 *
Colorado 3 3,262 *
Arizona 1 644 *
Total land held for development 9 11,721 2
Total 103 $647,388 100%
* Less than 1%
Percentage Leased and 10% Tenants
The following table sets forth the occupancy rates for each of the last five
years, the number of tenants occupying 10% or more of the developed square feet
at the Property as of the end of the year and the principal business of the
tenants in the Company's properties at December 31, 2000.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
INDUSTRIAL PROPERTIES
Northern California
Building #3 at Contra Costa
Diablo Ind. Park, Concord 100% 1 100% 1 100% 1 100% 1 100% 1 Television cable service.
Building #8 at Contra Costa
Diablo Ind. Park, Concord 100% 1 100% 1 100% 1 100% 1 100% 1 Warehouse and storage of medical supplies.
Building #18 at
Mason Ind. Park, Concord 83% 2 100% 2 92% 2 100% 2 100% 2 Warehouse of scaffolding materials and
construction supplies; roofing contractor.
Milpitas Town Center, Milpitas 100% 4 100% 4 100% 3 100% 4 100% 3 Manufacturer of blood glucose meters;
integrated technology solutions;
manufacturer of vacuum pumps and related
parts.
598 Gibraltar Drive, Milpitas 100% 1 100% 1 100% 1 100% 1 100% 1 Electronic computer component manufacturer.
Auburn Court, Fremont 100% 4 100% 4 100% 4 68% 3 100% 4 Research and development of silicon
implants and other medical products;
electronic computer component
manufacturer; computer software
developer; high-performance fiber optic
components supplier.
47650 Westinghouse Drive,
Fremont 100% 1 100% 1 100% 1 100% 1 100% 1 Electronic personal computer board
assembly.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
INDUSTRIAL PROPERTIES (continued)
Northern California (continued)
410 Allerton, South
San Francisco 100% 1 100% 1 100% 1 100% 1 100% 1 Candy manufacturer and distributor.
400 Grandview, South
San Francisco 100% 5 100% 4 100% 4 100% 4 100% 4 Radiology research and developer; freight
forwarding;
retail display company.
342 Allerton, South
San Francisco 100% 4 100% 4 100% 4 100% 4 100% 4 Freight forwarding; food broker.
301 East Grand, South
San Francisco 100% 3 100% 3 100% 3 75% 2 100% 3 Freight forwarding; distributor of MRI
equipment; moving company.
Fourier Avenue, Fremont 100% 1 100% 1 100% 1 100% 1 100% 1 Manufacturer of testers and equipment for
semi-conductors.
Lundy Avenue, San Jose 100% 2 100% 2 82% 1 100% 2 100% 2 Testing and distribution of semi-
conductors and other related electronic
components; software sales and
development.
115 Mason Circle, Concord 100% 5 100% 5 100% 5 100% 5 100% 5 Manufacturer and distributor of
pipeline; distributor of fund raising
products; distributor of water purifying
systems; fluid sealing and handling
company.
47600 Westinghouse Drive,
Fremont 100% 1 100% 1 100% 1 100% 1 100% 1 Research and development assembly and
testing related to the semi-
conductor/electronics industry.
860-870 Napa Valley Corporate
Way, Napa 96% 3 86% 3 100% 3 88% 2 94% 2 Winery; engineering company and software
developer.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
INDUSTRIAL PROPERTIES (continued)
47633 Westinghouse Drive,
Fremont 100% 1 100% 1 100% 1 100% 1 100% 1 Research and development assembly and
testing related to the semi-
conductor/electronics industry.
47513 Westinghouse Drive,
Fremont N/A N/A 100% 2 100% 2 100% 2 Manufacturer of semi-conductor equipment;
manufacturer and designer of arterial
balloon catheters and other related
devices.
Carneros Commons Phase I, N/A N/A N/A N/A 0% 0 New development project in lease-up phase.
Napa
Bordeaux Centre, Napa N/A N/A 38% 2 89% 4 100% 5 Cork manufacturer; marine electronics
distributor; wine storage and
distributor; research and development of
packaging material; and wine club
distributor.
O'Toole Business Park, San Jose 94% 0 90% 0 89% 0 100% 0 100% 1 Manufacturer of peptides used in
pharmaceutical research.
6500 Kaiser Drive, Fremont N/A 100% 1 100% 1 100% 1 100% 1 Office, research and development,
manufacturer of computers.
Bedford Fremont Business Park,
Fremont N/A 100% 1 100% 1 97% 1 97% 1 Administration and testing of samples for
managed care organizations.
Spinnaker Court, Fremont N/A 100% 2 100% 2 100% 2 100% 3 Design-to-distribution of computing
solutions; manufacturer of electronic
components for semiconductor; developer
of broadband products and related
components.
2277 Pine View Way, Petaluma N/A 100% 1 100% 1 100% 1 100% 1 Manufacturer and distributor of eyeglass
lenses for world-wide distribution.
The Mondavi Building, Napa N/A 100% 1 100% 1 100% 1 100% 1 Wine storage and administration.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
INDUSTRIAL PROPERTIES (continued)
Northern California (continued)
Monterey Commerce Center 2,
Monterey N/A 100% 1 100% 1 100% 1 100% 1 Language interpretation.
Monterey Commerce Center 3,
Monterey N/A 100% 3 100% 3 100% 3 81% 4 Office equipment sales/service;
telephone/data switching center;
electronic building systems
sales/service/warehousing; pharmaceutical
sales/service/warehousing.
Parkpoint Business Center,
Santa Rosa N/A N/A 100% 3 100% 3 95% 3 Physical therapy and rehabilitation;
point of sale machine manufacturer;
mortgage broker.
2180 S. McDowell, Petaluma N/A N/A 100% 2 81% 1 69% 1 Manufacturer of high-end, commercial
grade sound equipment.
2190 S. McDowell, Petaluma N/A N/A 100% 2 100% 2 100% 2 Bread distributor; distributor of
paper and packaging products.
Southern California
Dupont Industrial Center,
Ontario 59% 0 100% 1 97% 1 100% 2 100% 1 Distributor of swimming pool supplies.
3002 Dow Business Center,
Tustin 99% 0 100% 0 99% 0 99% 0 98% 0 No single tenant over 10%.
Carroll Tech I, San Diego 100% 1 100% 1 100% 1 100% 1 100% 1 Sales and service of point of sales
equipment.
Vista 1, Vista 100% 1 100% 1 0% 0 0% 0 100% 1 Water purifying components manufacturer.
Vista 2, Vista 100% 1 100% 1 100% 1 100% 1 100% 1 Manufacturer of graphite golf club shaft.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
INDUSTRIAL PROPERTIES (continued)
Southern California (continued)
Signal Systems Building,
San Diego 100% 1 100% 1 100% 1 100% 1 100% 1 Developer and manufacturer of avionic
diagnostic equipment.
Carroll Tech II, San Diego 100% 1 100% 1 100% 1 100% 1 100% 1 Bio-technology company.
2230 Oak Ridge Way, Vista N/A 100% 1 100% 1 100% 1 100% 1 Manufacturer of equipment for
circuit board assembly.
6960 Flanders Drive, San Diego N/A N/A 100% 1 100% 1 100% 1 Geotechnical and environmental
consultant.
Canyon Vista Center, San Diego N/A N/A N/A 100% 3 100% 3 Designer of interactive entertainment
software; product development testing
and marketing; testing of computer
networking products.
6325 Lusk Blvd., San Diego N/A N/A N/A 100% 2 100% 2 Bio-tech company developing diabetes
self-test products; apparel company.
Colorado
Bryant Street Quad, Denver 100% 3 100% 3 100% 3 100% 3 95% 4 Health care provider; photo processing
lab; developer and manufacturer of
heat exchangers and systems;
distributor of hearth products.
Bryant Street Annex, Denver 100% 2 100% 2 100% 2 100% 2 100% 2 Office supplies distributor;
automotive paint distributor.
Arizona
Westech Business Center, Phoenix 93% 0 96% 0 95% 0 96% 0 95% 0 N/A
Westech II, Phoenix N/A N/A 100% 3 100% 2 100% 2 Healthcare consultants; travel agency.
2601 W. Broadway, Tempe N/A 100% 1 100% 1 100% 1 100% 1 Wireless phone service provider.
Phoenix Airport Center #2,
Phoenix N/A 100% 1 100% 1 100% 1 100% 1 Electronic parts sales and customer
service.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
INDUSTRIAL PROPERTIES (continued)
Arizona (continued)
Phoenix Airport Center #3,
Phoenix N/A 100% 1 100% 1 100% 1 100% 1 Cosmetic manufacturer and distributor.
Phoenix Airport Center #4,
Phoenix N/A 100% 1 100% 1 100% 1 100% 1 Package delivery/service call center.
Phoenix Airport Center #5,
Phoenix N/A N/A 100% 1 100% 1 100% 1 Healthcare maintenance organization
corporate office.
Butterfield Business Center,
Tucson N/A 100% 3 100% 3 100% 2 100% 2 Sears call center; research and
development of automobile care items.
Butterfield Tech Center II,
Tucson N/A N/A N/A 56% 2 100% 4 Package distribution facilities; school
book distribution facility; distributor
of industrial uniform supplies.
Greystone Business Park,
Tempe N/A N/A N/A 11% 1 86% 3 Sales and service of electronic
equipment; business communications
equipment and multimedia integrations
services; sales, service and support
facilities for distribution of electrical
components.
Cimarron Business Park,
Scottsdale N/A N/A 98% 2 97% 2 90% 1 Printing and sales office.
Rio Salado Corporate Centre,
Phoenix N/A N/A N/A N/A 0% Rehabilitation completed during 2000;
under lease-up.
Phoenix Tech Center,
Phoenix N/A N/A N/A N/A 100% 1 Reprocessing/recycling of single-use non-
medical devices.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
INDUSTRIAL PROPERTIES (continued)
Arizona (continued)
Expressway Corporate
Center, Tempe N/A N/A 68% 1 100% 2 100% 2 Manufacturer of photographic equipment
for wafer circuiting; food
supplement manufacturer.
The Adams Brothers Building,
Phoenix N/A N/A N/A 100% 1 100% 1 Interior design and home products sales.
Bedford Realty Partners, L.P.,
Phoenix N/A N/A N/A 100% 2 100% 2 Medical research; consulting engineers.
Washington
Highlands Campus Building B,
Bothell N/A N/A N/A N/A 86% 4 Manufacturer and distributor of micro-
biological lab testing equipment; medical
prescription service provider; wholesaler
of flooring products; telecommunication.
Highlands Campus Building C,
Bothell N/A N/A N/A N/A 60% 2 Civil engineering consulting;
manufacturer and distributor of
ultrasound equipment.
SUBURBAN OFFICE PROPERTIES
Northern California
Village Green, Lafayette 100% 1 99% 1 100% 2 100% 2 100% 2 Environmental consultant; real estate
investment trust.
Canyon Park, San Ramon N/A 100% 2 100% 2 100% 2 100% 2 Geotechnical lab and research; healthcare
provider.
Crow Canyon Centre, San Ramon N/A N/A N/A 50% 1 100% 2 Health care provider; real estate
mortgage and interior designer.
Monterey Commerce Center 1,
Monterey N/A 87% 4 82% 4 79% 3 88% 3 Technology - software; technology -
digital audio discs; financing/loan
servicing.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
SUBURBAN OFFICE PROPERTIES (continued)
3380 Cypress, Petaluma N/A N/A 100% 1 100% 1 100% 1 Manufacturer of hearing devices.
Southern California
Laguna Hills Square, Laguna 86% 2 96% 4 93% 4 95% 4 100% 2 Medical facility; optometry and eye
surgery.
Carroll Tech III, San Diego N/A 100% 1 100% 1 100% 1 100% 1 On-line game developer.
Scripps Wateridge, San Diego N/A 100% 2 100% 2 100% 2 100% 2 Wireless communications; supplier of
digital wireless communication
products and technologies.
Carroll Tech IV, San Diego N/A N/A N/A 100% 1 100% 1 Manufacturer of video games.
Colorado
Oracle Building, Denver N/A 100% 2 100% 2 100% 2 100% 2 Software company; banking.
Texaco Building, Denver N/A N/A 100% 1 100% 1 100% 1 Oil company.
WaterPark @ Briarwood Bldg. 1,
Englewood N/A N/A N/A N/A 62% 1 Corporate travel agency.
WaterPark @ Briarwood Bldg. 2,
Englewood N/A N/A N/A N/A 70% 2 Data processing solutions for the finance
industry; distributor of electrical
components and computer products.
Bedford Center @ Rampart,
Englewood N/A N/A N/A N/A 97% 3 Office equipment sales and lease;
insurance company; corporate travel
agency.
Arizona
Executive Center at Southbank,
Phoenix N/A 98% 3 98% 3 98% 3 92% 3 Travel agency; call center for medical
records; telemarketing call center.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
SUBURBAN OFFICE PROPERTIES (continued)
Arizona (continued)
Troika Building, Tucson N/A 100% 1 100% 1 100% 1 100% 1 Architectural services
Phoenix Airport Center #1,
Phoenix N/A 100% 5 100% 5 100% 3 100% 5 Electronics marketing; banking services;
security services and sales office;
electronic marketing and sales;
engineering consulting.
Cabrillo Executive Center,
Phoenix N/A N/A 97% 2 100% 2 94% 3 Healthcare insurance company; insurance
company; provider of email systems and
software for businesses.
Mountain Pointe Office Park,
Phoenix N/A N/A N/A 0% 0 100% 1 Civil engineering.
1355 S. Clearview Avenue,
Mesa N/A N/A N/A 100% 1 100% 1 Debt collection services.
Greater Seattle Area
Orillia Office Park, Renton N/A 100% 1 100% 1 100% 1 100% 1 Manufacturer of aircraft.
Adobe Systems Bldg. 1, Seattle N/A N/A 100% 1 100% 1 100% 1 Computer software design and
engineering.
Adobe Systems Bldg. II, Seattle N/A N/A 77% 1 100% 2 100% 2 Computer software design and
engineering; non-profit acupuncture
and alternative medicine school
and clinic.
Highlands Campus, Bldg. A,
Bothell N/A N/A N/A 38% 1 100% 2 Computer software development and online
services; software developer.
The Federal Way Building,
Federal Way N/A N/A N/A 100% 3 100% 2 Property/casualty insurance company;
gasoline company.
Percentage Occupied/Number of Tenants Occupying 10% or more
1996 1997 1998 1999 2000
Property % # % # % # % # % # Principal Business at December 31, 2000
SUBURBAN OFFICE PROPERTIES (continued)
Greater Seattle Area (continued)
Federal Way Building II,
Federal Way N/A N/A N/A 100% 4 100% 3 Producer of semiconductor/computer
technology components; financial advisor
and lender; and full service insurance
company.
Nevada
U. S. Bank Centre, Reno N/A 94% 1 99% 1 100% 2 90% 2 Insurance services; mining.
Lease Expirations - Real Estate Portfolio
The following table presents lease expirations for each of the ten
years and thereafter beginning January 1, 2001. The table presents:
(i) the number of leases that expire each year, (ii) the square feet
covered by such expiring leases, and (iii) the percentage of total
occupied square feet for expiring leases.
Number of Percentage
Leases Occupied of Occupied
Year Expiring Square Feet Square Feet
2001 111 940,947 14.0%
2002 89 768,166 11.5
2003 90 986,768 14.7
2004 68 1,364,764 20.4
2005 70 1,117,461 16.7
2006 16 473,002 7.1
2007 10 493,042 7.4
2008 2 11,170 0.2
2009 2 41,758 0.6
2010 and thereafter 8 496,075 7.4
Total 466 6,693,153 100.0%
Principal Provisions of Leases
The following table sets forth the principal provisions of leases which
represent more than 10% of the gross leasable area ("GLA") of each of the
Company's Properties and the realty tax rate for each Property for 2000.
Annual # of Leases Square Feet Contract Rent
Property with 10% or Project of Each ($/Sq/Yr) Lease Renewal
Property Taxes/Rate More of GLA Square Feet Tenant At End of Year Expiration Options
INDUSTRIAL PROPERTIES
Northern California
Building #3 at Contra Costa $17,002 1 21,840 21,840 $8.04 Feb. 02 1-3 yr.
