As filed with the Securities and Exchange Commission on September 18,1997
- --------------------------------------------------------------------------------
UNITED STATES
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
SEPTEMBER 17, 1997
(Date of Report)
EQUITY RESIDENTIAL PROPERTIES TRUST
(Exact Name of Registrant as Specified in its Charter)
1-12252
(Commission File No.)
MARYLAND 13-3675988
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation)
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 474-1300
(Registrant's Telephone Number, Including Area Code)
- --------------------------------------------------------------------------------
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITIONS
Equity Residential Properties Trust and its subsidiaries (the "Company")
acquired two multi-family properties on August 27, 1997. The cash portion of
this transaction was financed primarily through the June 1997 Common Share
Offerings. Descriptions of the acquired properties follow. The Company has
also entered into a contract to acquire an additional 17 properties which are
discussed in Item 5.
Capitalized terms not defined herein are used as defined in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, as amended by Form 10-
K/A, and the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1997.
PACES STATION APARTMENTS AND PACES ON THE GREEN APARTMENTS, ATLANTA, GEORGIA
On August 27, 1997, the Company acquired two multifamily properties located in
Atlanta, Georgia ("Paces Station" and "Paces on the Green"). Paces Station was
approximately 94% occupied as of June 30, 1997. The property consists of 400
units in 37 two and three story residential buildings and one office/clubhouse
on approximately 32 acres. Amenities include a clubhouse, two swimming pools,
jacuzzi, wood burning fireplaces with gas starters, mini blinds, laundry
facilities, microwaves, breakfast bars, pantries, built-in bookshelves in select
units, and washer/dryer connections in all units. The property was constructed
in phases from 1984-1988. Property management services are being provided by
the Company since the date of acquisition.
Paces on the Green was approximately 98% occupied as of June 30, 1997. The
property consists of 210 units in 14 two and three story residential buildings
and one clubhouse on approximately nine acres. Amenities include a clubhouse,
two swimming pools, jacuzzi, lighted tennis courts, croquet and putting green,
car wash facilities, microwaves, washer/dryer hook-ups in all units, mini
blinds, and fireplaces in select units. The property was constructed in 1989.
Property management services are being provided by the Company since the date of
acquisition.
TERMS OF PURCHASE
Paces Station and Paces on the Green were purchased from an unaffiliated third
party for $37.3 million.
2
ITEM 5. OTHER EVENTS
THE AMERITECH TRANSACTION
The Company entered into a contract with an unaffiliated third party to acquire
17 multifamily properties. Below are the expected terms of purchase and the
descriptions of the properties which the Company deems to be probable
acquisitions (the "Ameritech Pension Trust Probable Properties" or the "Probable
Properties").
The descriptions and terms of purchase for the Probable Properties are discussed
below.
Capitalized terms not defined herein are used as defined in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, as amended by Form 10-
K/A, and the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1997.
EXPECTED TERMS OF PURCHASE
The aggregate purchase price of the Probable Properties is $292.4 million, which
includes the assumption of approximately $136 million of mortgage indebtedness
and the issuance of Common Shares in the amount of approximately $156.4 million.
DESCRIPTIONS OF PROPERTIES
AUTUMN CREEK APARTMENTS, CORDOVA, TENNESSEE
Autumn Creek Apartments ("Autumn Creek") is a 210-unit multifamily property
located in Cordova, Tennessee. Autumn Creek was approximately 92% occupied as
of July 28, 1997. The property consists of 20 two and three story buildings and
a clubhouse/leasing office on approximately 14 acres. Amenities include a
leasing office/clubhouse, lighted tennis court, swimming pool, sauna, whirlpool,
fitness center, vaulted ceilings, and washer/dryers in all units. The property
was constructed in 1991.
3
BLUE SWAN APARTMENTS, SAN ANTONIO, TEXAS
Blue Swan Apartments ("Blue Swan") is a 285-unit multifamily property located in
San Antonio, Texas. Blue Swan was approximately 87% occupied as of June 20,
1997. The property consists of 28 two and three story residential buildings
and two clubhouses on approximately 12 acres. Amenities include two clubhouses,
two swimming pools, two jacuzzis, fitness room, cabana, perimeter fencing with
card operated access gates, and washer/dryer connections in 261 units. The
property was constructed between 1985 and 1994.
BROOKRIDGE APARTMENTS, CENTREVILLE, VIRGINIA
Brookridge Apartments ("Brookridge") is a 252-unit multifamily property located
in Centreville, Virginia. Brookridge was approximately 97% occupied as of June
18, 1997. The property consists of 25 three and four story residential
buildings and a clubhouse/leasing office on approximately 15 acres. Amenities
include a clubhouse, swimming pool, fitness center, lighted tennis court,
washer/ dryers in each unit, fireplaces in select units, vaulted ceilings,
biking and jogging trails, and built in microwave ovens. The property was
constructed in 1989.
