-----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, AlxqG+D4RTPFtnZAkToOeNd9DaswxYSDsKkdFUQrh9bLd6/blLmGjBFCwX1EF070 sLYGFGHmMN9OL+oisR8nOw== 0000916641-97-001213.txt : 19980102 0000916641-97-001213.hdr.sgml : 19980102 ACCESSION NUMBER: 0000916641-97-001213 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971021 ITEM INFORMATION: FILED AS OF DATE: 19971231 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: 97747645 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 8-K/A 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 October 21, 1997, which was filed with the Securities and Exchange Commission on November 5, 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) /s/ Jerry A. Davis ---------------------------------- Jerry A. Davis Vice President and Chief Accounting Officer Date: December 31, 1997 ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits Description Location (a) Financial Statements of Real Estate Properties Acquired 3 through 27 (b) Pro Forma Financial Information 28 through 43 (c) Exhibits (23) Consents of Independent Public Accountants 44 BAMMELWOOD APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 [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 Auditors' Report To the Owners of Bammelwood Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Bammelwood Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Bammelwood 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 Bammelwood 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 Bammelwood 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 November 20, 1997 BAMMELWOOD APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 1,126,392 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 152,586 Repairs and Maintenance 228,728 Utilities 157,434 Property Management Fees 44,991 Other Operating Expenses 188,099 ------------ TOTAL RENTAL PROPERTY EXPENSES 771,838 ------------ INCOME FROM RENTAL OPERATIONS $ 354,554 ============ The accompanying notes are an integral part of this statement. BAMMELWOOD APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Bammelwood Apartments (The Property) consists of a 226 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 Bammelwood 228 L. P., a Texas 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 Judwin Properties, Inc., an affiliate of the owner of the property. Fees for such services were 4% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to United Dominion Realty, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on October 30, 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. BRAESRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 [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 Auditors' Report To the Owners of Braesridge Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Braesridge Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Braesridge 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 Braesridge 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 Braesridge 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 November 20, 1997 BRAESRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 2,889,746 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 286,778 Repairs and Maintenance 482,932 Utilities 222,924 Property Management Fees 100,031 Other Operating Expenses 494,164 ------------ TOTAL RENTAL PROPERTY EXPENSES 1,586,829 ------------ INCOME FROM RENTAL OPERATIONS $ 1,302,917 ============ The accompanying notes are an integral part of this statement. BRAESRIDGE APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Braesridge Apartments (The Property) consists of a 545 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 Braesridge 305 Associates, L. P., a Texas 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 Judwin Properties, Inc., an affiliate of the owner of the property. Fees for such services were 3.5% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to United Dominion Realty, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on September 26, 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. CAMINO VILLAGE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 [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 Auditors' Report To the Owners of Camino Village Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Camino Village Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Camino Village 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 Camino Village 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 Camino Village 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 November 20, 1997 CAMINO VILLAGE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 2,848,822 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 294,099 Repairs and Maintenance 481,717 Utilities 161,379 Property Management Fees 113,140 Other Operating Expenses 354,194 ------------ TOTAL RENTAL PROPERTY EXPENSES 1,404,529 ------------ INCOME FROM RENTAL OPERATIONS $ 1,444,293 ============ The accompanying notes are an integral part of this statement. CAMINO VILLAGE APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Camino Village Apartments (The Property) consists of a 