-----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, HNdwYkrpcmbXLffn+x7OXAvOlg2VW+mjNbI/MmSkyUOv906BXN3r276nuWypByy3 KvsZ9jsCdvock2otcEUgTg== 0000911420-03-000197.txt : 20030917 0000911420-03-000197.hdr.sgml : 20030917 20030917171744 ACCESSION NUMBER: 0000911420-03-000197 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20030710 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030917 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RFS PARTNERSHIP LP CENTRAL INDEX KEY: 0001168409 STANDARD INDUSTRIAL CLASSIFICATION: HOTELS & MOTELS [7011] FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-84334 FILM NUMBER: 03900021 BUSINESS ADDRESS: STREET 1: 450 SOUTH ORANGE AVENUE STREET 2: CNL CENTER @ CITY COMMONS CITY: ORLANDO STATE: FL ZIP: 32801 8-K/A 1 d913336.txt CURRENT REPORT AMENDED SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): July 10, 2003 Commission File Number: 333-84334 RFS PARTNERSHIP, L.P. (Exact name of registrant as specified in its charter) Tennessee 62-1541639 - ------------------- ------------------------- (State of organization) (I.R.S. Employer Identification No.) 450 South Orange Avenue, Orlando, Florida 32801 - ------------------------------------------- ------------------------- (Address of principal executive office) (Zip Code) (800) 650-1000 - -------------------------------------------------------------------------------- (Registrant's telephone number, including area code) (Page 1 of 3) This Amendment No. 1 on Form 8-K/A amends the Current Report on Form 8-K, dated July 15, 2003 and filed with the Securities and Exchange Commission on July 25, 2003 (the "Current Report"), of RFS Partnership, L.P., a Tennessee limited partnership, to provide the requisite pro forma financial information required by Item 7. Except as set forth in Item 7, no other changes are made to the Current Report. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (b) Pro Forma Financial Information. See Index to Financial Statements on page F-1. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] (Page 2 of 3) SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be filed on its behalf by the undersigned thereunto duly authorized. RFS PARTNERSHIP, L.P. By: CNL Rose GP Corp., its general partner Dated: September 17, 2003 By: /s/ Thomas J. Hutchison III ------------------------------- Name: Thomas J. Hutchison III Title: Chief Executive Officer (Page 3 of 3) Index to RFS Partnership, L.P. Pro Forma Financial Information (Unaudited) Pro Forma Consolidated Balance Sheet as of June 30, 2003............................................F-3 (Unaudited) Pro Forma Consolidated Statement of Earnings for the Six Months Ended June 30, 2003...........................F-4 (Unaudited) Pro Forma Consolidated Statement of Earnings for the Year Ended December 31, 2002.............................F-5 Notes to Pro Forma Financial Statements......................................F-6 F-1 PRO FORMA CONSOLIDATED FINANCIAL INFORMATION The following Unaudited Pro Forma Consolidated Statements of Earnings of RFS Partnership, L.P. and its subsidiaries (the "Company" or "RFS") for the six months ended June 30, 2003 and the year ended December 31, 2002, and the Unaudited Pro Forma Consolidated Balance Sheet of the Company as of June 30, 2003 (together with the Unaudited Pro Forma Consolidated Statements of Earnings, the "Pro Forma Consolidated Financial Statements"), have been prepared to illustrate the estimated effect of being acquired by CNL Hospitality Properties, Inc. ("CHP"), including the contribution of five hotel Properties with book values of approximately $127.3 million by CHP to the Company, repayment of loan facility of $8.5 million, the receipt of permanent financing of approximately $142.8 million, the repayment of approximately $41.8 million in secured notes (the "Acquisition Transaction"). The Unaudited Pro Forma Consolidated Balance Sheet has been adjusted to give effect to the Acquisition Transaction as if it had occurred on June 30, 2003 and the Unaudited Pro Forma Consolidated Statements of Earning have been adjusted to give pro forma effect to the Acquisition Transaction