UNITED STATES
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): November 21,1997
CENTURY REALTY TRUST
(Exact name of registrant as specified in its charter)
INDIANA 0-7716 35-1284316
(State or other jurisdiction (Commission (IRS Employer
incorporation) File Number) Identification No.)
823 Chamber of Commerce Building, Indianapolis, IN 46204
(Address of principal executive offices)
Registrant's telephone number, including area code: (317) 632-5467
Not applicable
(Former name or former address, if changed since last report)
ITEM 2. Acquisition or Disposition of Assets
On November 21, 1997, Century Realty Trust (the "Trust"), through a
wholly-owned qualified R.E.I.T. subsidiary, CR Management, Inc.
(the "Buyer"), acquired from a single unrelated seller, J. Scott
Porter, and MP Realty Group of Richmond, Indiana (the "Seller"),
the General Partner interest in five Limited Partnerships, each of
which owned, as its principle asset, a single apartment property.
Pursuant to the acquisition agreement, five new limited partnerships
(the "Operating Partnerships") were formed to acquire the assets and
liabilities from the five old partnerships (the "Selling Partnerships").
The operating partnerships issued, in the aggregate, approximately
285,000 operating partnership units (O.P. units) to the selling
partnerships for their contribution of net assets, and approximately
2,900 O.P. units representing a one percent equity interest, to CR
Management, Inc. The Buyer also assumed management control of the
partnerships and their respective apartment properties. For its one
percent equity interest, acquisition of the General Partner interest,
and management control, the Buyer paid $687,500 in cash and assumed
total General Partner responsibility for both the selling partnerships
and the operating partnerships. In addition, the Trust agreed to use
its best efforts to grant to each beneficial owner of O.P. units, within
two years after closing, the right to exchange his/her units, on a
one-for-one basis, for shares of beneficial interest of the Trust. After
ten years from closing, the Trust, at its option, can require that any
O.P. units not previously exchanged, be exhanged for Trust shares. At
the time of closing, the average quoted Bid price of the Trust's shares
of beneficial interest (OTC Electronic Bulletin Board) was $11.625 per
share. The share-equivalent value of the 285,000 O.P. units ($3.3 million)
plus the cash investment of $687,500 represents the approximate purchase
price of the real estate and other assets ($14.3 million) less assumed
mortgage debt and other liabilities ($10.7 million) of the operating
partnerships. In the aggregate, the apartment properties represent 92.3% of
the total partnership assets.
Following is a listing of the selling partnerships and operating partnerships:
Selling Operating
MP Realty Group
- Barcelona Associates, L.P. Barcelona Apartments, L.P.
MP Realty Group
- Beech Grove Associates, L.P. Beech Grove Apartments, L.P.
MP Realty Group
- Hampton Court Associates, L.P. Hampton Court Apartments, L.P.
MP Realty Group
- Sheffield Square Associates, L.P. Sheffield Square Apartments, L.P.
MP Realty Group
- West Wind Terrace Associates, L.P. WestWind Terrace Apartments, L.P.
Following is a description of the properties owned by the subject partnerships:
Year
Name Location Units Built
Barcelona Kokomo, IN 64 1971
Beech Grove Jeffersonville,IN 182 1973
Hampton Court Indianapolis, IN 92 1980
Sheffield Square New Albany, IN 152 1974
West Wind Terrace Indianapolis, IN 96 1967
Each of the properties was built as a garden-style apartment community, and
has been operated as such from its inception. It is the intent of the Trust
that each property will continue to be operated as a multi-family apartment
community. It is the further intent of the Trust to grant, within the two
years specified in the acquisition agreement, to each beneficial owner of
O.P. units, the right to exchange those units for shares of the Trust. The
Trust expects that most O.P. unit holders will, over time, exercise their
exchange option and that the Trust will, thereby, over time increase its
equity ownership interest in the partnerships.
The cash investment and other transactional and organizational fees and
expenses related to the acquisition was financed by $850,000 of short-term
borrowings under the Trust's $3 million unsecured credit facility with NBD
Bank, N.A. Subsequent to such borrowings, the Trust has a total of $2.75
million in loans outstanding under the credit facility.
The partnership valuations (purchase prices) which were negotiated with the
Seller with respect to each selling partnership through their investment
banker, were determined through an internal analysis by the Trust of the
historical cash flows and fair market values of the acquired properties with
adjustments for the Trust's estimates of the costs of operations. Those
estimates were based on many years of experience by the Trust's management
in operating multi-family apartment communities in Indiana of comparable
ages and sizes.
