SECURITIES AND EXCHANGE COMMISSION Washington, DC 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) May 26, 1994 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 changed since last report) ITEM 2. Acquisition or Disposition of Assets On April 1, 1994, the registrant, United Dominion Realty Trust, Inc. (the "Trust") signed 25 separate contracts to acquire a portfolio of 25 apartment communities, located primarily in the Southeast, in separate but related transactions from certain affiliates of Clover Financial Corporation, a New Jersey corporation for $162,997,000, including estimated closing costs (the "Portfolio Acquisition"). The proposed acquisition will be financed through several sources of cash which include (i) the net proceeds from a public offering of 7,000,000 shares of Common Stock, estimated to be $98,700,000, (ii) the assumption of two mortgage loans encumbering two properties in the Portfolio Acquisition totaling $11,700,000, and (iii) senior unsecured debt comprised of a combination of bank line borrowings and term debt. The 25 apartment communities consist of 5,170 total units located on a total of 365 acres, built at various times between 1964 and 1987. ITEM 5. Other Events The Trust anticipates financing a portion of its 1994 property acquisitions, including the Portfolio Acquisition, through the issuance of $75 million to $100 million of 7 to 10 year senior unsecured debt during the third quarter of 1994. To mitigate the risks of rising interest rates, on May 18, 1994, the Trust entered into an interest rate hedge agreement with Goldman, Sachs & Co., a New York limited partnership, which agreement has the effect of limiting the Trust's exposure to an increase in the 10-year Treasury Rate to a maximum of 7.197% for $75,000,000 of its debt to be issued on or before September 15, 1994. ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits Description Location (a) Financial Statements of Businesses Acquired 5 through 14 (b) Pro Forma Financial Information 14 through 23 (c) Exhibits (23) Consents of Independent Auditors 25 through 26 (99) Rate Hedge Agreement, dated May 18, 1994, between United Dominion Realty Trust, Inc. and Goldman, Sachs & Co. 27 through 33 Report of Independent Certified Public Accountants Holly Tree Park Apartments, Knolls at Newgate and Mallard Green Apartments Merchantville, New Jersey We have audited the accompanying combined historical summary of gross income and direct operating expenses of Holly Tree Park Apartments, Knolls at Newgate and Mallard Green Apartments, as defined in Note 2, for the year ended December 31, 1993. This combined historical summary is the responsi- bility of the management of Holly Tree Park Apartments, Knolls at Newgate and Mallard Green Apartments. Our responsibility is to express an opinion on this combined historical 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 combined historical summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined historical summary. An audit also includes assessing the basis of accounting used and the significant estimates made by management, as well as evaluating the overall presentation of the combined historical summary. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined historical summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission as described in Note 1 and is not intended to be a complete presentation of the gross income and direct operating expenses of Holly Tree Park Apartments, Knolls at Newgate and Mallard Green Apartments. In our opinion, the combined historical summary referred to above presents fairly, in all material respects, the combined gross income and combined direct operating expenses described in Note 2 of Holly Tree Park Apartments, Knolls at Newgate and Mallard Green Apartments for the year ended Decem- ber 31, 1993, in conformity with generally accepted accounting principles. /s/ BDO Seidman February 4, 1994 Combined Historical Summary of Gross Income and Direct Operating Expenses Year ended December 31, 1993 Gross income Net revenue $2,628,734 Direct operating expenses Real estate taxes 151,878 Repairs and maintenance 322,839 Utilities 296,193 Property management fees 128,486 Other operating expenses 427,649 Total direct operating expenses 1,327,045 Gross income in excess of direct operating expenses $1,301,689 See accompanying notes to combined historical summary of gross income and direct operating expenses. Notes to Combined Historical Summary of Gross Income and Direct Operating Expenses 1. Basis of Presentation The Holly Tree Park Apartments, Knolls at Newgate and Mallard Green Apartments (the "Properties") consist of three residential apartment properties located in Maryland, Virginia and North Carolina, respectively, together with the existing leases and property management agreements. The assets that comprise the Properties have been held as an investment of Clover Income Properties, L.P., Clover Income Properties II, L.P. and Clover Income Properties III, L.P., respectively (the "Owner"), throughout the period ended December 31, 1993. The accompanying financial statement presents the combined results of the Properties as a stand-alone entity. 