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) :
OCTOBER 17, 1996 (AUGUST 30, 1996)
ESSEX PROPERTY TRUST, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 1-13106 77-0369576
- -------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
777 CALIFORNIA AVENUE, PALO ALTO, CALIFORNIA 94304
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code : (415) 494-3700
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On August 30, 1996, Essex acquired Eastridge Apartments which was built in 1988
and contains 188 apartment units with 174,100 square feet located San Ramon,
California. The contract price was approximately $19,200,000. The price
includes the cost relating to the retirement of a land lease which occurred on
September 27, 1996. The seller was PCA Canyon View Associates, L.P. Essex
utilized proceeds from its August 14, 1996 offering of common stock to complete
the acquisition.
On August 30 1996, Essex acquired Landmark Apartments which was built in 1990
and contains 285 apartment units with 282,900 square feet located in Hillsboro,
Oregon. The contract price was $17,700,000. The seller was Metric Realty, an
Illinois general partnership. Essex utilized proceeds from its August 14, 1996
offering of common stock to complete the acquisition.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
The registrant hereby amends Item 7 by deleting sub parts A and B in their
entirety and replacing such sections with:
(A) FINANCIAL STATEMENTS - AUDITED (ATTACHMENT "A")
Combined Historical Summary of Gross Income and Direct Operating Expenses for
Camarillo Oaks, Treetops, Landmark and Eastridge Apartments for the Year Ended
December 31, 1995.
(B) PRO FORMA FINANCIAL INFORMATION - UNAUDITED (ATTACHMENT "B")
Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1996
Pro Forma Condensed Consolidated Statement of Operations for the six months
ended June 30, 1996
Pro Forma Condensed Consolidated Statement of Operations for the year ended
December 31, 1995
(C) EXHIBITS
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf of the
undersigned, hereunto duly authorized.
ESSEX PROPERTY TRUST, INC.
By: /s/ Mark J. Mikl
------------------------------
Mark J. Mikl, Controller
(Principal Accounting Officer)
Date: October 17, 1996
-----------------------------
ATTACHMENT "A"
CAMARILLO OAKS, TREETOPS, LANDMARK AND EASTRIDGE
Combined Historical Summary of Gross Income and
Direct Operating Expenses
December 31, 1995
(With Independent Auditors' Report Thereon)
ATTACHMENT "A"
CAMARILLO OAKS, TREETOPS, LANDMARK AND EASTRIDGE
Combined Historical Summary of Gross Income and
Direct Operating Expenses
Year Ended December 31, 1995
CONTENTS
PAGE
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Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . 1
Combined Historical Summary of Gross Income and Direct Operating Expenses . . 2
Notes to Combined Historical Summary of Gross Income and Direct Operating
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ATTACHMENT "A"
INDEPENDENT AUDITORS' REPORTINDEPENDENT AUDITORS REPORT
The Board of Directors
Essex Property Trust, Inc.:
We have audited the accompanying Combined Historical Summary of Gross Income and
Direct Operating Expenses (the Summary) of Camarillo Oaks, Treetops, Landmark
and Eastridge (the Properties) 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, that would not be comparable to those
resulting from the proposed future operations of the property.
In our opinion, the Summary referred to above presents fairly, in all material
respects, the gross combined income and direct operating expenses, exclusive of
expenses described in note 1, of Camarillo Oaks, Treetops, Landmark and
Eastridge for the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
San Francisco, California KPMG Peat Marwick LLP
September 18, 1996
1
ATTACHMENT "A"
CAMARILLO OAKS, TREETOPS, LANDMARK AND EASTRIDGE
Combined Historical Summary of Gross Income and
Direct Operating Expenses
Year Ended December 31, 1995
Revenues:
Rental income $ 8,971,675
Other 290,939
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9,262,614
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Operating expenses:
Maintenance and repairs 949,097
Real estate taxes 679,328
Utilities 647,928
Administrative 499,131
Advertising 144,276
Insurance 160,956
Other 35,617
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3,116,333
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Operating income $ 6,146,281
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--------------
2
ATTACHMENT "A"
CAMARILLO OAKS, TREETOPS, LANDMARK AND EASTRIDGE
Notes to Combined Historical Summary of Gross Income and
Direct Operating Expenses
Year Ended December 31, 1995
(1) PROPERTIES AND ACCOUNTING PRESENTATION
The Combined 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 and relates to the operations of
Camarillo Oaks, a 371-unit apartment community located in Camarillo,
California, Treetops, a 172-unit apartment community located in Fremont,
California, Landmark, a 285-unit apartment community located in Hillsboro,
Oregon, and Eastridge, a 188-unit apartment community located in San Ramon,
California.
