As filed with the Securities and Exchange Commission on December 13, 2000
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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
Date of report (Date of earliest event reported): OCTOBER 31, 2000
EQUITY RESIDENTIAL PROPERTIES TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
MARYLAND 1-12252 13-3675988
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) FILE NUMBER) IDENTIFICATION NO.)
TWO NORTH RIVERSIDE PLAZA, SUITE 400
CHICAGO, ILLINOIS 60606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code: (312) 474-1300
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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ITEM 5: OTHER EVENTS
On October 31, 2000, Equity Residential Properties Trust, a Maryland real estate
investment trust ("EQR"), sole general partner of ERP Operating Limited
Partnership, an Illinois limited partnership ("ERP"), acquired Grove Property
Trust, a Maryland real estate investment trust ("Grove"), through the merger of
a wholly owned subsidiary of ERP, pursuant to an Agreement and Plan of Merger
dated as of July 17, 2000 ("the Merger Agreement") by and between Grove, Grove
Operating, L.P. ("Grove OP") and ERP (the "Merger"). The Merger was approved by
the shareholders of Grove and the OP Unit holders of Grove OP at their special
meetings held on October 31, 2000. As part of the Merger Agreement, certain
Grove executives acquired Grove's four retail properties at the Merger closing
for approximately $21.7 million, including the assumption of approximately $7.5
million of debt. The Merger subsequently closed on October 31, 2000.
Each share of common stock of Grove outstanding immediately prior to the Merger
was cashed out pursuant to the Merger Agreement at $17.00 per common share. Each
unit of limited partnership in Grove OP was converted into the right to receive,
at the holders election, either cash in the amount of $17.00 or 0.3696 of a
limited partnership unit of ERP for each unit of Grove OP.
In connection with the Merger, EQR is hereby filing additional financial
information of Grove as of October 31, 2000 and for the ten-month and four-month
periods then ended. The financial information does not give effect to the Merger
or any related transactions.
2
GROVE PROPERTY TRUST
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except par value)
(Unaudited)
OCTOBER 31, 2000 DECEMBER 31, 1999
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ASSETS
Real estate assets:
Land $ 51,054 $ 45,770
Buildings and improvements 312,561 266,432
Furniture, fixtures and equipment 5,173 3,972
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368,788 316,174
Less accumulated depreciation (26,593) (17,639)
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Net real estate assets 342,195 298,535
Real estate held for sale - 2,671
Cash and cash equivalents 5,186 4,220
Deposits - restricted 699 325
Escrow deposits - restricted 12,724 8,188
Due from affiliates 11 112
Deferred charges, net of accumulated amortization of
$729 and 229, respectively 7,998 1,714
Other assets 1,453 1,432
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Total assets $ 370,266 $ 317,197
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LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable (including fair value step up of
$7,653 and $8,164, respectively) $ 218,500 $ 180,290
Line of Credit 37,950 15,300
Accounts payable, accrued expenses and other liabilities 2,724 10,268
Accrued interest 1,570 1,109
Acquisition notes payable 1,545 4,675
Distributions payable 731 2,177
Security deposits 4,143 3,394
Due to affiliates - 78
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Total liabilities 267,163 217,291
Minority interest in the Operating Partnership 32,515 32,231
Shareholders' equity:
Preferred shares, $.01 par value per share,
1,000,000 shares authorized; no shares
issued or outstanding - -
Common shares, $.01 par value per share, 34,000,000
shares authorized; 8,364,947 and 8,197,141 shares
issued and outstanding, respectively 84 82
Additional paid-in capital 77,668 75,968
Distributions in excess of earnings (7,164) (8,375)
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Total shareholders' equity 70,588 67,675
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Total liabilities and shareholders' equity $ 370,266 $ 317,197
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
GROVE PROPERTY TRUST
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
For the Ten Months Ended October 31, For the Four Months Ended October 31,
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2000 1999 2000 1999
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Revenues:
Rental income $ 56,512 $ 52,228 $ 24,585 $ 21,360
Property management income- affiliates 97 219 35 79
Other property related income 654 612 257 253
Interest income 723 452 356 173
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Total revenues 57,986 53,511 25,233 21,865
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Expenses:
Property operating 19,865 19,367 8,227 7,476
Real estate taxes 4,300 4,773 1,590 1,910
Interest 13,657 11,720 6,146 4,858
Depreciation 8,971 8,322 3,807 3,374
Amortization 526 204 370 84