2. Summary of Significant Accounting Policies Revenue and Expense Recognition The accompanying financial statement has been prepared using the accrual method of accounting. Rental revenue is recognized when earned and represents potential billings, net of vacancies and bad debts. Certain ex- penses such as depreciation, income taxes, interest expense and corporate expenses are not reflected in the financial statement, as required by Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Repairs and Maintenance Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements (including appliances and carpeting) are capitalized. 3. The Properties The Properties are located in Maryland, Virginia and North Carolina. There are 364 apartment units contained within the Properties. The apartments, which are typically garden-style units with one, two or three bedrooms, are managed by Allstate Management Corporation, an affiliate of the owner of the properties. The apartments are generally leased for terms of six months to one year. Average occupancy of the Properties was approxi- mately 93% during 1993. 4. Property Management Fees Property management services are provided through Allstate Management Corporation, an affiliate of the owner of the Properties. Fees for such services were 5% of gross receipts from operations, as defined in the applicable property management agreements. 5. Commitments and Contingencies The Knolls at Newgate Apartments was acquired subject to an existing ground lease from an unaffiliated third party which expires April 12, 2039. Lease payments of $1,440 ($17,280 per annum) are paid monthly. Additional rent, which is defined as 10% of all collections from tenants in excess of $316,000 for each calendar year, is payable within 90 days after the close of the calendar year. Additional rent payable at December 31, 1993 was $65,987. Report of Independent Auditors To the Board of Directors United Dominion Realty Trust, Inc. We have audited the accompanying combined statement of rental operations of Clover Financial Partnership Properties, as defined in Note 2, for the year ended December 31, 1993. This combined statement is the responsibility of the management of Clover Financial Partnership Properties. Our responsibility is to express an opinion on this combined statement based on our audit. We did not audit the statement of rental operations of Crossroads I, II, and III, Overlook, Park I and II, and Hunting Ridge Apartment Communities, which statements reflect total revenues of $5,638,277 for the year ended December 31, 1993. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Crossroads I, II and III, Overlook, Park I and II and Hunting Ridge Apartment Communities, is based solely on the report of the other auditors. 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 combined statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statement. An audit also includes assessing the basis of accounting used and the significant estimates made by management, as well as evaluating the overall presentation of the combined statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion on a Current Report on Form 8-K of United Dominion Realty Trust as described in Note 1 and is not intended to be a complete presentation of the gross income and direct operating expenses of Clover Financial Partnership Properties. Page 2 In our opinion, based on our audit and the report of other auditors, the combined statement referred to above presents fairly, in all material respects, the combined gross income and combined direct operating expenses described in Note 2 of Clover Financial Partnership Properties for the year ended December 31, 1993, in conformity with generally accepted accounting principles. /s/ ALLOY, SILVERSTEIN, SHAPIRO, ADAMS, MULFORD & CO. ALLOY, SILVERSTEIN, SHAPIRO, ADAMS, MULFORD & CO. May 19, 1994 CLOVER FINANCIAL PARTNERSHIP PROPERTIES COMBINED STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1993 REVENUES FROM RENTAL PROPERTY $ 25,715,828 RENTAL PROPERTY EXPENSES Real Estate Taxes $ 1,823,358 Repairs and Maintenance 4,115,651 Utilities, Water and Sewer 2,165,124 Property Management Fees 1,284,581 Other Operating Expenses 4,061,508 TOTAL RENTAL PROPERTY EXPENSES 13,450,222 INCOME FROM RENTAL OPERATIONS $ 12,265,606 The accompanying notes are an integral part of this statement. Page 3 CLOVER FINANCIAL PARTNERSHIP PROPERTIES NOTES TO THE COMBINED STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1993 1. Basis of Presentation The Clover Financial Partnership Properties consist of residential apartment communities together with the existing leases and property management agreements. The assets that comprise the Properties have been held as investments of Partnerships affiliated with Clover Financial Corp. throughout the year ended December 31, 1993. The accompanying financial statement presents the results of the combined rental operations