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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For fiscal year ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _________
Commission File Number 1-11706
CARRAMERICA REALTY CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 52-1796339
(State of Incorporation) (I.R.S. Employer Identification No.)
1850 K Street, N.W.
Washington, D.C. 20006
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (202) 729-7500
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
Common Stock, $0.01 Par Value New York Stock Exchange
Series B Cumulative Redeemable Preferred Stock, $0.01 Par Value New York Stock Exchange
Series C Depositary Cumulative Redeemable Preferred Stock, $0.001 Par Value New York Stock Exchange
Series D Depositary Cumulative Redeemable Preferred Stock, $0.001 Par Value New York Stock 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. [_]
As of March 1, 2001, the aggregate market value of the 36,452,365 shares of
Common Stock held by non-affiliates of the registrant was approximately $1,100.0
million, based upon the closing price of $30.18 on the New York Stock Exchange
composite tape on such date.
Number of shares of Common Stock outstanding as of March 1, 2001:
65,224,012
DOCUMENTS INCORPORATED BY REFERENCE: Portions of the proxy statement for the
Annual Stockholders Meeting to be held in 2001 are incorporated by reference
into Part III.
PART 1
Item 1. Business
THE COMPANY
General
CarrAmerica Realty Corporation is a fully integrated, self-administered and
self-managed publicly traded real estate investment trust ("REIT"). We focus on
the acquisition, development, ownership and operation of office properties,
located primarily in selected markets across the United States. As of December
31, 2000, we owned a greater than 50% interest in 252 operating office
properties and six properties under construction. The 252 operating properties
contain a total of approximately 20.4 million square feet of net rentable area.
The six properties under construction will contain approximately 552,000 square
feet of net rentable area. The operating properties in which we owned a greater
than 50% interest as of December 31, 2000 were 97.4 % leased. These properties
had approximately 1,350 tenants. As of December 31, 2000, we also owned minority
interests (ranging from 15% to 50%) in 31 operating office properties and seven
properties under construction. The 31 operating properties contain a total of
approximately 3.5 million square feet of net rentable area. The seven properties
under construction will contain approximately 1.2 million square feet of net
rentable area. The operating properties in which we owned a minority interest as
of December 31, 2000 were 99.1% leased.
We also are a leading office innovator, having made several strategic
investments or established strategic relationships with several companies that
complement our core real estate portfolio ownership. These investments and
relationships include HQ Global Workplaces, Inc., a global leader in executive
office suites; Broadband Office, Inc., a leading global provider of network-
based applications and communications, Internet and e-business solutions;
e'ssention, the engine behind InfoCentre, a web-based operations and issues
management platform; and DukeSolutions, a Duke Energy subsidiary providing
comprehensive energy management programs.
We were organized as a Maryland corporation on July 9, 1992, but we or our
predecessor, The Oliver Carr Company ("OCCO"), have developed, owned and
operated office buildings in the Washington, D.C. metropolitan area for more
than 38 years. In November 1995, we entered into a strategic alliance with a
wholly-owned subsidiary of Security Capital-U.S. Realty in which Security
Capital-U.S Realty purchased 11.6 million shares of our stock. In January 2001,
Security Capital-U.S. Realty merged with Security Capital Group International
("Security Capital"), and as a result, Security Capital now owns these shares.
As of December 31, 2000, Security Capital-U.S. Realty owned approximately 44.0%
of our outstanding common stock.
Our experienced staff of approximately 800 employees, including about 470
on-site building employees, provides a broad range of real estates services. Our
principal executive offices are located at 1850 K Street, NW, Washington, DC
20006. Our telephone number is 202-729-7500. Our web site can be found
www.carramerica.com.
Business Strategy
Our primary business objectives are to achieve long-term sustainable per
share cash flow growth and to maximize stockholder value by:
i. Acquiring, developing, owning and operating office properties
primarily in markets throughout the United States that exhibit strong,
long-term growth characteristics.
ii. Maintaining and enhancing a national operating system that provides
corporate users of office space a mix of products and services,
meeting their workplace needs both at the national and local levels.
Our major segments of continuing operations include real estate property
operations, which includes commercial property ownership, development operations
and other, including management services. Approximately 95.3% of our revenues
from continuing operations and approximately 88.3% of our assets are associated
with our real estate property operations. Our development operations include the
development of office space and the buildout of tenant spaces and are conducted
by us and through our subsidiary, CarrAmerica Development, Inc. ("CarrAmerica
Development"). Our investment in this business represents approximately 1.9% of
our revenues from continuing operations and approximately 3.1% of our assets.
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Real Estate Property Operations
Core Markets
We have focused our acquisition and development activity in U.S.
markets that possess long-term growth characteristics. Within these markets, we
target specific submarkets in which:
i. Long-term population and job growth are generally expected to
exceed the national average;
ii. Large, well educated employment pools exist; and
iii. Entry barriers exist for new supplies of office space.
We have established a local presence in each existing core market. This has been
done through our investment activity and relationships established by our
seasoned professional Market Managing Directors. Our core markets include:
* Pacific Region - Orange County/Los Angeles, CA, San Diego, CA,
San Francisco Bay Area, CA, Seattle, WA and Portland, OR
* Eastern Region - Metropolitan Washington, DC, and Atlanta, GA
* Mountain Region - Denver, CO, and Salt Lake City, UT
* Central Region - Austin, TX, Dallas, TX and Chicago, IL
For each core market, we have established a set of general guidelines
and physical criteria to evaluate investment opportunities. All of our
investment decisions are driven by real estate research. This research focuses
on variables such as the economic growth rate, the composition of job growth,
and office space supply and demand fundamentals.
As of December 31, 2000, our real estate property operations (on a
rentable square foot basis) were allocated among our regions as follows:
* 47.7% in the Pacific region
* 23.0% in the Eastern region
* 13.3% in the Mountain region
* 16.0% in the Central region
National Operating System
As part of our business strategy, we developed, and continue to
enhance, a national operating system. This system provides for nationally
coordinated customer service, marketing and development. Our national operating
system consists of three components:
* Market Managing Director Group. Our Market Managing Director
------------------------------
group consists of nine individuals who cover all of the markets
in which we own property. These Directors are responsible for
maximizing the performance of our properties in their respective
markets and ensuring that we are consistently meeting the needs
of our customers. Because they meet with our customers and local
brokers on a regular basis, the Managing Directors have extensive
knowledge of local conditions in their respective markets and are
invaluable identifying attractive investment opportunities in
them. Also, through their contact with customers, the Managing
Directors are well positioned to help the National Services Group
identify customers with new build-to-suit and multi-market
requirements.
* National Services Group. Our National Services Group is
-----------------------
responsible for marketing our properties, build-to-suit
capabilities and the national scope of our operations to a
targeted list of major corporate users. This group acts as a
primary point of contact for national customers, coordinating all
of the office space we offer and giving corporate customers the
opportunity to address their national space requirements
efficiently and economically.
* National Development Group. Our National Development Group is
--------------------------
responsible for developing office properties, build-to-suit
facilities and business parks. Through our subsidiary,
CarrAmerica
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Development, this development team consists of over 40 development and
project management professionals, who are located across the United
States and have an average of over 17 years of experience developing
office properties. Our team oversees every aspect of land planning,
building design, construction and development of office properties.
This ensures that all projects meet the same high standards and
uniform specifications in building design and systems. We believe that
the National Development Group's expertise has given us a competitive
edge in marketing our facilities and services to customers.
Our national operating system is designed to provide corporate users of
office space with a mix of products and services to meet their workplace needs
at both the national and local levels. We believe that through our existing
portfolio of operating properties, property development opportunities and land
acquired and currently held for development, we can generate incremental demand.
This can be accomplished through the relocation and expansion needs of many of
our customers, both within a single core market and in multiple core markets.
An increasingly important component of our business strategy involves
establishing alliances with companies or making investments in companies that
offer us new opportunities to build value for our customers and stockholders.
Some of the alliances or investments that we have established include the
following:
Strategic Alliances and Investments
HQ Global Workplaces. In 1997, we began making investments in HQ Global
Workplaces, a worldwide leader in providing office suites. HQ Global Workplaces
is the largest provider of flexible office outsourcing in the world. HQ Global
Workplaces and certain of its affiliates provide this office outsourcing to
customers by offering furnished individual offices and multi-office suites on a
short-term basis that are equipped for a number of services, including
telecommunications, broadband Internet access, copying, faxing and printing, as
well as secretarial support. We own approximately 16% of HQ Global Workplaces on
a fully diluted basis.
Broadband Office, Inc. Joining with several other real estate companies, we
formed Broadband Office, Inc. ("Broadband") in 1999. Broadband provides
telecommunications and technology services to office buildings throughout the
country. By contributing access to our property portfolio, we expect to benefit
from Broadband's ability to improve choice and services to our customers.
DukeSolutions. In December 1999, we entered into an alliance with
DukeSolutions, a Duke Energy subsidiary. The purpose of this alliance is to
implement a comprehensive energy management program that pioneers creative web-
based energy information and analysis strategies. This energy management program
became operational in 2000 and is intended to minimize risk due to deregulation
and to reduce energy costs for our customers.
AgilQuest. In September 2000, we made a $2.3 million equity investment in V
Technologies International Corporation d/b/a AgilQuest ("AgilQuest"). AgilQuest
created and operates an online resource reservation service that allows
individual employees to reserve office space when and where they need it. It
also enables employers to measure the use of office assets, allowing them to
position office resources more efficiently.
e'ssention. In November 2000, we formed a strategic relationship with
e'ssention, Inc. ("e'ssention"). e'ssention provides a web-based building
operation tool, InfoCentre, for use by our properties, customers and employees.