General and administrative 2,043 3,440 950 1,336
Merger costs 1,075 - 1,075 -
----------------- ------------------ ------------------ ------------------
Total expenses 50,437 47,826 22,165 19,038
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Income before gain (loss) on
sales, extraordinary item,
and minority interests 7,549 5,685 3,068 2,827
Gain (loss) on sales of property 1,533 (32) - (32)
----------------- ------------------ ------------------ ------------------
Income before minority
interests and extraordinary
item 9,082 5,653 3,068 2,795
Minority interest in consolidated
partnerships - 77 - 35
Minority interest in Operating
Partnership 2,889 1,739 970 874
----------------- ------------------ ------------------ ------------------
Income before extraordinary item 6,193 3,837 2,098 1,886
Extraordinary gain(loss) related to
debt extinguishment - 103 - (119)
----------------- ------------------ ------------------ ------------------
Net income 6,193 3,940 2,098 1,767
================= ================== ================== ==================
Income before extraordinary item per
common share - basic $ 0.75 $ 0.45 $ 0.25 $ 0.22
================= ================== ================== ==================
Extraordinary gain(loss) per common
share - basic $ - $ 0.01 $ - $ (0.01)
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Net income per common share - basic $ 0.75 $ 0.46 $ 0.25 $ 0.21
================= ================== ================== ==================
Income before extraordinary item per
common share - diluted $ 0.72 $ 0.44 $ 0.24 $ 0.22
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Extraordinary gain(loss) per common
share - diluted $ - $ 0.01 $ - $ (0.01)
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Net income per common share - diluted $ 0.72 $ 0.45 $ 0.24 $ 0.21
================= ================== ================== ==================
Weighted average common shares
outstanding - basic 8,284 8,512 8,345 8,418
Effect of stock options 306 152 379 177
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Weighted average common shares
outstanding - diluted 8,590 8,664 8,724 8,595
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Distributions declared per common
share outstanding $ 0.60 $ 0.54 $ 0.24 $ 0.18
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SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
GROVE PROPERTY TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Ten Months Ended October 31,
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2000 1999
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(In thousands)
Operating Activities:
Net income $ 6,193 $ 3,940
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization 9,497 8,526
Extraordinary item - (103)
Minority interests 2,889 1,816
Compensation expense paid with Company common shares 313 100
(Gain) loss on sale of property (1,533) 32
Write-off of intangible assets 12 -
Change in other assets (47) (2,141)
Change in accounts payable, accrued expenses and other liabilities (8,218) (298)
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Net cash provided by operating activities 9,106 11,872
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Investing activities:
Purchase of partnership interests - (3,359)
Deferred charges - (1)
Additions to real estate assets (24,435) (8,069)
Net proceeds from sale of property 4,193 248
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Net cash (used for) investing activities (20,242) (11,181)
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Financing activities:
Net proceeds from mortgage notes payable 14,868 34,938
Net borrowings (repayments) from line of credit 22,650 (10,400)
Proceeds from exercise of stock options - 535
Equity offering costs - (11)
Repayment of mortgage notes payable (4,516) (13,341)
Borrowings from affiliates, net (77) 686
Financing costs (6,785) (992)
Repurchase of stock (207) (6,872)
Dividends and distributions paid (8,921) (8,878)
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Net cash provided by (used for) financing activities 17,012 (4,335)
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Net change in cash and cash equivalents 5,876 (3,644)
Cash and cash equivalents, beginning of period 12,733 15,262
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Cash and cash equivalents, end of period $ 18,609 $ 11,618
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Supplemental Information:
Cash paid for interest $ 13,822 $ 12,085
Assumed mortgage notes $ 27,859 $ -
OP units issued pursuant to acquisition of properties $ 201 $ -
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
GROVE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 2000
1. BASIS OF PRESENTATION
The financial statements are presented on a consolidated
basis. Included in the Company's financial statements are the accounts of
the Operating Partnership and various property partnerships. Properties are
owned either directly by the Operating Partnership or are owned by various
limited partnerships or limited liability companies that in turn are wholly
owned by the Operating Partnership. All significant intercompany
transactions are eliminated in consolidation.
