-----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, NB8oBH1xZ1SQIyVmAV1TkgmU/tHWbeGke/ZsHT7P0SWfvg4LHQRmii9dG56gBDYm FPipmw/D+Zvw0CqNI4CnUA== 0000916641-96-001006.txt : 19961120 0000916641-96-001006.hdr.sgml : 19961120 ACCESSION NUMBER: 0000916641-96-001006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961031 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961115 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED DOMINION REALTY TRUST INC CENTRAL INDEX KEY: 0000074208 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 540857512 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10524 FILM NUMBER: 96667731 BUSINESS ADDRESS: STREET 1: 330 S 6TH ST STE 203 CITY: RICHMOND STATE: VA ZIP: 23219-3802 BUSINESS PHONE: 8047802691 MAIL ADDRESS: STREET 1: 10 SOUTH SIXTH STREET STREET 2: SUITE 203 CITY: RICHMOND STATE: VA ZIP: 23219-3802 FORMER COMPANY: FORMER CONFORMED NAME: OLD DOMINION REAL ESTATE INVESTMENT TRUST DATE OF NAME CHANGE: 19850110 FORMER COMPANY: FORMER CONFORMED NAME: OLD DOMINION REIT ONE DATE OF NAME CHANGE: 19770921 FORMER COMPANY: FORMER CONFORMED NAME: OLD DOMINION REAL ESTATE INVESTMENT TRUS DATE OF NAME CHANGE: 19741216 8-K 1 UNITED DOMINION REALTY TRUST, INC. FORM 8-K 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) October 31, 1996 ------------------------------- UNITED DOMINION REALTY TRUST, INC. (Exact name of registrant as specified in its charter) Virginia 1-10524 54-0857512 State or other jurisdiction of (Commission (I.R.S. Employer incorporation of organization) File Number) Identification No.) 10 South Sixth Street, Suite 203, Richmond, Virginia 23219-3802 (Address of principal executive offices) Registrant's telephone number, including area code (804) 780-2691 ----------------------------- NO CHANGE (Former name or former address, if change since last report) ITEM 2. OTHER EVENTS On October, 31 1996, the registrant, United Dominion Realty Trust, Inc. ("the Company"), acquired an apartment community from Property Asset Management, Inc., an affiliate of Lehman Brothers Holding, Inc. Following this transaction, the Company's acquisitions for 1996 were "significant" in the aggregate and necessitating the filing of this Form 8-K. A brief summary of each of the Company's 1996 acquisitions to date is set forth below. Each property was acquired from an unrelated seller for consideration agreed upon through arm's length bargaining. Unless stated otherwise, to the extent cash was utilized to complete an acquisition, the source of that cash was bank line borrowings. On February 20, 1996, the Company acquired an apartment community from Brooksea Associates, an Illinois limited partnership and an affiliate of Balcor Company for $6.0 million, including closing costs, all cash. Seabrook Apartments, located in Orlando, Florida, is a 200 home garden apartment community located on 15.52 acres constructed in 1984. On February 23, 1996, the Company acquired an apartment community from John Hancock Apartment Fund Limited Partnership, a Massachusetts limited partnership for $10.8 million, including closing costs, all cash. Hampton Ridge Apartments, located in Woodbridge, Virginia, is a 192 home garden apartment community located on 11.30 acres constructed in 1987. On March 7, 1996, the Company acquired an apartment community from RCPF Limited Partnership, a North Carolina limited partnership for $13.5 million, including closing costs, all cash. Steeplechase Apartments, located in Greensboro, North Carolina, is a 244 home garden apartment community located on 20.75 acres constructed in 1990. On March 28, 1996, the Company acquired an apartment community from Berkman Brookridge Tenn, L.L.C., a Georgia limited liability company for $6.2 million, including closing costs, all cash. Brookridge Apartments, located in Nashville, Tennessee, is a 176 home garden apartment community located on 10.36 acres constructed in 1986. On May 9, 1996, the Company acquired an apartment community from W.P. Associates, Limited, a Florida limited partnership and affiliate of Vestcor Equities, Inc. for $16.7 million, including closing costs, all cash. Westland Park Apartments, located in Jacksonville, Florida, is a 405 home garden apartment community located on 27.17 acres constructed in 1989 and 1990. On May 28, 1996, the Company acquired an apartment community from Antler Investors, an Illinois limited partnership and affiliate of The Balcor Company for $15.1 million, including closing costs. The Company assumed a $10.1 million mortgage note payable with John Hancock Mutual Life Insurance Company bearing interest of 8.25% and paid cash for the remaining $5.0 million. The Antlers Apartments, located in Jacksonville, Florida, is a 400 home garden apartment community located on 46.04 acres constructed in 1985. On June 25, 1996, the Company acquired an apartment community from Middle Ridge Apartments, L.P., a Delaware limited partnership and affiliate of Paracor Finance, Inc. for $16.6 million, including closing costs, all cash. Chase at Middle Ridge Apartments, located in Woodbridge, Virginia, is a 280 home garden apartment community located on 21.20 acres constructed in 1990. On June 26, 1996, United Dominion Realty L.P., a Virginia limited partnership, acquired an apartment community from Riverwood Investment Company, L.P., a California limited partnership for $14.1 million, including closing costs. The Company assumed a $5.7 million mortgage note payable with Metropolitan Life Insurance Company bearing interest of 9.0% and issued 136,260 operating partnership units at $14.725, valued at $2.0 million and paid cash for the remaining $6.4 million. Riverwood Apartments, located in Roswell, Georgia, is a 340 home garden apartment community located on 38.6 acres constructed in 1980. 2 On August 15, 1996, the Company acquired a portfolio of 18 apartment communities, containing 4,508 apartment homes, for an aggregate purchase price of $182.6 million, including closing costs (the "Southeast Portfolio"), from entities and individuals that control the real property owners (the "Seller") as previously reported on Form 8-K dated August 15, 1996. The acquisition of the Southeast Portfolio was financed through several sources which include: (i) cash of $25.1 million, (ii) the assumption of secured debt encumbering the properties in the aggregate amount of $109.8 million, (iii) Seller financing (unsecured) of $25.0 million and (iv) 1.7 million newly issued shares of the Company's common stock valued at $22.7 million ($13.50 per share). The debt assumed includes $71.2 million provided by First Union National Bank and Wachovia Bank under secured credit facilities. A description of each of the properties, the real property owners and related mortgage and construction debt (exclusive of the First Union National Bank and Wachovia Bank secured debt described above) is outlined below: * South Hills Apartments was conveyed by Carolina Residential Income Properties, L.L.C. South Hills Apartments, located in Charlotte, North Carolina, is a 144 home garden apartment community located on 12.85 acres constructed in 1984. * Chateau Village Apartments was conveyed by Southeast Mortgage & Investment Corporation. Chateau Village Apartments, located in Gastonia, North Carolina, is a 250 home garden apartment community located on 22.98 acres constructed in 1974. * Woodberry Apartments was purchased from Carolina Residential Income Properties, L.L.C. Woodberry Apartments, located in Asheville, North Carolina, is a 168 home garden apartment community located on 22.03 acres constructed in 1987. * Lake Brandt Apartments was coveyed by Southeast Mortgage & Investment Corporation. Lake Brandt Apartments, located in Greensboro, North Carolina, is a 284 home garden apartment community located on 32.25 acres constructed in 1995. * Northwinds Apartments was conveyed by Carolina Residential Income Properties, L.L.C. Northwinds Apartments, located in Greensboro, North Carolina, is a 232 home garden apartment community located on 28.68 acres constructed in 1988 and 1989. * Westwinds Apartments was conveyed by Carolina Residential Income Properties, L.L.C. Westwinds Apartments, located in Greensboro, North Carolina, is a 276 home garden apartment community located on 20.75 acres constructed in 1986. * Deerwood Crossing Apartments was conveyed by Southeast Mortgage & Investment Corporation. Deerwood Crossing Apartments, located in Winston-Salem, North Carolina, is a 285 home garden and townhouse apartment community located on 26.91 acres