Treetops was acquired on January 31, 1996. The acquisition of Camarillo
Oaks was completed on August 23, 1996. Landmark and Eastridge were acquired
on August 30, 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 operating results are derived by
deducting depreciation; however, as a Real Estate Investment Trust (REIT),
Essex Property Trust, Inc. is not subject to federal income tax if it
qualifies under the Internal Revenue Code ("Code") REIT provisions. That
is, Essex Property Trust, Inc. is not subject to federal income tax if it
distributes 95% of its taxable income and otherwise complies with the
provisions of the Code. Essex Property Trust, Inc. intends to pay dividends
in order to maintain its REIT status. Dividends paid to the REIT
shareholders are classified as return of capital, dividend income or
capital gains. Depreciation expense was estimated considering the purchase
price of each property and the appropriate tax method of depreciation.
Revenues $ 9,262,614
Operating expenses 3,116,333
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Cash available from operations 6,146,281
Depreciation expense 1,611,000
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Taxable income $ 4,535,281
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--------------
3
ATTACHMENT "B"
ESSEX PROPERTY TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
PRO FORMA
ADJUSTMENTS (2)
ACQUISITION
HISTORICAL PROPERTIES PRO FORMA
------------ -------------------------------
ASSETS
Real estate
Rental properties
Land and land improvements $ 62,525 $ 14,412 $ 76,937
Buildings and improvements 223,188 43,238 266,426
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285,713 57,650 343,363
Less accumulated depreciation (43,041) (43,041)
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242,672 57,650 300,322
Investments 8,589 8,589
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251,261 57,650 308,911
Cash and cash equivalents 5,710 (3,255) 2,455
Notes and other receivables 9,419 9,419
Other assets 7,099 7,099
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$ 273,489 $ 54,395 $ 327,884
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------------- ------------ -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage notes payable $ 141,792 141,792
Lines of credit 12,843 12,843
Accounts payable and accrued liabilities 5,574 5,574
Dividends payable 3,455 3,455
Other liabilities 1,668 1,668
------------- ------------ -----------
Total liabilities 165,332 0 165,332
Minority interest 25,660 25,660
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value, 670,000,000 shares
authorized, 6,275,000 shares issued and outstanding
(Pro Forma 8,805,000 shares issued and outstanding) 1 1
Additional paid in capital 112,070 54,395 166,465
Accumlulated deficit (29,574) (29,574)
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82,497 54,395 136,892
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$ 273,489 $ 54,395 $ 327,884
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See accompanying notes to Pro Forma financial statements
Page B-1
ATTACHMENT "B"
ESSEX PROPERTY TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
PRO FORMA ADJUSTMENTS (3)
----------------------------
ACQUISITION DISPOSITION
HISTORICAL PROPERITIES PROPERITIES PRO FORMA
------------- ---------------------------- ------------
REVENUES
Rental $ 22,004 $ 4,088 $ 701 $ 25,391
Interest and other income 1,304 78 8 1,374
------------- ------------- ------------ ------------
23,308 4,166 709 26,765
EXPENSES
Property operating expenses
Maintenance and repairs 2,105 232 55 2,282
Real estate taxes 1,769 302 69 2,002
Utilities 1,485 124 26 1,583
Administrative 1,254 253 48 1,459
Advertising 290 70 6 354
Insurance 292 37 11 318
Depreciation and amortization 4,237 735 106 4,866
------------- ------------- ------------ ------------
11,432 1,753 321 12,864
Interest 5,910 45 180 5,775
Amortization of deferred financing costs 426 1 8 419
General and administrative 863 0 0 863
Loss from hedge termination 39 0 0 39
------------- ------------- ------------ ------------
Total expenses 18,670 1,799 509 19,960
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Income before gain on sales of real estate,
minority interests and extraordinary item 4,638 2,367 200 6,805
Gain on sales of real estate 2,409 0 0 2,409
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Income before minority interests and
extraordinary item 7,047 2,367 200 9,214
Minority interest (1,100) (540) (45) (1,595)
------------- ------------- ------------ ------------
Income before extraordinary item 5,947 1,827 155 7,619
Extraordinary item (2,845) 0 0 (2,845)
