SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 2 to
Current Report
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Original Report: March 27, 1997
CORNERSTONE REALTY INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 0-23954 54-1589139
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
306 East Main Street
Richmond, Virginia 23219
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(804) 643-1761
CORNERSTONE REALTY INCOME TRUST, INC.
FORM 8-K/A
Index
Page No.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
e. Pro Forma Statement of Operations for
the quarter ended March 31, 1997
(unaudited)
Pro Forma Balance Sheet as of
March 31, 1997 (unaudited)
Pro Forma Statement of Operations
for the year ended December 31, 1996
(unaudited)
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The Company hereby amends Item 7.e. of its Current Report on Form 8-K
dated March 27, 1997 as follows:
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ITEM 7.e.
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Pro Forma Statement of Operations for the quarter ended March 31, 1997
(unaudited)
The Unaudited Pro Forma Statement of Operations for the three-month period ended
March 31, 1997 is presented as if 5 of the 7 Property acquisitions during 1997
had occurred on January 1, 1997. The Unaudited Pro Forma Statement of Operations
assumes the Company qualifying as a REIT, distributing at least 95% of its
taxable income, and, therefore, incurred no federal income tax liability for the
period presented. In the opinion of management, all adjustments necessary to
reflect the effects of these transactions have been made.
The Unaudited Pro Forma Statement of Operations is presented for comparative
purposes only and is not necessarily indicative of what the actual results of
the Company would have been for the period ended March 31, 1997 if the
acquisitions had occurred at the beginning of the period presented, nor does it
purport to be indicative of the results of operations in future periods. The
Unaudited Pro Forma Statement of Operations should be read in conjunction with,
and is qualified in its entirety by, the respective historical financial
statements and notes thereto of the Company incorporated by reference into this
Prospectus.
Historical Westchase Paces Arbor
Statement of Pro Forma Pro Forma
Operations Adjustments Adjustments
--------------------------------------------------------------
Date of Acquisitions - 1/15/97 3/1/97
Revenues from rental properties $15,023,222 $166,656 $128,993
Rental expenses:
Utilities 1,316,722 12,070 3,888
Repairs and maintenance 1,475,859 25,811 19,399
Taxes and insurance 1,396,859 16,024 8,094
Property management fee - - -
Property management 264,810 - -
Advertising 440,422 4,139 3,154
General and administrative 412,835 - -
Amortization and other depreciation 7,641 - -
Depreciation of rental property 3,184,003 - -
Other operating expenses 1,093,652 - -
Other 359,386 12,416 9,461
Management contract termination 135,999 - -
--------------------------------------------------------------
10,088,188 70,460 43,996
Income before interest income (expense) 4,935,034 96,196 84,997
Interest income 383,170 - -
Interest expense (1,316,464) - -
--------------------------------------------------------------
Net Income $4,001,740 $96,196 $84,997
Net income per share $0.14
======
Wgt. avg. number of shares outstanding 28,424,683
===========
Paces Forest Ashley Run Carlyle
Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments
-----------------------------------------------------------------
Date of Acquisitions 3/1/97 4/30/97 4/30/97
Revenues from rental properties $154,702 $687,615 $478,382
Rental expenses:
Utilities 4,815 43,534 47,960
Repairs and maintenance 19,103 89,251 69,304
Taxes and insurance 9,108 51,930 35,227
Property management fee - - -
Property management - - -
Advertising 3,298 13,030 9,257
General and administrative - - -
Amortization and other depreciation - - -
Depreciation of rental property - - -
Other operating expenses - - -
Other 9,894 39,089 27,771
Management contract termination - - -
------------------------------------------------------------------
46,218 236,834 189,519
Income before interest income (expense) 108,484 450,781 288,863
Interest income - - -
Interest expense - - -
------------------------------------------------------------------
Net Income $108,484 $450,781 $288,863
Net income per share
Wgt. avg. number of shares outstanding
1997
Pro Forma Total
Adjustments Pro Forma
------------------------- ----------------
Date of Acquisitions - -
Revenues from rental properties - $16,639,570
Rental expenses:
Utilities - 1,428,989
Repairs and maintenance - 1,698,727
Taxes and insurance - 1,517,242
Property management fee - 0
Property management - 264,810
Advertising - 473,300
General and administrative - 412,835
Amortization and other depreciation - 7,641
Depreciation of rental property 286,994 (A) 3,470,997
Other operating expenses - 1,093,652
Other - 458,017
Management contract termination - 135,999
------------------------- --------------
286,994 10,962,209
Income before interest income (expense) (286,994) 5,677,361
Interest income - 383,170
Interest expense (211,190) (B) (1,527,654)
------------------------- -------------
Net Income ($498,184) $4,532,877
Net income per share $0.14
=====
Wgt. avg. number of shares outstanding 3,085,267 (C) 31,509,950
=========== ===============
(A) Represents the depreciation expense of the properties acquired based on the
purchase price, excluding amounts allocated to land, of the properties for the
period of time not owned by the company. The weighted average life of the
property depreciated was 27.5 years.
