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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
May 1, 1998
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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
Effective May 1, 1998, American Realty Trust, Inc. (the "Company") purchased, in
a single transaction, twenty-nine apartment complexes from entities affiliated
with Investors General, Inc., an unrelated party, in Florida and Georgia
(collectively the "IGI Properties") for a total of $55.8 million (12.9% of the
Company's assets at December 31, 1997). The properties contain a total of 2,441
units and were constructed between 1968 and 1985.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December 31,
1997 and three months ended March 31, 1998. A pro forma balance sheet as of
March 31, 1998 is also presented.
A summary of the pro forma transaction follows:
Effective May 1, 1998, the Company purchased, in a single transaction,
twenty-nine apartment complexes totaling 2,441 units in Florida and Georgia for
$55.8 million. The Company acquired the properties through three wholly-owned
subsidiaries, ART Florida Portfolio I, Ltd., ART Florida Portfolio II, Ltd. and
ART Florida Portfolio III, Ltd., each a newly-formed Texas limited partnership
(collectively, the "Partnerships"). The Company paid $6.1 million in cash,
assumed $43.4 million in existing mortgage debt and issued a total of $6.6
million in Class A limited partner units in the acquiring entities, having the
Company as the Class B Limited Partner and a newly-formed wholly-owned
subsidiary of the Company, as the Managing General Partner. The Class A
unitholders are entitled to a $.08 per Class A unit preferred return in 1998,
$.09 in 1999 and $.10 thereafter. The mortgages bear interest at rates ranging
between 7.86% and 11.22% per annum, require monthly principal and interest
payments of $384,000 and mature between July 1, 1998 and September 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. The Company's management is not aware of any material factors
relating to the purchased properties that would cause the reported financial
information not to be necessarily indicative of future operating results.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
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AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
BALANCE SHEET
MARCH 31, 1998
ART ART ART
Portfolio Portfolio Portfolio Pro Forma
Actual I, Ltd. II, Ltd. III, Ltd. Combined
--------- --------- --------- --------- ---------
(dollars in thousands)
Assets
------
Notes and interest receivable
Performing .......................... $ 268 $ -- $ -- $ -- $ 268
Nonperforming ....................... 18,779 -- -- -- 18,779
--------- --------- --------- --------- ---------
19,047 -- -- -- 19,047
Less - allowance for estimated
losses .............................. (2,398) -- -- -- (2,398)
--------- --------- --------- --------- ---------
16,649 -- -- -- 16,649
Real estate held for sale, net of
accumulated depreciation ............ 200,910 -- -- -- 200,910
Real estate held for investment,
net of accumulated depreciation ..... 132,692 10,800 13,800 31,200 188,492
Pizza parlor equipment, net of
accumulated depreciation ............ 7,183 -- -- -- 7,183
Marketable equity securities, at
market value ........................ 5,018 -- -- -- 5,018
Cash and cash equivalents .............. 974 (2,000) (1,400) (2,700) (5,126)
Investments in equity investees ........ 48,598 -- -- -- 48,598
Intangibles, net of accumulated
amortization ........................ 15,152 -- -- -- 15,152
Other assets ........................... 24,019 -- 200 100 24,319
--------- --------- --------- --------- ---------
$ 451,195 $ 8,800 $ 12,600 $ 28,600 $ 501,195
========= ========= ========= ========= =========
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AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
BALANCE SHEET - Continued
MARCH 31, 1998
ART ART ART
Portfolio Portfolio Portfolio Pro Forma
Actual I, Ltd. II, Ltd. III, Ltd. Combined
--------- --------- --------- --------- ---------
(dollars in thousands)
Liabilities and Stockholders' Equity
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Liabilities
Notes and interest payable ............. $ 292,301 $ 7,300 $ 11,600 $ 24,500 $ 335,701
Margin borrowings ...................... 53,775 -- -- -- 53,775
Accounts payable and other
liabilities ......................... 30,825 -- -- -- 30,825
--------- --------- --------- --------- ---------
376,901 7,300 11,600 24,500 420,301
Minority interest ...................... 20,542 1,500 1,000 4,100 27,142
Commitments and contingencies
Stockholders' equity
Preferred Stock, $2.00 par value,
authorized 20,000,000 shares
issued and outstanding
Series B, 4,000 shares ............ 8 -- -- -- 8
Series C, 16,681 shares ........... 33 -- -- -- 33
Series F, 2,000,000 shares ........ 4,000 -- -- -- 4,000
Common Stock, $.01 par value;
authorized 100,000,000 shares,
issued 13,479,348 shares ............ 135 -- -- -- 135
Paid-in capital ........................ 84,943 -- -- -- 84,943
Accumulated (deficit) .................. (35,339) -- -- -- (35,339)
Treasury stock at cost, 2,767,427
shares .............................. (28) -- -- -- (28)
--------- --------- --------- --------- ---------
53,752 -- -- -- 53,752
--------- --------- --------- --------- ---------
$ 451,195 $ 8,800 $ 12,600 $ 28,600 $ 501,195
========= ========= ========= ========= =========
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AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
--------- --------- --------- --------- ----------- ---------