of the Properties as a single entity. The residential apartment communities included in the financial statement are as follows: Apartment Community Location # of Units Crossroads I, II and III Columbia, South Carolina 622 Overlook Greenville, South Carolina 237 Park I and II Columbia, South Carolina 292 Dover Country Club Dover, Delaware 224 Excalibur Charlotte, North Carolina 240 Great Oaks Ellicott City, Maryland 300 Grove Park Raleigh, North Carolina 65 Hampton Forest Greenville, South Carolina 130 Harris Pond Charlotte, North Carolina 170 Hunting Ridge Greenville, South Carolina 152 Huntingwood Lynchburg, Virginia 114 Indian Hills Anniston, Alabama 140 Landing Greenville, South Carolina 224 Marina Park North Miami, Florida 88 Royal Oaks Savannah, Georgia 228 Somerset Summerville, South Carolina 240 St. Andrews Columbia, South Carolina 232 Three Fountains Montgomery, Alabama 242 Twin Coves Glen Burnie, Maryland 132 Waterford Columbia, South Carolina 268 West Knoll Newark, Delaware 100 Woodside Glen Burnie, Maryland 366 2. Summary of Significant Accounting Policies Revenue and Expense Recognition The accompanying combined statement of rental operations has been prepared using the accrual method of accounting. Certain expenses such as depreciation, amortization, income taxes and mortgage interest expense are not reflected in the statement of rental operations, as required by Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Page 4 CLOVER FINANCIAL PARTNERSHIP PROPERTIES NOTES TO THE COMBINED STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1993 (Continued) 2. Summary of Significant Accounting Policies Repairs and Maintenance Repairs and maintenance costs were expensed as incurred, while significant improvements, renovations and replacements were capitalized. 3. Property Management Fees Property management services were provided through affiliates of Clover Financial Corp. Fees for such services vary by apartment community, as defined in the applicable property management agreements. Property management fees for the year ended December 31, 1993 are summarized as follows: Apartment Community % of Gross Receipts Amount Crossroads I, II and III 4% $ 124,111 Overlook 4% 35,530 Park I and II 4% 44,987 Dover Country Club 6% 84,484 Excalibur Apartments 5% 65,788 Great Oaks 6% 129,550 Grove Park 5% 18,466 Hampton Forest 5% 28,688 Harris Pond - (a) 60,000 Hunting Ridge 5% 27,261 Huntingwood 5% 32,657 Indian Hills 5% 37,032 Landing 5% 51,995 Marina Park 5% 32,453 Royal Oaks - (b) 107,143 Somerset 6% 59,892 St. Andrews 5% 65,069 Three Fountains 3% 38,842 Twin Coves 5% 36,592 Waterford 3% 38,145 West Knoll 5% 32,453 Woodside 6% 133,443 Total $ 1,284,581 (a) Annual fee of $60,000 (b) Seven year agreement for $750,000 ($107,143 annually) Page 5 UNITED DOMINION REALTY TRUST, INC. CERTAIN PROPERTIES PROPOSED TO BE ACQUIRED SUMMARY OF REVENUES AND CERTAIN RENTAL EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1993 (IN THOUSANDS OF DOLLARS) Rental income $28,345 Rental expenses (excluding depreciation): Utilities $2,461 Repairs and maintenance 4,439 Real estate taxes 1,975 Property management 1,413 Other rental expenses 4,489 14,777 Excess of revenues over certain rental expenses $13,568 CERTAIN PROPERTIES PROPOSED TO BE ACQUIRED SUMMARY OF REVENUES AND CERTAIN RENTAL EXPENSES FOR THE THREE MONTHS ENDED MARCH 31, 1994 (IN THOUSANDS OF DOLLARS) Rental income $ 7,149 Rental expenses (excluding depreciation): Utilities $ 737 Repairs and maintenance 1,174 Real estate taxes 511 Property management 357 Other rental expenses 1,127 3,906 Excess of revenues over certain rental expenses $ 3,243 NOTES TO SUMMARY OF REVENUES AND CERTAIN RENTAL EXPENSES The summaries of revenues and certain rental expenses reflect the operations of the Portfolio Acquisition (the "property") for the year ended December 31, 1993 based upon the audited statement of rental operations of the properties appearing elsewhere herein and for the three month period ended March 31, 1994 based upon the unaudited statement of rental operations of the property. The summaries have been prepared on the accrual method of accounting. Rental expenses include repair and maintenance expenses, utilities, real estate taxes, insurance and certain other expenses. In accordance with the regulations of the Securities and Exchange Commission, mortgage interest expenses, depreciation, and general and administrative costs have been excluded from operating expenses, as they are dependent upon a particular owner, purchase price or financial arrangement. In assessing the properties, management considered the existing and potential tenant base, expected job growth in the area, occupancy rates, the competitive nature of the market and comparative rental rates. Furthermore, current and anticipated maintenance and repair costs, real estate taxes and anticipated capital improvements were assessed. UNITED DOMINION REALTY TRUST, INC. PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED) The following balance sheet at March 31, 1994 gives effect to the