449 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 Camino Village Associates, Ltd., a Texas 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 Judwin Properties, Inc., an affiliate of the owner of the property. Fees for such services were 4% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to United Dominion Realty, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on November 20, 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. PECAN GROVE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 [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 Auditors' Report To the Owners of Pecan Grove Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Pecan Grove Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Pecan Grove 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 Pecan Grove 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 Pecan Grove 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 November 20, 1997 PECAN GROVE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 3,524,526 ----------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 473,624 Repairs and Maintenance 593,883 Utilities 215,818 Property Management Fees 176,521 Other Operating Expenses 451,183 ----------- TOTAL RENTAL PROPERTY EXPENSES 1,911,029 ----------- INCOME FROM RENTAL OPERATIONS $ 1,613,497 =========== The accompanying notes are an integral part of this statement. PECAN GROVE APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Pecan Grove Apartments (The Property) consists of a 580 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 Stanford Capital Realty Fund, Ltd., a Texas 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 Judwin Properties, 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, L. P., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on September 26, 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. WATERSIDE AT IRONBRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 [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 Auditors' Report To the Owners of Waterside at Ironbridge Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Waterside at Ironbridge Apartments for the year ended December 31, 1996. This financial statement is the responsibility of the management of Waterside at Ironbridge 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 Waterside at Ironbridge 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 Waterside at Ironbridge 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 November 14, 1997 WATERSIDE AT IRONBRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 REVENUES FROM RENTAL PROPERTY $ 2,092,272 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 105,706 Repairs and Maintenance 209,464 Utilities 115,615 Property Management Fees 83,809 Other Operating Expenses 150,664 ------------- TOTAL RENTAL PROPERTY EXPENSES 665,258 ------------- INCOME FROM RENTAL OPERATIONS $ 1,427,014 ============= The accompanying notes are an integral part of this statement. WATERSIDE AT IRONBRIDGE APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1996 NOTE 1 - BASIS OF PRESENTATION Waterside at Ironbridge Apartments (The Property) consists of a 265 unit garden style residential apartment community located in Richmond, Virginia together with the existing leases. The assets that comprise the Property have been held as an investment of Nissen Waterside Limited Partnership, a Maryland 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 Great Atlantic. Fees for such services were 4% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to United Dominion Realty Trust, Inc. on September 29, 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. BAMMELWOOD APARTMENTS STATEMENT OF RENTAL OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 [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 Bammelwood Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Bammelwood Apartments for the nine months ended September 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 November 20, 1997 BAMMELWOOD APARTMENTS STATEMENT OF RENTAL OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 812,783 ---------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 114,701 Repairs and Maintenance 151,577 Utilities 111,800 Property Management Fees 32,445 Other Operating Expenses 135,455 ---------- TOTAL RENTAL PROPERTY EXPENSES 545,978 ---------- INCOME FROM RENTAL OPERATIONS $ 266,805 ========== BRAESRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS EIGHT MONTHS ENDED AUGUST 31, 1997 [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 Braesridge Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Braesridge Apartments for the eight months ended August 31, 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 November 20, 1997 RAESRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS EIGHT MONTHS ENDED AUGUST 31, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 1,895,356 ----------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 191,595 Repairs and Maintenance 343,590 Utilities 151,530 Property Management Fees 66,380 Other Operating Expenses 317,848 ----------- TOTAL RENTAL PROPERTY EXPENSES 1,070,943 ----------- INCOME FROM RENTAL OPERATIONS $ 824,413 =========== CAMINO VILLAGE APARTMENTS STATEMENT OF RENTAL OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 [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 Camino Village Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Camino Village Apartments for the nine months ended September 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 November 20, 1997 CAMINO VILLAGE APARTMENTS STATEMENT OF RENTAL OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 2,206,052 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 221,546 Repairs and Maintenance 386,236 Utilities 129,947 Property Management Fees 84,808 Other Operating Expenses 256,708 ------------ TOTAL RENTAL PROPERTY EXPENSES 1,079,245 ------------ INCOME FROM RENTAL OPERATIONS $ 1,126,807 ============ PECAN GROVE APARTMENTS STATEMENT OF RENTAL OPERATIONS EIGHT MONTHS ENDED AUGUST 31, 1997 [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 Pecan Grove Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Pecan Grove Apartments for the eight months ended August 31, 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 November 20, 1997 PECAN GROVE APARTMENTS STATEMENT OF RENTAL OPERATIONS EIGHT MONTHS ENDED AUGUST 31, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 2,402,678 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 314,377 Repairs and Maintenance 393,708 Utilities 138,262 Property Management Fees 118,983 Other Operating Expenses 311,051 ------------ TOTAL RENTAL PROPERTY EXPENSES 1,276,381 ------------ INCOME FROM RENTAL OPERATIONS $ 1,126,297 ============ WATERSIDE AT IRONBRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS EIGHT MONTHS ENDED AUGUST 31, 1997 [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 Waterside at Ironbridge Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization and income taxes of Waterside at Ironbridge Apartments for the eight months ended August 31, 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 November 14, 1997 WATERSIDE AT IRONBRIDGE APARTMENTS STATEMENT OF RENTAL OPERATIONS EIGHT MONTHS ENDED AUGUST 31, 1997 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 1,455,721 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 87,283 Repairs and Maintenance 142,760 Utilities 76,804 Property Management Fees 58,229 Other Operating Expenses 112,081 ------------ TOTAL RENTAL PROPERTY EXPENSES 477,157 ------------ INCOME FROM RENTAL OPERATIONS $ 978,564 ============ UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED) The following unaudited consolidated pro forma balance sheet at September 30, 1997, gives effect to the acquisition of Bammelwood Apartments acquired on October 30, 1997 and Camino Village Apartments acquired on November 20, 1997 and other acquisitions made by United Dominion Realty Trust Inc. and its subsidiaries, including United Dominion Realty, L.P., its Operating Partnership, (collectively, the "Company") during 1996 and 1997. Other than Bammelwood Apartments and Camino Village Apartments, all acquisitions are reflected in the Company's historical unaudited consolidated balance sheet at September 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 nine months ended September 30, 1997 give 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, (collectively the "Option Properties"), (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, (collectively the "Texas Properties"), (iii) the July 1, 1997, portfolio acquisition of five apartment communities which consists of Lakeside Apartments, Mallards of Brandywine Apartments, Lotus Landing Apartments, Orange Oaks Apartments and Forest Creek Apartments, (collectively the "Florida Portfolio"), (iv) the acquisition of Greenhouse Patio Apartments (formerly Pecan Grove Apartments) and Braesridge Apartments acquired on September 26, 1997, Bammelwood Apartments acquired on October 30, 1997 and Camino Village Apartments acquired on November 20, 1997, (collectively the "Houston Portfolio"), and (v) the acquisition of Waterside at Ironbridge Apartments on September 29, 1997. 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 (the "Southeast Portfolio") 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. ("South West") 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 September 30, 1997 and for the nine months then ended (included in the Company's Form 10-Q for the quarterly period ended September 30, 1997) and the accompanying notes thereto. UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA BALANCE SHEETS September 30, 1997 (In thousands, except for share data) (Unaudited)
