e8vkza
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of
Report (Date of earliest event
reported) May 22, 2006
GOVERNMENT PROPERTIES TRUST, INC.
(Exact name of registrant as specified in its charter)
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Maryland
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1-31962
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20-0611663 |
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(State or other jurisdiction
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(Commission
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(IRS Employer |
of incorporation)
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File Number)
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Identification No.) |
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13625 California Street, Suite 310, Omaha, Nebraska
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68154 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code (402) 391-0010
None
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant hereby amends the following items, financial
statement, exhibits or other portions of its current Report on Form 8-K dated May 22, 2006, as filed on May 22, 2006 and, to include the
historical financial statements and pro forma financial information required by Item 9.01(a) and (b).
TABLE OF CONTENTS
Item 2.01. Acquisition of Assets
On May 18, 2006, Government Properties Trust, Inc. (GPT) completed its previously announced
acquisition of the United States Citizenship and Immigration Services (USCIS) property located at
1709 and 1717 Zoy Street, Harlingen, Texas (the Harlingen property) for approximately $27.1
million. The purchase price was determined through arms-length negotiations between GPT and
U.S.I.N.S. II, LLC, an unrelated party with an address at 1014 East Harrison Avenue, Harlingen,
Texas. GPT funded the purchase price with cash on hand and a mortgage loan from a financial
institution in the amount of approximately $19.9 million. The mortgage loan bears interest at a
fixed rate of 6.266% with principal and interest payments due monthly and are amortized on a
30-year schedule, with a balloon payment due June 1, 2016.
The Harlingen property consists of two conjoined buildings that are fully leased by the United
States of America under modified gross leases. The first building (USCIS I) was completed in
January 1998 and consists of a 19,000 square foot, single-story building. The USCIS I lease
expires in January 2018 and has an optional early termination right in January 2013. The second
building (USCIS II), was completed in 2002 and consists of a 108,000 square foot, two-story
building. The USCIS II lease expires in October 2022 and has no early termination right. The
USCIS utilizes these facilities, situated on approximately 10 acres of land, for administrative
purposes and processing immigrants in south Texas.
-3-
Item 9.01. Financial Statements, Pro Forma Financial Information, and Exhibits
GOVERNMENT PROPERTIES TRUST, INC.
United States Immigration and Naturalization Services District Office Harlingen, Texas
Statements of Revenue and Certain Expenses
For the Three Months Ended March 31, 2006 (Unaudited) and
For the Year Ended December 31, 2005
Report of Independent Registered Public Accounting Firm
The Board of Directors
Government Properties Trust, Inc.
We have audited the accompanying statement of revenue and certain expenses of the United States
Immigration and Naturalization Services District Office Harlingen, Texas (the Property) for the
year ended December 31, 2005. The statement of revenue and certain expenses is the responsibility
of the Propertys management. Our responsibility is to express an opinion on the Statement of
Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of revenue and certain expenses is free of
material misstatement. We were not engaged to perform an audit of the Propertys internal control
over financial reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the Propertys internal
control over financial reporting. Accordingly we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in the statement of
revenue and certain expenses, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall presentation of the statement of revenue and certain
expenses. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange Commission, for inclusion
in Government Properties Trust, Inc.s Current Report on Form 8-K as described in Note 2, and is
not intended to be a complete presentation of the Propertys revenue and expenses.
In our opinion, the statement of revenue and certain expenses referred to above presents fairly, in
all material respects, the revenue and certain expenses described in Note 2 for the year ended
December 31, 2005 in conformity with U.S. generally accepted accounting principles.
Chicago, Illinois
April 21, 2006
-4-
Government Properties Trust, Inc.
United States Immigration and Naturalization Services District Office Harlingen, Texas
Statements of Revenue and Certain Expenses
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Three Months Ended |
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March 31, 2006 |
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Year Ended |
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(Unaudited) |
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December 31, 2005 |
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Revenue |
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Rental income |
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$ |
720,768 |
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$ |
2,867,787 |
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Certain expenses |
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Utilities |
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71,039 |
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258,050 |
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Repairs and maintenance |
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13,076 |
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39,202 |
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Real estate taxes |
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65,898 |
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263,593 |
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Cleaning affiliate |
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21,198 |
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58,436 |
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Insurance |
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19,630 |
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78,488 |
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Other |
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984 |
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3,434 |
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Total expenses |
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191,825 |
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701,203 |
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Revenue in excess of certain expenses |
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$ |
528,943 |
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$ |
2,166,584 |
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See accompanying notes.
-5-
Government Properties Trust, Inc.
