-----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, OA/MVlT1c+d9eTSotEKjnVU6QaOT8JkljTxE5RU3QNy2xh/1b1xsuzmfv3x3PArs rU5k/VVSeNhDC3vy20X1ug== 0000910643-98-000047.txt : 19980514 0000910643-98-000047.hdr.sgml : 19980514 ACCESSION NUMBER: 0000910643-98-000047 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980513 ITEM INFORMATION: FILED AS OF DATE: 19980513 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/A SEC ACT: SEC FILE NUMBER: 001-12917 FILM NUMBER: 98618459 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/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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) April 28, 1998 (May 13, 1998) ---------------------- 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) The undersigned registrant hereby amends the following items, financial statements, exhibits or other portions of its Current Report on Form 8-K dated April 28, 1998, as set forth below: Item 7. Financial Statements, Proforma Financial Information and Exhibits (a) Financial Statements Saracen Portfolio Financial Statement: Independent Auditors' Report of Ernst & Young LLP dated April 9, 1998. Combined Statement of Revenue and Certain Expenses for the year ended December 31, 1997. (b) Proforma Financial Information Wellsford Real Properties, Inc. and Subsidiaries Proforma Financial Statements: Proforma Consolidated Income Statement for the year ended December 31, 1997 (unaudited) and related footnotes. Proforma Consolidated Balance Sheet as of December 31, 1997 (unaudited) and related footnotes. (c) 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 May 13, 1998 By: /s/ Gregory F. Hughes ------------------------------- Gregory F. Hughes Chief Financial Officer Combined Statement of Revenues and Certain Expenses The Saracen Properties Year Ended December 31, 1997 with Report of Independent Auditors The Saracen Properties Combined Statement of Revenues and Certain Expenses Year Ended December 31, 1997 Contents Report of Independent Auditors . . . . . . . . . . . . . . . . . . 1 Combined Statement of Revenues and Certain Expenses. . . . . . . . 2 Notes to Combined Statement of Revenues and Certain Expenses . . . 3 Report of Independent Auditors Board of Directors and Stockholders Wellsford Real Properties, Inc. We have audited the combined statement of revenues and certain expenses of the properties known as 333 Elm Street (Norfolk), Dedham Place Office, 128 Technology Center, 201 University Avenue, 7/57 Wells Avenue, 75/85/95 Wells Avenue (Research Center), 70 Wells Avenue, 160 Wells Avenue, 2331 Congress Street, 60 Turner Street, 74 Turner Street, 150 Wells Avenue, 72 River Park and 100 Wells Avenue (collectively, the "Saracen Properties"), to be acquired by Wellsford/Whitehall Properties, L.L.C., as described in Note 1, for the year ended December 31, 1997. This financial statement is the responsibility of the Saracen Properties' 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 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 combined 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 Saracen Properties' revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the combined revenues and certain expenses of the Saracen Properties as described in Note 1 for the year ended December 31, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP New York, New York April 9, 1998 The Saracen Properties Combined Statement of Revenues and Certain Expenses (Note 1) Year Ended December 31, 1997 Revenues: Base rents $18,822,788 Tenant escalations and reimbursements 1,630,548 Other income 170,996 ----------- Total revenues 20,624,332 ----------- Certain expenses: Property operating expenses 5,758,196 Real estate taxes 2,273,275 Management fees 793,910 ----------- Total certain expenses 8,825,381 ----------- Revenues in excess of certain expenses $11,798,951 =========== See accompanying notes. The Saracen Properties Notes to Combined Statement of Revenues and Certain Expenses Year Ended December 31, 1997 1. Basis of Presentation Presented herein is the combined statement of revenues and certain expenses related to the operations of fourteen commercial real estate properties known as 333 Elm Street (Norfolk), Dedham Place Office, 128 