Diablo Ind. Park, Concord $1.01/100
Building #8 at Contra Costa $24,308 1 31,800 31,800 $11.61 Dec. 05 1-5 yr.
Diablo Ind. Park, Concord $1.01/100
Building #18 at Mason $19,936 2 28,836 7,225 $7.44 May 03 None
Industrial Park, Concord $1.01/100 4,825 $7.79 Feb. 01 None
Milpitas Town Center, $70,544 4 102,620 23,924 $18.00 Apr. 02 1-5 yr.
Milpitas $1.10/100 24,426 $11.28 Apr. 02 1-2 yr.
30,840 $14.40 Jul. 03 1-5 yr.
23,430 $13.80 Jan. 05 None
598 Gibraltar Drive, $47,213 1 45,090 45,090 $19.20 Apr. 05 None
Milpitas $1.10/100
Auburn Court, Fremont $47,692 4 68,030 16,095 $14.93 Jul. 01 1-5 yr.
$1.04/100 12,060 $13.80 Apr. 03 None
15,755 $14.40 Mar. 03 None
18,160 $21.00 Jul. 05 None
47650 Westinghouse Drive, $16,500 1 24,030 24,030 $10.80 Sep. 04 None
Fremont $1.04/100
410 Allerton, $26,558 1 46,050 46,050 $7.80 Apr. 01 None
South San Francisco $1.03/100
400 Grandview, $82,359 4 107,004 21,841 $8.19 Dec. 03 None
South San Francisco $1.03/100 43,642 $8.33 Jul. 02 1-5 yr.
18,789 $8.90 May 04 None
18,864 $6.60 Jan. 03 None
342 Allerton, $53,060 4 69,312 19,751 $10.80 Mar. 03 None
South San Francisco $1.03/100 9,720 $9.47 Mar. 02 None
30,953 $10.51 Jun. 04 None
8,888 $10.12 Aug. 02 None
301 East Grand, $33,846 3 57,846 26,240 $8.44 Jun. 03 None
South San Francisco $1.03/100 17,206 $5.04 Dec. 03 None
14,400 $8.40 Jan. 05 1-5 yr.
Fourier Avenue, Fremont $106,562 1 104,400 104,400 $8.99 Apr. 04 None
$1.04/100
Lundy Avenue, San Jose $53,936 2 60,428 49,342 $14.40 Apr. 06 1-5 yr.
$1.09/100 11,086 $15.00 Jul. 04 1-5 yr.
115 Mason Circle, Concord $18,923 5 35,000 5,833 $6.84 Apr. 05 None
$1.01/100 5,832 $7.08 Jul. 01 None
8,154 $7.69 Aug. 02 None
7,296 $6.80 Nov. 02 1-3 yr.
7,885 $7.44 Apr. 03 None
47600 Westinghouse Drive, $17,103 1 24,030 24,030 $11.28 Oct. 03 1-3 yr.
Fremont $1.04/100
860-870 Napa Valley Corporate $86,090 2 67,775 17,551 $11.46 Feb. 03 None
Way, Napa $1.03/100 7,558 $11.02 Sep. 01 None
47633 Westinghouse Drive, $53,353 1 50,088 50,088 $12.31 Oct. 03 1-3 yr.
Fremont $1.04/100
47513 Westinghouse Drive, $110,729 2 65,385 35,132 $15.96 Feb. 05 1-5 yr.
Fremont $1.04/100 30,253 $15.00 Feb. 04 1-5 yr.
Carneros Commons Phase I, $29,989 0 40,290 N/A N/A N/A N/A
Napa $1.03/100
Bordeaux Centre, Napa $145,119 5 150,000 22,075 $7.86 Nov. 07 2-5 yr.
$1.03/100 16,076 $7.43 Nov. 07 1-5 yr.
51,790 $5.93 Jan. 04 1-5 yr.
18,434 $6.04 Dec. 04 1-5 yr.
16,180 $8.66 May 05 1-5 yr.
O'Toole Business Park, $116,347 1 122,320 15,514 $20.57 Sep. 03 None
San Jose $1.09/100
6500 Kaiser Drive, Fremont $176,614 1 78,611 78,611 $10.20 Sep. 04 2-5 yr.
$1.04/100
Bedford Fremont Business Center, $169,826 1 146,509 71,532 $16.08 Jul. 03 1-3 yr.
Fremont $1.04/100
Spinnaker Court, Fremont $157,740 3 98,500 53,380 $12.00 Mar. 01 None
$1.04/100 24,350 $10.20 Mar. 05 None
20,770 $27.00 Oct. 05 1-5 yr.
2277 Pine View Way, $105,099 1 120,480 120,480 $7.25 Mar. 07 2-5 yr.
Petaluma $1.07/100
The Mondavi Building, Napa $104,432 1 120,157 120,157 $5.17 Sep. 12 1-5 yr.
$1.03/100
Monterey Commerce $23,317 1 28,020 28,020 $15.60 Dec. 00 1-3 yr.
Center 2, Monterey $1.00/100
Monterey Commerce $23,009 4 24,240 3,817 $14.28 Jul. 01 1-5 yr.
Center 3, Monterey $1.00/100 3,050 $14.76 Nov. 03 1-3 yr.
4,448 $15.00 Oct. 05 1-5 yr.
8,350 $16.80 Oct. 05 1-5 yr.
Parkpoint Business Center, $73,054 3 67,869 8,767 $15.60 Oct. 02 1-5 yr.
Santa Rosa $1.09/100 7,894 $16.07 Oct. 01 1-5 yr.
17,505 $15.60 Mar. 03 1-5 yr.
2180 McDowell, Petaluma $40,073 1 43,197 29,709 $8.28 Mar. 05 None
$1.09/100
2190 S. McDowell, Petaluma $30,429 2 32,719 17,131 $9.16 Mar. 04 1-5 yr.
$1.09/100 15,588 $8.59 Apr. 06 2-5 yr.
Southern California
Dupont Industrial Center, $203,880 1 451,192 183,244 $2.88 Jan. 07 2-5 yr.
Ontario $1.04/100
3002 Dow Business Center, $187,575 0 192,125 N/A N/A N/A N/A
Tustin $1.01/100
Carroll Tech I, $22,218 1 21,936 21,936 $9.47 Nov. 05 2-3 yr.
San Diego $1.11/100
Vista 1, Vista $20,372 1 42,508 42,508 $3.11 Oct. 10 1-10 yr.
$1.03/100
Vista 2, Vista $33,328 1 47,550 47,550 $7.44 Sep. 01 1-5 yr.
$1.03/100
Signal Systems Building, $101,106 1 109,780 109,780 $10.79 Aug. 06 2-5 yr.
San Diego $1.02/100
Carroll Tech II, $36,254 1 37,586 37,586 $14.40 Dec. 01 None
San Diego $1.11/100
2230 Oak Ridge Way, $33,282 1 44,063 44,063 $6.83 Aug. 04 2-5 yr.
Vista $1.01/100
6960 Flanders Drive, $39,165 1 33,144 33,144 $10.38 May 03 1-5 yr.
San Diego $1.11/100
Canyon Vista Center, $63,889 3 63,746 17,591 $7.68 Dec. 04 1-5 yr.
San Diego $1.11/100 18,643 $11.40 Jan. 06 1-3 yr.
27,512 $10.66 May 02 1-5 yr.
6325 Lusk Blvd., $62,203 2 49,942 31,849 $16.09 Nov. 03 None
San Diego $1.11/100 18,093 $7.49 Jun. 01 None
Colorado
Bryant Street Quad, Denver $84,960 4 155,536 17,440 $4.50 Apr. 02 None
$6.73/100 20,726 $3.30 Dec. 06 1-5 yr.
16,055 $4.25 Feb. 02 1-3 yr.
22,044 $5.08 Jan. 03 None
Bryant Street Annex, Denver $34,558 2 55,000 42,148 $4.25 Nov. 01 2-1 yr.
$6.73/100 12,852 $4.50 Feb. 02 1-2 yr.
Arizona
Westech Business Center, Phoenix $131,593 0 143,940 N/A N/A N/A N/A
$13.02/100
Westech II, Phoenix $113,033 3 80,878 14,615 $9.24 Oct. 04 None
$13.02/100 11,819 $9.78 Nov. 02 1-2 yr.
11,739 $8.76 Nov. 02 1-2 yr.
2601 W. Broadway, Tempe $60,424 1 44,244 44,244 $7.43 Jan. 07 2-5 yr.
$12.55/100
Phoenix Airport Center #2, $59,607 1 35,768 35,768 $7.80 Aug. 06 1-5 yr.
Phoenix $13.02/100
Phoenix Airport Center #3, $57,108 1 55,122 55,122 $7.02 Jul. 01 2-5 yr.
Phoenix $13.02/100
Phoenix Airport Center #4, $34,589 1 30,504 30,504 $8.36 Jun. 05 1-5 yr.
Phoenix $13.02/100
Phoenix Airport Center #5, $93,282 1 60,000 60,000 $9.56 Sep. 02 1-5 yr.
Phoenix $13.02/100
Butterfield Business Center, $116,915 3 95,746 50,000 $6.30 Aug. 04 2-5 yr.
Tucson $16.81/100 14,982 $2.86 Aug. 04 1-5 yr.
26,026 $8.75 Jun. 01 None
Butterfield Tech Center II, $37,088 4 33,082 7,383 $7.52 Mar. 06 2-5 yr.
Tucson $16.81/100 11,064 $6.48 Sep. 02 1-2 yr.
7,259 $6.49 Dec. 02 1-2 yr.
7,376 $7.08 Nov. 04 None
Greystone Business Park, $89,004 3 60,738 6,520 $10.88 Nov. 04 2-3 yr.
Tempe $12.55/100 34,471 $10.67 Mar. 07 1-3 yr.
11,511 $11.40 Sep. 05 2-5 yr.
Cimarron Business Park, $141,842 1 94,800 13,800 $10.72 Mar. 04 None
Scottsdale $12.06/100
Rio Salado Corporate Centre, $73,111 0 80,322 N/A N/A N/A N/A
Tempe $12.55/100
Phoenix Tech Center, $36,032 1 39,280 39,280 $9.90 Feb. 05 2-5 yr.
Phoenix $13.28/100
Expressway Corporate Center, $90,643 2 79,331 40,528 $8.40 Mar. 03 None
Tempe $12.55/100 18,825 $9.77 Aug. 06 None
The Adams Brothers Building, $94,496 1 71,345 71,345 $4.69 Jan. 04 2-5 yr.
Phoenix $17.91/100
Bedford Realty Partners, L.P., $181,373 2 101,835 32,729 $9.60 Dec. 01 None
Phoenix $17.91/100 30,409 $7.08 Jun. 05 None
Washington
Highlands Campus Building B, $67,697 4 69,821 14,970 $12.65 Aug. 04 1-5 yr.
Bothell $1.31/100 20,831 $10.63 Jan. 01 1-5 yr.
9,412 $11.95 Jul. 08 1-5 yr.
9,201 $16.00 Sep. 05 None
Highlands Campus Building C, $75,832 2 57,478 7,008 $12.36 Jul. 07 1-5 yr.
Bothell $1.31/100 27,251 $15.00 Dec. 07 None
SUBURBAN OFFICE PROPERTIES
Northern California
Village Green, Lafayette $26,587 2 16,795 2,119 $30.11 Sep. 05 None
$1.12/100 11,062 $25.09 Mar. 05 None
Canyon Park, $62,371 2 57,667 48,265 $21.03 Feb. 05 2-5 yr.
San Ramon $1.03/100 9,402 $20.32 Jan. 03 None
Crow Canyon Centre, $50,680 2 39,108 19,615 $25.20 Oct. 06 2-5 yr.
San Ramon $1.03/100 16,478 $25.20 Jan. 05 1-5 yr.
Monterey Commerce Center 1, $63,065 4 50,031 5,809 $20.40 Aug. 02 1-3 yr.
Monterey $1.00/100 7,000 $19.56 Mar. 03 1-5 yr.
16,088 $20.40 Jul. 03 None
7,166 $20.40 Jul. 04 1-5 yr.
3880 Cypress Dr., $59,165 1 35,100 35,100 $13.56 May 07 1-5 yr.
Santa Rosa $1.07/100
Southern California
Laguna Hills Square, Laguna $66,258 5 51,734 8,474 $28.80 Nov. 10 2-5 yr.
$1.04/100 7,368 $26.38 Sep. 05 1-5 yr.
6,391 $26.47 Sep. 05 2-5 yr.
9,229 $20.88 Jun. 02 2-3 yr.
5,981 $28.32 Oct. 10 None
Carroll Tech III, San Diego $24,362 1 29,307 29,307 $9.98 Aug. 06 1-5 yr.
$1.11/100
Scripps Wateridge, San Diego $196,853 2 123,853 49,295 $12.85 Jul. 06 1-5 yr.
$1.11/100 74,558 $13.76 Aug. 05 2-3 yr.
Carroll Tech IV, San Diego $51,236 1 43,415 43,415 $12.44 Aug. 06 None
$1.11/100
Colorado
Oracle Building, Denver $327,705 2 90,712 10,043 $18.00 Aug. 11 4-5 yr.
$10.10/100 77,090 $24.00 Sep. 03 None
Texaco Building, Denver $562,666 1 237,055 237,055 $20.06 Jan. 05 2-5 yr.
$8.53/100
Waterpark @ Briarwood Bldg. 1, $35,749 1 29,405 18,295 $12.90 Aug. 05 1-5 yr.
Englewood $12.54/100
Waterpark @ Briarwood Bldg. 2, $26,423 2 73,781 15,362 $14.30 Oct. 05 2-5 yr.
Englewood $12.54/100 36,077 $12.70 Oct. 05 None
Bedford @ Rampart $502,862 3 165,191 36,857 $12.50 Mar. 04 2-2 yr.
Englewood $11.14/100 41,717 $12.50 Dec. 04 2-2 yr.
55,550 $12.75 Oct. 05 2-3 yr.
Arizona
Executive Center at Southbank, $280,819 4 140,157 38,106 $10.03 Apr. 02 1-5 yr.
Phoenix $17.91/100 17,910 $8.69 Sep. 03 2-5 yr.
30,518 $10.00 Jun. 01 2-5 yr.
21,626 $10.00 Jul. 02 2-5 yr.
Troika Building, Tucson $130,169 1 52,000 52,000 $10.00 Oct. 01 None
$17.94/100
Phoenix Airport Center #1, $48,768 5 32,460 11,195 $10.34 Nov. 05 2-5 yr.
Phoenix $13.02/100 4,527 $15.00 Dec. 01 1-5 yr.
4,449 $19.05 Dec. 02 None
4,041 $18.33 Jul. 01 None
8,248 $11.76 Jan. 01 None
Cabrillo Executive Center, $137,503 3 60,321 12,400 $17.75 Aug. 01 1-5 yr.
Phoenix $13.19/100 6,034 $18.79 Oct. 02 1-5 yr.
21,056 $17.00 Dec. 01 None
Mountain Pointe Office Park, $63,500 1 54,584 54,584 $19.20 Oct. 10 1-5 yr.
Phoenix $13.02/100
1355 S. Clearview Avenue, $71,131 1 57,193 57,193 $12.72 Apr. 05 2-5 yr.
Mesa $11.02/100
Greater Seattle Area
Orillia Office Park, Renton $361,828 1 334,255 334,255 $10.50 Feb. 04 None
$1.30/100
Adobe Systems Bldg. 1, $291,786 1 161,117 161,117 $15.53 Jul. 10 2-5 yr.
Seattle $1.22/100
Adobe Systems Bldg. 2, $237,330 2 136,111 93,211 $15.53 Jul. 10 2-5 yr.
Seattle $1.22/100 19,867 $19.88 May 03 None
Highlands Campus Building A $109,243 2 74,559 39,824 $14.56 Aug. 04 1-5 yr.
Bothell $1.31/100 13,498 $15.50 Dec. 04 1-5 yr.
The Federal Way Building, $75,500 2 65,000 32,871 $13.10 Apr. 06 2-3 yr.
Federal Way $1.35/100 26,420 $14.22 Oct. 04 1-5 yr.
Federal Way II, $112,591 3 115,032 16,230 $15.00 Jun. 05 1-5 yr.
Federal Way $1.35/100 33,716 $14.99 Dec. 04 None
40,000 $13.44 Aug. 09 2-5 yr.