CHANTECLEER LAKES APARTMENTS, NAPERVILLE, ILLINOIS
Chantecleer Lakes Apartments ("Chantecleer Lakes") is a 304-unit multifamily
property located in Naperville, Illinois. Chantecleer Lakes was approximately
92% occupied as of June 19, 1997. The property consists of 16 two story
residential buildings and a single-story clubhouse on approximately 19 acres.
Amenities include a swimming pool, clubhouse, health club with spa, washers and
dryers in each unit, three spring fed lakes, sunken living rooms, built-in
microwaves in each unit, and an intercom entry system. The property was
constructed in 1986.
CRESCENT AT CHERRY CREEK APARTMENTS, DENVER, COLORADO
Crescent at Cherry Creek Apartments ("Crescent at Cherry Creek") is a 216-unit
multifamily property located in Denver, Colorado. Crescent at Cherry Creek was
approximately 93% occupied as of July 23, 1997. The property consists of nine
three-story residential buildings and a single-story clubhouse. Amenities
include a clubhouse, swimming pool, spa, exercise/fitness facility, controlled
access gates, individual garages with openers, washer/dryer connections, and
fireplaces. The property was constructed in 1994.
GOVERNOR'S POINT APARTMENTS, ROSWELL, GEORGIA
Governor's Point Apartments ("Governor's Point") is a 468-unit multifamily
property located in Roswell, Georgia. Governor's Point was approximately 93%
occupied as of July 22, 1997. The property consists of 48 two story residential
buildings and two clubhouses on approximately 34 acres. Amenities include two
clubhouses, two swimming pools, spa, four lighted tennis courts, exercise room,
tot lot, washer/dryer connections, and fireplaces. The property was constructed
between 1982 and 1986.
4
HIDDEN PALMS APARTMENTS, TAMPA, FLORIDA
Hidden Palms Apartments ("Hidden Palms") is a 256-unit multifamily property
located in Tampa, Florida. Hidden Palms was approximately 88% occupied as of
July 7, 1997. The property consists of 15 two and three story residential
buildings and a single story clubhouse/leasing office on approximately 14 acres.
Amenities include a leasing office/ clubhouse, swimming pool, fitness center,
two jacuzzis, washer/dryer connections in all units, washer/dryers in select
units, vaulted ceilings, and picnic areas. The property was constructed in
1986.
IDLEWOOD APARTMENTS, INDIANAPOLIS, INDIANA
Idlewood Apartments ("Idlewood") is a 320-unit multifamily property located in
Indianapolis, Indiana. Idlewood was approximately 94% occupied as of June 30,
1997. The property consists of 20 two and three story residential buildings
and a one story clubhouse on approximately 29 acres. Amenities include a
clubhouse, swimming pool, playground, exercise room, sauna, carports and
garages. The property was constructed in 1991.
JEFFERSON AT WALNUT CREEK APARTMENTS, AUSTIN, TEXAS
Jefferson at Walnut Creek ("Jefferson at Walnut Creek") is a 342-unit
multifamily property located in Austin, Texas. Jefferson at Walnut Creek was
approximately 96% occupied as of June 18, 1997. The property consists of 15
three story residential buildings, one clubhouse, and one pool house on
approximately 20 acres. Amenities include a clubhouse, two swimming pools,
fitness center, spa, covered parking and garages, perimeter fence with access
gates, intrusion alarms, microwaves, fireplaces in some units, and washer/dryer
hookups. The property was constructed in 1994.
KIRBY PLACE APARTMENTS, HOUSTON, TEXAS
Kirby Place Apartments ("Kirby Place") is a 362-unit multifamily property
located in Houston, Texas. Kirby Place was approximately 97% occupied as of
June 18, 1997. The property consists of 15 three story and two four story
residential buildings on approximately nine acres. Amenities include a
clubhouse with conference/film room, business center, fitness room and aerobics
room, guard house, swimming pool, mountain bikes, nine foot ceilings, crown
molding, and washer/dryers in all units. The property was constructed in 1994.
LARKSPUR WOODS APARTMENTS, SACRAMENTO, CALIFORNIA
Larkspur Woods Apartments ("Larkspur Woods") is a 232-unit multifamily property
located in Sacramento, California. Larkspur Woods was approximately 97%
occupied as of June 20, 1997. The property consists of 27 two story
residential buildings and one clubhouse on approximately 16 acres. Amenities
include a heated outdoor swimming pool and spa, wood burning fireplaces,
clubhouse with business center and library, exercise room, gated entrance,
basketball half court, full size washer/dryers in each unit, picnic area, sauna,
and attached garages. The property was constructed in phases between 1989 and
1993.
