As filed with the Securities and Exchange Commission on November 13, 1997.
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment to Application of Report
Filed Pursuant to Section 12, 13 or 15(d) of
The Securities Exchange Act of 1934
EQUITY RESIDENTIAL PROPERTIES TRUST
(Exact Name of Registrant As Specified In Its Charter)
1-12252
(Commission File No.)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K dated
October 9, 1997 as set forth in the pages attached hereto:
Filing of amended information under Items 7 (a) and (b).
Pursuant to the requirements of Securities Exchange Act of 1934, the Registrant
has duly caused this amendment to be signed on its behalf by the undersigned,
thereunto duly authorized.
Equity Residential Properties Trust
Date: October 9, 1997 By: /s/ Michael J. McHugh
----------------------------
Michael J. McHugh
Senior Vice President, Chief
Accounting Officer and Treasurer
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
THE COMPANY IS HEREBY FILING PRO FORMA AND
FINANCIAL STATEMENT INFORMATION WITH
RESPECT TO
THE ACQUIRED AND PROBABLE PROPERTIES AS
DESCRIBED IN THE COMPANY'S CURRENT REPORT ON
FORM 8-K DATED OCTOBER 9, 1997.
C. EXHIBITS
--------
10 CAPREIT Apartment Portfolio-Agreement for Purchase of
Partnership Interests and Related Interests
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.
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
REQUIRED UNDER ITEM 7(B) OF FORM 8-K
3
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 September 30, 1997.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of
September 30, 1997 and Statements of Operations for the nine months ended
September 30, 1997 and for the year ended December 31, 1996 have been presented
as if the sale of 12,650,000 Depositary Shares in September and October 1997
(the "Series G Offering"), the issuance of $150,000,000 of 7 1/8% unsecured
fixed rate notes (the "Fourth Public Debt Offering") and the acquisition or
expected acquisition of 45 multifamily properties, including the related
assumption of $218.5 million of mortgage indebtedness, had occurred on September
30, 1997 with respect to the September 30, 1997 balance sheet, January 1, 1997
with respect to the statement of operations for the nine months ended September
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 and Note B of the Pro Forma Condensed
Consolidated Balance Sheet as of September 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 September 30, 1997 and the
Statements of Revenue and Certain Expenses for the acquired and probable
properties (included elsewhere herein).
4
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
ACQUIRED
AND PROBABLE PRO
HISTORICAL PROPERTIES (A) OFFERINGS (B) FORMA
------------ -------------- -------------- ------------
ASSETS
Rental property, net $ 4,422,229 $ 608,000 $ -- $ 5,030,229
Real estate held for disposition 3,948 -- -- 3,948
Investment in mortgage notes, net 176,051 -- -- 176,051
Cash and cash equivalents 277,997 (389,504) 187,065 75,558
Rents receivable 2,614 -- -- 2,614
Deposits-restricted 7,761 -- -- 7,761
Escrows deposits-mortgage 31,702 -- -- 31,702
Deferred financing costs, net 14,168 -- 1,313 15,481
Other assets 97,544 -- -- 97,544
------------ -------------- -------------- ------------
Total assets $ 5,034,014 $ 218,496 $ 188,378 $ 5,440,888
============ ============== ============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 963,819 $ 218,496 $ -- $ 1,182,315
Line of credit -- -- -- --
Notes, net 754,292 -- 148,703 902,995
Accounts payable and accrued expenses 56,864 -- -- 56,864
Accrued interest payable 20,493 -- -- 20,493
Due to affiliates 783 -- -- 783
Rents received in advance and other liabilities 28,928 -- -- 28,928
Security deposits 21,196 -- -- 21,196
Distributions payable 66,707 -- -- 66,707
------------ -------------- -------------- ------------
Total liabilities 1,913,082 218,496 148,703 2,280,281
------------ -------------- -------------- ------------
Commitments and contingencies
Minority Interests 181,884 -- -- 181,884
------------ -------------- -------------- ------------
Shareholders' equity:
Common shares 742 -- -- 742
Preferred shares 1,000,495 -- 41,250 1,041,745
Employee notes (5,173) -- -- (5,173)
Paid in capital 2,066,973 -- (1,575) 2,065,398
Distributions in excess of accumulated earnings (123,989) -- -- (123,989)
------------ -------------- -------------- ------------
Total shareholders' equity 2,939,048 -- 39,675 2,978,723
------------ -------------- -------------- ------------
Total liabilities and shareholders' equity $ 5,034,014 $ 218,496 $ 188,378 $ 5,440,888
============ ============== ============== ============
(A) Reflects the multifamily property acquisitions, which include Atrium,
Burwick Farms, Carolina Crossing, Chimneys, Clarion, Concorde Bridge,
Creekwood, Eastland on the Lake, Garden Lake, Gleneagle, Greyeagle, Hickory
Ridge, Hidden Oaks, Highland Grove, Mariners Wharf, Northlake, Silver
Springs, Tamarind at Stoneridge, Tivoli Lakes Club, Village of Sycamore
Ridge and Woodland Meadows (collectively the "Acquired Properties").
