-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nn7GINQgqedSZ1FwMHpEVI6dFk/KBfYm3KTMUX7WJ7ktDCXlaQdmdK9vrb1//q7n suo6TvzmcgqmruY4HS+3fQ== 0000910643-97-000172.txt : 19980102 0000910643-97-000172.hdr.sgml : 19980102 ACCESSION NUMBER: 0000910643-97-000172 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19971231 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971231 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: WELLSFORD REAL PROPERTIES INC CENTRAL INDEX KEY: 0001038222 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 133926898 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12917 FILM NUMBER: 97747553 BUSINESS ADDRESS: STREET 1: 610 FIFTH AVENUE SEVENTH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020 BUSINESS PHONE: 2123332300 MAIL ADDRESS: STREET 1: 610 FIFTH AVENUE SEVENTH FLOOR CITY: NEW YORK STATE: NY ZIP: 10020 8-K 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) December 31, 1997 (December 16, 1997) Wellsford Real Properties, Inc. - ---------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) 1-12917 13-3926898 - ----------------------------------------------------------------------------- (Commission File Number) (IRS Employer Identification No.) Maryland - ----------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 610 Fifth Avenue, New York, New York 10020 - ----------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (212) 333-2300 - ----------------------------------------------------------------------------- (Registrant's telephone number, including area code) Item 2. Acquisition or Disposition of Assets On December 16, 1997, Wellsford/Whitehall Properties, L.L.C. (the "Purchaser"), a 50.1% subsidiary of Wellsford Commercial Properties Trust, which is a 99.9% subsidiary of Wellsford Real Properties, Inc. (the "Company"), acquired Mountain Heights Office Center ("Mountain Heights"), located in Berkeley Heights, N.J. Mountain Heights is comprised of an approximately 175,300 square foot building that is currently 100% occupied and an approximately 109,800 square foot building that is currently vacant. The Purchaser paid $29.1 million for Mountain Heights, $26.3 million of which was funded through temporary financing with the proceeds of a loan from the Company which pays interest at LIBOR plus 4% and is due in January 1998. Permanent financing is expected to be secured on or about December 31, 1997. Item 7. Financial Statements, Proforma Financial Information and Exhibits (a) Financial Statements The Mountain Heights Financial Statements: Independent Accountants' Report of Ernst & Young LLP dated December 19, 1997. Combined Statements of Revenues and Certain Expenses for the year ended December 31, 1996 (audited) and nine months ended September 30, 1997 (unaudited). Pro Forma Consolidated Income Statement for the Nine Months Ended September 30, 1997 (unaudited) and related footnotes. Pro Forma Consolidated Income Statement for the Year Ended December 31, 1996 (unaudited) and related footnotes. Pro Forma Consolidated Balance Sheet for September 30, 1997 (unaudited) and related footnotes. (b) Exhibits None. 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. Wellsford Real Properties, Inc. -------------------------------- (Registrant) Date: December 31, 1997 By: /s/Gregory F. Hughes ----------------------------- Gregory F. Hughes Chief Financial Officer Statements of Revenues and Certain Expenses Mountain Heights Office Center Year Ended December 31, 1996 with Report of Independent Auditors Statements of Revenue and Certain Expenses Mountain Heights Office Center Year Ended December 31, 1996 Contents Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . .1 Statements of Revenues and Certain Expenses. . . . . . . . . . . . . . . . .2 Notes to Statements of Revenues and Certain Expenses . . . . . . . . . . . .3 Report of Independent Auditors Board of Directors and Stockholders Wellsford Real Properties, Inc. We have audited the statement of revenues and certain expenses of the property known as Mountain Heights Office Center (the "Property"), acquired by Wellsford/Whitehall Properties, L.L.C., as described in Note 1, for the year ended December 31, 1996. This financial statement is the responsibility of the Wellsford/Whitehall Properties, L.L.C. management. Our responsibility is to express an opinion on this financial statement 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 financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and the significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K of Wellsford Real Properties, Inc. and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of Mountain Heights Office Center as described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, New York December 19, 1997 Mountain Heights Office Center Statements of Revenues and Certain Expenses (in thousands) (Note 1) Nine Months Year Ended Ended September December 30, 1997 31, 1996 ----------- ---------- (unaudited) Revenues: Base Rents $ 2,677 $ 2,858 Tenant