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
August 2, 2000
-----------------------------------------------
Date of Report (Date of Earliest Event Reported)
AMERICAN REALTY INVESTORS, INC.
-----------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Nevada 1-15663 75-2847135
- -------------------------------------------------------------------------------
(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
---------------
Not Applicable
---------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
- --------------------------------------------
On August 2, 2000, American Realty Trust, Inc. ("ART") and National Realty, L.P.
("NRLP") reorganized and combined under ownership of a new company. As a result
of this transaction, ART and NRLP became subsidiaries of American Realty
Investors, Inc. ("ARI"). ARI distributed shares of ARI common stock to the
current shareholders of ART and the unitholders of NRLP (other than ART). Each
outstanding share of ART common stock was converted into .91 shares of ARI
common stock and each outstanding share of ART preferred stock was converted
into one share of ARI preferred stock with similar rights and privileges. Each
outstanding unit of NRLP (other than those owned by ART or its subsidiaries)
were converted into one share of ARI common stock.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
- -----------------------------------------
(a) Proforma financial information:
The following unaudited proforma combined financial information of ARI
represents the historical consolidated balance sheets and statements of
operations of ART and NRLP after giving effect to the business combination. The
unaudited proforma combined balance sheet data at June 30, 2000 gives effect to
the business combination as if it had occurred on June 30, 2000. The unaudited
proforma combined statements of operations for the six months ended June 30,
2000 and the fiscal year ended December 31, 1999 gives effect to the business
combination as if it had occurred in January 1, 1999. These statements have been
prepared on the basis of accounting as a business combination and are based on
the assumption set forth in the notes thereto.
2
AMERICAN REALTY INVESTORS, INC.
UNAUDITED PROFORMA
COMBINED BALANCE SHEET
June 30, 2000
Historical Proforma
----------
ART (A) Adjustments ARI
----------- -------------- ---------
(dollars in thousands, except per share)
Asset
-----
Notes and interest receivable............. $ 34,530 $ 14,004 (B) $ 34,530
(14,004) (C)
Less - allowance for estimated losses..... (2,577) (2,577)
----------- ----------- ---------
31,953 -- 31,953
Real estate held for sale................. 312,495 312,495
Real estate held for investment, net of
accumulated depreciation................ 438,698 { (67,543) (D) } 372,155
{ 1,000 (E) }
Pizza parlor equipment, net of
accumulated depreciation................ 7,033 7,033
Marketable equity securities, at market
value................................... 847 847
Investment in equity investees............ 41,976 41,976
Intangibles, net of accumulated
amortization............................ 14,074 14,074
Cash and cash equivalents................. 2,732 2,732
Other assets.............................. 50,873 50,873
----------- ----------- ---------
$ 900,681 $ (66,543) $ 834,138
=========== ============ =========
AMERICAN REALTY INVESTORS, INC.
UNAUDITED PROFORMA
COMBINED BALANCE SHEET - Continued
June 30, 2000
Historical Proforma
ART (A) Adjustments ARI
------------ ----------- -----------
(dollars in thousands, except per share)
Liabilities and Stockholders'/Unitholders' Equity
- -------------------------------------------------
Liabilities
Notes and interest payable............................. $ 692,972 $ (14,004) (C) $ 678,968
Margin borrowings...................................... 33,678 33,678
Other liabilities...................................... 25,719 1,000 (E) 26,719
------------ ----------- -----------
752,369 (13,004) 739,365
Minority interest......................................... 109,950 (80,535) (D) 29,415
Stockholders'/Unitholders' Equity
ART/ARI
Preferred Stock
Series F; 2,600,000 shares outstanding (liquidation
preference ($26,000)................................. 4,600 4,600
Series I; 50,000 outstanding (liquidation
preference ($500).................................... 100 100
Common Stock $.01 par value, issued 13,496,348 shares,
historical 15,101,630 shares proforma.................. 115 17 (D) 132
Paid in capital........................................... 85,508 26,979 (D) 112,487
Accumulated (deficit)..................................... (51,953) (51,953)
Treasury stock 827,800 shares historical; 753,298 shares
proforma, at cost...................................... (8) (8)
NRLP
General partner........................................ -- { 14,004 (B) } --
{ (14,004) (D) }
Limited partners; 6,321,524 units
outstanding............................................ -- --
------------ ----------- -----------
38,362 26,996 65,358
------------ ----------- -----------
$ 900,681 $ (66,543) $ 834,138
============ =========== ===========
4
NOTES TO UNAUDITED PROFORMA
COMBINED BALANCE SHEET
June 30, 2000
Note A. As of December 31, 1998 and 1999, ART's financial statements
included the consolidation of NRLP. The assets, liabilities and
equity accounts of NRLP are included in ART's historical
consolidated balance sheet at June 30, 2000. The combination of
ART and NRLP into ARI has been accounted for as purchase
accounting.