constructed in 1973. * Dutch Village Apartments was conveyed by Southeast Mortgage & Investment Corporation. Dutch Village Apartments, located in Winston-Salem, North Carolina, is a 203 home garden and townhouse apartment community located on 13.98 acres constructed in 1970. * Ramsgate Apartments was conveyed by Carolina Residential Income Properties, L.L.C. Ramsgate Apartments, located in Chapel Hill , North Carolina, is a 188 home garden apartment community located on 12.96 acres constructed in 1988. * Cumberland Trace Apartments was conveyed by from Southeast Mortgage & Investment Corporation. Cumberland Trace Apartments, located in Fayetteville, North Carolina, is a 248 home garden apartment community located on 21.79 acres constructed in 1973. * Morganton Place Apartments was conveyed by Southeast Mortgage & Investment Corporation. The property is encumbered by an $8.7 million mortgage note payable with Wachovia Bank bearing a variable rate of interest at LIBOR + 1.0%. Morganton Place Apartments, located in Fayetteville, North Carolina, is a 280 home garden apartment community located on 13.63 acres 3 constructed in 1994. * The Village at Cliffdale Apartments was conveyed by The Village at Cliffdale, L.L.C. The property is encumbered by a $10.5 million mortgage note payable bearing interest at 7.875%. The Village at Cliffdale Apartments, located in Fayetteville, North Carolina, is a 356 home garden apartment community located on 24.78 acres constructed in 1991 and 1992. * Cape Harbor Apartments was conveyed by Southeast Mortgage & Investment Corporation. Cape Harbor is encumbered by a $9.5 million construction loan bearing interest at LIBOR + 1.0%. Cape Harbor Apartments, located in Wilmington, North Carolina, is a 360 home garden apartment community located on 24.78 acres constructed in 1995 and 1996. * Rivergate Apartments was conveyed by Rivergate Apartments Inc. The property is encumbered by a $9.8 million mortgage note payable at 8.0%. Rivergate Apartments, located in Columbia, South Carolina, is a 316 home garden apartment community located on 19.20 acres constructed in 1989. * Stonesthrow Apartments was conveyed by Carolina Residential Income Properties, L.L.C. Stonesthrow Apartments, located in Greenville, South Carolina, is a 388 home garden apartment community located on 26.10 acres constructed in 1990 and 1995. * Westgate Apartments was conveyed by Spartanburg Multi-Family Associates. Westgate Apartments, located in Spartanburg, South Carolina, is a 122 home garden apartment community located on 7.95 acres constructed in 1976. * Lake of the Woods Apartments was conveyed by from Southeast Mortgage & Investment Corporation. Lake of the Woods Apartments, located in Atlanta, Georgia, is a 216 home garden apartment community located on 22.12 acres constructed in 1989. * Kings Arms Apartments was conveyed by Southeast Mortgage & Investment Corporation. Kings Arms Apartments, located in Virginia Beach, Virginia , is a 192 home garden and townhouse apartment community located on 15.88 acres constructed in 1966. On September 26, 1996, the Company acquired an apartment community from Park Forest Associates, L.P., a Pennsylvannia limited partnership, for $6.5 million, including closing costs. The Company assumed a $4.3 million mortgage note payable from American General Life Insurance Company bearing interest of 8.125% and paid cash for the remaining $2.2 million. Park Forest Apartments, located in Greensboro, North Carolina, is a 151 home garden apartment community located on 11.48 acres constructed in 1987. On October 31, 1996, the Company acquired an apartment community from Property Asset Management, Inc., a Delaware corporation and affiliate of Lehman Brothers Holding, Inc. for $15.2 million, including closing costs. Los Altos Apartments, located in Orlando, Florida, is a 328 home garden apartment community located on 17.50 acres constructed in 1990. 4 ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits Description Location (a) Financial Statements of Businesses Acquired 6 through 15 (b) Pro Forma Financial Information 16 through 27 (c) Exhibits Consents of Independent Public Accountants 29 through 30 5 [L.P. MARTIN & COMPANY LETTERHEAD] Independent Auditors' Report To the Owners of Steeplechase Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Steeplechase Apartments for the year ended December 31, 1995. This financial statement is the responsibility of the management of Steeplechase Apartments. Our responsibility is to express an opinion on this 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 statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a Current Report on Form 8-K of United Dominion Realty Trust, Inc.), as described in Note 4, and is not intended to be a complete presentation of Steeplechase Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the income and operating expenses, as described in Note 2, of Steeplechase Apartments for the year ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ L. P. Martin & Company, P.C. L. P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia June 20, 1996 6 STEEPLECHASE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1995 REVENUES FROM RENTAL PROPERTY $1,867,137 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 147,446 Repairs and Maintenance 176,289 Utilities 67,354 Property Management Fees 93,375 Other Operating Expenses 169,109 ---------- TOTAL RENTAL PROPERTY EXPENSES 653,573 ---------- INCOME FROM RENTAL OPERATIONS $1,213,564 ========== The accompanying notes are an integral part of this statement. 7 STEEPLECHASE APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1995 NOTE 1 - BASIS OF PRESENTATION Steeplechase Apartments (The Property) consists of a 244 unit garden style residential apartment community located in Greensboro, North Carolina together with the existing leases. The assets that comprise the Property have been held as an investment of RCPF Limited Partnership, a North Carolina limited partnership (the owner), throughout the year ended December 31, 1995. The accompanying financial statement presents the results of rental operations of the Property as a stand-alone entity. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue and Expense Recognition The accompanying statement of rental operations has been prepared using the accrual method of accounting. Certain expenses such as depreciation, amortization, income taxes, mortgage interest expense and asset management fees are not reflected in the statement of rental operations, as required by Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Repairs and Maintenance Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through Richardson Corporation, an affiliate of the owner of the property. Fees for such services were 5% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to, UDRT of North Carolina, L.L.C., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on March 7, 1996. This statement of rental operations has been prepared to be included in a Current Report on Form 8-K to be filed by United Dominion Realty Trust, Inc. 8 [L.P. MARTIN & COMPANY LETTERHEAD] Independent Auditors' Report To the Owners of Westland Park Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Westland Park Apartments for the year ended December 31, 1995. This financial statement is the responsibility of the management of Westland Park Apartments. Our responsibility is to express an opinion on this 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 statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a Current Report on Form 8-K of United Dominion Realty Trust, Inc.), as described in Note 4, and is not intended to be a complete presentation of Westland Park Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the income and operating expenses, as described in Note 2, of Westland Park Apartments for the year ended December 31, 1995, in conformity with generally accepted accounting principles. /s/ L. P. Martin & Company, P.C. L. P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia June 18, 1996 9 WESTLAND PARK APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1995 REVENUES FROM RENTAL PROPERTY $2,771,484 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 250,083 Repairs and Maintenance 304,307 Utilities 105,284 Property Management Fees 152,463 Other Operating Expenses 377,894 ------- TOTAL RENTAL PROPERTY EXPENSES 1,190,031 --------- INCOME FROM RENTAL OPERATIONS $1,581,453 ========== The accompanying notes are an integral part of this statement. 