proposed acquisition by the Trust of the 25 apartment communities included in the Portfolio Acquisition from certain affiliates of the Clover Financial Corporation, a New Jersey corporation. The pro forma condensed statements of operations for the year ended December 31, 1993 and the three months ended March 31, 1994 assume the acquisition of the property as if it had occurred at the beginning of each period presented. The pro forma condensed statements have been prepared by the management of the Trust. The pro forma condensed financial statements of operations may not be indicative of the results that would have occurred had the acquisitions been completed on the dates indicated. Also, they necessarily are not indicative of future results. The pro forma condensed financial statements should be read in conjunction with the Trust's audited financial statements for the year ended December 31, 1993 (included in the Trust's Form 10-K for the year ended December 31, 1993) and the unaudited financial statements as of March 31, 1994 and for the three months then ended (included in the Trust's Form 10-Q for the periods ended March 31, 1994) and the accompanying notes. UNITED DOMINION REALTY TRUST, INC. PRO FORMA BALANCE SHEET MARCH 31, 1994 (UNAUDITED) (IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA) ACQUISITIONS PREVIOUSLY REPORTED ON PORTFOLIO FORM 8-K DATED HISTORICAL (A) ACQUISITION APRIL 15, 1994 BALANCE SHEET ASSETS Real estate owned Apartments............................................................. $532,227 $ 162,997(B) $ 21,198(G) Shopping centers....................................................... 74,450 Office and Industrial.................................................. 4,593 611,270 162,997 21,198 Less accumulated depreciation.......................................... 97,150 514,120 162,997 21,198 Cash and cash equivalents................................................ 10,489 Other assets............................................................. 10,993 $535,602 $ 162,997 $ 21,198 LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage notes payable................................................... $ 72,660 $ 11,700(C) Notes payable............................................................ 188,101 52,597(D) $ 21,198(H) Accounts payable, accrued expenses and other............................. 7,259 Tenants' deposits and rents paid in advance.............................. 3,372 Distributions payable to shareholders.................................... 8,130 279,522 64,297 21,198 Shareholders' equity Common stock, $1 par value; 60,000,000 shares authorized 41,703,785 shares issued and outstanding (48,703,785 in pro forma)..................... 41,704 7,000(E) Additional paid in capital............................................. 302,981 91,700(F) Notes receivable from office shareholders.............................. (4,096) Distributions in excess of earnings.................................... (84,509) Total shareholders' equity............................................. 256,080 98,700 -- $535,602 $ 162,997 $ 21,198 PRO FORMA BALANCE SHEET ASSETS Real estate owned Apartments............................................................. $716,422 Shopping centers....................................................... 74,450 Office and Industrial.................................................. 4,593 795,465 Less accumulated depreciation.......................................... 97,150 698,315 Cash and cash equivalents................................................ 10,489 Other assets............................................................. 10,993 $719,797 LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage notes payable................................................... $ 84,360 Notes payable............................................................ 261,896 Accounts payable, accrued expenses and other............................. 7,259 Tenants' deposits and rents paid in advance.............................. 3,372 Distributions payable to shareholders.................................... 8,130 365,017 Shareholders' equity Common stock, $1 par value; 60,000,000 shares authorized 41,703,785 shares issued and outstanding (48,703,785 in pro forma)..................... 48,704 Additional paid in capital............................................. 394,681 Notes receivable from office shareholders.............................. (4,096) Distributions in excess of earnings.................................... (84,509) Total shareholders' equity............................................. 354,780 $719,797 UNITED DOMINION REALTY TRUST, INC. NOTES TO PRO FORMA BALANCE SHEET MARCH 31, 1994 (UNAUDITED) (A) Represents the Trust's Historical Balance Sheet contained in the Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994. (B) Represents the initial purchase price of $161,950,000 for the 25 properties proposed to be acquired in the Portfolio Acquisition plus estimated closing costs of $1,047,000. (C) Represents the assumption of two mortgage loans encumbering two properties included in the Portfolio Acquisition as follows: LOAN INTEREST PROPERTY NAME AMOUNT RATE Harris Pond Apartments................................................... $5,200,000 8.75% Royal Oaks Apartments.................................................... 