as if it had occurred on January 1, 2002. The pro forma adjustments also reflect the Company's preliminary determination of purchase accounting adjustments as a result of the acquisition by CHP and are based upon available information and certain assumptions that the Company believes are reasonable. The actual allocation of the purchase price and the resulting effect on income from operations may differ significantly from the pro forma amounts included herein. Consequently, the amounts reflected in the Pro Forma Consolidated Financial Statements are subject to change, and the final amounts may differ substantially. The Pro Forma Consolidated Financial Statements should be read in conjunction with the Company's consolidated financial statements and notes thereto included in the Form 10-K dated December 31, 2002. This pro forma consolidated financial information is presented for informational purposes only and does not purport to be indicative of the Company's financial results or conditions if the various events and transactions reflected therein had occurred on the dates, or been in effect during the periods, indicated. This pro forma consolidated financial information should not be viewed as indicative of the Company's financial results or conditions in the future. (Left blank intentionally) F-2 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2003 (in thousands) Historical RFS LP RFS LP Pro Forma June 30, Transaction RFS LP 2003 Adjustments Consolidated ------------- ----------- ------------ Investments in hotel $ 587,660 $ 242,589 (a) $ 830,249 Cash and cash equivalents 5,894 5,894 Restricted cash 5,474 5,474 Accounts receivable 5,058 5,058 Deferred expenses, net 7,779 3,214 (d) 10,993 Other assets 4,105 4,105 Deferred income taxes 27,376 27,376 ------------ ----------- ------------ Total assets $ 643,346 $ 245,803 $ 889,149 ============ =========== ============ Accounts payable and accrued expenses $ 25,454 $ 11,836 (a) $ 37,290 Borrowing on line of credit 8,500 (8,500) (d) - Mortgage notes payable 157,941 142,770 (c) 300,711 Senior notes payable 121,220 (41,770) (c) 79,450 ------------- ----------- ------------ Total liabilities 313,115 104,336 417,451 ------------- ----------- ------------ Commitments and contingencies Redeemable limited partnership units 29,837 (29,837) (b,c) - Partners capital: General partnership units Total partner's capital 300,394 171,304 (c) 471,698 ------------- ----------- ------------ Total liabilities and partners equity $ 643,346 245,803 $ 889,149 ============= =========== ============ See accompanying notes to unaudited pro forma consolidated financial statements. F-3 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS FOR THE SIX MONTHS ENDED JUNE 30, 2003 (in thousands) Historical RFS LP RFS LP Pro Forma June 30, Transaction RFS LP 2003 Adjustements Consolidated ------------ ------------- ------------ Revenues: Rooms $ 80,046 9,414(1) $ 89,460 Food and beverage 8,635 2,760(1) 11,395 Other operating departments 2,808 534(1) 3,342 Lease revenue 2,842 2,281(1) 5,123 Deferred revenue (1,461) (1,461) Other 208 208 ----------- ------------ ----------- Total hotel revenue 93,078 14,989 108,067 ---------- ------------ ----------- Hotel operating expenses: Rooms 16,829 2,528(1) 19,357 Food and beverage 6,247 2,459(1) 8,706 Other operating departments 825 200(1) 1,025 Property operating costs 11,468 3,047(1) 14,515 Property taxes, insurance and other 6,113 1,042(1) 7,155 Franchise cost 7,751 89(1) 7,840 Maintenance and repairs 5,360 991(1) 6,351 Management fees 2,653 672(1) 3,325 Depreciation and amortization 15,619 1,916(3) 17,535 General and administrative 10,001 10,001 ----------- ------------- ----------- Total hotel operating expenses 82,866 12,944 95,810 ----------- ------------- ----------- Operating income 10,212 2,045 12,257 Interest expense and loan cost amortization 13,927 2,245(2) 16,172 Benefit from taxes (1,546) (1,546) Loss on sale of assets 9 9 ----------- ------------ ----------- Net loss from operations $(2,178) (200) $ (2,378) =========== ============ =========== Earnings (loss) per unit data: Basic earnings (loss) per unit $ (0.07) (4) =========== Weighted average common units outstanding basic and diluted 31,233 (4) =========== See accompanying notes to unaudited pro forma consolidated financial statements. F-4 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF EARNINGS FOR THE YEAR ENDED DECEMBER 31, 2002 (in thousands) Historical RFS LP RFS LP Pro Forma December 31, Transaction RFS LP 2002 Adjustments Consolidated ----------- ------------ ------------- Revenues: Rooms $ 169,357 15,071(1) $ 184,428 Food and beverage 17,452 5,071(1) 22,523 Other operating departments 6,449 1,462(1) 7,911 Lease revenue 5,229 4,562(1) 9,791 Other 411 411 ----------- ------------ ---------- Total hotel revenue 198,898 26,166 225,064 ----------- ------------ ---------- Hotel operating expenses: Rooms 34,679 4,226(1) 38,905 Food and beverage 12,793 4,438(1) 17,231 Other operating departments 1,874 517(1) 2,391 Property operating costs 21,798 4,067(1) 25,865 Property taxes, insurance and other 12,536 2,184(1) 14,720 Franchise cost 16,265 16(1) 16,281 Maintenance and repair 9,485 1,067(1) 10,552 Management fees 4,876 1,088(1) 5,964 Depreciation and amortization 31,059 3,326(3) 34,385 General and administrative 19,079 19,079 ----------- ----------- ---------- Total hotel operating 164,444 20,929 185,373 expenses ------------ ----------- ---------- Operating income 34,454 5,237 39,691 Debt extinguishments and swap termination cost 10,122 10,122 Interest expense and loan cost amortization 27,101 4,488(2) 31,589 Losses from discontinued operations 3,709 3,709 Benefit from taxes (1,096) (1,096) Loss on redemption of preferred units 1,562 1,562 Preferred dividends 1,890 1,890 Gain on sale of assets (950) (950) ----------- ------------ ----------- Net loss from operations $ (7,884) $ 749 $ (7,135) =========== ============ =========== Earnings (loss) per unit data: Basic earnings (loss) per unit $ (0.26) (4) =========== Weighted average common units outstanding--basic and diluted 29,905 (4) =========== See accompanying notes to unaudited pro forma consolidated financial statements. F-5 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND THE YEAR ENDED DECEMBER 31, 2002 UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET: (a) The estimated cash paid in connection with the transaction and preliminary adjustments to the historical book value of RFS as a result of the Acquisition Transaction are as follows (in thousands): Historical book value of RFS net assets acquired $ 300,394 Adjustments to net assets: Termination and severance liability (11,836) Write off of deferred loan cost related to senior notes (from Note (d)) (3,786) ---------- Adjusted net assets acquired $ 284,772 ========== Cash consideration for Acquisition Transaction including transaction costs (from Note (b)) $400,013 Less: Adjusted net assets acquired (284,772) ---------- Net purchase price in excess of net assets acquired $ 115,241 Plus: Contribution of five hotel properties from CNL 127,348 Hospitality Properties, Inc. ========== Total increase in net assets $ 242,589 ========== Severance and termination costs, estimated to be approximately $11.8 million and deferred loan cost of approximately $3.7 million, have been reflected as liabilities in the accompanying Unaudited Pro Forma Consolidated Balance Sheet. In connection with the Acquisition Transaction , CHP contributed five hotel Properties with a combined book value of approximately $127.3 million to the Company, that have been reflected as assets in the accompanying Unaudited Pro Forma Consolidated Balance Sheet. (b) Reflects the sources and uses of funds for the Acquisition Transaction (in thousands): Sources of funds: Cash consideration received $344,350 Permanent financing obtained * 142,770 --------- Total sources of funds $487,120 ========= Uses of funds: Cash consideration for RFS Transaction $379,571 Estimated transaction costs 20,442 Repayment of loan facility 8,500 Loan cost on new permanent financing 7,000 Acquisition of minority interest OP units 29,837 Repayment of senior notes 41,770 --------- Total uses of funds $487,120 ========= * The Acquisition Transaction will initially be financed with