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, 1996
-------------------------------
UNITED DOMINION REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
Virginia 1-10524 54-0857512
State or other jurisdiction of (Commission (I.R.S. Employer
incorporation of organization) File Number) Identification No.)
10 South Sixth Street, Suite 203, Richmond, Virginia 23219-3802
(Address of principal executive offices)
Registrant's telephone number, including area code (804) 780-2691
---------------------------
NO CHANGE
(Former name or former address, if change since last report)
ITEM 5. OTHER EVENTS
During the nine month period ended September 30, 1996, the Company acquired 28
apartment communities containing 7,096 apartment homes at a total cost of $293.9
million, including closing costs. During 1995, the Company acquired 23 apartment
communities containing 5,142 apartment homes at a total cost of $195.3 million,
including closing costs. Information regarding unaudited pro forma results of
operations for the nine months ended September 30, 1996 and the year ended
December 31, 1995, is included herein. Pro forma results for the 1996 period
assumes the acquisition of an 18 apartment community portfolio ("Southeast
Portfolio") containing 4,508 apartment homes at a total cost of $182.6 million,
including closing costs, as if the acquisition had occurred on January 1, 1996.
Pro forma results for the 1995 period assumes the acquisition of 13 apartment
communities containing 2,147 apartment homes at a total cost of $98.6 million
and the acquisition of the Southeast Portfolio , as if the acquisitions had
occurred on January 1, 1995.
2
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
Description Location
(a) Pro Forma Financial Information 4 through 14
3
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
The consolidated pro forma balance sheet at September 30, 1996 is not
presented as all of the acquisitions reported on were purchased prior to
September 30, 1996 and are reflected in the Company's unaudited consolidated
balance sheet at September 30, 1996 included in the Company's quarterly report
on Form 10-Q for the quarter then ended.
The following consolidated pro forma statements of operations for the
year ended December 31, 1995 and for the nine months ended September 30, 1996,
assume the acquisition of the Southeast Portfolio and other acquisitions made
during 1995 as if they had occurred at the beginning of each period presented.
The consolidated pro forma statements of operations have been prepared
by the management of the Company. The consolidated pro forma statements of
operations are not necessarily indicative of the results that would have
occurred had the acquisitions been completed on the dates indicated, nor are
purported to be indicative of future results. The consolidated pro forma
statements of operations should be read in conjunction with the Company's
audited consolidated financial statements for the year ended December 31, 1995
(included in the Company's Form 10-K for the year ended December 31, 1995) and
its unaudited consolidated financial statements as of September 30, 1996 and for
the nine months then ended (included in the Company's Form 10-Q for the
quarterly period ended September 30, 1996) and the accompanying notes thereto.
4
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 1996
(UNAUDITED)
(In thousands, except per share data)
NON-DEVELOPMENT DEVELOPMENT
NON-DEVELOPMENT PROPERTIES DEVELOPMENT PROPERTIES
PROPERTIES SOUTHEAST PROPERTIES SOUTHEAST
SOUTHEAST PORTFOLIO SOUTHEAST PORTFOLIO
PORTFOLIO PRO FORMA PORTFOLIO PRO FORMA PRO
HISTORICAL (1) ACQUISITION (9) ADJUSTMENTS (12) ACQUISITION (10) ADJUSTMENTS (12) FORMA
-------------- --------------- ---------------- ---------------- ---------------- -----
Income
Rental income $175,119 $9,160 $2,265 $3,757 $929 $191,230
Interest and other income 1,197 1,197
----------------------------------------------------------------------------------------
176,316 9,160 2,265 3,757 929 192,427
Expenses
Rental expenses:
Utilities 12,810 662 164 219 54 13,909
Repairs & maintenance 29,847 1,146 283 316 78 31,670
Real estate taxes 12,698 651 161 321 79 13,910
Property management 4,192 452 (172)(13) 184 (70)(18) 4,586
Other operating expenses 16,852 699 232 (14) 266 89 (19) 18,138
Depreciation of real estate owned 33,711 2,344 (15) 1,316 (20) 37,371
Interest 35,413 4,566 (16) 2,223 (21) 42,202
General and administrative 4,192 4,192
Other depreciation and amortization 917 917
Impairment loss on real estate
held for disposition 290 290
----------------------------------------------------------------------------------------
150,922 3,610 7,578 1,306 3,769 167,185
Income before gains (losses) on sales of
investments and minority interest of
unitholders in operating partnership 25,394 5,550 (5,313) 2,451 (2,840) 25,242
Gains (losses) on sales of investments 2,176 2,176
Minority interest of unitholders in
operating partnership (26) (26)
----------------------------------------------------------------------------------------
Net income 27,544 5,550 (5,313) 2,451 (2,840) 27,392
Dividends to preferred shareholders 7,284 7,284
----------------------------------------------------------------------------------------
Net income available to common
shareholders $20,260 $5,550 $(5,313) $2,451 $(2,840) $20,108
=======================================================================================
Net income per common share $.36 $.34
======== =====
Distributions declared per common share $.72 $.72
======== =====
Weighted average number of common shares
outstanding 56,978 774 (17) 578 (22) 58,330
See accompanying notes.