The Seller is not, and never has been, affiliated with the Trust, any
trustee or officer of the Trust or any associate of any such Trustee or
officer, except that King R.Traub, an officer and trustee of the Trust,
directly or indirectly, is a limited partner in four of the five selling
partnerships. In the aggregate, Mr.Traub has a beneficial interest in 2,576
O.P. units which represents less than one percent of the total limited
partner interests. Traub and Company, Inc., of which King R.Traub is a
principal, was paid fees totaling $111,875 by the selling partnerships for
its services as investment banker in this transaction. Mr. Traub, in his
capacity as an officer and Trustee of the Trust, abstained from all
discussions, negotiations and decisions related to this transaction.
ITEM 7. Financial Statements and Exhibits
(a) See index attached hereto relating to the audited Statement of
Revenue and Certain Expenses for the year ended December 31, 1996,
applicable to the acquired properties.
(b) Pro forma Financial Information.
See index attached hereto relating to the Pro forma financial
statements of the Registrant reflecting the interests acquired
and noted in Item 2.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CENTURY REALTY TRUST
Date: __________________ By:___________________________________
John I. Bradshaw, Jr.
Executive Vice President
Secretary and Treasurer
Date: ___________________ By:___________________________________
David F. White
Controller
CENTURY REALTY TRUST
Form 8-K/A
November 21, 1997
INDEX TO FINANCIAL INFORMATION
Pro forma financial statements:
Unaudited pro forma balance sheet as of December 31,1996
Unaudited pro forma statement of income for the year
ended December 31,1996
Notes to pro forma financial statements
Historical financial information for the Acquired Properties:
Report of independent accountants
Statement of Revenue and Certain Expenses for the
year ended December 31,1996
Notes to Statement of Revenue and Certain Expenses
CENTURY REALTY TRUST
PRO FORMA BALANCE SHEET
December 31, 1996
(In thousands)
Unaudited
Pro Forma
Century Including
Realty Properties Acquired 11/21/97 Properties
_____________________________
Trust Partnership Additional Acquired
Historical Net Assets Investment 11/21/97
___________ ____________ ___________ ___________
ASSETS
Real estate investments:
Land $2,068 $1,118 $3,186
Buildings 32,913 11,830 44,743
Equipment 838 193 1,031
Allowances for depreciation (7,476) (7,476)
________ _________ _______ _________
28,343 13,141 41,484
Net investment in direct financing leases 444 444
________ __________ _______ _________
28,787 13,141 41,928
Cash and cash equivalents 315 148 ($73) 390
Short-term investments 591 (132) 459
Accounts and accrued income receivable 335 3 338
Mortgage note receivable 132 132
Undeveloped land 100 100
Other assets 410 969 887 2,266
________ _________ _______ _________
$30,538 $14,261 $814 $45,613
________ _________ _______ _________
________ _________ _______ _________
LIABILITIES
Short-term debt $16 $850 $866
Mortgage notes payable $20,438 10,099 30,537
Accounts payable and accrued compensation 288 80 368
Accrued interest 133 49 182
State income and property taxes 952 316 1,268
Tenants' security deposits and unearned rent 394 103 497
________ _________ _______ _________
22,205 10,663 850 33,718
MINORITY INTEREST IN
OPERATING PARTNERSHIPS 3,598 (36) 3,562
SHAREHOLDERS' EQUITY
Shares of beneficial interest, no par value--
authorized 5,000,000 shares, issued
1,529,353 including 75,414 share in 1996
and 77,414 shares in 1995 in treasury 6,249 6,249
Undistributed income other than from gain
on the sale of real estate 1,284 1,284
Undistributed net realized gain from
the sale of real estate 1,316 1,316
Cost of treasury shares (516) (516)
________ _________ _______ ________
8,333 8,333
________ _________ _______ ________
$30,538 $14,261 $814 $45,613
________ _________ _______ ________
________ _________ _______ ________
See accompanying notes.