proceeds from a bridge loan, which will be refinanced with proceeds from the issuance of debt securities. The interest cost under the bridge loan is not expected to be materially greater than the interest cost for the permanent debt security financing. F-6 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND THE YEAR ENDED DECEMBER 31, 2002 (c) The adjustments to partners' capital as a result of the Acquisition Transaction are as follows (amounts in thousands): Partners' capital: Contribution of five hotel Properties from CHP (from Note (a)) $127,348 Net purchase price in excess of net assets acquired (from Note (a)) 115,241 Permanent financing obtained net of retirement of approximately $41.8 million in secured notes (101,000) Retirement of minority interest RFS OP units 29,837 Repayment of loan facility 8,500 Estimated loan costs of new permanent financing (from Note (d)) 7,000 Write off of existing loan costs on senior notes (from Note (d)) (3,786) Assumption of termination and severance liability (11,836) ---------- Net increase in partners' capital $171,304 ========== (d) In connection with the Acquisition Transaction, the Company repaid a loan facility of approximately $8.5 million which appears on the historical RFS balance sheet as of June 30, 2003. Additionally, the Company obtained new permanent financing totaling approximately $142.8 million in connection with the transaction. As a result, certain RFS historical loan costs will be written off for approximately $3.7 million and new loan costs of approximately $7.0 will be incurred by the Company. In addition, the Company will pay off senior notes for approximately $41.8 million. The above table is a summary of adjustments related to the Acquisition Transaction which have been included on the accompanying Unaudited Pro Forma Consolidated Balance Sheet (in thousands): Adjustments to loan costs: Write off of existing loan costs related to repaid loan facility $ (3,786) Additional loan costs in connection with new permanent financing 7,000 ---------- Total change in loan costs $ 3,214 ========== F-7 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND THE YEAR ENDED DECEMBER 31, 2002 UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF EARNINGS: (1) Reflects increase in hotel revenue and hotel operating expenses resulting from the five contributed hotel properties of approximately $14.9 million and $11.0 million respectively, for the six months ended June 30, 2003 and $26.1 million and $17.6 million respectively, for the year ended December 31, 2002. Adjustments for estimated pro forma, hotel revenues and hotel operating expenses reflects historical data from hotel operational financial statements. The following table summarizes the adjustments to hotel revenue and hotel operating expenses (in thousands): Year ended Six months December ended June 31, 2002 30, 2003 ------------ ---------- TRS properties: Hotel operating revenues: Room $ 15,071 $ 9,414 Food and beverage 5,071 2,760 Other hotel operating 1,462 534 Lease revenue 4,562 2,281 ----------- ---------- Total hotel operating revenue 26,166 14,989 ----------- ---------- Hotel operating expenses: Room $ 4,226 $ 2,528 Food and beverage 4,438 2,459 Other hotel operating 517 200 Property operating cost 4,067 3,046 Property taxes, 2,184 1,042 insurance and other Franchise costs 16 89 Maintenance and repair 1,067 991 Management fess 1,088 672 ----------- ---------- Total hotel operating revenue 17,603 11,027 ----------- ---------- Net revenue from hotel operations $ 8,563 $ 3,962 =========== ========== F-8 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND THE YEAR ENDED DECEMBER 31, 2002 (2) Reflects increase in interest and loan cost amortization expense resulting from the repayment of a loan facility of approximately $7.0 million and $8.5 million as of December 31, 2002 and June 30, 2003, respectively, which is included on the RFS historical balance sheet. Additionally, reflects repayment of approximately $41.8 million on its senior notes and the acquisition of approximately $142.8 million in new permanent financing by the Company, including estimated debt