Nevada
U.S. Bank Centre, Reno $140,724 2 104,324 39,656 $24.00 Oct. 01 None
$3.45/100 13,064 $20.76 Jun. 04 None
Average Base Rent
The following table sets forth the average rent at the end of each
year for the last five years for each property owned as of December
31, 2000.
Average Base Rent ($/Sq Ft/Yr) At End of Year
1996 1997 1998 1999 2000
INDUSTRIAL PROPERTIES:
Northern California
Building #3 at Contra Costa Diablo $6.64 $6.84 $6.84 $7.80 $8.04
Building #8 at Contra Costa Diablo $6.00 $6.00 $6.00 $6.72 $11.61
Building #18 at Mason Industrial Park $6.78 $6.88 $6.93 $7.22 $7.54
Milpitas Town Center $8.03 $8.90 $10.69 $12.74 $14.36
598 Gibraltar Drive $9.48 $9.48 $10.44 $10.44 $19.20
Auburn Court $6.78 $7.80 $10.62 $11.25 $16.13
47650 Westinghouse Drive $5.52 $9.00 $9.60 $10.20 $10.80
410 Allerton $5.16 $5.16 $6.60 $7.20 $7.80
400 Grandview $7.53 $7.03 $7.50 $7.95 $8.27
342 Allerton $7.18 $7.57 $7.73 $9.13 $10.40
301 East Grand $5.57 $5.58 $6.30 $6.90 $7.42
Fourier Avenue $8.99 $8.99 $8.99 $8.99 $8.99
Lundy Avenue $7.09 $7.09 $7.36 $14.40 $14.51
115 Mason Circle $6.05 $6.22 $6.59 $6.78 $7.21
47600 Westinghouse Drive $5.94 $10.20 $10.56 $10.92 $11.28
860-870 Napa Valley Corporate $9.44 $8.86 $9.48 $9.90 $11.06
47633 Westinghouse Drive $11.37 $11.60 $11.83 $12.06 $12.31
47513 Westinghouse Drive N/A N/A $14.32 $14.92 $15.52
Carneros Commons Phase I* N/A N/A N/A N/A -
Bordeaux Centre N/A N/A $7.33 $6.57 $7.06
O'Toole Business Center $8.75 $10.31 $13.81 $14.38 $17.16
6500 Kaiser Drive N/A $9.00 $9.60 $9.60 $10.20
Bedford Fremont Business Center N/A $11.93 $14.63 $16.39 $17.97
Spinnaker Court N/A $8.01 $8.25 $8.25 $14.72
2277 Pine View Way N/A $6.91 $6.91 $7.25 $7.25
The Mondavi Building N/A $4.92 $4.92 $5.17 $5.17
Monterey Commerce Center 2 N/A $14.16 $14.64 $15.12 $15.60
Monterey Commerce Center 3 N/A $14.70 $15.22 $15.32 $15.59
Parkpoint Business Center N/A N/A $15.19 $15.68 $16.50
2180 McDowell N/A N/A $8.37 $11.20 $8.28
2190 McDowell N/A N/A $8.19 $8.39 $8.89
Southern California
Dupont Industrial Center $3.53 $3.40 $3.44 $3.67 $3.82
3002 Dow Business Center $8.55 $8.32 $8.86 $9.52 $10.20
Carroll Tech I $10.35 $11.93 $3.17 $9.11 $9.47
Vista 1 $5.16 $0.00 $0.00 $0.00 $3.11
* Shell construction completed during 2000; property in lease-up
phase.
Average Base Rent ($/Sq Ft/Yr) At End of Year
1996 1997 1998 1999 2000
INDUSTRIAL PROPERTIES (continued):
Southern California (continued)
Vista 2 $6.36 $6.61 $6.88 $7.15 $7.44
Signal Systems Building $7.80 $8.11 $10.20 $10.42 $10.79
Carroll Tech II N/A $11.52 $12.00 $13.79 $14.40
2230 Oak Ridge Way N/A N/A $6.49 $6.63 $6.83
6960 Flanders Drive N/A N/A $9.60 $9.98 $10.38
Canyon Vista Center N/A N/A N/A $8.86 $10.05
6325 Lusk Blvd. N/A N/A N/A $12.48 $12.98
Colorado
Bryant Street Quad $3.39 $3.82 $3.96 $4.13 $4.32
Bryant Street Annex $3.93 $4.09 $4.17 $4.17 $4.31
Arizona
Westech Business Center $8.85 $9.44 $9.99 $9.97 $10.37
Westech II N/A N/A $8.86 $8.87 $9.63
2601 W. Broadway N/A $7.14 $7.14 $7.14 $7.43
Phoenix Airport Center #2 N/A $7.20 $7.20 $7.80 $7.80
Phoenix Airport Center #3 N/A $6.36 $6.36 $7.02 $7.02
Phoenix Airport Center #4 N/A $7.20 $7.80 $7.80 $8.36
Phoenix Airport Center #5 N/A $7.21 $8.68 $8.68 $9.56
Butterfield Business Center N/A $7.08 $7.11 $6.38 $6.45
Butterfield Tech Center II N/A N/A N/A $6.67 $6.85
Greystone Business Park N/A N/A N/A $10.56 $10.85
Cimarron Business Park N/A N/A $8.94 $10.09 $10.29
Rio Salado Corporate Centre N/A N/A N/A N/A $0.00
Phoenix Tech Center N/A N/A N/A N/A $9.90
Expressway Corporate Center N/A N/A $8.21 $8.78 $8.97
The Adams Brothers Building N/A N/A N/A $4.56 $4.69
Bedford Realty Partners, L.P. N/A N/A N/A $7.21 $8.00
Washington
Highlands Campus Building B N/A N/A N/A N/A $12.34
Highlands Campus Building C N/A N/A N/A N/A $14.46
Average Base Rent ($/Sq Ft/Yr) At End of Year
1996 1997 1998 1999 2000
SUBURBAN OFFICE PROPERTIES:
Northern California
Village Green $19.99 $23.24 $23.70 $24.45 $26.69
Canyon Park N/A $15.92 $16.44 $16.44 $20.92
Crow Canyon Centre N/A N/A N/A $25.20 $25.43
Monterey Commerce Center 1 N/A $20.12 $19.78 $19.69 $20.36
3880 Cypress Drive N/A N/A $13.08 $13.08 $13.56
Southern California
Laguna Hills Square $25.38 $23.90 $24.79 $25.17 $24.44
Carroll Tech III N/A $8.52 $8.52 $9.60 $9.98
Scripps Wateridge N/A $11.41 $12.53 $13.16 $13.40
Carroll Tech IV N/A N/A N/A $15.00 $12.44
Colorado
Oracle Building N/A $23.37 $23.34 $23.34 $23.34
Texaco Building N/A N/A $18.05 $18.05 $20.06
WaterPark @ Briarwood Bldg. 1* N/A N/A N/A N/A $12.90
WaterPark @ Briarwood Bldg. 2* N/A N/A N/A N/A $13.18
Bedford Center @ Rampart N/A N/A N/A N/A $12.73
Arizona
Executive Center at Southbank N/A $9.23 $9.46 $9.64 $9.89
Troika Building N/A $9.00 $10.00 $10.00 $10.00
Phoenix Airport Center #1 N/A $13.81 $13.69 $13.97 $9.97
Cabrillo Executive Center N/A N/A $16.64 $17.03 $17.24
Mountain Pointe Office Park N/A N/A N/A N/A $19.20
1355 S. Clearview Avenue N/A N/A N/A $12.72 $12.72
Greater Seattle Area
Orillia Office Park N/A $9.35 $9.35 $9.35 $10.50
Adobe Systems Bldg. 1 N/A N/A $15.53 $15.53 $15.53
Adobe Systems Bldg. 2 N/A N/A $22.04 $16.71 $16.74
Highlands Campus Building A N/A N/A N/A $12.51 $15.06
The Federal Way Building N/A N/A N/A $12.65 $13.77
Federal Way II N/A N/A N/A $14.20 $14.31
Nevada
U.S. Bank Centre N/A $18.59 $18.76 $19.03 $22.48
* Shell construction completed during 2000; property in lease-up
phase.
Tax Information
The following table sets forth tax information of the Company's real
estate investments at December 31, 2000, as follows: (i) Federal tax
basis, (ii) annual rate of depreciation, (iii) method of depreciation,
and (iv) life claimed, with respect to each property or component
thereof for purposes of depreciation (in thousands):
Federal Annual Rate of Depreciation Life
Depreciable assets Tax Basis Depreciation Method In Years
INDUSTRIAL PROPERTIES
Northern California $ 3,783 3.18% Straight Line 31.5
105,807 2.56% Straight Line 39.0
109,590
Southern California 42,647 2.56% Straight Line 39.0
Colorado 3,314 2.56% Straight Line 39.0
Arizona 54,206 2.56% Straight Line 39.0
Greater Seattle Area 15,154 2.56% Straight Line 39.0
Total depreciable assets for industrial properties 224,911
SUBURBAN OFFICE PROPERTIES
Northern California 22,162 2.56% Straight Line 39.0
Southern California 21,853 2.56% Straight Line 39.0
Colorado 60,738 2.56% Straight Line 39.0
Arizona 25,749 2.56% Straight Line 39.0
Greater Seattle Area 101,402 2.56% Straight Line 39.0
Nevada 10,803 2.56% Straight Line 39.0
Total depreciable assets for suburban office properties 242,707
$467,618
For additional information on the Company's real estate portfolio, see
Note 2 to the Consolidated Financial Statements.
ITEM 3. LEGAL PROCEEDINGS
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The Common Stock of the Company trades on the New York Stock Exchange
and the Pacific Exchange under the symbol "BED." As of December 31,
2000 the Company had 940 stockholders of record. A significant number
of these stockholders are also nominees holding stock in street name
for individuals. The following table shows the high and low sale
prices per share reported on the New York Stock Exchange and the
dividends declared per share by the Company on the Common Stock for
each quarterly period during 1999 and 2000.
Dividend
High Low Per Share
1999
First Quarter $17 3/16 $14 5/8 $.36
Second Quarter $18 7/16 $14 1/2 $.39
Third Quarter $18 1/4 $16 11/16 $.39
Fourth Quarter $17 5/8 $15 11/16 $.42
2000
First Quarter $17 5/8 $15 5/8 $.42
Second Quarter $19 7/16 $15 5/8 $.42
Third Quarter $21 1/16 $18 9/16 $.45
Fourth Quarter $20 3/4 $18 $.45
ITEM 6. SELECTED FINANCIAL DATA
Following is a table of selected financial data of the Company for the
last five years (which should be read in conjunction with the
discussion under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial
Statements and Notes thereto contained herein):
(in thousands of dollars, except per share data)
2000 1999 1998 1997 1996
Operating Data:
Rental income $ 97,518 $ 90,527 $ 73,451 $ 46,377 $ 27,541
Gain (loss) on sales of real
estate investments 38,171 7,743 - 11,533 406
Net income 68,087 39,855 31,496 31,291 11,021
Net income applicable
to common stockholders 68,087 39,855 31,496 27,791 6,516
Per common share -
assuming dilution
Income before
extraordinary item $ 3.69 $ 1.87 $ 1.38 $ 1.94 $ 1.14
Net income $ 3.69 $ 1.86 $ 1.38 $ 1.94 $ 1.14
Balance Sheet Data:
Real estate investments, net $611,444 $651,038 $581,458 $423,086 $224,501
Bank loan payable 77,320 137,156 147,443 8,216 46,097
Mortgage loans payable 224,205 206,880 80,116 60,323 51,850
Redeemable preferred shares - - - - 50,000
Common and other
stockholders' equity 299,515 300,180 347,589 346,426 73,756
Other Data:
Net cash provided by
operating activities $ 44,290 $ 45,540 $ 38,949 $ 25,041 $ 14,378
Net cash provided
(used) by investing activities 70,005 (72,317) (168,018) (180,358) (96,964)
Net cash provided (used) by
financing activities (112,719) 27,075 128,994 155,350 82,887
Funds From Operations(1) 43,864 45,554 42,312 25,582 13,645
Dividends declared per share $ 1.74 $ 1.56 $ 1.32 $ 1.13 $ 1.00
(1) Management considers Funds From Operations to be one measure of
the performance of an equity REIT. Funds From Operations is used by
financial analysts in evaluating REITs and can be one measure of a
REIT's ability to make cash distributions. Presentation of this
information provides the reader with an additional measure to compare
the performance of REITs. Funds From Operations is generally defined
by the National Association of Real Estate Investment Trusts as net
income (loss) (computed in accordance with generally accepted
accounting principles), excluding extraordinary items such as gains
(losses) from debt restructurings and sales of property, plus
depreciation and amortization, and after adjustments for
unconsolidated partnerships and joint ventures. Funds From Operations
was computed by the Company in accordance with this definition.
Beginning in the first quarter of 2000, non-recurring items other than
extraordinary items as defined by generally accepted accounting
principles are no longer excluded in the calculation of Funds From
Operations. Funds From Operations does not represent cash generated
by operating activities in accordance with generally accepted
accounting principles; it is not necessarily indicative of cash
available to fund cash needs and should not be considered as an
alternative to net income (loss) as an indicator of the Company's
operating performance or as an alternative to cash flow as a measure
of liquidity. Further, Funds From Operations as disclosed by other
REITs may not be comparable to the Company's presentation.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
The following should be read in conjunction with the Selected Financial
Data and the Consolidated Financial Statements and Notes thereto, all of
which are included herein.
Results of Operations
The Company's operations consist of owning and operating industrial and
suburban office properties located primarily in the western United
States.
Increases in revenues, expenses, net income and cash flows in the years
compared below were due primarily to the acquisition, development and
sale of operating properties as follows:
2000 1999 1998
Number of Square Number of Square Number of Square
Properties Feet Properties Feet Properties Feet
Acquisitions
Industrial - - 5 334,000 10 531,000
Office 1 165,000 4 280,000 6 650,000
1 165,000 9 614,000 16 1,181,000
Development
Industrial 3 160,000 2 235,000 - -
Office 2 103,000 3 154,000 - -
5 263,000 5 389,000 - -
Sales
Industrial 15 917,000 3 448,000 - -
Office 5 314,000 1 114,000 - -
20 1,231,000 4 562,000 - -
Comparison of 2000 to 1999
Income from Property Operations
Income from property operations (defined as rental income less rental
expenses) increased $3,085,000 or 6% in 2000 compared with 1999. This
is due to an increase in rental income of $6,991,000 offset by an
increase in rental expenses (which include operating expenses, real
estate taxes and depreciation and amortization) of $3,906,000.
The increase in rental income and expenses is primarily attributable to
properties acquired and properties developed during 2000 and 1999. These
acquisition and development activities increased rental income and rental
expenses in 2000 by $9,513,000 and $4,367,000, respectively, as compared
to 1999. These increases were partially offset by the sale of one
office property and three industrial properties in 1999, and the sale of
fifteen industrial properties and five office properties in 2000, which
resulted in a reduction in rental income and rental expenses of
$7,300,000 and $2,946,000, respectively, as compared to 1999. The
remaining increase in rental income of $4,778,000 is primarily due to an
increase in rental rates and expense recovery income. The remaining
increase of $2,485,000 in rental expenses is mainly due to increases in
property tax assessments, management fees and electricity costs.
Other Income
During 2000, the Company recorded $615,000 in other income. This sum
represents a forfeited earnest money deposit from a buyer who failed to
perform under the terms of the Purchase and Sale Agreement for a property
located in Tempe, Arizona.
Expenses
Interest expense, which includes amortization of loan fees, increased
$5,856,000 or 31% in 2000 compared with 1999. The increase is
attributable to the Company's higher borrowing costs and related costs
to finance the property acquisitions and development activities during
1999 and 2000 and the repurchase of shares since November 1998. The
amortization of loan fees was $1,658,000 and $1,495,000 for 2000 and
1999, respectively. General and administrative expenses increased
$648,000 or 18% in 2000 compared to 1999, primarily as a result of
increased costs associated with stock compensation benefits.
Gain on Sales
In the first quarter 2000, the Company sold an industrial property in San
Jose, California and two industrial properties in Beaverton, Oregon for
net sale prices totaling $36,338,000, which resulted in an aggregate gain
of approximately $15,234,000.