5
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS
For the Twelve Months Ended December 31, 1995
(Unaudited)
(In thousands of dollars, except per share data)
ACQUISITIONS
PREVIOUSLY
REPORTED ON JUNE 30, 1995 AND
FORM 8-K DATED DECEMBER 28, 1995
JUNE 30, 1995 AND ACQUISITIONS PRO FORMA
FORM 8-K DATED PRO FORMA BEFORE 1996
HISTORICAL (1) DECEMBER 28, 1995 (2) ADJUSTMENTS (3) ACQUISITIONS
--------------- --------------------- --------------- ------------
Income
Rental Income $195,240 $6,519 $1,045 $202,804
Interest and other income 1,692 (269)(4) 1,423
------------------------------------------------------------------
196,932 6,519 776 204,227
Expenses
Rental Expenses
Utilities 14,464 430 64 14,958
Repairs & maintenance 30,374 895 98 31,367
Real estate taxes 14,058 504 67 14,629
Property management 5,300 284 (25)(5) 5,559
Other operating expenses 17,446 844 106 18,396
Depreciation of real estate owned 38,939 1,088 (6) 40,027
Interest 40,646 532 (7) 41,178
General and administrative 4,865 4,865
Other depreciation and amortization 1,103 1,103
Other expenses:
Impairment loss on real estate held
for disposition 1,700 1,700
------------------------------------------------------------------
168,895 2,957 1,930 173,782
------------------------------------------------------------------
Income before gains (losses) on sales of
investments and extraordinary item 28,037 3,562 (1,154) 30,445
Gains (losses) on sales of investments 5,090 5,090
------------------------------------------------------------------
Net income 33,127 3,562 (1,154) 35,535
Dividends to preferred shareholders 6,637 2,599 (8) 9,236
------------------------------------------------------------------
Net income available to common shareholders $26,490 $3,562 ($3,753) $26,299
==================================================================
Net income per common share $0.50 $0.50
==================================================================
Distributions declared per common share $0.90 $0.90
==================================================================
Weighted average number of common shares
outstanding 52,781 52,781
NON-DEVELOPMENT DEVELOPMENT
NON-DEVELOPMENT PROPERTIES DEVELOPMENT PROPERTIES
PROPERTIES SOUTHEAST PROPERTIES SOUTHEAST
SOUTHEAST SOUTH HILLS PORTFOLIO SOUTHEAST PORTFOLIO
PORTFOLIO PRO FORMA PRO FORMA PORTFOLIO PRO FORMA PRO
ACQUISITION (9) ADJUSTMENTS (11) ADJUSTMENTS ACQUISITION (10) ADJUSTMENTS FORMA
---------------- ----------------- ------------ ---------------- ----------- -----
Income
Rental Income $17,539 $52 $5,011 $225,406
Interest and other income 1,423
----------------------------------------------------------------------------------------
17,539 52 0 5,011 0 226,829
Expenses
Rental Expenses
Utilities 1,311 4 319 16,592
Repairs & maintenance 2,632 13 447 34,459
Real estate taxes 1,303 5 325 16,262
Property management 866 3 ($436)(13) 231 ($108)(18) 6,115
Other operating expenses 1,353 9 96 (14) 542 26 (19) 20,422
Depreciation of real estate owned 3,780 (15) 1,421 (20) 45,228
Interest 7,362 (16) 2,447 (21) 50,987
General and administrative 4,865
Other depreciation and amortization 1,103
Other expenses:
Impairment loss on real estate
held for disposition 1,700
----------------------------------------------------------------------------------------
7,465 34 10,802 1,864 3,786 197,733
----------------------------------------------------------------------------------------
Income before gains (losses) on sales of
investments and extraordinary item 10,074 18 (10,802) 3,147 (3,786) 29,096
Gains (losses) on sales of investments 5,090
----------------------------------------------------------------------------------------
Net income 10,074 18 (10,802) 3,147 (3,786) 34,186
Dividends to preferred shareholders 9,236
Net income available to common shareholders $10,074 $18 ($10,802) $3,147 ($3,786) $24,950
========================================================================================
Net income per common share $0.46
========================================================================================
Distributions declared per common share $0.90
========================================================================================
Weighted average number of common shares
outstanding 934 (17) 441 (22) 54,156
See accompanying notes.
