SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
(Amendment No. 1)
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) November 7, 2005
WINTHROP REALTY TRUST
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(Exact Name of Registrant as Specified in Its Charter)
Ohio
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(State or Other Jurisdiction of Incorporation)
001-06249 34-6513657
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(Commission File Number) (I.R.S. Employer Identification No.)
7 Bulfinch Place, Suite 500, P.O. Box 9507, Boston, Massachusetts 02114
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(Address of Principal Executive Offices) (Zip Code)
(617) 570-4614
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(Registrant's Telephone Number, Including Area Code)
n/a
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligations of the registrant under any of the
following provisions
|_| Written communications pursuant to Rule 425 under the Securities Act (17
CFT|R 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
INDEX
Item 9.01 Financial Statements and Exhibits.................................. 3
Signatures ...................................................................13
2
Explanatory Note as to the Purpose of this Amendment
Winthrop Realty Trust (the "Trust") filed a Current Report on Form 8-K on
November 10, 2005 with regard to the acquisition of 3,125,000 shares of common
stock in Newkirk Realty Trust, Inc. ("Newkirk") at a price per share of $16, for
a total purchase price of $50,000,000. In addition, the Trust assigned to
Newkirk the rights it held under an Exclusivity Services Agreement with Michael
Ashner, the Trust's Chief Executive Officer, relating to business opportunities
generated by or offered to Mr. Ashner relating solely to net-lease assets, as
defined. In consideration for the assignment of these rights, Newkirk issued to
the Trust an additional 1,250,000 shares of Newkirk's common stock (a value of
$20,000,000). The foregoing transactions are more fully described in the Current
Report on Form 8-K filed on November 10, 2005. The purpose of this Amendment to
the Current Report is to provide the financial information required by Article
11 of Regulation S-X.
Item 9.01 Financial Statements and Exhibits
The following financial statements and pro forma financial information are filed
as part of this report.
(a) Financial Statements of Real Estate Acquired:
Newkirk Realty Trust, Inc. Balance Sheet as of July 22, 2005
Newkirk did not have any operations until November 2005.
(b) Winthrop Realty Trust Unaudited Pro Forma Financial Statements:
The unaudited pro forma consolidated financial statements set forth
(i) the pro forma balance sheet of the Trust as of September 30,
2005, as if the acquisition of the Newkirk common stock and the sale
of the exclusivity rights had occurred on September 30, 2005, (ii)
the pro forma consolidated statement of operations of the Trust for
the year ended December 31, 2004, as if the acquisition of the
Newkirk common stock and the sale of the exclusivity rights had
occurred on January 1, 2004, and (iii) the pro forma consolidated
statement of operations of the Trust for the nine-month period ended
September 30, 2005, as if the acquisition of the Newkirk common
stock and the sale of the exclusivity rights had occurred on January
1, 2004. The pro forma financial statements are based upon
assumptions contained in the notes thereto and should be read in
conjunction with such notes.
The unaudited pro forma consolidated financial statements may not
necessarily reflect the results of operations or financial position
of the Trust which would have actually resulted had the investment
occurred as of the dates indicated, nor should they be taken as
indicative of the future results of operations or the future
financial position of the Trust. Differences could result from
various factors, including but not limited to changes in occupancy,
rental rates and rental expenses.
3
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Newkirk Realty Trust, Inc.:
We have audited the accompanying balance sheet of Newkirk Realty Trust,
Inc. ("the Company") as of July 22, 2005. This financial statement is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with the standards of the Public
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the balance
sheet is free of material misstatement. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial
reporting as a basis for designing audit procedures that are appropriate in the
circumstances but not for the purpose of expressing an opinion on the
effectiveness of the Company's internal control over financial reporting.
Accordingly, we express no such opinion. An audit also includes examining, on a
test basis, evidence supporting the amounts and disclosures in the balance
sheet, assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, such balance sheet presents fairly, in all material
respects, the financial position of Newkirk Realty Trust, Inc. at July 22, 2005,
in conformity with accounting principles generally accepted in the United States
of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
August 5, 2005
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NEWKIRK REALTY TRUST, INC.