escalations and reimbursements 118 178 -------------------------- Total revenues 2,795 3,036 -------------------------- Certain Expenses: Property operating expenses 769 1,061 Real estate taxes 356 516 Management fees 44 58 -------------------------- Total certain expenses 1,169 1,635 -------------------------- Revenues in excess of certain expenses $ 1,626 $ 1,401 ========================== See accompanying notes. Mountain Heights Office Center Notes to Statements of Revenues and Certain Expenses For the Year Ended December 31, 1996 1. Basis of Presentation Presented herein is the statements of revenues and certain expenses related to the operations of two office buildings, Mountain Heights Office Center (the "Property"), located in Berkeley Heights, New Jersey. The Property is comprised of a 100% leased building and an unoccupied building to be renovated. The Property was acquired by Wellsford/Whitehall Properties, L.L.C. ("Wellsford Office") on December 16, 1997 from California State Teachers Retirement Systems ("CalSters"). Wellsford Real Properties, Inc. has a 50.1% interest in Wellsford Office. The accompanying financial statements have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate properties. Accordingly, the financial statements exclude certain expenses that may not be comparable to those expected to be incurred by Wellsford Office in the proposed future operations of the Property. Expenses excluded consist of interest, depreciation and general and administrative expenses not directly related to the future operations. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statement and accompanying notes. Actual results could differ from those estimates. The statement of revenues and certain expenses for the nine months ended September 30, 1997 is unaudited; however, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the statement of revenues and certain expenses for this interim period have been included. The results of interim periods are not necessarily indicative of the results to be obtained for a full fiscal year. 2. Lease and Revenue Recognition The Property is being leased to tenants under operating leases with leases expiring at various dates over the next nine years. Minimum rental income is generally recognized on a straight-line basis over the term of the lease. The excess of amounts so recognized over amounts due pursuant to the underlying leases amounted to approximately $257,000, for the year ended December 31, 1996. The lease agreements generally contain provisions which provide for reimbursement of real estate taxes and operating expenses over base year amounts, as well as fixed increases in rent. 3. Management and Leasing Agreements During 1996 the Property was managed and leased by Compass Management and Leasing, Inc. Mountain Heights Office Center Notes to Statements of Revenues and Certain Expenses (continued) 4. Property Operating Expenses Property operating expenses for the year ended December 31, 1996 include approximately $30,000 for insurance, $389,000 for utilities, $65,000 in general and administrative expenses, $451,000 in repair and maintenance costs, and $126,000 for payroll costs. 5. Significant Tenants Five tenants accounted for approximately 19%, 11%, 9%, 9%, and 8% of the 1996 base rents on a straight line basis, respectively. Wellsford Real Properties, Inc. Pro Forma Consolidated Income Statement Nine Months Ended September 30, 1997 (In thousands except per share data) (Unaudited) Mountain Heights Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- REVENUE Rental income $ 1,260 $ 1,260 Interest income 4,125 89 (A) 4,214 Joint venture income 160 (176) (B) (16) ---------- -------- --------- Total Revenue 5,545 (87) 5,458 ---------- -------- --------- EXPENSES Property operating and maintenance 241 241 Real estate taxes 106 106 General and administrative 1,521 1,521 Depreciation 221 221 Property management 18 18 ---------- --------- ---------- Total Expenses 2,107 0 2,107 ---------- --------- ---------- Income before income taxes 3,438 (87) 3,351 Provision for income taxes 1,003 (38) 965 (C) ---------- --------- ---------- Net income $ 2,435 ($ 49) $ 2,386 ========== ========= ========== Net income per common share $ 0.14 $ 0.14 ========== ========== Weighted average common shares outstanding 16,912 16,912 ========== ========== Wellsford Real Properties, Inc. Notes to Pro Forma Consolidated Income Statement Nine Months Ended September 30, 1997 (Unaudited) (A) Represents interest income on the net $1.3 million bridge loan draw by Wellsford/Whitehall Properties, L.L.C. to fund the purchase of Mountain Heights, for nine months at 9% (LIBOR + 3%). (B) Represents nine months of operations of Mountain Heights as follows: (In thousands) Mountain Heights 1,626 Represents historical operating revenues and expenses of this asset for the nine months ended September 30, 1997. Depreciation expense (464) Represents depreciation on Mountain Heights for nine months utilizing a 40 year