In the second quarter 2000, the Company sold an industrial property in
San Diego, California for a net sale price of $2,165,000, which resulted
in a loss of approximately $6,000.
In the third quarter 2000, the Company sold three office properties, ten
industrial properties, and a .99 acre parcel of land for net sale prices
totaling $74,773,000, which resulted in an aggregate net gain of
approximately $20,219,000. The properties were located in Mountain View,
California; Bellevue, Washington; Overland Park and Lenexa, Kansas;
Kansas City, Missouri; and Austin, Texas.
In the fourth quarter 2000, the Company sold an office property in
Overland Park, Kansas, an office property in Austin, Texas, and an
industrial property in Farmers Branch, Texas, which included 1.43 acres
of land. These properties were sold for net sale prices totaling
$17,306,000, which resulted in an aggregate net gain of $2,724,000.
In the first quarter 1999, the Company sold an industrial property in
South San Francisco, California for a net sale price of $1,789,000, which
resulted in a gain of approximately $540,000.
In the second quarter 1999, the Company sold an office property in Salt
Lake City, Utah and a 1.35 acre parcel of land in Vista, California for
net sale prices totaling $13,545,000, which resulted in an aggregate gain
of approximately $7,043,000.
In the third quarter 1999, the Company sold an industrial property in
Modesto, California for a net sale price of $4,012,000, which resulted
in a gain of approximately $218,000.
In the fourth quarter 1999, the Company sold an industrial property in
Lenexa, Kansas for a net sale price of $4,895,000, which resulted in a
loss of approximately $58,000.
Dividends
Common stock dividends and distributions per OP Unit declared for the
first and second quarters of 2000 were $0.42 per share, and $0.45 per
share for the third and fourth quarters. Consistent with the Company's
policy, dividends and distributions were paid in the quarter after the
quarter in which they were declared.
Comparison of 1999 to 1998
Income from Property Operations
Income from property operations increased $8,947,000 or 19% in 1999
compared with 1998. This is due to an increase in rental income of
$17,076,000 offset by an increase in rental expenses of $8,129,000.
The increase in rental income and expenses is primarily attributable to
properties acquired and, to a lesser extent, properties developed during
1999 and 1998. These acquisition and development activities increased
rental income and rental expenses in 1999 by $14,787,000 and $7,646,000,
respectively, as compared to 1998. These increases were partially offset
by the sale of one office property and three industrial properties in
1999, which resulted in a reduction in rental income and rental expenses
of $1,505,000 and $729,000, respectively, as compared to 1998. The
remaining increase in rental income of $3,794,000 and rental expenses of
$1,212,000 is due primarily to increased occupancy in 1999 as compared
to 1998, as well as an overall increase in rental rates.
Expenses
Interest expense, which includes amortization of loan fees, increased
$7,806,000 or 70% in 1999 compared with 1998. The increase is
attributable to the Company's higher level of borrowings and related
costs to finance the property acquisitions and development activities
during 1998 and 1999 and the repurchase of shares since November 1998.
The amortization of loan fees was $1,495,000 and $1,013,000 for 1999 and
1998, respectively. General and administrative expenses increased
$175,000 or 5% from $3,386,000 in 1998 to $3,561,000 in 1999. The 1998
general and administrative expenses included costs of $434,000 related
to the Company exploring strategic alternatives including selling its
portfolio of properties. Such discussions were terminated in the fourth
quarter of 1998. Excluding these costs, general and administrative
expenses increased 21% in 1999 compared with 1998, primarily the result
of increased personnel costs.
Gain on Sales
In the first quarter 1999, the Company sold an industrial property in
South San Francisco, California for a net sale price of $1,789,000, which
resulted in a gain of approximately $540,000.
In the second quarter 1999, the Company sold an office property in Salt
Lake City, Utah and a 1.35 acre parcel of land in Vista, California for
net sale prices totaling $13,545,000, which resulted in an aggregate gain
of approximately $7,043,000.
In the third quarter 1999, the Company sold an industrial property in
Modesto, California for a net sale price of $4,012,000, which resulted
in a gain of approximately $218,000.
In the fourth quarter 1999, the Company sold an industrial property in
Lenexa, Kansas for a net sale price of $4,895,000, which resulted in a
loss of approximately $58,000.
Dividends
Common stock dividends and distributions per OP Unit declared were $0.36
for the first quarter of 1999, $0.39 for the second and third quarters,
and $0.42 for the fourth quarter. Consistent with the Company's policy,
dividends and distributions were paid in the quarter after the quarter
in which they were declared.
Financial Condition
Total assets of the Company at December 31, 2000 decreased by $37,244,000
compared with December 31, 1999, primarily resulting from the sale of
real estate investments of $92,410,000, offset by additions of
$27,246,000 in development costs and $27,268,000 in property and land
acquisitions. Total liabilities at December 31, 2000 decreased by
$36,579,000 compared with December 31, 1999, primarily as a result of the
pay down of debt with proceeds from real estate sales.
Liquidity and Capital Resources
In June 1998, the Company amended and restated its secured revolving
credit facility with Bank of America. Under this facility, which matures
June 1, 2001, the Company can borrow up to $175 million on a secured
basis. The facility contains an unsecured sub-line of $50 million.
Secured loans bear interest at a floating rate equal to either the
lender's published "reference rate" or LIBOR plus a margin ranging from
1.10% to 1.35% depending on the Company's leverage level. The interest
rate on the unsecured loans is either the lender's published "reference
rate" or LIBOR plus a margin
of 1.50%. As of December 31, 2000, the facility, which was all secured,
had an outstanding balance of $77,320,000 and an effective interest rate
of 7.98%. Currently, the Company is in the process of renewing the
credit facility with its existing bank group.
In May 1999, the Company obtained a total of $108 million of mortgage
financing from TIAA. The financing consists of a $43.45 million 10-year
loan, a $37.2 million 8-year loan, and a $27.35 million 6-year loan, all
with interest at a fixed rate of 7.17%. In November 1999, the Company
obtained an additional $22.15 million mortgage loan from TIAA. The loan
has a 7-year term with interest at a fixed rate of 7.95%. In December
1999, the Company obtained a $4.6 million mortgage loan from Union Bank.
The loan has a 5-year term with interest at a variable rate of LIBOR plus
2.50%. In July 2000, the Company obtained a total of $30.89 million of
mortgage financing from Security Life of Denver Insurance Company. The
loans have a 5-year term with options to renew for four additional 5-year
terms. Interest on the mortgages are at a variable rate of LIBOR plus
1.40%. Proceeds from the mortgage loans, net of loan costs, were used
to pay down a portion of the outstanding balance of the Company's $175
million line of credit.
The Company was in compliance with the covenants and requirements of its
various debt financings throughout 2000. The Company anticipates that
the cash flow generated by its real estate investments and funds
available under the above credit facility will be sufficient to meet its
short-term liquidity requirements.
During the twelve months ended December 31, 2000, the Company's operating
activities provided cash flow of $44,290,000. Investing activities
utilized cash of $60,576,000 for real estate investments and development,
offset by proceeds from real estate sales of $130,581,000. Financing
activities utilized net cash flow of $112,719,000 consisting of the net
proceeds from bank borrowings and mortgage loans of $109,777,000 and net
proceeds from the issuance of common stock of $4,764,000, offset by
repayment of bank borrowings and mortgage loans of $153,344,000, payment
of dividends and distributions of $31,978,000, and the repurchase of
2,280,837 shares of common stock for $41,938,000.
During the twelve months ended December 31, 1999, the Company's operating
activities provided cash flow of $45,540,000. Investing activities
utilized cash of $96,558,000 for real estate acquisitions, offset by
proceeds from real estate sales of $24,241,000. Financing activities
provided net cash flow of $27,075,000 consisting of the proceeds from
bank borrowings and mortgage loans of $276,180,000 and net proceeds from
the exercise of stock options of $2,004,000, offset by repayment of bank
borrowings and mortgage loans of $161,652,000, payment of dividends and
distributions of $32,712,000, redemption of partnership units of
$160,000, and the repurchase of 3,346,625 shares of common stock for
$56,585,000.
The Company expects to fund the cost of acquisitions, capital
expenditures, costs associated with lease renewals and reletting of
space, repayment of indebtedness, share repurchases, and development of
properties from (i) cash flow from operations, (ii) borrowings under the
credit facility and, if available, other indebtedness (which may include
indebtedness assumed in acquisitions), and (iii) the sale of certain real
estate investments.
The ability to obtain mortgage loans on income producing property is
dependent upon the ability to attract and retain tenants and the
economics of the various markets in which the properties are located, as
well as the willingness of mortgage-lending institutions to make loans
secured by real property. The ability to sell real estate investments
is partially dependent upon the ability of purchasers to obtain financing
at commercially reasonable rates.
Potential Factors Affecting Future Operating Results
Many factors affect the Company's actual financial performance and may
cause the Company's future results to be markedly outside of the
Company's current expectations. These factors include the following:
Interest Rate Fluctuations
At the present time, borrowings under the Company's credit facility, the
$4.6 million mortgage loan from Union Bank, and the $30.89 million
mortgage loans from Security Life of Denver Insurance Company bear
interest at floating rates. The Company recognizes that its results from
operations may be negatively impacted by future increases in interest
rates and substantial additional borrowings to finance property
acquisitions, development projects and share repurchases.
Lease Renewals
While the Company historically has been successful in renewing and
reletting space, the Company is subject to the risk that certain leases
expiring in 2001 and beyond may not be renewed, or the terms of renewal
may be less favorable to
the Company than current lease terms. The Company expects to incur costs
in making improvements or repairs to its portfolio of properties required
by new or renewing tenants and expects to incur expenses associated with
brokerage commissions payable in connection with the reletting of space.
Inflation
Most of the leases require the tenants to pay their share of operating
expenses, including common area maintenance, real estate taxes and
insurance, thereby reducing the Company's exposure to increases in costs
and operating expenses resulting from inflation. Inflation, including
escalations in electricity costs in California and neighboring states,
however, could result in an increase in the Company's borrowing and other
operating expenses.
Government Regulations
The Company's properties are subject to various federal, state and local
regulatory requirements such as local building codes and other similar
regulations. The Company believes its properties are currently in
substantial compliance with all applicable regulatory requirements,
although expenditures at its properties may be required to comply with
changes in these laws. No material expenditures are contemplated at this
time in order to comply with any such laws or regulations.
Under various federal, state and local laws, ordinances and regulations,
an owner or operator of real estate is liable for the costs of removal
or remediation of certain hazardous or toxic substances released on,
above, under, or in such property. Such laws often impose such liability
without regard to whether the owner knew of, or was responsible for, the
presence of such hazardous or toxic substances. The costs of such
removal or remediation could be substantial.
Additionally, the presence of such substances or the failure to properly
remediate such substances may adversely affect the owner's ability to
borrow using such real estate as collateral.
The Company believes that it is in compliance in all material respects
with all federal, state and local laws regarding hazardous or toxic
substances, and the Company has not been notified by any governmental
authority of any non-compliance or other claim in connection with any of
its present or former properties. Accordingly, the Company does not
currently anticipate that compliance with federal, state and local
environmental protection regulations will have any material adverse
impact on the financial position, results of operations or liquidity of
the Company. There can be no assurance, however, that future discoveries
or events at the Company's properties, or changes to current
environmental regulations, will not result in such a material adverse
impact.
Financial Performance
Management considers Funds From Operations (FFO) to be one measure of the
performance of an equity REIT. FFO during the three and twelve months
ended December 31, 2000 was $10,533,000 and $43,864,000, respectively.
During the same periods in 1999, FFO was $11,014,000 and $45,554,000,
respectively. FFO is used by financial analysts in evaluating REITs and
can be one measure of a REIT's ability to make cash distributions.
Presentation of this information provides the reader with an additional
measure to compare the performance of REITs. FFO is generally defined
by the National Association of Real Estate Investment Trusts as net
income (loss) (computed in accordance with accounting principles
generally accepted in the United States of America), excluding
extraordinary items such as gains (losses) from debt restructurings and
sales of property, plus depreciation and amortization, and after
adjustments for unconsolidated partnerships and joint ventures. FFO was
computed by the Company in accordance with this definition. In
accordance with the clarification of Funds From Operations issued by
NAREIT's leadership in October 1999, beginning in the first quarter of
2000, non-recurring items other than extraordinary items as defined by
generally accepted accounting principles are no longer excluded in the
calculation of FFO. FFO does not represent cash generated by operating
activities in accordance with generally accepted accounting principles;
it is not necessarily indicative of cash available to fund cash needs and
should not be considered as an alternative to net income (loss) as an
indicator of the Company's operating performance or as an alternative to
cash flow as a measure of liquidity. Further, FFO as disclosed by other
REITs may not be comparable to the Company's presentation.
Funds From Operations (in thousands, except share amounts):
Three Months Ended Twelve Months Ended
December 31, December 31,
2000 1999 2000 1999
Net income $ 9,490 $ 6,962 $ 68,087 $ 39,855
Add:
Depreciation and
amortization 3,752 3,962 13,812 13,016
Minority interest 35 32 136 128
Extraordinary item - - - 298
(Gain) loss on sales (2,744) 58 (38,171) (7,743)
Funds From Operations $ 10,533 $ 11,014 $ 43,864 $ 45,554
Weighted average number of
shares - diluted: 17,666,761 20,163,669 18,501,905 21,477,013
ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company is exposed to interest rate changes primarily as a result of
its line of credit and long-term debt used to maintain liquidity and fund
capital expenditures and expansion of the Company's real estate
investment portfolio and operations. The Company's interest rate risk
management objective is to limit the impact of interest rate changes on
earnings and cash flows and to lower its overall borrowing costs. To
achieve its objectives, the Company balances its borrowings between fixed
and variable rate debt. The Company does not enter into derivative or
interest rate transactions for speculative purposes.
The Company's interest rate risk is monitored using a variety of
techniques. The table below presents the principal amounts, weighted
average interest rates, fair values and other terms required by year of
expected maturity to evaluate the expected cash flows and sensitivity to
interest rate changes (dollars in thousands):
Fair
2001 2002 2003 2004 2005 Thereafter Total Value
Variable rate LIBOR debt $77,789 $ 508 $ 551 $ 598 $ 4,873 $ 28,313 $112,632 $112,632
Average interest rate 7.98% 8.15% 8.15% 8.15% 9.03% 8.02% 8.04% 8.04%
Fixed rate debt $ 3,341 $17,333 $21,278 $ 3,358 $27,710 $115,872 $188,892 $189,452
Average interest rate 7.32% 7.46% 7.07% 7.36% 7.19% 7.37% 7.32% 7.25%
As the table incorporates only those exposures that exist as of December
31, 2000, it does not consider those exposures or positions which could
arise after that date. Moreover, because firm commitments are not
presented in the table above, the information presented therein has
limited predictive value. As a result, the Company's ultimate realized
gain or loss with respect to interest rate fluctuations will depend on
the exposures that arise during the period, the Company's hedging
strategies at that time, and interest rates.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The response to this item is submitted as a separate section of this
Form 10-K. See Item 14.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
The information required by Items 10 through 13 of Part III is
incorporated by reference from the Registrant's Proxy Statement which
will be mailed to stockholders in connection with the Registrant's annual
meeting of stockholders scheduled to be held on May 17, 2001.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
A. 1. Financial Statements
Page
Independent Auditors' Report. 48
Consolidated Balance Sheets as of December 31, 2000 and 1999. 49
Consolidated Statements of Income for the years ended December 50
31, 2000, 1999 and 1998.
Consolidated Statements of Stockholders' Equity for the years 51
ended December 31, 2000, 1999 and 1998.
Consolidated Statements of Cash Flows for the years ended 52
December 31, 2000, 1999 and 1998.
Notes to Consolidated Financial Statements. 53
2. Financial Statement Schedules
Page
Schedule III - Real Estate and Accumulated Depreciation 69
All other schedules have been omitted as they are not
applicable, or not required or because the information is
given in the Consolidated Financial Statements or related
Notes to Consolidated Financial Statements.
3. Exhibits
Exhibit No.List of Exhibits
3.1(a) Articles of Incorporation of Bedford Property Investors,
Inc. is incorporated herein by reference to Exhibit 4.2
of the Company's Registration Statement on Form S-2 (File
No. 333-00921) filed on February 14, 1996.