(B) Represents the interest expense for 3 of the 5 Properties for the period in
which the properties were not owned for the three month period ended March 31,
1997, interest was computed based on interest rates under the Company's line of
credit in effect at the time of the respective acquisition.
(C) Represents additional common shares used to purchase Ashley Run and Carlyle
based upon purhase prices of $18,000,000 and $11,580,000, respectively and
common shares issued in April, 1997 with net proceeds of $9.5875 per share to
the Company.
Pro Forma Balance Sheet as of March 31, 1997 (unaudited)
The Unaudited Pro Forma Balance Sheet gives effect to the 2 Property
acquisitions in April, 1997 having occurred on March 31, 1997.
The Unaudited Pro Forma Balance Sheet is presented for comparative purposes only
and is not necessarily indicative of what the actual financial position of the
Company would have been at March 31, 1997, nor does it purport to represent the
future financial position of the Company. This Unaudited Pro Forma Balance Sheet
should be read in conjunction with, and is qualified in its entirety by, the
respective historical financial statements and notes thereto of the Company
incorporated by reference into this Prospectus.
Historical Ashley Run Carlyle
Balance Pro Forma Pro Forma Total
Sheet Adjustments Adjustments Pro Forma
-------------------------------------------------------------- -------------------
ASSETS 4/30/97 4/30/97
Investment in Rental Property
Land $52,926,166 $ 3,780,000 $ 3,589,800 $60,295,966
Building 279,951,281 14,220,000 7,990,200 302,161,481
Property Improvements 30,901,524 - - 30,901,524
Furniture 7,048,084 - - 7,048,084
-------------------------------------------------------------- -------------------
370,827,055 18,000,000 11,580,000 400,407,055
Less accumulated depreciation (15,523,819) - - (15,523,819)
-------------------------------------------------------------- -------------------
355,303,236 18,000,000 11,580,000 384,883,236
Cash and cash equivalents 4,005,142 - - 4,005,142
Prepaid expenses 385,529 - - 385,529
Other assets 3,591,208 - - 3,591,208
-------------------------------------------------------------- --------------------
7,981,879 - - 7,981,879
-------------------------------------------------------------- --------------------
$363,285,115 $18,000,000 $11,580,000 $392,865,115
============================================================== ===================
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Notes payable $93,395,949 - - $93,395,949
Accounts payable-related party 7,433,092 - - 7,433,092
Accounts payable 712,192 - - 712,192
Accrued expenses 2,558,234 - - 2,558,234
Rents received in advance 193,312 - - 193,312
Tenant security deposits 1,737,330 - - 1,737,330
-------------------------------------------------------------- -------------------
106,030,109 - - 106,030,109
Shareholders' equity
Common stock 281,961,091 18,000,000 11,580,000 (A) 311,541,091
Deferred Compensation (49,501) - - (49,501)
Distributions in excess of net income (24,656,584) - - (24,656,584)
-------------------------------------------------------------- ------------------
257,255,006 18,000,000 11,580,000 286,835,006
-------------------------------------------------------------- -------------------
$363,285,115 $18,000,000 $11,580,000 $392,865,115
============================================================== ===================
(A) Reflects the acquisition of the two properties using proceeds of the common
stock offering in April, 1997, yielding net proceeds of $9.5875 per share to the
Company.
Pro Forma Statement of Operations for the year ended December 31, 1996
(unaudited)
The Unaudited Pro Forma Statement of Operations for the year ended December 31,
1996 is presented as if 20 of the 21 Property acquisitions during 1996 and 5 of
the 7 Property acquisitions during 1997 had occurred on January 1, 1996. The
Unaudited Pro Forma Statement of Operations assumes the Company qualifying as a
REIT, distributing at least 95% of its taxable income, and, therefore, incurred
no federal income tax liability for the period presented. In the opinion of
management, all adjustments necessary to reflect the effects of these
transactions have been made.
The Unaudited Pro Forma Statement of Operations is presented for comparative
purposes only and is not necessarily indicative of what the actual results of
the Company would have been for the period ended December 31, 1996 if the
acquisitions had occurred at the beginning of the period presented, nor does it
purport to be indicative of the results of operations in future periods. The
Unaudited Pro Forma Statement of Operations should be read in conjunction with,
and is qualified in its entirety by, the respective historical financial
statements and notes thereto of the Company incorporated by reference into this
Prospectus.