------------- ------------- ------------ ------------
Net income $ 3,102 $ 1,827 $ 155 $ 4,774
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------------- ------------- ------------ ------------
PER SHARE DATA
Net income per share from operations
before extraordinary item $ 0.95 $ 0.87
Extraordinary item - debt extinguishment (0.45) (0.32)
------------- ------------
Net income per share $ 0.50 $ 0.54
------------- ------------
------------- ------------
Weighted average number of shares
outstanding during the period 6,275,000 8,805,000
------------- ------------
------------- ------------
SUPPLEMENTAL INFORMATION - FUNDS FROM OPERATIONS
Income before minority interest and
extraordinary item $ 7,047 $ 2,367 $ 200 $ 9,214
Adjustments
Depreciation and amortization 4,237 735 106 4,866
Adjustment for unconsolidated
joint ventures 249 0 0 249
Non-recurring items, including gain on
sales of real estate and loss from
hedge termination (2,370) 0 0 (2,370)
Minority interest - Pathways (272) 0 (272)
------------- ------------- ------------ ------------
Funds from operations $ 8,891 $ 3,102 $ 306 $ 11,687
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
See accompanying notes to Pro Forma financial statements
Page B-2
ATTACHMENT "B"
ESSEX PROPERTY TRUST, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
PRO FORMA ADJUSTMENTS (2)
--------------------------
ACQUISITION DISPOSITION
HISTORICAL PROPERITIES PROPERITIES PRO FORMA
------------- ---------------------------- ------------
REVENUES
Rental $ 41,640 $ 9,525 $ 1,813 $ 49,352
Interest and other income 2,300 175 23 2,452
------------- ------------- ------------ ------------
43,940 9,700 1,836 51,804
EXPENSES
Property operating expenses
Maintenance and repairs 3,811 585 171 4,225
Real estate taxes 3,371 735 191 3,915
Utilities 2,974 328 133 3,169
Administrative 2,592 571 121 3,042
Advertising 299 147 34 412
Insurance 557 85 26 616
Depreciation and amortization 8,007 1,611 286 9,332
------------- ------------- ------------ ------------
21,611 4,062 962 24,711
Interest 10,928 545 474 10,999
Amortization of deferred financing costs 1,355 8 23 1,340
General and administrative 1,527 0 0 1,527
Loss from hedge termination 288 0 0 288
------------- ------------- ------------ ------------
Total expenses 35,709 4,615 1,459 38,865
------------- ------------- ------------ ------------
Income before gain on sales of real estate,
minority interests and extraordinary item 8,231 5,085 377 12,939
Gain on sales of real estate 6,013 0 (2,801) 8,814
------------- ------------- ------------ ------------
Income before minority interests and
extraordinary item 14,244 5,085 (2,424) 21,753
Minority interest (3,486) (1,159) (86) (4,559)
------------- ------------- ------------ ------------
Income before extraordinary item 10,758 3,926 (2,510) 17,194
Extraordinary item (154) 0 0 (154)
------------- ------------- ------------ ------------
Net income $ 10,604 $ 3,926 (2,510) $ 17,040
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
PER SHARE DATA
Net income per share from operations
before extraordinary item $ 1.71 $ 1.95
Extraordinary item - debt extinguishment (0.02) (0.02)
------------- ------------
Net income per share $ 1.69 $ 1.93
------------- ------------
------------- ------------
Weighted average number of shares
outstanding during the period 6,275,000 8,805,000
------------- ------------
------------- ------------
SUPPLEMENTAL INFORMATION - FUNDS FROM OPERATIONS
Income before minority interest and
extraordinary item $ 14,244 $ 5,085 (2,424) $ 21,753
Adjustments
Depreciation and amortization 8,007 1,611 286 9,332
Adjustment for unconsolidated
joint ventures 121 0 0 121
Non-recurring items, including gain on
sales of real estate and loss from
hedge termination (5,725) 0 2,801 (8,526)
Minority interest - Pathways (527) 0 (527)
------------- ------------- ------------ ------------
Funds from operations $ 16,120 $ 6,696 663 $ 22,153
------------- ------------- ------------ ------------
------------- ------------- ------------ ------------
See accompanying notes to Pro Forma financial statements
Page B-3
ATTACHMENT "B"
ESSEX PROPERTY TRUST, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
(1) - OVERVIEW
On August 14, 1996, Essex Property Trust, Inc. sold 2,200,000 shares of common
stock in a follow-on public offering for $22.75 per share. In addition, on
August 20, 1996 the underwriters on this transaction exercised their
"over-allotment" option and purchased and additional 330,000 shares for $22.75
per share. Essex Portfolio, L.P. (the "Operating Partnership" of which 82.6% is
currently owned by Essex Property Trust, Inc.) has utilized these proceeds for
property acquisitions and debt repayments.