Reflects the probable acquisitions of Arbor Glen, Breckinridge Court,
Ethans Glen III, Ethans Ridge I, Ethans Ridge II, Farmington Gates,
Fountain Place I, Fountain Place II, Geary Courtyard, James Street
Crossing, Ocean Walk, Regency Woods, Ridgeway Commons, River Oaks, Royal
Oaks, The Cedars, Trailway Pond I, Trailway Pond II, Valley Creek I, Valley
Creek II, Westwood Pines, White Bear Woods, Woodcrest Villa, and Woodlane
Place (collectively the "Probable Properties"). In connection with such
acquired and probable acquisitions: (i) the amounts presented include the
initial purchase price as well as subsequent closing costs anticipated to
be incurred and (ii) the expected assumption of $218.5 million of mortgage
indebtedness.
(B) Reflects the additional issuance of 1,650,000 depositary shares (the
"Series G Depositary Shares"). Each Series G Depositary Share represents a
1/10 fractional interest in a 7 1/4% Series G Convertible Cumulative
Preferred Share of Beneficial Interest, $0.01 par value per share (the
"Series G Preferred Shares"). The Liquidation preference of each of the
Series G Preferred Shares is $250.00 per share (equivalent to $25 per
Series G Depositary Share). Also included is the issuance of $150,000,000
of debt in connection with the Fourth Public Debt Offering at an interest
rate of 7.125%, net of discount and certain issuance costs.
5
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR SHARE DATA)
ACQUIRED
AND PROBABLE PRO
HISTORICAL PROPERTIES (A) ADJUSTMENTS (B) FORMA
------------ --------------- ---------------- ----------
REVENUES
Rental income $ 482,980 $ 63,654 $ -- $ 546,634
Fee and asset management 4,364 -- -- 4,364
Interest income - investment in mortgage notes 14,821 -- -- 14,821
Interest and other income 7,513 -- (3,332) 4,181
------------ --------------- --------------- ----------
Total revenues 509,678 63,654 (3,332) 570,000
------------ --------------- --------------- ----------
EXPENSES
Property and maintenance 117,681 19,907 (1,200) 136,388
Real estate taxes and insurance 48,560 7,764 -- 56,324
Property management 18,765 -- 1,591 20,356
Fee and asset management 2,523 -- -- 2,523
Depreciation 106,114 -- 13,680 119,794
Interest:
Expense incurred 82,775 -- 19,966 102,741
Amortization of deferred financing 1,810 -- 49 1,859
costs
General and administrative 10,037 -- -- 10,037
------------ --------------- ----------- ----------
Total expenses 388,265 27,671 34,086 450,022
------------ --------------- ----------- ----------
Income before gain on disposition of properties
and allocation to Minority Interests 121,413 $ 35,983 $ (37,418) 119,978
=============== ===========
Gain on disposition of properties 3,923 --
------------ ----------
Income before allocation to Minority Interests 125,336 119,978
(Income) allocated to Minority Interests (C) (9,431) (7,063)
------------ ----------
Net income 115,905 112,915
Preferred distributions 37,287 (D) 54,095
------------ ----------
Net income available to Common Shares $ 78,618 $ 58,820
============ ==========
Net income per weighted average Common
Share outstanding $ 1.28 $ 0.96
============ ==========
Weighted average Common Shares outstanding 61,577 (E) 61,577
============ ==========
(A) Reflects the results of operations for the Acquired and Probable
Properties. The amounts presented represent the historical amounts for
certain revenues and expenses for the nine months ended September 30, 1997.