5
NORTHWOODS VILLAGE APARTMENTS, CARY, NORTH CAROLINA
Northwoods Village Apartments ("Northwoods Village") is a 228-unit multifamily
property located in Cary, North Carolina. Northwoods Village was approximately
97% occupied as of June 30, 1997. The property consists of 23 two story
residential buildings and one clubhouse/leasing office on approximately 14
acres. Amenities include a leasing office/clubhouse, two swimming pools, lighted
tennis court, sand volleyball court, full size washer/dryers in each unit,
vaulted ceilings, and fireplaces. The property was constructed in 1986.
ORCHARD OF LANDEN APARTMENTS, MAINEVILLE, OHIO
Orchard of Landen Apartments ("Orchard of Landen") is a 312-unit multifamily
property located in Maineville, Ohio. Orchard of Landen was approximately 97%
occupied as of July 25, 1997. The property consists of 39 two story residential
buildings on approximately 33 acres. Amenities include a clubhouse, swimming
pool and spa, exercise room, membership to Pine Ridge Recreation Association,
jogging trails, and washer/dryers hook ups. The property was constructed
between 1985 and 1988.
PREAKNESS APARTMENTS, ANTIOCH, TENNESSEE
Preakness Apartments ("Preakness") is a 260-unit multifamily property located in
Antioch, Tennessee. Preakness was approximately 90% occupied as of June 20,
1997. The property consists of 15 three story residential buildings and one
clubhouse/leasing office on approximately 13 acres. Amenities include a leasing
office/clubhouse, swimming pool, fitness center, indoor jacuzzi, lighted tennis
court, sand volleyball court, barbecue/picnic area, woodburning fireplaces,
large private balconies, and washer/dryer connections in each unit. The
property was constructed in 1986.
RIVERSIDE PARK APARTMENTS, TULSA, OKLAHOMA
Riverside Park Apartments ("Riverside Park") is a 288-unit multifamily property
located in Tulsa, Oklahoma. Riverside Park was approximately 97% occupied as
of July 22, 1997. The property consists of 12 three story residential buildings
and one clubhouse. Amenities include a clubhouse, swimming pool, spa,
washer/dryer connections, washer/dryers and vaulted ceilings in select units,
and fireplaces. The property was constructed in 1994.
SYCAMORE CREEK APARTMENTS, SCOTTSDALE, ARIZONA
Sycamore Creek Apartments ("Sycamore Creek") is a 350-unit multifamily property
located in Scottsdale, Arizona. Sycamore Creek was approximately 86% occupied
as of July 22, 1997. The property consists of 20 two story residential
buildings and two clubhouses on approximately 19 acres. Amenities include two
clubhouses, two swimming pools, two spas, two lighted tennis courts, exercise
room, sauna, washer/dryer connections, and fireplaces. The property was
constructed in 1984.
6
TRINITY LAKES APARTMENTS, CORDOVA, TENNESSEE
Trinity Lakes Apartments ("Trinity Lakes") is a 330-unit multifamily property
located in Cordova, Tennessee. Trinity Lakes was approximately 97% occupied as
of July 28, 1997. The property consists of 20 three story residential buildings
and one clubhouse/leasing office on approximately 26 acres. Amenities include a
leasing office/clubhouse, swimming pool, two lighted tennis courts, jacuzzi,
sauna, racquetball court, vaulted ceilings, washer/dryers and built in
microwaves in each unit, and fireplaces in select units. The property was
constructed in 1985.
The Company expects to provide property management services for the Probable
Properties.
The closings of the Probable Properties are subject to certain contingencies and
conditions, therefore, there can be no assurance that any or all of these
transactions will be consummated, or that the final terms thereof will not
differ in material respects from those summarized above.
7
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
C. EXHIBITS
--------
24.1 CONSENT OF ERNST & YOUNG LLP
No information is required under Items 1, 3, 4, and 6, and these items
have therefore been omitted.
8
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
REQUIRED UNDER ITEM 7(b) OF FORM 8-K
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Capitalized terms not defined herein are used as defined in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996, as amended by Form 10-
K/A, and the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1997.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1997 and Statements of Operations for the six months ended June 30,
1997 and for the year ended December 31, 1996 have been presented as if the June
1997 Common Share Offerings and the acquisition or probable acquisition of 19
multifamily properties had occurred on June 30, 1997 with respect to the June
30, 1997 balance sheet, January 1, 1997 with respect to the statement of
operations for the six months ended June 30, 1997 and January 1, 1996 with
respect to the statement of operations for the year ended December 31, 1996.