We have implemented InfoCentre at most of our properties. It allows for real-
time communications and monitoring of building and customer related maintenance
activities via the Internet 24 hours per day, seven days per week.
Growth Strategy
Development
Development of office properties is an important component of our growth
strategy. We believe that long-term investment returns resulting from properties
we develop will generally exceed those from properties we acquire, without the
assumption of significantly increased investment risks. We seek to control
development risks by:
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* employing extensively trained and experienced development personnel;
* avoiding the assumption of entitlement risk in conjunction with land
acquisitions;
* entering into guaranteed maximum price construction contracts with
seasoned and credible contractors;
* focusing on pre-leasing space and build-to-suit opportunities with our
customer network;
* analyzing the supply and demand characteristics of a market before
commencing inventory development in that market.
In general, we will only undertake inventory development, which excludes
construction of pre-leased properties, in markets with strong real estate
fundamentals. We then construct office buildings attractive to a wide range of
office users. Our research-driven development program enables us to tailor our
development activities in each core market, from inventory development,
build-to-suit projects and acquiring and holding land for future development.
We believe that having a land inventory to support future development
provides us with a competitive advantage. We use this advantage to respond to
customers' needs for office space in markets with low vacancy rates, barriers to
entry for new supplies of office space and increasing rental rates. In addition
to our portfolio of operating properties and projects currently under
development, we own or control, as of December 31, 2000, land in eight of our
markets. This land is expected to support future development of up to 2.0
million square feet of office space.
Acquisitions
From 1996 to 1998, we were very active in acquiring office properties as we
established an operating platform for our national business strategy. In light
of capital constraints and pricing disparities that favored development over
acquisitions, our acquisition activity in 1999 and 2000 was limited. We will
selectively pursue acquisitions in our core markets where attractive
opportunities exist, particularly when pricing yields make acquisitions of
existing properties attractive in comparison to new property development.
Asset Optimization
As a component of our business strategy, we may dispose of assets that
become inconsistent with our long-term strategic or return objectives or where
market conditions for disposition are favorable. We then redeploy the proceeds
from the dispositions into other office properties, or use them to fund
development operations, or support other corporate needs. We also may contribute
properties that we own into joint ventures with third parties.
Our ability to dispose of properties is limited, however, in light of an
agreement we have with Security Capital to use reasonable efforts to dispose of
properties through tax-deferred exchanges and agreements that we have entered
into with respect to properties owned by our subsidiaries CarrAmerica Realty,
L.P. and Carr Realty, L.P. Tax laws applicable to REITs also restrict our
ability to dispose of properties.
2000 Activities
Development and Acquisitions Activity
During 2000, we placed in service approximately 1.0 million square feet of
office properties that were previously under development. The total cost for
these projects was approximately $161.6 million. We expect that the first year
stabilized unleveraged return on this square footage will be 11.5%. As of
December 31, 2000, we had approximately 0.6 million square feet of office space
under construction in six projects that we wholly owned. Our total investment in
these projects is expected to be $94.7 million. Through December 31, 2000, we
had expended $48.3 million or 51.0% of the total expected investment for these
projects. During 2000, development of properties for others has become a more
significant part of this segment of our business. This includes development of
properties for joint ventures in which we are partners and for unaffiliated
parties. As of December 31, 2000, we
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were managing $267.3 million in projects for others, including $255.7 million
relating to the projects in which we had a minority interest.
During 2000, we acquired two operating properties and six parcels of land
we intend to hold for future development for approximately $35.3 million. The
operating properties contain approximately 0.1 million square feet. The land is
expected to support the development of approximately 0.9 million square feet of
office space.
Joint Ventures
In May 2000, we entered into a joint venture with JER Partners to develop a
440,000 square foot office building in downtown Austin, Texas. Construction of
this building is scheduled for completion in June 2002. As of December 31, 2000,
we also had approximately 784,000 square feet of office space under construction
in six projects in which we own minority interests. All of these projects are
expected to cost approximately $255.7 million. Our total investment in these
projects is expected to be approximately $98.9 million. Through December 31,
2000, approximately 38.3% or $97.9 million of the total project costs had been
expended.
Dispositions
On August 17, 2000, we closed on a joint venture transaction with New York
State Teachers' Retirement System ("NYSTRS"). At closing, we contributed
properties to the joint venture, Carr Office Park, L.L.C., and NYSTRS
contributed cash of approximately $255.1 million. The venture encompasses five
suburban office parks in four markets. We received cash totaling approximately
$249.6 million from these transactions and hold a 35% interest in the joint
venture. Our investment in Carr Office Park, L.L.C. at December 31, 2000 was
$124.5 million.
In addition to the properties contributed to the NYSTRS joint venture, we
disposed of an additional 16 properties (including one property in which we held
an interest through an unconsolidated entity) in 2000 and four parcels of land
that were being held for development. We recognized a net gain of $24.1 million,
net of taxes of $5.6 million, on these transactions.
HQ Global Workplaces
In June 2000, we sold a substantial portion of our equity interest in HQ
Global and our debt and equity interests in two European executive suites
affiliates in connection with the merger of HQ Global with VANTAS Incorporated.
We received $377.3 million in cash in connection with these transactions. In
addition, $140.5 million of debt which we guaranteed was repaid with a portion
of the cash proceeds. We own approximately 16% of the equity of the merged
entity on a fully diluted basis. Our investment is accounted for under the cost
method of accounting.
As part of the HQ Global/VANTAS transaction, we received put rights with
respect to our continuing interest in HQ Global. These rights can be exercised
at specified times at our option if HQ Global has not completed an initial
public offering. A portion of the put is exercisable in late 2001, with the
balance exercisable in June 2002. Payment for our HQ Global stock will be based
on the fair market value of our investment and can be made either in cash, a
short-term note (in the case of the 2001 put right) or delivery of common stock
of FrontLine Capital Group, a NASDAQ-listed company and the majority shareholder
of HQ Global.
Financing Activity
In September 2000, we retired $150 million of senior unsecured credit notes
that were to mature on October 1, 2000.
Forward-Looking Statements
Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause our, and our affiliates, or the
industry's actual results, performance or achievements to be materially
different from any future results, performance or
6
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following:
* National and local economic, business and real estate conditions
that will, among other things affect:
* Demand for office properties
* Availability and creditworthiness of tenants
* Level of lease rents
* Availability of financing for both tenants and us;
* Adverse changes in the real estate markets, including, among
other things:
* Competition with other companies
* Risks of real estate acquisition and development
* Failure of pending developments to be completed on time
and on budget;
* Actions, strategies and performance of affiliates that we may not
control;
* Governmental actions and initiatives;
* Environmental/safety requirements.
Our Directors
Our directors are divided into three classes, with approximately one-
third of the directors elected by the stockholders annually. The current members
of our Board of Directors are as follows:
* Thomas A. Carr, 42, has been our Chairman of the Board of Directors since
May 2000 and President and a director since 1993 and Chief Executive
Officer since 1997. Mr. Carr's term as director of the Company expires at
the 2001 Annual Meeting of Stockholders. He has been renominated for
election by the stockholders at that meeting to serve another three-year
term. Mr. Carr was our Chief Operating Officer from April 1995 to May 1997
and our Chief Financial Officer from February 1993 to April 1995. Also, he
is a director of The Oliver Carr Company. Mr. Carr holds a Master of
Business Administration degree from Harvard Business School and a Bachelor
of Arts degree from Brown University. Mr. Carr is a member of the Board of
Directors of the National Association of Real Estate Investment Trusts, and
a member of the Young Presidents Organization, Federal City Council and the
International Development Research Council. He is a member of the Board of
Directors of HQ Global. Mr. Carr is the son of Oliver T. Carr, Jr. and the
brother of Robert O. Carr. Mr. Carr is a member of the Investment Committee
and the Executive Committee of the Board of Directors. In addition, Mr.
Carr is a member of management's Operating Committee and Investment
Committee.
* Oliver T. Carr, Jr., 75, was Chairman of our Board of Directors from
February 1993 until May 2000. He also served as our Chief Executive Officer
from 1993 to 1997. Mr. Carr's term as a director expires at the 2002 Annual
Meeting of Stockholders. Mr. Carr founded The Oliver Carr Company in 1962
and since that time he has been its Chairman of the Board and a director as
well as President from 1962 to 2000. He also is Chairman Emeritus of the
Board of Trustees of The George Washington University. Mr. Carr is the
father of both our current Chairman, President and Chief Executive Officer,
Thomas A. Carr, and Robert O. Carr, the President of Carr Urban
Development, Inc. Mr. Carr is a member of the Investment Committee and the
Executive Committee of the Board of Directors.
* Ronald Blankenship, 51, has been a director since August 1998. Mr.
Blankenship's term as a director expires at the 2003 Annual Meeting of
Stockholders. Mr. Blankenship was nominated to the Board as a designee of
Security Capital, one of our major stockholders. Mr. Blankenship has been
the Vice Chairman and Chief Operating Officer of Security Capital Group
Incorporated since May 1998. Previously, Mr. Blankenship was Managing
Director of Security Capital Group Incorporated from March 1991 to May
1998. Mr. Blankenship is a director of Security Capital Group Incorporated
and Storage USA, Inc. He received a B.B.A. from the University of Texas at
Austin. Mr. Blankenship is a member of the Executive Compensation Committee
of the Board of Directors.
* Andrew F. Brimmer, 74, has been a director since February 1993. Dr.
Brimmer's term as a director expires at the 2002 Annual Meeting of
Stockholders. He has been President of Brimmer & Company, Inc., an economic
and financial consulting firm, since 1976. Dr. Brimmer is the Wilmer D.
