-----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, VrC231xMEgnApDPzdFjsaPk4EZXgSuTij3bnIDJBdhe6oezUvTgTdhAojuMfsgNt M11BJlNH/Eob4Q18cttKNg== 0000916641-98-000134.txt : 19980218 0000916641-98-000134.hdr.sgml : 19980218 ACCESSION NUMBER: 0000916641-98-000134 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980217 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980217 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED DOMINION REALTY TRUST INC CENTRAL INDEX KEY: 0000074208 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 540857512 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-10524 FILM NUMBER: 98543465 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 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported) February 17, 1998 -------------------------------- United Dominion Realty Trust, Inc. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Virginia 1-10524 54-0857512 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission (I.R.S. Employer Incorporation) File Number) Identification No.) 10 South Sixth Street, Richmond, Virginia 23219-3802 - -------------------------------------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code (804) 780-2691 ------------------------------ NO CHANGE - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Item 5. Other Events On December 19, 1997, the United Dominion Realty Trust, Inc, (United Dominion) announced the execution of a definitive merger agreement pursuant to which ASR, Inc. ("ASR") would be merged with and into a wholly-owned subsidiary of United Dominion (the "Merger ") which would continue the geographic expansion of the United Dominion into the Western region of the United States. At December 31, 1997, ASR owned and operated 41 apartment communities containing 7,725 apartment homes in the Southwest and Pacific Northwest. Pursuant the Merger, each share of the ASR's common stock will be exchanged for 1.575 shares of United Dominion. The Merger has been structured as a tax-free transaction and will be treated as a purchase for accounting purposes. The Merger is subject to ASR's shareholders and customary regulatory and other conditions. There can be no assurances that the transaction will be consummated. United Dominion filed a Form S-4 Amendment No. 1 with the Securities and Exchange Commission (Registration No. 333-45305) which included the Unaudited Pro Forma Combined Financial Statements of United Dominion and ASR as if the Merger had occurred on January 1, 1996. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits (c) Exhibits 99.1 Unaudited Combined Pro Forma Financial Statements SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on behalf by the undersigned hereunto duly authorized. UNITED DOMINION REALTY TRUST, INC. Date: February 17, 1998 /s/ James Dolphin ------------------ ----------------------------------- James Dolphin, Executive Vice President and Chief Financial Officer Date February 17, 1998 /s/ Jerry A. Davis ------------------ ----------------------------------- Jerry Davis, Vice President and Corporate Controller EX-99.1 2 UNAUDITED COMBINED PRO FORMA FINANCIAL STATEMENTS UNITED DOMINION REALTY TRUST, INC. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS For the Year Ended December 31, 1996 and the Nine Months Ended September 30, 1997 BASIS OF PRESENTATION The Unaudited Pro Forma Combined Statements of Operations for the year ended December 31, 1996 and the nine months ended September 30, 1997 are presented as if the Merger had occurred on January 1, 1996. The Unaudited Pro Forma Combined Statements of Operations give effect to the Merger under the purchase method of accounting in accordance with Accounting Standards Board Opinion No. 16, and the combined entity qualifying as a REIT, distributing at least 95% of its taxable income, and therefore, incurring no federal income tax liability for the periods presented. In addition to the Merger, the United Dominion Pro Forma Statements of Operations give effect to the following acquisitions as if they had occurred on January 1, 1996: (i) the acquisition of a portfolio of 18 apartment communities in August 1996, (ii) the acquisition of two apartment communities in May 1996, (iii) the acquisition of South West Property Trust Inc. (44 apartment communities) on December 31, 1996 and (iv) the acquisition of 17 apartment communities during 1997 (See Note (A) to the Unaudited Pro Forma Combined Statements of Operations). In the opinion of management, all adjustments necessary to reflect the effects of these transactions have been made. The ASR Pro Forma Statements of Operations give effect to the following acquisitions as if they had occurred on January 1, 1996: (i) the acquisition of the Winton Properties and Winton and Associates on April 30, 1997, (ii) the acquisition of Pima Mortgage L.P. and Pima Realty Advisors, Inc. on April 30, 1997, (iii) the acquisition of London Park Apartments in March 1997, (iv) the acquisition of the remaining 85% interest in La Privada Apartments L.L.C. and the related sale of ASR's interest in the other five joint ventures on April 30, 1997, (v) the acquisition of Ivystone/Woodsedge Apartments and The Court Apartments in April 1997, (vi) the acquisition of Gentry Place Apartments, Smith Summit Apartments, Park on Preston Apartments and On The Boulevard Apartments in September 1997, and (viii) the acquisition of Arbor Terrace Apartments in October 1997 (see Note (B) to the Unaudited Pro Forma Combined Statements of Operations). The Unaudited Pro Forma Combined Statements of Operations are presented for comparative purposes only and are not necessarily indicative of what the actual combined results of United Dominion and ASR would have been for the year ended December 31, 1996 and the nine months ended September 30, 1997 if the Merger and other acquisitions had occurred on January 1, 1996, nor do they purport to be indicative of the results of operations in future periods. The Unaudited Pro Forma Combined Statements of Operations should be read in conjunction with, and are qualified in their entirety by, the respective historical financial statements and notes thereto of United Dominion and ASR. UNITED DOMINION REALTY TRUST, INC. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS For the Year Ended December 31, 1996 (In thousands, except per share data)
United United Disposition Pro Forma Dominion Dominion ASR of Mortgage Merger Pro Forma Pro Forma (A) Pro Forma (B) Assets (C) Adjustments Combined ------------- ------------- ---------- ----------- -------- Income Rental income................................. $377,580 $44,759 $422,339 Interest and other non-property income...................................... 2,683 2,683 ----- ----- 380,263 44,759 425,022 Expenses Rental expenses: Utilities................................... 26,744 3,541 30,285 Repairs and maintenance..................... 58,365 5,712 64,077 Real estate taxes........................... 30,706 4,139 34,845 Property management......................... 8,948 1,481 $(372) (E) 10,057 Other rental expenses....................... 39,486 5,769 45,255 Depreciation of real estate owned............. 73,220 9,839 (390) (D) 82,669 Interest...................................... 85,109 13,429 (1,229) (F) 97,309 General and administrative.................... 7,113 3,158 (2,605) (G) 7,666 Other depreciation and amortization........... 1,629 438 (70) (H) 1,997 Impairment loss on real estate owned....................................... 290 290 --- --- 331,610 47,506 (4,666) 374,450 ------- ------ ------- ------- Income from and gains on sales or redemptions of mortgage assets................ 12,103 $(12,103) ------ --------- Income before gains on sales of investments and minority interest of unitholders in operating partnership.......... 48,653 9,356 (12,103) 4,666 50,572 Gains on sales of investments.................. 4,346 4,346 Minority interest of unitholders in operating partnership......................... (582) (573) (1,155) ----- ----- ------- Net income..................................... 52,417 8,783 (12,103) 4,666 53,763 Dividends to preferred shareholders............ 9,713 9,713 ----- ----- Net income available to common shareholders.................................. $42,704 $8,783 $(12,103) $4,666 $44,050 ======= ====== ========= ====== ======= Net income per common share.................... $0.52 $0.49 ===== ===== Distributions declared per common share......................................... $0.96 $0.96 ===== ===== Weighted average number of common shares outstanding............................ 81,505 7,859 (I) 89,364 ====== ========= ====== See accompanying notes. UNITED DOMINION REALTY TRUST, INC. UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS For the Nine Months Ended September 30, 1997 (In thousands, except per share data) United United ASR Disposition Pro Forma Dominion Dominion Pro of Mortgage Merger Pro Forma Pro Forma(A) Forma(B) Assets(C) Adjustments Combined ------------ -------- --------- ----------- -------- Income Rental income............................... $300,752 $34,417 $335,169 Interest and other non-property income.................................... 867 464 1,331 --- --- ----- 301,619 34,881 336,500 Expenses Rental expenses: Utilities................................. 19,429 2,569 21,998 Repairs and maintenance................... 43,139 3,819 46,958 Real estate taxes......................... 24,682 3,389 28,071 Property management....................... 9,679 1,065 $(279) (E) 10,465 Other rental expenses..................... 32,134 4,981 37,115 Depreciation of real estate owned........... 57,487 7,330 (143) (D) 64,674 Interest.................................... 64,212 10,075 (853) (F) 73,434 General and administrative.................. 5,271 2,506 (2,374) (G) 5,403 Acquisition related expense................. 6,215 6,215 Other depreciation and amortization......... 1,339 207 (24) (H) 1,522 Impairment loss on real estate owned..................................... 1,400 1,400 ----- ----- 258,772 42,156 (3,673) 297,255 ------- ------ ------- ------- Income from and gains on sales or redemptions of mortgage assets............ 17,265 $(17,265) ------ --------- Income before gains on sales of investments and minority interest of unitholders in operating partnership 42,847 9,990 (17,265) 3,673 39,245 Gains on sales of investments............... 12,682 474 13,156 Minority interest of unitholders in operating partnership..................... (443) (374) (817) ----- ----- ----- Net income.................................. 55,086 10,090 (17,265) 3,673 51,584 Dividends to preferred shareholders......... 11,692 11,692 ------ ------ Net income available to common shareholders.............................. $43,394 $10,090 $(17,265) $3,673 $39,892 ======= ======= ========= ====== ======= Net income per common share................. $0.50 $0.42 ===== ===== Distributions declared per common share..................................... $0.7575 $0.7575 ======= ======= Weighted average number of common shares outstanding........................ 86,602 7,859 (I) 94,461 ====== ========= ======