10 WESTLAND PARK APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1995 NOTE 1 - BASIS OF PRESENTATION Westland Park Apartments (The Property) consists of a 405 unit garden style residential apartment community located in Jacksonville, Florida together with the existing leases. The assets that comprise the Property have been held as an investment of W. P. Associates, Ltd., a Florida limited partnership (the owner), throughout the year ended December 31, 1995. The accompanying financial statement presents the results of rental operations of the Property as a stand-alone entity. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue and Expense Recognition The accompanying statement of rental operations has been prepared using the accrual method of accounting. Certain expenses such as depreciation, amortization, income taxes, mortgage interest expense and asset management fees are not reflected in the statement of rental operations, as required by Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Repairs and Maintenance Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through Vestcor Realty Management, Inc., an affiliate of the owner of the property. Fees for such services were 5 1/2% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to United Dominion Realty Trust, Inc. on May 9, 1996. This statement of rental operations has been prepared to be included in a Current Report on Form 8-K to be filed by United Dominion Realty Trust, Inc. 11 [L.P. MARTIN & COMPANY LETTERHEAD] Independent Accountants' Compilation Report To the Owners of Steeplechase Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization, income taxes, and asset management fees of Steeplechase Apartments for the two months ended February 29, 1996, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of the management and owners. We have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or any other form of assurance on it. Management has elected to omit substantially all of the disclosures required by generally accepted accounting principles. If the omitted disclosures were included in the financial statement, they might influence the user's conclusions about the results of operations. Accordingly, this financial statement is not designed for those who are not informed about such matters. /s/ L. P. Martin & Company, P.C. L. P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia June 20, 1996 12 STEEPLECHASE APARTMENTS STATEMENT OF RENTAL OPERATIONS TWO MONTHS ENDED FEBRUARY 29, 1996 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $320,076 -------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 24,600 Repairs and Maintenance 30,473 Utilities 12,843 Property Management Fees 15,986 Other Operating Expenses 27,110 -------- TOTAL RENTAL PROPERTY EXPENSES 111,012 -------- INCOME FROM RENTAL OPERATIONS $209,064 ======== 13 [L.P. MARTIN & COMPANY LETTERHEAD] Independent Accountants' Compilation Report To the Owners of Westland Park Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization, income taxes, and asset management fees of Westland Park Apartments for the four months ended April 30, 1996, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of the management and owners. We have not audited or reviewed the accompanying financial statement and, accordingly, do not express an opinion or any other form of assurance on it. Management has elected to omit substantially all of the disclosures required by generally accepted accounting principles. If the omitted disclosures were included in the financial statement, they might influence the user's conclusions about the results of operations. Accordingly, this financial statement is not designed for those who are not informed about such matters. /s/ L. P. Martin & Company, P.C. L. P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia June 18, 1996 14 WESTLAND PARK APARTMENTS STATEMENT OF RENTAL OPERATIONS FOUR MONTHS ENDED APRIL 30, 1996 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $958,123 -------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 89,401 Repairs and Maintenance 108,053 Utilities 36,889 Property Management Fees 52,665 Other Operating Expenses 125,652 ------- TOTAL RENTAL PROPERTY EXPENSES 412,660 ------- INCOME FROM RENTAL OPERATIONS $545,463 ======== 15 UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) The consolidated pro forma balance sheet at September 30, 1996 is not presented as the acquisitions of Steeplechase Apartments and Westland Park Apartments were acquired on March 7, 1996, and May 9, 1996, respectively. Consequently, these acquisitions are reflected in the Company's unaudited consolidated balance sheet at September 30, 1996 included in the Company's quarterly report on Form 10-Q for the quarter then ended. The following consolidated pro forma statements of operations for the year ended December 31, 1995 and for the nine months ended September 30, 1996, assume the acquisitions occurred at the beginning of each period presented. The consolidated pro forma statements of operations have been prepared by the management of the Company. The consolidated pro forma statements of operations are not necessarily indicative of the results that would have occurred had the acquisitions been completed on the dates indicated, nor are purported to be indicative of future results. The consolidated pro forma statements of operations should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 1995 (included in the Company's Form 10-K for the year ended December 31, 1995) and its unaudited consolidated financial statements as of September 30, 1996 and for the nine months then ended (included in the Company's Form 10-Q for the quarterly period ended September 30, 1996) and the accompanying notes thereto. 16 UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS For the Twelve Months Ended December 31, 1995 (Unaudited) (In thousands of dollars, except per share data)
ACQUISITIONS PREVIOUSLY REPORTED ON JUNE 30, 1995 AND FORM 8-K DATED DECEMBER 28, 1995 JUNE 30, 1995 AND ACQUISITIONS PRO FORMA FORM 8-K DATED PRO FORMA BEFORE 1996 HISTORICAL (1) DECEMBER 28, 1995 (2) ADJUSTMENTS (3) ACQUISITIONS --------------- ---------------------- ---------------- ------------- Income Rental Income $195,240 $6,519 $1,045 $202,804 Interest and dividend income 1,692 (269)(4) 1,423 ------- ------ ---------- -------- 196,932 6,519 776 204,227 Expenses Rental Expenses Utilities 14,464 430 64 14,958 Repairs & maintenance 30,374 895 98 31,367 Real estate taxes 14,058 504 67 14,629 Property management 5,300 284 (25)(5) 5,559 Other operating expenses 17,446 844 106 18,396 Depreciation of real estate owned 38,939 1,088 (6) 40,027 Interest 40,646 532 (7) 41,178 General and administrative 4,865 4,865 Other depreciation and amortization 1,103 1,103 Other expenses: Impairment loss on real estate held for disposition 1,700 1,700 ------- ------ ------ -------- 168,895 2,957 1,930 173,782 ------- ------ ------ -------- Income before gains on sales of investments and extraordinary item 28,037 3,562 (1,154) 30,445 Gains on sales of investments 5,090 5,090 ------ ----- ------ ------ Net income 33,127 3,562 (1,154) 35,535 Dividends to preferred shareholders 6,637 2,599 (8) 9,236 ------ ----- ------ ------ Net income available to common shareholders $26,490 $3,562 ($3,753) $26,299 ====== ===== ====== ====== Net income per common share $0.50 $0.50 ===== ===== Distributions declared per common share $0.90 $0.90 ===== ===== Weighted average number of common shares outstanding 52,781 52,781
NON-DEVELOPMENT DEVELOPMENT NON-DEVELOPMENT PROPERTIES DEVELOPMENT PROPERTIES PROPERTIES SOUTHEAST PROPERTIES SOUTHEAST SOUTHEAST SOUTH HILLS PORTFOLIO SOUTHEAST PORTFOLIO PORTFOLIO PRO FORMA PRO FORMA PORTFOLIO PRO FORMA ACQUISITION (9) ADJUSTMENTS (11) ADJUSTMENTS ACQUISITION (10) ADJUSTMENTS --------------- ---------------- ----------- ---------------- ----------- Income Rental Income $17,539 $52 $5,011 Interest and dividend income ------ -- --------- ----- ----- 17,539 52 0 5,011 0 Expenses Rental Expenses Utilities 1,311 4 319 Repairs & maintenance 2,632 13 447 Real estate taxes 1,303 5 325 Property management 866 3 ($436)(13) 231 ($108)(18) Other operating expenses 1,353 9 96 (14) 542 26 (19) Depreciation of real estate owned 3,780 (15) 1,421 (20) Interest 7,362 (16) 2,447 (21) General and administrative Other depreciation and amortization Other expenses: Impairment loss on real estate held for disposition ----- -- ------ ----- ----- 7,465 34 10,802 1,864 3,786 ----- -- ------ ----- ----- Income before gains on sales of investments and extraordinary item 10,074 18 (10,802) 3,147 (3,786) Gains on sales of investments ------ -- ------ ----- ----- Net income 10,074 18 (10,802) 3,147 (3,786) Dividends to preferred shareholders ------- -- ------- ----- ----- Net income available to common shareholders $10,074 $18 ($10,802) $3,147 ($3,786) ======= == ======= ===== ====== Net income per common share Distributions declared per common share Weighted average number of common shares 934 (17) 441(22) outstanding