6
UNITED DOMINION REALTY TRUST, INC.
NOTES TO CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
THE TWELVE MONTHS ENDED DECEMBER 31, 1995
(UNAUDITED)
Basis of Presentation
For presentation purposes in the consolidated pro forma statements of operations
on this Form 8-K, the Southeast Portfolio has been segregated into two
components, the development properties and the non-development properties. There
are 14 properties containing 3,196 units which are considered non-development
properties and 4 properties containing 1,312 units which are considered
development properties. The 14 non-development properties were built prior to
1995 and the four development properties had completed units available for
occupancy at various times during 1995 and 1996. For each of the periods
presented, the pro forma adjustments for the four development properties are
determined based upon the weighted average balance of the purchase price
outstanding. The weighted average balance of the purchase price outstanding was
calculated by assuming the properties were financed and acquired by the Company
on the dates on which certificates of occupancy were obtained for each unit
during 1995 and 1996.
The accompanying consolidated pro forma statements of operations assume the
following events occurred on the first day of each reporting period presented:
(i) the acquisition of four apartment communities previously reported on Form
8-K dated December 28, 1995, and (ii) the acquisition of nine apartment
communities previously reported on Form 8-K dated June 30, 1995. For 1995, in
connection with the acquisitions previously described, the pro forma statements
of operations include the April 24, 1995 sale of 4.2 million shares of 9 1/4%
Cumulative Redeemable Preferred Stock with a $25 liquidation preference value
("preferred stock"). Net proceeds from the sale of the preferred stock were used
to fund the Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and
to temporarily repay in full, then existing bank debt until such time additional
acquisitions were completed. Of the 4.2 million shares sold, 2.7 million shares
were assumed to be used to acquire the Acquisitions Previously Reported on Form
8-K dated June 30, 1995 and 878,589 shares were assumed to have been used to
acquire Hunters Ridge Apartments and Mallards of Wedgewood Apartments (two of
the properties included in the acquisitions previously reported on Form 8-K
dated December 28, 1995). Therefore, such consolidated pro forma statements of
operations assume the issuance of 3.6 million shares of preferred stock from the
period January 1, 1995 to April 24, 1995 for the twelve months ended December
31, 1995. In addition, the consolidated pro forma statements of operations
assume the acquisition of the 14 non-development apartment communities contained
in the Southeast Portfolio as if it had occurred on the first day of each
reporting period presented. The pro forma statements of operations include the
effect of debt and equity incurred in connection with the acquisition of the 14
non-development apartment communities contained in the Southeast Portfolio which
includes: (i) bank lines of credit of approximately $14.0 million with a
weighted average interest rate of 6.01% (the Company's market interest rate on
short-term bank borrowings in effect at the time of the acquisition), (ii) the
assumption of secured debt encumbering the properties in the aggregate amount of
approximately $75.2 million with a weighted average interest rate of 7.30%,
(iii) Seller financing of approximately $13.9 million bearing interest of 7.10%,
and (iv) the issuance of approximately 934,000 newly issued shares of the
Company's common stock valued at $13.50 (the closing sales price of the
Company's common stock on the date of acquisition) per share for total
consideration of $12.6 million. The consolidated pro forma statements of
operations also assume the acquisition of the four development apartment
communities contained in the Southeast Portfolio. The pro forma statements of
operations include the effects of debt and equity incurred in connection with
the acquisition of the four development apartment communities contained in the
Southeast Portfolio which includes: (i) bank lines of credit of approximately
$11.2 million with a weighted average interest rate of 6.01% (the Company's
market interest rate on short-term bank borrowings in effect at the time of the
acquisition), (ii) the assumption of secured debt encumbering the properties in
the aggregate amount of approximately $34.6 million with a weighted average
interest rate of 6.59%, (iii) Seller financing of approximately $11.1 million
bearing interest of 7.10% and (iv) the issuance of approximately 746,000 newly
issued shares of the Company's common stock valued at $13.50 per share (the
closing sales price of the Company's common stock on the date of acquisition)
for total consideration of $10.1 million.