All of these properties are included on a pro forma basis as described in Note A
of the Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1997.
The unaudited Pro Forma Condensed Consolidated Financial Statements are not
necessarily indicative of the results of future operations, nor the results of
historical operations, had all the transactions occurred as described above on
either January 1, 1996 or January 1, 1997.
The Pro Forma Condensed Consolidated Financial Statements should be read in
conjunction with the accompanying Notes to the Pro Forma Condensed Consolidated
Financial Statements, the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, as amended by Form 10-K/A, the Company's Quarterly
Report on Form 10-Q for the quarterly period ended June 30, 1997 and the
Combined Statements of Revenue and Certain Expenses for the acquired and for the
probable properties (included elsewhere herein).
10
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
MOST RECENT
PROBABLE ACQUIRED PRO
HISTORICAL PROPERTIES (A) PROPERTIES (B) FORMA
--------------- ------------------ ----------------- ------------
ASSETS
Rental property, net $ 4,124,835 $ 297,502 $ 37,940 $ 4,460,277
Real estate held for disposition 3,947 -- -- 3,947
Investment in mortgage notes, net 174,764 -- -- 174,764
Cash and cash equivalents 311,358 (5,102) (37,940) 268,316
Rents receivable 2,078 -- -- 2,078
Deposits-restricted 6,112 -- -- 6,112
Escrows deposits-mortgage 28,698 -- -- 28,698
Deferred financing costs, net 14,306 -- -- 14,306
Other assets 72,636 -- -- 72,636
--------------- ------------------ ----------------- ------------
Total assets $ 4,738,734 $ 292,400 $ -- $ 5,031,134
=============== ================== ================= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 960,879 $ 136,000 $ -- $ 1,096,879
Line of credit -- -- -- --
Notes, net 754,508 -- -- 754,508
Accounts payable and accrued expenses 43,001 -- -- 43,001
Accrued interest payable 22,210 -- -- 22,210
Due to affiliates 649 -- -- 649
Rents received in advance and other liabilities 31,844 -- -- 31,844
Security deposits 19,231 -- -- 19,231
Distributions payable 64,506 -- -- 64,506
--------------- ------------------ ----------------- ------------
Total liabilities 1,896,828 136,000 -- 2,032,828
--------------- ------------------ ----------------- ------------
Commitments and contingencies
Minority Interests 179,222 -- -- 179,222
--------------- ------------------ ----------------- ------------
Shareholders' equity:
Common shares 736 34 -- 770
Preferred shares 725,495 -- -- 725,495
Employee notes (5,202) -- -- (5,202)
Paid in capital 2,050,152 156,366 -- 2,206,518
Distributions in excess of accumulated earnings (108,497) -- -- (108,497)
--------------- ------------------ ----------------- ------------
Total shareholders' equity 2,662,684 156,400 -- 2,819,084
--------------- ------------------ ----------------- ------------
Total liabilities and shareholders' equity $ 4,738,734 $ 292,400 $ -- $ 5,031,134
=============== ================== ================= ============
(A) Reflects the probable acquisitions of Hidden Palms, Idlewood, Riverside
Park, Sycamore Creek, Blue Swan, Autumn Creek, Governor's Point, Northwoods
Village, Preakness, Trinity Lakes, Larkspur Woods, Brookridge, Chantecleer
Lakes, Orchard of Landen, Crescent at Cherry Creek, Jefferson at Walnut
Creek and Kirby Place (collectively the "Probable Properties"). In
connection with such probable acquisitions: (i) the amounts presented
include the initial purchase price as well as subsequent closing costs
anticipated to be incurred and capital improvements anticipated to be
required as identified in the acquisition process; (ii) the expected
assumption of $136 million of mortgage indebtedness; and (iii) the expected
issuance of Common Shares with an expected value of approximately $156.4
million.
(B) Reflects the most recent multifamily property acquisitions, which include
Paces on the Green and Paces Station (collectively the "Most Recent Acquired
Properties").
