-----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, LdZZ+GwevpX4IILtV8c6NP1W6W9NpCqncmtBLE2DvX4VmL1KDM99/XXRsjpe6JoP bYvMuJsh08Za7+y2XgDYug== 0000916641-98-001114.txt : 19981020 0000916641-98-001114.hdr.sgml : 19981020 ACCESSION NUMBER: 0000916641-98-001114 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980528 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19981019 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: 98727379 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 UDRT 8-K As Filed With the Securities and Exchange Commission on October 19, 1998 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 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): May 28, 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 File Number) (I.R.S. Employer Incorporation) Identification No.)
10 South Sixth Street, Richmond, Virginia 23219-3802 (Address of Principal Executive Offices - Zip Code) (804) 780-2691 Registrant's Telephone Number, Including Area Code Item 2. Acquisition or Disposition of Assets On May 28, 1998, UDR Western Residential, a Virginia corporation and wholly-owned subsidiary of United Dominion Realty Trust, Inc. (United Dominion), acquired Rancho Mirage Apartments from Rancho Properties L.P. for $38.5 million, including closing costs, all cash. Rancho Mirage Apartments, located in Phoenix, Arizona, is a 856 home garden style apartment community located on 19.3 acres and was constructed in two phases in 1984 and 1985. ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits Description Location ------------- -------------- (a) Financial Statements of Businesses Acquired 4 through 8 (b) Pro Forma Financial Information 9 through 21 (c) Exhibits (23) Consent of Independent Public Accountants 22 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 Rancho Mirage Apartments We have audited the accompanying statement of rental operations (as defined in Note 2) of Rancho Mirage Apartments for the year ended December 31, 1997. This financial statement is the responsibility of the management of Rancho Mirage 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 Rancho Mirage 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 Rancho Mirage Apartments for the year ended December 31, 1997, 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 July 9, 1998 RANCHO MIRAGE APARTMENTS STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1997 REVENUES FROM RENTAL PROPERTY $ 5,208,687 ------------- RENTAL PROPERTY EXPENSES: Real Estate Taxes 186,565 Repairs and Maintenance 919,197 Utilities 308,745 Property Management Fees 207,927 Other Operating Expenses 516,301 ------------- TOTAL RENTAL PROPERTY EXPENSES 2,138,735 ------------- INCOME FROM RENTAL OPERATIONS $ 3,069,952 ============= The accompanying notes are integral part of this statement. RANCHO MIRAGE APARTMENTS NOTES TO THE STATEMENT OF RENTAL OPERATIONS YEAR ENDED DECEMBER 31, 1997 NOTE 1 - BASIS OF PRESENTATION Rancho Mirage Apartments (The Property) consists of a 856 unit residential apartment community located in Phoenix, Arizona, together with the existing leases. The assets that comprise the Property have been held as an investment of Rancho Properties, L.P., a Delaware limited partnership (the Owner), throughout the year ended December 31, 1997. The accompanying financial statement presents the results of rental operations of the Property as a stand-alone entity. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Revenue and Expense Recognition - The accompanying statement of rental operations has been prepared using the accrual method of accounting. Certain expenses such as depreciation, amortization, income taxes, mortgage interest expense and entity expenses 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 Heitman Properties Ltd. Fees for such services were 4% of gross receipts from operations. NOTE 4 - SALE OF PROPERTY The property was sold to UDR Western Residential, Inc., a wholly owned subsidiary of United Dominion Realty Trust, Inc. on May 28, 1998. This statement of rental operations has been prepared to be included in a Current Report on Form 8-K to be filed by United Dominion Realty Trust, Inc. L.P. MARTIN & COMPANY LETTERHEAD A PROFESSIONAL CORPORATION CERTIFIED PUBLIC ACCOUNTANTS 4132 INNSLAKE DRIVE GLEN ALLEN, VIRGINIA 23060 