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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) — January 6, 2006
American Spectrum Realty, Inc.
(Exact Name of Registrant as Specified in its Charter)
Maryland | 001-16785 | 522258674 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
5850 San Felipe, Suite 450 Houston, Texas 77057
(Address of Principal Executive Offices) (Zip Code)
(713) 706-6200
(Registrant’s Telephone Number, Including Area Code)
(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 (see General Instructions A.2. below):
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))
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Item 2.01 Completion of Acquisition or Disposition of Assets.
During 2005 and the subsequent interim period through January 6, 2006, American Spectrum Realty, Inc. (the “Company”), as part of its future business plan to exit non-core markets, sold four of its properties for a total sales price of $47.3 million, which represents approximately 25% of the Company’s consolidated assets reported as of December 31, 2004. The Company received net proceeds of $16.5 million, of which $11.1 million is being held in escrow as a source to assist the funding of future acquisitions in tax-deferred exchanges. The sales prices were negotiated amounts between the purchasers, which were unrelated parties, and the Company. The following table provides certain details on each property sold:
Sale | Property | Property | ||||||
Date | Name | Location | Type | Purchaser | ||||
3/1/2005 | Sorrento I | San Diego, CA | Industrial | Veralliance Properties, Inc. | ||||
9/22/2005 | Richardson Plaza | Columbia, SC | Shopping Center | Richardson Station, Inc. | ||||
10/27/2005 | The Lakes | Hazelwood, MO | Apartment | KH Lakes Investments, LLC | ||||
1/6/06 | Mira Mesa | San Diego, CA | Office | CIP Real Estate |
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Item 9.01 Financial Statements and Exhibits.
(a) | Financial statements of the business acquired. Not Applicable. | |
(b) | Pro forma information. |
The following unaudited pro forma consolidated financial statements are filed with this report:
Pro Forma Consolidated Balance Sheet as of September 30, 2005
Pro Forma Consolidated Statements of Operations:
Pro Forma Consolidated Statements of Operations:
Nine Months Ended September 30, 2005
Year Ended December 31, 2004
Year Ended December 31, 2004
The pro forma consolidated balance sheet presented as of September 30, 2005 reflects the financial position of the Company after giving effect to the sale of the properties assuming the sales occurred on September 30, 2005, and includes adjustments which give effect to events that are directly attributable to the transaction, are factually supportable and have a continuing impact.
The pro forma statements of operations are presented for the year ended December 31, 2004, and the nine months ended September 30, 2005. The pro forma statements of operations present the Company’s operations as if the transactions described in Item 2.01 had occurred on January 1, 2004.
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American Spectrum Realty, Inc.
Pro Forma Consolidated Balance Sheet
As of September 30, 2005
Pro Forma | ||||||||||||
(In 000's) | Historical | Adjustments | Pro Forma | |||||||||
ASSETS | ||||||||||||
Real estate held for investment | 179,265 | (10,089 | )(a) | 169,176 | ||||||||
Accumulation depreciation | 31,921 | (2,450 | )(a) | 29,471 | ||||||||
Real estate held for investment, net | 147,344 | (7,639 | ) | 139,705 | ||||||||
Real estate held for sale | 13,453 | (13,453 | ) | — | ||||||||
Cash and cash equivalents | 848 | 1,779 | (b) | 2,627 | ||||||||
Tenant and other receivables, net of allowance for doubtful accounts | 718 | — | 718 | |||||||||
Deferred rents receivable | 1,688 | (161 | )(c) | 1,527 | ||||||||
Deposits held in escrow | 552 | 10,609 | (d) | 11,161 | ||||||||
Investment in management company | 4,000 | — | 4,000 | |||||||||
Prepaid and other assets, net | 10,234 | (359 | )(a) | 9,875 | ||||||||
Total Assets | 178,837 | (9,224 | ) | 169,613 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Liabilities: | ||||||||||||
Notes payable, net of premiums | 134,835 | (8,997 | )(a) | 125,838 | ||||||||
Notes payable, litigation settlement | 9,512 | — | 9,512 | |||||||||
Liabilities related to real estate held for sale | 11,969 | (11,969 | )(b) | |||||||||
Accounts payable | 2,734 | — | 2,734 | |||||||||
Deferred tax liability | 1,109 | — | 1,109 | |||||||||
Accrued and other liabilities | 6,764 | (463 | )(a) | 6,301 | ||||||||
Total Liabilities | 166,923 | (21,429 | ) | 145,494 | ||||||||
Minority Interest | 4,913 | 1,587 | (e) | 6,500 | ||||||||
Commitments and Contingencies: | ||||||||||||
Stockholders’ Equity: | ||||||||||||
Preferred stock | — | — | — | |||||||||
Common stock | 16 | — | 16 | |||||||||
Additional paid in capital | 46,055 | — | 46,055 | |||||||||
Accumulated deficit | (36,428 | ) | 10,618 | (e) | (25,810 | ) | ||||||
Receivable from principal stockholders | (950 | ) | — | (950 | ) | |||||||
Treasury stock | (1,692 | ) | — | (1,692 | ) | |||||||
Total Stockholders’ Equity | 7,001 | 10,618 | 17,619 | |||||||||
Total Liabilities and Stockholders’ Equity | 178,837 | (9,224 | ) | 169,613 | ||||||||
(a) | To eliminate the assets sold and the liabilities assumed or paid at closing for those assets. Based on amounts included in the consolidated balance sheet on September 30, 2005. | |
(b) | To eliminate the assets sold and liabilities paid for those assets classified as held for sale. | |
(c) | Cash received from property sales (net of deposits held in escrow, assumption of debt, repayments of debt and sales costs). | |
(d) | Proceeds from property sales held in escrow which are anticipated to be used for future acquisitions in tax-deferred exchanges. | |
(e) | Assumes sale of properties occurred on September 30, 2005. |
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American Spectrum Realty, Inc.