7
The assumption of secured debt encumbering the properties consists of the
following: (i) four mortgage notes payable encumbering specific properties
aggregating $38.6 million, (ii) a $40 million secured senior credit facility
with Wachovia Bank and (iii) a $31.2 million secured senior credit facility with
First Union National Bank, as follows:
Specific Mortgage or Construction Notes Payable:
Loan Interest
Property Name Amount Rate
Cape Harbor* $ 9,500,000 6.531% (Variable-LIBOR + 1%)
The Village at Cliffdale 10,509,232 7.875%
Rivergate 9,837,246 8.000%
Morganton Place 8,739,750 6.531% (Variable-LIBOR + 1%)
-------------
$38,586,228
============
*Construction Note Payable
Cross-Collateralize Secured Notes Payable:
Loan Interest
Lender Amount Rate
Wachovia Bank** $10,000,000 7.14% (a)
Wachovia Bank** 5,000,000 6.98% (a)
Wachovia Bank** 25,000,000 6.53% (Variable-LIBOR +1%)
First Union National Bank*** 20,000,000 7.75% (a)
First Union National Bank*** 5,000,000 7.38% (a)
First Union National Bank*** 5,000,000 7.50% (a)
First Union National Bank*** 1,232,805 6.61% (Variable-LIBOR +1.18%)
-----------
$71,232,805
-------------
Total Mortgage Notes Payable $109,819,033
=============
** The $40 million Wachovia Bank senior credit facility is secured by six
properties contained in the Southeast Portfolio. For purposes of this
Form 8- K, LIBOR is assumed to be 5.53% which represents the 3 month
LIBOR on August 15, 1996, the date of the acquisition. There are two
related interest rate swap agreements with Wachovia Bank in the
aggregate notional amount of $15 million under which the Company pays a
fixed-rate of interest and receives a variable-rate on the notional
amounts. The interest rate swaps effectively change the Company's
interest rate exposure from a variable-rate to a fixed-rate of 7.09%
(weighted average) on $15 million of the $40 million senior credit
facility.
*** The $31.2 million First Union National Bank senior credit
facility is secured by seven properties contained in the
Southeast Portfolio. For purposes of this Form 8- K, LIBOR is
assumed to be 5.43% which represents the 1 month LIBOR on
August 15, 1996, the date of the acquisition. There are three
interest rate swap agreements with First Union National Bank in
the aggregate notional amount of $30 million under which the
Company pays a fixed-rate of interest and receives a
variable-rate on the notional amounts. The interest rate swaps
effectively change the Company's interest rate exposure from a
variable-rate to a fixed-rate of 7.65% (weighted average) on
$30 million of the $31.2 million senior credit facility.
The unaudited pro forma statements of operations are not necessarily indicative
of what the Company's results would have been for the nine months ended
September 30, 1996 and for the year ended December 31, 1995 if the acquisitions
had been consummated at the beginning of each period presented, nor do they
purport to be indicative of the results of operations or financial position in
future periods.
8
(1) Represents the Company's Historical Statements of Operations contained
in its Quarterly Report on Form 10-Q for the nine months ended
September 30, 1996 and its Annual Report on Form 10-K for the year
ended December 31, 1995.
(2) Amounts appearing under the column entitled "Acquisitions Previously
Reported on Form 8-K dated June 30, 1995 and Form 8-K dated December
28, 1995" give effect to significant acquisitions that have been
previously reported to the Securities and Exchange Commission by the
Company on Form 8-K dated June 30, 1995 and Form 8-K dated December 28,
1995. A reconciliation of net income for the twelve months ended
December 31, 1995 is as follows:
Net Income
Filing to Update Twelve Months
8-K Filed 8-K (In thousands)
--------- ------------------ ---------------
June 30, 1995 N/A $ 1,821
December 28, 1995 8-K/A 1,741
-----
$ 3,562
=====
(3) Represents operations of the Acquisitions Previously Reported on Form
8-K Dated June 30, 1995 for the 33 day period from April 1, 1995 to May
3, 1995, which represents the period not owned by the Company during
the second quarter of 1995 (based on the operating statements of the
properties for the stub period January 1, 1995 to March 31, 1995). The
unaudited combined statements of rental operations were for the stub
period January 1, 1995 to March 31, 1995.