The accompanying interim financial statements have been prepared by
the Company's management in accordance with accounting principles generally
accepted in the United States for interim financial information and with
the rules and regulations of the Securities and Exchange Commission. In the
opinion of management, the interim financial statements presented herein
reflect all adjustments of a normal and recurring nature, which are
necessary to fairly state the interim financial statements. The results of
operations for the interim period ended October 31, 2000 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 2000. These financial statements should be read in
conjunction with the Company's audited financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.
2. MORTGAGE NOTES PAYABLE
Total mortgage notes payable consist of the following at October 31,
2000 (in thousands):
Amortizing mortgage notes $ 155,500
Interest only first mortgage note 63,000
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$ 218,500
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The contractual principal amount outstanding of mortgage notes
payable is $210.8 million. The book value of approximately $43.7 million of
amortizing mortgage notes, assumed with above average market interest rates
in conjunction with the McNeil Portfolio acquisition, have been adjusted
upward by approximately $7.7 million to reflect the fair value of the notes
at the Company's estimated market interest rate of 7.0%.
The amortizing mortgage notes have fixed interest rates between 6.2%
and 12.5%. These notes mature between the years 2000 and 2031 and are
collateralized by thirty-six of the properties with an aggregate carrying
amount of approximately $201.2 million as of October 31, 2000. Certain of
these notes are partially guaranteed by certain executive officers and
shareholders of the Company. During the second quarter, the Company
received second mortgage financing on six properties, with net proceeds
totaling approximately $8.3 million, and a face amount of approximately
$14.8 million. The average interest rate on the face amount of the new
second mortgages is 7.4% and the weighted average maturity of the new
second mortgages is 7.4 years.
The interest only first mortgage note requires monthly payments of
interest at an effective fixed interest rate of 6.7% and matures in 2008.
This note is collateralized by seventeen properties with an aggregate
carrying amount of approximately $86.1 million as of October 31, 2000.
3. ACQUISITION NOTES PAYABLE
In conjunction with the purchase of the McNeil Portfolio, the Company
agreed to issue additional OP units and pay cash (together the "Acquisition
Notes Payable") to certain continuing partners in the event that any of
certain McNeil Portfolio properties were converted to a market rate
property.
6
GROVE PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
OCTOBER 31, 2000
4. SHAREHOLDERS' EQUITY
The following table outlines the 2000 activity in the Operating
Partnership equity accounts:
Company's Limited Partners'
Operating Operating
Partnership Partnership
Units Units
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Outstanding at December 31, 1999 8,197,141 3,903,936
Common Units exchanged 156,075 (156,075)
Common Shares repurchased (16,249) -
Common Shares issued pursuant to employee stock compensation plan 27,980 -
OP Units issued related to Acquisition Notes Payable - 91,907
OP Units issued pursuant to acquisition of properties - 13,388
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Outstanding at October 31, 2000 8,364,947 3,853,156
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Ownership Percentage 69% 31%
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5. ACQUISITION OF PROPERTIES
During the second quarter of 2000, the Company purchased three
properties located in Massachusetts including 912 apartments for
approximately $33.5 million. The purchase price included a $12.0 million
cash payment and the assumption of mortgage debt totaling $21.5 million.
The cash portion of the purchase was funded with the Company's revolving
credit facility and cash on hand. The assumed mortgage debt has a weighted
average fixed interest rate of 7.9% and a weighted average maturity of 20.8
years.
On October 30 2000, the Company purchased two properties located in
Massachusetts including 231 apartments for approximately $7.4 million. The
purchase price included a $0.9 million cash payment, operating units valued
at $0.2 million and the assumption of mortgage debt totaling $6.3 million.
The cash portion of the purchase was funded with the Company's revolving
credit facility and cash on hand. The assumed mortgage debt has a weighted
average fixed interest rate of 8.6% and a weighted average maturity of 12.7
years.
7
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.
EQUITY RESIDENTIAL PROPERTIES TRUST
Date: December 13, 2000 By: /s/ Michael J. McHugh
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Michael J. McHugh, Executive Vice
President and Chief Accounting Officer
8