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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): AUGUST 14, 1997
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BAY APARTMENT COMMUNITIES, INC.
(Exact name of Registrant as specified in charter)
MARYLAND 1-12672 77-0404318
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission file number) (IRS employer
of incorporation) identification no.)
4340 STEVENS CREEK BOULEVARD, SUITE 275, SAN JOSE, CA 95129
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(Address of principal executive offices) (Zip Code)
(408) 983-1500
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
AMENDMENT OF CREDIT FACILITY
On July 2, 1997, Bay Apartment Communities, Inc. (the "Company")
amended its $200 million unsecured acquisition and construction line of credit
(the "Unsecured Credit Facility") from Union Bank of Switzerland ("UBS") and
other participating banks, which it originally received in May 1996. Under the
terms of the Amended and Restated Revolving Loan Agreement, the Unsecured Credit
Facility now matures in May 2000 and bears interest at a rate equal to the 30,
60 or 90 day London Interbank Offered Rate ("LIBOR") plus .90%. This new
interest rate compares favorably with the Unsecured Credit Facility's original
interest rate of LIBOR plus 1.55%. In addition, the Unsecured Credit Facility
now carries a competitive bid option under which the Company may request UBS to
solicit competitive bids from the participating banks for short-term borrowings
priced at a margin above or below the 30, 60 or 90 day LIBOR.
PROPERTY ACQUISITIONS
From April 30, 1997 through July 15, 1997, the Company acquired three
properties (consisting of two apartment home communities and one land site),
which have not previously been disclosed in a Current Report on Form 8-K, for an
aggregate purchase price of approximately $44.55 million. As of August 13, 1997
the Company's portfolio consisted of 42 communities containing 10,739 apartment
homes and four land sites on which it is building, or plans to commence building
in the future, four communities, which will contain an aggregate of
approximately 1,527 apartment homes. The recently acquired properties are
described below. Except as noted below, substantially all of the purchase price
for each property acquired was funded by drawing on the Company's Unsecured
Credit Facility. Neither the Company, any subsidiary of the Company nor any
director or officer of the Company was affiliated with or had a material
relationship with the seller of any property described below.
AMADOR OAKS. On April 30, 1997, the Company purchased a 204 apartment
home community located in Dublin, California from Metric Institutional
Co-Investment Partners II, a California general partnership, for approximately
$22.85 million. The Company has planned a repositioning program at the
community, which will include repairing and resurfacing decks, exterior caulking
and painting, repairing exterior siding and trim and installing new carpet and
linoleum in approximately one-half of the apartment homes. In addition, the
Company intends to upgrade the community's leasing office, pool area and
landscaping, install roofs on trash enclosures and replace cloth awnings.
SAN FRANCISCO LAND SITE. On June 16, 1997, the Company acquired,
through Bay Rincon, LP, a California limited partnership of which it is the sole
general partner, a portion of a city block in the Rincon Hill area of San
Francisco, California. This land site was purchased from CNS Partners II, Ltd.,
a California limited partnership, for approximately $7.8 million. The Company
intends to build two 16-story towers above a four-story parking garage
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on this site, which will contain in the aggregate between 201 and 220 apartment
homes, approximately 2,900 square feet of retail space and between 224 and 271
controlled access parking spaces.
REGENCY APARTMENTS. On July 15, 1997, the Company purchased a 195
apartment home community located in Daly City, California from Independent
Exchange Services, Inc. F/B/O Allan A. Sebanc & Beverly M. Sebanc and Kenneth D.
McCloskey & Charlotte M. McCloskey for approximately $13.9 million. The Company
plans to undertake a major reconstruction program at the community, which will
include exterior siding, new roofs, new windows and major repairs to stairwells
and decks. Interior upgrades will include new floor and wall coverings, new
electrical switches and fixtures, new plumbing fixtures and new appliances
throughout the community. In addition, the Company will reconstruct the leasing
center and upgrade the community's recreation center and pool area, parking
lots, landscaping and drainage.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements under Rule 3-14 of Regulation S-X
(b) Pro Forma Financial Statements
(c) Exhibits
10.1 Amended and Restated Revolving Loan Agreement, dated as of July 2,
1997, between the Company and Union Bank of Switzerland.
23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Company has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
BAY APARTMENT COMMUNITIES, INC.