(4) Reflects the reduction of interest income associated with the use of
short-term investments to acquire Hunters Ridge Apartments (66 of the
365 days during 1995) and Mallards of Wedgewood Apartments (93 of the
365 days during 1995) at market interest rates in effect at the time of
the acquisition. As discussed in the "Basis of Presentation", Hunters
Ridge Apartments and Mallards of Wedgewood Apartments were assumed to
have been acquired with 878,589 shares of the preferred stock. The net
proceeds from the sale of the preferred stock were received on April
24, 1995 and were temporarily invested in short-term investments until
such time as these acquisitions occurred.
Purchase Interest Interest Income
Property Price Rate Adjustment
-------- ----------------- ------ ------------
Hunters Ridge $13,403,983 6.17% $ 149,544
Mallards of Wedgewood 7,823,950 6.00% 119,610
------------- ----------
$21,227,933 $ 269,154
=========== ==========
(5) Reflects the net reduction in property management fees for the
Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and
Form 8-K dated December 28, 1995. The Company internally managed its
apartment portfolio at a then assumed cost of approximately 3.5% of
rental income (based on 1994 actual information). The Company uses 98%
of the amount reported as rental income in calculating the property
management fee, as 2% of the amount reported as rental income is
assumed to be other income which is not subject to management fee. As
documented in Notes 13 and 18, based upon 1995 actual information, the
Company internally managed its apartment properties at an assumed cost
of approximately 2.5% of rental income. The decrease in the management
fee from 3.5% in 1994 to 2.5% in 1995 was a result of the economies of
scale and efficiencies the Company achieved due to the significant
growth experienced by the Company during this same time.
(6) Reflects the net adjustments to depreciation expense to record the
Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and
December 28, 1995 at the beginning of each period presented.
Depreciation is computed on a straight-line basis over the estimated
useful lives of the related assets. Buildings have been depreciated
over 35 years and other improvements over 15 years based upon the
initial cost of the Acquisitions Previously Reported on Form 8-K dated
June 30, 1995 of $65.7 million and Acquisitions Previously Reported on
Form 8-K dated December 31, 1995 of $32.9 million. The allocation and
estimated useful lives are as follows:
9
Acquisitions Previously Reported on Form 8-K dated June 30, 1995:
Estimated Twelve Month
Allocation of Useful Life Depreciation
Purchase Price In Years Adjustment**
-------------- ------------ ---------------
Building $ 50,495,338 35 $ 492,931
Other Improvements 2,916,939 15 66,441
Land 12,292,524 N\A --
---------- -----------
$ 65,704,801 $ 559,372
============ ===========
** The Acquisitions Previously Reported on Form 8-K Dated June 30, 1995
were purchased by the Company on May 4, 1995, as such, the depreciation
adjustment for the twelve months ended December 31, 1995 is computed
for the 123 day period (out of 360 days) the properties were not owned
by the Company.
Acquisitions Previously Reported on Form 8-K dated December 28, 1995:
Estimated Twelve Month
Allocation of Useful Life Depreciation
Purchase Price In Years Adjustment**
-------------- ------------ -----------------
Building $ 25,438,503 35 $ 442,549
Other Improvements 2,138,662 15 86,814
Land 5,290,780 N\A --
------------ --------------
$ 32,867,945 $ 529,363
============ =============
Total $ 98,572,746 $ 1,088,735
============ ============
** The Acquisitions Previously reported on Form 8-K Dated December 28,
1995 were purchased by the Company at various times during the second
and third quarters of 1995. The depreciation adjustment is computed for
each property based on the number of days the properties were not owned
by the Company. The weighted average number of days the properties were
not owned by the Company during 1995 was 219.20 days (out of 360 days).