Technology Center, 201 University Avenue, 7/57 Wells Avenue, 75/85/95 Wells Avenue (Research Center) 70 Wells Avenue, 160 Wells Avenue, 2331 Congress Street, 60 Turner Street, 74 Turner Street, 150 Wells Avenue, 72 River Park and 100 Wells Avenue (collectively, the "Saracen Properties"). The Saracen Properties are not a legal entity, but are a combination of the operations of the real estate properties owned and managed by the Saracen Companies ("Saracen") and expected to be contributed to Wellsford/Whitehall Properties, L.L.C. ("Wellsford Office") by Saracen, in exchange for operating units of Wellsford Office and cash. Wellsford Real Properties, Inc. has a 50.1% interest in Wellsford Office. The Saracen Properties are all located in the suburbs of Boston, Massachusetts, with the exception of 2331 Congress Street, which is located in Portland, Maine. The accompanying financial statement has been prepared in accordance with applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate properties. Accordingly, the financial statement excludes certain expenses that may not be comparable to those expected to be incurred by Wellsford Office in the proposed future operations of the Saracen Properties. Expenses excluded consist of interest, depreciation, amortization, 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 statements and accompanying notes. Actual results could differ from those estimates. 2. Lease and Revenue Recognition The Saracen Properties are being leased to tenants under operating leases. Minimum rental income is generally recognized on a straight-line basis over the term of the lease. The excess of amounts due pursuant to the underlying leases over amounts recognized on a straight-line basis amounted to approximately $650,000 for the year ended December 31, 1997. Lease agreements for certain of the Saracen Properties contain provisions which provide for reimbursements of real estate taxes and operating expenses over base year amounts, as well as fixed increases in rent. Prior to September 1, 1997, 70 Wells Avenue was net leased in its entirety to a single tenant user. Commencing September 1, 1997, 70 Wells Avenue was converted to a gross leased property and two tenants signed leases, representing 100% of 70 Wells Avenue's rentable space. 3. Management and Leasing Agreements The Saracen Properties are managed and leased by an affiliate. The affiliate provides management and leasing services at a rate of 3.75% to 5% of gross cash receipts. 4. Property Operating Expenses Property operating expenses for the year ended December 31, 1997 include approximately $156,000 for insurance, $3,120,000 for utilities, $139,000 for general and administrative expenses, $2,072,000 in repair and maintenance costs and $271,000 for payroll costs. 5. Related Party Transactions In addition to management and leasing services, affiliates provide construction services and electrical contracting services to the Saracen Properties. An affiliate leased space from the Saracen Properties in 1997. Rental income earned from this lease approximated $102,000 for the year ended December 31, 1997. 6. Significant Tenants Three tenants accounted for approximately 23%, 18% and 10% of the combined 1997 base rents on a straight line basis, respectively. 7. Tenants Leases The Saracen Properties, other than 74 Turner Street, are principally multi- tenant office buildings with leases expiring at various dates over the next sixteen years. 74 Turner Street is a parcel of vacant land adjacent to 128 Technology Center and 60 Turner Street. Minimum future fixed base rents under noncancelable leases as of December 31, 1997 are as follows: Year ending December 31: 1998 $20,651,000 1999 16,858,000 2000 9,636,000 2001 7,476,000 2002 2,827,000 Thereafter 10,230,000 ----------- $67,678,000 =========== Wellsford Real Properties, Inc. Pro Forma Consolidated Income Statement Year Ended December 31, 1997 (In thousands except per share data) (Unaudited) Saracen Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- REVENUE Rental income $1,291 $1,291 Interest income 7,780 (360) (A) 7,420 Joint Venture income 15 (470) (B) (455) ------------------------ --------- Total Revenue 9,086 (830) 8,256 ------------------------ --------- EXPENSES Property operating and maint. 