Between January 31, 1996 and August 30, 1996, Essex consummated four property
acquisitions and two property dispositions with independent third parties in
"arms-lengths" transactions. Two property acquisitions occurred on August 30,
1996 and their terms are summarized in Item 2 of this filing. Below are the
remaining property acquisitions and dispositions which occurred in 1996 and
whose effects are reflected in these Pro Forma Financial Statements.
OTHER 1996 ACQUISITIONS
On January 31, 1996, Essex acquired Treetops Apartments which was built in 1978
and contains 172 apartment units with 131,200 square feet and is located in
Fremont, California. The contract price was $10,725,000. Essex funded this
acquisition by assuming an existing 8.5% fixed interest rate mortgage in the
amount of $7,266,000 and the remainder was funded by Essex's lines of credit.
On August 14, 1996, Essex repaid the mortgage on the property with the proceeds
from its secondary common stock offering. On August 22, 1996, Essex completed a
$9,800,000 tax exempt bond financing for the property.
On August 23, 1996, Essex completed its acquisition of Camarillo Oaks Apartments
for a contract price of $20,750,000. Camarillo Oaks is a 371-unit apartment
property consisting of approximately 303,800 square feet located in Camarillo,
California. Essex utilized proceeds from its August 14, 1996 offering of common
stock and from the sale of a property to complete the acquisition. Essex is in
the process of placing approximately $19,000,000 of tax-exempt financing on the
property.
1996 DISPOSITIONS
On April 30, 1996, Essex sold Viareggio Apartments, a 116-unit, 89,615 square
foot apartment community located in San Jose, California. The gross sales price
was $10,610,000, resulting in a net gain of approximately $2,195,000. Essex
used the proceeds to reduce indebtedness and to facilitate the acquisition of
Camarillo Oaks.
On June 21, 1996, Essex sold Westbridge Apartments, a 92-unit, 104,560 square
foot apartment community in Yuba City, California. The gross sales price was
$3,700,000, resulting in a net gain of approximately $214,000. Essex used the
proceeds to reduce outstanding indebtedness.
Page B-4
ATTACHMENT "B"
ESSEX PROPERTY TRUST, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND DECEMBER 31, 1995
(Unaudited)
(Dollars in thousands, except shares and per share amounts)
(2) - PRO FORMA BALANCE SHEET ADJUSTMENTS
The pro forma condensed consolidated balance sheet as of June 30, 1996 includes
pro forma adjustments for property acquisitions subsequent to June 30, 1996.
Real estate investments were increased by $57,650 based on the contracted
acquisition prices. It is assumed that 75% of the increase in real estate
investment will be allocated to buildings and improvements for purposes of
depreciation. The acquisitions were purchased with proceeds from its August 14,
1996 offering of common stock. The detail of the increase in real estate
investment based on each properties acquisition price is as follows:
Camarillo Oaks Apartments: $20,750
Eastridge Apartments: $19,200
Landmank Apartments: $17,700
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$57,650
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(3) - PRO FORMA STATEMENTS OF OPERATIONS ADJUSTMENTS
The pro forma condensed consolidated statement of operations for the six months
ended June 30, 1996 and for the twelve months ended December 31, 1995 include
the following proforma adjustments:
For Treetops Apartments, acquired on January 31, 1996, pro forma adjustment was
made by taking its five months actual operating results through June 30, 1996
and semi annualizing or annualizing them for their inclusion in either the six
months ended June 30, 1996 or the twelve months ended December 31, 1995 Pro
Forma Statement of Operations, respectively.
For Viareggio Apartments and Westbridge Apartments, the Pro Forma Statements of
Operations reflects the elimination of the actual results of operations. The
twelve month ended December 31, 1995 Pro Forma Statement of Operation reflects
the gain on sale of these properties as if the sales had occurred on January 1,
1995.
The properties acquired subsequent to June 30, 1996, Camarillo Oaks Apartments,
Eastridge Apartments and Landmark Apartments were included in the six months
ended June 30, 1996 or the twelve months ended December 31, 1995 Pro Forma
Statements of Operations based on their respective semi-annualized or annualized
internal operating budgets.
Page B-5