See accompanying notes. UNITED DOMINION REALTY TRUST, INC. NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS OR THE YEAR ENDED DECEMBER 31, 1996 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) (A) The United Dominion Pro Forma Statements of Operations reflect the historical results of United Dominion adjusted to reflect the operations of: (i) 18 apartment communities acquired in an August 15, 1996 portfolio acquisition as previously reported on Form 8-K dated August 15, 1996 filed with the Securities and Exchange Commission on August 31, 1996 (subsequently updated to reflect results of operations for the twelve months ended December 31, 1996 on Form 8-K/A filed March 17, 1997), (ii) the acquisition of two apartment communities in May 1996, as previously reported on Form 8-K dated October 31, 1996 filed with the Securities and Exchange Commission on November 15, 1996 (subsequently updated to reflect results of operations for the twelve months ended December 31, 1996 on Form 8-K/A filed on March 17, 1997, (iii) the acquisition of 44 apartment communities owned by South West Property Trust Inc. on December 31, 1996, as previously reported on Form 8-K dated December 31, 1996 filed with the Securities and Exchange Commission on January 15, 1997, including Form 8-K/A filed on March 17, 1997, (iv) the acquisition of 12 apartment communities as previously reported on Form 8-K dated July 1, 1997, including Form 8-K/A filed September 15, 1997 (subsequently amended to reflect the results of operations for the nine months ended September 30, 1997 on Form 8-K/A filed on December 31, 1997), and (v) the acquisition of five apartment communities during the third quarter of 1997 as previously reported on Form 8-K dated October 21, 1997 filed with the Securities and Exchange Commission on November 5, 1997, including Form 8-K/A filed on December 31, 1997, all incorporated by reference into this Registration Statement, for the periods not owned by United Dominion. (B) The ASR Pro Forma Statements of Operations reflect the historical results of ASR adjusted to reflect the following 1997 transactions. The pro forma adjustments for these transactions have been reported in the Current Reports on Form 8-K filed by ASR with the Securities and Exchange Commission: (a) (i) the acquisition of the Winton Properties and Winton & Associates on April 30, 1997, (ii) the acquisition of Pima Mortgage L.P. and Pima Realty Advisors, Inc. on April 30, 1997, (iii) the acquisition of London Park Apartments in March 1997, (iv) the acquisition of the remaining 85% interest in La Privada Apartments L.L.C. and the related sale of the Company's interests in the other five joint ventures on April 30, 1997, and (v) the acquisition of Ivystone/Woodsedge Apartments and The Court Apartments in April 1997, all as previously reported on Form 8-K filed on May 15, 1997, as amended on Form 8-K/A filed on June 16, 1997; (b) the acquisition of three apartment communities in September 1997 as previously reported on Form 8-K filed on September 18, 1997; (c) the acquisition of On The Boulevard Apartments in September, 1997 and the acquisition of Arbor Terrace Apartments in October, 1997, as previously reported on Form 8-K filed on November 6, 1997, as amended on Form 8-K/A filed on January 6, 1998. Certain reclassifications have been made to ASR's pro forma statements of operations to conform to United Dominion's financial statement presentations. The reclassifications consist primarily of reporting minority interest consistent with United Dominion's presentation. (C) Represents the elimination of the income from and gains on sales or redemptions of mortgage assets reported by ASR during the periods presented. Beginning in 1996, ASR implemented a strategic plan to divest its mortgage asset portfolio and reinvest the net proceeds in the acquisition of apartment communities. ASR completed the sale of its remaining mortgage asset portfolio in June 1997, the net proceeds of which were primarily used to acquire apartment communities. The income from and gains on sales of mortgage assets is eliminated since these assets will not have a continuing impact on results of operations for the combined entity. (D) Represents the net decrease in depreciation of real estate owned as a result of recording the ASR real estate assets at fair value versus historical cost and using United Dominion's depreciable lives. 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 26.8 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 the fair value of depreciable real estate assets at September 30, 1997: Purchase price (See Pro Forma Combined Balance Sheet Note (C))................................................................................. $334,616 Less: Purchase price allocated to cash and cash equivalents..................................................................... 8,284 Purchase price allocated to other assets......................................................... 10,130 Purchase price allocated to land................................................................. 47,290 Purchase price allocated to real estate under development...................................................................................... 925 Purchase price allocated to real estate held for disposition...................................................................................... 14,830 ------ Pro forma basis of ASR's depreciable real estate held for investment at fair value............................................................. $253,157 ======== Calculation of depreciation of real estate owned for the year ended December 31, 1996 and the nine months ended September 30, 1997 are as follows:
Nine Months Year Ended Ended December 31, September 30, 1996 1997 ---- ---- Depreciation expense based upon an estimated weighted average useful life of approximately 26.8 years................................... $9,449 $7,187 Less: ASR's pro forma depreciation of real estate owned............................................... (9,839) (7,330) ------- ------- Pro forma adjustment.......................................... $(390) $(143) ====== ====== (E) Reflects the net estimated reduction of property management costs of $372 and $279 for the year ended December 31, 1996 and the nine months ended September 30, 1997, respectively, based upon the identified historical costs of certain items which are anticipated to be eliminated or reduced as a result of the Merger, as follows: Nine Months Year Ended Ended December 31, September 30, 1996 1997 ---- ---- Net reduction in salary, benefits and other compensation due to the termination of all ASR employees prior to the Merger in accordance with the Merger Agreement............................ $(249) $(187) Net reduction in travel and entertainment......................... (20) (15) Net reduction in professional services............................ (34) (25) Net reduction in other expenses................................... (69) (52) ---- ---- Pro forma adjustment.............................................. $(372) $(279) ====== ====== (F) Represents the net adjustment to interest expense for the year ended December 31, 1996 and the nine months ended September 30, 1997, as follows: Nine Months Year Ended Ended December 31, September 30, 1996 1997 ---- ---- To adjust amortization of ASR's deferred financing costs which would be eliminated in the Merger....................... $(368) $(207) To reflect the amortization of the premium required to record ASR's mortgage notes payable at fair value............................................................... (1,196) (897) To reflect the additional borrowings of $5,492 (See Note (G) of the Pro Forma Combined Balance Sheet) at current market interest rates available to United Dominion of 6.1%............................................. 335 251 --- --- Pro forma adjustment................................................. $(1,229) $(853) ======== ====== (G) Represents the net reduction to general and administrative expenses of $2,605 and $2,374 for the year ended December 31, 1996 and the nine months ended September 30, 1997, respectively, based upon the identified historical costs of certain items which are anticipated to be eliminated or reduced as a result of the Merger, as follows: Nine Months Year Ended Ended December 31, September 30, 1996 1997 ---- ---- Salary, benefits and other compensation due to the termination of all ASR employees prior to the Merger in accordance with the Merger Agreement................................................ ($2,155) ($1,954) Duplicate public company expenses......................................... (64) (28) Professional services..................................................... (238) (273) Other expenses............................................................ (148) (119) ----- ----- Pro forma adjustment...................................................... ($2,605) ($2,374) ======== ======== (H) Represents the elimination of the pro forma amortization of goodwill included in the ASR Pro Forma Statements of Operations which would be eliminated in the Merger. (I) The pro forma weighted average shares outstanding for the year ended December 31, 1996 and the nine months ended September 30, 1997 are computed as follows: Nine Months Year Ended Ended December 31, September 30, 1996 1997 ---- ---- ASR's pro forma weighted average common shares and operating partnership units outstanding................................ 5,961 5,961 Less: units in the operating partnership................................ (971) (971) ----- ----- ASR pro forma weighted average common shares outstanding 4,990 4,990 ===== ===== United Dominion pro forma weighted average common shares outstanding............................................................ 81,505 86,602 Increase in United Dominion common stock at an the Exchange Ratio of 1.575 for the ASR pro forma weighted average common shares outstanding**.................................... 7,859 7,859 ----- ----- Pro forma combined shares............................................... 89,364 94,461 ====== ======