Barrett Professor of Economics at the
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University of Massachusetts, Amherst. He also serves as a director of
BlackRock Investment Income Trust, Inc. (and other funds) and Borg-Warner
Automotive, Inc. From June 1995 through August 1998, Dr. Brimmer served as
chairman of the District of Columbia Financial Control Board. He was a
member of the Board of Governors of the Federal Reserve System from March
1966 through August 1974. Dr. Brimmer received a B.A. degree and a master's
degree in economics from the University of Washington and a Ph.D. in
economics from Harvard University. Dr. Brimmer is a member of the Audit
Committee of the Board of Directors.
* A. James Clark, 73, has been a director since February 1993. Mr. Clark's
term as a director expires at the 2003 Annual Meeting of Stockholders. He
is Chairman of the Board and CEO of Clark Enterprises, Inc., a Bethesda,
Maryland-based company. Clark Enterprises, Inc. has been involved in real
estate, and commercial and residential construction since 1972. Mr. Clark
is on the Board of Trustees of the University of Maryland College Park
Foundation, and is a Trustee Emeritus of the Johns Hopkins University and
the Johns Hopkins Board of Medicine. He is also a member of the PGA Tour
Golf Course Properties Advisory Board. Mr. Clark is a graduate of the
University of Maryland. He is a member of the Investment Committee, the
Executive Committee, the Executive Compensation Committee, and the
Nominating Committee of the Board of Directors.
* Timothy Howard, 52, has been a director since August 1998. Mr. Howard's
term as a director expires at the 2003 Annual Meeting of Stockholders. Mr.
Howard has been the Executive Vice President and Chief Financial Officer
of Fannie Mae since 1990 and a member of Fannie Mae's Office of the
Chairman since November 2000. From 1988 to 1990, Mr. Howard was Executive
Vice President - Asset Management of Fannie Mae. Mr. Howard has held
positions of increasing responsibility with Fannie Mae since beginning with
the company in 1982. Mr. Howard is a member of the Audit Committee and the
Executive Compensation Committee of the Board of Directors.
* Caroline S. McBride, 47, has been a director since July 1996. Ms. McBride's
term as a director expires at the 2001 Annual Meeting of Stockholders. She
has been renominated for election by the stockholders at that meeting to
serve another three-year term. Ms. McBride was nominated to the Board as a
designee of Security Capital, one of our major stockholders. Since June
1996, Ms. McBride has been a Managing Director of the Capital Division of
Security Capital Group. From June 1996 to July 1997, Ms. McBride was
Managing Director of Security Global Capital Management Group. From July
1978 to May 1996, she was with IBM, where she was director of private
market investments for the IBM Retirement Fund from 1994 to 1996. From 1992
to 1994, she was director of real estate investments for the IBM Retirement
Fund. Ms. McBride is on the Board of Directors of Storage USA, Inc.,
BelmontCorp., CWS Communities Trust and the Real Estate Research Institute.
Ms. McBride received her Masters in Business Administration degree from New
York University and a Bachelor of Arts degree from Middlebury College. Ms.
McBride is a member of the Investment Committee of the Board of Directors.
* William D. Sanders, 59, has been a director since May 1996. Mr. Sanders'
term as a director expires at the 2002 Annual Meeting of Stockholders. Mr.
Sanders was nominated to the Board as a designee of Security Capital, one
of our major stockholders. He is the founder and Chairman of Security
Capital Group. Mr. Sanders retired on December 31, 1989 as Chief Executive
Officer of LaSalle Partners Limited, a firm he founded in 1968. Mr. Sanders
is on the Board of Directors of Security Capital and Storage USA, Inc. Mr.
Sanders is a former trustee and member of the executive committee of the
University of Chicago and a former trustee fellow of Cornell University.
Mr. Sanders received his Bachelor of Science degree from Cornell
University. Mr. Sanders is a member of the Nominating Committee of the
Board of Directors.
* Wesley S. Williams, Jr., 58, has been a director since February 1993.
Mr. Williams' term as a director expires at the 2001 Annual Meeting of
Stockholders. He has been renominated for election by the stockholders at
that meeting to serve another three-year term. Mr. Williams has been a
partner of the law firm of Covington & Burling since 1975. After serving as
a junior member of the Faculty of Law of Columbia University, Mr. Williams
was adjunct professor of real estate finance law at Georgetown University
Law Center from 1971 to 1973. In addition, he is an author or contributing
author of several texts on banking law and on real estate investment and
finance. Mr. Williams is on the Editorial Advisory Board of the District of
Columbia Real Estate Reporter. Mr. Williams serves as Deputy Chairman of
the Board of Directors of the Federal Reserve Bank of Richmond. Mr.
Williams is Co-Chairman of the Board of Directors and Co-CEO of The
Lockhart Companies Inc. and of its real estate, insurance, consumer
finance, and miscellaneous internet and venture subsidiaries. Mr. Williams
is a member of the Executive Committee of the Board of Trustees of Penn
Mutual
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Life Insurance Company, of which he is the Senior Trustee. He is also a
member of the Executive Committee of the Board of Regents of the
Smithsonian Institution. Mr. Williams received B.A. and J.D. degrees from
Harvard University, an M.A. degree from the Fletcher School of Law and
Diplomacy and an LL.M. from Columbia University. Mr. Williams is a member
of the Audit Committee and Executive Compensation Committee of the Board of
Directors.
Our Executive Officers and Certain Key Employees
As of December 31, 2000, our executive officers and key employees
(including executive officers and key employees of CarrAmerica Development, Inc.
and other affiliates) were as follows:
* Karen B. Dorigan, 36, has been Chief Investment Officer since November
2000. Prior to that time, she was Managing Director - Capital Markets and
Investments since April 1999. Prior to that time, Ms. Dorigan served as a
Senior Vice President since May 1997. Prior to that, Ms. Dorigan was the
Company's Vice President--Land Due Diligence since January 1996. Prior to
that, Ms. Dorigan served for more than nine years in a variety of
capacities in the development business of The Oliver Carr Company,
including from February 1993 to January 1996 as a Vice President. Ms.
Dorigan holds a Bachelor of Science degree in Economics from the University
of Pennsylvania, Wharton School. Ms. Dorigan is a member of management's
Operating Committee and Investment Committee.
* Kent C. Gregory, 50, has been Managing Director - National Services since
July 1997. Prior to joining us, Mr. Gregory had been employed by Opus, a
real estate service company, since 1991, as Senior Vice President of
National Accounts. He holds a Masters in Business Administration from Pace
University and a Bachelor of Arts degree in Business Administration from
St. Thomas University. He is a member of management's Operating Committee
and Investment Committee.
* Philip L. Hawkins, 45, has been Chief Operating Officer since October 1998.
From February 1996 to October 1998, Mr. Hawkins served as Managing
Director--Asset Management. Prior to that time, Mr. Hawkins was employed
by LaSalle Partners Limited, a real estate services company, since 1982. At
LaSalle, he served as Executive Vice President, Eastern Division, Asset
Management Group from 1995 to 1996, as Senior Vice President, Northeast
Region, Asset Management Group from 1990 to 1994, and in other asset
management positions prior to that time. Mr. Hawkins also was a director of
LaSalle Partners Limited. He holds a Masters in Business Administration
from the University of Chicago Graduate School of Business and a Bachelor
of Arts degree from Hamilton College. Mr. Hawkins is a member of
management's Operating Committee and Investment Committee. Mr. Hawkins is
also a member of the Board of Directors and the Executive Committee of
Broadband Office, Inc.
* Richard F. Katchuk, 54, has been Chief Financial Officer since February
1999. From 1995 to 1999, Mr. Katchuk served as Chief Financial Officer and
Corporate Executive Vice President of Crestar Financial Corporation. Prior
to joining Crestar Financial Corporation, Mr. Katchuk was with Banc One,
serving as a Senior Vice President Corporate Finance from 1988 to 1995. Mr.
Katchuk holds a Bachelor of Arts degree in Economics from Hobart & William
Smith Colleges. Mr. Katchuk is a member of management's Operating Committee
and Investment Committee.
* Linda A. Madrid, 41, has been Managing Director, General Counsel and
Corporate Secretary since November 1998. Prior to that time Ms. Madrid
served as Senior Vice President and General Counsel since March 1998. Prior
to that time, Ms. Madrid had been Senior Vice President, Managing Director
of Legal Affairs and Corporate Secretary of Riggs National
Corporation/Riggs Bank N.A. since February 1996 and Vice President and
Litigation Manager from September 1993 to January 1996. Before joining
Riggs, Ms. Madrid practiced law in several law firms in Washington, D.C.
and served as Assistant General Counsel for Amtrak. Ms. Madrid holds a J.D.
from Georgetown University Law Center and a Bachelor of Arts degree from
Arizona State University. Ms. Madrid is a member of management's Operating
Committee.
* Paul R. Adkins, 42, has been Managing Director - Private Capital since May
1999. From 1996 to 1999, Mr. Adkins served as the Company's Senior Vice
President, Market Managing Director for Washington, D.C. Mr. Adkins has
been with the Company for over 17 years, including serving as Vice
President of Acquisitions from May 1994 to August 1996. Prior to that, Mr.
Adkins served in a variety of other capacities with the Company,
9
with over 12 years in commercial real estate leasing. Mr. Adkins is a
member of the District of Columbia's Building Industry Association and
Northern Virginia's National Association of Industrial and Office Parks.
Mr. Adkins holds a Bachelor of Arts degree in Economics from Bucknell
University. Mr. Adkins is a member of management's Operating Committee.
* Steven N. Bralower, 52, has been Executive Vice President of Carr Real
Estate Services, Inc. ("Carr Services, Inc."), an affiliate that conducts
management and leasing operations, since January 1999, and Senior Vice
President of Carr Realty, L.P., a subsidiary, since May 1996. Mr. Bralower
was Senior Vice President of Carr Services, Inc. from 1993 to May 1996. Mr.