(dollars in thousands)
Income
Sales ................................ $ 17,926 $ -- $ -- $ -- $ -- $ 17,926
Rents ................................ 29,075 2,023 2,993 6,068 -- 40,159
Interest ............................. 2,835 -- -- -- -- 2,835
Other ................................ 135 119 121 340 -- 715
--------- --------- --------- --------- --------- ---------
49,971 2,142 3,114 6,408 -- 61,635
Expenses
Cost of sales ........................ 14,492 -- -- -- -- 14,492
Property operations .................. 24,195 1,043 1,542 3,126 -- 29,906
Interest ............................. 30,231 -- -- -- 3,778 34,009
Advisory and
servicing fees to
affiliates ....................... 2,657 -- -- -- -- 2,657
General and
administrative ................... 6,997 -- -- -- -- 6,997
Depreciation ......................... 3,338 -- -- -- 1,255 4,593
Minority interest .................... 1,445 -- -- -- 528 1,973
--------- --------- --------- --------- --------- ---------
83,355 1,043 1,542 3,126 5,561 94,627
--------- --------- --------- --------- --------- ---------
(Loss) from operations ................. (33,384) 1,099 1,572 3,282 (5,561) (32,992)
Equity in income of
investees ............................ 10,660 -- -- -- -- 10,660
Gain on sale of real
estate ............................... 20,296 -- -- -- -- 20,296
--------- --------- --------- --------- --------- ---------
Net income (loss) ...................... (2,428) 1,099 1,572 3,282 (5,561) (2,036)
Preferred dividend
requirement .......................... (206) -- -- -- -- (206)
--------- --------- --------- --------- --------- ---------
Net income (loss)
applicable to Common
shares ............................... $ (2,634) $ 1,099 $ 1,572 $ 3,282 $ (5,561) $ (2,242)
========= ========= ========= ========= ========= =========
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AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
YEAR ENDED DECEMBER 31, 1997
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
--------- --------- --------- --------- ----------- ---------
(dollars in thousands)
Earnings per share
Net (loss) ......................... $ (.22) $ (.19)
========== ==========
Weighted average
Common shares used
in computing
earnings per share.................. 11,710,013 11,710,013
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The accompanying footnotes are an integral part of this
Pro Forma Combined Statement of Operations.
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AMERICAN REALTY TRUST, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
1. The Pro Forma Combined Statement of Operations assumes the properties were
purchased on January 1, 1997.
2. The pro forma interest adjustment is based on the mortgages assumed for
each property portfolio at the date of purchase. The pro forma depreciation
adjustment is based on the purchase price of each portfolio depreciated
under the Company's established depreciation policies.
Interest:
ART Portfolio I, Ltd. $ 709
ART Portfolio II, Ltd. 1,053
ART Portfolio III, Ltd. 2,016
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Total $3,778
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Depreciation:
ART Portfolio I, Ltd. $ 243
ART Portfolio II, Ltd. 310
ART Portfolio III, Ltd. 702
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Total $1,255
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3. The pro forma minority interest adjustment is based on the number of Class
A limited partner units issued on the date of purchase at the 1998 stated
preferred return rate.
ART Portfolio I, Ltd. $ 120
ART Portfolio II, Ltd. 80
ART Portfolio III, Ltd. 328
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Total $ 528
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AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
--------- --------- --------- --------- ----------- ---------
(dollars in thousands)
Income
Sales ................................. $ 6,753 $ -- $ -- $ -- $ -- $ 6,753
Rents ................................. 11,567 504 750 1,532 -- 14,353
Interest .............................. 138 -- -- -- -- 138
Other ................................. (209) 21 20 66 -- (102)
--------- --------- --------- --------- --------- ---------
18,249 525 770 1,598 -- 21,142
Expenses
Cost of sales ......................... 5,780 -- -- -- -- 5,780
Property operations ................... 9,663 192 294 597 -- 10,746
Interest .............................. 9,536 -- -- -- 796 10,332
Advisory and servicing fees to
affiliates ........................ 760 -- -- -- -- 760
General and administrative ............ 2,285 -- -- -- -- 2,285
Depreciation .......................... 1,232 -- -- -- 333 1,565
Minority interest ..................... 488 -- -- -- 132 620
--------- --------- --------- --------- --------- ---------
29,744 192 294 597 1,261 32,088
--------- --------- --------- --------- --------- ---------
(Loss) from operations ................. (11,495) 333 476 1,001 (1,261) (10,946)
Equity in income of investees .......... 2,387 -- -- -- -- 2,387
Gain on sale of real estate ............ -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net income (loss) ...................... (9,108) 333 476 1,001 (1,261) (8,559)
Preferred dividend requirement ......... (51) -- -- -- -- (51)
--------- --------- --------- --------- --------- ---------
Net income (loss) applicable to Common
shares ................................ $ (9,159) $ 333 $ 476 $ 1,001 $ (1,261) $ (8,610)
========= ========= ========= ========= ========= =========
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AMERICAN REALTY TRUST, INC.