Pro Forma Consolidated Statement of Operations
For the Nine Months Ended September 30, 2005
Pro Forma | |||||||||||||
(In 000’s) | Historical | Adj’s (a) | Pro Forma | ||||||||||
REVENUES: | |||||||||||||
Rental revenue | 17,955 | (1,041 | ) | 16,914 | |||||||||
Interest and other income | 334 | — | 334 | ||||||||||
Total revenues | 18,289 | (1,041 | ) | 17,248 | |||||||||
EXPENSES: | |||||||||||||
Property operating | 7,791 | (614 | ) | 7,177 | |||||||||
General and administrative | 2,745 | — | 2,745 | ||||||||||
Depreciation and amortization | 7,791 | (730 | ) | 7,061 | |||||||||
Interest expense | 8,004 | (604 | ) | 7,400 | |||||||||
Total expenses | 26,331 | (1,948 | ) | 24,383 | |||||||||
Net (loss) income before minority interest | (8,042 | ) | 907 | (7,135 | ) | ||||||||
Minority interest | 555 | (113 | ) | 442 | |||||||||
Net (loss) income from continuing operations | (7,487 | ) | 794 | (6,693 | ) | ||||||||
Basic per share data: | |||||||||||||
Net (loss) income from continuing operations | (5.08 | ) | 0.53 | (4.55 | ) | ||||||||
Number of shares used | 1,472,549 | 1,472,549 | 1,472,549 | ||||||||||
(a) | To eliminate the results of operations for the properties sold for the entire period. |
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American Spectrum Realty, Inc.
Pro Forma Consolidated Statement of Operations
For the Year Ended December 31, 2004
Pro Forma | ||||||||||||
(In 000's) | Historical | Adj's (a) | Pro Forma | |||||||||
REVENUES: | ||||||||||||
Rental revenue | 26,923 | (4,544 | ) | 22,379 | ||||||||
Interest and other income | 235 | — | 235 | |||||||||
Total revenues | 27,158 | (4,544 | ) | 22,614 | ||||||||
EXPENSES: | ||||||||||||
Property operating | 10,582 | (2,388 | ) | 8,194 | ||||||||
General and administrative | 4,438 | — | 4,438 | |||||||||
Depreciation and amortization | 10,433 | (1,800 | ) | 8,633 | ||||||||
Interest expense | 11,996 | (1,695 | ) | 10,301 | ||||||||
Total expenses | 37,449 | (5,883 | ) | 31,566 | ||||||||
OTHER INCOME (LOSS): | ||||||||||||
Net loss on extinguishment of debt | (729 | ) | 613 | (116 | ) | |||||||
Total other income (loss) | (729 | ) | 613 | (116 | ) | |||||||
Net (loss) income before income tax benefit, minority interest and discontinued operations | (11,020 | ) | 1,952 | (9,068 | ) | |||||||
Income tax benefit | 2,222 | — | 2,222 | |||||||||
Net (loss) income before minority interest and discontinued operations | (8,798 | ) | 1,952 | (6,846 | ) | |||||||
Minority interest | 1,299 | (244 | ) | 1,055 | ||||||||
Net (loss) income from continuing operations | (7,499 | ) | 1,708 | (5,791 | ) | |||||||
Gain on sale of properties (b) | — | 15,543 | 15,543 | |||||||||
Net (loss) income from continuing operations and gain on sale of properties | (7,499 | ) | 17,251 | 9,752 | ||||||||
Basic per share data: | ||||||||||||
Net (loss) income from continuing operations | (4.83 | ) | 1.10 | (3.73 | ) | |||||||
Gain on sale of properties | — | 10.02 | 10.02 | |||||||||
Net (loss) income from continuing operations and gain on sale of properties | (4.83 | ) | 11.12 | 6.29 | ||||||||
Number of shares used | 1,551,189 | 1,551,189 | 1,551,189 | |||||||||
(a) | To eliminate the results of operations for the properties sold for the entire period. | |
(b) | Assumes the sales of the properties occurred on January 1, 2004. Gain lower than expected to be reported due to the higher basis in the properties, ie depreciation taken from January 1, 2004 through the date of the sales reflected in the pro forma. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
AMERICAN SPECTRUM REALTY, INC. | ||||
By: | /s/ William J. Carden | |||
Name: | William J. Carden | |||
Title: | Chairman of the Board, President, Acting Chief Financial Officer and Chief Executive Officer | |||
Date: January 12, 2006