Bralower is a member of the Greater Washington Commercial Association of
Realtors. Mr. Bralower has been a member of the Georgetown University Law
Center adjunct faculty since 1987. Mr. Bralower holds a Bachelor of Arts
degree from Kenyon College.
* Robert O. Carr, 51, has been President of CarrAmerica Urban Development,
Inc., a subsidiary of CarrAmerica Development, since June 1998, and
Chairman of the Board of Directors of Carr Services, Inc., since February
1993. Mr. Carr served as one of our directors from 1993 until 1997 and as
President of Carr Services, Inc. from 1993 to 1998. Mr. Carr is a director
of The Oliver Carr Company. From 1987 until February 1993, he served as
President and Chief Executive Officer of The Oliver Carr Company. Mr. Carr
is a member of the Boards of Directors of the Greater Washington Research
Center, the Corcoran School of Art and the National Cathedral School for
Girls. Mr. Carr is also a member of the Greater Washington Board of Trade,
the Urban Land Institute and the D.C. Chamber of Commerce. Mr. Carr holds a
Bachelor of Arts degree from Trinity College. Mr. Carr is the son of Oliver
T. Carr, Jr. and the brother of Thomas A. Carr.
* Clete Casper, 41, has been Market Managing Director -Seattle since July
1999. Prior to that time Mr. Casper served as the Company's Vice President,
Market Managing Director for Seattle since July 1996. Mr. Casper has over
10 years of experience in real estate and marketing. Mr. Casper's most
recent experience includes one year as a Senior Associate with CB
Commercial Real Estate Group Inc., Seattle, Washington. Prior to that, Mr.
Casper was with Sabey Corporation in Seattle, Washington, serving as
Development Manager for four years and as a Marketing Associate for five
years. Mr. Casper is a graduate of Washington State University. Mr. Casper
is a member of management's Operating Committee.
* John J. Donovan, Jr., 57, has been a Market Managing Director since July
1999 and President of Carr Services, Inc., since January 1999. Prior to
that time, Mr. Donovan served as Senior Vice President of Carr Services,
Inc. from 1993 to 1998. He is a member of the Advisory Board for Jubilee
Enterprise of Greater Washington, the Economic Club of Washington, the
Greater Washington Board of Trade and the Greater Washington Commercial
Association of Realtors. Mr. Donovan holds a Bachelor of Arts degree from
Georgetown University. Mr. Donovan is a member of management's Operating
Committee.
* J. Thad Ellis, 40, has been Market Managing Director - Atlanta since July
1999. Prior to that time Mr. Ellis served as the Company's Vice President,
Market Managing Director for Atlanta since November 1996. Mr. Ellis has
over 15 years of experience in real estate. Mr. Ellis' most recent
experience includes 10 years with Peterson Properties. At Peterson
Properties, his primary responsibility was to oversee and coordinate
leasing and property management for the management services portfolio. Mr.
Ellis is a graduate of Washington & Lee University and is a member of the
National Association of Industrial and Office Parks and Atlanta's Chamber
of Commerce and is on the Advisory Board of Black's Guide. Mr. Ellis is a
member of management's Operating Committee.
* Richard W. Greninger, 49, has been Managing Director - Property Operations
since May 1999. Prior to that time Mr. Greninger served as Senior Vice
President--Operations since January 1998. Prior to that, Mr. Greninger had
been the Senior Vice President of Carr Services, Inc., since March 1995.
Prior to that time, he had been Vice President of Carr Services, Inc. since
February 1993. During 1994, Mr. Greninger served as President of the
Greater Washington Apartment and Office Building Association. Mr. Greninger
has served as a director of both the Institute of Real Estate Management
and the Building Owners and Managers Association and is currently Chairman
of its National Advisory Council. He is also a member of the Board of
Directors of e'ssention. Mr. Greninger holds a Masters in Business
Administration from the University of Cincinnati and a Bachelor of Science
degree from Ohio State University. Mr. Greninger is a member of
management's Operating Committee.
10
* Dale F. Hogg, 58, joined us from Iridium, LLC, in May 2000 as Senior Vice
President of Human Resources and Administration. Before joining Iridium in
1994, Mr. Hogg was Corporate Manager, Global Staffing and Corporate
Manager, Compensation for W.R. Grace & Co. from 1991. Mr. Hogg holds a
Bachelor of Science degree from Colorado State University. He is a member
of management's Operating Committee.
* William Krokowski, 38, has been Market Managing Director - Denver since
December 1999. Prior to that time Mr. Krokowski served as Vice
President/Director of Development for CarrAmerica Development, Inc., an
affiliate, since 1997. Prior to 1997, Mr. Krokowski was a member of our
investments group. Prior to joining CarrAmerica, Mr. Krokowski spent over
five years with Tishman Speyer Properties in New York and Washington, D.C.
as a development manager. Mr. Krokowski holds a Civil Engineering degree
from Bucknell University and a Masters in Business Administration from Duke
University. Mr. Krokowski is a member of management's Operating Committee.
* Joel A. Manfredo, 46, became Chief Technology Officer and Managing Director
of e-business solutions in November 2000. Prior to joining us, Mr. Manfredo
was Vice President and Director of Information Strategies with The Rouse
Company from 1988. Mr. Manfredo served as Director of Investment Assets for
a subsidiary of McCormick and Company from 1981 to 1988. Mr. Manfredo holds
a Masters of Science in Finance and a Masters of Business Administration
from Loyola College, as well as, a Bachelors of Science in Business
Administration from Lehigh University. He is a member of management's
Operating Committee.
* Robert M. Milkovich, 41, has been Market Managing Director - Phoenix since
July 1999. Prior to that time Mr. Milkovich served as Vice President,
Market Managing Director for Phoenix, Arizona since January 1998. Mr.
Milkovich has over 14 years of experience in real estate leasing. Mr.
Milkovich's most recent experience includes five years as the Assistant
Vice President of leasing for Carr Services, Inc. Mr. Milkovich holds a
Bachelor of Science in Business Administration from the University of
Maryland. Mr. Milkovich is a member of management's Operating Committee.
* Malcolm O'Donnell, 43, joined us in October 2000 as Vice President and
Managing Director for our Southern California region. He was previously
employed as Principal of Alpine Holding and Keller Equity Group, Inc.
overseeing development projects. From March 1997 to December 1997, Mr.
O'Donnell was Vice President of Acquisitions for Beacon Properties. Mr.
O'Donnell holds a Bachelor of Science degree from the University of
Southern California. He is a member of management's Operating Committee.
* Gerald J. O'Malley, 57, has been Market Managing Director - Chicago since
July 1999. Prior to that time Mr. O'Malley served as Vice President, Market
Managing Director for Chicago since July 1996. Mr. O'Malley has over 32
years of experience in real estate marketing. Mr. O'Malley's most recent
experience includes 10 years as founder and President of G. J. O'Malley &
Company, a real estate office leasing company. Mr. O'Malley holds a
Bachelors of Business Administration degree from Loyola University. Mr.
O'Malley is a member of management's Operating Committee.
* Jeffrey S. Pace, 38, has been Market Managing Director - Austin since July
1999. Prior to that time Mr. Pace served as Vice President, Market Managing
Director for Austin, Texas since May 1997. Mr. Pace has over 14 years of
experience in real estate marketing. Mr. Pace's most recent experience was
with Trammell Crow Company, where he served as Marketing Director. Prior to
that time, Mr. Pace held the position of Marketing Representative in the
Dallas and Austin markets for Carlisle Property Company, Stockton,
Luedmann, French & West and Trammell Crow Company from 1985 to 1997. Mr.
Pace holds a Masters of Business Administration from the University of
Texas at Arlington and a Bachelor of Science from the University of Texas
at Austin. Mr. Pace is a member of management's Operating Committee.
* Stephen E. Riffee, 43, has been Senior Vice President, Controller and
Treasurer since July 1999. Prior to that time, Mr. Riffee served as Vice
President Finance and Chief Accounting Officer of Marriott International,
Inc. for three years. Prior to joining Marriott International, Inc., Mr.
Riffee served as Assistant Vice President at Burlington Northern Railroad
after having previously worked in the National Transportation Practice of
KPMG Peat Marwick. Mr. Riffee holds a Bachelor of Science in Commerce
degree from the McIntire School of Commerce of the University of Virginia.
Mr. Riffee is a member of management's Operating Committee.
* Leah Segawa, 44, has been Market Managing Director - Northern California
since June 1999. Prior to that time Ms. Segawa served as Vice President and
Development Coordinator for CarrAmerica Development, Inc., an
11
affiliate. Prior to this, from 1989 to 1997, Ms. Segawa was President of
WesTerra Collaborative Ltd., a real estate development consulting firm
which managed a wide range of development projects. Ms. Segawa holds a
Bachelor of Arts with honors in Architecture from University of California
at Berkeley and a Masters of Business Administration from Harvard
University. Ms. Segawa is a member of management's Operating Committee.
* William H. Vanderstraaten, 40, has been Market Managing Director - Dallas
since July 1999. Prior to that time Mr. Vanderstraaten served as Vice
President, Market Managing Director for Dallas since April 1997. Mr.
Vanderstraaten has over 16 years of experience in real estate development
and leasing fields. Mr. Vanderstraaten's most recent experience prior to
working for the Company includes eight years as Vice President--New
Development for Harwood Pacific Corporation in Dallas, Texas, where his
primary responsibilities were directing large scale development projects
and coordinating leasing efforts for portfolios. Mr. Vanderstraaten holds a
Bachelor of Science degree in Business Administration from Southern
Methodist University. Mr. Vanderstraaten is a member of management's
Operating Committee.
