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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
December 18, 1996
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Date of Report (Date of Earliest Event Reported)
AMERICAN REALTY TRUST, INC.
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(Exact Name of Registrant as Specified in its Charter)
Georgia 1-9948 54-0697989
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(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 17, 1996, American Realty Trust, Inc. (the "Company") purchased the
Best Western Oceanside in Virginia Beach, Virginia for $6.8 million (4.2% of
the Company's assets at December 31, 1995). The seller of the property was
Atlantic Resort Associates, L.P. ("ARALP"), a Virginia partnership.. The
property was constructed in 1983 and consists of 110 rooms.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December
31, 1995 and the nine months ended September 30, 1996. A pro forma balance
sheet as of September 30, 1996 is also presented.
A summary of the pro forma transaction follows:
On December 17, 1996, the Company purchased the Best Western Oceanside in
Virginia Beach, Virginia for $6.8 million exclusive of commissions and closing
costs. The Company acquired the property through Ocean Beach Partners, L.P.
("OCPLP"), a newly formed partnership of which ART Oceanview Corporation, a
wholly-owned subsidiary of the Company is the 1% general partner and the
Company is the 99% Class B limited partner. In conjunction with the
acquisition, OCPLP issued 1,813,660 Class A limited partner units in OCPLP
having an agreed value of $1.00 per partnership unit to the former limited
partners of ARALP. The Class A limited partner units are entitled to a $.095
per unit preferred annual return. The Class A limited partners do not
otherwise participate in the income, loss or cash flow of the property. The
Class A limited partner units may be exchanged for Series D Cumulative
Preferred Stock in the Company at a rate of 20 units per share of preferred
stock. No more than one-third of the Class A limited partner units held
may be exchanged between January 1, 1997 and May 31, 2001. Between June 1,
2001 and May 31, 2006 all unexchanged Class A units are exchangeable. The
Company obtained new mortgage financing for the remaining $5.0 million of the
purchase price. The mortgage bears interest at 9.94% per annum, requires
monthly payments of principal and interest of $48,685 and matures January 1,
2017.
The pro forma statements of operations present the Company's operations as if
the transaction described above had occurred at the beginning of each of the
periods presented.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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AMERICAN REALTY TRUST, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
Best Western
Actual Oceanside Pro forma
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(dollars in thousands)
Assets
Notes and interest receivable
Performing............................................... $ 51,392 $ - $ 51,392
Nonperforming, nonaccruing............................... 1,827 - 1,827
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53,219 - 53,219
Less - allowance for estimated losses......................... (3,926) - (3,926)
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49,293 - 49,293
Real estate held for sale, net of accumulated depreciation.... 60,403 - 60,403
Less - allowance for estimated losses......................... (3,328) - (3,328)
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57,075 - 57,075
Real estate held for investment, net of accumulated
depreciation............................................. 31,924 6,879 38,803
Investments in marketable equity securities, at market........ 1,947 - 1,947
Investments in equity investees............................... 54,335 - 54,335
Cash and cash equivalents..................................... 1,097 - 1,097
Other assets.................................................. 9,454 - 9,454
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$ 205,125 $ 6,879 $ 212,004
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AMERICAN REALTY TRUST, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
Best Western
Actual Oceanside Pro forma
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(dollars in thousands)
Liabilities and Shareholders' Equity
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Liabilities
Notes and interest payable.................................... $ 107,613 $ 5,066 $ 112,679
Margin borrowings............................................. 36,843 - 36,843
Other liabilities............................................. 7,640 - 7,640
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152,096 5,066 157,162
Minority interest............................................. 1,097 1,813 2,910
Commitments and contingencies
Shareholders' equity
Preferred Stock, authorized 20,000,000 shares, issued and
outstanding
4,000 shares Series B, 10% cumulative, $2.00 par value... 8 - 8
15,489 shares Series C, 10% cumulative, $2.00 par value.. 31 - 31
Common Stock, $.01 par value; authorized 16,667,000 shares,
6,739,540 shares in 1996 and 5,858,328 in 1995 issued.... 68 - 68
Paid-in capital............................................... 68,623 - 68,623
Accumulated distributions in excess of accumulated
earnings................................................. (16,795) - (16,795)
Treasury stock at cost, 282,352............................... (3) - (3)
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51,932 - 51,932
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$ 205,125 $ 6,879 $ 212,004
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AMERICAN REALTY TRUST, INC.