BALANCE SHEET
JULY 22, 2005
ASSETS
Cash $ 1,000
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Preferred Shares of Beneficial Interest, $.01 par value
1,000,000 shares authorized, none issued and outstanding $ --
Common Shares of Beneficial Interest, $.01 par value
400,000,000 shares authorized, 100 issued and outstanding 1
Additional paid in capital 999
--------
$ 1,000
========
See Accompanying Notes to Balance Sheet.
5
NEWKIRK REALTY TRUST, INC.
NOTES TO BALANCE SHEET
1. ORGANIZATION
Newkirk Realty Trust, Inc., a Maryland corporation (the "Company"), was
formed on July 22, 2005 for the purpose of becoming the general partner of The
Newkirk Master Limited Partnership and to acquire a 30.1% interest in the
Newkirk Master Limited Partnership. The Newkirk Master Limited Partnership is a
Delaware limited partnership, which is a publicly reporting limited partnership
that owns a diversified portfolio of triple-net leased properties and other real
estate-related assets. The Company has not commenced operations.
2. SUMMARY OF ACCOUNTING POLICIES
Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the reporting date. Actual amounts could differ from those estimates.
Income Taxes
The Company intends to qualify and operate as a real estate investment
trust ("REIT") under the provisions of the Internal Revenue Code. Under these
provisions, the Company is required to distribute at least 90% of its REIT
taxable income to its shareholders to maintain the REIT qualification and not be
subject to Federal income taxes for the portion of taxable income distributed.
The Company must also satisfy certain tests concerning the nature of its assets
and income distributed and meet certain record keeping requirements.
3. SUBSEQUENT EVENTS (UNAUDITED)
On November 7, 2005, the Company completed its initial public offering of
common shares (the "IPO") pursuant to which it sold 15,000,000 shares of its
common shares at a per share price of $16. Simultaneously with the IPO, the
Company sold to Winthrop Realty Trust (formerly known as First Union Real Estate
Equity and Mortgage Investments) 3,125,000 shares of its common shares for a
purchase price of $16 per share or $50 million in the aggregate. In addition,
the Company issued an additional. 1,250,000 shares to Winthrop Realty Trust
pursuant to an Acquisition Agreement (the "Exclusivity Assignment Agreement") in
consideration for the assignment by Winthrop Realty Trust of certain exclusivity
rights with respect to net-lease business opportunities offered to or generated
by Michael Ashner, the Chairman and Chief Executive Officer of the Company and
Winthrop Realty Trust.
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WINTHROP REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2005
Pro Forma
Adjustments
Historical ----------- Pro Forma
September 30, Newkirk September 30,
2005 Realty Trust 2005
(In thousands) (a)
Assets
Investment in real estate, at cost
Land $ 11,004 $ -- $ 11,004
Buildings and improvements 166,777 -- 166,777
--------- --------- ---------
177,781 -- 177,781
Less - Accumulated depreciation (8,017) -- (8,017)
--------- --------- ---------
Investments in real estate, net 169,764 -- 169,764
Cash and cash equivalents 85,136 (50,000) 35,136
Restricted cash 876 -- 876
Mortgage-backed securities available for sale pledged under
repurchase agreements 107,733 -- 107,733
Loans receivable 9,173 -- 9,173
Accounts receivable and prepayments, net 15,338 -- 15,338
Real estate securities - available for sale 30,418 -- 30,418
Preferred equity investment 78,417 -- 78,417
Equity investment in Newkirk Realty Trust, Inc. -- 70,000 70,000
Lease intangibles, net 26,004 -- 26,004
Deferred financing costs, net 1,177 -- 1,177
Assets of discontinued operations 1,382 -- 1,382
Other assets 1,405 -- 1,405
--------- --------- ---------
TOTAL ASSETS $ 526,823 $ 20,000 $ 546,823
========= ========= =========
LIABILITIES
Repurchase agreements $ 104,196 $ -- $ 104,196
Mortgage loans payable 176,298 -- 176,298
Accounts payable and accrued liabilities 5,716 -- 5,716
Dividends payable 1,616 -- 1,616