United States Immigration and Naturalization Services District Office Harlingen, Texas
Notes to Statements of Revenue and Certain Expenses
Three Month Period Ended March 31, 2006 (Unaudited), and Year Ended December 31, 2005
1. Description of the Property
The United States Immigration and Naturalization Services District Office Harlingen,
Texas (the Property), located at 1709 and 1717 Zoy Street, Harlingen, Texas, consist of
various office buildings totaling approximately 127,000 rentable square feet (unaudited) that are
100% leased to the United States Immigration and Naturalization Services with two leases expiring
in October 2022 and January 2018. One of the leases totaling approximately 19,000 rentable square
feet (unaudited) has an optional early termination date of January 2013.
2. Summary of Significant Accounting Policies
The accompanying statement of revenue and certain expenses for the year ended December 31, 2005 was
prepared for purposes of complying with the rules and regulations of the Securities and Exchange
Commission. The accompanying financial statement is not representative of the actual operations of
the Property for the periods presented nor indicative of future operations as certain expenses,
primarily depreciation, amortization and interest expense, which may not be comparable to the
expenses expected to be incurred in future operations of Property, have been excluded.
In the preparation of the statement of revenue and certain expenses in conformity with accounting
principles generally accepted in the United States, management makes estimates and assumptions that
affect the reported amounts of revenue and expenses during the reporting period. Actual results
could differ from these estimates.
Rental income is recorded when due from the tenant under the term of the respective leases, which
is not materially different than the straight-line method. The current supplemental lease
agreements base monthly rental payments totaling $234,453, through the term of the leases subject
to annual rent increases based on the Consumer Price Index, as defined. The base monthly rent in
place as of March 31, 2006 (unaudited) and December 31, 2005, was $240,330 and $240,134,
respectively.
3. Interim Period (unaudited)
The unaudited statement of revenue and certain expenses for the three months ended March 31, 2006,
has been prepared for purposes of complying with the rules and regulations of the Securities and
Exchange Commission. In the opinion of management, all adjustments considered necessary for a fair
presentation have been included. Operating results for the three months ended March 31, 2006 are
not necessarily indicative of the results that may be expected for the year ending December 31,
2006.
4. Related Party Transactions
An affiliate of the Property provides and allocates cleaning services amongst various properties.
Such services amounted to $21,198 for the period ended March 31, 2006 (unaudited), and $58,436 for
the year ended December 31, 2005.
-6-
Pro Forma Consolidated Balance Sheet
(Unaudited)
The accompanying unaudited Pro Forma Consolidated Balance Sheet of the Company is presented as if
the Harlingen property was acquired on March 31, 2006. This Pro Forma Consolidated Balance Sheet
should be read in conjunction with the Companys historical consolidated financial statements and
notes thereto as filed on Form 10-K for the year ended December 31, 2005 and on Form 10-Q for the
three months ended March 31, 2006. In managements opinion, all adjustments necessary to reflect
the acquisition of the Harlingen property have been made. The following Pro Forma Consolidated
Balance Sheet is not necessarily indicative of what the actual financial position would have been
assuming the above transactions had been consummated at March 31, 2006, nor does it purport to
represent the future financial position of the Company.
-7-
Government Properties Trust, Inc.
Pro Forma Consolidated Balance Sheet
(in thousands, except share amounts)
March 31, 2006
(Unaudited)
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Historical (A) |
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Harlingen (B) |
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Pro Forma |
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ASSETS |
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Real estate at cost: |
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Land |
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$ |
35,986 |
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$ |
1,680 |
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$ |
37,666 |
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Buildings and improvements |
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306,557 |
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19,710 |
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326,267 |
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Tenant origination costs |
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72,573 |
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5,940 |
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78,513 |
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Real estate under development |
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228 |
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228 |
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Furniture and equipment |
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474 |
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474 |
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415,818 |
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27,330 |
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443,148 |
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Accumulated depreciation |
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(16,936 |
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(16,936 |
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398,882 |
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27,330 |
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426,212 |
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Cash and cash equivalents |
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2,512 |
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(1,597 |
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915 |
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Restricted cash escrows |
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11,031 |
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11,031 |
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Tenant receivables |
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8,167 |
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8,167 |
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Notes receivable from tenant |
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586 |
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586 |
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Deferred costs, net |
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3,942 |
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61 |
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4,003 |
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Real estate deposits |
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150 |
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(150 |
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Other assets |
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4,068 |
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(2 |
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4,066 |
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Total assets |
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$ |
429,338 |
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$ |
25,642 |
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$ |
454,980 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Liabilities: |
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Accounts payable and accrued expenses |
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$ |
9,259 |
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$ |
92 |
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$ |
9,351 |
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Dividends payable |
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3,114 |
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3,114 |
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Lines of credit |
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26,480 |
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5,600 |
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32,080 |
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Mortgage notes payable |
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233,304 |
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19,950 |
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253,254 |
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Total liabilities |
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272,157 |
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25,642 |
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297,799 |
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Stockholders equity: |
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Common stock ($0.01 par value;
50,000,000 shares authorized, 20,763,136
issued and outstanding at March 31,
2006) |
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206 |
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206 |
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Additional paid-in capital |
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189,548 |
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189,548 |
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Accumulated deficit |
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(34,835 |
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(34,835 |
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Accumulated other comprehensive income |
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2,262 |
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2,262 |
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Total stockholders equity |
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157,181 |
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157,181 |
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Total liabilities and stockholders equity |
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$ |
429,338 |
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$ |
25,642 |
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$ |
454,980 |
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See accompanying notes.