11
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR SHARE DATA)
MOST RECENT
PROBABLE ACQUIRED ACQUIRED PRO
HISTORICAL PROPERTIES (A) PROPERTIES (B) ADJUSTMENTS (C) FORMA
---------- -------------- -------------- --------------- ---------
REVENUES
Rental income $ 290,799 $ 19,907 $ 2,531 $ -- $ 313,237
Fee and asset management 3,110 -- -- -- 3,110
Interest income - investment in mortgage notes 8,011 -- -- -- 8,011
Interest and other income 4,404 -- -- (2,411) 1,993
----------- ------------- ------------- --------------- ----------
Total revenues 306,324 19,907 2,531 (2,411) 326,351
----------- ------------- ------------- --------------- ----------
EXPENSES
Property and maintenance 70,760 6,409 954 (926) 77,197
Real estate taxes and insurance 29,667 2,388 254 -- 32,309
Property management 11,819 -- -- 561 12,380
Fee and asset management 1,569 -- -- -- 1,569
Depreciation 62,775 -- -- 5,032 67,807
Interest: --
Expense incurred 50,924 -- -- 4,420 55,344
Amortization of deferred financing costs 1,220 -- -- 1,220
General and administrative 6,206 -- -- -- 6,206
---------- ------------- ------------- --------------- ----------
Total expenses 234,940 8,797 1,208 9,087 254,032
---------- ------------- ------------- --------------- ----------
Income before gain on disposition of properties
and allocation to Minority Interests 71,384 $ 11,110 $ 1,323 $ (11,498) 72,319
============= ============= ===============
Gain on disposition of properties 3,632 --
---------- ----------
Income before allocation to Minority Interests 75,016 72,319
(Income) allocated to Minority Interests (D) (6,345) (5,102)
---------- ----------
Net income 68,671 67,217
Preferred distributions 20,939 20,939
---------- ----------
Net income available to Common Shares $ 47,732 $ 46,278
========== ==========
Net income per weighted average Common
Share outstanding $ 0.86 $ 0.69
========== ==========
Weighted average Common Shares outstanding 55,385 (E) 67,110
========== ==========
(A) Reflects the results of operations for the Probable Properties. The amounts
presented represent the historical amounts for certain revenues and expenses
for the six months ended June 30, 1997.
(B) Reflects the results of operations for the Most Recent Acquired Properties.
The amounts presented for rental revenues, property and maintenance and real
estate taxes and insurance are based on the revenues and certain expenses of
the Most Recent Acquired Propertie s for the six months ended June 30, 1997.
12
(C) Reflects the following adjustments to the Probable Properties and Most
Recent Acquired Properties results of operations as follows:
Interest and other income:
Reduction of interest income due to the use of working capital for property
acquisitions $ (2,411)
============
Property and maintenance:
The elimination of third-party management fees where the Company is providing onsite property
management services $ (926)
============
Property management:
Incremental cost associated with self management of the Probable Properties and the Most
Recent Acquired Properties for the six months ended June 30, 1997 $ 561
============
Depreciation:
Reflects depreciation based on the expected total investment of $335.4 million for the Probable
Properties and the Most Recent Acquired Properties less 10% allocated to land and depreciated
over a 30-year life for real property. Depreciation for the Probable Properties and the Most
Recent Acquired Properties reflect amounts for the six months ended June 30,1997. $ 5,032
============
Interest:
Expense incurred:
Interest on mortgage indebtedness for the Probable Properties. (F) 4,420
============
(D) A portion of income was allocated to Minority Interests representing
interests in the Operating Partnership not owned by the Company. The pro
forma allocation to Minority Interests (represented by OP Units) is based
upon the percentage owned by such Minority Interests after giving effect to
the pro forma transactions.
(E) Pro Forma weighted average Common Shares outstanding for the six months
ended June 30, 1997 was 67.1 million, which assumes the Common Shares issued
in connection with the June 1997 Common Share Offerings were outstanding as
of January 1, 1997 and includes approximately 3.4 million Common Shares
issued in connection with the acquisition of the Probable Properties. The
Common Shares outstanding does not include any shares issued in a private or
public offering that have not been used or are not intended to be used for
acquisitions or repayment of debt directly incurred in an acquisition.
