SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________________
FORM 8-K
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): December 13, 1996 (November 7,
1996)
ESSEX PROPERTY TRUST, INC.
(Exact name of Registrant as
Specified in its Charter)
MARYLAND
(State or Other Jurisdiction
of Incorporation)
1-13106
(Commission File Number)
77-0369576
(IRS Employer Identification No.)
777 CALIFORNIA AVENUE
PALO ALTO, CA 94304
(415) 494-3700
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
Page 1 of 9 Pages
Item 5. OTHER EVENTS.
On November 7, 1996, Essex Property Trust, Inc. (the "Company"), in an arms-
length transaction with an unrelated third party, acquired the Meadowood
Apartments ("Meadowood"), a 320-unit multi-family residential property in Simi
Valley, California, at a total capitalized cost (acquisition cost plus
renovation and reconstruction costs committed at the time of the acquisition) of
$26.4 million. Meadowood contains a total of 264,568 rentable square feet. The
purchase price was based upon a number of factors, including historical and
projected rental income, appropriate capitalization rates for similar
properties, market comparables, prevailing market conditions in the area and
extensive due diligence studies including review of financial operations and
physical inspection.
The Company partially financed this acquisition through the assumption of $17.73
million in tax exempt bonds with a 6.455% interest rate. The interest rate on
the bonds is fixed through February 2008 at which time they will be repriced at
the market rate at that time. The bonds mature in January 2026. The balance of
the purchase price was funded by the October 24, 1996 issuance of $19.42 million
in variable rate tax exempt bonds issued by the City of Camarillo in connection
with the financing of Camarillo Oaks Apartments. The Camarillo bonds carry a
"AAA" rating and are enhanced by FNMA and mature in October 2026. The bonds
have a seven year interest rate cap at 7%.
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements.
Meadowood Apartments Historical Summary of Gross Income and
Direct Operating Expenses.
Item Page
---- ----
Independent Auditors' Report 1
Historical Summary of Gross Income and
Direct Operating Expenses 2
Notes to Historical Summary of Gross
Income and Direct Operating Expenses 3
(b) Pro Forma Financial Statements.
Pro forma financial information concerning the period from January 1,
1996 through September 30, 1996 was included in the Form 10-Q Quarterly Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the
Quarterly Period Ended September 30, 1996, filed by the Company with the
Securities and Exchange Commission on November 14, 1996.
(a) Exhibits.
There are no exhibits filed with this Form 8-K.
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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.
ESSEX PROPERTY TRUST, INC.
December 13, 1996 By: /s/ Mark J. Mikl
---------------------
Mark J. Mikl
Controller
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MEADOWOOD APARTMENTS
Historical Summary of Gross Income and
Direct Operating Expenses
December 31, 1995
(With Independent Auditors' Report Thereon)
5
MEADOWOOD APARTMENTS
Historical Summary of Gross Income and
Direct Operating Expenses
Year Ended December 31, 1995
CONTENTS
Page
----
Independent Auditors' Report................................................ 1
Historical Summary of Gross Income and Direct Operating Expenses............ 2
Notes to Historical Summary of Gross Income and Direct Operating Expenses... 3
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INDEPENDENT AUDITORS' REPORT
The Board of Directors
Essex Property Trust, Inc.:
We have audited the accompanying historical summary of gross income and direct
operating expenses (the Summary) of Meadowood Apartments (the Property) for the
year ended December 31, 1995. The Summary is the responsibility of management.
Our responsibility is to express an opinion on the Summary 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 Summary is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Summary. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall Summary presentation. We believe that our audit provides
a reasonable basis for our opinion.
The accompanying Summary was prepared to comply with the requirements of Rule 3-
14 of Regulation S-X of the Securities and Exchange Commission and excludes
certain expenses, described in note 1, and therefore is not intended to be a
complete presentation of the Property's revenues and expenses.
In our opinion, the Summary referred to above presents fairly, in all material
respects, the gross income and direct operating expenses, exclusive of expenses
described in note 1, of Meadowood Apartments for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
San Francisco, California /s/ KPMG Peat Marwick LLP
December 13, 1996 KPMG Peat Marwick LLP
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MEADOWOOD APARTMENTS
Historical Summary of Gross Income and
Direct Operating Expenses
Year ended December 31, 1995
Gross Income:
Rental income $ 3,023,522
Other 46,620
-----------
3,070,142
-----------
Direct operating expenses:
Maintenance and repairs 250,492
Real estate taxes 229,494
Utilities 202,716
Administrative 162,806
Advertising 30,667
Insurance 26,406
Other 1,563
-----------
904,144
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Excess of gross income over
direct operating expenses $ 2,165,998
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MEADOWOOD APARTMENTS
Notes to Historical Summary of Gross Income and
Direct Operating Expenses
Year ended December 31, 1995
(1) PROPERTIES AND ACCOUNTING PRESENTATION
The historical summary of gross income and direct operating expenses has
been prepared in accordance with Rule 3-14 of Regulation S-X of the
Securities and Exchange Commission ("Rule 3-14") and relates to the
operations of Meadowood Apartments, a 320-unit apartment community located
in Simi Valley, California, which was acquired by Essex Property Trust, Inc.
(the Company) on November 7, 1996.
In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees and income taxes as
these expenses would not be comparable to the proposed future operations of
the property.
The acquisition of the property may result in a new valuation for purposes
of determining future property tax assessments.
Rental revenue is recognized on the accrual basis of accounting. Tenant
leases are generally for a one year period or less.
(2) ESTIMATED TAXABLE OPERATING RESULTS AND CASH TO BE MADE AVAILABLE BY
OPERATIONS (UNAUDITED)
Pro forma cash available from operations and pro forma taxable income for
1995 are shown below. Pro forma taxable income is derived by deducting
depreciation. The Company has and intends to continue to qualify as a real
estate investment trust (REIT) under the Internal Revenue Code ("Code") REIT
provisions. That is, the Company is generally not subject to federal income
tax if it distributes at least 100% of its taxable income and otherwise
complies with the REIT provisions of the Code. Depreciation expense was
estimated applying the appropriate tax life ( 27.5 years) on a straight line
basis.
Revenues $ 3,070,142
Operating expenses 904,144
-----------
Pro forma cash available from operations 2,165,998
Depreciation expense 655,000
-----------
Pro forma taxable income $ 1,510,998
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