3.1(b) Charter of the Company, as amended, is incorporated
herein by reference to Exhibit 4.2 of the Company's
Amendment No. 1 to its Registration Statement on Form S-2
(File No. 333-00921) filed on March 29, 1996.
3.1(c) Articles of Amendment of Charter of Bedford Property
Investors, Inc. is incorporated herein by reference to
Exhibit 3.1 to the Company's Form 10-Q for the quarter
ended June 30, 1997.
3.2* Amended and Restated Bylaws of the Company.
10.6(a)* BPIA Agreement dated as of January 1, 1995, by and
between Westminster Holdings, Inc., a California
corporation doing business as BPI Acquisitions and
Bedford Property Investors, Inc.
10.6(b)* Amendment to BPIA Agreement dated as of January 1, 1997.
10.6(c)* Second Amendment to BPIA Agreement dated as of January 1,
1999.
10.6(d)* Third Amendment to BPIA Agreement dated as of December
10, 2000.
10.6(e)* Fourth Amendment to BPIA Agreement dated as of December
10, 2000.
10.13 Promissory Note dated March 20, 1996 executed by the
Company and payable to the order of Prudential Insurance
Company of America is incorporated herein by reference to
Exhibit 10.13 to the Company's Amendment No. 1 to its
Registration Statement on Form S-2 (File No. 333-00921)
filed on March 29, 1996.
10.14 Loan Agreement dated as of December 24, 1996 between
Bedford Property Investors, Inc. as Borrower and Union
Bank of California, N.A. as Lender is incorporated herein
by reference to Exhibit 10.14 to the Company's Form 10-K
for the year ended December 31, 1996.
10.15 The Company's Dividend Reinvestment and Stock Purchase
Plan is incorporated herein by reference to the Company's
post-effective Amendment No. 1 to its Registration
Statement on Form S-3 (File No. 333-33795) filed on
November 20, 1997.
10.16 The Company's Amended and Restated Employee Stock Plan
incorporated herein by reference to Exhibit 10.16 to the
Company's Form 10-K for the year ended December 31, 1997.
10.17 Fourth Amended and Restated Credit Agreement (Secured
Loan) among Bedford Property Investors, Inc., The Banks
Party Hereto and Bank of America National Trust and
Savings Association, as Arranger and as Administrative
Agent for the Banks, and Union Bank of California, NA as
Co-Agent for the Banks, dated June 15, 1998 is
incorporated herein by reference to Exhibit 10.17 to the
Company's Form 10-Q for the quarter ended June 30, 1998.
10.18 The Company's Amended and Restated 1992 Directors' Stock
Option Plan is incorporated herein by reference to
Exhibit 10.18 to the Company's Form 10-K for the year
ended December 31, 1997.
10.22 Promissory Note made as of May 28, 1999, by and between
Bedford Property Investors, Incorporated and Teachers
Insurance and Annuity Association of America is
incorporated herein by reference to Exhibit 10.22 to the
Company's Form 10-Q for the quarter ended June 30, 1999.
10.23 Promissory Note made as of May 28, 1999, by and between
Bedford Property Investors, Incorporated and Teachers
Insurance and Annuity Association of America is
incorporated herein by reference to Exhibit 10.23 to the
Company's Form 10-Q for the quarter ended June 30, 1999.
10.24 Promissory Note made as of May 28, 1999, by and between
Bedford Property Investors, Incorporated and Teachers
Insurance and Annuity Association of America is
incorporated herein by reference to Exhibit 10.24 to the
Company's Form 10-Q for the quarter ended June 30, 1999.
10.28 Promissory Note made as of November 22, 1999, by and
between Bedford Property Investors, Incorporated and
Teachers Insurance and Annuity Association of America is
incorporated herein by reference to Exhibit 10.28 to the
Company's Form 10-K for the year ended December 31, 1999.
10.29 Loan Agreement dated as of July 27, 2000, between Bedford
Property Investors, Inc. as Borrower and Security Life of
Denver Insurance Company as Lender is incorporated herein
by reference to Exhibit 10.29 to the Company's Form 10-Q
for the quarter ended June 30, 2000.
10.30 Loan Agreement dated as of July 27, 2000, between Bedford
Property Investors, Inc. as Borrower and Security Life of
Denver Insurance Company as Lender is incorporated herein
by reference to Exhibit 10.30 to the Company's Form 10-Q
for the quarter ended June 30, 2000.
10.31 Amended and Restated Promissory Note dated May 24, 1996
executed by the Company and payable to the order of
Prudential Insurance Company of America is incorporated
herein by reference to Exhibit 10.13 to the Company's
Form 10-Q for the quarter ended June 30, 1996.
10.32 Loan Agreement dated as of January 30, 1998 between
Bedford Property Investors, Inc. as Borrower and
Prudential Insurance Company of America as Lender is
incorporated herein by reference to Exhibit 10.15 to the
Company's Form 10-K for the year ended December 31, 1997.
10.33 Amended and Restated Unsecured Credit Agreement among
Bedford Property Investors, Inc., The Banks Party Hereto
and Bank of America National Trust and Savings
Association, as Arranger and as Administrative Agent for
the Banks, and Union Bank of California, N.A., as Co-
Agent for the Banks, dated June 15, 1999, is incorporated
herein by reference to Exhibit 10.18 to the Company's
Form 10-Q for the quarter ended June 30, 1998.
10.34* Form of Retention Agreement.
12* Ratio of Earnings to Fixed Charges.
21.1* Subsidiaries of the Company.
23.1* Consent of KPMG LLP, independent public accountants.
* Filed herewith
Independent Auditors' Report
To the Stockholders and the Board of Directors of
Bedford Property Investors, Inc.:
We have audited the consolidated financial statements of Bedford Property
Investors, Inc. and subsidiaries as listed in the accompanying index.
In connection with our audits of the consolidated financial statements,
we also have audited the financial statement schedule as listed in the
accompanying index. These consolidated financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that
we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Bedford Property Investors, Inc. and subsidiaries as of December 31, 2000
and 1999, and the results of their operations and their cash flows for
each of the years in the three-year period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United
States of America. Also in our opinion, the related financial statement
schedule, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects,
the information set forth therein.
KPMG LLP
San Francisco, California
February 2, 2001
BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2000 AND 1999
(in thousands, except share and per share amounts)
2000 1999
Assets:
Real estate investments:
Industrial buildings $305,857 $279,367
Office buildings 310,882 294,420
Operating properties held for sale 5,226 80,563
Properties under development 13,702 19,246
Land held for development 11,721 6,137
647,388 679,733
Less accumulated depreciation 35,944 28,695
611,444 651,038
Cash and cash equivalents 3,160 1,584
Other assets 19,562 18,788
$634,166 $671,410
Liabilities and Stockholders' Equity:
Bank loan payable $ 77,320 $137,156
Mortgage loans payable 224,205 206,880
Accounts payable and accrued expenses 15,665 9,767
Dividends and distributions payable 8,005 8,270
Other liabilities 8,227 7,928
Total liabilities 333,422 370,001
Minority interest in consolidated partnership 1,229 1,229
Stockholders' equity:
Common stock, par value $0.02 per share;
authorized 50,000,000 shares;
issued and outstanding 17,709,738
shares in 2000 and 19,613,472 shares in 1999 354 392
Additional paid-in capital 316,084 353,220
Accumulated dividends in
excess of net income (16,923) (53,432)
Total stockholders' equity 299,515 300,180
$634,166 $671,410
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 and 1998
(in thousands, except share and per share amounts)
2000 1999 1998
Property operations:
Rental income $97,518 $90,527 $73,451
Rental expenses:
Operating expenses 16,814 14,550 11,026
Real estate taxes 8,920 8,074 6,220
Depreciation and amortization 13,812 13,016 10,265
Income from property operations 57,972 54,887 45,940
General and administrative expenses (4,209) (3,561) (3,386)
Interest income 500 182 223
Interest expense (24,826) (18,970) (11,164)
Other income 615 - -
Income before gain on sales of real
estate investments and minority interest 30,052 32,538 31,613
Gain on sales of real estate investments, net 38,171 7,743 -
Minority interest (136) (128) (117)
Income before extraordinary item 68,087 40,153 31,496
Extraordinary item-loss on early extinguishment of debt - (298) -
Net income $68,087 $39,855 $31,496
Earnings per share - basic:
Income before extraordinary item $ 3.73 $ 1.88 $ 1.39
Extraordinary item-loss on early extinguishment of debt - (0.01) -
Net income per share - basic $ 3.73 $ 1.87 $ 1.39
Weighted average number of shares - basic 18,236,512 21,267,088 22,634,656
Earnings per share - diluted:
Income before extraordinary item $ 3.69 $ 1.87 $ 1.38
Extraordinary item-loss on early extinguishment of debt - (0.01) -
Net income per share - diluted $ 3.69 $ 1.86 $ 1.38
Weighted average number of shares - diluted 18,501,905 21,477,013 22,929,807
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(in thousands, except per share amounts)
Accumulated Total
Additional dividends stock-
Common paid-in in excess of holders'
stock capital net income equity
Balance, December 31, 1997 452 408,209 (62,235) 346,426
Issuance of common stock 1 1,366 - 1,367
Repurchase and retirement of
common stock - (1,815) - (1,815)
Net income - - 31,496 31,496
Dividends to common stockholders - - (29,885) (29,885)
($1.32 per share)
Balance, December 31, 1998 453 407,760 (60,624) 347,589
Issuance of common stock 6 1,978 - 1,984
Repurchase and retirement of common stock (67) (56,518) - (56,585)
Net income - - 39,855 39,855
Dividends to common stockholders
($1.56 per share) - - (32,663) (32,663)
Balance, December 31, 1999 $ 392 $353,220 $(53,432) $300,180
Issuance of common stock 8 4,756 - 4,764
Repurchase and retirement of common stock (46) (41,892) - (41,938)
Net income - - 68,087 68,087
Dividends to common stockholders
($1.74 per share) - - - (31,578) (31,578)
Balance, December 31, 2000 $ 354 $316,084 $(16,923) $299,515
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(in thousands)
2000 1999 1998
Operating Activities:
Net income $68,087 $39,855 $31,496
Adjustments to reconcile net income to net cash provided
by operating activities:
Minority interest 136 128 117
Depreciation and amortization 5,767 14,212 11,508
Gain on sales of real estate investments, net (38,171) (7,743) -
Change in other assets (6,815) (4,436) (7,259)
Change in accounts payable and accrued expenses 4,931 1,534 1,656
Change in other liabilities 355 1,990 1,431
Net cash provided by operating activities 44,290 45,540 38,949
Investing Activities:
Investments in real estate (60,576) (96,558) (168,018)
Proceeds from sales of real estate investments, net 130,581 24,241 -
Net cash provided (used) by investing activities 70,005 (72,317) (168,018)
Financing Activities:
Proceeds from bank loan payable 79,624 141,972 158,097
Repayments of bank loan payable (139,778) (152,657) (19,889)
Proceeds from mortgage loans payable, net of loan costs 30,153 134,208 21,084
Repayments of mortgage loans payable (13,566) (8,995) (1,107)
Issuance of common stock 4,764 2,004 1,367
Repurchase and retirement of common stock (41,938) (56,585) (1,815)
Redemption of partnership units - (160) (128)
Payment of dividends and distributions (31,978) (32,712) (28,615)
Net cash (used) provided by financing activities (112,719) 27,075 128,994
Net increase (decrease) in cash and cash equivalents 1,576 298 (75)
Cash and cash equivalents at beginning of year 1,584 1,286 1,361
Cash and cash equivalents at end of year $ 3,160 $ 1,584 $ 1,286
Supplemental disclosure of cash flow information
a) Non-cash investing and financing activities:
Debt incurred with real estate acquired $ - $ 5,602 $ -
b) Cash paid during the year for interest, net of amounts
capitalized $23,372 $16,624 $ 9,329
See accompanying notes to consolidated financial statements.
BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000 AND 1999
Note 1 - Organization and Summary of Significant Accounting Policies and
Practices
The Company
Bedford Property Investors, Inc. (the "Company") is a Maryland real
estate investment trust with investments primarily in industrial and
suburban office properties concentrated in the western United States.
The Company's common stock trades under the symbol "BED" on both the New
York Stock Exchange and Pacific Exchange.
Principles of Consolidation
The consolidated financial statements include the accounts of the
Company, its wholly-owned subsidiaries and Bedford Realty Partners, L.P.
All significant inter-entity balances have been eliminated in
consolidation.
Cash and Cash Equivalents
The Company considers all demand deposits, money market accounts and
investments in certificates of deposit and repurchase agreements
purchased with a maturity of three months or less, at the date of
purchase, to be cash equivalents. The Company maintains its cash and
cash equivalents at financial institutions. The combined account
balances at each institution periodically exceed the Federal Depository
Insurance Corporation ("FDIC") insurance coverage, and, as a result,
there is a concentration of credit risk related to amounts on deposit in
excess of FDIC insurance coverage. The Company believes that the risk
is not significant, as the Company does not anticipate their non-
performance.
Use of Estimates
The preparation of these financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management of the Company to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of financial statements,
and the reported amounts of revenues and expenses during the reporting
periods. Actual results could differ from those estimates.
Federal Income Taxes
The Company has elected to be taxed as a real estate investment trust
under Sections 856 to 860 of the Internal Revenue Code of 1986, as
amended (the "Code"). A real estate investment trust is generally not
subject to federal income tax on that portion of its real estate
investment trust taxable income ("Taxable Income"), which is distributed
to its stockholders, provided that at least 95% of Taxable Income is
distributed and other requirements are met. The Company believes it is
in compliance with the Code.
As of December 31, 2000, for federal income tax purposes, the Company had
an ordinary loss carry forward of approximately $19 million. As the
Company does not expect to incur income tax liabilities, the asset value
of these losses has been effectively fully reserved. For federal income
tax purposes, dividend distributions made for 2000 were classified 2% as
ordinary, 19% as unrecaptured section 1250 gain, and 79% capital gain;
dividend distributions made for 1999 were classified 97% as ordinary and
3% as capital gain; dividend distributions made for 1998 were classified
96% as ordinary and 4% as return of capital.
Real Estate Investments
Buildings and improvements are carried at cost less accumulated
depreciation. Buildings are depreciated on a straight-line basis over
45 years. Upon the acquisition of an investment by the Company,
acquisition-related costs are added to the carrying cost of that
investment. These costs are depreciated over the useful lives of the
buildings. Leasing commissions and improvements to tenants' space
incurred subsequent to the acquisition are amortized over the terms of
the respective leases. Expenditures for repairs and maintenance which
do not add to the value or prolong the useful life of a property are
expensed as incurred. When the Company concludes that the recovery of
the carrying amount of a real estate investment is impaired, it reduces
such carrying amount to the estimated fair value of the investment.
Investments which are considered held for sale are carried at the lower
of the carrying amount or fair value less costs to sell and such
properties are no longer depreciated.
Income Recognition
Rental income from operating leases is recognized in income on a
straight-line basis over the period of the related lease agreement.
Aggregate rental income exceeded contractual rentals by $2,597,000,
$2,797,000, and $2,252,000 for 2000, 1999, and 1998, respectively.
Stock-Based Compensation
The Company measures compensation expense for its employee stock-based
compensation plans using the intrinsic value method and has provided in
Note 6 pro forma disclosures of the effect on net income and earnings per
share as if the fair value-based method had been applied in measuring
compensation expense.
In March 2000, the FASB issued FASB Interpretation No. 44, Accounting for
Certain Transactions involving Stock Compensation - an interpretation of
APB Opinion No. 25 (FIN 44). The provisions of FIN 44 were effective
July 1, 2000. The adoption of FIN 44 did not have a material impact on
the Company's financial statements.
Comprehensive Income
There are no adjustments necessary to net income as presented in the
accompanying consolidated statements of income to derive comprehensive
income in accordance with FASB Statement No. 130, Reporting Comprehensive
Income.
Per Share Data
Per share data are based on the weighted average number of common shares
outstanding during the year. Stock options issued under the Company's
stock option plans, non-vested restricted stock, and the limited
partnership units of Bedford Realty Partners, L.P. are included in the
calculation of diluted per share data if, upon exercise or vestiture,
they would have a dilutive effect.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued
Financial Accounting Standard No. 133, Accounting for Derivative
Instruments and Hedging Activities. SFAS 133, as amended, is effective
for all fiscal quarters of fiscal years beginning after June 15, 2000.