6
(B) Reflects the following adjustments to
the Acquired and Probable Properties
results of operations as follows:
Interest and other income:
Reduction of interest income due to
the use of working capital for
property acquisitions. $ (3,332)
========
Property and maintenance:
The elimination of third-party
management fees where the Company
is providing onsite property
management services. $ (1,200)
========
Property management:
Incremental cost associated with
self management of the Acquired
and Probable Properties for the
nine months ended September 30,
1997. $ 1,591
========
Depreciation:
Reflects depreciation based on
the expected total investment
of $608 million for the
Acquired and Probable
Properties less 10% allocated
to land and depreciated over a
30-year life for real property.
Depreciation for the Acquired
and Probable Properties reflect
amounts for the nine months
ended September 30,1997. $ 13,680
========
Interest:
Expense incurred:
Interest on mortgage indebtedness
for the Probable Properties. $ 11,950
Interest associated with the Fourth
Public Debt Offering in the amount
of $150 million at an interest
rate of 7.125% per annum. 8,016
--------
$ 19,966
========
Amortization of deferred financing
costs:
Amortization of financing costs
associated with the Fourth Public
Debt Offering in the amount of
$1.3 million over 20 years. $ 49
========
(C) 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.
(D) Preferred distributions represent amounts payable to Series A Preferred
Shares, Series B Preferred Shares, Series C Preferred Shares, and Series G
Preferred Shares at the rates of 9.375%, 9.125%, 9.125% and 7.25%,
respectively, of the liquidation preference thereof per annum.
(E) Pro Forma weighted average Common Shares outstanding for the nine months
ended September 30, 1997 was 61.6 million. 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.
7
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)
ACQUIRED
AND PROBABLE PRO
HISTORICAL PROPERTIES (A) ADJUSTMENTS (B) FORMA
------------ -------------- --------------- -------------
REVENUES
Rental income $ 454,412 $ 82,441 $ -- $ 536,853
Fee and asset management 6,749 -- -- 6,749
Interest income - investment in mortgage notes 12,819 -- -- 12,819
Interest and other income 4,405 107 (2,942) 1,570
------------ --------------- --------------- -------------
Total revenues 478,385 82,548 (2,942) 557,991
------------ --------------- --------------- -------------
EXPENSES
Property and maintenance 127,172 25,754 (1,732) 151,194
Real estate taxes and insurance 44,128 9,848 -- 53,976
Property management 17,512 -- 2,064 19,576
Fee and asset management 3,837 -- -- 3,837
Depreciation 93,253 -- 18,240 111,493
Interest:
Expense incurred 81,351 -- 26,621 107,972
Amortization of deferred financing costs 4,242 -- 66 4,308
General and administrative 9,857 -- -- 9,857
------------ --------------- --------------- -------------
Total expenses 381,352 35,602 45,259 462,213
------------ --------------- --------------- -------------
Income before gain on disposition of properties 97,033 $ 46,946 $ (48,201) 95,778
=============== ===============
Gain on disposition of properties 22,402 --
------------ -------------
Income before extraordinary item 119,435 95,778
Extraordinary item:
Write-off of unamortized costs on refinanced debt (3,512) --
------------ -------------
Income before allocation to Minority Interests 115,923 95,778
(Income) allocated to Minority Interests (C) (14,299) (7,307)
------------ -------------
Net income 101,624 88,471
Preferred distributions 29,015 (D) 51,943
------------ -------------
Net income available to Common Shares $ 72,609 $ 36,528
============ =============
Net income per weighted average Common
Share outstanding $ 1.70 $ 0.86
============ =============
Weighted average Common Shares outstanding 42,586 (E) 42,586
============ ============
(A) Reflects the results of operations of the Acquired and 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 Acquired and Probable Properties for the year ended
December 31, 1996.
8
(B) Reflects the following adjustments to the Acquired and Probable 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. $ (1,732)
==========
Property management:
Incremental cost associated with self management of the
Acquired and Probable Properties for the year ended
December 31, 1996. $ 2,064
==========
Depreciation:
Reflects depreciation based on the expected total
investment of $608 million for the Acquired and Probable
Properties less amounts allocated to land, generally 10%,
and depreciated over a 30-year life for real property. $ 18,240
==========
Interest:
Expense incurred:
Interest on mortgage indebtedness for the Probable $ 15,933
Properties.