(7) Reflects the additional interest expense associated with the
Acquisitions Previously Reported on Form 8-K dated December 28, 1995 as
follows: (i) variable-rate bank debt aggregating $2.7 million used to
fund the acquisitions at assumed interest rates equal to market rates
in effect at the time of each respective acquisition, (ii) the
assumption of a fixed-rate mortgage note in the amount of $3.3 million
bearing interest of 7.6% in connection with the acquisition of Marble
Hill Apartments and (iii) the assumption of a $5.6 million
variable-rate tax-exempt housing bond bearing interest of 5.14% in
connection with the acquisition of Andover Place Apartments.
Twelve Month
Amount Interest Interest
Property Type of Debt Debt Rate Adjustment**
-------- ------------ --------------- ------- -------------
Marble Hill Bank Debt $ 2,629,662 6.48% $ 126,517
Marble Hill Mortgage Debt 3,344,066 7.60% 188,697
Andover Place Bank Debt 46,284 6.48% 2,227
Andover Place Tax-Exempt Bonds 5,620,000 5.14% 214,475
--------- ----- -----------
$11,640,012 $ 531,916
============= ==========
** For the twelve months ended December 31, 1995, the interest expense
adjustment is for 271 days (based on a 365 day year) as the properties
were purchased on September 28, 1995.
(8) Reflects the adjustment to net income to record dividends paid to
preferred shareholders on 3,598,001 shares of preferred stock in
calculating net income available to common shareholders for the 114 day
period (out of 365 days) from the period January 1, 1995 to April 24,
1995 for the twelve months ended December 31, 1995.
10
(9) Represents the actual results of operations for the 14 properties
containing 3,196 units which are considered non-development properties.
A reconciliation of the combined rental operations of the development
and non-development properties to the audited combined results of
operations for the twelve months ended December 31, 1995 and the
unaudited combined results of operations for the six months ended June
30, 1996, as appearing in Form 8-K dated August 15, 1996, is as
follows:
Net Income Net Income
Twelve Months Six Months
Properties (In 000's) (In 000's)
---------- ---------------- --------------
Development Properties $ 3,147 $ 2,451
Non-Developmement Properties 10,074 5,550
------ -----
$ 13,221 $ 8,001
======== =======
(10) Represents the actual results of operations for the 4 properties
containing 1,312 units which are considered development properties for
the six month period ended June 30, 1996. See Note 9 above.
(11) Represents operations of South Hills Apartments for the 29 day period
from January 1, 1995 to January 29, 1995, which represents the period
not owned by the Sellers of the Southeast Portfolio during 1995 (based
on the unaudited operating statement of the property for the stub
period January 30, 1995 to December 31 , 1995).
(12) Represents the pro forma results of operations for the 14
non-development properties and the four development properties for the
the 45 day period from July 1, 1996 to August 15, 1996, which was the
period that the properties were not owned by the Company during the
quarter ended September 30, 1996 (based on the unaudited combined
statement of rental operations for the 182 day stub period from January
1, 1996 to June 30, 1996). The unaudited combined statement of rental
operations was for the stub period January 1, 1996 to June 30, 1996, as
appearing in Form 8-K dated August 15, 1996 (See Notes 9 and 10 above).
(13) Reflects the net decrease in property management fees for the
non-development properties. The Company internally manages its
apartment properties at an assumed cost of approximately 2.5% of rental
income (based upon 1995 actual information). The Company uses 98% of
the amount reported as rental income in calculating the property
management fee, as 2% of the amount reported as rental income is
assumed to be other income which is not subject to management fee.
(14) Represents the net increase in insurance expense to reflect that the
Company insures its apartments for approximately $29.97 per unit more
than the historical insurance expense of the 3,196 apartment units for
the the non-development properties contained in Southeast Portfolio
(the nine months ended September 30, 1996, includes a pro forma
adjustment for 227 out of 366 days).
(15) Reflects the net adjustments to depreciation expense to record the
non-development properties in the Southeast Portfolio acquisition at
the beginning of each period presented. Depreciation is computed on a
straight-line basis over the useful lives of the related assets based
upon the actual purchase price allocation of the Southeast Portfolio.