PRO FORMA COMBINED
STATEMENT OF OPERATIONS - Continued
THREE MONTHS ENDED MARCH 31, 1998
ART ART ART
Portfolio Portfolio Portfolio Pro Forma Pro Forma
Actual I, Ltd. II Ltd. III, Ltd. Adjustments Combined
---------- --------- --------- --------- ----------- ---------
(dollars in thousands)
Earnings per share
Net (loss).......................... $ (.86) $ (.80)
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Weighted average
Common shares used in computing
earnings per share................... 10,711,921 10,711,921
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The accompanying footnotes are an integral part of this
Pro Forma Combined Statement of Operations.
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AMERICAN REALTY TRUST, INC.
NOTES TO PRO FORMA COMBINED
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1998
1. The Pro Forma Combined Statement of Operations assumes the properties were
purchased on January 1, 1998.
2. The pro forma interest adjustment is based on the mortgages assumed for
each property portfolio at the date of purchase. The pro forma depreciation
adjustment is based on the purchase price of each portfolio depreciated
under the Company's established depreciation policies.
Interest:
ART Portfolio I, Ltd. $178
ART Portfolio II, Ltd. 261
ART Portfolio III, Ltd. 357
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Total $796
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Depreciation:
ART Portfolio I, Ltd. $ 61
ART Portfolio II, Ltd. 96
ART Portfolio III, Ltd. 176
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Total $333
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3. The pro forma minority interest adjustment is based on the number of Class
A limited partner units issued on the date of purchase at the 1998 stated
preferred return rate.
ART Portfolio I, Ltd. $ 30
ART Portfolio II, Ltd. 20
ART Portfolio III, Ltd. 82
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Total $132
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
(c) Exhibits: The following exhibits are filed herewith or incorporated by
reference as indicated below.
Exhibit
Number Description
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3.2 Articles of Amendment to the Articles of Incorporation of American
Realty Trust, Inc. setting forth the Certificate of Designations,
Preferences and Relative Participating or Optional or Other Special
Rights, and Qualifications, Limitations or Restrictions thereof of
Series H Cumulative Convertible Preferred Stock, dated June 26, 1998,
filed herewith.
99.0 Audited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio I, Ltd., for the year ended December 31,
1997, filed herewith.
99.1 Audited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio II, Ltd., for the year ended December 31,
1997, filed herewith.
99.2 Audited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio III, Ltd., for the year ended December 31,
1997, filed herewith.
99.3 Unaudited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio I, Ltd., for the three months ended March 31,
1998, filed herewith.
99.4 Unaudited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio II, Ltd., for the three months ended March
31, 1998, filed herewith.
99.5 Unaudited Combined Statement of Revenues and Direct Operating Expenses
of ART Florida Portfolio III, Ltd., for the three months ended March
31, 1998, filed herewith.
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SIGNATURE PAGE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
AMERICAN REALTY TRUST, INC.
Date: July 16, 1998 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
AMENDMENT TO ITS
CURRENT REPORT ON FORM 8-K/A
Dated May 1, 1998
Exhibit Page
Number Description Number
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3.2 Articles of Amendment to the Articles of Incorporation of American 14
Realty Trust, Inc. setting forth the Certificate of Designations,
Preferences and Relative Participating or Optional or Other Special
Rights, and Qualifications, Limitations or Restrictions thereof of
Series H Cumulative Convertible Preferred Stock, dated June 26, 1998,
filed herewith.
99.0 Audited Combined Statement of Revenues and Direct Operating Expenses 27
of ART Florida Portfolio I, Ltd., for the year ended December 31,
1997, filed herewith.
99.1 Audited Combined Statement of Revenues and Direct Operating Expenses 32
of ART Florida Portfolio II, Ltd., for the year ended December 31,
1997, filed herewith.
99.2 Audited Combined Statement of Revenues and Direct Operating Expenses 37
of ART Florida Portfolio III, Ltd., for the year ended December 31,
1997, filed herewith.
99.3 Unaudited Combined Statement of Revenues and Direct Operating Expenses 42
of ART Florida Portfolio I, Ltd., for the three months ended March 31,
1998, filed herewith.
99.4 Unaudited Combined Statement of Revenues and Direct Operating Expenses 43
of ART Florida Portfolio II, Ltd., for the three months ended March
31, 1998, filed herewith.
99.5 Unaudited Combined Statement of Revenues and Direct Operating Expenses 44
of ART Florida Portfolio III, Ltd., for the three months ended March
31, 1998, filed herewith.
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