WESTLAND PARK AND STEEPLECHASE APARTMENTS PRO FORMA PRO ACQUISITIONS (23) ADJUSTMENTS FORMA ----------------- ----------- ----- Income Rental Income $4,639 $230,045 Interest and dividend income 1,423 ----- ----- -------- 4,639 0 231,468 Expenses Rental Expenses Utilities 173 16,765 Repairs & maintenance 481 34,940 Real estate taxes 398 16,660 Property management 245 (131)(25) 6,229 Other operating expenses 547 20,969 Depreciation of real estate owned 904 (26) 46,132 Interest 1,805 (27) 52,792 General and administrative 4,865 Other depreciation and amortization 1,103 Other expenses: Impairment loss on real estate held for disposition 1,700 ----- ----- ------- 1,844 2,578 202,155 ----- ----- ------- Income before gains on sales of investments and extraordinary item 2,795 (2,578) 29,313 Gains on sales of investments 5,090 ----- ----- ----- Net income 2,795 (2,578) 34,403 Dividends to preferred shareholders 9,236 ------ -------- ------- Net income available to common shareholders $2,795 ($2,578) $25,167 ====== ======== ======= Net income per common share $0.46 ======= Distributions declared per common share $0.90 ======= Weighted average number of common shares outstanding 54,156
17 UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA STATEMENT OF OPERATIONS For the Nine Months Ended September 30, 1996 (UNAUDITED) (In thousands, except per share data)
NON-DEVELOPMENT NON-DEVELOPMENT PROPERTIES DEVELOPMENT PROPERTIES SOUTHEAST PROPERTIES SOUTHEAST PORTFOLIO SOUTHEAST PORTFOLIO PRO FORMA PORTFOLIO HISTORICAL (1) ACQUISITION (9) ADJUSTMENTS (12) ACQUISITION (10) ------------- -------------- ---------------- ---------------- Income Rental income $175,119 $9,160 $2,265 $3,757 Interest and dividend income 1,197 ------- ----- ----- ----- 176,316 9,160 2,265 3,757 Expenses Rental expenses: Utilities 12,810 662 164 219 Repairs & maintenance 29,847 1,146 283 316 Real estate taxes 12,698 651 161 321 Property management 4,192 452 (172)(13) 184 Other operating expenses 16,852 699 232 (14) 266 Depreciation of real estate owned 33,711 2,344 (15) Interest 35,413 4,566 (16) General and administrative 4,192 Other depreciation and amortization 917 Impairment loss on real estate held for disposition 290 ------- ----- ----- ----- 150,922 3,610 7,578 1,306 Income before gains on sales of investments and minority interest of unitholders in operating partnership 25,394 5,550 (5,313) 2,451 Gains on sales of investments 2,176 Minority interest of unitholders in operating partnership (26) ------ ----- ----- ----- Net income 27,544 5,550 (5,313) 2,451 Dividends to preferred shareholders 7,284 ------ ----- ----- ----- Net income available to common shareholders $20,260 $5,550 (5,313) $2,451 ====== ===== ===== ===== Net income per common share $.36 ===== Distributions declared per common share $.72 ===== Weighted average number of common shares outstanding 56,978 774 (17)
DEVELOPMENT PROPERTIES WESTLAND PARK SOUTHEAST WESTLAND PARK AND STEEPLECHASE PORTFOLIO AND STEEPLECHASE APARTMENTS PRO FORMA APARTMENTS PRO FORMA PRO ADJUSTMENTS (12) AQUISITIONS (23) ADJUSTMENTS (24) FORMA ---------------- --------------- ---------------- ----- Income Rental income $929 $1,278 $95 $192,603 Interest and dividend income 1,197 ---- ------ ---- -------- 929 1,278 95 193,800 Expenses Rental expenses: Utilities 54 50 4 13,963 Repairs & maintenance 78 139 10 31,819 Real estate taxes 79 114 8 14,032 Property management (70)(18) 69 (30)(25) 4,625 Other operating expenses 89 (19) 153 11 18,302 Depreciation of real estate owned 1,316 (20) 252 (26) 37,623 Interest 2,223 (21) 499 (27) 42,701 General and administrative 4,192 Other depreciation and amortization 917 Impairment loss on real estate held for disposition 290 ----- --- --- ----- 3,769 525 754 168,464 Income before gains on sales of investments and minority interest of unitholders in operating partnership (2,840) 753 (659) 25,336 Gains on sales of investments 2,176 Minority interest of unitholders in operating partnership (26) ----- --- ---- ------ Net income (2,840) 753 (659) 27,486 Dividends to preferred shareholders 7,284 ----- --- --- ------ Net income available to common shareholders (2,840) 753 (659) $20,202 ===== === === ======= Net income per common share $0.35 ====== Distributions declared per common share $.72 ====== Weighted average number of common shares outstanding 578 (22) 58,330
See accompanying notes. 18 UNITED DOMINION REALTY TRUST, INC. NOTES TO CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND THE TWELVE MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED) Basis of Presentation The consolidated pro forma statements of operations on this Form 8-K reflect the historical results of the Company adjusted to reflect the operations of: (i) Steeplechase Apartments and Westland Park Apartments aquired on March 7, 1996 and May 9, 1996, (ii) 18 apartment communities (the "Southeast Portfolio") acquired in an August 15, 1996 portfolio acquisition as previously reported on Form 8-K dated August 15, 1996 (subsequently updated to reflect the results of operations for the nine months ended September 30, 1996 on Form 8-K dated October 31, 1996), (iii) nine apartment communities acquired in a May 4, 1995 portfolio acquisition as previously reported on Form 8-K dated June 30, 1995 and (iv) four apartment communities acquired during the second half of 1995 as previously reported on Form 8-K dated December 28, 1995. For presentation purposes in the consolidated pro forma statements of operations on this Form 8-K, the Southeast Portfolio has been segregated into two components, the development properties and the non-development properties. There are 14 properties containing 3,196 units which are considered non-development properties and 4 properties containing 1,312 units which are considered development properties. The 14 non-development properties were built prior to 1995 and the four development properties had completed units available for occupancy at various times during 1995 and 1996. For each of the periods presented, the pro forma adjustments for the four development properties are determined based upon the weighted average balance of the purchase price outstanding. The weighted average balance of the purchase price outstanding was calculated by assuming the properties were financed and acquired by the Company on the dates on which certificates of occupancy were obtained for each unit during 1995 and 1996. The accompanying consolidated pro forma statements of operations assume the following events occurred on the first day of each reporting period presented: (i) the acquisition of Westland Park and Steeplechase Apartments with bank line borrowings aggregating $30.2 million and a weighted average interest rate of 5.98% (the Company's weighted average market interest rate on short-term bank borrowings in effect at the time of each of the acquisitions), (ii) the acquisition of four apartment communities previously reported on Form 8-K dated December 28, 1995, and (iii) the acquisition of nine apartment communities previously reported on Form 8-K dated June 30, 1995. For 1995, in connection with the acquisitions previously described, the pro forma statements of operations include the April 24, 1995 sale of 4.2 million shares of 9 1/4% Cumulative Redeemable Preferred Stock with a $25 liquidation preference value ("preferred stock"). Net proceeds from the sale of the preferred stock were used to fund the Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and to temporarily repay in full, then existing bank debt until such time additional acquisitions were completed. Of the 4.2 million shares sold, 2.7 million shares were assumed to be used to acquire the Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and 878,589 shares were assumed to have been used to acquire Hunters Ridge Apartments and Mallards of Wedgewood Apartments (two of the properties included in the acquisitions previously reported on Form 8-K dated December 28, 1995). Therefore, such consolidated pro forma statements of operations