estimated useful life. Interest exp. - term loan (1,425) Represents interest on a $25.0 million draw on the Wellsford/Whitehall Properties, L.L.C. term loan for nine months at 7.6% (LIBOR + 1.6%) Interest exp. - Company bridge loan (89) Represents interest on the net $1.3 million Company bridge loan draw to fund Mountain Heights, for nine months at 9% (LIBOR + 3%) ________ (352) Company interest through WCPT 50.10% ________ ($176) ======== (C) Represents the Company's estimated provision for federal and state income taxes at rates of 35% and 14% respectively. Wellsford Real Properties, Inc. Pro Forma Consolidated Income Statement Year Ended December 31, 1996 (In thousands except per share data) (Unaudited) Mountain Heights Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- REVENUE Rental income $ 0 Interest income $ 757 $ 119 (A) 876 Joint venture income (620) (B) (620) ---------- --------- ---------- Total Revenue 757 (501) 256 ---------- --------- ---------- EXPENSES Property operating and maintenance 0 Real estate taxes 0 General and administrative 0 Depreciation 0 Property management 0 ---------- --------- ---------- Total Expenses 0 0 0 ---------- --------- ---------- Income before income taxes 757 (501) 256 Provision for income taxes (221) (221)(C) ---------- --------- ---------- Net income $ 757 ($ 280) $ 477 ========== ========= ========== Wellsford Real Properties, Inc. Notes to Pro Forma Consolidated Income Statement Year Ended December 31, 1996 (Unaudited) (A) Represents interest income on the net $1.3 million bridge loan draw by Wellsford/Whitehall Properties, L.L.C. to fund the purchase of Mountain Heights, for one year at 9% (LIBOR + 3%). (B) Represents one year of operations of Mountain Heights as follows: (In thousands) Mountain Heights 1,401 Represents historical operating revenues and expenses of this asset for the year ended December 31, 1996. Depreciation expense (619) Represents depreciation on Mountain Heights for one year utilizing a 40 year estimated useful life. Interest exp. - term loan (1,900) Represents interest on a $25.0 million draw on the Wellsford/Whitehall Properties, L.L.C. term loan for one year at 7.6% (LIBOR + 1.6%) Interest exp. - Company bridge loan (119) Represents interest on the net $1.3 million Company bridge loan draw to fund Mountain Heights, for one year at 9% (LIBOR + 3%) ________ (1,237) Company interest through WCPT 50.10% ________ ($620) ======== (C) Represents the Company's estimated provision for federal and state income taxes at rates of 35% and 14%, respectively. Wellsford Real Properties, Inc. Pro Forma Consolidated Balance Sheet September 30, 1997 (In thousands) (Unaudited) Mountain Heights Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- ASSETS Real estate assets, at cost: Land $ 0 $ 0 Buildings and improvements 0 ---------- --------- ---------- Less, accumulated depreciation 0 0 0 ---------- --------- ---------- 0 0 0 Construction in process 21,864 21,864 ---------- --------- ---------- 21,864 0 21,864 Notes receivable 145,880 26,325 (A) 147,205 (25,000) (C) Investment in joint venture 32,425 1,403 (B) 33,828 --------- ------- ------- Total real estate assets 200,169 2,728 202,897 Cash and cash equivalents 5,533 (26,325) (A) 2,805 (1,403) (B) 25,000 (C) Restricted cash 6,717 6,717 Other assets 1,983 1,983 ---------- --------- ---------- Total Assets $ 214,402 $ 0 $ 214,402 ========== ========= ========== LIABILITIES AND EQUITY Liabilities: Tax exempt mortgage note payable $ 14,755 $ 14,755 Credit facility 10,000 10,000 Other liabilities 6,667 6,667 ---------- --------- ---------- Total Liabilities 31,422 0 31,422 ---------- --------- ---------- Commitments and contingencies -- -- -- Minority Interest 3,092 3,092 Equity: Common Stock, 197,650,000 shares authorized - 16,572,043 shares, $.01 par value per share, issued and outstanding as adjusted 166 166 Class A Common Stock, 350,000 shares authorized - 339,806 shares, $.01 par value per share, issued and outstanding as adjusted 3 3 Series A 8% Convertible Redeemable Preferred Stock, 2,000,000 shares authorized - no shares, $.01 par value per share, issued and outstanding -- -- Paid in capital in excess of par value 178,288 178,288 Retained earnings 1,431 1,431 ---------- --------- ---------- Total Equity 179,888 0 179,888 ---------- --------- ---------- Total Liabilities and Equity $ 214,402 $ 0 $ 214,402 ========== ========= ========== Wellsford Real Properties, Inc. Notes to Pro Forma Consolidated Balance Sheet September 30, 1997 (In thousands) (Unaudited) (A) Represents a draw on the Company's bridge loan to Wellsford/Whitehall Properties, L.L.C. to fund the purchase of Mountain Heights. (B) Represents funding of the Company's capital contribution to Wellsford/Whitehall Properties, L.L.C. for the purchase of Mountain Heights. (C) Represents repayment of a portion of the Company bridge loan using proceeds from a draw on the Wellsford/Whitehall Properties, L.L.C. term loan. -----END PRIVACY-ENHANCED MESSAGE-----