-8-
Notes to Pro Forma Consolidated Balance Sheet
(Unaudited)
(A) Represents the historical consolidated balance sheet of the Company as of March 31, 2006.
(B) Reflects the acquisition and preliminary purchase price allocation of the Harlingen property
on May 18, 2006 for a total purchase price of approximately $27.3 million. The amounts presented
include the initial purchase price of $27.1 million and closing costs of $0.2 million and were
allocated based on the fair market value of the assets acquired and liabilities assumed. The
purchase price was funded with cash on hand, a draw on the Companys line-of-credit and a mortgage
loan from a financial institution in the amount of $19.9 million.
-9-
Pro Forma Consolidated Statements of Operations
(Unaudited)
The accompanying unaudited Pro Forma Consolidated Statements of Operations for the three month
period ended March 31, 2006 and for the year ended December 31, 2005 of the Company is presented as
if the Harlingen property and other properties acquired in 2006 and 2005 (the Acquired Properties)
had been acquired on January 1, 2005. These Pro Forma Consolidated Statements of Operations should
be read in conjunction with the Companys historical consolidated financial statements and notes
thereto as filed on Form 10-K for the year ended December 31, 2005 and on Form 10-Q for the three
months ended March 31, 2006. In managements opinion, all adjustments necessary to reflect the
above acquisitions have been made.
The unaudited Pro Forma Consolidated Statements of Operations are not necessarily indicative of
what the actual results of operations would have been for the three months ended March 31, 2006 and
for the year ended December 31, 2005 assuming the above transactions had been consummated at
January 1, 2005, nor does it purport to represent the future results of operations of the Company.
-10-
Government Properties Trust, Inc.
Pro Forma Statement of Operations
For the year ended December 31, 2005
(Unaudited and in thousands, except per share amounts)
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Acquired |
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Adjustments |
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Historical (A) |
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Harlingen (B) |
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Properties (B) |
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(C), (D) |
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Pro Forma |
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Revenue |
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Rental income |
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$ |
26,877 |
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$ |
2,868 |
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$ |
9,629 |
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$ |
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$ |
39,374 |
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Tenant reimbursements |
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1,323 |
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357 |
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1,680 |
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Total revenue |
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28,200 |
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2,868 |
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9,986 |
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41,054 |
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Expenses |
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Property operations |
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4,883 |
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437 |
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2,206 |
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7,526 |
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Real estate taxes |
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2,712 |
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264 |
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|
616 |
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3,592 |
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Depreciation and amortization |
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9,888 |
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4,873 |
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|
14,761 |
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General and administrative |
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4,960 |
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|
4,960 |
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Total expenses |
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22,443 |
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|
|
701 |
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|
|
2,822 |
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|
4,873 |
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|
30,839 |
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|
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Operating income |
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|
5,757 |
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|
|
2,167 |
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|
7,164 |
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(4,873 |
) |
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|
10,215 |
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Other income (expense) |
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|
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|
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Interest income |
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1,521 |
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|
|
|
|
|
|
|
|
|
|
|
|
|
1,521 |
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Interest expense |
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|
(9,345 |
) |
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|
|
|
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|
|
(4,541 |
) |
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|
(13,886 |
) |
Amortization of deferred financing fees |
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(355 |
) |
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(40 |
) |
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|
(395 |
) |
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|
|
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Net (loss) income |
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$ |
(2,422 |
) |
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$ |
2,167 |
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$ |
7,164 |
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$ |
(9,454 |
) |
|
$ |
(2,545 |
) |
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Earnings per share (basic and diluted) |
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Net (loss) income per share (basic and diluted) |
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$ |
(0.12 |
) |
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$ |
(0.12 |
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Weighted average shares outstanding (basic and diluted) |
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20,569 |
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|
194 |
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|
20,763 |
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See accompanying notes.
-11-
Government Properties Trust, Inc.