Buildings have been depreciated over 35 years and other improvements
over a weighted average life of 7.1622 years based upon the initial
cost of the non-development properties in the Southeast Portfolio of
$115.7 million. The allocation and useful lives are as follows for the
nondevelopment properties:
Twelve Months Nine Months
Allocation of Useful Life Depreciation Depreciation
Purchase Price In Years Adjustment** Adjustment**
-------------- ----------- ---------------- -------------
Building $ 96,637,354 35 $ 2,761,067 $ 1,712,465
Other Improvements 7,296,003 7.1622 1,018,681 631,805
Land 11,739,024 N\A -- --
---------- ----------------------------------
$115,672,381 $ 3,779,748 $ 2,344,270
============ =========== =============
11
** The nine months ended September 30, 1996, includes a pro forma
adjustment for 227 out of 366 days. The twelve months ended December
31, 1995 includes a pro forma adjustment for the full year.
(16) Reflects the additional interest expense associated with the
acquisition of the non-development properties contained in the
Southeast Portfolio as follows: (i) variable-rate bank debt aggregating
$14.0 million used to fund the acquisition at assumed interest rates
equal to market rates in effect at the time of the acquisition of
6.01%, (ii) the assumption of secured debt in the amount of $75.2
million which includes two mortgage notes aggregating $20.3 million and
seven cross-collateralized notes aggregating $54.9 million with a
weighted average interest rate of 7.36%, and (iii) the issuance of a
fixed-rate $13.9 million note to the Seller of the Southeast Portfolio
bearing interest of 7.10%.
Weighted
Average Twelve Month Nine Month
Interest Interest Expense Interest Expense
Type of Debt Amount Rate Adjustment** Adjustment**
------------ --------------- ------------- ------------- ---------------
Bank Lines $ 13,982,880 6.01% $ 840,371 $ 521,214
Secured Debt* 75,175,680 7.36% 5,534,563 3,432,639
Note to Seller 13,902,591 7.10% 987,084 612,208
------------- -------------- --------------
$103,061,151 $ 7,362,018 $ 4,566,061
============ ============ =============
** The nine months ended September 30, 1996, includes a pro forma
adjustment for 227 out of 366 days. The twelve months ended December
31, 1995 includes a pro forma adjustment for the full year.
(17) Represents the issuance of 934,165 shares of the Company's common stock
to the Seller of the Southeast Portfolio at $13.50 per share
attributable to the non-development properties in the Southeast
Portfolio based upon the aggregate allocated purchase price. The shares
are assumed to have been outstanding from the beginning of each period
presented. The nine months ended September 30, 1996, includes a pro
forma adjustment for 227 out of 274 days. The twelve months ended
December 31, 1995 includes a pro forma adjustment for the full year.
(18) Reflects the net decrease in property management fees for the
development properties. The Company internally manages its apartment
properties at an assumed cost of approximately 2.5% of rental income
(based upon 1995 actual information). The Company uses 98% of the
amount reported as rental income in calculating the property management
fee, as 2% of the amount reported as rental income is assumed to be
other income which is not subject to management fee.
(19) Represents the net increase in insurance expense to reflect that the
Company insures its apartments for approximately $29.97 per unit more
than the historical insurance expense of the 1,312 apartment units for
the development properties contained in Southeast Portfolio. Since the
four development properties were under various stages of construction
during 1995 and 1996, the weighted average number of units outstanding
for both periods presented is used in the calculation of the insurance
expense pro forma adjustment. For the twelve months ended December 31,
1995, and the nine months ended September 30, 1996, the weighted
average number of development units outstanding was 861 and 1,241 (the
nine months ended September 30, 1996, includes a pro forma adjustment
for 227 out of 366 days), respectively.
(20) Reflects the net adjustments to depreciation expense to record the
development properties in the Southeast Portfolio acquisition at the
beginning of each period presented. Depreciation is computed on a
straight-line basis over the useful lives of the related assets based
upon the actual purchase price allocations of the Southeast Portfolio.