Deferred income 37 10,000 10,037
Loan payable 30 -- 30
Liabilities of discontinued operations 1,708 -- 1,708
--------- --------- ---------
TOTAL LIABILITIES 289,601 10,000 299,601
--------- --------- ---------
MINORITY INTEREST 5,694 -- 5,694
--------- --------- ---------
SHAREHOLDERS' EQUITY
Series A Cumulative Convertible Redeemable Preferred Shares
of Beneficial Interest, $25 per share liquidating
preference, 2,300,000 shares authorized, 983,082 outstanding 23,131 -- 23,131
Series B-1 Cumulative Convertible Redeemable Preferred Shares
of Beneficial Interest, $25 per share liquidating
preference, 4,000,000 shares authorized and outstanding 94,316 -- 94,316
Common Shares of Beneficial Interest, $1 par, unlimited
authorized, 32,058,913 outstanding 32,059 -- 32,059
Additional paid in capital 210,877 -- 210,877
Accumulated other comprehensive income 4,554 -- 4,554
Accumulated distributions in excess of net income (133,409) 10,000 (123,409)
--------- --------- ---------
Total Shareholders' Equity 231,528 10,000 241,528
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 526,823 $ 20,000 $ 546,823
========= ========= =========
See notes to unaudited pro forma financial statements
7
WINTHROP REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2004
Pro Forma
(In thousands, except per share data) Adjustments
-----------
Newkirk
Historical Realty Trust Pro Forma
---------- ------------ ---------
(a)
Revenues
Rents $ 3,390 $ -- $ 3,390
Interest and dividends 2,528 -- 2,528
------- ------- -------
5,918 -- 5,918
------- ------- -------
Expenses
Property operating 786 -- 786
Real estate taxes 66 -- 66
Depreciation and amortization 735 -- 735
Interest 698 -- 698
General and administrative 4,104 -- 4,104
------- ------- -------
6,389 -- 6,389
------- ------- -------
Other Income
Insurance recoveries 1,254 -- 1,254
Gain on sale of exclusivity agreement
rights -- 13,333 13,333
Gain on sale of securities available-
for-sale 1,153 -- 1,153
Equity in earnings of Newkirk Realty
Trust, Inc. -- 6,823 6,823
------- ------- -------
2,407 20,156 22,563
------- ------- -------
Income from continuing operations $ 1,936 $20,156 $22,092
======= ======= =======
Per share data - Basic and Diluted:
Income from continuing operations
applicable to Common Shares of
Beneficial Interest $ -- $ 0.64
======= =======
Basic and diluted weighted average
Common Shares of Beneficial Interest 31,059 31,059
======= =======
See notes to unaudited pro forma financial statements.
8
WINTHROP REALTY TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2005
Pro Forma
(In thousands, except per share data) Adjustments
-----------
Newkirk
Historical Realty Trust Proforma
---------- ------------ --------
(b)
Revenue
Rents $18,076 $ -- $18,076
Interest and dividends 4,772 -- 4,772
------- ------- -------
22,848 -- 22,848
------- ------- -------
Expenses
Property operating 547 -- 547
Real estate taxes 62 -- 62
Depreciation and amortization 4,987 -- 4,987
Interest 10,530 -- 10,530
State and local taxes 615 -- 615
General and administrative 3,750 -- 3,750
------- ------- -------
20,491 -- 20,491
------- ------- -------
Other Income
Gain on the sale of real estate securities
available for sale 243 -- 243
Legal settlement 11,000 -- 11,000
Equity in earnings of preferred equity
investment 2,598 -- 2,598
Minority interest 75 -- 75
Gain on sale of exclusivity rights -- 2,500 2,500
Equity in earnings of Newkirk Realty
Trust, Inc. -- 2,842 2,842
------- ------- -------
13,916 5,342 19,258
------- ------- -------
Income from continuing operations $16,273 $ 5,342 $21,615
======= ======= =======
Per share data -- Basic:
Income from continuing operations
applicable to Common Shares of Beneficial
Interest $ 0.35 $ 0.52
======= =======
Diluted:
Income from continuing operations
applicable to Common Shares of Beneficial
Interest $ 0.35 $ 0.52
======= =======
Basic weighted average Common Shares of
Beneficial Interest 31,887 31,887
Stock Options 45 45
======= =======
Diluted weighted average Common Shares of
Beneficial Interest 31,932 31,932
======= =======
See note to unaudited pro forma financial statements.