(F) Detail of interest expense on mortgage indebtedness for the Probable
Properties:
Mortgage Interest Interest
Property Indebtedness Rate Expense
- ------------------------------ --------------- ------------- ----------
Hidden Palms $ 4,174 6.50% $ 136
Idlewood 6,574 6.50% 214
Riverside Park 6,900 6.50% 224
Sycamore Creek 10,093 6.50% 328
Blue Swan 4,199 6.50% 136
Autumn Creek 4,958 6.50% 161
Governor's Point 13,226 6.50% 430
Northwoods Village 6,004 6.50% 195
Preakness 4,299 6.50% 140
Trinity Lakes 7,916 6.50% 257
Larkspur Woods 9,523 6.50% 309
Brookridge 8,100 6.50% 263
Cantecleer Lakes 10,203 6.50% 332
Orchard of Landen 9,229 6.50% 300
Crescent at Cherry Creek 8,335 6.50% 271
Jefferson at Walnut Creek 8,358 6.50% 272
Kirby Place 13,909 6.50% 452
--------------- ----------
Totals $ 136,000 $ 4,420
=============== ==========
13
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR SHARE DATA)
MOST RECENT
PROBABLE ACQUIRED PRO
HISTORICAL PROPERTIES (A) PROPERTIES (B) ADJUSTMENTS (C) FORMA
---------- -------------- -------------- --------------- ---------
REVENUES
Rental income $ 454,412 $ 39,251 $ 5,368 $ -- $ 499,031
Fee and asset management 6,749 -- -- -- 6,749
Interest income - investment in mortgage notes 12,819 -- -- -- 12,819
Interest and other income 4,405 -- -- (2,942) 1,463
---------- -------------- -------------- --------------- ---------
Total revenues 478,385 39,251 5,368 (2,942) 520,062
---------- -------------- -------------- --------------- ---------
EXPENSES
Property and maintenance 127,172 12,696 1,558 (1,846) 139,580
Real estate taxes and insurance 44,128 4,531 482 -- 49,141
Property management 17,512 -- -- 1,115 18,627
Fee and asset management 3,837 -- -- -- 3,837
Depreciation 93,253 -- -- 10,063 103,316
Interest:
Expense incurred 81,351 -- -- 8,840 90,191
Amortization of deferred financing costs 4,242 -- -- -- 4,242
General and administrative 9,857 -- -- -- 9,857
---------- -------------- -------------- --------------- ---------
Total expenses 381,352 17,227 2,040 18,172 418,791
---------- -------------- -------------- --------------- ---------
Income before gain on disposition of properties 97,033 $ 22,024 $ 3,328 $ (21,114) 101,271
============== ============== ===============
Gain on disposition of properties 22,402 --
---------- ---------
Income before extraordinary item 119,435 101,271
Extraordinary item:
Write-off of unamortized costs on refinanced
debt (3,512) --
---------- ---------
Income before allocation to Minority Interests 115,923 101,271
(Income) allocated to Minority Interests (D) (14,299) (9,805)
---------- ---------
Net income 101,624 91,466
Preferred distributions 29,015 29,015
---------- ---------
Net income available to Common Shares $ 72,609 $ 62,451
========== =========
Net income per weighted average Common
Share outstanding $ 1.70 $ 1.14
========== =========
Weighted average Common Shares outstanding 42,586 (E) 54,997
========== =========
(A) Reflects the results of operations of the Probable Properties. The amounts
presented for rental revenues, property and maintenance and real estate
taxes and insurance are based on the revenues and certain expenses of the
Probable Properties for the year ended December 31, 1996.
(B) Reflects the results of operations for the Most Recent Acquired Properties.
The amounts presented for rental revenues, property and maintenance and
real estate taxes and insurance are based on the revenues and certain
expenses of the Most Recent Acquired Properties for the year ended December
31, 1996.
14
(C) Reflects the following adjustments to the Probable Properties and Most
Recent Acquired Properties results of operations as follows:
Interest and other income:
Reduction of interest income due to the use of working
capital for property acquisitions $ (2,942)
==========
Property and maintenance:
The elimination of third-party management fees where the
Company is providing onsite property management services $ (1,846)
==========
Property management:
Incremental cost associated with self management of the
Probable Properties and the Most Recent Acquired Properties
for the year ended December 31, 1996 $ 1,115
==========
Depreciation:
Reflects depreciation based on the expected total investment
of $335.4 million for the Probable Properties and the Most
Recent Acquired Properties less amounts allocated to land,
generally 10%, and depreciated over a 30-year life for real
property. $ 10,063
==========
Interest:
Expense incurred:
Interest on mortgage indebtedness for the Probable
Properties. (F) $ 8,840
==========
(D) A portion of income/loss was allocated to Minority Interests representing
interests in the Operating Partnership not owned by the Company. The pro
forma allocation to Minority Interests (represented by OP Units) is based
upon the percentage owned by such Minority Interests after giving effect to
the pro forma transactions.
(E) Pro Forma weighted average Common Shares outstanding for the year ended
December 31, 1996 was 55 million, which includes 42.6 million weighted
average Common Shares outstanding as of December 31, 1996 plus the issuance
of 9 million Common Shares in connection with the June 1997 Common Share
Offerings and the issuance of 3.4 million Common Shares in connection with
the acquisition of the Probable Properties. The Common Shares outstanding
does not include any shares issued in a private or public offering that
have not been used or are not intended to be used for acquisitions or
repayment of debt directly incurred in an acquisition.