* Karen L. Widmayer, 42, has served as Senior Vice President of Corporate
Communications since August 1999. Prior to that time Ms. Widmayer served as
Vice President of Corporate Communications since 1997. Ms. Widmayer is an
18-year veteran of CarrAmerica and our predecessor company. Ms. Widmayer is
responsible for our strategic marketing and branding including media
relations, advertising, community relations, employee communications,
corporate and project marketing as well as our web site and intranet site.
Ms. Widmayer performed Masters work in Economics at the University of
Tennessee. Ms. Widmayer holds a Bachelor of Arts degree in Business
Management from Virginia Intermont College. Ms. Widmayer is a member of
management's Operating Committee.
* James S. Williams, 44, has been a Managing Director since April 1999 and
President of CarrAmerica Development since May 1999. Prior to that time Mr.
Williams was Senior Vice President of CarrAmerica Development since October
1996. Mr. Williams rejoined us after two years as Vice President of
Operations of Chadwick International. Prior to that, from 1983 to 1994, he
served in a variety of capacities for The Oliver Carr Company including
Senior Vice President of Development. Mr. Williams is a guest lecturer at
George Washington University. He holds a Bachelor of Science degree in
Business Administration from West Virginia University. Mr. Williams is a
member of the Board of Directors and a member of the Executive Committee of
the District of Columbia Building Industry Association. He is a member of
the Investment Committee of CarrAmerica Development and a member of
management's Investment Committee and Operating Committee.
Risk Factors
In addition to the other information in this document, you should
consider carefully the following risk factors in evaluating an investment in our
securities.
Our Performance is Subject to Risks Associated with Real Estate Investment
We are a real estate company that derives most of its income from the
ownership and operation of office buildings. There are a number of factors that
may adversely affect the income that our properties generate, including the
following:
* Economic Downturns. Downturns in the national economy, or in
------------------
regions or localities where our properties are located, generally
will negatively impact the demand for office space.
* Oversupply of Office Space. An oversupply of space in markets
--------------------------
where we own office properties making it more difficult for us to
lease space at attractive rental rates would typically cause
rental rates and occupancies to decline.
* Competitive Properties. If our properties are not as attractive to
----------------------
tenants (in terms of rents, services or location) as other
properties that are competitive with ours, we will lose tenants to
those properties or could have to reduce our rental rates to
compensate for that disparity.
* Renovation Costs. In order to maintain the quality of our office
----------------
buildings and successfully compete against other properties, we
periodically have to spend money to repair and renovate our
properties.
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* Tenant Risk. Our performance depends on our ability to collect
-----------
rent from our tenants. While no tenant in our portfolio accounted
for more than 5% of our rental revenue as of December 31, 2000,
our financial position may be adversely affected by financial
difficulties experienced by a major tenant, or by a number of
smaller tenants, including bankruptcies, insolvencies or general
downturns in business.
* Reletting Costs. As leases expire, we try to either relet the
---------------
space to an existing tenant or attract a new tenant to occupy the
space. In either case, we likely will incur significant costs in
the process. In addition, if market rents have declined since the
time the expiring lease was entered into, the terms of any new
lease signed likely will not be as favorable to us as the terms of
the expiring lease, thereby reducing the income earned from that
space.
* Regulatory Costs. There are a number of government regulations,
----------------
including zoning, tax and accessibility laws that apply to the
ownership and operation of office buildings. Compliance with
existing and newly adopted regulations may require us to spend a
significant amount of money on our properties.
* Fixed Nature of Costs. Most of the costs associated with owning
---------------------
and operating an office building are not necessarily reduced when
circumstances such as market factors and competition cause a
reduction in income from the property.
* Environmental Problems. Federal, state and local laws and
----------------------
regulations relating to the protection of the environment may
require a current or previous owner or operator of real property
to investigate and clean up hazardous or toxic substances or
petroleum product releases at the property. The clean up can be
costly. The presence of or failure to clean up contamination may
adversely affect our ability to sell or lease a property or to
borrow using a property as collateral.
* Competition. A number of other major real estate investors with
-----------
significant capital compete with us. These competitors include
publicly traded REITs, private REITs, investment banking firms and
private institutional investment funds.
New Developments and Acquisitions May Fail to Perform As Expected
Over the last few years, we have embarked on a major acquisition and
development program. In deciding whether to acquire or develop a particular
property, we made certain assumptions regarding the expected future performance
of that property. If a number of these new properties do not perform as
expected, our financial performance will be adversely affected.
While our acquisition pace has declined significantly, we remain very
active in developing office properties. New office property developments are
subject to a number of risks, including construction delays, complications in
obtaining necessary zoning, occupancy and other governmental permits, cost
overruns, financing risks, and the possible inability to meet expected occupancy
and rent levels. If any of these problems occur, development costs for a project
will increase, and there may be costs incurred for projects that are not
completed.
We Do Not Have Exclusive Control Over Our Joint Venture Investments
We have invested in projects or properties as a co-venturer or partner
in the development of new properties and the continued operations of operating
properties. These investments involve risks not present in a wholly owned
project. Risks related to these investments include:
* Absence of exclusive control over the development, financing,
leasing, management and other aspects of the project;
* Possibility that our co-venturer or partner might:
* become bankrupt;
* have interests or goals that are inconsistent with ours;
* take action contrary to our instructions, requests or
interests (including those related to our qualification as a
REIT for tax purposes); or
* otherwise impede our objectives.
13
Our Use of Debt Subjects Us to Various Financing Risks
While we believe that we have a conservative borrowing policy, we do
regularly borrow money to finance our business, particularly the acquisition and
development of properties. We generally incur unsecured debt, although in many
cases we will incur mortgage debt that is secured by one or more of our office
buildings. There are risks inherent in borrowing money, including the following:
* No Limitation on Debt Incurrence. The Company's organizational
--------------------------------
documents do not limit the amount of debt the Company can incur.
The degree of leverage of the Company could have important
consequences, including making it more difficult for us to obtain
additional financing in the future for business needs, as well as
making us more vulnerable to an economic downturn.
* Possible Inability to Meet Scheduled Debt Payments. If our
--------------------------------------------------
properties do not perform as expected, our cash flow from our
properties may not be enough to make required principal and
interest payments. If a property is mortgaged to secure payment of
indebtedness and we are unable to meet mortgage payments, the
holder of the mortgage or lender could foreclose on the property,
resulting in loss of income and asset value. An unsecured lender
could also attempt to foreclose on some of the Company's assets in
order to receive payment.
* Inability to Refinance Debt. In almost every case, very little of
---------------------------
the principal amount that we borrow is repaid prior to the
maturity of the loan. We generally expect to refinance that debt
when it matures, although in some cases we may pay off the loan.
If principal amounts due at maturity cannot be refinanced,
extended or paid with proceeds of other capital transactions, such
as new equity capital, our cash flow may be insufficient to repay
all maturing debt. Prevailing interest rates or other factors at
the time of a refinancing (such as possible reluctance of lenders
to make commercial real estate loans) may result in higher
interest rates and increased interest expense.
* Financial Covenants Could Adversely Affect Our Financial
--------------------------------------------------------
Condition. Our credit facilities and the indentures under which
---------
our senior unsecured indebtedness are issued contain financial and
operating covenants, including coverage ratios and other
limitations on our ability to incur secured and unsecured
indebtedness, sell all or substantially all of our assets and
engage in mergers, consolidations and certain acquisitions. These
covenants may restrict our ability to engage in transactions that
would otherwise be in our best interests.
* Variable Interest Rates Could Increase the Cost of Borrowing. A
------------------------------------------------------------
significant amount of our financing is through an unsecured line
of credit. The line of credit is subject to variable floating
interest rates. Because we have not hedged against interest
fluctuations, significant increases in interest rates could
dramatically increase our costs of borrowing on the line of
credit. Additionally, interest rates on certain of our debt are
based on the credit rating of our debt by independent agencies,
and would be increased in the event that the credit ratings are
downgraded.
Our Business Structure Has Certain Risks Associated With It
* A Major Stockholder Has Influence on Our Operations.
Security Capital owned approximately 44.0% of our outstanding common stock
as of December 31, 2000. No other stockholder is permitted to own more than
5% of our common stock, subject to certain exceptions. Under a Stockholders
Agreement with us, Security Capital has the right to nominate up to 40% of
the directors. The Stockholders Agreement also gives Security Capital
certain rights that limit our ability to take certain actions and limits
our ability to engage in certain transactions that may be in the short-term
best interests of other stockholders. This situation results in Security
Capital having a substantial influence over our affairs. This could
potentially be disadvantageous to other stockholders' interests, which may
not converge with the interests of Security Capital.
14
* Certain Officers and Directors May Have Interests that Conflict with the
Interests of Stockholders.
Certain of our officers and members of our board of directors own units of
limited partner interest in Carr Realty, L.P., a partnership that holds
some of our properties. These individuals may have personal interests that
conflict with the interests of our stockholders with respect to business
decisions affecting us and Carr Realty, L.P., such as interests in the
timing and pricing of property sales or refinancings in order to obtain
favorable tax treatment. We, as the sole general partner of Carr Realty,
L.P., have the exclusive authority to determine whether and on what terms
Carr Realty L.P. will sell or refinance an individual property, but the
effect of certain transactions on these unitholders may our influence
decisions affecting these properties.
* We May Not Be Able to Sell Properties When Appropriate.
Real estate property investments generally cannot be sold quickly. In
addition, an agreement we have with Security Capital requires us to use
reasonable efforts to dispose of properties through tax deferred exchanges.