Buildings have been depreciated over 35 years and other improvements
over a weighted average life of 6.7 years based upon the initial cost
of the development properties in the Southeast Portfolio of $67.0
million. The allocation and useful lives are as follows for the
development properties:
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For the twelve months ended December 31, 1995:
Weighted Average Twelve Months
Allocation of Allocation of Useful Life Depreciation
Purchase Price Purchase Price** In Years Adjustment** *
-------------- ----------------- ------------ ----------------
Building $ 57,967,420 $37,151,197 35 $ 1,061,463
Other Improvements 4,048,512 2,408,985 6.7 359,550
Land 4,952,938 2,938,969 N\A --
------------- ------------ ------------
$ 66,968,870 $42,499,151 $ 1,421,013
============= =========== ===========
For the nine months ended September 30, 1996:
Weighted Average Nine Months
Allocation of Allocation of Useful Life Depreciation
Purchase Price Purchase Price** In Years Adjustment***
-------------- ---------------- ----------- -------------
Building $ 57,967,420 $54,604,690 35 $ 967,624
Other Improvements 4,048,512 3,768,179 6.7 348,820
Land 4,952,938 4,623,032 N\A --
----------- ------------- ---------------
$ 66,968,870 $62,995,901 $ 1,316,444
============= =========== ===========
** Since the four development properties were under various stages of
construction during 1995 and 1996, the weighted average balance of the
purchase price outstanding for both periods presented is used in the
calculation for the depreciation expense pro forma adjustment.
*** The nine months ended September 30, 1996, includes a pro forma
adjustment for 227 out of 366 days. The twelve months ended December
31, 1995 includes a pro forma adjustment for the full year.
(21) Reflects the additional interest expense associated with the
acquisition of the development properties contained in the Southeast
Portfolio as follows: (i) additional bank debt aggregating $11.2
million used to fund the acquisition at assumed interest rates equal to
market rates in effect at the time of the acquisition of 6.01%, (ii)
the assumption of various secured debt aggregating $34.6 million
bearing a weighted average interest rate of 6.76% which includes one
mortgage note, one construction note and seven cross- collateralized
notes (See Note 3 of the Notes to the Consolidated Balance Sheet) and
(iii) the issuance of a fixed-rate $11.1 million note to the Seller of
the Southeast Portfolio bearing interest of 7.10%.
For the twelve months ended December 31, 1995:
Twelve Months
Development Weighted Average Weighted Average Interest Expense
Property Total Debt Debt Outstanding Interest Rate Adjustment**
-------------- ---------- ----------------- ---------------- ----------------
Morganton Place $ 12,386,796 $ 11,264,470 6.537781% $ 736,446
Lake Brandt 12,000,041 7,495,453 7.016978% 525,954
Cape Harbor 16,733,447 2,868,373 6.540838% 187,616
Stonesthrow 15,781,975 14,919,438 6.684529% 997,294
------------- -------------- --------------
$ 56,902,259 $ 36,547,734 $ 2,447,310
============= ============== ==============
For the nine months ended September 30, 1996:
Development Weighted Average Weighted Average Interest Expense
Property Total Debt Debt Outstanding Interest Rate Adjustment**
------------- ---------- ---------------- ---------------- ----------------
Morganton Place $ 12,386,796 $ 12,386,796 6.537781% $ 502,266
Lake Brandt 12,000,041 12,000,041 7.016978% 522,249
Cape Harbor 16,733,447 13,410,168 6.540838% 544,017
Stonesthrow 15,781,975 15,781,975 6.684529% 654,300
------------- --------------- ------------
$ 56,902,259 $ 53,578,980 $ 2,222,832
============= =============== ===========
** Since the four development properties were under various stages of
construction during 1995 and 1996, the interest expense pro forma
adjustment is based on the weighted average amount of debt outstanding
as determined by the weighted average balance of the purchase price
outstanding during each of the periods presented. For the nine months
ended September 30, 1996, the interest expense adjustment is calculated
on 227 out of 366 days.
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(22) Represents the issuance of 745,675 shares of the Company's common
stock to the Seller of the Southeast Portfolio at $13.50 per share
attributable to the development properties in the Southeast Portfolio
based on the aggregate allocated purchase price. The shares are
assumed to have been issued and outstanding from the earlier of the
beginning of each period presented or the date on which certificates of
occupancy were granted for each unit contained in the development
properties. For the twelve months ended December 31, 1995 and the nine
months ended September 30, 1996, based upon the weighted average
balance of the purchase price outstanding during 1995 and 1996, the
weighted average days the stock is assumed to have been outstanding is
215.79 (out of 365 days) and 175.92 (out of 227 days), respectively.
14
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 hereunto duly authorized.
UNITED DOMINION REALTY TRUST, INC.
Date: October 31, 1996 /s/ James Dolphin
------------------------------- ------------------------------------
James Dolphin, Senior Vice President
Chief Financial Officer
Date: October 31, 1996 /s/ Jerry A. Davis
------------------------------- ------------------------------------
Jerry A. Davis, Vice President
Corporate Controller
15