CENTURY REALTY TRUST
PRO FORMA STATEMENT OF INCOME
Year Ended December 31, 1996
(In thousands)
Unaudited
Pro Forma
Including
Century Partnership Partnership
Realty Properties Properties
Trust Acquired Pro Forma Acquired
Historical 11/21/97 Adjustments 11/21/97
__________ __________ ____________ _________
INCOME
Real estate operations:
Rental income $8,120 $2,867 $10,987
Income from direct financing
leases 61 61
Other income 162 114 $104 380
_______ _______ _______ _______
8,343 2,981 104 11,428
Less:
Real estate operating expenses 3,012 1,179 4,191
Depreciation 1,114 394 1,508
Real estate taxes 842 290 1,132
_______ _______ _______ _______
4,968 1,863 0 6,831
_______ _______ _______ _______
3,375 1,118 104 4,597
Interest income 41 16 11 68
_______ _______ _______ _______
3,416 1,134 115 4,665
EXPENSES
Interest 1,861 877 68 2,806
State income taxes 144 1 145
General and administrative expenses 389 115 504
_______ _______ _______ _______
2,394 992 69 3,455
_______ _______ _______ _______
Income before minority interest 1,022 142 46 1,210
Minority interest in operating
partnership (141) (141)
_______ _______ _______ _______
NET INCOME $1,022 $1 $46 $1,069
_______ _______ _______ _______
_______ _______ _______ _______
See accompanying notes.
CENTURY REALTY TRUST
NOTES TO THE PRO FORMA FINANCIAL STATEMENTS
Year Ended December 31, 1997
Unaudited
1. Basis of presentation. The pro forma financial statements of Century
Realty Trust, which are unaudited, have been prepared based on its
historical financial statements for the year ended December 31, 1996.
The pro forma balance sheet of the Trust at December 31, 1996, has been
prepared as if the acquisition of the Acquired Properties had occurred on
December 31, 1996. The pro forma statement of income for the year ended
December 31, 1996, has been prepared as if the acquisition of the properties
had occurred on January 1, 1996. In management's opinion, all adjustments
necessary to reflect the effects of the acquisition of the property have
been made. The pro forma financial statements should be read in conjunction
with the historical financial statements of the Trust.
The pro forma financial statements are not necessarily indicative of the
actual financial condition or the results of operations had the acquisition
occurred on the "as if" dates, nor are they necessarily indicative of the
financial position or results of operations for future periods. Prior to the
acquisition, management of the Registrant conducted an examination of the
seller's records and obtained detailed engineering inspections of the physical
properties. Occupancy rates and trends were reviewed, financial records of
operating expenses were reviewed for reasonableness including, but not
limited to, property taxes, utilities and maintenance, and replacement
reserves were evaluated as to adequacy in view of the physical inspection
results. Following such examinations and reasonable inquiries, the Registrant
is not aware of any material factors relating to the Acquired Properties
that would cause the reported financial information not to be necessarily
indicative of future operating results.
2. Pro forma adjustments. On November 21, 1997, the Trust purchased the
general partnership interest in the Acquired Properties, which consist of
five limited partnerships, each of which owned a single apartment project.
In the aggregate, the apartment properties contain 586 units. At the time of
closing, the net assets of each partnership were transferred to a new
operating partnership in exchange for operating partnership units
representing current fair value of the net assets transferred. Approximately
92.3% of the net asset value was represented by the land, buildings and
equipment of the apartment assets. Based on the local tax assessors'
valuations, 8.5% of the total apartment property value was allocated to land.
Furnishings and equipment was valued at fair value based on a physical
inventory taken at the time of closing. The balance of the apartment
property valuation, 90% of the total, was assigned to buildings and
improvements. The newly-formed operating partnerships assumed the existing
mortgage loans from the predecessor entities. The existing mortgage loans,
with interest rates ranging from 8.25% to 8.875%, mature between 2006 and
2030. The balance of the purchase price consisted of $3.6 million of
operating partnership units and $927,000 cash and short-term borrowings.
Revenue and certain property-related operating expenses of the Acquired
Properties for the year ended December 31, 1996 were audited. To the extent
applicable, the audited amounts are reflected in the pro forma statement of
income. Expenses related to the ownership of the properties, namely interest,
depreciation and certain entity-related expenses were computed as follows:
Interest. Interest expense applicable to the existing mortgage
loans was computed at the contract rates on the unpaid balances,
assuming that all monthly payments were made timely, plus one-year's
amortization of loan procurement and assumption costs. Interest
applicable to the short-term bank loan accrues at the rate of LIBOR
plus a spread and is adjustable periodically at intervals selected
by the borrower. For pro forma purposes, an assumed effective rate
of 8% was used for one year on the balance of $850,000. The Short-term
loan interest expense is shown as a "Pro Forma Adjustment".
Depreciation. Depreciation was computed for one year using the
straight-line method and useful lives of 33.3 years and five years
for buildings and improvements, and furnishings and equipment,
respectively.