Agreements that we have entered into with respect to certain properties
owned by CarrAmerica Realty, L.P. and Carr Realty, L.P. limit our ability
to dispose of property. Also, the tax laws applicable to REITs restrict our
ability to dispose of certain properties. Therefore, we may by unable to
vary our portfolio promptly in response to market conditions, which may
adversely affect our financial position.
* Lack of Voting Control Over Carr Real Estate Services, Inc.
While most of our income is generated from the ownership and operation of
our office buildings, we own a nonvoting interest in Carr Real Estate
Services, Inc., which produces a significant contribution to our income.
Carr Real Estate Services, Inc. conducts management and leasing operations
for third parties and for office buildings in which we own less than a 100%
interest. As of December 31, 2000, we owned approximately 95% of the
economic interest in Carr Real Estate Services, Inc. through the ownership
of nonvoting common stock. The voting common stock of Carr Real Estate
Services, Inc. is owned by entities and individuals that have some
affiliation with us. As a result, we have no right to elect the directors
of Carr Real Estate Services, Inc., and our ability to influence its
operations is limited. Carr Real Estate Services, Inc. may engage in
business activities that are not in our best interests.
* We Depend On External Capital.
To qualify as a REIT, we generally must distribute to our stockholders each
year at least 90% of our net taxable income excluding net capital gain.
Because of these distribution requirements, we likely will not be able to
fund all future capital needs, including capital for property development
and acquisitions, with income from operations. We therefore will have to
rely on third-party sources of capital, which may or may not be available
on favorable terms, if at all. Our access to third-party sources of capital
depends on a number of things, including the market's perception of our
growth potential and our current and potential future earnings.
Certain Factors May Inhibit Changes in Control of the Company
* Charter and By-law Provisions.
Certain provisions of our charter and by-laws may delay or prevent a change
in control of the Company or other transactions that could provide our
common stockholders with a premium over the then-prevailing market price of
their common stock or that might otherwise be in the best interests of our
stockholders. These include a staggered board of directors and the ability
of our board of directors to authorize the issuance of preferred stock
without stockholder approval. Also, any future series of preferred stock
may have voting provisions that could delay or prevent a change in control
or other transaction that might involve a premium price or otherwise be in
the best interests of our common stockholders.
* Ownership Limit.
In order to assist us in maintaining our qualification as a REIT and for
other strategic reasons, our charter contains certain provisions generally
limiting the ownership of shares of capital stock by any single stockholder
to 5% of our outstanding common stock and/or 5% of any class or series of
preferred stock. The federal tax laws include complex stock ownership and
attribution rules that apply in determining whether a stockholder
15
exceeds the ownership limits. These rules may cause a stockholder to be
treated as owning stock that is actually owned by others, including family
members and entities in which the stockholder has an ownership interest.
Our board of directors could waive this restriction if it were satisfied
that ownership in excess of these ownership limits would not jeopardize our
status as a REIT and the board otherwise decided that a waiver would be in
our interests. Capital stock acquired or transferred in breach of the
ownership limit will be automatically transferred to a trust for the
benefit of a designated charitable beneficiary.
* Maryland Law Provisions.
Certain provisions of Maryland law which are applicable to us because we
are a Maryland corporation prohibit "business combinations" with any person
that beneficially owns ten percent or more of our outstanding voting shares
(an "interested stockholder") or with an affiliate of the interested
stockholder. These prohibitions last for five years after the most recent
date on which the person became an interested stockholder. After the five-
year period, a business combination with an interested stockholder must be
approved by two super-majority stockholder votes unless, among other
conditions, our common stockholders receive a minimum price for their
shares and the consideration is received in cash or in the same form as
previously paid by the interested stockholder for its common shares. Our
board of directors has opted out of these business combination provisions.
Consequently, the five-year prohibition and the super-majority vote
requirements will not apply to a business combination involving us. Our
board of directors may, however, repeal this election in most cases and
cause us to become subject to these provisions in the future. Being subject
to the provisions could delay or prevent a change in control or other
transactions that might involve a premium price or otherwise be in the best
interests of our stockholders.
The Market Value of Our Securities Can Be Adversely Affected by Many Factors
As with any public company, a number of factors may adversely influence
the public market price of our common stock, many of which are beyond our
control. These factors include:
* Level of institutional interest in us;
* Perception of REITs generally and REITs with portfolios similar
to ours, in particular, by market professionals;
* Attractiveness of securities of REITs in comparison to other
companies;
* Our financial condition and performance;
* The market's perception of our growth potential and potential
future cash dividends;
* Increases in market interest rates, which may lead investors to
demand a higher annual yield from our distributions in relation
to the price paid for our stock;
* Relatively low trading volume of shares of REITs in general,
which tends to exacerbate a market trend with respect to our
stock.
Sales of a substantial number of shares of our stock, or the perception
that such sales could occur, also could adversely affect prevailing market
prices for our stock. In addition to the possibility that we may sell shares of
our stock in a public offering at any time, we also may issue shares of common
stock upon redemption of units of interest held by third parties in affiliated
partnerships that we control, as well as upon exercise of stock options that we
grant to our employees and others. All of these shares will be available for
sale in the public markets from time to time. In addition, Security Capital, our
largest stockholder (owning more than one-third of our shares) has the right to
sell its shares at any time, pursuant to registration rights granted to it in
connection with its original investment in us.
Our Status As a REIT
We believe that we qualify for taxation as a REIT for federal income
tax purposes, and we plan to operate so that we can continue to meet the
requirements for taxation as a REIT. If we qualify as a REIT, we generally will
not be subject to federal income tax on our income that we distribute currently
to our shareholders. Many of the REIT requirements, however, are highly
technical and complex. The determination that we are a REIT requires an analysis
of various factual matters and circumstances that may not be totally within our
control. For example, to qualify as a REIT, at least 95% of our gross income
must come from specific passive sources, like rent, that are itemized in the
REIT tax laws. We also are required to distribute to our stockholders at least
90% of our REIT taxable income (excluding capital gains). The fact that we hold
some of our assets through partnerships and their
16
subsidiaries further complicates the application of the REIT requirements. Even
a technical or inadvertent mistake could jeopardize our REIT status.
Furthermore, Congress and the IRS might make changes to the tax laws and
regulations, and the courts might issue new rulings, that make it more
difficult, or impossible, for us to remain qualified as a REIT.
If we fail to qualify as a REIT for federal income tax purposes, we
would be subject to federal income tax at regular corporate rates. Also, unless
the IRS granted us relief under certain statutory provisions, we would remain
disqualified as a REIT for four years following the year we first failed to
qualify. If we failed to qualify as a REIT, we would have to pay significant
income taxes. This likely would have a significant adverse affect on the value
of our securities. In addition, we would no longer be required to pay any
dividends to stockholders.
Even if we qualify as a REIT for federal income tax purposes, we are
required to pay certain federal, state and local taxes on our income and
property. For example, if we have net income from "prohibited transactions,"
that income will be subject to a 100% tax. In general, prohibited transactions
are sales or other dispositions of property held primarily for sale to customers
in the ordinary course of business. The determination as to whether a particular
sale is a prohibited transaction depends on the facts and circumstances related
to that sale. While we have recently undertaken a significant number of asset
sales, we do not believe that those sales should be considered prohibited
transactions, but there can be no assurance that the IRS would not contend
otherwise. In addition, any net taxable income earned directly by some of our
affiliates, including Carr Real Estate Services, Inc. and CarrAmerica
Development, Inc., is subject to federal and state corporate income tax. To the
extent that we and our affiliates are required to pay federal, state and local
taxes, we will have less cash available for distributions to our shareholders.
Prior to December 31, 2000, a REIT could not own securities in any one
issuer if the value of those securities exceeded 5% of the value of the REIT's
total assets or the securities owned by the REIT represented more than 10% of
the issuer's outstanding voting securities. As a result of the REIT
Modernization Act, after December 31, 2000, the 5% value test and the 10% voting
security test were modified in two respects. First, the 10% voting securities
test was expanded so that REITs also are prohibited from owning more than 10% of
the value of the outstanding securities of any one issuer. Second, an exception
to these tests allows a REIT to own securities of a subsidiary that exceed the
5% value test and the new 10% vote or value test if the subsidiary elects to be
a "taxable REIT subsidiary." Under a new asset test, for taxable years beginning
after December 31, 2000, we are not able to own securities of taxable REIT
subsidiaries that represent in the aggregate more than 20% of the value of our
total assets.
Several provisions of the new law ensure that a taxable REIT subsidiary
will be subject to an appropriate level of federal income taxation. For example,
a taxable REIT subsidiary is limited in its ability to deduct interest payments
made to an affiliated REIT. In addition, the REIT has to pay a 100% penalty tax
on some payments that it receives if the economic arrangements between the REIT,
the REIT's tenants, and the taxable REIT subsidiary are not comparable to
similar arrangements between unrelated parties.
We currently own more than 10% of the total value of the outstanding
securities of HQ Global, Carr Real Estate Services, Inc. and CarrAmerica
Development. These entities have elected to be taxable REIT subsidiaries.
17
Item 2. PROPERTIES
General
As of December 31, 2000, we owned interests (consisting of whole or
partial ownership interests) in 283 operating properties located in 13 markets
across the United States. As of December 31, 2000, we owned fee simple title or
leasehold interest in 250 operating properties, controlling partial interests in
two operating properties and non-controlling partial interests of 15% to 50% in
31 operating properties. In addition, as of December 31, 2000, we owned (either
directly or through CarrAmerica Development) six properties under development.