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WINTHROP REALTY TRUST
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
On November 7, 2005, Winthrop Realty Trust (the "Trust") consummated the
transactions contemplated by (i) a definitive Securities Purchase Agreement
between the Trust and Newkirk Realty Trust, Inc. ("Newkirk") and (ii) an
Acquisition Agreement between the Trust and Newkirk. Newkirk was formed to
acquire a 30.1% interest in The Newkirk Master Limited Partnership, a Delaware
limited partnership, which is a publicly reporting limited partnership that owns
a diversified portfolio of triple-net leased properties and other real
estate-related assets.
Pursuant to the Securities Purchase Agreement, the Trust acquired 3,125,000
shares of common stock in Newkirk for a per share purchase price of $16.00, for
a total purchase price of $50 million. Pursuant to the Acquisition Agreement,
the Trust assigned to Newkirk the rights it held under an Exclusivity Services
Agreement (the "Exclusivity Services Agreement") with Michael Ashner, the
Trust's Chief Executive Officer, relating solely to business opportunities
generated by or offered to Mr. Ashner relating to net-lease assets, as defined.
In consideration for the assignment of these rights, Newkirk issued to the Trust
an additional 1,250,000 shares of Newkirk's common stock (the "Exclusivity
Shares") valued at $20,000,000. The transactions pursuant to both Agreements
were entered into in connection with the closing of Newkirk's initial public
offering.
With respect to the Exclusivity Shares, 625,000 shares, reducing by 17,361
shares per month, were received subject to forfeiture over a 36 month period
upon the termination of the Exclusivity Services Agreement in certain events.
The 4,375,000 shares of the common stock of Newkirk acquired by the Trust under
the Agreements represent 22.58% of the outstanding common shares of Newkirk at
November 7, 2005. The Trust exercises significant influence, but not control,
over Newkirk; hence, this investment will be accounted for using the equity
method of accounting.
2. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
The unaudited pro forma consolidated balance sheet as of September 30, 2005, is
based on the historical balance sheet for the Trust presented in its Quarterly
Report on Form 10-Q as of September 30, 2005 and includes adjustments, assuming
the equity investment in Newkirk occurred as of that date. Significant pro forma
adjustments in the unaudited pro forma consolidated balance sheet are as
follows:
(a) Represents the acquisition for cash of $50,000,000 of 3,125,000 Newkirk
common shares and the sale of the exclusivity rights for 1,250,000 shares
valued at $20,000,000 of which 625,000 shares, reducing by 17,361 shares
per month, are subject to forfeiture over 36 months. The gain on the sale
of the exclusivity agreement of $20,000,000 is reflected in the balance
sheet as $10,000,000 earned on non-forfeitable shares and $10,000,000 as
deferred income to be earned over 36 months.
10
3. UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
The unaudited pro forma consolidated statement of operations for the year ended
December 31, 2004, includes adjustments assuming that the equity investment in
Newkirk occurred as of January 1, 2004, and is based on the historical statement
of operations for the Trust presented in its Annual Report on Form 10-K for the
year ended December 31, 2004. The unaudited pro forma consolidated statement of
operations for the nine months ended September 30, 2005, includes adjustments
assuming that the equity investment in Newkirk occurred as of January 1, 2004,
and is based on the historical statement of operations for the Trust presented
in its Quarterly Report of Form 10-Q for the period ended September 30, 2005.
Significant pro forma adjustments in the unaudited pro forma consolidated
statements of operations include the following:
December 31, 2004
a) Represents the pro forma adjustments reflecting the equity pick up of
Newkirk based upon the pro forma earnings presented for the year ended
December 31, 2004 presented in Newkirk's registration statement on Form
S-11 dated November 7, 2005.
The gain on the sale of the exclusivity agreement is reflected in the
statement of operations as $10,000,000 earned on non-forfeitable shares
and $3,333,333 of deferred income related to the $10,000,000 of
forfeitable shares earned over 36 months.
September 30, 2005
b) Represents the pro forma adjustments reflecting the equity pick up of
Newkirk based upon the pro forma earnings presented for the six months
ended June 30, 2005 presented in Newkirk's registration statement adjusted
to September 30, 2005.
The gain on the sale of the exclusivity agreement is reflected in the
statement of operations as $2,500,000 of deferred income related to the
$10,000,000 of forfeitable shares earned over 36 months.
11
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 hereunto duly authorized on this 20th day of January, 2006.
WINTHROP REALTY TRUST
By: /s/Thomas C. Staples
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Thomas C. Staples
Chief Financial Officer
12