Interest associated with the Fourth Public Debt Offering 10,688
in the amount of $150 million at an interest rate of ---------
7.125% per annum. $ 26,621
=========
Amortization of deferred financing costs:
Amortization of financing costs associated with the
Fourth Public Debt Offering in the amount of $1.3
million over 20 years. $ 66
=========
(C) 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.
(D) Preferred distributions represent amounts payable to Series A Preferred
Shares, Series B Preferred Shares, Series C Preferred Shares, Series D
Preferred Shares, Series E Preferred Shares, Series F Preferred Shares and
Series G Preferred Shares at the rates of 9.375%, 9.125%, 9.125%, 8.60%,
7.00%, 9.65% and 7.25%, respectively, of the liquidation preference thereof
per annum.
(E) Pro Forma weighted average Common Shares outstanding for the year ended
December 31, 1996 was 42.6 million. 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.
9
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
REQUIRED UNDER ITEM 7(A) OF FORM 8-K
10
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 CAPREIT Acquired and Probable Properties (the Acquired and
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 Acquired and 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 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 Acquired and 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
November 12, 1997
11
CAPREIT Acquired and Probable Properties
Combined Statements of Revenue and Certain Expenses
(Amounts in Thousands)
FOR THE
NINE MONTHS
ENDED FOR THE
SEPTEMBER YEAR ENDED
30, 1997 DECEMBER 31,
(UNAUDITED) 1996
---------------------------------
REVENUE
Rental Income $63,372 $82,441
Other Income 282 107
---------------------------------
63,654 82,548
---------------------------------
CERTAIN EXPENSES
Property operating and maintenance 19,189 24,665
Real estate taxes and insurance 7,764 9,848
Management fees 718 1,089
---------------------------------
27,671 35,602
---------------------------------
Revenue in excess of certain expenses $35,983 $46,946
=================================
See accompanying notes.
12
CAPREIT Acquired and Probable Properties
Notes to Combined Statements of Revenue and Certain Expenses
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined financial statements consist of 45 multifamily
properties (the "CAPREIT Acquired and Probable Properties" or the "Acquired and
Probable Properties"). Equity Residential Properties Trust (the "Company")
acquired 21 of these multifamily properties on October 9, 1997 (the "Acquired
Properties"). The Company made a commitment to acquire or has reached an
agreement, in principle, to acquire the remaining 24 properties and the Company
is in the final stages of documenting the acquisition of these properties (the
"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 statements of revenue and certain expenses for the
year ended December 31, 1996 and the nine months ended September 30, 1997
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission for inclusion in the
Current Report of the Company on Form 8-K. The accompanying combined financial
statements are not representative of the actual operations of the CAPREIT
Acquired and 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 CAPREIT Acquired and 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 the Acquired and 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.
13
CAPREIT Acquired and Probable Properties
Notes to Combined Statements
of Revenue and Certain Expenses (continued)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
The CAPREIT Acquired and Probable Properties have been presented on a combined
basis because all of the properties were either commonly owned or managed by
CAPREIT, the seller of the Acquired and Probable Properties.
2. DESCRIPTION OF PROPERTIES
The 45 Acquired and Probable Properties are multifamily properties and contain a
total of 10,724 units. The properties range in size from 48 to 468 units. The
Acquired and Probable Properties are located in Florida, Georgia, South
Carolina, North Carolina, Tennessee, Kentucky, Michigan, Ohio, Minnesota,
Missouri, Iowa, Kansas, California and Washington.
The Company's total investment for the Acquired and Probable Properties,
including initial purchase price and closing costs is expected to be
approximately $608 million.
Forty-four of the Acquired and Probable Properties were or are anticipated to be
managed by a management company affiliated with CAPREIT through the date of
acquisition. The remaining property was managed by a party unaffiliated with the
seller. Subsequent to the date of acquisition, the Company began to manage the
Acquired Properties and it is expected that subsequent to the sale of the
Probable Properties to the Company, the Company will also manage the Probable
Properties. For fifteen of the Acquired and Probable Properties, the management
fee was 3.5% of total revenues plus an incentive fee in amount equal to a
percentage, ranging from .25% to .5%, of total revenues, based on achieving
certain performance targets. For twenty-nine of the properties, an amount was
paid to the management company for reimbursement of certain costs, which equated
to approximately 1% of total revenues for those properties.
14