Other Entity-Related Income and Expenses: The partnership entities are
obligated contractually to pay certain fees, namely accounting and
administrative fees to the general partner. Those fees total $68,000
annually. The acquisition agreement also provides that the cash
distributions to the Operating Partnership unit holders is limited to
the amount of dividends paid to shareholders of Century Realty Trust,
with one operating partnership unit being considered equivalent to one
share of beneficial interest of the Trust. Excess distributable cash
flow is to be paid to the general partner as an additional fee. For
1996, the aggregate excess cash flow was computed to be $36,000. The
contractual fees and the contingent fees, which totaled $104,000, is
shown as additional pro form income under "Pro Forma Adjustments".
BRADY, WARE & SCHOENFELD, INC.
One Woodside Drive
Richmond, IN 47374
Board of Directors and Shareholders
Century Realty Trust
Indianapolis, Indiana
We have audited the accompanying combined statement of revenue and certain
expenses of Century Realty Trust Acquired Properties, for the year ended
December 31, 1996. This combined statement of revenue and certain expenses
is the responsibility of the management of Century Realty Trust. Our
responsibility is to express an opinion on this combined statement of revenue
and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the combined statement of revenue
and certain expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the combined statement of revenue and certain expenses. An audit also
includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
combined statement of revenue and certain expenses. We believe that our
audit provides a reasonable basis for our opinion.
As discussed in Note A, the accompanying combined 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
the Current Report of Century Realty Trust on Form 8-K and is not intended
to be a complete presentation of Century Realty Trust Acquired Properties'
revenue and expenses.
In our opinion, the combined statement of revenue and certain expenses
referred to above presents fairly, in all material respects, the revenue
and certain expenses, as discussed in Nota A, of Century Realty Trust
Acquired Properties for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
SS: BRADY, WARE & SCHOENFELD, INC.
Richmond, Indiana
January 14, 1998
CENTURY REALTY TRUST
ACQUIRED PROPERTIES
STATEMENT OF REVENUE AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1996
REVENUE
Rental income $ 2,866,954
Other revenue 114,285
____________
2,981,239
CERTAIN OPERATING EXPENSES
Management fees 146,059
Personnel expenses 409,242
Administrative expenses 148,568
Utilities 191,031
Operating and maintenance expenses 214,390
Real estate taxes 290,379
Insurance 69,958
____________
1,469,627
____________
EXCESS OF REVENUE OVER CERTAIN
OPERATING EXPENSES $ 1,511,612
____________
____________
See notes to statement of revenue and certain expenses.
CENTURY REALTY TRUST
ACQUIRED PROPERTIES
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined statement of revenue and certain expenses of
Century Realty Trust Acquired Properties for the year ended December 31,
1996, consists of five multifamily properties. Century Realty Trust
Acquired Properties was acquired by Century Realty Trust on November 21,
1997. The accompanying combined statement of revenue and certain expenses
has been prepared on the accrual basis of accounting.
The following is a description of Century Realty Trust Acquired Properties:
M.P. Realty Group - Barcelona Associates, L.P. owns and operates a 64 unit
apartment complex in Kokomo, Indiana.
M.P. Realty Group - Beech Grove Associates, L.P. owns and operates a 182 unit
apartment complex in Jeffersonville, Indiana.
M.P. Realty Group - Hampton Court Associates, L.P. owns and operates a 92
unit apartment complex in Indianapolis, Indiana.
M.P. Realty Group - Sheffield Square Associates, L.P. owns and operates a
152 unit apartment complex in New Albany, Indiana.
M.P. Realty Group - West Wind Terrace Associates, L.P. owns and operates
a 96 unit apartment complex in Indianapolis, Indiana.
The accompanying combined 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 the Current Report
of Century Realty Trust on Form 8-K.
The accompanying statement of revenue and certain expenses has been
presented on a combined basis because all of the properties had a common
general partner and were managed by First Richmond Corporation.
The accompanying combined statement of revenue and certain expenses is not
representative of the actual operations of Century Realty Trust Acquired
Properties for the year ended December 31, 1996, as certain expenses, which
may not be comparable to the expenses to be incurred by Century Realty
Trust in the proposed future operations of Century Realty Trust Acquired
Properties, have been excluded. Expenses excluded consist of interest,
depreciation and amortization and other costs not directly related to the
future operations of Century Realty Trust Acquired Properties.
In the preparation of the combined statement of revenue and expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that effect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income is recognized when earned and due from tenants.
Property management fees, by agreement, are five percent of project revenue.