Note B. To record note receivable and accrued interest from NMC for its
general partner capital contribution to NRLP.
Note C. To eliminate NMC note payable and NRLP note receivable for NMC
general partner capital contribution.
Note D. To record the purchase by ART of the minority interest in NRLP at
its estimated fair market value. Estimate fair value of 2,732,354
units at $9.88 (the closing price of NRLP units on August 2,
2000).
Note E. To record estimated closing costs.
5
AMERICAN REALTY INVESTORS, INC.
UNAUDITED PROFORMA
COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 2000
Historical Proforma
ART (A) Adjustments ARI
------------ ------------- ------------
(dollars in thousands, except per share)
Property operations
Rents................................. $ 70,503 $ 70,503
Property operations................... 46,675 46,675
------------ ------------
Operating income.................... 23,828 23,828
Land operations
Sales................................. 18,953 18,953
Cost of sales......................... 15,442 15,442
------------ ------------
Gain on land sales.................. 3,511 3,511
Pizza parlor operations
Sales................................. 16,264 16,264
Cost of sales......................... 13,340 13,340
------------ ------------
Gross margin........................ 2,924 2,924
Income from operations.................. 30,263 30,263
Other income
Interest income....................... 3,012 3,012
Equity in income of investees......... 296 296
Gain on sale of real estate........... 48,232 48,232
Other................................. (187) (187)
------------ ------------
51,353 51,353
Other expenses
Interest.............................. 40,573 $ (1,274) (E) 39,299
Depreciation and amortization......... 8,908 (1,689) (F) 7,219
General and administrative............ 8,832 (1,883) (C) 6,949
Advisory fee to affiliate............. 2,624 254 (D) 2,878
Minority interest..................... 27,266 (26,786) (B) 480
------------ ------------- ------------
88,203 (31,378) 56,825
Net (loss).............................. (6,587) 31,378 24,791
Preferred dividend requirement.......... (1,071) (1,071)
------------ ------------- ------------
(7,658) 31,378 23,720
Earnings per share
Net (loss)............................ $ (.71) $ 1.81
============ ============
Weighted average common shares used in
computing earnings per share............ 10,738,003 13,075,268
============ ============
6
NOTES TO UNAUDITED PROFORMA COMBINED STATEMENT OF OPERATIONS
For the Six Months Ended June 30, 1999
(dollars in thousands)
Note A. As of December 31, 1998 and 1999, ART's financial statements
included the consolidation of NRLP. The revenues and expenses of
NRLP are included in ART's historical consolidated statement of
operations for the six months ended June 30, 2000. The
combination of ART and NRLP into ARI has been accounted for as
purchase accounting.
Note B. To eliminate NRLP minority interest included in ART's historical
statement of operations.
Note C. To eliminate BCM costs reimbursements permitted by NRLP's
partnership agreement but identified as costs of the advisor in
ART's advisory agreement with BCM.
Note D. To charge the .75% per annum advisory fee on NRLP's assets at
June 30, 2000, for which a charge had not previously been made.