(F) Detail of interest expense on mortgage indebtedness for the Probable
Properties:
Mortgage Interest Interest
Property Indebtedness Rate Expense
- ------------------------ ------------ --------------------------
Hidden Palms $ 4,174 6.50% $ 271
Idlewood 6,574 6.50% 427
Riverside Park 6,900 6.50% 449
Sycamore Creek 10,093 6.50% 656
Blue Swan 4,199 6.50% 273
Autumn Creek 4,958 6.50% 322
Governor's Point 13,226 6.50% 860
Northwoods Village 6,004 6.50% 390
Preakness 4,299 6.50% 279
Trinity Lakes 7,916 6.50% 515
Larkspur Woods 9,523 6.50% 619
Brookridge 8,100 6.50% 527
Cantecleer Lakes 10,203 6.50% 663
Orchard of Landen 9,229 6.50% 600
Crescent at Cherry Creek 8,335 6.50% 542
Jefferson at Walnut Creek 8,358 6.50% 543
Kirby Place 13,909 6.50% 904
------------ ----------
Totals $ 136,000 $ 8,840
============ ==========
15
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
REQUIRED UNDER ITEM 7(a) OF FORM 8-K
Report of Independent Auditors
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Ameritech Pension Trust Probable Properties (the Probable
Properties) described in Note 2 for the year ended December 31, 1996. This
combined Statement of Revenue and Certain Expenses is the responsibility of the
Probable Properties' management. Our responsibility is to express an opinion on
the combined Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that that we plan and perform the audit to obtain
reasonable assurance about whether the Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying combined Statement of Revenue and Certain Expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in Equity Residential Properties Trust's
Current Report on Form 8-K as described in Note 1, and is not intended to be a
complete presentation of the Probable Properties' combined revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1996 in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
August 15, 1997
17
AMERITECH PENSION TRUST PROBABLE PROPERTIES
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
---------------- -----------------
REVENUE
Rental Income $ 19,907 $ 39,251
---------------- -----------------
CERTAIN EXPENSES
Property operating and maintenance 5,585 11,064
Real estate taxes and insurance 2,388 4,531
Management fees 824 1,632
---------------- -----------------
8,797 17,227
---------------- -----------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 11,110 $ 22,024
================ =================
See accompanying notes.
18
AMERITECH PENSION TRUST PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined Statements of Revenue and Certain Expenses for
the year ended December 31, 1996 and the six months ended June 30, 1997
(unaudited) were prepared for purposes of complying with the rules and
regulations of the Securities and Exchange Commission. The accompanying
combined financial statements consist of 17 multifamily properties for
which Equity Residential Properties Trust (the "Company") made a commitment
to acquire or has reached an agreement, in principle, to acquire these
properties and the Company is in the final stages of completing the
acquisition of these properties, (the "Ameritech Pension Trust Probable
Properties"). The closing of these pending transactions are subject to
certain contingencies and conditions; therefore, there can be no assurance
that these transactions will be consummated.
The accompanying combined financial statements are not representative of
the actual operations of the Ameritech Pension Trust Probable Properties
for the periods presented as certain expenses, which may not be comparable
to the expenses to be incurred by the Company in the proposed future
operations of the Ameritech Pension Trust Probable Properties, have been
excluded. Expenses excluded consist of interest, depreciation and
amortization, professional fees and other costs not directly related to the
future operations of Ameritech Pension Trust Probable Properties.
In the preparation of the combined Statements of Revenue and Certain
Expenses in conformity with generally accepted accounting principles,
management makes estimates and assumptions that effect the reported amounts
of revenue and expenses during the reporting period. Actual results could
differ from these estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
The Ameritech Pension Trust Probable Properties are expected to be managed
by two unaffiliated management companies through the acquisition date to
maintain and manage the operations of the Probable Properties. Management
fees are based upon a percentage ranging from 2.5% to 5% of total income.
Upon acquisition of the Probable Properties by the Company, such management
contracts will be canceled at which time the Company will begin to manage
the properties.