Acquisition of Bammelwood and Assets Historical (1) Camino Village Pro Forma ----------------- ---------------- ----------------- Real estate owned: Real estate held for investment $ 2,217,063 $ 19,457 (2) $ 2,236,520 Less: accumulated depreciation 200,538 200,538 ------------- ---------- ------------- 2,016,525 19,457 2,035,982 Real estate under development 33,628 33,628 Real estate held for disposition 131,576 131,576 Cash and cash equivalents 5,383 5,383 Other assets 65,639 65,639 ------------- ---------- ------------- Total assets $ 2,252,751 $ 19,457 $ 2,272,208 ============= ========== ============= Liabilities and shareholders' equity Notes payable-secured $ 412,624 $ 11,671 (3) $ 424,295 Notes payable-unsecured 687,521 3,698 (3) 691,219 Distributions payable to common shareholders 22,261 22,261 Accounts payable, accrued expenses and other liabilities 62,361 62,361 ------------- ---------- ------------- Total liabilities 1,184,767 15,369 1,200,136 Minority interest of unitholders in operating partnership 10,482 4,088 (3) 14,570 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 88,161,626 shares issued and outstanding (81,982,551 in 1996) 88,162 88,162 Additional paid-in capital 893,701 893,701 Notes receivable from officer-shareholders (9,168) (9,168) Distributions in excess of net income (170,193) (170,193) ------------ ---------- -------------- Total shareholders' equity 1,057,502 0 1,057,502 ------------ ---------- -------------- Total liabilities and shareholders' equity $ 2,252,751 $ 19,457 $ 2,272,208 ============ ========== ==============
See accompanying notes. UNITED DOMINION REALTY TRUST, INC. NOTES TO CONSOLIDATED PRO FORMA BALANCE SHEET SEPTEMBER 30, 1997 (UNAUDITED) Basis of Presentation The accompanying unaudited consolidated pro forma balance sheet gives pro forma effect as of September 30, 1997, of the acquisition by the Company of Bammelwood Apartments on October 30, 1997 and Camino Village Apartments on November 20, 1997 for an aggregate purchase price of approximately $19.5 million, including closing costs. The acquisitions were funded with additional borrowings under bank lines of credit of approximately $3.7 million, the assumption of two mortgage notes payable aggregating $11.7 million and the issuance of Operating Partnership Units with an aggregate value of $4.1 million. (1) Represents the Company's Historical Balance Sheet contained in its Quarterly Report on Form 10-Q for the nine months ended September 30, 1997. (2) Represents the acquisition by the Company of Bammelwood Apartments and the Camino Village Apartments on October 30, 1997 and November 20, 1997, respectively, for an aggregate purchase price of approximately $19.5 million, including closing costs. (3) Represents the financing of Bammelwood Apartments and Camino Village Apartments which consists of the following: (i) bank line borrowings by the Company of approximately $3.7 million at a weighted average interest rate of 6.09% (represents the Company's weighted average market interest rate for short-term bank borrowings at the time of the acquisitions), (ii) the assumptions two mortgage notes payable aggregating $11.7 million bearing a weighted average interest of 9.0% and (iii) the issuance of 277,132 Operating Partnership Units at a value of $14.75 per Unit for an aggregate value of $4.1 million. 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, 1996 (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 disposition 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 partnership (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 Dated Property Trust Inc South West October 31, 1996 Previously Reported Property Trust Inc Pro Forma on Form 8-K Dated Pro Forma Adjustments December 31, 1996 (14) Adjustments ------------------- ---------------------- ----------------- Revenues Rental income $ 95 (10) $ 82,169 $ Interest, dividend and other non-property income 976 ------------------- ---------------------- ----------------- 95 83,145 0 Expenses Rental expenses: Utilities 4 (10) 5,492 Repairs and maintenance 10 (10) 10,818 Real estate taxes 8 (10) 8,631 Property management (30)(10)(11) 2,884 (1,089) (15) Other operating expenses 11 (10) 10,418 Depreciation of real estate owned 252 (12) 13,447 2,015 (16) Interest 499 (13) 14,126 (1,316) (17) General and administrative 3,133 (1,438) (18) Other depreciation and amortization 330 Impairment loss on real estate held for disposition ------------------- ---------------------- ----------------- 754 69,279 (1,828) ------------------- ---------------------- ----------------- Income before gains on sales of investments and minority interest of unitholders in operating partnership (659) 13,866 1,828 Gains on sales of investments ------------------- ---------------------- ----------------- Income before minority interest of unitholders in operating partnership (659) 13,866 1,828 Minority interest of unitholders in operating partnership ------------------- ---------------------- ----------------- Income before extraordinary item (659) 13,866 1,828 =================== ====================== ================= Dividends to preferred shareholders =================== ====================== ================= Net income per common share before extraordinary item Dividends declared per common share Weighted average number of common shares outstanding 22,671 (19) Pro Forma Acquisition Acquisition Acquisition Before 1997 of Option of Texas of Florida Acquisitions Properties (20) Properties (21) Portfolio (23) -------------- ----------------- ---------------- -------------- Revenues Rental income $ 341,765 $ 7,862 $ 9,748 $ 5,724 Interest, dividend and other non-property income 2,683 -------------- ----------------- ---------------- -------------- 344,448 7,862 9,748 5,724 Expenses Rental expenses: Utilities 24,380 394 707 389 Repairs and maintenance 53,455 796 1,246 872 Real estate taxes 27,313 457 1,124 499 Property management 7,803 390 362 287 Other operating expenses 35,378 609 921 941 Depreciation of real estate owned 66,784 Interest 70,941 General and administrative 7,113 Other depreciation and amortization 1,629 Impairment loss on real estate held for disposition 290 -------------- ----------------- ---------------- -------------- 295,086 2,646 4,360 2,988 -------------- ----------------- ---------------- -------------- Income before gains on sales of investments and minority interest of unitholders in operating partnership 49,362 5,216 5,388 2,736 Gains on sales of investments 4,346 -------------- ----------------- ---------------- -------------- Income before minority interest of unitholders in operating partnership 53,708 5,216 5,388 2,736 Minority interest of unitholders in operating partnership (58) -- -- -------------- ----------------- ---------------- -------------- Income before extraordinary item 53,650 5,216 5,388 2,736 ============== ================= ================ ============== 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 81,505 Pro Forma as Previously Reported on Form 8-K/A dated July 1, 1997 Pro and filed on Acquisition Acquisition of Form September 15, 1997 of Houston Waterside at Pro Forma Adjustments Pro Forma Portfolio (27) Ironbridge (28) Adjustments Pro Forma ------------ ------------------ ------------- ---------------- ------------- --------- Revenues Rental income $ $ 365,099 $ 10,389 $ 2,092 $ $ 377,580 Interest, dividend and other non-property income 2,683 2,683 -------------- ------------- ------------- ------------ ------------ ---------- 0 367,782 10,389 2,092 - 380,263 Expenses Rental expenses: Utilities 25,870 758 116 26,744 Repairs and maintenance 56,369 1,787 209 58,365 Real estate taxes 29,393 1,207 106 30,706 Property management (278) (24) 8,564 435 84 (135) (30) 8,948 Other operating expenses 37,849 1,487 150 39,486 Depreciation of real estate owned 4,412 (25) 71,196 2,024 (31) 73,220 Interest 9,929 (26) 80,870 4,239 (32) 85,109 General and administrative 7,113 7,113 Other depreciation and amortization 1,629 1,629 Impairment loss on real estate held for disposition 290 290 -------------- ------------- ------------- ------------ ------------ ---------- 14,063 319,143 5,674 665 6,128 331,610 -------------- -------------- ------------- ------------ ------------ ---------- Income before gains on sales of investmnts and minority interest of unitholders in operating partnership (14,063) 48,639 4,715 1,427 (6,128) 48,653 Gains on sales of investments 4,346 - - - 4,346 -------------- ------------ ------------- ------------ ------------ --------- Income before minority interest of unitholders in operating partnership (14,063) 52,985 4,715 1,427 (6,128) 52,999 Minority interest of unitholders in operating partnership - (58) (524) (33) (582) -------------- ------------- ------------- ------------ ------------ --------- Income before extraordinary item (14,063) 52,927 4,715 1,427 (6,652) 52,417 ============== ============= ============= ============ ============ ========= Dividends to preferred shareholders (9,713) (9,713) =============== ============= ============= ============ ============ ========= Net income per common share before extraordinary item $ 0.53 $ 0.52 ============= ============ Dividends declared per common share $ 0.96 $ 0.96 ============= ============ Weighted average number of shares outstanding 81,505 81,505
See accompanying notes. UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1997 (In thousands, except per share data) (Unaudited)
Acquisition Acquisition of Acquisition of Acquisition of Option Texas Texas Properties of Florida Historical (1) Properties (20) Properties (21) Adjustments (22) Portfolio (23) -------------- --------------- ----------------- ----------------- ---------------- Revenues Rental income $ 284,182 $ 1,401 $ 2,346 $ 473 $ 2,943 Interest and other non-property income 867 -------------- --------------- ----------------- ----------------- ---------------- 285,049 1,401 2,346 473 2,943 Expenses Rental expenses: Utilities 18,290 79 168 36 207 Repairs and maintenance 40,707 152 253 53 460 Real estate taxes 23,014 76 294 55 249 Property management 9,154 70 88 18 152 Other rental expenses 30,051 87 268 48 466 Real estate depreciation 55,029 Interest 58,265 General and administrative 5,271 Other depreciation and amortization 1,339 Impairment loss on real estate held for disposition 1,400 -------------- --------------- ----------------- ----------------- ---------------- 242,520 464 1,071 210 1,534 Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership 42,529 937 1,275 263 1,409 Gains on sales of investments 12,682 Minority interest of unitholders in operating partnership (112) -------------- --------------- ----------------- ----------------- ---------------- Income before extraordinary item 55,099 937 1,275 263 1,409 ============== =============== ================= ================= ================ Dividends to preferred shareholders (11,692) ============== =============== ================= ================= ================ Net income per common share before extraordinary item $ 0.50 ============== Dividends declared per common share $ 0.7575 ============== Weighted average number of common shares outstanding 86,602 Option Properties, Texas Properties Acquisition of and Florida Houston Properties Portfolio Acquisition Acquisition of and Waterside at Pro Forma of Houston Waterside at Ironbridge Adjustments Portfolio (27) Ironbridge (28) Adjustments (29) Revenues ---------------- -------------- ---------------- ------------------- Rental income Interest and other non-property income $ $ 7,317 $ 1,456 $ 634 ---------------- -------------- ---------------- ------------------- 0 7,317 1,456 634 Expenses Rental expenses: Utilities Repairs and maintenance 532 77 40 Real estate taxes 1,275 143 96 Property management 842 87 65 Other rental expenses (92) (24) 303 58 27 Real estate depreciation 1,021 112 81 Interest 1,059 (25) General and administrative 2,801 (26) Other depreciation and amortization Impairment loss on real estate held for disposition ---------------- ------------ ---------------- ------------------ 3,768 3,973 477 309 Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership Gains on sales of investments (3,768) 3,344 979 325 Minority interest of unitholders in operating partnership ---------------- ------------ ---------------- ------------------ Income before extraordinary item (3,768) 3,344 979 325 ================ ============ ================ ================== Dividends to preferred shareholders ================ ============= ================ ================== Net income per common share before extraordinary item Dividends declared per common share Weighted average number of common shares outstanding Pro Forma Adjustments Pro Forma --------------- -------------- Revenues Rental income $ $ 300,752 Interest and other non-property income 867 --------------- -------------- 0 301,619 Expenses Rental expenses: Utilities 19,429 Repairs and maintenance 43,139 Real estate taxes 24,682 Property management (99)(30) 9,679 Other rental expenses 32,134 Real estate depreciation 1,399 (31) 57,487 Interest 3,146 (32) 64,212 General and administrative 5,271 Other depreciation and amortization 1,399 Impairment loss on real estate held 1,400 for disposition -------------- -------------- 4,446 258,772 Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership (4,446) 42,847 Gains on sales of investments 12,682 Minority interest of unitholders in operating partnership (331)(33) (443) --------------- -------------- (4,777) 55,086 Income before extraordinary item =============== ============== (11,692) Dividends to preferred shareholders =============== ============== Net income per common share before extraordinary item $ 0.50 ============== Dividends declared per common share $ 0.7575 ============== Weighted average number of common shares outstanding 86,602
See accompanying notes. UNITED DOMINION REALTY TRUST, INC. NOTES TO CONSOLIDATED PRO FORMA STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 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) (as previously reported on Form 8-K dated July 1, 1997 and subsequently amended on Form 8-K/A No. 1 dated July 1, 1997 which was filed with the Securities and Exchange Commission on September 15, 1997), (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") (as previously reported on Form 8-K dated July 1, 1997 and subsequently amended on Form 8-K/A No. 1 dated July 1, 1997 which was filed with the Securities and Exchange Commission on September 15, 1997), (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, (as previously reported on Form 8-K dated July 1, 1997 and subsequently amended on Form 8-K/A No. 1 dated July 1, 1997 which was filed with the Securities and Exchange Commission on September 15, 1997), (iv) a portfolio of four apartment communities (the "Houston Portfolio") which consist of Greenhouse Patio Apartments (formerly Pecan Grove Apartments) and Braesridge Apartments acquired on September 26, 1997, Bammelwood Apartments acquired on October 30, 1997 and Camino Village Apartments acquired on November 20, 1997, (v) Waterside at Ironbridge Apartments acquired on September 29, 1997, (vi) 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), (vii) 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 (viii) 18 apartment communities containing 4,508 apartment homes acquired in an August 15, 1996 portfolio acquisition (the ASoutheast 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 of 17 apartment communities containing 5,394 apartment homes for an aggregate purchase price of approximately $218.5 million, including closing costs as referenced in sections (i) through (v) of the above paragraph. These acquisitions are assumed to have been purchased with bank line borrowings aggregating $145.9 million with a weighted average interest rate of 6.24%, the assumption of seven mortgage notes payable aggregating $60.1 million with a weighted average interest rate of 8.43% and the issuance of 849,498 Operating Partnership Units at $14.75 per Unit for an aggregate value of $12.5 million. These acquisitions are shown as if the acquistions occurred on the first day of each reporting period presented. 