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
Best Western
Actual Oceanside(1) Proforma
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(dollars in thousands, except per share)
Income
Rents...................... $ 14,733 $ 1,735 $ 16,468
Interest................... 3,416 - 3,416
Other...................... 1,293 - 1,293
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19,442 1,735 21,177
Expenses
Property operations........ 11,166 1,263 12,429
Equity in losses of
investees............... 3,122 - 3,122
Interest................... 10,656 316 10,972
Depreciation and
amortization............ 1,319 - 1,319
Advisory fee to affiliate.. 1,093 - 1,093
General and administrative 1,855 - 1,855
Minority interest.......... - 57 57
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29,211 1,636 30,847
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Income (loss) before gain on
sale of real estate and
extraordinary gain......... (9,769) 99 (9,670)
Gain on sale of real estate... 7,799 - 7,799
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Income (loss) before extra-
ordinary gain.............. (1,970) 99 (1,871)
Extraordinary gain............ 381 - 381
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Net income (loss)............. (1,589) $ 99 (1,490)
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Preferred dividend
requirement................ (65) (65)
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Net income (loss) applicable
to Common shares........... $ (1,654) $ (1,555)
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Earnings per share
Income before
extraordinary gain...... $ (.32) (.30)
Extraordinary gain......... .06 .06
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Net (loss)................. $ (.26) (.24)
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Weighted average shares of
Common Stock used in
computing earnings per
share...................... 6,357,447 6,357,447
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(1) Assumes acquisition by the Company on January 1, 1996.
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AMERICAN REALTY TRUST, INC.
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Best Western
Actual Oceanside(1) Proforma
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(dollars in thousands, except per share)
Income
Rents..................... $ 17,869 $ 2,357 $ 20,226
Interest.................. 4,929 - 4,929
Other..................... 154 - 154
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22,952 2,357 25,309
Expenses
Property operations....... 13,260 883 14,143
Equity in losses of
investees.............. 5,123 - 5,123
Interest.................. 8,941 503 9,444
Depreciation and
amortization........... 1,691 - 1,691
Advisory fee to affiliate. 1,195 - 1,195
General and administrative 2,554 - 2,554
Minority interest......... 671 172 843
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33,435 1,558 34,993
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Income (loss) from operations (10,483) 799 (9,684)
Income tax expense........... 2 - 2
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Income (loss) before gain on
sale of real estate and
extraordinary gain........ (10,485) 799 (9,686)
Gain on sale of real estate.. 6,866 - 6,866
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Income (loss) before extra-
ordinary gain............. (3,619) 799 (2,820)
Extraordinary gain........... 783 - 783
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Net (loss)................... $ (2,836) $ 799 $ (2,037)
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Earnings per share
Income (loss) before
extraordinary gain..... $ (.62) $ (.48)
Extraordinary gain........ .14 .14
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Net (loss)................ $ (.48) $ (.34)
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Weighted average shares of
Common Stock used in
computing earnings per
share..................... 5,858,328 5,858,328
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(1) Assumes acquisition by the Company on January 1, 1995.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
(b) Financial statements of properties acquired:
Exhibit
Number Description
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99.0 The Best Western Oceanside Audited Statement of Revenues and Direct
Operating Expenses for the year ended December 31, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
AMERICAN REALTY TRUST, INC.
Date: January 15, 1996 By: /s/ Thomas A. Holland
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Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
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AMERICAN REALTY TRUST, INC.
EXHIBIT TO ITS
CURRENT REPORT ON FORM 8-K
Dated December 18, 1996
Exhibit Page
Number Description Number
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99.0 Best Western Oceanside Audited Statement of 9
Revenues and Direct Operating Expenses for
the year ended December 31, 1995.