241 241 Real estate taxes 106 106 General and administrative 3,160 3,160 Depreciation 295 295 Interest 0 0 Property management 18 18 ------------------------ --------- Total Expenses 3,820 0 3,820 ------------------------ --------- Income before income taxes 5,266 (830) 4,436 Provision for income taxes 2,213 (371) (C) 1,842 ------------------------ --------- Net income $3,053 ($459) $2,594 ======================== ========= Net income per common share, basic $0.18 $0.15 ======================== ========= Weighted average common shares outstanding 16,922 16,922 ======================== ========= Wellsford Real Properties, Inc. Notes to Pro Forma Consolidated Income Statement Year Ended December 31, 1997 (Unaudited) (A) Represents one year of interest income on the cash contributed in connection with the acquisition of the Saracen Properties. (B) Represents one year of operations of the Saracen Properties and related items as follows: (In thousands) Operations $12,181 * Depreciation expense (3,163) One year utilizing a 40 year estimated useful life. Interest expense - BOB (2,796) Represents interest on the $35.8 million draws on the Bank of Boston term loan and revolver for one year at approximately 7.8% (LIBOR + an average of 2.2%). Interest expense - Nomura (5,498) Represents interest on the $68.4 million loan from Nomura Asset Capital Corp. for one year at 8.035%. General and administrative (516) Represents the asset management fee payable to Saracen for one year based on 2.5% of the gross revenues of the Saracen Properties. Preferred return (1,200) Represents preferred return -------- payable to Saracen. (992) Company interest 47.40% After the issuance of units -------- to Saracen. ($470) ======== * Represents historical operating revenues and expenses of these assets for the year ended December 31, 1997. (C) Represents the Company's estimated provision for (benefit from) federal and state income taxes at rates of 35% and 15%, respectively. Wellsford Real Properties, Inc. Pro Forma Consolidated Balance Sheet December 31, 1997 (In thousands) (Unaudited) Saracen Pro Forma Historical Adjustments Pro Forma ---------- ----------- --------- ASSETS Real estate assets, at cost: Land $5,225 $5,255 Buildings and improvements 36,338 36,338 ----------------------- --------- 41,563 0 41,563 Less, accumulated depreciation 0 0 ----------------------- --------- 41,563 0 41,563 Construction in process 17,178 17,178 ----------------------- --------- 58,741 0 58,741 Notes receivable 105,632 105,632 Investment in joint venture 44,780 9,009 (A) 53,789 ----------------------- --------- Total real estate assets 209,153 9,009 218,162 Cash and cash equivalents 29,895 (9,009) (A) 20,886 Restricted cash 7,696 7,696 Other assets 3,230 3,230 ----------------------- --------- Total Assets $249,974 $0 $249,974 ======================= ========= LIABILITIES AND EQUITY Liabilities: Tax exempt mortgage note payable $14,755 $14,755 Mortgage payable 34,500 34,500 Credit facility 7,500 7,500 Other liabilities 9,763 9,763 ----------------------- --------- Total Liabilities 66,518 $0 66,518 ----------------------- --------- Commitments and contingencies -- -- -- Minority Interest 2,297 2,297 Equity: Series A 8% Convertible Redeemable Preferred Stock, 2,000,000 shares authorized - no shares, $.01 par value per share, issued and outstanding -- -- Common Stock, 197,650,000 shares authorized - 16,656,707 shares, $.01 par value per share, issued and outstanding 167 167 Class A Common Stock, 350,000 shares authorized - 339,806, $.01 par value per share, issued and outstanding 3 3 Paid in capital in excess of par value 179,722 179,722 Retained earnings 1,942 1,942 Deferred Compensation (675) (675) ----------------------- --------- Total Equity 181,159 0 181,159 ----------------------- --------- Total Liabilities and Equity $249,974 $0 $249,974 ======================= ========= Wellsford Real Properties, Inc. Notes to Pro Forma Consolidated Balance Sheet December 31, 1997 (In thousands) (Unaudited) (A) Represents the Company's capital contribution in connection with the acquisition of the Saracen Properties, including closing costs. -----END PRIVACY-ENHANCED MESSAGE-----