Except as we disclose in "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital
Resources", we have no immediate plans to renovate our operating properties
other than for routine capital maintenance. We believe our properties are
adequately covered by insurance. We believe that, as a result of our national
operating system, market research capabilities, access to capital and experience
as an owner, operator and developer of properties, we will continue to be able
to identify and consummate acquisition and development opportunities and to
operate our portfolio more effectively than competitors without such
capabilities. We compete in many of our markets with other real estate
operators, some of which may have been active in those markets for a longer
period of time than we have.
The following table sets forth information about each operating
property in which we own an interest as of December 31, 2000.
18
Net Total Average
Rentable Annualized Base Rent
# of Area in Percent Base Rent/3/ /Leased
Property Buildings Sq. Feet/1/ Leased/2/ (in thousands) Sq. Feet/4/ Significant Tenants/5/
- ---------------------------------- ---------- ------------ -------- -------------- ---------- ------------------------
Consolidated Properties
EASTERN REGION
- --------------
Downtown Washington, D.C.:
International Square 3 1,014,556 100.0% $ 33,736 $33.25 International Monetary Fund
(49%)
900 19th Street 1 101,215 100.0% 3,252 32.14 America's Community Bankers
(30%), Stone & Webster (13%),
Korn/Ferry International
(12%), Lucent Technologies
(11%)
2550 M Street 1 187,931 96.8% 7,800 42.89 Patton & Boggs (96%)
1730 Pennsylvania Avenue/6/ 1 229,377 100.0% 8,181 35.67 Federal Deposit Insurance Co.
(47%), King & Spalding (39%)
1255 23rd Street/7/ 1 306,126 99.3% 8,573 28.20 Chronicle of Higher Education
(29%), William M. Mercer,
Inc. (22%)
1747 Pennsylvania Avenue 1 152,104 99.8% 4,843 31.89 Legg Mason Wood Walker,
Inc. (29%)
1775 Pennsylvania Avenue 1 143,981 97.5% 4,065 28.95 Citicorp Savings of
Washington, DC (89%)
Suburban Washington, D.C.:
One Rock Spring Plaza/6/ 1 205,721 98.4% 5,393 26.63 Caterair International (22%),
Sybase, Inc. (19%)
Sunrise Corporate Center 3 260,253 99.2% 6,082 23.57 Software AG of North America
(81%)
Reston Crossing East & West 2 327,788 100.0% 5,736 17.50 Nextel Communications, Inc.
(100%)
Atlanta, GA:
Glenridge 1 64,219 91.9% 1,149 19.48 digitalinsurance.com (15%),
Communication Trends, Inc.
(11%)
Century Springs West 1 95,055 83.1% 1,498 18.97 No tenant occupies 10%
Holcomb Place 1 72,889 100.0% 1,277 17.52 Intercept Group, Inc. (47%),
Hitachi Telecom (USA), Inc.
(20%), Progeni Corporation
(13%)
Midori 1 99,691 100.0% 2,113 21.20 National Consumer Services
(66%), United Parcel Service
(21%)
Parkwood 1 150,270 98.5% 2,893 19.54 Onesource (22%), Corecommerce
(11%)
Lakewood 1 80,483 100.0% 1,429 17.75 Paychex, Inc. (28%), Morrison
Health Care, Inc. (25%), The
Mulling Group (25%), Hickson
(USA) Corp. (17%)
The Summit 1 179,085 100.0% 3,202 17.88 Unisys Corporation (86%), CSC
Continuum, Inc. (14%)
Spalding Ridge 1 128,233 99.3% 2,581 20.28 IT Corporation (57%), Federal
Deposit Insurance Co. (10%)
2400 Lake Park Drive 1 100,918 78.6% 1,347 16.99 United Healthcare Services,
Inc. (29%), GSA (17%)
680 Engineering Drive 1 62,154 100.0% 613 9.86 EMS Technologies Inc. (67%),
Enreve Corporation (22%),
Loral Aerospace Corporation
(11%)
Embassy Row 3 464,895 92.6% 7,890 18.32 Ceridian Corporation (24%),
Cabot Corporation (10%)
Embassy 100, 500 2 190,470 100.0% 4,112 21.59 Art Institute of Atlanta,
Inc. (60%), Edutrek
International, Inc. (40%)
Waterford Centre 1 82,344 97.4% 1,534 19.12 Dateq Information Network
Inc. (21%), VCG, Inc. (18%),
Arkwright Mutual Insurance
(15%)
-------- ---------- ------
Southeast Region Subtotal 31 4,699,758 97.6%
PACIFIC REGION
- --------------
Southern California: Orange County/
Los Angeles
Scenic Business Park 4 140,812 98.1% 2,206 15.97 Talbert Medical Group (20%),
Miles, Wright, Finely & Zak
(18%), Terayon Communications
(17%), Coast Community College
(13%)
Harbor Corporate Park 4 151,924 96.1% 2,734 18.73 Clayton Environmental (10%)
Plaza PacifiCare 1 104,377 100.0% 1,019 9.76 Pacificare Health Systems Inc.
(100%)
Katella 1 80,609 97.2% 1,337 17.06 Friendly Hills Healthcare
(19%)
19
Net Total Average
Rentable Annualized Base Rent
# of Area in Percent Base Rent/3/ /Leased
Property Buildings Sq. Feet/1/ Leased/2/ (in thousands) Sq. Feet/4/ Significant Tenants/5/
- ----------------------------------- ---------- ---------- --------- ------------- --------- -------------------------------
Warner Center 12 344,147 98.2% 7,987 23.64 El Camino Resources, Inc. (25%),
General Services Administration
(17%)
South Coast Executive Center 2 161,692 100.0% 3,784 23.40 State Comp. Insurance Fund (33%)
Warner Premier 1 61,553 66.3% 952 23.34 RSL Com, USA (27%), Charles
Schwab (12%)
Von Karman 1 104,138 100.0% 2,552 24.51 Vision Solutions, Inc. (41%),
Fidelity National Title Ins.
(26%), Taco Bell Corporation
(18%)
2600 W. Olive 1 144,831 100.0% 3,685 25.44 Walt Disney Company (89%)
Bay Technology Center 2 107,481 100.0% 1,629 15.16 Amresco Residential Mortgage
(57%), Aqcess Technologies, Inc.
(43%)
Pacific Corporate Plaza 1, 2, 3 3 125,298 100.0% 2,138 11.70 Zland, Inc. (53%), Covenant Care
California, Inc. (16%)
Alton Deere Plaza 6 182,183 82.1% 2,835 18.96 Nextlink California (34%)
Westlake Spectrum 2 108,084 100.0% 2,000 19.96 Pinkerton's Inc. (63%), Coyote
Network Systems, Inc. (21%),
Insweb Corporation (16%)
Southern California,
San Diego:
Del Mar Corporate Plaza 2 123,142 100.0% 3,293 26.74 Stellcom, Inc. (79%), Peregrine
Systems, Inc. (21%)
Wateridge Pavilion 1 62,194 84.5% 938 17.84 Infogation (25%), Platinum
Solutions, Inc. (19%), Wateridge
Insurance Service (18%), TCS
Mortgage, Inc. (14%)
Towne Center Technology Park 1, 2, 3 3 182,120 100.0% 3,064 16.82 Gateway, Inc. (100%)
Lightspan 1 64,800 100.0% 1,182 18.24 Lightspan Partnership, Inc.
(100%)
La Jolla Spectrum 1 79,759 100.0% 2,465 30.90 Novartis Agricultural Discover
(100%)
Palomar Oaks Technology Park 6 170,358 100.0% 2,102 12.34 Unifet, Inc. (23%), Excalibur
Technologies Corp. (18%), Torrey
Pines Research, Inc. (13%),
Pacific Analytical, Inc. (11%)
Jaycor 1 105,358 100.0%# 1,896 18.00 Gateway, Inc. (100%)
Highlands Corporate Center 5 205,085 99.0% 6,044 29.77 Brobeck, Phleger & Harrison
(14%), Genesis Communications
(12%)
Northern California,
San Francisco Bay Area:
CarrAmerica Corporate Center 6 1,001,976 99.8% 18,773 18.77 AT&T (47%), Peoplesoft (32%),
Pacific Bell Mobile Services
(17%)
Valley Business Park I 2 61,600 100.0% 1,102 17.88 Leybold Inficon, Inc. (38%),
Informative Inc. (19%),
Millipore, Inc. (19%), Acer
Labs, Inc. USA (17%)
Bayshore Centre 2 1 94,874 100.0% 1,879 19.80 Redback Networks, Inc. (100%)
Rincon Centre 3 201,178 100.0% 3,254 16.17 Toshiba america Electronic
(31%), Propel Software
Corporation (44%), Future
Electronics Corp. (19%)
Valley Centre II 4 212,082 100.0% 3,617 17.06 Boston Scientific (100%)
Valley Office Centre 2 68,881 100.0% 2,165 31.43 Bank of America (21%), Quadrep,
Inc. (13%)
Valley Centre 2 102,291 100.0% 1,928 18.84 Seagate Technology (40%),
Numberical Technologies, Inc.
(38%), Vivace Networks (22%)
Valley Business Park II 6 166,928 100.0% 3,228 19.34 Pericom Semiconductor Corp.