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 each of the periods presented, the pro forma adjustments for the four development properties are determined based upon the weighted average balance of the purchase price outstanding. The weighted average balance of the purchase price outstanding was calculated by assuming the properties were financed and acquired by the Company on the dates on which certificates of occupancy were obtained for each unit during 1995 and 1996. 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, 1996 include the effect of debt and equity incurred in connection with the acquisition of the 14 non-development apartment communities contained in the Southeast Portfolio which includes: (i) bank lines of credit of approximately $14.0 million with a weighted average interest rate of 6.01% (the Company's market interest rate on short-term bank borrowings in effect at the time of the acquisition), (ii) the assumption of secured debt encumbering the properties in the aggregate amount of approximately $75.2 million with a weighted average interest rate of 7.30%, (iii) Seller financing of approximately $13.9 million bearing interest of 7.10%, and (iv) the issuance of approximately 934,000 newly issued shares of the Company's common stock valued at $13.50 (the closing sales price of the Company's common stock on the date of 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 ============= 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. *** 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 nine months ended September 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 nine months ended September 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. (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%.
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). (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 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 ========= (19) The pro forma weighted average shares outstanding for the twelve months ended December 31, 1996 are 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 previously reported in the unaudited combined results of operations as appearing in Form 8-K/A No. 1 dated July 1, 1997 filed with the Securities and Exchange Commission on September 15, 1997. (21) Represents the actual results of operations of the Texas Properties as previously reported in the unaudited combined results of operations as appearing in Form 8-K/A No. 1 dated July 1, 1997 filed with the Securities and Exchange Commission on September 15, 1997. (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 nine month period ended September 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 as previously reported in Form 8-K/A No. 1 dated July 1, 1997 filed with the Securities and Exchange Commission on September 15, 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 nine month period ended September 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 as previously reported in Form 8-K/A No. 1 dated July 1, 1997 filed with the Securities and Exchange Commission on September 15, 1997. (23) Represents the actual results of operations of the Florida Portfolio as previously reported in the unaudited combined results of operations as appearing in Form 8-K/A dated July 1, 1997 filed with the Securities and Exchange Commission on September 15, 1997. (24) Reflects the net reduction in property management fees for the Option Properties, Texas Properties and Florida Portfolio. 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) at the time of the filing of the Form 8-K/A dated July 1, 1997 filed with the Securities and Exchange Commission on September 15, 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 Option Properties, Texas Properties and Florida Portfolio 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):
Twelve Month Nine 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 nine months ended September 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 Option Properties, Texas Properties and Florida Portfolio 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 Nine 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 nine months ended September 30, 1997, includes a pro forma adjustment for 59 out of 365 days. *** The nine months ended September 30, 1997, includes a pro forma adjustment for approximately 103 out of 365 days. **** The nine months ended September 30, 1997, includes a pro forma adjustment for 181 out of 365 days. (27) Represents the actual results of operations of the Houston Portfolio as reported elsewhere herein. (28) Represents the actual results of operations of Waterside at Ironbridge Apartments as reported elsewhere herein. (29) Represents operations of Greenhouse Patio Apartments and Braesridge Apartments (for the 26 day period from September 1, 1997 to September 26, 1997) and Waterside at Ironbridge Apartments (for the 29 day period