19
AMERITECH PENSION TRUST PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES (CONTINUED)
NOTE 2 - DESCRIPTION OF PROPERTIES
The following properties are included in the combined Statements of Revenue
and Certain Expenses:
Date Number Total
Property Name Location Seller Acquired of Units Investment (B)
------------------- -------------- -------------- -------------- ----------- -------------------
Autumn Creek Cordova, TN (A) (C) 210 $ 11,112,170
Blue Swan San Antonio, TX (A) (C) 285 9,164,020
Brookridge Centreville, VA (A) (C) 252 18,703,016
Chantecleer Lakes Naperville, IL (A) (C) 304 23,202,100
Crescent at Cherry Creek Denver, CO (A) (C) 216 17,841,960
Governor's Point Rosewell, CO (A) (C) 468 28,971,870
Hidden Palms Tampa, FL (A) (C) 256 8,678,519
Idlewood Indianapolis, IN (A) (C) 320 14,268,800
Jefferson at Walnut Creek Austin, TX (A) (C) 342 17,392,900
Kirby Place Houston, TX (A) (C) 362 29,619,460
Larkspur Woods Sacramento, CA (A) (C) 232 20,769,400
Northwoods Village Cary, NC (A) (C) 228 13,264,424
Orchard of Landen Maineville, OH (A) (C) 312 20,475,439
Preakness Antioch, TN (A) (C) 260 10,025,100
Riverside Park Tulsa, OK (A) (C) 288 14,380,400
Sycamore Creek Scottsdale, AZ (A) (C) 350 22,495,819
Trinity Lakes Cordova, TN (A) (C) 330 17,136,700
------ ----------------
5,015 $ 297,502,097
====== ================
Notes:
(A) The Ameritech Pension Trust Probable Properties have been presented on a
combined basis because all of the Probable Properties are commonly owned by
Ameritech Pension Trust.
(B) Includes initial purchase price, closing costs and amounts specified at
date of purchase for future capital improvements.
(C) The Company has made a commitment to acquire this property or has reached
an agreement in principle and is in the final stages of documenting the
acquisition of this property.
20
Report of Independent Auditors
The Board of Trustees of
Equity Office Properties Trust
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of Paces on the Green and Paces Station (the Properties) for the year
ended December 31, 1996. This combined Statement of Revenue and Certain
Expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined Statement of Revenue and
Certain Expenses 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 Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures made in the Statement of Revenue and
Certain Expenses. An audit also includes assessing the basis of accounting used
and significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying combined Statement of Revenue and Certain Expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission for inclusion in Equity Residential Properties Trust's
Current Report on Form 8-K as described in Note 1, and is not intended to be a
complete presentation of the Properties' combined revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
September 5, 1997
21
PACES ON THE GREEN AND PACES STATION
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
FOR THE PERIOD
FROM JANUARY 1, 1997 FOR THE
TO AUGUST 27, 1997 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1996
-------------------- -----------------
REVENUE
Rental Income $ 3,430 $ 5,368
-------------------- -----------------
CERTAIN EXPENSES
Property operating and maintenance 1,086 1,344
Real estate taxes and insurance 316 482
Management fees 137 214
-------------------- -----------------
1,539 2,040
-------------------- -----------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 1,891 $ 3,328
==================== =================
See accompanying notes.
22
PACES ON THE GREEN AND PACES STATION
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined Statements of Revenue and Certain Expenses for the
year ended December 31, 1996 and the period from January 1, 1997 to
August 27, 1997 (unaudited) were prepared for purposes of complying with the
rules and regulations of the Securities and Exchange Commission. The
accompanying combined financial statements are not representative of the
actual operations of Paces on the Green and Paces Station (the "Properties")
for the periods presented nor indicative of future operations as certain
expenses, primarily depreciation, amortization and interest expense, which
may not be comparable to the expenses expected to be incurred by Equity
Residential Properties Trust (the "Company") in future operations of
Properties, have been excluded.
In preparation of the combined Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principals, management makes
estimates and assumptions that effect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
The Properties were managed by an unaffiliated management company through
the acquisition date to maintain and manage the operations of the
Properties. Management fees were based on 4% of total income. Property
management services are being provided by the Company since the date of
acquisition.
Note 2 - Description of Properties
The following Properties are included in the combined statements of
revenue and certain expenses:
Date Number Total
Property Name Location Seller Acquired of Units Investment (B)
------------------- ------------ ------ -------- -------- --------------
Paces on the Green Atlanta, GA (A) 8/27/97 210 $ 13,061,000
Paces Station Atlanta, GA (A) 8/27/97 400 24,879,000
-------- --------------
610 $ 37,940,000
======== ==============
Notes:
(A) These Properties have been presented on a combined basis because the
Properties are commonly owned by the California Policeman and
Fireman's Fund.
(B) Includes initial purchase price, closing costs, start up costs and
amounts specified at date of purchase for future capital improvements.
23
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 thereunto duly authorized.
EQUITY RESIDENTIAL PROPERTIES TRUST
September 17, 1997 By: /s/ Michael J. McHugh
- ------------------ ---------------------------
(Date) Michael J. McHugh
Senior Vice President, Chief
Accounting Officer and Treasurer
24