Historical Pro Forma Westchase Paces Arbor
Statement of 1996 Pro Forma Before 1997 Pro Forma Pro Forma
Operations Acquisitions Adjustments Acquisitions Adjustments Adjustments
------------ ------------ ----------- ------------ ----------- -----------
Date of Acquisitions - - 1/15/97 3/1/97
Revenues from rental properties $40,352,955 $11,707,374 - $52,060,329 $1,999,870 $773,960
Rental expenses:
Utilities 3,870,541 816,694 - 4,687,235 144,841 23,325
Repairs and maintenance 4,203,180 1,883,845 - 6,087,025 309,732 116,391
Taxes and insurance 3,275,422 947,968 - 4,223,390 192,289 48,563
Property management fee 1,243,215 - 603,961 (A) 1,847,176 - -
Property management 741,257 - - 741,257 - -
Advertising 1,126,295 306,249 - 1,432,544 49,665 18,921
General and administrative 1,495,528 - 97,860 (B) 1,593,388 - -
Amortization and other depreciation 47,133 - - 47,133 - -
Depreciation of rental property 8,068,063 - 2,513,278 (C) 10,581,341 - -
Other operating expenses 2,638,183 - - 2,638,183 - -
Other 151,537 927,643 - 1,079,180 148,994 56,764
Management contract termination 16,526,012 - - 16,526,012 - -
------------ ------------ ----------- ------------ ----------- -----------
43,386,366 4,882,399 3,215,099 51,483,864 845,521 263,964
Income before interest income (expense) (3,033,411) 6,824,975 (3,215,099) 576,465 1,154,349 509,996
Interest income 287,344 - - 287,344 - -
Interest expense (1,423,782) - ( 2,991,838)(D) (4,415,620) - -
------------ ---------- ----------- ------------ ----------- -----------
Net Income ($4,169,849) $6,824,975 ($6,206,937) ($3,551,811) $1,154,349 $509,996
Net income per share ($0.21) ($0.14)
------------ ------------
Wgt. avg. number of shares outstanding 20,210,432 4,693,325 (E) 24,903,757
------------ ========== ============
Paces Forest Ashley Run Carlyle
Pro Forma Pro Forma Pro Forma Pro Forma Total
Adjustments Adjustments Adjustments Adjustments Pro Forma
------------ ----------- ----------- ----------- ---------
Date of Acquisitions 3/1/97 4/30/97 4/30/97 -
Revenues from rental properties $928,214 $2,750,461 $1,913,527 - $60,426,361
Rental expenses:
Utilities 28,891 174,135 191,838 - 5,250,265
Repairs and maintenance 114,620 357,004 277,214 - 7,261,986
Taxes and insurance 54,649 207,720 140,909 - 4,867,520
Property management fee - - - $302,088 (A) 2,149,264
Property management - - - - 741,257
Advertising 19,788 52,118 37,029 - 1,610,065
General and administrative - - - - 1,593,388
Amortization and other depreciation - - - - 47,133
Depreciation of rental property - - - 1,482,143 (C) 12,063,484
Other operating expenses - - - - 2,638,183
Other 59,364 156,355 111,086 - 1,611,743
Management contract termination - - - - 16,526,012
------------ ----------- ----------- ----------- ----------
277,312 947,332 758,076 1,784,231 56,360,300
Income before interest income (expense) 650,902 1,803,129 1,155,451 (1,784,231) 4,066,061
Interest income - - - - 287,344
Interest expense - - - (1,657,643)(D) (6,073,263)
------------ ----------- ----------- ----------- ----------
Net Income $650,902 $1,803,129 $1,155,451 ($3,441,874) ($1,719,858)
Net income per share ($0.06)
----------
Wgt. avg. number of shares outstanding 3,085,267 (F) 27,989,024
=========== ==========
(A) Represents the property management fee of 5% of rental income and the
processing costs equal to $2.50 per apartment unit per month charged by the
external management company for the period of time not owned by the Company
until the management contract was terminated in September, 1996.
(B) Represents the advisory fee of .25% of accumulated capital contributions
under the "best efforts" offering for the period of time not owned by the
Company until the time the advisor contract was terminated in September, 1996.
(C) Represents the depreciation expense of the properties acquired based on the
purchase price, excluding amounts allocated to land, of the properties for the
period of time not owned by the Company. The weighted average life of the
property depreciated was 27.5 years.
(D) Represents the interest expense for the properties for the period in which
the properties were not owned for the year ended December 31, 1996, interest was
computed based on interest rates under the Company's line of credit in effect at
the time of the respective acquisition.
(E) Represents additional common shares used to purchase 16 of the 21 properties
purchased during 1996 using the proceeds of the "best efforts" common stock
offering with net proceeds of $9.79 per share to the Company.
(F) Represents additional common shares used to purchase Ashley Run and Carlyle
based upon purchase prices of $18,000,000 and $11,580,000, respectively and
common shares issued in April, 1997 with net proceeds of $9.5875 per share to
the Company.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report on Form 8-K/A to be signed on its behalf
by the undersigned hereunto duly authorized.
Cornerstone Realty Income Trust, Inc.
Date: July 31, 1997 By:/s/ Stanley J. Olander, Jr.
---------------------------
Stanley J. Olander, Jr.
Chief Financial Officer of
Cornerstone Realty Income
Trust, Inc.
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