from September 1, 1997 to September 29, 1997), which represents the period the properties were not owned by the Company during the nine month period ended September 30, 1997 (based on the operating statements of the properties for the stub period January 1, 1997 to August 31, 1997 which consists of 243 days). The unaudited combined statements of rental operations were for the stub period January 1, 1997 to August 31, 1997 as reported elsewhere herein. (30) Reflects the net reduction in property management fees for the Houston Properties and Waterside at Ironbridge Apartments as reported elsewhere herein. The Company internally manages its apartment portfolio at an assumed cost of approximately 3.2% of rental income (based on 1997 actual information for the nine months ended September 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 nine months ended September 30, 1997) of the amount reported as rental income is assumed to be other income which is not subject to management fee. (31) Reflects the net adjustments to record depreciation expense for the Houston Properties and Waterside at Ironbridge Apartments, 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 7.72 years based upon the initial cost of the Properties of $67.4 million. The allocation and useful lives are as follows (in thousands of dollars):
Twelve Month Nine Month Useful Life Depreciation Depreciation Purchase Price In Years Expense Adjustments Expense Adjustment* Buildings $ 50,828 35 $ 1,452 $ 1,001 Other Improvements 4,415 7.72 572 398 Land 12,120 n/a -- -- ------------- --------- -------- Total $ 67,363 $ 2,024 $ 1,399 ============= ========= ========
* The nine months ended September 30, 1997, includes a pro forma adjustment for 8.275 months (8 months for Greenhouse Patio Apartments, Braesridge Apartments and Waterside at Ironbridge Apartments and 9 months for Camino Village Apartments and Bammelwood Apartments) out of 12 months. (32) Reflects the additional interest expense associated with the Houston Properties and Waterside at Ironbridge Apartments as reported elsewhere herein which consists of the following: (i) variable-rate bank debt aggregating approximately $16.8 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 6.1% and (ii) the assumption of approximately $38.0 million of fixed-rate mortgage debt with a weighted average interest rate of 8.43% as outlined below (in thousands of dollars):
Twelve Month Nine Month Weighted Average Interest Expense Interest Expense Acquisition Type of Debt Amount Interest Rate Adjustment * Adjustment Houston Properties Bank Lines $ 6,877 6.089% $ 419 $ 311 ** Houston Properties Secured Debt 32,874 8.685% 2,855 2,116 ** Waterside Bank Lines 9,949 6.087% 606 451 *** Waterside Secured Debt 5,133 7.000% 359 268 *** -------------- ---------- ---------- $ 54,833 $ 4,239 $ 3,146 ============== ========== ==========
* The twelve months ended December 31, 1996 includes a pro forma adjustment for the full year. ** The nine months ended September 30, 1997, includes a pro forma adjustment for approximately 271 out of 365 days. *** The nine months ended September 30, 1997, includes a pro forma adjustment for approximately 272 out of 365 days. (33) Reflects the additional minority interest expense associated with the acquisition of Houston Properties. In connection with the acquisition of the Houston Properties, the Company issued 849,498 Operating Partnership Units at $14.75 per Unit for an aggregate value of $12.5 million. Assuming the acquisition of the Houston Properties at the beginning of each period presented, the minority interest ownership would have been 10.6339% of the Operating Partnership which had earnings of approximately $5.5 million and $4.2 million for the twelve months ended December 31, 1996 and the nine months ended September 30, 1997, respectively. EX-23 2 CONSENT OF INDEPENDENT AUDITORS [L.P. MARTIN & COMPANY LETTERHEAD] 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 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. 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, Registration Statement Form S-8 No. 333-32829, and Registration Statement Form S-8 No. 333-42691, of United Dominion Realty Trust, Inc. of our report dated November 14, 1997, with respect to the statement of rental operations of Waterside at Ironbridge Apartments for the year ended December 31, 1996, our report dated November 20, 1997, with respect to the statement of rental operations of Bammelwood Apartments for the year ended December 31, 1996, our report dated November 20, 1997, with respect to the statement of rental operations of Braesridge Apartments for the year ended December 31, 1996, our report dated November 20, 1997, with respect to the statement of rental operations of Camino Village Apartments for the year ended December 31, 1996, and our report dated November 20, 1997, with respect to the statement of rental operations of Pecan Grove 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 October 21, 1997. /s/ L. P. Martin & Company, P.C. L. P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia December 31, 1997 -----END PRIVACY-ENHANCED MESSAGE-----