Pro Forma Statement of Operations
For the three months ended March 31, 2006
(Unaudited and in thousands, except per share amounts)
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Acquired |
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Adjustments |
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Historical (A) |
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Harlingen (B) |
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Properties
(B) |
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(C), (D) |
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Pro Forma |
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Revenue |
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Rental income |
|
$ |
9,800 |
|
|
$ |
721 |
|
|
$ |
319 |
|
|
$ |
|
|
|
$ |
10,840 |
|
Tenant reimbursements |
|
|
566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
566 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue |
|
|
10,366 |
|
|
|
721 |
|
|
|
319 |
|
|
|
|
|
|
|
11,406 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property operations |
|
|
1,811 |
|
|
|
126 |
|
|
|
49 |
|
|
|
|
|
|
|
1,986 |
|
Real estate taxes |
|
|
926 |
|
|
|
66 |
|
|
|
18 |
|
|
|
|
|
|
|
1,010 |
|
Depreciation and amortization |
|
|
3,641 |
|
|
|
|
|
|
|
|
|
|
|
319 |
|
|
|
3,960 |
|
General and administrative |
|
|
1,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,309 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total expenses |
|
|
7,687 |
|
|
|
192 |
|
|
|
67 |
|
|
|
319 |
|
|
|
8,265 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income |
|
|
2,679 |
|
|
|
529 |
|
|
|
252 |
|
|
|
(319 |
) |
|
|
3,141 |
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
122 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122 |
|
Interest expense |
|
|
(3,403 |
) |
|
|
|
|
|
|
|
|
|
|
(346 |
) |
|
|
(3,749 |
) |
Amortization of deferred financing fees |
|
|
(203 |
) |
|
|
|
|
|
|
|
|
|
|
(3 |
) |
|
|
(206 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(805 |
) |
|
$ |
529 |
|
|
$ |
252 |
|
|
$ |
(668 |
) |
|
$ |
(692 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (basic and diluted)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share (basic and diluted) |
|
$ |
(0.04 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding (basic and diluted) |
|
|
20,604 |
|
|
|
|
|
|
|
|
|
|
|
159 |
|
|
|
20,763 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
-12-
Notes to Pro Forma Consolidated Statements of Operations
(Unaudited)
(A) Represents the historical consolidated statements of operations of the Company.
(B) Represents the historical operations for the Acquired Properties prior to the Companys date
of acquisition. Audited historical financial information for the Harlingen property is included in
this report on Form 8-K/A.
(C) Represents pro forma adjustments related to the Companys ownership of the Harlingen property
and Acquired Properties prior to its date of acquisition:
|
|
|
|
|
|
|
|
|
|
|
Adjustments For |
|
|
Adjustments For |
|
|
|
Three Months Ended |
|
|
Year Ended |
|
|
|
March 31, |
|
|
December 31, |
|
(in thousands) |
|
2006 |
|
|
2005 |
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization (1) |
|
|
|
|
|
|
|
|
Harlingen |
|
$ |
230 |
|
|
$ |
917 |
|
Acquired Properties |
|
|
89 |
|
|
|
3,956 |
|
|
|
|
|
|
|
|
Total depreciation and amortization expense |
|
$ |
319 |
|
|
$ |
4,873 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense (2) |
|
|
|
|
|
|
|
|
Harlingen |
|
$ |
(280 |
) |
|
$ |
(1,121 |
) |
Acquired Properties |
|
|
(66 |
) |
|
|
(3,420 |
) |
|
|
|
|
|
|
|
Total interest expense |
|
$ |
(346 |
) |
|
$ |
(4,541 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of deferred financing fees (2) |
|
|
|
|
|
|
|
|
Harlingen |
|
$ |
(1 |
) |
|
$ |
(6 |
) |
Acquired Properties |
|
|
(2 |
) |
|
|
(34 |
) |
|
|
|
|
|
|
|
Total amortization of deferred financing fees |
|
$ |
(3 |
) |
|
$ |
(40 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Represents estimated depreciation and amortization of the Harlingen
and Acquired Properties based upon the preliminary purchase price
allocations in accordance with our depreciation and amortization policy. |
|
|
(2) |
|
Represents estimated interest expense for the individual
Harlingen and Acquired Properties mortgage debt, the stated interest
rate and amortization of deferred loan fees. |
(D) Represents pro forma adjustment of 194,000 and 159,000 related to weighted average shares
outstanding to reflect the total number of shares outstanding as of December 31, 2005 and March 31,
2006, respectively.
-13-
(C) Exhibits
The following exhibit is included in this Report:
Exhibit 23.1 Consent of Ernst & Young LLP
-14-
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
|
|
|
|
|
GOVERNMENT PROPERTIES TRUST, INC.
|
|
Date: July 31, 2006 |
By: |
/s/ Nancy D. Olson
|
|
|
|
Nancy D. Olson |
|
|
|
Chief Financial Officer and Treasurer |
|
-15-
EXHIBIT INDEX
|
|
|
Exhibit Number |
|
Description |
|
|
|
23.1
|
|
Consent of Ernst & Young LLP |
-16-