SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Date of Report: February 3, 1998
(Date of earliest event reported)
Commission File Number 1-12486
ASSOCIATED ESTATES REALTY CORPORATION
(Exact name of registrant as specified in its charter)
OHIO 34-1747603
(State or other Jurisdiction of (IRS Employer
Incorporation or organization) Identification
Number)
5025 Swetland Court, Richmond Heights, Ohio 44143-1467
(Address of Principal Executive Offices) (Zip Code)
(216) 261-5000
(Registrant's telephone number, including area code)
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Item 2: Acquisition of Assets
On February 3, 1998, Associated Estates Realty Corporation
(the "Company") acquired certain assets, consisting principally
of the Multifamily Properties as further described below from the
named sellers (the "Acquired Properties"). The Falls Apartments
was acquired by AERC of Georgia, a wholly owned qualified REIT
subsidiary of the Company. The Acquired Properties were as
follows:
Date of Name of
Purchase Seller Multifamily Property Suites
02/03/98 MIG Atlanta Falls Corp. The Falls Apartments 520
02/03/98 MIG/Reflections, Inc. Reflections Apartments 184
02/03/98 Stonemark Apartments II, Cypress Shores Apartments 300
Inc.
With respect to the Acquired Properties, the Company
purchased all of the above named sellers' right, title and
interest in the apartment complexes and land together with all
rights of way, easements, licenses, permits, fixtures,
furnishings, equipment, the right to manage, other intangible
assets, leases and tenancies, and all guaranties, warranties and
other intangible rights pertaining to the Acquired Properties.
Neither the Company nor any of its shareholders owned any
interests in the sellers prior to the acquisition of the Acquired
Properties by the Company. The purchase price of the Acquired
Properties was approximately $59.5 million, of which $15.3
million represented liabilities assumed (which includes mortgage
indebtedness of $15.0 million).
A commonality of ownership exists among MIG Atlanta Falls
Corp., MIG/Reflections, Inc. and Stonemark Apartments II, Inc.,
and accordingly, the acquisition is considered to be a single
transaction.
In determining the price paid for the Acquired Properties,
the Company considered the historical and expected cash flow from
the Acquired Properties, the nature of the occupancy trends and
terms of the leases in place, current operating costs and taxes,
the physical condition of the Acquired Properties, the potential
to increase their cash flow and other factors. The Company also
considered the capitalization rates at which it believes
apartment properties have recently sold, but determined the
prices it was willing to pay for the Acquired Properties
primarily based on the factors discussed above. No independent
appraisals were performed in connection with the acquisitions.
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The Company, after investigation of the properties, is not aware
of any material factors, other than those enumerated above, that
would cause the financial information reported to not be
necessarily indicative of future expected operating results.
Certain other information concerning the Acquired Properties
is summarized below. The cash purchase price of the Acquired
Properties has been financed primarily with cash on hand made
available through an unsecured 90 day term loan and the
assumption of mortgage indebtedness. The Acquired Properties
have been operated, since construction, as rental properties.
The Company will manage all of the Acquired Properties;
however, interim management agreements have been entered into
with the current managers. The interim management agreements are
cancelable upon 30 days notice by the Company.
Certain other information concerning the Acquired Properties
is summarized below:
Number Number
Name of of of Type of Year
Property Location Suites Buildings Construction Constructed
The Falls Duluth, 520 31 Two and three story garden 1986
Apartments Georgia style apartments with
wood and brick exteriors
Reflections Columbia, 184 11 Two and three story garden 1985
Apartments Maryland style apartments with wood
exteriors
Cypress Shores Coconut 300 13 Two and three story garden 1991
Apartments Creek, style apartments with wood
Florida and stucco exteriors
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Item 7: Financial Statements and Exhibits
A. Financial Statements
It is not possible to provide the combined audited income
statement pursuant to Rule 3-14 of Regulation S-X for the fiscal
year ended December 31, 1997 at the time of the filing of this
report; such income statement will be filed as an amendment to
this Form 8-K under cover of Form 8-K/A within sixty days of the
due date of this report.
B. Pro Forma Financial Information
It is not possible to provide the combined unaudited pro
forma income statement at the time of the filing of this report;
such pro forma information will be filed within sixty days of the
due date of this report.
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Exhibits:
10.01 Purchase Agreement dated January 28, 1998
between Stonemark Apartments II, Inc., a
Florida Corporation, Seller and Associated
Estates Realty Corporation, an Ohio
Corporation, Buyer.
10.02 Purchase Agreement dated January 28, 1998 between
MIG Atlanta Falls Corp., a Michigan Corporation,
Seller and Associated Estates Realty Corporation,
an Ohio Corporation, Buyer.
10.03 Purchase Agreement dated January 28, 1998 between
MIG Reflections, Inc., a Maryland Corporation,
Seller and Associated Estates Realty Corporation,
an Ohio Corporation, Buyer.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereto duly authorized.
Associated Estates Realty Corporation
Date: February 17, 1998 /s/ Dennis W. Bikun
Dennis W. Bikun
Chief Financial Officer & Treasurer
Chief Accounting Officer