6,500,000 8.50% (D) Represents assumed additional borrowings of $52,597,000 necessary to fund a portion of the Portfolio Acquisition. (E) Represents the issuance of 7,000,000 shares in the Offering. (F) Represents the net proceeds from the Offering attributable to Additional Paid in Capital. In determining net proceeds, underwriting discounts and other offering costs equal to 6% of gross proceeds, or $6,300,000, have been assumed. (G) Represents the aggregate purchase price of $21,198,000 of two apartment communities purchased on April 8, 1994 and April 14, 1994, as previously reported on Form 8-K dated April 15, 1994. (H) Represents assumed additional borrowings of $21,198,000 on unsecured notes payable necessary to fund the acquisitions of the properties in (G). UNITED DOMINION REALTY TRUST, INC. PRO FORMA STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1994 (UNAUDITED) (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) ACQUISITIONS PREVIOUSLY REPORTED ON PRO PORTFOLIO FORM 8-K DATED FORMA HISTORICAL (A) ACQUISITION (B) APRIL 15, 1994 (C) ADJUSTMENTS STATEMENT OF OPERATIONS INCOME Property operations: Rental income........................................... $ 26,706 $ 7,149 $1,421 Property expenses: Utilities............................................. 2,712 737 81 Repairs & maintenance................................. 3,716 1,174 257 Real estate taxes..................................... 1,802 511 64 Property management................................... 921 357 72 $ (177)(E) Other operating expenses.............................. 2,234 1,127 283 (139)(F) Depreciation of real estate owned..................... 5,706 1,168(G) 17,091 3,906 757 852 Income from property operations........................... 9,615 3,243 664 (852) Interest income........................................... 114 9,729 3,243 664 (852) EXPENSES Interest................................................ 4,655 1,581(I) General and administrative.............................. 1,474 Other depreciation and amortization..................... 185 6,314 -- -- 1,581 Income before gains (losses) on investments............... 3,415 3,243 664 (2,433) Gains (losses) on sale of investments..................... Net income................................................ $ 3,415 $ 3,243 $ 664 $(2,433) Net income per share...................................... $ 0.08 Distributions declared per share.......................... .195 Weighted average number of shares outstanding............. 41,688 7,000 PRO FORMA STATEMENT OF OPERATIONS INCOME Property operations: Rental income........................................... $35,276 Property expenses: Utilities............................................. 3,530 Repairs & maintenance................................. 5,147 Real estate taxes..................................... 2,377 Property management................................... 1,173 Other operating expenses.............................. 3,505 Depreciation of real estate owned..................... 6,874 22,606 Income from property operations........................... 12,670 Interest income........................................... 114 12,784 EXPENSES Interest................................................ 6,236 General and administrative.............................. 1,474 Other depreciation and amortization..................... 185 7,895 Income before gains (losses) on investments............... 4,889 Gains (losses) on sale of investments..................... Net income................................................ $ 4,889 Net income per share...................................... $ 0.10 Distributions declared per share.......................... .195 Weighted average number of shares outstanding............. 48,688 UNITED DOMINION REALTY TRUST, INC. PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1993 (UNAUDITED) (IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA) ACQUISITIONS ACQUISITIONS PREVIOUSLY PREVIOUSLY REPORTED ON REPORTED ON PRO PORTFOLIO FORM 8-K DATED FORM 8-K DATED FORMA HISTORICAL (A) ACQUISITION (B) APRIL 15, 1994 (C) DECEMBER 31, 1993 (D) ADJUSTMENTS STATEMENT OF OPERATIONS INCOME Property operations: Rental income..................... $ 89,084 $28,345 $6,990 $ 9,424 Property expenses: Utilities....................... 7,838 2,461 379 846 Repairs & maintenance........... 13,950 4,439 773 1,407 Real estate taxes............... 5,777 1,975 565 780 Property management............. 2,782 1,413 297 422 $ (816)(E) Other operating expenses........ 7,512 4,489 1,236 1,552 (554)(F) Depreciation of real estate owned......................... 19,764 6,878(G) 57,623 14,777 3,250 5,007 5,508 Income from property operations..... 31,461 13,568 3,740 4,417 (5,508) Interest income..................... 