assume the issuance of 3.6 million shares of preferred stock from the period January 1, 1995 to April 24, 1995 for the twelve months ended December 31, 1995. In addition, the consolidated pro forma statements of operations assume the acquisition of the 14 non-development apartment communities contained in the Southeast Portfolio as if it had occurred on the first day of each reporting period presented. The pro forma statements of operations include the effect of debt and equity incurred in connection with the acquisition of the 14 non-development apartment communities contained in the Southeast Portfolio which includes: (i) bank lines of credit of approximately $14.0 million with a weighted average interest rate of 6.01% (the Company's market interest rate on short-term bank borrowings in effect at the time of the acquisition), (ii) the assumption of secured debt encumbering the properties in the aggregate amount of approximately $75.2 million with a weighted average interest rate of 7.30%, (iii) Seller financing of approximately $13.9 million bearing interest of 7.10%, and (iv) the issuance of approximately 934,000 newly issued shares of the Company's common stock valued at $13.50 (the closing sales price of the Company's common stock on the date of 19 acquisition) per share for total consideration of $12.6 million. The consolidated pro forma statements of operations also assume the acquisition of the four development apartment communities contained in the Southeast Portfolio. The pro forma statements of operations include the effects of debt and equity incurred in connection with the acquisition of the four development apartment communities contained in the Southeast Portfolio which includes: (i) bank lines of credit of approximately $11.2 million with a weighted average interest rate of 6.01% (the Company's market interest rate on short-term bank borrowings in effect at the time of the acquisition), (ii) the assumption of secured debt encumbering the properties in the aggregate amount of approximately $34.6 million with a weighted average interest rate of 6.59%, (iii) Seller financing of approximately $11.1 million bearing interest of 7.10% and (iv) the issuance of approximately 746,000 newly issued shares of the Company's common stock valued at $13.50 per share (the closing sales price of the Company's common stock on the date of acquisition) for total consideration of $10.1 million. The assumption of secured debt encumbering the Southeast Portfolio properties consists of the following: (i) four mortgage notes payable encumbering specific properties aggregating $38.6 million, (ii) a $40 million secured senior credit facility with Wachovia Bank and (iii) a $31.2 million secured senior credit facility with First Union National Bank, as follows: Specific Mortgage or Construction Notes Payable: Loan Interest Property Name Amount Rate Cape Harbor* $ 9,500,000 6.531% (Variable-LIBOR + 1%) The Village at Cliffdale 10,509,232 7.875% Rivergate 9,837,246 8.000% Morganton Place 8,739,750 6.531% (Variable-LIBOR + 1%) ------------- $38,586,228 =========== *Construction Note Payable Cross-Collateralize Secured Notes Payable: Loan Interest Lender Amount Rate Wachovia Bank** $ 10,000,000 7.14% Wachovia Bank** 5,000,000 6.98% Wachovia Bank** 25,000,000 6.53% (Variable-LIBOR +1%) First Union National Bank*** 20,000,000 7.75% First Union National Bank*** 5,000,000 7.38% First Union National Bank*** 5,000,000 7.50% First Union National Bank*** 1,232,805 6.61% (Variable-LIBOR +1.18%) ----------- $ 71,232,805 =========== Total Mortgage Notes Payable $109,819,033 =========== ** The $40 million Wachovia Bank senior credit facility is secured by six properties contained in the Southeast Portfolio. For purposes of this Form 8- K, LIBOR is assumed to be 5.53% which represents the 3 month LIBOR on August 15, 1996, the date of the acquisition. There are two related interest rate swap agreements with Wachovia Bank in the aggregate notional amount of $15 million under which the Company pays a fixed-rate of interest and receives a variable-rate on the notional amounts. The interest rate swaps effectively change the Company's interest rate exposure from a variable-rate to a fixed-rate of 7.09% (weighted average) on $15 million of the $40 million senior credit facility. *** The $31.2 million First Union National Bank senior credit facility is secured by seven properties contained in the Southeast Portfolio. For purposes of this Form 8- K, LIBOR is assumed to be 5.43% which represents the 1 month LIBOR on August 15, 1996, the date of the acquisition. There are three interest rate swap agreements with First Union National Bank in the aggregate notional amount of $30 million under which the Company pays a fixed-rate of interest and receives a variable-rate on the notional 20 amounts. The interest rate swaps effectively change the Company's interest rate exposure from a variable-rate to a fixed-rate of 7.65% (weighted average) on $30 million of the $31.2 million senior credit facility. The unaudited pro forma statements of operations are not necessarily indicative of what the Company's results would have been for the nine months ended September 30, 1996 and for the year ended December 31, 1995 if the acquisitions had been consummated at the beginning of each period presented, nor do they purport to be indicative of the results of operations or financial position in future periods. (1) Represents the Company's Historical Statements of Operations contained in its Quarterly Report on Form 10-Q for the nine months ended September 30, 1996 and its Annual Report on Form 10-K for the year ended December 31, 1995. (2) Amounts appearing under the column entitled "Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and Form 8-K dated December 28, 1995" give effect to significant acquisitions that have been previously reported to the Securities and Exchange Commission by the Company on Form 8-K dated June 30, 1995 and Form 8-K dated December 28, 1995. A reconciliation of net income for the twelve months ended December 31, 1995 is as follows: Net Income Filing to Update Twelve Months 8-K Filed 8-K (In thousands) --------- ----------------------- --------------- June 30, 1995 N/A $1,821 December 28, 1995 8-K/A 1,741 ----- $3,562 ===== (3) Represents operations of the Acquisitions Previously Reported on Form 8-K Dated June 30, 1995 for the 33 day period from April 1, 1995 to May 3, 1995, which represents the period not owned by the Company during the second quarter of 1995 (based on the operating statements of the properties for the stub period January 1, 1995 to March 31, 1995). The unaudited combined statements of rental operations were for the stub period January 1, 1995 to March 31, 1995. (4) Reflects the reduction of interest income associated with the use of short-term investments to acquire Hunters Ridge Apartments (66 of the 365 days during 1995) and Mallards of Wedgewood Apartments (93 of the 365 days during 1995) at market interest rates in effect at the time of the acquisition. As discussed in the "Basis of Presentation", Hunters Ridge Apartments and Mallards of Wedgewood Apartments were assumed to have been acquired with 878,589 shares of the preferred stock. The net proceeds from the sale of the preferred stock were received on April 24, 1995 and were temporarily invested in short-term investments until such time as these acquisitions occurred. Purchase Interest Interest Income Property Price Rate Adjustment -------- ------------- ------ ------------ Hunters Ridge $13,403,983 6.17% $ 149,544 Mallards of Wedgewood 7,823,950 6.00% 119,610 ------------- ---------- $21,227,933 $ 269,154 =========== ========== (5) Reflects the net reduction in property management fees for the Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and Form 8-K dated December 28, 1995. The Company internally managed its apartment portfolio at a then assumed cost of approximately 3.5% of rental income (based on 1994 actual information). The Company uses 98% of the amount reported as rental income in calculating the property management fee, as 2% of the amount reported as rental income is assumed to be other income which is not subject to management fee. As documented in Notes 13 and 18, based upon 1995 actual information, the Company internally managed its apartment properties at an assumed cost of approximately 2.5% of rental income. The decrease in the management fee from 3.5% in 1994 to 2.5% in 1995 was a result of the economies of scale and efficiencies the Company achieved due to the significant growth experienced by 21 the Company during this same time. (6) Reflects the net adjustments to depreciation expense to record the Acquisitions Previously Reported on Form 8-K dated June 30, 1995 and December 28, 1995 at the beginning of each period presented. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets. Buildings have been depreciated over 35 years and other improvements over 15 years based upon the initial cost of the Acquisitions Previously Reported on Form 8-K dated June 30, 1995 of $65.7 million and Acquisitions Previously Reported on Form 8-K dated December 31, 1995 of $32.9 million. The allocation and estimated useful lives are as follows: Acquisitions Previously Reported on Form 8-K dated June 30, 1995: Estimated Twelve Month Allocation of Useful Life Depreciation Purchase Price In Years Adjustment** -------------- ----------- ------------ Building $ 50,495,338 35 $ 492,931 Other Improvements 2,916,939 15 66,441 Land 12,292,524 N\A -- ---------- ----------- $ 65,704,801 $ 559,372 ============ =========== ** The Acquisitions Previously Reported on Form 8-K Dated June 30, 1995 were purchased by the Company on May 4, 1995, as such, the depreciation adjustment for the twelve months ended December 31, 1995 is computed for the 123 day period (out of 360 days) the properties were not owned by the Company. Acquisitions Previously Reported on Form 8-K dated December 28, 1995: Estimated Twelve Month Allocation of Useful Life Depreciation Purchase Price In Years Adjustment** -------------- ----------- ------------ Building $ 25,438,503 35 $ 442,549 Other Improvements 2,138,662 15 86,814 Land 5,290,780 N\A -- ------------ ------------- $ 32,867,945 $ 529,363 ============ ============= Total $ 98,572,746 $ 1,088,735 ============ ============ ** The Acquisitions Previously reported on Form 8-K Dated December 28, 1995 were purchased by the Company at various times during the second and third quarters of 1995. The depreciation adjustment is computed for each property based on the number of days the properties were not owned by the Company. The weighted average number of days the properties were not owned by the Company during 1995 was 219.20 days (out of 360 days). (7) Reflects the additional interest expense associated with the Acquisitions Previously Reported on Form 8-K dated December 28, 1995 as follows: (i) variable-rate bank debt aggregating $2.7 million used to fund the acquisitions at assumed interest rates equal to market rates in effect at the time of each respective acquisition, (ii) the assumption of a fixed-rate mortgage note in the amount of $3.3 million bearing interest of 7.6% in connection with the acquisition of Marble Hill Apartments and (iii) the assumption of a $5.6 million variable-rate tax-exempt housing bond bearing interest of 5.14% in connection with the acquisition of Andover Place Apartments. 22 Twelve Month Amount Interest Interest Property Type of Debt Debt Rate Adjustment** - -------- ------------ --------------- ------- ------------- Marble Hill Bank Debt $ 2,629,662 6.48% $126,517 Marble Hill Mortgage Debt 3,344,066 7.60% 188,697 Andover Place Bank Debt 46,284 6.48% 2,227 Andover Place Tax-Exempt Bonds 5,620,000 5.14% 214,475 ----------- ----- ----------- $11,640,012 $531,916 ============= ========== ** For the twelve months ended December 31, 1995, the interest expense adjustment is for 271 days (based on a 365 day year) as the properties were purchased on September 28, 1995. (8) Reflects the adjustment to net income to record dividends paid to preferred shareholders on 3,598,001 shares of preferred stock in calculating net income available to common shareholders for the 114 day period (out of 365 days) from the period January 1, 1995 to April 24, 1995 for the twelve months ended December 31, 1995. (9) Represents the actual results of operations for the 14 properties containing 3,196 units which are considered non-development properties. A reconciliation of the combined rental operations of the development and non-development properties to the audited combined results of operations for the twelve months ended December 31, 1995 and the unaudited combined results of operations for the six months ended June 30, 1996, as appearing in Form 8-K dated August 15, 1996, is as follows: Net Income Net Income Twelve Months Six Months Properties (In 000's) (In 000's) ---------- ----------------- -------------- Development Properties $ 3,147 $2,451 Non-Developmement Properties 10,074 5,550 ------- ----- $13,221 $8,001 ======= ====== (10) Represents the actual results of operations for the 4 properties containing 1,312 units which are considered development properties for the six month period ended June 30, 1996. See Note 9 above. (11) Represents operations of South Hills Apartments for the 29 day period from January 1, 1995 to January 29, 1995, which represents the period not owned by the Sellers of the Southeast Portfolio during 1995 (based on the unaudited operating statement of the property for the stub period January 30, 1995 to December 31, 1995). (12) Represents the pro forma results of operations for the 14 non-development properties and the four development properties for the the 45 day period from July 1, 1996 to August 15, 1996, which was the period that the properties were not owned by the Company during the quarter ended September 30, 1996 (based on the unaudited combined statement of rental operations for the 182 day stub period from January 1, 1996 to June 30, 1996). The unaudited combined statement of rental operations was for the stub period January 1, 1996 to June 30, 1996, as appearing in Form 8-K dated August 15, 1996 (See Notes 9 and 10 above). (13) Reflects the net decrease in property management fees for the non-development properties. The Company internally manages its apartment properties at an assumed cost of approximately 2.5% of rental income (based upon 1995 actual information). The Company uses 98% of the amount reported as rental income in calculating the property management fee, as 2% of the amount reported as rental income is assumed to be other income which is not subject to management fee. (14) Represents the net increase in insurance expense to reflect that the Company insures its apartments for approximately $29.97 per unit more than the historical insurance expense of the 3,196 apartment units for the the non-development properties contained in Southeast Portfolio (the nine months ended September 23 30, 1996, includes a pro forma adjustment for 227 out of 366 days). (15) Reflects the net adjustments to depreciation expense to record the non-development properties in the Southeast Portfolio acquisition at the beginning of each period presented. Depreciation is computed on a straight-line basis over the useful lives of the related assets based upon the actual purchase price allocation of the Southeast Portfolio. Buildings have been depreciated over 35 years and other improvements over a weighted average life of 7.1622 years based upon the initial cost of the non-development properties in the Southeast Portfolio of $115.7 million. The allocation and useful lives are as follows for the non-development properties:
Twelve Months Nine Months Allocation of Useful Life Depreciation Depreciation Purchase Price In Years Adjustment** Adjustment** -------------- ----------- ------------ ----------- Building $ 96,637,354 35 $2,761,067 $1,712,465 Other Improvements 7,296,003 7.1622 1,018,681 631,805 Land 11,739,024 N\A -- -- ------------ ----------- ----------- $115,672,381 $3,779,748 $2,344,270 ============ =========== ===========
** The nine months ended September 30, 1996, includes a pro forma adjustment for 227 out of 366 days. The twelve months ended December 31, 1995 includes a pro forma adjustment for the full year. (16) Reflects the additional interest expense associated with the acquisition of the non-development properties contained in the Southeast Portfolio as follows: (i) variable-rate bank debt aggregating $14.0 million used to fund the acquisition at assumed interest rates equal to market rates in effect at the time of the acquisition of 6.01%, (ii) the assumption of secured debt in the amount of $75.2 million which includes two mortgage notes aggregating $20.3 million and seven cross-collateralized notes aggregating $54.9 million with a weighted average interest rate of 7.36%, and (iii) the issuance of a fixed-rate $13.9 million note to the Seller of the Southeast Portfolio bearing interest of 7.10%.