acquisition costs. The following is a summary of the interest expense adjustment calculation for the year ended December 31, 2002 (in thousands): Estimated Estimated Annual Balance Rate Interest --------------------------------- Additional interest and loan cost amortization as a result of RFS Transaction: Acquisition of permanent financing * $ 142,770 5.82% $ 8,309 Estimated loan cost amortization ($7,000 for 6 years) 1,167 ------------ Total estimated additional expenses 9,476 ------------ Reduction in interest and loan cost amortization as a result of repayment: Loan facility 6,950 3.32% 230 Senior notes 41,770 9.75% 4,073 Estimated loan cost amortization ($4,107 for 6 years) 685 ------------ Total estimated expense reduction $ 4,988 ------------ Net increase in interest and loan cost amortization under new debt structure 4,488 ============ * Blended estimated interest rate. In the event that interest rates on floating rate debt increase by one-eight of one percent, the pro forma adjustment for interest expense would increase by approximately $0.1 million. F-9 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND THE YEAR ENDED DECEMBER 31, 2002 (2) The following summary of the interest expense adjustment calculation for the six months ended June 30, 2003 (in thousands): Estimated Estimated Annual Balance Rate Interest ----------------------------- Additional interest and loan cost amortization as a result of RFS Transaction: Acquisition of permanent financing * $ 142,770 5.82% $ 4,155 Estimated loan cost amortization ($7,000 for 6 years) 583 ------------ Total estimated additional expenses 4,738 ------------ Reduction in interest and loan cost amortization as a result of repayment: Loan facility 8,500 3.32% 141 Senior notes 41,770 9.75% 2,036 Estimated loan cost amortization ($3,786 for 6 years) 316 ------------ Total estimated expense reduction $ 2,493 ------------ Net increase in interest and loan cost amortization under new debt structure $ 2,245 ============ * Blended estimated interest rate. In the event that interest rates on floating rate debt increase by one-eight of one percent, the pro forma adjustment for interest expense would increase by approximately $0.5 million. F-10 RFS PARTNERSHIP, L.P. AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED FOR THE SIX MONTHS ENDED JUNE 30, 2003 AND THE YEAR ENDED DECEMBER 31, 2002 (3) Adjustments for estimated pro forma depreciation and amortization of real estate assets are based on the adjusted basis of hotel property assets and their estimated fair values. The increase in the historical cost basis of hotel properties acquired by the Company through the Acquisition Transaction (see note (a) above) was approximately $220.8 million and $242.6 million for the year ended December 31, 2002 and the six months ended June 30, 2003, respectively. The following table summarizes the adjustments to depreciation and amortization of real estate assets (in thousands): Year ended Six months December ended June 31,2002 30, 2003 ------------ ------------ Hotel properties acquired at historical RFS book value $ 593,289 $ 587,660 Allocation of purchase price to hotel properties 220,765 242,589 ------------ ------------ Estimated total fixed assets $ 814,054 $ 830,249 Estimated allocation between land, buildings and equipment: Land $ 75,707 9.3% 77,213 9.3% Buildings 603,214 74.1% 615,215 74.1% Equipment 135,133 16.6% 137,821 16.6% ------------ ------------ Total $ 814,054 100% 830,249 100% ============ ============ Annual and six month ended estimated depreciation expense Buildings (40 years) $ 15,080 7,690 Equipment (7 years) 19,305 9,845 ------------ ------------ Total estimated depreciation expense 34,385 17,535 Less historical RFS depreciation expense (31,059) (15,619) ------------ ------------ Estimated adjustment to depreciation expense $ 3,326 $ 1,916 ============ ============ (4) As a result of the Acquisition Transaction, RFS is a wholly owned subsidiary of CHP and results of operations on a per unit basis is considered irrelevant and, therefore, is not presented as a pro forma basis. 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