Note E. To eliminate ART's interest expense relating to NMC's general
partner capital contribution note. Interest income is not
recognized by NRLP.
Note E. To adjust depreciation for excess fair value of minority interest
in NRLP acquired over carrying value of NRLP assets acquired.
Estimated average remaining useful life of 20 years.
7
AMERICAN REALTY INVESTORS, INC.
UNAUDITED PROFORMA
COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
Historical Proforma
----------
ART (A) Adjustments ARI
---------- ----------------- -----------
(dollars in thousands, except per share)
Property operations
Rents................................ $ 157,631 $ 157,631
Property operations.................. 106,554 106,554
----------- -----------
Operating income................... 51,077 51,077
Land operations
Sales................................ 69,618 69,618
Cost of sales........................ 46,066 46,066
----------- -----------
Gain on land sales................. 23,552 23,552
Pizza parlor operations
Sales................................ 30,781 30,781
Cost of sales........................ 26,278 26,278
----------- -----------
Gross margin....................... 4,503 4,503
Income from operations................. 79,132 79,132
Other income
Interest income...................... 6,414 6,414
Equity in income of investees........ 11,847 11,847
Gain on sale of real estate.......... 105,708 105,708
Other................................ (846) (846)
----------- -----------
123,123 123,123
Other expenses
Interest............................. 91,736 $ (2,393) (E) 89,343
Depreciation and amortization........ 17,376 (111) (F) 17,265
General and administrative........... 17,111 (4,728) (C) 12,383
Litigation settlement................ 425 425
Provision for loss................... 3,109 3,109
Advisory fee to affiliate............ 5,538 811 (D) 6,349
Minority interest.................... 56,662 (55,678) (B) 984
----------- --------- -----------
191,957 (62,099) 129,858
Net (loss)............................. 10,298 62,099 72,397
Preferred dividend requirement......... (2,281) (2,281)
----------- --------- -----------
8,017 62,099 70,116
Earnings per share
Net (loss)........................... $ .75 $ 5.58
=========== ===========
Weighted average common shares used in
computing earnings per share......... 10,759,416 12,561,073
=========== ===========
8
NOTES TO UNAUDITED PROFORMA COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
(dollars in thousands)
Note A. To eliminate equity earnings of NRLP included in ART's historical
statement of operations.
Note B. To eliminate BCM costs reimbursements permitted by NRLP's partnership
agreement but identified as a cost of the advisor in ART's advisory
agreement with BCM.
Note C. To charge the .75% per annum advisory fee on NRLP's assets at December
31, 1999, for which a charge had not previously been made.
Note D. To eliminate NRLP interest income and ART interest expense on amounts
due to NRLP from ART.
Note E. To eliminate ART's interest expense related to NMC's general partner
capital contribution note. Interest income is not recognized by NRLP.
Note F. To adjust depreciation for excess of fair value of minority interest
in NRLP acquired over carrying value of NRLP assets acquired.
Estimated average remaining useful life of 20 years.
9
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
- ------------------------------------------
(b) Financial statements of property acquired:
Exhibit
Number Description
- ------- ----------------------------------------------------------------------
99.0 Audited Consolidated Financial Statements of National Realty, L.P. for
the year ended December 1999 (incorporated by reference to Item 8. of
National Realty, L.P.'s Annual Report on Form 10-K, dated March 28,
2000.
99.1 Unaudited Consolidated Financial Statements of National Realty, L.P.
for the six months ended June 30, 2000 (incorporated by reference to
Item 1. of National Realty, L.P.'s Quarterly Report on Form 10-Q for
the quarter ended June 30, 2000, dated August 14, 2000).
10
SIGNATURE PAGE
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 hereto duly authorized.
AMERICAN REALTY INVESTORS, INC.
Date: August 18, 2000 By: /s/ Mark W. Branigan
------------------------ --------------------------------
Mark W. Branigan
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
11