Management believes that the adoption of this statement will not have a
material impact on the Company's financial statements.
Note 2 - Real Estate Investments
As of December 31, 2000, the Company's real estate investments were
diversified by property type as follows (dollars in thousands):
Number of Percent
Properties Cost of Total
Industrial buildings 60 $305,857 47%
Office buildings 27 310,882 48%
Operating properties held for sale 2 5,226 1%
Properties under development 5 13,702 2%
Land held for development 9 11,721 2%
Total 103 $647,388 100%
Note 2 - Real Estate Investments (continued)
The following table sets forth the Company's real estate investments as
of December 31, 2000 (in thousands):
Less
Development Accumulated
Land Building In Progress Depreciation Total
Industrial buildings
Northern California $ 44,738 $110,285 $ - $12,002 $143,021
Arizona 20,218 56,342 - 4,172 72,388
Southern California 18,308 42,707 - 4,312 56,703
Greater Seattle Area 3,409 9,850 - 469 12,790
Total industrial buildings 86,673 219,184 - 20,955 284,902
Office buildings
Northern California 5,781 22,203 - 1,487 26,497
Arizona 11,954 27,848 - 1,692 38,110
Southern California 9,361 21,854 - 1,818 29,397
Colorado 10,373 71,011 - 2,904 78,480
Greater Seattle Area 16,811 100,780 - 5,767 111,824
Nevada 2,102 10,804 - 922 11,984
Total office buildings 56,382 254,500 - 14,590 296,292
Operating properties held for sale
Colorado 1,911 3,315 - 399 4,827
Total operating properties held for sale 1,911 3,315 - 399 4,827
Properties under development
Northern California 461 - 522 - 983
Colorado 4,111 - 8,608 - 12,719
Total properties under development 4,572 - 9,130 - 13,702
Land held for development
Northern California 3,822 - 22 - 3,844
Arizona 644 - - - 644
Southern California 3,887 - 84 - 3,971
Colorado 3,106 - 156 - 3,262
Total land held for development 11,459 - 262 - 11,721
Total as of December 31, 2000 $160,997 $476,999 $ 9,392 $35,944 $611,444
Total as of December 31, 1999 $166,948 $493,539 $19,246 $28,695 $651,038
Company personnel directly manage all but five of the Company's
properties from regional offices located in Lafayette, CA; Tustin, CA;
Phoenix, AZ; Greenwood Village, CO; and Seattle, WA. The Company has
retained outside managers to assist in some of the management functions
for these five properties, which are U.S. Bank Centre in Reno, NV and
Bryant Street Quad, Bryant Street Annex, Texaco and Oracle in Denver, CO.
All financial record-keeping is centralized at the Company's corporate
office in Lafayette, CA.
Income from property operations for properties held for sale as of
December 31, 2000 was $821,000, $715,000, and $609,000 for the twelve
months ending December 31, 2000, 1999 and 1998, respectively.
During 2000, 1999 and 1998, the Company capitalized interest costs
relating to properties under development totaling $1,964,000, $2,148,000
and $2,177,000, respectively.
Note 3 - Consolidated Partnership
In December 1996, the Company formed Bedford Realty Partners, L.P. (the
"Operating Partnership"), with the Company as the sole general partner,
for the purpose of acquiring real estate. In exchange for contributing
a property into the Operating Partnership, the owners of the property
received limited partnership units ("OP Units"). A limited partner can
seek redemption of the OP Units at any time. The Company, at its option,
may redeem the OP Units by either (i) issuing common stock at the rate
of one share of common stock for each OP Unit, or (ii) paying cash to a
limited partner based on the average trading price of its common stock.
Each OP Unit is allocated partnership income and cash flow at a rate
equal to the dividend being paid by the Company on a share of common
stock. Additional partnership income and cash flow is allocated 99% to
the Company and 1% to the limited partners.
This acquisition strategy is referred to as a "Down REIT" transaction;
as long as certain tax attributes are maintained, the income tax
consequences to a limited partner are generally deferred until such time
as the limited partner redeems their OP Units.
On December 17, 1996, the Company acquired a $3.6 million industrial
property located in Modesto, California utilizing the Operating
Partnership. The sellers of the property received 108,497 OP Units. A
director of the Company was a 9% owner of the property, but did not
participate in the approval of the acquisition. In December 1999, the
Modesto, California property was exchanged for a property located in
Phoenix, Arizona. As of December 31, 2000 the Company has redeemed
30,505 OP units for cash.
Note 4 - Leases
Minimum future lease payments to be received as of December 31, 2000 are
as follows (in thousands):
2001 $ 78,243
2002 72,034
2003 64,818
2004 48,920
2005 28,710
Thereafter 49,120
$341,845
The total minimum future lease payments shown above do not include
tenants' obligations for reimbursement of operating expenses or taxes as
provided by the terms of certain leases.
Note 5 - Related Party Transactions
The Company's activities relating to the development and acquisition of
new properties and debt and equity financings have been performed by
Bedford Acquisitions, Inc. (BAI) pursuant to a written contract dated
January 1, 1995, as amended. The contract provides that BAI is obligated
to provide services to the Company with respect to the Company's
acquisition and financing activities, and that BAI is responsible for the
payment of its expenses incurred in connection therewith. The contract
provides that BAI is to be paid a fee in an amount equal to the lesser
of (i) 1 1/2% of the gross amount of the aggregate purchase price of the
property for acquisitions and dispositions, up to 1 1/2% of any loans
arranged by BAI, plus 5% of development project costs, or (ii) an amount
equal to (a) the aggregate amount of approved expenses funded by BAI
through the time of such acquisition, disposition, loan, or development
minus (b) the aggregate amount of fees previously paid to BAI pursuant
to such arrangement. In no event will the aggregate amount of fees paid
to BAI exceed the aggregate amount of costs funded by BAI. The agreement
with BAI has a term of one year and expires on December 31, 2001. The
agreement is to be automatically extended for an additional term of one
year unless either party gives notice of its intent to terminate the
agreement by October 31, 2001.
For 2000, 1999, and 1998, the Company paid BAI $2,431,000, $2,783,000,
and $2,272,000, respectively, for acquisition and financing activities
performed pursuant to the foregoing arrangements. The Company believes
that since the fees charged under the foregoing arrangements (i) have
been and continue to be comparable to those charged by other sponsors of
real estate investment entities or other third party service providers
and (ii) have been and continue to be charged only for services on
acquired properties or completed financings, such fees are properly
includable in direct acquisition costs and capitalized as part of the
asset or financing activities.
Note 6 - Stock Compensation Plans
Initially 900,000 shares of the Company's Common Stock were reserved for
issuance under the Employee Stock Option Plan (the "Employee Plan"). In
May 1998, the shareholders approved an additional 2,100,000 shares. The
Employee Plan expires in 2003. The Employee Plan provides for
non-qualified stock options and incentive stock options.
The Employee Plan is administered by the Compensation Committee of the
Board of Directors, which determines the terms of options granted,
including the exercise price, the number of shares subject to the option,
and the exercisability of the options. Options granted to employees are
exercisable upon vesting, and typically vest over a four-year period.
The Employee Plan requires that the exercise price of incentive stock
options be at least equal to the fair market value of such shares on the
date of grant and that the exercise price of non-qualified stock options
be equal to at least 85% of the fair market value of such shares on the
date of the grant. The maximum term of options granted is ten years.
Initially 250,000 shares of the Company's Common Stock were reserved for
issuance under the Directors' Stock Option Plan (the "Directors' Plan").
In May 1996 and 1998, the shareholders approved an additional 250,000
shares and 500,000 shares, respectively. The Directors' Plan expires in
2002. The Directors' Plan provides for the grant of non-qualified stock
options to directors of the Company. The Directors' Plan contains an
automatic grant feature whereby a director receives a one-time "initial
option" to purchase 25,000 shares upon a director's appointment to the
Board of Directors and thereafter receives automatic annual grants of
options to purchase 10,000 shares upon re-election to the Board of
Directors. Options granted are generally exercisable six months from the
date of grant.
The Directors' Plan requires that the exercise price of options be equal
to the fair market value of the underlying shares on the date of grant.
The maximum term of options granted is ten years.
In September 1995, the Company established a Management Stock Acquisition
program which was subsequently modified by the Board in 1999. Under the
program, certain options may be exercised by option holders with a
recourse note payable to the Company. Such note bears interest at 7.5%
or the Applicable Federal Rate as defined by the Internal Revenue
Service, whichever is higher. The note is due on the first of nine years
and nine months after the date of the grant or within ninety days from
termination of employment, with interest payable quarterly. During 2000,
1999, 1996 and 1995, options for 200,750 shares of Common Stock were
exercised in exchange for notes payable to the Company. The unpaid
balance of the notes was $2,150,000 and $974,000 at December 31, 2000 and
1999, respectively, and is included in the accompanying consolidated
balance sheet as a reduction of additional paid-in capital.
In addition, the Company may grant restricted stock to employees pursuant
to the Employee Plan. These shares generally vest over five years and
are subject to forfeiture under certain conditions. For 2000, 1999, 1998
and 1997, the Company granted 110,651 shares, 201,751 shares, 48,500
shares, and 30,000 shares of restricted stock net of forfeitures,
respectively. Deferred compensation associated with unvested restricted
stock was $4,003,000 and $3,958,000 as of December 31, 2000 and 1999,
respectively, and is included in the accompanying consolidated balance
sheets as a reduction of additional paid-in capital.
The Company applies APB
Opinion No. 25 and related interpretations in accounting for its plans.
Accordingly, compensation costs have not been recognized for either the
Employee or the Directors' Plan. Had compensation costs for the plans been
determined consistent with FASB Statement No. 123, the Company's net income
and earnings per share would have been reduced to the pro forma amounts
indicated below:
2000 1999 1998
Net income:
As reported $68,087,000 $39,855,000 $31,496,000
Pro forma 67,865,000 39,496,000 31,158,000
Earnings per share - basic:
As reported $ 3.73 $ 1.87 $ 1.39
Pro forma 3.72 1.86 1.38
Earnings per share - diluted:
As reported $ 3.69 $ 1.86 $ 1.38
Pro forma 3.68 1.84 1.36
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted-
average assumptions used for grants in 2000, 1999 and 1998, respectively:
dividend yield of 9.2%, 9.4%, and 7.3%; expected volatility of 18.2%,
18.4% and 17.0%; risk-free interest rates of 5.1%, 6.8% and 4.6%. The
expected life for the director's options is ten years for 2000 and five
years for 1999 and 1998. The expected life for the employee's options
is ten years for each period.
A summary of the status of the Company's plans as of December 31, 2000,
1999 and 1998 and changes during the years ended on those dates is
presented below:
2000 1999 1998
Weighted Weighted Weighted
Average Average Average
Shares Exercise Price Shares Exercise Price Shares Exercise Price
Employee Plan
Outstanding at beginning
of year 736,625 $17.72 1,117,250 $18.10 713,750 $16.52
Granted 127,000 17.94 - - 619,000 19.67
Exercised (138,375) 13.26 (63,500) 13.66 (29,625) 13.03
Forfeited and cancelled (250,000) 18.89 (317,125) 19.15 (185,875) 18.05
Outstanding at end of year 475,250 $18.46 736,625 $17.72 1,117,250 $18.10
Options exercisable 141,250 330,875 239,250
Weighted average fair value
of options granted during
the year $ 1.04 - $ 1.12
Directors' Plan
Outstanding at beginning
of year 345,000 $16.33 310,000 $15.79 365,000 $11.65
Granted 50,000 17.94 70,000 17.72 70,000 19.56
Exercised (145,000) 14.24 (25,000) 12.97 (125,000) 5.81
Expired (10,000) 17.72 (10,000) 17.72 - -
Outstanding at end of year 240,000 $17.79 345,000 $16.33 310,000 $15.79
Options exercisable 240,000 345,000 310,000
Weighted average fair value
of options granted during
the year $ 1.04 $ 1.24 $ 1.32
The following table summarizes information about stock options
outstanding on December 31, 2000:
Options Outstanding Options Exercisable
Weighted Avg.
Range of Number Remaining Weighted Avg. Number Weighted Avg.
Exercise Price Outstanding Contractual Life Exercise Price Exercisable Exercise Price
Employee Plan
$13.00 1,250 5.4 $13.00 1,250 $13.00
17.63 to 20.06 474,000 7.5 18.47 140,000 18.06
$13.00 to 20.06 475,250 7.5 $18.46 141,250 $18.01
Directors' Plan
$14.22 40,000 5.8 $14.22 40,000 $14.22
17.72 50,000 8.8 17.72 50,000 17.72
17.94 50,000 9.8 17.94 50,000 17.94
18.82 50,000 6.8 18.82 50,000 18.82
19.56 50,000 7.8 19.56 50,000 19.56
$14.22 to 19.56 240,000 7.9 $17.79 240,000 $17.79
Note 7 - Bank Loan Payable
In June 1998, the Company amended and restated its secured revolving
credit facility led by Bank of America. Under this facility, which
matures June 1, 2001, the Company can borrow up to $175 million on a
secured basis. The facility contains an unsecured sub-line of $50
million. The secured loans bear interest at a floating rate equal to
either the lender's published "reference rate" or LIBOR plus a margin
ranging from 1.10% to 1.35% depending on the Company's leverage level.
The unsecured loans bear interest at either the lender's published
"reference rate" or LIBOR plus a margin of 1.50%. At December 31,
2000, the facility, which was all secured, had an outstanding balance
of $77,320,000 with an interest rate of LIBOR plus 1.35%. The credit
facility is secured by mortgages on 26 properties, which properties
collectively accounted for approximately 27% of the Company's
annualized base rent and approximately 29% of the Company's total real
estate assets as of December 31, 2000, together with the rental
proceeds from such properties.
The credit facility contains various restrictive covenants including,
among other things, a covenant limiting quarterly dividends to 95% of
average Funds From Operations. The Company was in compliance with the
covenants and requirements of its revolving credit facility throughout
2000.
The daily weighted average amount owed to the bank was $116,683,000
and $113,082,000 in 2000 and 1999, respectively. The weighted average
interest rates in these periods were 7.75% and 6.48%, respectively.
The effective interest rate at December 31, 2000 was 7.98%.
Currently, the Company is in the process of renewing the credit
facility with its existing bank group.
Note 8 - Mortgage Loans Payable
In May 1999, the Company obtained a total of $108 million of mortgage
financing from TIAA. The financing consists of a $43.45 million 10-
year loan, a $37.2 million 8-year loan, and a $27.35 million 6-year
loan, all with interest at a fixed rate of 7.17%. In November 1999,
the Company obtained an additional $22.15 million mortgage loan from
TIAA. The loan has a 7-year term with interest at a fixed rate of
7.95%. In December 1999, the Company obtained a $4.6 million mortgage
loan from Union Bank. The loan has a 5-year term with interest at a
variable rate of LIBOR plus 2.50%. In July 2000, the Company obtained
a total of $30.89 million of mortgage financing from Security Life of
Denver Insurance Company. The loans have a 5-year term with options
to renew for four additional 5-year terms. Interest on the mortgages
are at a variable rate of LIBOR plus 1.40%. Proceeds from the
mortgage loans, net of loan costs, were used to pay down a portion of
the outstanding balance of the Company's $175 million line of credit.
Mortgage loans payable at December 31, 2000 and 1999 consist of the
following (in thousands):
2000 1999
7.50% note due January 1, 2002 $ 14,321 $ 23,889
7.02% note due March 15, 2003 18,916 19,257
Floating rate note due January 1, 2005,
current rate of 9.16% 4,553 4,600
7.17% note due June 1, 2005 26,727 27,150
8.90% note due July 31, 2006 8,336 8,513
6.91% note due July 31, 2006 19,920 20,288
7.95% note due December 1, 2006 21,858 22,150
7.17% note due June 1, 2007 36,353 36,928
7.75% note due April 1, 2009 - 973
7.17% note due June 1, 2009 42,461 43,132
Floating rate note due August 1, 2005,
current rate of 8.015% 7,444 -
Floating rate note due August 1, 2005,
current rate of 8.015% 23,316 -
$224,205 $206,880
The mortgage loans are collateralized by 49 properties at December 31,
2000, which properties collectively accounted for approximately 57% of
the Company's annualized base rent and approximately 52% of the
Company's total real estate assets as of December 31, 2000, together
with the rental proceeds from such properties. The Company was in
compliance with the covenants and requirements of its various mortgage
financings throughout 2000.