Weighted Average Twelve Month Nine Month Interest Interest Expense Interest Expense Type of Debt Amount Rate Adjustment** Adjustment** - ------------ ------------- -------- ------------- --------------- Bank Lines $ 13,982,880 6.01% $ 840,371 $ 521,214 Secured Debt* 75,175,680 7.36% 5,534,563 3,432,639 Note to Seller 13,902,591 7.10% 987,084 612,208 ------------- ----------- ----------- $103,061,151 $7,362,018 $4,566,061 ============ =========== ===========
** The nine months ended September 30, 1996, includes a pro forma adjustment for 227 out of 366 days. The twelve months ended December 31, 1995 includes a pro forma adjustment for the full year. (17) Represents the issuance of 934,165 shares of the Company's common stock to the Seller of the Southeast Portfolio at $13.50 per share attributable to the non-development properties in the Southeast Portfolio based upon the aggregate allocated purchase price. The shares are assumed to have been outstanding from the beginning of each period presented. The nine months ended September 30, 1996, includes a pro forma adjustment for 227 out of 274 days. The twelve months ended December 31, 1995 includes a pro forma adjustment for the full year. (18) Reflects the net decrease in property management fees for the development properties. The Company internally manages its apartment properties at an assumed cost of approximately 2.5% of rental income (based upon 1995 actual information). The Company uses 98% of the amount reported as rental income in calculating the property management fee, as 2% of the amount reported as rental income is assumed to be other income which is not subject to management fee. 24 (19) Represents the net increase in insurance expense to reflect that the Company insures its apartments for approximately $29.97 per unit more than the historical insurance expense of the 1,312 apartment units for the development properties contained in Southeast Portfolio. Since the four development properties were under various stages of construction during 1995 and 1996, the weighted average number of units outstanding for both periods presented is used in the calculation of the insurance expense pro forma adjustment. For the twelve months ended December 31, 1995, and the nine months ended September 30, 1996, the weighted average number of development units outstanding was 861 and 1,241 (the nine months ended September 30, 1996, includes a pro forma adjustment for 227 out of 366 days), respectively. (20) Reflects the net adjustments to depreciation expense to record the development properties in the Southeast Portfolio acquisition at the beginning of each period presented. Depreciation is computed on a straight-line basis over the useful lives of the related assets based upon the actual purchase price allocations of the Southeast Portfolio. Buildings have been depreciated over 35 years and other improvements over a weighted average life of 6.7 years based upon the initial cost of the development properties in the Southeast Portfolio of $67.0 million. The allocation and useful lives are as follows for the development properties: For the twelve months ended December 31, 1995:
Weighted Average Twelve Months Allocation of Allocation of Useful Life Depreciation Purchase Price Purchase Price** In Years Adjustment*** -------------- ---------------- ---------- ------------- Building $57,967,420 $37,151,197 35 $ 1,061,463 Other Improvements 4,048,512 2,408,985 6.7 359,550 Land 4,952,938 2,938,969 N\A -- ----------- ----------- ----------- $66,968,870 $42,499,151 $ 1,421,013 ============= =========== ===========
For the nine months ended September 30, 1996:
Weighted Average Nine Months Allocation of Allocation of Useful Life Depreciation Purchase Price Purchase Price** In Years Adjustment*** -------------- ---------------- ----------- ------------- Building $57,967,420 $54,604,690 35 $ 967,624 Other Improvements 4,048,512 3,768,179 6.7 348,820 Land 4,952,938 4,623,032 N\A -- ------------- ----------- ----------- $66,968,870 $62,995,901 $1,316,444 ============= =========== ===========
** Since the four development properties were under various stages of construction during 1995 and 1996, the weighted average balance of the purchase price outstanding for both periods presented is used in the calculation for the depreciation expense pro forma adjustment. *** The nine months ended September 30, 1996, includes a pro forma adjustment for 227 out of 366 days. The twelve months ended December 31, 1995 includes a pro forma adjustment for the full year. (21) Reflects the additional interest expense associated with the acquisition of the development properties contained in the Southeast Portfolio as follows: (i) additional bank debt aggregating $11.2 million used to fund the acquisition at assumed interest rates equal to market rates in effect at the time of the acquisition of 6.01%, (ii) the assumption of various secured debt aggregating $34.6 million bearing a weighted average interest rate of 6.76% which includes one mortgage note, one construction note and seven cross- collateralized notes (See Note 3 of the Notes to the Consolidated Balance Sheet) and (iii) the issuance of a fixed-rate $11.1 million note to the Seller of the Southeast Portfolio bearing interest of 7.10%. 25 For the twelve months ended December 31, 1995:
Twelve Months Development Weighted Average Weighted Average Interest Expense Property Total Debt Debt Outstanding Interest Rate Adjustment** ----------- ---------- ----------------- ---------------- ----------------- Morganton Place $12,386,796 $11,264,470 6.537781% $ 736,446 Lake Brandt 12,000,041 7,495,453 7.016978% 525,954 Cape Harbor 16,733,447 2,868,373 6.540838% 187,616 Stonesthrow 15,781,975 14,919,438 6.684529% 997,294 ---------- ---------- ---------- $56,902,259 $36,547,734 $2,447,310 ============= ============== ===========
For the nine months ended September 30, 1996:
Development Weighted Average Weighted Average Interest Expense Property Total Debt Debt Outstanding Interest Rate Adjustment** - ----------- ---------- ---------------- ---------------- --------------- Morganton Place $ 12,386,796 $ 12,386,796 6.537781% $ 502,266 Lake Brandt 12,000,041 12,000,041 7.016978% 522,249 Cape Harbor 16,733,447 13,410,168 6.540838% 544,017 Stonesthrow 15,781,975 15,781,975 6.684529% 654,300 ---------- ---------- ---------- $ 56,902,259 $ 53,578,980 $2,222,832 ============= =============== ===========
** Since the four development properties were under various stages of construction during 1995 and 1996, the interest expense pro forma adjustment is based on the weighted average amount of debt outstanding as determined by the weighted average balance of the purchase price outstanding during each of the periods presented. For the nine months ended September 30, 1996, the interest expense adjustment is calculated on 227 out of 366 days. (22) Represents the issuance of 745,675 shares of the Company's common stock to the Seller of the Southeast Portfolio at $13.50 per share attributable to the development properties in the Southeast Portfolio based on the aggregate allocated purchase price. The shares are assumed to have been issued and outstanding from the earlier of the beginning of each period presented or the date on which certificates of occupancy were granted for each unit contained in the development properties. For the twelve months ended December 31, 1995 and the nine months ended September 30, 1996, based upon the weighted average balance of the purchase price outstanding during 1995 and 1996, the weighted average days the stock is assumed to have been outstanding is 215.79 (out of 365 days) and 175.92 (out of 227 days), respectively. (23) Represents the actual results of operations for Steeplechase Apartments and Westland Park Apartments as reported elsewhere herein. (24) Represents the pro forma adjustments for Westland Park and Steeplechase Apartments. For Westland Park Apartments this represents the 8 day period from May 1, 1996 to May 9, 1996, which was the period that the property was not owned by the Company during 1996 and the period not included in the actual results of operations in Note 23 (based on the average per day unaudited statement of rental operations for the 121 day stub period from January 1, 1996 to April 30, 1996). For Steeplechase Apartments this represents the 6 day period from March 1, 1996 to March 6, 1996, which was the period that the property was not owned by the Company during 1996 and the period not included in the actual results of operations in Note 23 (based on the average per day unaudited statement of rental operations for the 60 day stub period from January 1, 1996 to February 29, 1996). (25) Reflects the net decrease in property management fees for Westland Park and Steeplechase Apartments. The Company internally manages its apartment properties at an assumed cost of approximately 2.5% of rental income (based upon 1995 actual information). The Company uses 98% of the amount reported as rental income in calculating the property management fee, as 2% of the amount reported as rental income is assumed to be other income which is not subject to management fee. 26 (26) Reflects the net adjustments to depreciation expense to record Westland Park and Steeplechase Apartments acquisitions at the beginning of each period presented. Depreciation is computed on a straight-line basis over the useful lives of the related assets based upon the actual purchase price allocations of the properties. Buildings have been depreciated over 35 years and other assets over 5, 10 or 20 years depending on the useful life of the related asset. The weighted average life of other assets for Westland Park and Steeplechase Apartments is approximately 7.41 years based upon the initial cost of the properties of $30.2 million. The allocation and useful lives are as follows: For the twelve months ended December 31, 1995: Twelve Months Allocation of Useful Life Depreciation Purchase Price In Years Adjustment -------------- ----------- ------------- Building $25,133,903 35 $718,112 Other Improvements 1,375,227 7.405319 185,707 Land 3,689,016 -- -- ---------- --------- Total $30,198,146 $903,819 =========== ======== For the nine months ended September 30, 1996: Nine Months Allocation of Useful Life Depreciation Purchase Price In Years Adjustment** -------------- ----------- ------------- Building $25,133,903 35 $200,384 Other Improvements 1,375,227 7.405319 51,820 Land 3,689,016 -- -- -------------- ----------- $30,198,146 $252,204 ============= =========== ** The nine months ended September 30, 1996, includes a pro forma adjustment for 102.13 out of 366 days (66 days for Steeplechase Apartments and 129 days for Westland Park Apartments). The twelve months ended December 31, 1995 includes a pro forma adjustment for the full year. (27) Reflects the additional interest expense associated with the acquisition of Westalnd Park and Steeplechase Apartments on variable-rate bank debt aggregating $30.2 million used to fund the acquisitions at assumed interest rates equal to market rates in effect at the time of each respective acquisition. For the twelve months ended December 31, 1995: Twelve Months Interest Expense Property Total Debt Interest Rate Adjustment** - ----------- ---------- ------------- ---------------- Westland Park $ 16,699,276 6.0296% $1,006,899 Steeplechase 13,498,870 5.9144% 798,376 ---------- --------- $ 30,198,146 $1,805,275 ============= ============= For the nine months ended September 30, 1996: Nine Months Interest Expense Property Total Debt Interest Rate Adjustment*** - -------- -------------- --------------- --------------- Westland Park $16,699,276 6.0296% $354,891 Steeplechase 13,498,870 5.9144% 143,969 ------------- -------------- $30,198,146 $498,860 ============= ============= ** For the twelve months ended December 31, 1995, the interest expense adjustment is for the full year. *** For the nine months ended September 30, 1996, the interest expense adjustment for Westland Park and Steeplechase Apartments is for 129 and 66 days, respectively (based on a 366 day year). 27 Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. UNITED DOMINION REALTY TRUST, INC. Date: November 15, 1996 /s/ James Dolphin ----------------------------- ------------------------------------ James Dolphin, Senior Vice President Chief Financial Officer Date: November 15, 1996 /s/ Jerry A. Davis ----------------------------- ------------------------------ Jerry A. Davis, Vice President Corporate Controller Exhibit 23(a) [L.P. Martin & Company Letterhead] CONSENT OF INDEPENDENT AUDITORS The Board of Directors United Dominion Realty Trust, Inc. We consent to the incorporation by reference in the previously filed Registration Statement Form S-3 No. 33-40433, Registration Statement Form S-3 No. 33-32930, Registration Statement Form S-3 No. 33-55159, Registration Statement Form S-3 No. 33-64275, Registration Statement Form S-3 No. 333-11207, Registration Statement Form S-3 No. 333-15133, Registration Statement Form S-8 No. 33-47926, Registration Statement Form S-8 No. 33-48000, and Registration Statement Form S-8 No. 33-58201 of United Dominion Realty Trust, Inc. of our report dated June 20, 1996, with respect to the statement of rental operations of Steeplechase Apartments for the year ended December 31, 1995, included in this Form 8-K dated October 31, 1996. /s/ L.P. Martin & Company, P.C. - ------------------------------- L.P. Martin & Company, P.C. L.P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia November 13, 1996 Exhibit 23(b) [L.P. Martin & Company Letterhead] CONSENT OF INDEPENDENT AUDITORS The Board of Directors United Dominion Realty Trust, Inc. We consent to the incorporation by reference in the previously filed Registration Statement Form S-3 No. 33-40433, Registration Statement Form S-3 No. 33-32930, Registration Statement Form S-3 No. 33-55159, Registration Statement Form S-3 No. 33-64275, Registration Statement Form S-3 No. 333-11207, Registration Statement Form S-3 No. 333-15133, Registration Statement Form S-8 No. 33-47926, Registration Statement Form S-8 No. 33-48000, and Registration Statement Form S-8 No. 33-58201 of United Dominion Realty Trust, Inc. of our report dated June 18, 1996, with respect to the statement of rental operations of Westland Park Apartments for the year ended December 31, 1995, included in this Form 8-K dated October 31, 1996. /s/ L.P. Martin & Company, P.C. - ------------------------------- L.P. Martin & Company, P.C. L.P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia November 13, 1996 -----END PRIVACY-ENHANCED MESSAGE-----