708 (438)(H) 32,169 13,568 3,740 4,417 (5,946) EXPENSES Interest.......................... 16,938 8,183(I) General and administrative........ 3,349 Other depreciation and amortization.................... 596 20,883 -- -- -- 8,183 Income before gains (losses) on investments....................... 11,286 13,568 3,740 4,417 (14,129) Gains (losses) on sale of investments....................... (89) Net income.......................... $ 11,197 $13,568 $3,740 $ 4,417 $ (14,129) Net income per share................ $ 0.29 Distributions declared per share.... 0.70 Weighted average number of shares outstanding....................... 38,202 7,000 PRO FORMA STATEMENT OF OPERATIONS INCOME Property operations: Rental income..................... $133,843 Property expenses: Utilities....................... 11,524 Repairs & maintenance........... 20,569 Real estate taxes............... 9,097 Property management............. 4,098 Other operating expenses........ 14,235 Depreciation of real estate owned......................... 26,642 86,165 Income from property operations..... 47,678 Interest income..................... 270 47,948 EXPENSES Interest.......................... 25,121 General and administrative........ 3,349 Other depreciation and amortization.................... 596 29,066 Income before gains (losses) on investments....................... 18,882 Gains (losses) on sale of investments....................... (89 ) Net income.......................... $ 18,793 Net income per share................ $ 0.42 Distributions declared per share.... 0.70 Weighted average number of shares outstanding....................... 45,202 UNITED DOMINION REALTY TRUST, INC. NOTES TO PRO FORMA STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND THE YEAR ENDED DECEMBER 31, 1993 (UNAUDITED) (A) Represents the Trust's Historical Statements of Operations contained in its Quarterly Report on Form 10-Q for the three months ended March 31, 1994 and its Annual Report on Form 10-K for the year ended December 31, 1993. (B) Represents actual rental income and related operating expenses of the proposed Portfolio Acquisition, as reported elsewhere herein. (C) Represents rental income and related operating expenses of four apartment acquisitions, as previously reported on Form 8-K dated April 15, 1994. (D) Reflects the net adjustments required to allow for a full year of rental income and operating expenses for the year ended December 31, 1993, for the Trust's acquisitions reported on Form 8-K during 1993. (E) Reflects the net decrease in property management fees for the Portfolio Acquisition and the Trust's 1993 and 1994 acquisitions. The Trust internally manages its apartment properties at a cost of approximately 3% of rental income. (F) Reflects the net decrease in insurance expense to reflect that the Trust insures its apartments for approximately $107 per unit less that the historical insurance expense of the Portfolio Acquisition. (G) Represents the net adjustments to depreciation expense as outlined in the table below. 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 an assumed allocation of the estimated initial cost of the Portfolio Acquisition. 3 MONTHS ENDED 12 MONTHS ENDED MARCH 31, 1994 DECEMBER 31, 1993 Increase related to the Portfolio Acquisition $1,022,000 $ 4,088,000 Increase related to the acquisitions previously reported on Form 8-K dated April 15, 1994 146,000 1,280,000 Increase related to the acquisitions previously reported on Form 8-K dated December 31, 1993 -- 1,510,000 Total $1,168,000 $ 6,878,000 (H) Reflects the reduction of interest income associated with the use of short-term investments to acquire the properties at assumed interest rates in effect at the time of each respective acquisition for the year ended December 31, 1993, for the Trust's 1993 acquisitions reported on Form 8-K during 1993. (I) Reflects the additional interest expense associated with the increase in bank lines of credit and the assumption of two mortgage notes assumed to have been incurred by the Trust to purchase (i) the Portfolio Acquisition at interest rates and maturities which are currently available to the Trust, (ii) the 1994 apartment acquisitions through May 13, 1994 at interest rates under the Trust's bank lines of credit on the date of purchase, and (iii) the 1993 apartment acquisitions made by the Trust at interest rates and maturities that were available at the time of each acquisition as follows: 3 MONTHS ENDED 12 MONTHS ENDED MARCH 31, 1994 DECEMBER 31, 1993 Increase related to the Portfolio Acquisition $1,192,000 $ 4,769,000 Increase related to the acquisitions previously reported on Form 8-K dated April 15, 1994 389,000 1,871,000 Increase related to the acquisitions previously reported on Form 8-K dated December 31, 1993 -- 1,543,000 Total $1,581,000 $ 8,183,000 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. UNITED DOMINION REALTY TRUST, INC. Date: May 26, 1994 /s/ James Dolphin James Dolphin, Senior Vice President Chief Financial Officer Date: May 26, 1994 /s/ Jerry A. Davis Jerry A. Davis, Vice President Controller