The following table presents scheduled principal payments on mortgage
loans as of December 31, 2000 assuming the exercise of the four
additional 5-year terms on the Security Life of Denver Insurance
Company mortgages (in thousands):
2001 $ 3,810
2002 17,842
2003 21,829
2004 3,956
2005 32,582
Thereafter 144,186
$224,205
Note 9 - Repurchases of Common Stock
In July 1998, the Company's board of directors approved a share
repurchase program of 3 million shares which was increased first to
4.5 million shares in September 1999 and later to 8 million shares in
September 2000. Since November 1998, the Company has repurchased and
retired 5,739,000 shares at an average price of $17.49 per share.
Note 10 - Segment Disclosure
The Company has six reportable segments organized by the region in
which they operate: Northern California (Northern California and
Nevada), Southwest (Arizona and greater Austin, Texas), Southern
California, Northwest (greater Portland, Oregon and greater Seattle,
Washington), Midwest (greater Kansas City, Kansas/Missouri and greater
Dallas, Texas) and Colorado.
The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The
Company evaluates performance based upon income from real estate from
the combined properties in each segment.
For the year ended December 31, 2000 (in thousands, except percentages)
Northern Southern Corporate
California Southwest California Northwest Midwest Colorado & Other Consolidated
Rental income $ 33,438 $ 18,497 $ 13,788 $ 18,755 $ 3,628 $ 9,412 $ - $ 97,518
Operating expenses and
real estate taxes 7,368 5,264 2,656 5,769 1,238 3,439 - 25,734
Depreciation and
amortization 4,861 2,587 1,913 3,306 (86) 1,231 - 13,812
Income from property operations $ 21,209 $ 10,646 $ 9,219 $ 9,680 $ 2,476 $ 4,742 $ - $ 57,972
Percent of income from
property operations 37% 18% 16% 17% 4% 8% - % 100%
Interest income(1) 26 4 - 1 1 - 468 500
Interest expense - (450) - - - - (24,376) (24,826)
General and administrative
expenses - - - - - - (4,209) (4,209)
Other income - 615 - - - - - 615
Income before minority interest
and gain on sales 21,235 10,815 9,219 9,681 2,477 4,742 (28,117) 30,052
Minority interest - - - - - - (136) (136)
Gain (loss) on sales of real
estate investments 26,174 2,756 (6) 5,431 3,816 - - 38,171
Net income $ 47,409 $ 13,571 $ 9,213 $ 15,112 $ 6,293 $ 4,742 $(28,253) $ 68,087
Real estate investments $200,741 $117,005 $ 96,201 $130,849 $ - $102,592 $ - $647,388
Additions/dispositions of real
estate investments $ (4,517) $(16,506) $ 1,743 $(19,532) $(30,293) $ 36,760 $ - $(32,345)
Total assets $210,137 $108,337 $105,497 $115,247 $ 7,253 $ 83,636 $ 4,059 $634,166
(1) The interest income in Northern California, Southwest, Northwest, and
Midwest segments represents interest earned from tenant notes
receivable.
For the year ended December 31, 1999 (in thousands, except percentages)
Northern Southern Corporate
California Southwest California Northwest Midwest Colorado & Other Consolidated
Rental income $ 32,900 $ 15,726 $ 12,382 $ 15,528 $ 5,363 $ 8,628 $ - $ 90,527
Operating expenses and
real estate taxes 7,193 4,274 2,481 3,944 1,509 2,947 276 22,624
Depreciation and
amortization 4,624 2,087 1,768 2,509 874 1,154 - 13,016
Income from property
operations $ 21,083 $ 9,365 $ 8,133 $ 9,075 $ 2,980 $ 4,527 $ (276) $ 54,887
Percent of income from
property operations 38% 17% 15% 17% 6% 8% (1)% 100%
Interest income(1) 24 3 - 4 - - 151 182
Interest expense - - - - - - (18,970) (18,970)
General and
administrative expenses - - - - - - (3,561) (3,561)
Income before minority
interest and gain
on sales 21,107 9,368 8,133 9,079 2,980 4,527 (22,656) 32,538
Minority interest - - - - - - (128) (128)
Gain (loss) on sales of real
estate investments 7,756 - 45 - (58) - - 7,743
Income before
extraordinary item 28,863 9,368 8,178 9,079 2,922 4,527 (22,784) 40,153
Loss on early
extinguishment of debt (298) - - - - - - (298)
Net income $ 28,565 $ 9,368 $ 8,178 $ 9,079 $ 2,922 $ 4,527 $(22,784) $ 39,855
Real estate investments $205,258 $133,511 $ 94,458 $150,381 $ 30,293 $ 65,832 $ - $679,733
Additions/dispositions of
real estate investments $ (4,331) $ 24,079 $ 17,060 $ 37,131 $ (1,918) $ 7,731 $ - $ 79,752
Total assets $212,612 $123,411 $101,542 $134,843 $ 29,662 $ 64,329 $ 5,011 $671,410
(1) The interest income in Northern California, Southwest, and Northwest
segments represents interest earned from tenant notes receivable.
For the year ended December 31, 1998 (in thousands, except percentages)
Northern Southern Corporate
California Southwest California Northwest Midwest Colorado & Other Consolidated
Rental income $ 30,759 $ 11,900 $ 10,274 $ 9,281 $ 4,943 $ 6,317 $ (23) $ 73,451
Operating expenses and
real estate taxes 6,954 3,200 2,142 1,345 1,326 1,935 344 17,246
Depreciation and
amortization 3,939 1,629 1,495 1,586 779 837 - 10,265
Income from property
operations $ 19,866 $ 7,071 $ 6,637 $ 6,350 $ 2,838 $ 3,545 $ (367) $ 45,940
Percent of income from
property operations 43% 15% 15% 14% 6% 8% (1)% 100%
Interest income(1) 15 - - 16 - - 192 223
Interest expense - - - - - - (11,164) (11,164)
General and administrative
expenses - - - - - - (3,386) (3,386)
Income before minority
interest 19,881 7,071 6,637 6,366 2,838 3,545 (14,725) 31,613
Minority interest - - - - - - (117) (117)
Net income $ 19,881 $ 7,071 $ 6,637 $ 6,366 $ 2,838 $ 3,545 $(14,842) $ 31,496
Real estate investments $209,589 $109,432 $ 77,398 $113,250 $ 32,211 $ 58,101 $ - $599,981
Additions to real
estate investments $ 24,182 $ 41,420 $ 6,349 $ 56,852 $ 2,927 $ 36,180 $ - $167,910
Total assets $210,867 $103,637 $ 81,708 $109,471 $ 30,486 $ 57,184 $ 4,971 $598,324
(1) The interest income in the Northern California and Northwest segments
represents interest earned from tenant notes receivable.
Note 11 - Fair Value of Financial Instruments
The carrying values of trade accounts payable and receivables approximate
fair value due to the short-term maturity of these instruments. Management
has determined that the market value of the $188,892,000 fixed rate debt at
December 31, 2000 is approximately $189,452,000 based on the terms of
existing debt compared to those available in the marketplace. At December
31, 1999, the fixed rate debt of $202,280,000 had an approximate market
value of $189,882,000. The carrying value of variable rate debt
approximates fair value, as the interest rates and other terms are
comparable to current market terms.
Note 12 - Earnings per Share
Following is a reconciliation of earnings per share:
(in thousands, except share and per share amounts)
Year Ended December 31,
2000 1999 1998
Basic:
Income before extraordinary item $ 68,087 $ 40,153 $ 31,496
Extraordinary item - loss on early
extinguishment of debt - (298) -
Net income $ 68,087 $ 39,855 $ 31,496
Weighted average number of shares - basic 18,236,512 21,267,088 22,634,656
Earnings per share:
Income before extraordinary item $ 3.73 $ 1.88 $ 1.39
Extraordinary item - loss on early
extinguishment of debt - (0.01) -
Net income for basic earnings per share $ 3.73 $ 1.87 $ 1.39
Diluted:
Income before extraordinary item $ 68,087 $ 40,153 $ 31,496
Add: Minority interest 136 128 117
Extraordinary item - loss on early extinguishment of debt - (298) -
Net income for diluted earnings per share $ 68,223 $ 39,983 $ 31,613
Weighted average number of shares (from above) 18,236,512 21,267,088 22,634,656
Weighted average shares
of dilutive stock options using average
period stock price under the treasury
stock method 52,958 62,196 205,522
Weighted average shares issuable upon the
conversion of operating partnership units 77,992 82,402 89,629
Weighted average shares of non-vested restricted
stock using average period stock
price under the treasury stock method 134,443 65,327 -
Weighted average number of shares -
diluted 18,501,905 21,477,013 22,929,807
Earnings per share:
Income before extraordinary item $ 3.69 $ 1.87 $ 1.38
Extraordinary item - loss on early
extinguishment of debt - (0.01) -
Net income for diluted earnings per share $ 3.69 $ 1.86 $ 1.38
Since their effect would have been antidilutive, 280,000, 817,000, and
729,000 of the Company's stock options have been excluded from diluted
earnings per share for the years ended December 31, 2000, 1999, and 1998,
respectively.
Note 13 - Quarterly Financial Data-Unaudited
The following is a summary of quarterly results of operations for 2000 and
1999 (in thousands of dollars, except per share data):
2000 Quarters Ended 3/31 6/30 9/30 12/31
Rental income $24,392 $24,957 $24,662 $23,507
Income from property operations 14,941 14,708 14,942 13,380
Income before gain on sales of real estate
investments and minority interest 8,030 7,550 7,689 6,781
Net income $23,231 $ 7,511 $27,854 $ 9,490
Earnings per share - basic $ 1.20 $ 0.41 $ 1.54 $ 0.55
Earnings per share - diluted $ 1.19 $ 0.41 $ 1.52 $ 0.54
1999 Quarters Ended 3/31 6/30 9/30 12/31
Rental income $21,359 $22,346 $22,475 $24,347
Income from property operations 12,899 14,229 14,081 13,678
Income before gain on sales of real estate
investments and minority interest 8,274 8,556 8,656 7,052
Net income $ 8,811 $15,267 $ 8,815 $ 6,962
Earnings per share - basic $ 0.39 $ 0.70 $ 0.41 $ 0.35
Earnings per share - diluted $ 0.39 $ 0.70 $ 0.41 $ 0.35
Note 14 - Commitments and Contingencies
The Company has contractual construction commitments of $13.5 million as of
December 31, 2000 relating to its properties under development.
From time to time, the Company is subject to legal claims in the ordinary
course of business. The Company currently is not aware of any such legal
proceedings or claims that it believes will have, individually or in the
aggregate, a material adverse effect on its business, prospects, financial
condition or operating results.
BEDFORD PROPERTY INVESTORS, INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2000
(in thousands of dollars)
Initial Cost Cost Cap- Gross Amount
to Company italized Carried at De-
Build- Subsequent Close of Period Accum- Date Date preciable
ings & to Ac- ulated De- Con- Ac- Life
Description Land Improvement quisition Land Building Total preciation structed quired (Years)
Industrial buildings:
Northern California
Building #3 at Contra
Costa
Diablo Industrial Park,
Concord* $ 495 $ 1,159 $ 47 $ 495 $ 1,206 $ 1,701 $ 276 1983 12/90 45
Building #8 at Contra Costa
Diablo Industrial Park,
Concord* 877 1,548 203 877 1,751 2,628 488 1981 12/90 45
Building #18 at Mason
Industrial Park, Concord* 610 1,265 133 610 1,398 2,008 319 1984 12/90 45
Milpitas Town Center,
Milpitas* 1,400 4,421 149 1,400 4,570 5,970 651 1983 8/94 45
598 Gibraltar Drive,
Milpitas* 535 2,522 - 535 2,522 3,057 993 1996 5/96 45
Auburn Court, Fremont* 1,391 2,473 359 1,415 2,808 4,223 349 1983 12/95 45
47650 Westinghouse Drive,
Fremont* 267 893 60 271 949 1,220 106 1982 12/95 45
410 Allerton, South
San Francisco* 1,333 889 39 1,356 905 2,261 102 1970 12/95 45
400 Grandview, South
San Francisco* 3,246 3,517 969 3,300 4,432 7,732 464 1976 12/95 45
342 Allerton, South
San Francisco* 2,516 1,542 379 2,558 1,879 4,437 224 1969 12/95 45
301 East Grand, South
San Francisco* 2,036 959 167 2,070 1,092 3,162 138 1974 12/95 45
Fourier Avenue, Fremont* 2,120 7,018 - 2,120 7,018 9,138 715 1982 5/96 45
Lundy Avenue, San Jose* 2,055 2,184 257 2,055 2,441 4,496 246 1982 7/96 45
115 Mason Circle, Concord* 697 854 68 697 922 1,619 104 1971 9/96 45
47600 Westinghouse Drive,
Fremont* 356 1,067 43 356 1,110 1,466 106 1982 9/96 45
860-870 Napa Valley
Corporate Way, Napa* 933 3,515 648 933 4,163 5,096 464 1984 9/96 45
47633 Westinghouse Drive,
Fremont* 1,051 3,239 251 1,051 3,490 4,541 324 1983 10/96 45
47513 Westinghouse Drive,
Fremont* 1,624 - 4,089 1,625 4,088 5,713 680 1998 10/96 45
Carneros Commons Phase I,
Napa 500 - 2,398 500 2,398 2,898 0 2000 12/96 45
Bordeaux Centre, Napa* 1,151 - 6,708 1,151 6,708 7,859 912 1998 12/96 45
O'Toole Business Park,
San Jose* 3,933 5,748 500 3,933 6,248 10,181 604 1984 12/96 45
6500 Kaiser Drive, Fremont* 1,556 6,411 28 1,556 6,439 7,995 572 1990 1/97 45
Bedford Fremont Business
Center, Fremont* 3,598 9,004 215 3,598 9,219 12,817 835 1990 3/97 45
Spinnaker Court, Fremont* 2,548 5,989 177 2,549 6,165 8,714 491 1986 5/97 45
2277 Pine View Way,
Petaluma* 1,861 7,074 3 1,861 7,077 8,938 564 1989 6/97 45
Mondavi Building, Napa* 1,315 5,214 - 1,315 5,214 6,529 377 1985 9/97 45
Building #2 at Monterey
Commerce Center, Monterey* 611 1,833 1 611 1,834 2,445 126 1990 12/97 45
Building #3 at Monterey
Commerce Center, Monterey* 604 1,812 161 604 1,973 2,577 136 1990 12/97 45
Parkpoint Business Center,
Santa Rosa* 1,975 4,474 491 1,976 4,964 6,940 344 1981 2/98 45
2180 S. McDowell, Petaluma* 773 3,006 13 774 3,018 3,792 168 1990 7/98 45
2190 S. McDowell, Petaluma* 587 2,283 - 587 2,283 2,870 127 1996 7/98 45
Arizona
Westech Business Center,
Phoenix* 3,531 4,422 512 3,531 4,934 8,465 707 1985 4/96 45
Westech II, Phoenix* 1,033 - 3,954 1,033 3,954 4,987 822 1998 7/96 45
2601 W. Broadway, Tempe* 1,127 2,348 102 1,127 2,450 3,577 185 1977 7/97 45
Building #2 at Phoenix
Airport Center, Phoenix* 723 3,278 16 723 3,294 4,017 249 1990 7/97 45
Building #3 at Phoenix
Airport Center, Phoenix* 682 3,163 - 682 3,163 3,845 240 1990 7/97 45