Dated: August 14, 1997 By:/s/ Jeffrey B. Van Horn
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Jeffrey B. Van Horn
Vice President and Chief Financial Officer
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REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Bay Apartment Communities, Inc.:
We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the Historical Summary) of Amador Oaks Apartments, Dublin,
California (the Property) for the year ended December 31, 1996. The Historical
Summary is the responsibility of the Property's owner. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining on a test basis, evidence supporting the amounts and
disclosures in the Historical Summary. 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 Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with rules and regulations of the Securities and Exchange Commission, as
described in Note A, and is not intended to be a complete presentation of the
Property's revenues and expenses and may not be comparable to results from
proposed future operations of the Property.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses, described in Note
A, of Amador Oaks Apartments, Dublin, California, for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
San Francisco, California Coopers & Lybrand L.L.P.
June 2, 1997
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AMADOR OAKS APARTMENTS
HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES
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Year Ended
December 31,
1996
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Revenues:
Rental income $2,397,463
Other 50,871
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2,448,334
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Direct operating expenses:
On-site management 225,370
Real property tax 211,976
Utilities 156,890
Repairs and maintenance 184,877
Other 74,854
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853,967
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Revenue in excess of direct
operating expenses $1,594,367
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The accompanying note is an integral
part of this Historical Summary
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AMADOR OAKS APARTMENTS
NOTE TO HISTORICAL SUMMARY OF REVENUES
AND DIRECT OPERATING EXPENSES
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A. PROPERTY AND BASIS OF ACCOUNTING:
The accompanying Historical Summary of Revenues and Direct Operating
Expenses has been prepared in accordance with Rule 3-14 of Regulation
S-X of the Securities and Exchange Commission and relates to the
operations of Amador Oaks Apartments, located in Dublin, California with
204 apartment homes.
In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees, and income taxes.
Rental income attributable to residential leases is recorded when due from
tenants.
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REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors
Bay Apartment Communities, Inc.:
We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the Historical Summary) of Regency Apartments, Daly City,
California (the Property) for the year ended December 31, 1996. The Historical
Summary is the responsibility of the Property's owner. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining on a test basis, evidence supporting the amounts and
disclosures in the Historical Summary. 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 Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with rules and regulations of the Securities and Exchange Commission, as
described in Note A, and is not intended to be a complete presentation of the
Property's revenues and expenses and may not be comparable to results from
proposed future operations of the Property.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses, described in Note
A, of Regency Apartments, Daly City, California, for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
San Francisco, California Coopers & Lybrand L.L.P.
June 2, 1997
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REGENCY APARTMENTS
HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES
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Year Ended
December 31,
1996
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Revenues:
Rental income $1,488,932
Other 18,212
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1,507,144
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Direct operating expenses:
On-site management 40,457
Real property tax 163,332
Utilities 135,044
Repairs and maintenance 292,890
Other 29,135
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660,858
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Revenue in excess of direct
operating expenses $ 846,286
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The accompanying note is an integral
part of this Historical Summary
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REGENCY APARTMENTS
NOTE TO HISTORICAL SUMMARY OF REVENUES
AND DIRECT OPERATING EXPENSES
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A. PROPERTY AND BASIS OF ACCOUNTING:
The accompanying Historical Summary of Revenues and Direct Operating
Expenses has been prepared in accordance with Rule 3-14 of Regulation
S-X of the Securities and Exchange Commission and relates to the
operations of Regency Apartments, located in Daly City, California with
195 apartment homes.
In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees, and income taxes.
Rental income attributable to residential leases is recorded when due from
tenants.