(40%)
Rio Robles 7 368,178 100.0% 5,660 15.37 Fujitsu Microlectronics (41%),
KLA Instruments Corporation
(36%), NEC Systems, Inc. (23%)
3745 North First Street 1 67,582 100.0% 973 14.40 Comdisco, Inc. (100%)
Baytech Business Park 4 300,000 100.0% 5,181 17.27 Schlumberger Technologies (34%),
Caspian Networks (25%), Rapid 5
Networks, Inc. (13%)
3571 North First Street 1 116,000 100.0% 1,357 11.70 Sun Microsystems, Inc. (100%)
San Mateo Center I 1 70,000 100.0% 2,604 37.20 Franklin Resources (100%)
Oakmead West Land A-G 7 425,981 100.0% 9,457 22.20 Applied Materials Inc. (100%)
San Mateo II & III 2 141,404 100.0% 5,684 40.20 Franklin Resources (34%),
Women.com Networks (31%)
20
Net Total Average
Rentable Annualized Base Rent
# of Area in Percent Base Rent/3/ /Leased
Property Buildings Sq. Feet/1/ Leased/2/ (in thousands) Sq. Feet/4/ Significant Tenants/5/
- ---------------------------------- --------- ----------- --------- -------------- ----------- ----------------------
Hacienda West 2 206,992 99.3% 5,599 27.23 Sun Microsystems, Inc.
(13%), Paychex, Inc.
(12%)
Sunnyvale Technology Center 5 165,520 100.0% 3,320 13.77 Lattice Semiconductor
Corp. (51%), BMC
Software (25%),
Metelics Corporation
(12%), Nokia Internet
Comm., Inc. (12%)
Clarify Corporate Center 1, 2, 3, 4 4 258,048 100.0% 6,482 25.12 Nortel Networks, Inc.
(100%)
Valley Technology Center 1, 2, 3, 4 & 5 7 460,590 100.0% 10,703 23.24 Lattice Semiconductor
Corp. (29%), TSMC
North America, Inc.
(24%), Navisite, Inc.
(14%)
Golden Gateway Commons 3 273,327 98.6% 8,068 29.94 Sharper Image
Corporation (21%), ABM
Industries, Inc. (11%)
Techmart Commerce Center 1 265,979 100.0% 10,256 38.56 Network Conference
Co., Inc. (14%)
Freemont Technology Park 1, 2, 3 3 139,304 100.0% 2,469 17.73 Applied Fiber Optics,
Inc. (39%), Flash
Electronics, Inc.
(32%), Bandwidth
Unlimited, Inc. (29%)
Portland, OR:
Sunset Corporate Park 3 132,531 97.9% 1,054 8.12 First Insight
Corporation (34%),
Volkswagon Corporation
(34%), Mindfinders
Inc. (17%)
Rock Creek Corp Center 1 142,662 100.0% 431 3.02 Corillian Corporation
(86%), University of
Phoenix (14%)
Seattle, WA:
Redmond 10 396,497 100.0% 5,453 13.75 Avaya, Inc. (21%),
Cardiac Pacemakers
Inc. (20%), Genetic
Systems (14%)
Redmond Hilltop B & C 2 90,880 100.0% 1,370 15.07 Concur Technologies
(90%)
Canyon Park 6 316,978 96.4% 3,656 11.97 Icos Corporation
(28%), Targeted
Genetics Corporation
(24%), Federal Express
Corporation (10%)
Willow Creek 1 96,179 100.0% 981 10.20 Data I/.O Corporation
(100%)
Willow Creek Corp. Center 1, 2, 3, 4, 5, 6 6 329,009 100.0% 5,089 15.47 Safeco Insurance Co.
of America (52%),
Metawave
Communications Co.
(29%), Nextlink Comm
unications, Inc. (13%)
Canyon Park Commons 1, 2, 4 3 176,846 100.0% 2,251 12.73 Washington Mutual Bank
(62%), AT&T Corp.
(38%)
Canyon Park Commons 1 95,290 100.0% 1,342 14.08 Safeco Insurance Co.
(100%)
---- --------- -----
Pacific Region Subtotal 167 9,755,532 98.9%
CENTRAL REGION
- --------------
Austin, TX:
City View Centre 3 136,183 100.0% 2,506 18.40 Holt, Reinhart &
Winston, Inc. (76%),
Confiniti (16%)
City View Center 1 128,716 100.0% 2,073 16.10 Broadwing
Telecommunication
(100%)
Tower of the Hills 2 166,149 99.7% 2,922 17.65 Texas Gauaranteed
Student Loan (70%)
Chicago, IL:
Parkway North I 1 249,314 87.8% 3,386 15.46 Alliant Foodservice,
Inc. (53%), Toshiba
America Electronics
(10%)
Unisys 2 364,115 89.8% 4,930 15.07 PNC Mortgage Corp. of
America (24%), Hub
Group, Inc. (11%)
The Crossings 2 296,230 91.7% 4,880 17.96 Allstate Insurance
Company (14%)
Bannockburn I & II 2 209,582 97.8% 3,248 15.85 IMC Global, Inc.
(39%), Parexel (21%)
Bannockburn IV 1 108,469 96.0% 1,655 15.90 Open Text, Inc. (35%),
Abbott Laboratories
(13%), New York Life
Insurance Co. (10%)
Dallas, TX:
Cedar Maple Plaza 3 112,682 78.9% 1,773 19.95 No tenant occupies 10%
Quorum North 1 116,084 92.9% 2,070 19.20 Digital Madtrix
Systems, Inc. (20%),
HQ Dallas Quorum North
(17%)
Quorum Place 1 178,296 97.1% 3,241 18.72 VHA Southwest, Inc.
(22%), Objectspace,
Inc. (11%)
21
Net Total Average
Rentable Annualized Base Rent
# of Area in Percent Base Rent/3/ /Leased
Property Buildings Sq. Feet/1/ Leased/2/ (in thousands) Sq. Feet/4/ Significant Tenants/5/
- ---------------------------------- ---------- ---------- -------- -------------- ----------- ----------------------------
Tollway Plaza 1, 2 2 359,903 99.4% 8,458 23.64 Sun Microsystems, Inc. (27%),
American Relocation Mgmt.
(10%), Omnioffices, Inc. (10%)
Two Mission Park 1 78,046 100.0% 1,332 17.06 Macromedia, Inc. (32%), Bland,
Garvey & Taylor, Inc. (17%)
Commons @ Las Colinas 1, 3 2 604,234 100.0% 9,810 16.24 Nokia, Inc. (100%)
5000 Quorum 1 161,823 97.2% 3,087 19.63 Case Corporation (11%)
---------- --------- -----
Central Region Subtotal 25 3,269,826 95.6%
MOUNTAIN REGION
- ---------------
Denver, CO:
Harlequin Plaza 2 329,210 90.2% 5,148 17.33 Travelers Insurance Co. (24%),
Bellco First Federal Credit
(13%), Regis University (11%)
Quebec Court I 1 130,000 100.0% 2,144 16.50 Time Warner Communications
(100%)
Quebec Court II 1 157,294 100.0% 2,187 13.90 Tele-Communications, Inc.
(100%)
Quebec Centre 3 106,865 83.9% 1,551 17.29 Walberg & Dagner, P.C. (11%)
Phoenix, AZ:
Camelback Lakes 2 201,373 99.9% 4,114 20.44 Chancellor Media of L.A. (38%),
Humana Health Plan, Inc. (14%),
American Founders Life Ins.
(10%), Compass Bank (10%)
Pointe Corridor 1 178,114 68.7% 2,268 18.53 Compasslearning, Inc. (20%),
Benesight (12%)
Four Gateway 1 136,817 98.5% 2,953 21.92 Eclipsys Corporation (29%),
Options Health Care, Inc. (26%)
Highland Park 1 78,970 88.5% 1,489 21.30 Springstreet (14%)
The Grove @ Black Canyon 1 104,571 95.9% 1,979 19.73 Cigna Healthcare of Arizona
(81%)
Qwest Communications 4 532,506 100.0% 9,144 17.17 Qwest Communications (100%)
Concord Place 1 133,555 73.3% 2,273 23.24 Peacock Hislop, Staley & Given
(16%)
Salt Lake City, UT:
Sorenson Research Park 5 283,076 93.4% 3,193 12.07 Convergys Customer Mgmt. (46%),
Intel Corporation (15%), ITT
Educational Services, Inc.
(15%)
Wasatch Corporate Center 3 178,231 100.0% 2,185 12.26 Advata Bank Corporation (28%),
Achieveglobal, Inc. (23%),
Fonix Corporation (14%),
Tenfold Corporation (14%),
Musician's Friend, Inc. (12%)
Wasatch Corporate Center 17, 18 2 121,654 100.0% 1,784 14.67 Ebay, Inc. (59%), Citrix
Systems (21%), Western
Aggregates, Inc. (15%)
Sorenson X 1 41,288 100.0% 763 18.49 Electronic Data Systems (73%)
-------- ---------- ------- ---------
Mountain Region Subtotal 29 2,713,524 93.6%
Total Consolidated Properties 252 20,438,640 409,073
Weighted Average 97.4% 20.54
Unconsolidated Properties
- -------------------------
Washington, D.C.:
1919 Pennsylvania/8/ 1 263,931 98.3% 8,709 36.61 Allied Capital Corporation
(21%), Cole, Raywid &
Braverman, LLP (15%)
Bond Building/9/ 1 242,787 98.4% 2,181 27.23 General Services
Administration (97%)
1717 Pennsylvania Avenue/10/ 1 184,446 100.0% 6,732 36.50 MCI Telecommunications Corp.
(57%)
Booz-Allen & Hamilton Building/11/ 1 222,989 100.0% 3,604 16.16 Booz, Allen & Hamilton, Inc.
(100%)
Portland, OR:
GM Call Center/12/ 1 103,279 100.0% 1,232 11.93 GM Call Center (100%)
Chicago, IL:
Parkway North/13/ 5 653,914 100.0% 10,667 17.51 Fujisawa USA, Inc. (20%),
Associates Commerce Solutions
(19%), Shand Morahan & Company
(11%)
Dallas, TX:
Royal Ridge/13/ 3 370,997 99.0% 6,155 16.59 Capital One Services, Inc.
(43%), GTE North, Inc. (39%),
Cendant Operations, Inc. (11%)
Austin, TX: