-----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, ErwlDKVFXWYlmUtedi05LhNSw/82ZDOFj5Ix5pQofWU9TR6l0Og5jRF2dY7Wwtes 5Vex33uCNNJXI/8zkdaI4g== 0000916641-97-000931.txt : 19970918 0000916641-97-000931.hdr.sgml : 19970918 ACCESSION NUMBER: 0000916641-97-000931 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970701 ITEM INFORMATION: FILED AS OF DATE: 19970915 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/A SEC ACT: SEC FILE NUMBER: 001-10524 FILM NUMBER: 97680522 BUSINESS ADDRESS: STREET 1: 10 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/A 1 UNITED DOMINION REALTY TRUST, INC. 8/KA UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A AMENDMENT TO APPLICATION OR REPORT Pursuant to Section 12, 13 or 15(d) of THE SECURITIES EXCHANGE ACT OF 1934 UNITED DOMINION REALTY TRUST, INC. (Exact name of registrant as specified in its charter) AMENDMENT NO. 1 The undersigned registrant hereby amends its Current Report on Form 8-K dated July 1, 1997, which was filed with the Securities and Exchange Commission on July 15, 1997, to include the Financial Statements of Real Estate Properties Acquired, the Consolidated Pro Forma Financial Statements and Notes thereto, and Exhibits as set forth on the pages attached hereto. ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Real Estate Properties Acquired (b) Pro Forma Financial Information (c) Exhibits (23) Consent of Experts SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this Amendment to be signed on its behalf by the undersigned, thereto duly authorized. UNITED DOMINION REALTY TRUST, INC. (Registrant) ------------------------------------------ Jerry A. Davis Vice President and Chief Accounting Officer ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits Description Location ----------- -------- (a) Financial Statements of Real Estate Properties Acquired 3 through 61 (b) Pro Forma Financial Information 62 through 75 (c) Exhibits (23) Consents of Independent Public Accountants 76 2 L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Trinity Place Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Trinity Place Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Trinity Place 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 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 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 Trinity Place Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Trinity Place Apartments for the year ended December 31, 1996, 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 25, 1997 TRINITY PLACE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 2,550,732 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 154,047 Repairs and Maintenance 219,655 Utilities 106,970 Property Management Fees 126,013 Other Operating Expenses 210,985 ------------- OTAL RENTAL PROPERTY EXPENSES 817,670 ------------- INCOME FROM RENTAL OPERATIONS $ 1,733,062 ============= The accompanying notes are an integral part of this statement. TRINITY PLACE APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Trinity Place Apartments (The Property) consists of a 380 unit garden style residential apartment community located in Raleigh, North Carolina together with the existing leases. The assets that comprise the Property have been held as an investment of Rogers Properties Limited Partnership, a North Carolina limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided from January 1, 1996 to August 31, 1996 through Southeast Apartments Management, Inc. (formerly State Street Management, Inc.) an affiliate of the owner of the property. Fees for such services were 5% of gross receipts from operations. United Dominion Realty Trust, Inc. provided property management services from September 1, 1996 to December 31, 1996. 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 February 28, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTS 4132 INNSLAKE DR GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Stoneybrooke Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Stoneybrooke Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Stoneybrooke 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 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 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 Stoneybrooke Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Stoneybrooke Apartments for the year ended December 31, 1996, 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 25, 1997 STONEYBROOKE APARTMENTS ----------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 2,754,175 --------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 126,426 Repairs and Maintenance 293,116 Utilities 133,674 Property Management Fees 136,954 Other Operating Expens 189,484 --------------- TOTAL RENTAL PROPERTY EXPENSES 879,654 --------------- INCOME FROM RENTAL OPERATIONS $ 1,874,521 =============== The accompanying notes are an integral part of this statement. STONEYBROOKE APARTMENTS ----------------------- NOTES TO STATEMENT OF RENTAL OPERATIONS --------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Stoneybrooke Apartments (The Property) consists of a 400 unit garden style residential apartment community located in Charlotte, North Carolina together with the existing leases. The assets that comprise the Property have been held as an investment of Capers Properties Limited Partnership, a North Carolina limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided from January 1, 1996 to August 31, 1996 through Southeast Apartments Management, Inc. (formerly State Street Management, Inc.) an affiliate of the owner of the property. Fees for such services were 5% of gross receipts from operations. United Dominion Realty Trust, Inc. provided property management services from September 1, 1996 to December 31,1996. 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 February 28, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Tradewinds Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Tradewinds Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Tradewinds 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 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 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 Tradewinds Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Tradewinds Apartments for the year ended December 31, 1996, 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 25, 1997 TRADEWINDS APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 2,557,442 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 176,043 Repairs and Maintenance 283,463 Utilities 153,564 Property Management Fees 127,323 Other Operating Expenses 208,186 -------------- TOTAL RENTAL PROPERTY EXPENSES 948,579 ------------- INCOME FROM RENTAL OPERATIONS $ 1,608,863 ============= The accompanying notes are an integral part of this statement. TRADEWINDS APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Tradewinds Apartments (The Property) consists of a 380 unit garden style residential apartment community located in Wilmington, North Carolina together with the existing leases. The assets that comprise the Property have been held as an investment of Wideman Properties Limited Partnership, a North Carolina limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided from January 1, 1996 to August 31, 1996 through Southeast Apartments Management, Inc. (formerly State Street Management, Inc.) an affiliate of the owner of the property. Fees for such services were 5% of gross receipts from operations. United Dominion Realty Trust, Inc. provided property management services from September 1, 1996 to December 31, 1996. 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 February 28, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Lotus Landing Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Lotus Landing Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Lotus Landing 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 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 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 Lotus Landing Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Lotus Landing Apartments for the year ended December 31, 1996, 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 August 7, 1997 LOTUS LANDING APARTMENTS ------------------------ STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 1,696,932 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 170,888 Repairs and Maintenance 294,914 Utilities 121,634 Property Management Fees 84,588 Other Operating Expenses 274,868 ------------- TOTAL RENTAL PROPERTY EXPENSES 946,892 ------------- INCOME FROM RENTAL OPERATIONS $ 750,040 ============= The accompanying notes are an integral part of this statement. LOTUS LANDING APARTMENTS ------------------------ NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Lotus Landing Apartments (The Property) consists of a 260 unit garden style residential apartment community located in Orlando, Florida together with the existing leases. The assets that comprise the Property have been held as an investment of American Capitol Group I Assets, Limited Partnership, a Delaware limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through Union Management Company USA, Inc., 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 United Dominion Realty Trust, Inc. on July 1, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Orange Oaks Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Orange Oaks Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Orange Oaks 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 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 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 Orange Oaks Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Orange Oaks Apartments for the year ended December 31, 1996, 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 August 7, 1997 ORANGE OAKS APARTMENTS ---------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 1,201,039 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 111,839 Repairs and Maintenance 171,850 Utilities 90,231 Property Management Fees 61,565 Other Operating Expenses 198,998 ------------ TOTAL RENTAL PROPERTY EXPENS 634,483 ============ INCOME FROM RENTAL OPERATIONS $ 566,556 ============ The accompanying notes are an integral part of this statement. ORANGE OAKS APARTMENTS ---------------------- NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Orange Oaks Apartments (The Property) consists of a 192 unit garden style residential apartment community located in Tampa, Florida together with the existing leases. The assets that comprise the Property have been held as an investment of American Capitol Group I Assets, Limited Partnership, a Delaware limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through Union Management Company USA, Inc., 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 United Dominion Realty Trust, Inc. on July 1, 1997. 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. [L.P. MARTIN & COMPANY LETTERHEAD] A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Mallards of Brandywine We have audited the accompanying statement of rental operations (as defined in Note 2) of Mallards of Brandywine for the year ended December 31, 1996. This financial statement is the responsibility of the management of Mallards of Brandywine. 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 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 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 Mallards of Brandywine's revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Mallards of Brandywine for the year ended December 31, 1996, 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 August 7, 1997 MALLARDS OF BRANDYWINE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 934,392 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 79,852 Repairs and Maintenance 148,412 Utilities 30,634 Property Management Fees 46,737 Other Operating Expenses 150,976 ---------- TOTAL RENTAL PROPERTY EXPENSES 456,611 ----------- INCOME FROM RENTAL OPERATIONS $ 477,781 =========== The accompanying notes are an integral part of this statement. MALLARDS OF BRANDYWINE NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Mallards of Brandywine (The Property) consists of a 168 unit garden style residential apartment community located in Daytona Beach, Florida together with the existing leases. The assets that comprise the Property have been held as an investment of American Capitol Group I Assets, Limited Partnership, a Delaware limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through Union Management Company USA, Inc., 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 United Dominion Realty Trust, Inc. on July 1, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Forest Creek Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Forest Creek Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Forest Creek 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 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 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 Forest Creek Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Forest Creek Apartments for the year ended December 31, 1996, 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 August 7, 1997 FOREST CREEK APARTMENTS ------------------------ STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 517,169 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 50,168 Repairs and Maintenance 79,899 Utilities 40,678 Property Management Fees 25,813 Other Operating Expense 99,364 ------------ TOTAL RENTAL PROPERTY EXPENSES 295,922 ------------ INCOME FROM RENTAL OPERATIONS $ 221,247 ============ The accompanying notes are an integral part of this statement. FOREST CREEK APARTMENTS ------------------------ NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Forest Creek Apartments (The Property) consists of a 104 unit garden style residential apartment community located in Tampa, Florida together with the existing leases. The assets that comprise the Property have been held as an investment of American Capitol Group I Assets, Limited Partnership, a Delaware limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through Union Management Company, USA Inc., 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 United Dominion Realty Trust, Inc. on July 1, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Lakeside Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Lakeside Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Lakeside 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 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 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 Lakeside Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Lakeside Apartments for the year ended December 31, 1996, 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 August 7, 1997 LAKESIDE APARTMENTS ------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 1,374,214 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 86,163 Repairs and Maintenance 177,451 Utilities 105,352 Property Management Fees 68,726 Other Operating Expenses 216,479 ------------- TOTAL RENTAL PROPERTY EXPENSES 654,171 ------------- INCOME FROM RENTAL OPERATIONS $ 720,043 ============= The accompanying notes are an integral part of this statement. LAKESIDE APARTMENTS ------------------- NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Lakeside Apartments (The Property) consists of a 210 unit garden style residential apartment community located in Daytona Beach, Florida together with the existing leases. The assets that comprise the Property have been held as an investment of American Capitol Group I Assets, Limited Partnership, a Delaware limited partnership (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Advertising - Advertising costs are expensed when incurred. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through Union Management Company USA, Inc., 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 United Dominion Realty Trust, Inc. on July 1, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Pineloch Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Pineloch Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Pineloch 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 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 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 Pineloch Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Pineloch Apartments for the year ended December 31, 1996, 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 11, 1997 PINELOCH APARTMENTS ------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 2,704,646 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 360,579 Repairs and Maintenance 288,646 Utilities 206,193 Property Management Fees 100,522 Other Operating Expenses 280,115 ------------- TOTAL RENTAL PROPERTY EXPENSES 1,236,055 ------------- INCOME FROM RENTAL OPERATIONS $ 1,468,591 ============= The accompanying notes are an integral part of this statement. PINELOCH APARTMENTS ------------------- NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Pineloch Apartments (The Property) consists of a 440 unit garden style residential apartment community located in Houston, Texas together with the existing leases. The assets that comprise the Property have been held as an investment of Security Capital Pacific Trust, a Maryland real estate investment trust (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Estimates - The preparation of financial statements in conformity with generally accepted accounting princples requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through SCG Realty Services Incorporated, an affiliate of the owner of the property. Fees for such services were 3.75% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to South West Properties, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on May 8, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Seahawk Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Seahawk Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Seahawk 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 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 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 Seahawk Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Seahawk Apartments for the year ended December 31, 1996, 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 11, 1997 SEAHAWK APARTMENTS ------------------ STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 1,568,203 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 186,030 Repairs and Maintenance 182,574 Utilities 76,339 Property Management Fees 58,552 Other Operating Expenses 158,569 ------------ TOTAL RENTAL PROPERTY EXPENSES 662,064 ------------ INCOME FROM RENTAL OPERATIONS $ 906,139 ============ The accompanying notes are an integral part of this statement. SEAHAWK APARTMENTS ------------------ NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Seahawk Apartments (The Property) consists of a 224 unit garden style residential apartment community located in Houston, Texas together with the existing leases. The assets that comprise the Property have been held as an investment of Security Capital Pacific Trust, a Maryland real estate investment trust (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Estimates- The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through SCG Realty Services Incorporated, an affiliate of the owner of the property. Fees for such services were 3.75% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to South West Properties, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on May 8, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Anderson Mill Oaks Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Anderson Mill Oaks Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Anderson Mill Oaks 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 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 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 Anderson Mill Oaks Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Anderson Mill Oaks Apartments for the year ended December 31, 1996, 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 11, 1997 ANDERSON MILL OAKS APARTMENTS ----------------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 2,486,965 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 298,713 Repairs and Maintenance 405,269 Utilities 159,379 Property Management Fees 92,636 Other Operating Expenses 196,135 ------------- TOTAL RENTAL PROPERTY EXPENSES 1,152,132 ------------- INCOME FROM RENTAL OPERATIONS $ 1,334,833 ============= The accompanying notes are an integral part of this statement. ANDERSON MILL OAKS APARTMENTS ----------------------------- NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION - ------------------------------ Anderson Mill Oaks Apartments (The Property) consists of a 350 unit garden style residential apartment community located in Austin, Texas together with the existing leases. The assets that comprise the Property have been held as an investment of Security Capital Pacific Trust, a Maryland real estate investment trust (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through SCG Realty Services Incorporated, an affiliate of the owner of the property. Fees for such services were 3.75% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to South West Properties, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on March 25, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Post Oak Ridge Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Post Oak Ridge Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Post Oak Ridge 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 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 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 Post Oak Ridge Apartments' revenues and expenses. In our opinion, the statement referred to above presents fairly, in all material respects, the revenues and operating expenses, as described in Note 2, of Post Oak Ridge Apartments for the year ended December 31, 1996, 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 11, 1997 POST OAK RIDGE APARTMENTS ------------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ YEAR ENDED DECEMBER 31, 1996 ---------------------------- REVENUES FROM RENTAL PROPERTY $ 2,988,522 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 278,931 Repairs and Maintenance 369,890 Utilities 264,985 Property Management Fees 110,378 Other Operating Expenses 286,213 ------------- TOTAL RENTAL PROPERTY EXPENSES 1,310,397 ------------- INCOME FROM RENTAL OPERATIONS $ 1,678,125 ============= The accompanying notes are an integral part of this statement. POST OAK RIDGE APARTMENTS -------------------------- NOTES TO THE STATEMENT OF RENTAL OPERATIONS ------------------------------------------- YEAR ENDED DECEMBER 31, 1996 ---------------------------- NOTE 1 - BASIS OF PRESENTATION Post Oak Ridge Apartments (The Property) consists of a 486 unit garden style residential apartment community located in Lewisville, a suburb northwest of Dallas, Texas together with the existing leases. The assets that comprise the Property have been held as an investment of Security Capital Pacific Trust, a Maryland real estate investment trust (the Owner), throughout the year ended December 31, 1996. 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 and mortgage interest expense 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. Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. NOTE 3 - PROPERTY MANAGEMENT FEES Property management services were provided through SCG Realty Services Incorporated, an affiliate of the owner of the property. Fees for such services were 3.75% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to South West Properties, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on March 27, 1997. 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. L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Trinity Place Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Trinity Place Apartments for the two months ended February 28, 1997, 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 25, 1997 TRINITY PLACE APARTMENTS ------------------------ STATEMENT OF RENTAL OPERATIONS ------------------------------ TWO MONTHS ENDED FEBRUARY 28, 1997 ---------------------------------- (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 486,537 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 25,674 Repairs and Maintenance 55,626 Utilities 21,704 Property Management Fees 24,122 Other Operating Expenses 28,152 ---------- TOTAL RENTAL PROPERTY EXPENSES 155,278 ---------- INCOME FROM RENTAL OPERATIONS $ 331,259 ========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Stoneybrooke Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Stoneybrooke Apartments for the two months ended February 28, 1997, 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 25, 1997 STONEYBROOKE APARTMENTS ----------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ TWO MONTHS ENDED FEBRUARY 28, 1997 ---------------------------------- (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 480,901 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 21,071 Repairs and Maintenance 54,682 Utilities 25,837 Property Management Fees 24,192 Other Operating Expenses 28,464 ----------- TOTAL RENTAL PROPERTY EXPENSES 154,246 ----------- INCOME FROM RENTAL OPERATIONS $ 326,655 =========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Tradewinds Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Tradewinds Apartments for the two months ended February 28, 1997, 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 25, 1997 TRADEWINDS APARTMENTS --------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ TWO MONTHS ENDED FEBRUARY 28, 1997 ---------------------------------- (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 433,803 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 29,341 Repairs and Maintenance 41,702 Utilities 31,391 Property Management Fees 21,761 Other Operating Expenses 30,864 ---------- TOTAL RENTAL PROPERTY EXPENSES 155,059 ---------- INCOME FROM RENTAL OPERATIONS $ 278,744 ========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Lotus Landing Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Lotus Landing Apartments for the six months ended June 30, 1997, 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 August 7, 1997 LOTUS LANDING APARTMENTS ------------------------ STATEMENT OF RENTAL OPERATIONS ------------------------------ SIX MONTHS ENDED JUNE 30, 1997 ------------------------------ (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 884,314 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 85,444 Repairs and Maintenance 152,819 Utilities 61,619 Property Management Fees 45,859 Other Operating Expenses 131,053 ---------- TOTAL RENTAL PROPERTY EXPENSES 476,794 ---------- INCOME FROM RENTAL OPERATIONS $ 407,520 ========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Anderson Mill Oaks Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Anderson Mill Oaks Apartments for the two months ended February 28, 1997, 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 11, 1997 ANDERSON MILL OAKS APARTMENTS ----------------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ TWO MONTHS ENDED FEBRUARY 28, 1997 ---------------------------------- (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 412,770 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 53,600 Repairs and Maintenance 41,585 Utilities 26,516 Property Management Fees 15,094 Other Operating Expenses 35,066 ------------ TOTAL RENTAL PROPERTY EXPENSES 171,861 ---------- INCOME FROM RENTAL OPERATIONS $ 240,909 ========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCONTANTS 4132 INNSLAKE DRIVE GLENN ALLEN, VIRGINIA 23060 PHONE: (804) 366-2626 FAX: (804) 346-9311 Independent Auditors' Report To the Owners of Post Oak Ridge Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Post Oak Ridge Apartments for the two months ended February 28, 1997, 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 11, 1997 POST OAK RIDGE APARTMENTS ------------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ TWO MONTHS ENDED FEBRUARY 28, 1997 ---------------------------------- (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 503,849 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 49,600 Repairs and Maintenance 63,308 Utilities 44,652 Property Management Fees 19,391 Other Operating Expenses 53,454 ---------- TOTAL RENTAL PROPERTY EXPENSES 230,405 ---------- INCOME FROM RENTAL OPERATIONS $ 273,444 ========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Accountants' Compilation Report To the Owners of Pineloch Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Pineloch Apartments for the four months ended April 30, 1997, 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 11, 1997 PINELOCH APARTMENTS STATEMENT OF RENTAL OPERATIONS FOUR MONTHS ENDED APRIL 30, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 897,791 ----------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 126,400 Repairs and Maintenance 92,878 Utilities 74,279 Property Management Fees 33,327 Other Operating Expenses 120,384 ----------- TOTAL RENTAL PROPERTY EXPENSES 447,268 ----------- INCOME FROM RENTAL OPERATIONS $ 450,523 =========== [L.P. MARTIN & COMPANY LETTERHEAD] A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Accountants' Compilation Report To the Owners of Seahawk Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Seahawk Apartments for the four months ended April 30, 1997, 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 11, 1997 SEAHAWK APARTMENTS STATEMENT OF RENTAL OPERATIONS FOUR MONTHS ENDED APRIL 30, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 531,957 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 64,332 Repairs and Maintenance 55,533 Utilities 22,982 Property Management Fees 20,069 Other Operating Expenses 58,760 ---------- TOTAL RENTAL PROPERTY EXPENSES 221,676 ---------- INCOME FROM RENTAL OPERATIONS $ 310,281 ========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Accountants' Compilation Report To the Owners of Orange Oaks Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Orange Oaks Apartments for the six months ended June 30, 1997, 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 August 7, 1997 ORANGE OAKS APARTMENTS STATEMENT OF RENTAL OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 612,597 ----------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 55,920 Repairs and Maintenance 98,354 Utilities 58,424 Property Management Fees 31,926 Other Operating Expenses 95,499 ----------- TOTAL RENTAL PROPERTY EXPENSES 340,123 ----------- INCOME FROM RENTAL OPERATIONS $ 272,474 =========== [L.P. MARTIN & COMPANY LETTERHEAD] A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Accountants' Compilation Report To the Owners of Mallards of Brandywine We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Mallards of Brandywine for the six months ended June 30, 1997, 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 August 7, 1997 MALLARDS OF BRANDYWINE STATEMENT OF RENTAL OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 474,841 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 39,926 Repairs and Maintenance 79,039 Utilities 14,603 Property Management Fees 24,406 Other Operating Expenses 70,450 ------------ TOTAL RENTAL PROPERTY EXPENSES 228,424 ------------ INCOME FROM RENTAL OPERATIONS $ 246,417 ============ [L.P. MARTIN & COMPANY LETTERHEAD] A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Accountants' Compilation Report To the Owners of Forest Creek Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Forest Creek Apartments for the six months ended June 30, 1997, 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 August 7, 1997 FOREST CREEK APARTMENTS ----------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ SIX MONTHS ENDED JUNE 30, 1997 ------------------------------ (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 262,886 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 25,084 Repairs and Maintenance 45,328 Utilities 20,188 Property Management Fees 13,383 Other Operating Expenses 46,462 --------- TOTAL RENTAL PROPERTY EXPENSES 150,445 --------- INCOME FROM RENTAL OPERATIONS $ 112,441 ========== L.P. MARTIN & COMPANY A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Accountants' Compilation Report To the Owners of Lakeside Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Lakeside Apartments for the six months ended June 30, 1997, 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 August 7, 1997 LAKESIDE APARTMENTS -------------------- STATEMENT OF RENTAL OPERATIONS ------------------------------ SIX MONTHS ENDED JUNE 30, 1997 ------------------------------ (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 708,537 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 43,081 Repairs and Maintenance 84,024 Utilities 52,096 Property Management Fees 36,745 Other Operating Expenses 122,180 ---------- TOTAL RENTAL PROPERTY EXPENSES 338,126 ---------- INCOME FROM RENTAL OPERATIONS $ 370,411 ========== UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) The following unaudited consolidated pro forma balance sheet at June 30, 1997 gives effect to the acquisition by the Company of a portfolio of five apartment communities acquired on July 1, 1997 and other acquisitions made by the Company during 1996 and 1997. Other than the five apartment communities acquired on July 1, 1997 all acquisitions are reflected in the Company's historical unaudited consolidated balance sheet at June 30, 1997 included in the Company's quarterly report on Form 10-Q for the quarter then ended. The unaudited consolidated pro forma statements of operations for the twelve months ended December 31, 1996 and the six months ended June 30, 1997 gives effect to the following 1997 acquisitions as if they had occurred at the beginning of each period presented: (i) the acquisition of Crosswinds Apartments (formerly Tradewinds Apartments), Stoney Pointe Apartments (formerly Stoneybrooke Apartments) and Dominion Trinity Place Apartments, (formerly Trinity Place Apartments) on February 28, 1997, (ii) the acquisition of Anderson Mill Oaks Apartments acquired on March 25, 1997, Oak Ridge Apartments (formerly Post Oak Ridge Apartments) acquired on March 27, 1997, and Green Oaks Apartments (formerly Pineloch Apartments) and Skyhawk Apartments (formerly Seahawk Apartments) acquired on May 8, 1997, and (iii) the acquisition of a portfolio of five apartment communities acquired on July 1, 1997 which consists of Lakeside Apartments, Mallards of Brandywine Apartments, Lotus Landing Apartments, Orange Oaks Apartments and Forest Creek Apartments. In addition, the unaudited consolidated pro forma statement of operations for the twelve months ended December 31, 1996 gives effect to the following acquisitions as if they had occurred on January 1, 1996: (i) the acquisition of Steeplechase Apartments and Westland Park Apartments on March 7, 1996 and May 9, 1996, respectively (as previously reported on Form 8-K dated October 31, 1996), (ii) the acquisition of a portfolio of 18 apartment communities on August 15, 1996 as previously reported on Form 8-K dated August 15, 1996, and (iii) the acquisition of 44 apartment communities owned by South West Property Trust Inc. on December 31, 1996 (as previously reported on Form 8-K dated December 31, 1996). The unaudited consolidated pro forma statements of operations have been prepared by the management of the Company. The unaudited 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 unaudited 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, 1996 (included in the Company's Form 10-K for the twelve months ended December 31, 1996) and its unaudited consolidated financial statements as of June 30, 1997 and for the six months then ended (included in the Company's Form 10-Q for the quarterly period ended June 30, 1997) and the accompanying notes thereto. 62 UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA BALANCE SHEETS JUNE 30, 1997 (In thousands, except for share data) (Unaudited)
Acquisition of Historical (1) Florida Portfolio Pro Forma ------------------- ------------------- ------------- Assets Real estate owned: Real estate held for investment $ 2,135,654 $ 36,000 (2) $ 2,171,654 Less: accumulated depreciation 181,662 181,662 --------------- ------------------- ---------------- 1,953,992 36,000 1,989,992 Real estate under development 62,716 62,716 Real estate held for disposition 85,431 85,431 Cash and cash equivalents 8,296 8,296 Other assets 33,220 33,220 -------------- ------------ ------------ Total assets $ 2,143,655 $ 36,000 $ 2,179,655 ============== ============= ============== Liabilities and shareholders' equity Notes payable-secured $ 389,106 $ $ 389,106 Notes payable-unsecured 626,242 36,000 (3) 662,242 Distributions payable to common shareholders 22,037 22,037 Accounts payable, accrued expenses and other liabilities 54,511 54,511 -------------- ------------ ------------ Total liabilities 1,091,896 36,000 1,127,896 Minority interest of unitholders in operating partnership 2,021 2,021 Shareholders' equity: Preferred stock, no par value; $25 liquidation preference, 25,000,000 shares authorized; 4,200,000 shares 9.25% Series A Cumulative Redeemable 105,000 105,000 6,000,000 shares 8.60% Series B Cumulative Redeemable 150,000 150,000 Common stock, $1 par value; 150,000,000 shares authorized 87,274,566 shares issued and outstanding (81,982,551 in 1996 87,275 87,275 Additional paid-in-capital 882,257 882,257 Notes receivable from officer-shareholders (9,198) (9,198) Distributions in excess of net income (165,596) (165,596) -------------- ------------ ------------ Total shareholders' equity 1,049,738 0 1,049,738 -------------- ------------ ------------ Total liabilities and shareholders' equity $ 2,143,655 $ 36,000 $ 2,179,655 ============== ============= ==============
63 See accompanying notes. UNITED DOMINION REALTY TRUST, INC. NOTES TO CONSOLIDATED PRO FORMA BALANCE SHEET JUNE 30, 1997 (UNAUDITED) Basis of Presentation The accompanying unaudited consolidated pro forma balance sheet assumes the completion as of June 30, 1997 of the acquisition by the Company on July 1, 1997 of a portfolio of five apartment communities containing 934 apartment homes, for an aggregate purchase price of approximately $36.0 million, including closing costs (the "Florida Portfolio") and additional borrowings under bank lines of credit of approximately $36.0 to fund the acquisition. (1) Represents the Company's Historical Balance Sheet contained in its Quarterly Report on Form 10-Q for the six months ended June 30, 1997. (2) Represents the acquisition by the Company of the Florida Portfolio for an aggregate purchase price of approximately $36.0 million, including closing costs. (3) Represents bank line borrowings by the Company of approximately $36.0 million at a weighted average interest rate of 6.41% (represents the Company's market interest rate for short-term bank borrowings at the time of acquisition) to fund the Florida Portfolio described in Note 2. 64 UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS TWELVE MONTHS ENDED DECEMBER 31, 1996 (In thousands, except per share data) (Unaudited)
Acquisition of Southeast Portfolio Acquisition of Acquisitions Previously Reported Southeast Portfolio Previously Reported on Form 8-K Dated Pro Forma on Form 8-K Dated Historical(1) August 15, 1996 (2) Adjustments October 31, 1997 (9) -------------- -------------------- -------------------- ------------------- Revenues Rental income $ 242,112 $ 12,917 $ 3,194 (3) $ 1,278 Interest, dividend and other non-property income 1,707 --------- ----------- ---------- --------- 243,819 12,917 3,194 1,278 Expenses Rental expenses: Utilities 17,735 881 218 (3) 50 Repairs and maintenance 40,665 1,462 361 (3) 139 Real estate taxes 17,348 972 240 (3) 114 Property management 5,575 636 (242) (3)(4) 69 Other operating expenses 23,510 965 321 (3)(5) 153 Depreciation of real estate owned 47,410 3,660 (6) Interest 50,843 6,789 (7) General and administrative 5,418 Other depreciation and amortization 1,299 Impairment loss on real estate held for dispositon 290 ------- ------- -------- ------- 210,093 4,916 11,347 525 ------- ------- -------- ------- Income before gains on sales of investments and minority interest of unitholders in operating partnership 33,726 8,001 (8,153) 753 Gains on sales of investments 4,346 ------ ------- -------- ------- Income before minority interest of unitholders in operating partnership 38,072 8,001 (8,153) 753 Minority interest of unitholders in operating partnersip (58) ------ ------- ------- ------- Income before extraordinary item 38,014 8,001 (8,153) 753 ======= ======== ======= ======= Dividends to preferred shareholders (9,713) ======= ======== ======= ======= Net income per common share before extraordinary item $ 0.49 ======== Dividends declared per common share $ 0.96 ======== Weighted average number of common shares outstanding 57,482 1,352 (8)
Acquisitions Acquisition of Previously Reported South West Acquisition of on Form 8-K Date Property Trust Inc South West October 31,1997 Previously Reported Property Trust Inc. Pro Forma Pro Forma on Form 8-K Dated Pro Forma Before 1997 Adjustments December 31, 1996 (14) Adjustments Acquisitions ------------------ --------------------- -------------------- ------------- Revenues Rental income $ 95 (10) $ 82,169 $ $ 341,765 Interest, dividend and other non-property income 976 2,683 -------- ---------- ---------- ---------- 95 83,145 0 344,448 Expenses Rental expenses: Utilities 4 (10) 5,492 24,380 Repairs and maintenance 10 (10) 10,818 53,455 Real estate taxes 8 (10) 8,631 27,313 Property management (30) (10)(11) 2,884 (1,089) (15) 7,803 Other operating expenses 11 (10) 10,418 35,378 Depreciation of real estate owned 252 (12) 13,447 2,015 (16) 66,784 Interest 499 (13) 14,126 (1,316) (17) 70,941 General and administrative 3,133 (1,438) (18) 7,113 Other depreciation and amortization 330 1,629 Impairment loss on real estate held for dispositon 290 -------- ------- -------- ------- 754 69,279 (1,828) 295,086 -------- ------- -------- ------- Income before gains on sales of investments and minority interest of unitholders in operating partnership (659) 13,866 1,828 49,362 Gains on sales of investments 4,346 ------- ------- -------- -------- Income before minority interest of unitholders in operating partnership (659) 13,866 1,828 53,708 Minority interest of unitholders in operating partnersip (58) ------- ------ ------ ------ Income before extraordinary item (659) 13,866 1,828 53,650 ======= ====== ====== ====== Dividends to preferred shareholders (9,713) ======= ====== ====== ====== Net income per common share before extraordinary item $ 0.54 ======= Dividends declared per common share $ 0.96 ====== Weighted average number of common shares outstanding 22,671 (19) 81,505
Acquisition Acquisition of Option Acquisition of of Florida Pro Forma Properties(20) Texas Properties(21) Portfolio(23) Adjustments Pro Forma -------------- --------------------- -------------- ------------ ---------- Revenues Rental income $ 7,862 $ 9,748 $ 5,724 $ $ 365,099 Interest, dividend and other non-property income 2,683 --------- --------- --------- --------- ---------- 7,862 9,748 5,724 0 367,782 Expenses Rental expenses: Utilities 394 707 389 25,870 Repairs and maintenance 796 1,246 872 56,369 Real estate taxes 457 1,124 499 29,393 Property management 390 362 287 (278) (24) 8,564 Other operating expenses 609 921 941 37,849 Depreciation of real estate owned 4,412 (25) 71,196 Interest 9,929 (26) 80,870 General and administrative 7,113 Other depreciation and amortization 1,629 Impairment loss on real estate held for dispositon 290 ------- ------ -------- -------- -------- 2,646 4,360 2,988 14,063 319,143 ------- ------ -------- -------- -------- Income before gains on sales of investments and minority interest of unitholders in operating partnership 5,216 5,388 2,736 (14,063) 48,639 Gains on sales of investments 4,346 ------- ------ -------- ------- ------- Income before minority interest of unitholders in operating partnership 5,216 5,388 2,736 (14,063) 52,985 Minority interest of unitholders in operating Partnersip -- -- -- (58) ------- ------ ------- -------- ------- Income before extraordinary item 5,216 5,388 2,736 (14,063) 52,927 ======= ====== ======== ======= ======= Dividends to preferred shareholders (9,713) ======= ====== ======== ======== ======= Net income per common share before extraordinary item $ 0.53 ======= Dividends declared per common share $ 0.96 ======= Weighted average number of common shares outstanding 81,505
65 See accompanying notes. UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS SIX MONTHS ENDED JUNE 30, 1997 (In thousands, except per share data) (Unaudited)
Acquisition Acquisition of Acquisition of of Option Texas Texas Properties Historical(1) Properties(20) Properties(21) Adjustments(22) Revenues Rental income $ 185,366 $ 1,401 $ 2,346 $ 473 Interest and other non-property income 388 ----------- --------- ---------- -------- 185,754 1,401 2,346 473 Expenses Rental expenses: Utilities 12,124 79 168 36 Repairs and maintenance 26,179 152 253 53 Real estate taxes 14,907 76 294 55 Property management 6,074 70 88 18 Other rental expenses 19,289 87 268 48 Real estate depreciation 35,289 Interest 38,919 General and administrative 3,653 Other depreciation and amortization 845 Impairment loss on real estate held for disposition -- ----------- --------- ---------- -------- 157,279 464 1,071 210 Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership 28,475 937 1,275 263 Gains on sales of investments 3,374 Minority interest of unitholder in operating partnership (59) ----------- --------- ---------- -------- Income before extraordinary item 31,790 937 1,275 263 =========== ========= ========== ======== Dividends to preferred shareholders (6,039) =========== ========= ========== ======== Net income per common share before extraordinary item $ 0.30 =========== Dividends declared per common share $.5050 =========== Weighted average number of commmon shares outstanding 85,967
66
Acquisition of Florida Pro Forma Portfolio(23) Adjustments Pro Forma Revenues Rental income $ 2,943 $ $ 192,529 Interest and other non-property income 388 -------------- ---------- ----------- 2,943 0 192,917 Expenses Rental expenses: Utilities 207 12,614 Repairs and maintenance 460 27,097 Real estate taxes 249 15,581 Property management 152 (92)(24) 6,310 Other rental expenses 466 20,158 Real estate depreciation 1,059 (25) 36,348 Interest 2,801 (26) 41,720 General and administrative 3,653 Other depreciation and amortization 845 Impairment loss on real estate held for disposition -- -------------- ---------- ----------- 1,534 3,768 164,326 Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership 1,409 (3,768) 28,591 Gains on sales of investments 3,374 Minority interest of unitholder in operating partnership (59) -------------- ---------- ----------- Income before extraordinary item 1,409 (3,768) 31,906 ============== ========== =========== Dividends to preferred shareholders (6,039) =========== Net income per common share before extraordinary item $ 0.30 =========== Dividends declared per common share $ .0505 =========== Weighted average number of commmon shares outstanding 85,967
See accompanying notes. UNITED DOMINION REALTY TRUST, INC. NOTES TO CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND THE TWELVE MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED) Basis of Presentation The unaudited consolidated pro forma statements of operations on this Form 8-K/A reflect the historical results of the Company adjusted to reflect the operations of: (i) Crosswinds Apartments (formerly Tradewinds Apartments), Stoney Pointe Apartments (formerly Stoneybrooke Apartments) and Dominion Trinity Place Apartments, formerly (Trinity Place Apartments) acquired on February 28, 1997, (the "Option Properties), (ii) Anderson Mill Oaks Apartments acquired on March 25, 1997, Oak Ridge Apartments (formerly Post Oak Ridge Apartments) acquired on March 27, 1997, Green Oaks Apartments (formerly Pineloch Apartments) and Skyhawk Apartments (formerly Seahawk Apartments) acquired on May 8, 1997, (the "Texas Properties"), (iii) a portfolio of five apartment communities containing 934 apartment homes acquired on July 1, 1997 (the "Florida Portfolio") which consist of Lakeside Apartments, Mallards of Brandywine Apartments, Lotus Landing Apartments , Orange Oaks Apartments and Forest Creek Apartments, (iv) 44 apartment communities containing 14,320 apartment homes (excluding 675 under development) owned by South West Property Trust Inc. ("South West") that were merged with and into UDR Western Residential, Inc., a wholly-owned subsidiary of the Company, in a statutory merger (the "Merger") on December 31, 1996, (as previously reported on Form 8-K dated December 31, 1996 and subsequently amended on Form 8-K/A No. 1 dated December 31, 1996 which was filed with the Securities and Exchange Commission on March 17, 1997), (v) Steeplechase Apartments and Westland Park Apartments acquired on March 7, 1996 and May 9, 1996, (as previously reported on Form 8-K dated October 31, 1996 and subsequently updated to reflect results of operations for the twelve months ended December 31, 1996 on Form 8-K/A No. 1 dated December 31, 1996 which was filed with the Securities and Exchange Commission on March 17, 1997) and (vi) 18 apartment communities containing 4,508 apartment homes acquired in an August 15, 1996 portfolio acquisition (the "Southeast Portfolio") (as previously reported on Form 8-K dated August 15, 1996 and subsequently updated to reflect the results of operations for the twelve months ended December 31, 1996 on Form 8-K/A No. 1 dated December 31, 1996 which was filed with the Securities and Exchange Commission on March 17, 1997). The above referenced acquisitions are shown as if the acquisitions occurred on the first day of each reporting period presented. The unaudited consolidated pro forma statements of operations on this Form 8-K/A assume the acquisition during the six months ended June 30, 1997 of 12 apartment communities containing 3,594 apartment homes for an aggregate purchase price of approximately $151.1 million, including closing costs as referenced in sections (i) through (iii) of the above paragraph (the "Properties"). These acquisitions are assumed to have been purchased with bank line borrowings aggregating $129.1 million with a weighted average interest rate of 6.26% and the assumption of two mortgage notes payable aggregating $22.0 million with a weighted average interest rate of 8.39%. For presentation purposes in the notes to the unaudited consolidated pro forma statements of operations for the twelve months ended December 31, 1996 on this Form 8-K/A, 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 the period 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. Also, the unaudited consolidated pro forma statements of operations for the twelve months ended December 31, 1996 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 the reporting period presented. The unaudited consolidated pro forma statements of operations for the twelve months ended December 31, 1997 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 67 $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 acquisition) per share for total consideration of $12.6 million. The unaudited consolidated pro forma statements of operations for the twelve months ended December 31, 1996 also assume the acquisition of the four development apartment communities contained in the Southeast Portfolio. The unaudited consolidated pro forma statements of operations for the twelve months ended December 31, 1996 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/A, 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. 68 *** 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/A, 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 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 consolidated pro forma statements of operations assume the Merger with South West occurred on January 1, 1996. The Merger was accounted for as a purchase in accordance with Accounting Principles Board No. 16. Assets and liabilities acquired were recorded at their fair values at December 31, 1996 and the results of operations are included from the date of acquisition. The unaudited consolidated pro forma statements of operations for the twelve months ended December 31, 1996 excludes extraordinary items of $10,677,000 included in the South West Consolidated Statement of Operations which primarily relate to costs directly attributable to the Merger and are therefore non-recurring. In connection with the Merger, the Company issued approximately 22.8 million shares of the Company's common stock at $14.125 per share for all of the outstanding common stock of South West for an aggregate equity value of approximately $322.1 million. The Company acquired real estate assets of $559.6 million plus other assets and cash of $8.4 million and $2.7 million, respectively. In addition, the Company assumed debt totaling approximately $225.0 million, including the following: (i) a renegotiated unsecured line of credit with an investment bank in the amount of $69.1 million and a weighted average interest rate of 6.3%, (ii) an unsecured note payable in the amount of $55.9 million bearing interest of 7.9%, (iii) two REMIC financings aggregating $94.9 million with a weighted average interest rate of 7.76%, (iv) one mortgage note payable in the amount of $5.1 million bearing interest of 8.5%, and (v) other liabilities aggregating $23.8 million. In addition to the Merger outlined above, the unaudited consolidated pro forma statements of operations assume 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). The unaudited consolidated pro forma statements of operations are not necessarily indicative of what the Company's results would have been for the six months ended June 30, 1997 and for the twelve months ended December 31, 1996 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 six months ended June 30, 1997 and its Annual Report on Form 10-K for the twelve months ended December 31, 1996. (2) Represents the actual results of operations for the Southeast Portfolio as previously reported in the unaudited combined results of operations for the six months ended June 30, 1996, as appearing in Form 8-K dated August 15, 1996. (3) Represents the pro forma results of operations for the Southeast Portfolio for 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 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 Note 2 above). (4) Reflects the net decrease in property management fees for the Southeast Portfolio. The Company internally managed its apartment properties at an assumed cost of approximately 2.5% of rental income (based upon 1995 actual information). The Company used 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. 69 (5) 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 for the 4,508 apartment units in Southeast Portfolio. The Southeast Portfolio had four properties containing 1,312 units under development during 1996. Since the four properties were under various stages of development during 1996, the weighted average units outstanding for the period presented is used in the calculation of the insurance pro forma adjustment. For the twelve months ended December 31, 1996 the weighted average units outstanding was 4,437 (3,196 non-development apartment homes and a weighted average 1,241 development apartment homes). The twelve months ended December 31, 1996 includes a pro forma adjustment for 227 out of 366 days. (6) Reflects the net adjustments to depreciation expense to record the Southeast Portfolio. For the non-development properties, 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: Allocation of Useful Life Depreciation Purchase Price In Years Adjustment* -------------- ----------- -------------- Building $ 96,637,354 35 $ 1,712,465 Other Improvements 7,296,003 7.1622 631,805 Land 11,739,024 N\A -- ----------- ------------- $115,672,381 $ 2,344,270 ============ ============= Reflects the net adjustments to depreciation expense to record the development properties in 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:
Weighted Average 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 ============= ============= =========== Total $182,641,251 $ 3,660,714 ============ ===========
* The twelve months ended December 31, 1996 includes a pro forma adjustment for 227 out of 366 days. ** Since the four development properties were under various stages of construction during 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. (7) Reflects the additional interest expense associated with the acquisition of the Southeast Portfolio. The additional interest expense associated with the non-development properties contained in the Southeast Portfolio is 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%. 70 Weighted Average Interest Expense Type of Debt Total Debt Interest Rate Adjustment** ------------ ------------ ---------------- --------------- Bank Lines $ 13,982,880 6.01% $ 521,214 Secured Debt* 75,175,680 7.36% 3,432,639 Note to Seller 13,902,591 7.10% 612,208 ------------ ------------- $103,061,151 $ 4,566,061 ============ ============= The additional interest expense associated with the acquisition of the development properties contained in the Southeast Portfolio is 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 and (iii) the issuance of a fixed-rate $11.1 million note to the Seller of the Southeast Portfolio bearing interest of 7.10%.
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 ============ =============== =========== Total $159,963,410 $ 6,788,893 ============= ===========
* The four development properties were under various stages of construction during 1996, therefore, 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. ** The twelve months ended December 31, 1996 includes an interest expense adjustment calculated on 227 days out of 366 days. (8) Represents the issuance of 1,679,840 shares of the Company's common stock to the Seller of the Southeast Portfolio at $13.50 per share. The Company issued 934,165 shares of common stock which were 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 the period presented and includes a pro forma adjustment for 227 out of 366 days. The Company issued 745,675 shares of common stock which were 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 the 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, 1996, based upon the weighted average balance of the purchase price outstanding during 1996, the weighted average days the stock related to the development properties is assumed to have been outstanding 175.92 (out of 366 days). (9) Represents the actual results of operations for Steeplechase Apartments and Westland Park Apartments that have been previously reported to the Securities and Exchange Commission on Form 8-K dated October 31, 1996. (10) 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 8, 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 9 (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 9 (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). 71 (11) Reflects the net decrease in property management fees for Westland Park and Steeplechase Apartments. The Company internally managed its apartment properties at an assumed cost of approximately 2.5% of rental income (based upon 1995 actual information). The Company used 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. (12) Reflects the net adjustments to depreciation expense to record Westland Park and Steeplechase Apartments acquisitions at the beginning of the 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: 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 twelve months ended December 31, 1996, includes a pro forma adjustment for 102.13 (66 days for Steeplechase Apartments and 129 days for Westland Park Apartments) out of 366 days. (13) Reflects the additional interest expense associated with the acquisition of Westland 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. 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 ============= ============= * The interest expense adjustment for Westland Park and Steeplechase Apartments is for 129 and 66 days, respectively (based on a 366 day year). (14) Represents the historical results of operations of South West Property Trust Inc. for the twelve months ended December 31, 1996, as previously reported on Form 8-K dated December 31,1996 and subsequently amended on Form 8-K/A Amendment No. 1 dated December 31, 1996 which was filed with the Securities and Exchange Commission on March 17, 1997. Certain reclassifications have been made to South West's historical statements of operations to conform to the Company's financial statement presentations. (15) Reflects the net estimated reduction of property management costs of $1,089,000 for the twelve months ended December 31, 1996 based upon the identified historical costs for those items which are anticipated to be eliminated or reduced as a result of the Merger, as follows (in thousands): Net reduction in salary, benefits and occupancy costs $ 497 Net reduction in travel, entertainment & other 141 Net reduction in other expenses 451 ------- Pro forma adjustment $ 1,089 ======= (16) Represents the net increase in depreciation of real estate owned as a result of recording the South West real estate assets at fair value versus historical cost. Depreciation is computed on a straight-line basis over the estimated useful lives of the related assets which have an estimated 72 weighted average useful life of approximately 27.6 years. 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. Calculation of fair value of depreciable real estate assets at December 31, 1996 (in thousands): Purchase price $ 572,281 Less: Purchase price allocated to cash and other assets (12,690) Purchase price allocated to land (104,044) Purchase price allocated to real estate under development* (28,623) ----------- Pro forma basis of South West's depreciable real estate held for investment at fair value assets $ 426,924 =========== * At December 31, 1996 South West had one apartment community containing 315 apartment homes and three additions to existing properties which will total 360 apartment homes under development. The historical cost of real estate under development is assumed to be at fair value. Calculation of depreciation of real estate owned for the twelve months ended December 31, 1996 (in thousands): Depreciation expense based upon an estimated weighted average useful life of approximately 27.6 years $ 15,462 Less historical South West depreciation of real estate owned (13,447) --------- Pro forma adjustment $ 2,015 ======== (17) Represents the estimated net adjustment to interest expense as a result of the Merger for the twelve months ended December 31, 1996, as follows (in thousands):
To adjust amortization of South West's deferred financing costs which were eliminated in connection with the Merger $ (1,295) To adjust the amortization of the premium required to mark South West's notes payable to fair value (278) To reflect the additional borrowings of $4.1 million of variable-rate bank line borrowings used to fund the Merger costs (at current market interest rates available to the Company of 6.3%) 257 ----------- Pro forma adjustment $ (1,316) ===========
(18) Represents the net reduction to general and administrative costs of $1,438,000 for the twelve months ended December 31, 1996 based upon the identified historical costs of certain items which are anticipated to be eliminated or reduced as a results of the Merger, as follows (in thousands): Net reduction in salary, benefits and occupancy costs $ 659 Net reduction in duplication of public company expenses 178 Net reduction in other expenses 601 ------ $ 1,438 ====== 73 (19) The pro forma weighted average shares outstanding for the twelve months ended December 31, 1996 is computed as follows (in thousands): South West's historical weighted average common shares outstanding 20,937 Plus: effect of South West vested stock options converted upon Merger 211 Less: dilutive effect of South West stock options To be eliminated in the Merger (220) ------ South West adjusted weighted average common shares outstanding 20,928 ====== The Company's pro forma weighted average common shares outstanding 58,834 Issuance of the Company's common stock at an exchange ratio of 1.0833 for all of the South West common stock in connection with the Merger ** 22,671 ------- Pro forma shares 81,505 ====== ** Weighted average historical South West common shares outstanding multiplied by the exchange ratio. (20) Represents the actual results of operations of the Option Properties as reported elsewhere herein. (21) Represents the actual results of operations of the Texas Properties as reported elsewhere herein. (22) Represents operations of Oak Ridge Apartments (for the 26 day period from March 1, 1997 to March 26, 1997) and Anderson Mill Oaks Apartments (for the 24 day period from March 1, 1997 to March 24, 1997), which represents the period the properties were not owned by the Company during the six month period ended June 30, 1997 (based on the operating statements of the properties for the stub period January 1, 1997 to February 28, 1997). The unaudited combined statements of rental operations were for the stub period January 1, 1997 to February 28, 1997. Represents operations of Pineloch Apartments and Seahawk Apartments, (for the 7 day period from May 1, 1997 to May 7, 1997), which represents the period the properties were not owned by the Company during the six month period ended June 30, 1997 (based on the operating statements of the properties for the stub period January 1, 1997 to April 30, 1997). The unaudited combined statements of rental operations were for the stub period January 1, 1997 to April 30, 1997. (23) Represents the actual results of operations of the Florida Portfolio as reported elsewhere herein. (24) Reflects the net reduction in property management fees for the Properties as reported elsewhere herein. The Company internally manages its apartment portfolio at an assumed cost of approximately 3.4% of rental income (based on 1997 actual information for the six months ended June 30, 1997). The Company uses 96% of the amount reported as rental income in calculating the property management fee, as approximately 4% (based on 1997 actual information for the six months ended June 30, 1997) of the amount reported as rental income is assumed to be other income which is not subject to management fee. (25) Reflects the net adjustments to record depreciation expense for the Properties, 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 Company's policy is to record a full month of depreciation in the month of acquisition. The weighted average life of other improvements is approximately 7.67 years based upon the initial cost of the Properties of $151.1 million. The allocation and useful lives are as follows (in thousands of dollars): 74
Twelve Month Six Month Useful Life Depreciation Depreciation Purchase Price In Years Expense Adjustments Expense Adjustment* -------------- ----------- ------------------- ------------------- Buildings $ 118,714 35 $ 3,392 $ 814 Other Improvements 7,822 7.67 1,020 245 Land 24,612 n/a -- -- --------- -------- ------- Total $ 151,148 $ 4,412 $ 1,059 ========= ======== =======
* The six months ended June 30, 1997, includes a pro forma adjustment for 2.88 months (1 month for the Option Properties, 2 months for Anderson Mill Oaks and Oak Ridge Apartments, 4 months for Pineloch Apartments and Seahawk Apartments, and 6 months for the Florida Portfolio) out of 12 months. (26) Reflects the additional interest expense associated with the Properties as reported elsewhere herein which consists of the following: (i) variable-rate bank debt aggregating approximately $129.1 million used to fund the acquisitions at assumed interest rates equal to market rates in effect at the time of each acquisition with a weighted average interest rate of 6.26% and (ii) the assumption of approximately $22.0 million of fixed-rate mortgage debt with a weighted average interest rate of 8.39% as outlined below (in thousands of dollars):
Twelve Month Six Month Weighted Average Interest Expense Interest Expense Acquisition Type of Debt Amount Interest Rate Adjustment * Adjustment ------------------ ------------ ------ ---------------- ---------------- ---------------- Option Properties Bank Lines $ 36,774 6.058% $ 2,228 $ 360 ** Option Properties Secured Debt 22,063 8.389% 1,851 299 ** Texas Properties Bank Lines 56,311 6.291% 3,542 998 *** Florida Portfolio Bank Lines 36,000 6.410% 2,308 1,144 **** ---------- --------- ----- $ 151,148 $ 9,929 $ 2,801 ========== ========= =======
* The twelve months ended December 31, 1996 includes a pro forma adjustment for the full year. ** The six months ended June 30, 1997, includes a pro forma adjustment for 59 out of 365 days. *** The six months ended June 30, 1997, includes a pro forma adjustment for approximately 103 out of 365 days. **** The six months ended June 30, 1997, includes a pro forma adjustment for 181 out of 365 days. 75 EX-23 2 EXHIBIT 23 [LETTERHEAD] L.P. MARTIN & COMPANY 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 348-2828 FAX: (804) 346-9311 CONSENT OF L.P. MARTIN & COMPANY, P.C., 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. 333-27221, 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, Registration Statement Form S-8 No. 33-58201 and Registration Statement Form S-8 No. 333-32829 of United Dominion Realty Trust, Inc. of our report dated June 11, 1997, with respect to the statement of rental operations of Anderson Mill Oaks Apartments for the year ended December 31, 1996, our report dated June 11, 1997, with respect to the statement of rental operations of Pineloch Apartments for the year ended December 31, 1996, our report dated June 11, 1997, with respect to the statement of rental operations of Post Oak Ridge Apartments for the year ended December 31, 1996, our report dated June 11, 1997, with respect to the statement of rental operations of Seahawk Apartments for the year ended December 31, 1996, our report dated June 25, 1997, with respect to the statement of rental operations of Tradewinds Apartments for the year ended December 31, 1996, our report dated June 25, 1997, with respect to the statement of rental operations of Trinity Place Apartments for the year ended December 31, 1996, our report dated June 25, 1997, with respect to the statement of rental operations of Stoneybrooke Apartments for the year ended December 31, 1996, our report dated August 7, 1997, with respect to the statement of rental operations of Forest Creek Apartments for the year ended December 31, 1996, our report dated August 7, 1997, with respect to the statement of rental operations of Lakeside Apartments for the year ended December 31, 1996, our report dated August 7, 1997, with respect to the statement of rental operations of Lotus Landing Apartments for the year ended December 31, 1996, our report dated August 7, 1997, with respect to the statement of rental operations of Mallards of Brandywine Apartments for the year ended December 31, 1996, and our report dated August 7, 1997, with respect to the statement of rental operations of Orange Oaks Apartments for the year ended December 31, 1996, included in this Form 8-K/A, Amendment to Application or Report on Form 8-K dated July 1, 1997. /s/ L.P. Martin & Company, P.C. L.P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia September 15, 1997 -----END PRIVACY-ENHANCED MESSAGE-----