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BAY APARTMENT COMMUNITIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1996
(In thousands, except per share data)
(Unaudited)
1997 Other
Historical Acquisitions Transactions Pro Forma
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Assets:
Real Estate Assets:
Land $ 152,277 $ 8,901 A -- $ 161,178
Buildings and Improvements 511,583 26,704 A -- 538,287
Furniture, fixtures & equipment 35,542 1,491 A -- 37,033
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699,402 37,096 -- 736,498
Less accumulated depreciation (52,554) 0 -- (52,554)
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Operating real estate assets 646,848 37,096 -- 683,944
Construction in progress 50,945 0 -- 50,945
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Net Real Estate Assets 697,793 37,096 -- 734,889
Cash & cash equivalents 920 0 D 920
Restricted cash 960 0 -- 960
Other assets, net 12,236 0 -- 12,236
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Total Assets $ 711,909 $ 37,096 $ 0 $ 749,005
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Liabilities and Shareholders' Equity:
Notes payable 273,688 36,906 B (36,906)E 273,688
Accounts payable and accrued expenses 5,450 0 -- 5,450
Dividends payable 8,939 0 -- 8,939
Other liabilities 4,553 190 C -- 4,743
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Total Liabilities 292,630 37,096 (36,906) 292,820
Minority interest 7,002 -- 7,002
Shareholders' Equity:
Preferred stock 27 0 15 F 42
Common stock 190 0 0 190
Paid in capital 435,723 0 36,891 G 472,614
Dividends in excess of accumulated earnings (23,663) 0 -- (23,663)
------------ ------------ ------------ ------------
Total Shareholders' Equity 412,277 0 36,906 449,183
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Total Liabilities and Shareholders' Equity $ 711,909 $ 37,096 $ 0 $ 749,005
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BAY APARTMENT COMMUNITIES, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(In thousands, except share and per share data)
(Unaudited)
1997 Other
Historical Acquisitions Transactions Pro Forma
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Revenue:
Rental $ 80,377 $ 3,886 H -- $ 84,263
Other 2,216 69 H -- 2,285
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Total revenue 82,593 3,955 -- 86,548
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Expenses:
Property operating 18,924 1,036 I -- 19,960
Property taxes 6,353 375 I -- 6,728
General and administrative 3,895 104 I -- 3,999
Interest and financing 14,276 2,602 J (2,602) L 14,276
Depreciation and amortization 18,689 1,103 K -- 19,792
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Total expenses 62,137 5,220 (2,602) 64,755
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Income before minority interest and 20,456 (1,265) 2,602 21,793
extraordinary item
Minority interest (319) -- -- (319)
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Income before extraordinary item 20,137 (1,265) 2,602 21,474
Extraordinary item (511) -- -- (511)
------------ ------------ ------------ ------------
Net income 19,626 (1,265) 2,602 20,963
Preferred dividend requirement (4,264) -- (3,136) M (7,400)
------------ ------------ ------------ ------------
Earnings available to common shares $ 15,362 ($1,265) ($534) $ 13,563
============ ============ ============ ============
Weighted average shares outstanding 15,126,242 15,126,242
Per share $ 1.02 $ 0.90
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1. Basis of Presentation:
The pro forma financial statements of Bay Apartment Communities, Inc. (the
"Company"), which are unaudited, have been prepared based on the historical
financial statements of the Company. The pro forma consolidated balance sheet
has been prepared as if the acquisition of the two apartment communities during
the period from April 30, 1997 to July 15, 1997 (the "1997 Acquisition
Communities"), an underwritten public offering of Series C preferred stock in
June 1997 (the "June Offering"), and related paydown on the $200 million
unsecured line of credit (the "Credit Facility"), had occurred on December 31,
1996. The pro forma consolidated statement of operations for the twelve months
ended December 31, 1996, has been prepared as if the above mentioned events had
occurred on January 1, 1996. In management's opinion, all adjustments necessary
to reflect the effects of these transactions have been made. The pro forma
financial statements should be read in conjunction with the historical financial
statements of the Company.
2. PRO FORMA ADJUSTMENTS:
A- Additional real estate assets are attributable to the 1997 Acquisition
Communities which consist of the $13.9 million acquisition of the Regency
Apartments, and the $22.85 million acquisition of the Amador Apartments.
B- Increase in Notes Payable is attributable to cash used to acquire the
1997 Acquisition Communities which was drawn from the Credit Facility.
C- Increase in other liabilities is attributable to resident deposits and
accrued property taxes from the 1997 Acquisition Communities.
D- There is no change in cash which is attributable to $36.9 million of the
net proceeds from the June Offering which were used to paydown the Credit
Facility. This represents 1,476,000 shares of the total 2,300,000 shares
issued.
E- Decrease in notes payable is attributable to the paydown of the Credit
Facility.
F- Increase in preferred stock is attributable to the issuance of shares in
the June Offering.
G- Additional paid in capital is attributable to the net proceeds from the
June Offering.
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H- Additional rental and other revenue is attributable to the 1997 Acquisition
Communities.
I- Additional property operating expense, property tax expense, and general
and administrative expense are attributable to the 1997 Acquisition
Communities.
J- Additional Interest and Financing expense is attributable to the interest
incurred on funds obtained from the Credit Facility which were used to
acquire the 1997 Acquisition Communities.
K- Depreciation expense attributable to the 1997 Acquisition Communities has
been computed using the straight-line method over 30 years for buildings
and 7 years for furniture, fixtures and equipment.
L- Decrease in Interest and Financing is attributable to the net proceeds from
the June Offering used to paydown the Credit Facility.
M- Increase in preferred dividends required for 1,476,000 shares issued
under the June Offering.
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