** Weighted average pro forma adjusted ASR common shares outstanding multiplied by the Exchange Ratio. UNITED DOMINION REALTY TRUST, INC. UNAUDITED PRO FORMA COMBINED BALANCE SHEET SEPTEMBER 30, 1997 BASIS OF PRESENTATION The Unaudited Pro Forma Combined Balance Sheet gives effect to the proposed Merger of United Dominion and ASR as if the Merger had occurred on September 30, 1997. In addition, The Unaudited Pro Forma Combined Balance Sheet gives effect to the acquisition by United Dominion of two apartment communities during the fourth quarter of 1997 as previously reported on Form 8-K dated October 21, 1997 filed with the Securities and Exchange Commission on November 5, 1997, including Form 8-K/A filed on December 31, 1997, and the acquisition by ASR of one apartment community on October 27, 1997, as previously reported on Form 8-K dated October 27, 1997 filed with the Securities and Exchange Commission on November 6, 1997, including Form 8-K/A filed on January 6, 1998. The Unaudited Pro Forma Combined Balance Sheet gives effect to the Merger under the purchase method of accounting in accordance with Accounting Standards Board Opinion No. 16. In the opinion of management, all significant adjustments necessary to reflect the effects of the Merger have been made. The Unaudited Pro Forma Combined Balance Sheet is presented for comparative purposes only and is not necessarily indicative of what the actual combined financial position of United Dominion and ASR would have been at September 30, 1997, nor does it purport to represent the future combined financial position of United Dominion and ASR. This Unaudited Pro Forma Combined Balance Sheet should be read in conjunction with, and is qualified in its entirety by, the respective historical financial statements and notes thereto of United Dominion and ASR. UNITED DOMINION REALTY TRUST, INC. CONSOLIDATED BALANCE SHEETS September 30, 1997 (Amounts in thousands, except for share data)
United United ProForma Dominion Dominion ASR Merger Pro Forma Pro Forma (A) Pro Forma (B) Adjustments Combined ------------- ------------- ----------- -------- ASSETS Real estate owned: Real estate held for investment......................... $2,236,520 $273,780 $26,667 (D) $2,536,967 Less: accumulated depreciation.......................... (200,538) (11,539) 11,539 (D) (200,538) --------- -------- ---------- --------- 2,035,982 262,241 38,206 2,336,429 Real estate under development........................... 33,628 925 34,553 Real estate held for disposition........................ 131,576 14,830 (D) 146,406 Cash and cash equivalents................................ 5,383 8,284 13,667 Other assets............................................. 65,639 14,363 (4,233)(E) 75,769 ------ ------ ----------- ------ Total assets........................................ $2,272,208 $285,813 $48,803 $2,606,824 ========== ======== ======= ========== LIABILITIES AND SHAREHOLDERS' EQUITY Notes payable-secured.................................... $424,295 $175,118 $8,220 (F) $607,633 Notes payable-unsecured.................................. 691,219 5,492 (G) 696,711 Distributions payable to common shareholders............. 22,261 22,261 Accounts payable and other liabilities................... 62,361 10,047 72,408 ------ ------ ------ Total liabilities................................... 1,200,136 185,165 13,712 1,399,013 Minority interest of unitholders in operating partnership............................................. 14,570 19,527 1,893 (H) 35,990 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............................................ 88,162 51 7,808 (I) 96,021 Additional paid-in capital.............................. 893,701 1 91,155 (84,695)(I) 1,000,161 Notes receivable from officer shareholders.............. (9,168) (317) 317 (I) (9,168) Distributions in excess of earnings..................... (170,193) (109,768) 109,768 (I) (170,193) --------- --------- ----------- --------- Total shareholders' equity.............................. 1,057,502 81,121 33,198 1,171,821 --------- ------ ------ --------- Total liabilities and shareholders' equity.......... $2,272,208 $285,813 $48,803 $2,606,824 ========== ======== ======= ==========
See accompanying notes. UNITED DOMINION REALTY TRUST, INC. NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET SEPTEMBER 30, 1997 (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (A) The Unaudited Pro Forma Balance Sheet reflects the historical results of United Dominion adjusted to reflect the acquisition of two apartment communities during the fourth quarter of 1997 as previously reported on Form 8-K dated October 21, 1997 filed with the Securities and Exchange Commission on November 5, 1997, including Form 8-K/A filed on December 31, 1997. (B) The Unaudited Pro Forma Balance Sheet reflects the historical results of ASR adjusted to reflect the acquisition of one apartment community acquired on October 27, 1997 as previously reported on Form 8-K dated October 27, 1997 filed by ASR with the Securities and Exchange Commission on November 6, 1997, as amended on Form 8-K/A filed on January 6, 1998. Certain reclassifications have been made to ASR's historical balance sheet to conform to United Dominion's balance sheet presentation. The reclassifications consist primarily of reporting minority interest consistent with United Dominion's presentation. (C) Represents adjustments to record the Merger in accordance with the purchase method of accounting, based upon the assumed purchase price of $334,616, assuming a market value of $14.00 per share of United Dominion common stock, as follows: Issuance of 7,859 shares of United Dominion common stock based on the 1.575 exchange ratio in exchange for 4,990 shares of ASR common stock at an assumed price of $14.00 per share........................................................................ $110,031 Adjustment to record the fair value of the 971 ASR LP Units not acquired by United Dominion which are convertible to 1.575 shares at an assumed price of $14.00 per share.................................... 21,420 Assumption of ASR liabilities............................................................. 185,165 Adjustment to record ASR mortgage notes payable at fair value................................................................................... 8,220 Adjustment to record ASR stock options at fair value (353 stock options convertible to 1.575 shares of United Dominion common stock at a fair value of $7.875)........................................ 4,378 Merger costs (see calculation below)...................................................... 5,402 ----- Total adjustment.......................................................................... $334,616 ======== The following is an estimate of the fees and other expenses related to the Merger: Advisory fees.................................................... $1,100 Legal and accounting fees........................................ 800 Severance and other compensation................................. 3,187 Other............................................................ 315 --- Total adjustment................................................. $5,402 ====== (D) Increase of $53,036 in the net book value of ASR's real estate assets based upon United Dominion's purchase price and the adjustment to eliminate ASR's pro forma accumulated depreciation of $11,539, as follows: Purchase price (See Note (C)).................................................... $334,616 Less basis of ASR's assets assumed: Real estate held for investment, net of accumulated depreciation.............................................................. $262,241 Real estate held for development............................................. 925 Cash and cash equivalents.................................................... 8,284 Other assets (See Note (E)).................................................. 10,130 ------ 281,580 Pro forma adjustment -- step up to record fair value of ASR's real estate assets............................................................ 53,036 Less: Reclass of real estate held for disposition**.............................. 14,830 ------ Pro forma adjustments real estate held for investment............................ $38,206 ======= ** United Dominion intends to sell three apartment communities and one office building included in the ASR portfolio. Consequently, the assumed fair value less the estimated costs to sell aggregating $14,830 would be reclassified to real estate held for disposition. (E) To adjust the pro forma basis of ASR's other assets to eliminate deferred financing and similar costs in the aggregate amount of $4,233, which would be eliminated in connection with the Merger. (F) To record the $8,220 premium required to adjust the ASR fixed-rate mortgage notes payable to estimated fair value based on interest rates believed to be available to United Dominion for issuance of mortgage debt with similar terms and remaining maturities. (G) Represents the additional borrowings of $5,492 of variable-rate bank debt incurred by United Dominion to fund Merger costs of $5,402 (See Note (C)) and registration costs of $90 (See Note (I)). (H) Adjustment to record the fair value of 971 ASR LP Units convertible to 1.575 shares of United Dominion Common Stock pursuant to the Merger Agreement at an assumed price of $14.00 per share, as follows: ASR LP Units............................................................. 971 Exchange Ratio........................................................... 1.575 ----- Adjusted ASR LP Units.................................................... 1,530 Assumed price per Unit................................................... $14.00 ------ Value of ASR LP Units.................................................... $21,420 Less: ASR pro forma minority interest.................................... 19,527 ------ Pro forma adjustment..................................................... $1,893 ====== (I) To adjust ASR's pro forma shareholders' equity to reflect the issuance of 7,859 shares of United Dominion common stock at an assumed price of $14.00 per share (at an exchange ratio of 1.575), in exchange for all of the 4,990 outstanding shares of ASR's common stock, to record the estimated Registration Costs in connection with the Merger of $90 and to record the fair value of the ASR Stock Options of $4,378 (see Note (C)), as follows:
Additional Notes Receivable Distributions Common Paid-In Officer In Excess Stock Capital Shareholders Of Earnings ----- ------- ------------ ----------- Issuance of United Dominion common stock.............. $7,859 $102,172 $-- $-- Registration costs incurred in connection with the Merger.............................................. (90) Record the fair value of the ASR Stock Options (See Note (C))............................................. 4,378 ASR's pro forma shareholders' equity.................. (51) (191,155) 317 109,768 ---- --------- --- ------- Pro forma adjustments................................. $7,808 $(84,695) $317 $109,768 ====== ========= ==== ========
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