Building #4 at Phoenix
Airport Center, Phoenix* 517 1,732 - 517 1,732 2,249 132 1990 7/97 45
Building #5 at Phoenix
Airport Center, Phoenix* 1,507 3,860 5 1,507 3,865 5,372 293 1990 7/97 45
Butterfield Business Center,
Tucson* 909 4,230 76 909 4,306 5,215 305 1986 11/97 45
Butterfield Tech Center II,
Tucson 102 - 1,752 102 1,752 1,854 168 1999 11/97 45
Greystone Business Park,
Tempe 1,232 - 4,407 1,232 4,407 5,639 190 1999 12/97 45
Cimarron Business Park,
Scottsdale* 1,776 4,471 258 1,778 4,727 6,505 302 1979-85 3/98 45
Rio Salado Corporate Center,
Tempe 1,723 2,882 1,666 1,723 4,548 6,271 42 1982-84 7/98 45
Phoenix Tech Center, Phoenix 1,322 945 877 1,322 1,822 3,144 119 1985 8/98 45
Expressway Corporate Center,
Tempe* 1,467 3,175 213 1,468 3,387 4,855 207 1985 11/98 45
The Adams Brothers Building,
Phoenix* 1,572 1,613 49 1,572 1,662 3,234 58 1988-95 6/99 45
Bedford Realty Partners, L.P.,
Phoenix* 992 6,241 99 992 6,340 7,332 152 1986 12/99 45
Southern California
Dupont Industrial Center,
Ontario* 3,588 6,162 239 3,588 6,401 9,989 1,039 1989 5/94 45
3002 Dow Business Center,
Tustin* 4,209 7,291 1,073 4,305 8,268 12,573 1,261 1987-89 12/95 45
Carroll Tech I, San Diego* 511 1,372 187 511 1,559 2,070 179 1984 10/96 45
Vista I, Vista 646 2,135 64 646 2,199 2,845 202 1990 10/96 45
Vista II, Vista 566 1,832 - 566 1,832 2,398 170 1990 10/96 45
Signal Systems Building,
San Diego* 2,228 7,264 - 2,228 7,264 9,492 646 1990 12/96 45
Carroll Tech II, San Diego* 1,022 2,129 - 1,022 2,129 3,151 201 1984 10/96 45
2230 Oak Ridge Way, Vista* 684 2,191 - 684 2,191 2,875 165 1997 10/97 45
6960 Flanders Drive,
San Diego* 864 2,591 (2) 865 2,588 3,453 144 1989 6/98 45
Canyon Vista Center,
San Diego* 1,664 4,645 137 1,664 4,782 6,446 189 1986 4/99 45
6325 Lusk Blvd., San Diego* 2,229 3,484 9 2,229 3,493 5,722 116 1991 7/99 45
Greater Seattle Area
Highlands Campus
Building B, Bothell 1,762 - 5,529 1,762 5,529 7,291 410 1999 6/98 45
Highlands Campus
Building C, Bothell 1,646 - 4,322 1,646 4,322 5,968 58 2000 6/98 45
Office buildings:
Northern California
Village Green, Lafayette* 547 1,245 588 743 1,637 2,380 268 1983 7/94 45
Canyon Park, San Ramon* 1,933 3,098 3,001 1,933 6,099 8,032 309 1971-72 12/97 45
Crow Canyon Centre,
San Ramon* 778 - 5,253 778 5,253 6,031 275 1999 12/97 45
Building #1 at Monterey
Commerce Center,
Monterey* 616 5,302 153 616 5,455 6,071 427 1990 12/97 45
3380 Cypress Drive,
Petaluma* 1,709 3,760 1 1,710 3,760 5,470 209 1989 7/98 45
Arizona
Executive Center at
Southbank, Phoenix* 4,943 7,134 102 4,943 7,236 12,179 626 1989 3/97 45
Troika Building, Tucson* 1,332 2,631 46 1,332 2,677 4,009 212 1985 6/97 45
Building #1 at Phoenix
Airport Center, Phoenix* 944 1,541 77 944 1,618 2,562 119 1990 7/97 45
Phoenix Airport Center
Parking, Phoenix* 1,369 81 - 1,369 81 1,450 6 1990 7/97 45
Cabrillo Executive Center,
Phoenix* 480 5,614 234 480 5,848 6,328 401 1983 2/98 45
Mountain Pointe Office Park,
Phoenix 837 - 4,935 837 4,935 5,772 135 1999 2/98 45
1355 S. Clearview
Avenue, Mesa* 2,049 5,450 3 2,049 5,453 7,502 192 1998 6/99 45
Southern California
Laguna Hills Square, Laguna* 2,436 3,655 967 2,436 4,622 7,058 582 1983 3/96 45
Building #3 at Carroll
Tech Center, San Diego* 716 1,400 56 716 1,456 2,172 137 1984 10/96 45
Scripps Wateridge,
San Diego* 4,160 12,472 3 4,160 12,475 16,635 971 1990 6/97 45
Building #4 at Carroll Tech
Center, San Diego* 2,050 3,224 76 2,050 3,300 5,350 128 1986 3/99 45
Colorado
Oracle Building, Denver* 1,860 13,249 88 1,860 13,337 15,197 945 1996 10/97 45
Texaco Building, Denver* 3,699 31,631 1,044 3,700 32,674 36,374 1,849 1981 5/98 45
WaterPark @ Briarwood
Building 1, Englewood 286 - 2,682 286 2,682 2,968 48 2000 4/99 45
WaterPark @ Briarwood
Building 2, Englewood 716 - 5,008 716 5,008 5,724 28 2000 4/99 45
Bedford Center at Rampart,
Englewood 3,811 18,031 (720) 3,811 17,311 21,122 33 1998 11/00 45
Greater Seattle Area
Orillia Office Park,
Renton* 10,021 22,975 - 10,021 22,975 32,996 1,787 1986 7/97 45
Adobe Systems Bldg. 1,
Seattle* - 22,403 3,923 - 26,326 26,326 1,462 1998 3/98 45
Adobe Systems Bldg. 2,
Seattle* - 18,931 3,353 - 22,284 22,284 1,261 1998 3/98 45
Highlands Campus,
Building A, Bothell 2,066 - 7,763 2,066 7,763 9,829 619 1999 6/98 45
The Federal Way Building,
Federal Way* 2,208 7,009 29 2,208 7,038 9,246 240 1999 6/99 45
Federal Way II,
Federal Way 2,500 14,307 102 2,515 14,394 16,909 398 1999 9/99 45
Nevada
U.S. Bank Centre, Reno 2,102 10,264 541 2,102 10,805 12,907 922 1989 5/97 45
Operating properties
held for sale:
Colorado
Bryant Street Quad,
Denver* 1,394 2,181 171 1,416 2,330 3,746 269 1971-73 12/95 45
Bryant Street Annex,
Denver* 487 866 127 495 985 1,480 130 1968 12/95 45
Properties under development:
Northern California
Carneros Commons
Phase II, Napa 461 - 523 461 523 984 - N/A 12/96 45
Colorado
Belleview Corporate Plaza
II Office, Denver 2,622 - 5,721 2,622 5,721 8,343 - N/A 10/98 45
Belleview Corporate Plaza,
Parking, Denver 487 - 75 487 75 562 - N/A 10/98 45
WaterPark @ Briarwood
Phase II, Englewood 1,002 - 2,812 1,002 2,812 3,814 - N/A 4/99 45
Land held for development:
Scripps Land, San Diego, CA 622 - 83 622 83 705 - N/A 6/97 45
Mondavi Land, Napa Lot
12G, Northern CA 1,150 - 12 1,150 12 1,162 - N/A 3/98 45
West Tempe Lots 30 and 31,
Tempe, AZ 551 - 93 644 - 644 - N/A 7/98 45
210 Lafayette Circle,
Northern CA 511 - 2 511 2 513 - N/A 11/98 45
Belleview Corporate Plaza
III, IV, Denver, CO 2,299 - 26 2,299 26 2,325 - N/A 10/99 45
Belleview Corporate Plaza,
Retail, Denver, CO 807 - 129 807 129 936 - N/A 10/98 45
Napa Lots 9B & 8D, Napa, CA 2,161 - 7 2,161 7 2,168 - N/A 11/00 45
Ontario (Jurupa) Land,
Ontario, CA 3,266 - - 3,266 - 3,266 - N/A 12/00 45
$160,376 $393,823 $93,189 $160,997 $486,391 $647,388 $35,944
(A) (A)
* Property is encumbered, see footnotes 7 and 8 to the consolidated financial
statements.
See accompanying independent auditors' report.
NOTES TO SCHEDULE III
(in thousands of dollars)
(A) An analysis of the activity in real estate investments for the years
ended December 31, 2000, 1999, and 1998 is presented below:
Investment Accumulated Depreciation
2000 1999 1998 2000 1999 1998
BALANCE AT BEGINNING OF PERIOD $679,733 $599,981 $432,071 $28,695 $18,523 $8,985
Add (deduct):
Acquisition of Didde Building - - 2,207 - - -
Acquisition of El Caro Executive Center - - 6,279 - - -
Acquisition of Park Point Business Center - - 6,897 - - -
Acquisition of Mountain Pointe Office Park - - 2,878 - - -
Acquisition of Mondavi Land, Napa Lot 12G - - 1,157 - - -
Acquisition of Adobe I - - 26,306 - - -
Acquisition of Adobe II - - 22,254 - - -
Acquisition of 5502 Oberlin Drive - - 2,188 - - -
Acquisition of Cimarron Business Park - - 6,322 - - -
Acquisition of Ferrell Drive Land - - 188 - - -
Acquisition of Texaco Building - - 35,698 - - -
Acquisition of Geocon Building - - 3,452 - - -
Acquisition of Austin Braker 2 - - 2,245 - - -
Acquisition of Austin Rutland 10 - - 3,255 - - -
Acquisition of Austin Southpark A, B and C - - 5,753 - - -
Acquisition of Highlands Campus Land - - 8,110 - - -
Acquisition of Rio Salado Corporate Centre - - 4,906 - - -
Acquisition of West Tempe Land Lots 30 and 31 - - 572 - - -
Acquisition of 3880 Cypress Drive - - 5,470 - - -
Acquisition of 2180 S. McDowell Blvd. - - 3,780 - - -
Acquisition of 2190 S. McDowell Blvd. - - 2,870 - - -
Acquisition of 10232 S. 51st Street - - 2,368 - - -
Acquisition of 210 Lafayette Circle - - 511 - - -
Acquisition of Expressway Corporate Center - - 4,644 - - -
Acquisition of Carroll Tech IV - 5,330 - - - -
Acquisition of Canyon Vista Center - 6,389 - - - -
Acquisition of WaterPark at Briarwood - 1,620 - - - -
Acquisition of 1355 S. Clearview Avenue - 7,502 - - - -
Acquisition of The Adams Brothers Building - 3,234 - - - -
Acquisition of The Federal Way Building - 9,217 - - - -
Acquisition of 6325 Lusk Blvd. - 5,723 - - - -
Acquisition of Panorama III - 2,658 - - - -
Acquisition of Federal Way II - 16,807 - - - -
Acquisition of Belleview Corporate Plaza - 6,837 - - - -
Sale of 417 Eccles (B) - (1,200) - - (37) -
Sale of Woodlands Tower II (C) - (6,963) - - (1,031) -
Sale of Oak Ridge Land (C) - (378) - - - -
Sale of Doherty Avenue (D) - (3,909) - - (152) -
Sale of Continental Can (E) - (5,016) - - (124) -
Acquisition of Bedford Center at Rampart 21,122 - - - - -
Acquisition of Napa Land Lots 9B & 8D 2,161 - - - - -
Acquisition of Jurupa Land 3,266 - - - - -
Sale of 350 E. Plumeria (F) (8,570) - - (373) - -
Sale of Twin Oaks Technology Center (F) (6,904) - - (620) - -
Sale of Twin Oaks Business Center (F) (4,617) - - (380) - -
Sale of 5502 Oberlin Drive (G) (2,188) - - (28) - -
Sale of 100 View Street (H) (4,636) - - (365) - -
Sale of Kenyon Center (I) (15,075) - - (677) - -
Sale of 99th Street #1 (I) (2,276) - - (159) - -
Sale of 99th Street #2 (I) (828) - - (54) - -
Sale of 99th Street #3 (I) (2,718) - - (505) - -
Sale of 99th Street #4 (I) (3,723) - - (391) - -
Sale of Lackman Business Center (I) (2,517) - - (245) - -
Sale of Panorama (I) (4,125) - - (289) - -
Sale of Panorama III (I) (2,649) - - (22) - -
Sale of Overland Park Land (I) (1) - - - - -
Sale of 6600 College Blvd. (I) (6,619) - - (382) - -
Sale of Austin Braker 2 (I) (2,285) - - (59) - -
Sale of Austin Rutland (I) (3,280) - - (94) - -
Sale of Austin SouthPark(I) (5,815) - - (160) - -
Sale of Didde Building (J) (2,226) - - (58) - -
Sale of Great Hills Trail (J) (9,859) - - (394) - -
Sale of Ferrell Drive (J) (2,791) - - (73) - -
Sale of Ferrell Drive Land (J) (188) - - - - -
Capitalized costs 34,996 31,901 7,600 - - -
Depreciation - - - 12,577 11,516 9,538
BALANCE AT END OF PERIOD $647,388 $679,733 $599,981 $35,944 $28,695 $18,523
(B) The property was sold in March 1999.
(C) The properties were sold in June 1999.
(D) The property was sold in August 1999.
(E) The property was sold in December 1999.
(F) The properties were sold in March 2000.
(G) The property was sold in June 2000.
(H) The property was sold in August 2000.
(I) The properties were sold in September 2000.
(J) The properties were sold in October 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
BEDFORD PROPERTY INVESTORS, INC.
By: /s/ Peter B. Bedford
Peter B. Bedford
Chairman of the Board and
Chief Executive Officer
Dated: March 29, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following person on behalf of the
Registrant and in the capacity and on the date indicated.
/s/ Peter B. Bedford March 29, 2001
Peter B. Bedford, Chairman of the Board
and Chief Executive Officer
/s/ Anthony Downs March 29, 2001
Anthony Downs, Director
/s/ Anthony M. Frank March 29, 2001
Anthony M. Frank, Director
/s/ Martin I. Zankel March 29, 2001
Martin I. Zankel, Director
/s/ Thomas H. Nolan, Jr. March 29, 2001
Thomas H. Nolan, Jr., Director
/s/ Hanh Kihara March 29, 2001
Hanh Kihara
Senior Vice President and
Chief Financial Officer
/s/ Krista K. Rowland March 29, 2001
Krista K. Rowland, Vice President Controller
Exhibit 12
Bedford Property Investors, Inc. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges and Preferred Dividends
and Limited Partner Distributions
(in thousands, except ratios)
Year Ended December 31,
2000 1999 1998 1997 1996
Net income $68,087 $39,855 $31,496 $31,291 $11,021
Fixed charges - interest and amortization
of loan fees 24,826 18,970 11,164 7,918 4,347
Fixed charges - interest capitalized 1,964 2,148 2,177 627 -
Net income including fixed charges 94,877 60,973 44,837 39,836 15,368
Preferred dividends and limited partner
distributions 136 128 117 3,608 4,505
Net income including fixed charges,
preferred dividends and limited
partner distributions $95,013 $61,101 $44,954 $43,444 $19,873
Ratio of earnings to fixed charges,
including preferred dividends and
limited partner distributions 3.53 2.88 3.34 3.57 2.25
Ratio of earnings to fixed charges,
excluding preferred dividends and
limited partner distributions 3.54 2.89 3.36 4.66 3.54
Exhibit 21.1
Subsidiaries of Bedford Property Investors, Inc.
Name Under
Subsidiary Which Subsidiary is
Name State of Incorporation doing Business
1. ICMPI (Concord Diablo 3), Inc. Delaware ICMPI (Concord Diablo 3), Inc.
2. ICMPI (Concord Diablo 8), Inc. Delaware ICMPI (Concord Diablo 8), Inc.
3. ICMPI (Concord Mason 18), Inc. Delaware ICMPI (Concord Mason 18), Inc.
4. ICMPI (Overland Park), Inc. Delaware ICMPI (Overland Park), Inc.
5. ICMPI (Lenexa), Inc. Delaware ICMPI (Lenexa), Inc.
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors
Bedford Property Investors, Inc.:
We consent to incorporation by reference in the registration statements on
Form S-3 (No.'s 333-23687, 333-33643 and 333-33795) and the registration
statements on Form S-8 (No.'s 033-52375, 333-18215, 333-70681 and 333-
74707) of Bedford Property Investors, Inc. of our report dated February 2,
2001, relating to the consolidated balance sheets of Bedford Property
Investors, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of income, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31,
2000, and the related financial statement schedule as of December 31, 2000,
which report appears in the December 31, 2000 annual report on Form 10-K of
Bedford Property Investors, Inc.
KPMG LLP
San Francisco, California
March 29, 2001