PHONE: (804) 346-2626 FAX: (804) 346-9311 Independent Accountants' Compilation Report To the Owners of Rancho Mirage Apartments We have compiled the accompanying statement of rental operations exclusive of mortgage interest expense, depreciation, amortization, income taxes and entity expenses of Rancho Mirage Apartments for the four months ended April 30, 1998, 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 July 9, 1998 RANCHO MIRAGE APARTMENTS STATEMENT OF RENTAL OPERATIONS FOUR MONTHS ENDED APRIL 30, 1998 (See Independent Accountants' Compilation Report) REVENUES FROM RENTAL PROPERTY $ 1,767,596 ------------ RENTAL PROPERTY EXPENSES: Real Estate Taxes 62,189 Repairs and Maintenance 301,377 Utilities 92,617 Property Management Fees 70,113 Other Operating Expenses 167,277 ------------ TOTAL RENTAL PROPERTY EXPENSES 693,573 ------------ INCOME FROM RENTAL OPERATIONS $ 1,074,023 ============ UNITED DOMINION REALTY TRUST, INC. UNAUDITED CONSOLIDATED PRO FORMA CONDENSED FINANCIAL STATEMENTS The unaudited Balance Sheet at June 30, 1998 is not presented as all of the acquisitions reported on were purchased prior to June 30, 1998 and are reflected in United Dominion's unaudited Balance Sheet at June 30, 1998 included in United Dominion's quarterly report on Form 10-Q for the quarter then ended. The following unaudited Consolidated Pro Forma Condensed Statements of Operations for the twelve months ended December 31, 1997 and the six months ended June 30, 1998 give effect to the following 1998 acquisitions as if they occurred on January 1, 1997: (i) the January 9, 1998 portfolio acquisition of three apartment communities (collectively the Tennessee Portfolio) which consists of The Trails at Kirby Parkway Apartments and The Trails at Mount Moriah Apartments (which run as one community under the name The Trails) and Cinnamon Trails Apartments, (ii) the acquisition of Dogwood Creek Apartments on February 6, 1998, (iii) the acquisition of 39 apartment communities with 7,550 apartment homes owned by ASR Investment Corporation that were merged with and into a wholly-owned subsidiary of United Dominion, in a statutory merger on March 27, 1998, (iv) the April 16, 1998 portfolio acquisition of eight apartment communities (collectively the San Antonio Portfolio) which consists of Audubon Apartments, Carmel Apartments, Cimarron Apartments, Grand Cypress Apartments, Kenton Place Apartments, Peppermill Apartments, The Crest Apartments and Villages of Thousand Oaks Apartments and (v) the May 28, 1998 acquisition of Rancho Mirage Apartments. In addition, the unaudited Consolidated Pro Forma Condensed Statements of Operations for the twelve months ended December 31, 1997 give effect to the following 1997 acquisitions as if they had occurred on January 1, 1997: (i) the acquisition of Crosswinds Apartments (formerly Tradewinds Apartments), Stoney Pointe Apartments (formerly Stoneybrooke Apartments) and Dominion Trinity Place Apartments, (formerly Trinity Place Apartments) on February 28, 1997, (ii) the acquisition of Anderson Mill Oaks Apartments acquired on March 25, 1997, Oak Ridge Apartments (formerly Post Oak Ridge Apartments) acquired on March 27, 1997, and Green Oaks Apartments (formerly Pineloch Apartments) and Skyhawk Apartments (formerly Seahawk Apartments) acquired on May 8, 1997, (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, (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 and (v) the acquisition of Waterside at Ironbridge Apartments on September 29, 1997. The unaudited Consolidated Pro Forma Condensed Statements of Operations have been prepared by the management of United Dominion. The unaudited Consolidated Pro Forma Condensed 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 Condensed Statements of Operations should be read in conjunction with the accompanying Notes to the unaudited Consolidated Pro Forma Condensed Statements of Operations, United Dominion's audited consolidated financial statements for the twelve months ended December 31, 1997 (included in United Dominion's Form 10-K for the twelve months ended December 31, 1997) and its unaudited consolidated financial statements for the six months ended June 30, 1998 (included in United Dominion's Form 10-Q for the quarterly period ended June 30, 1998) and the accompanying notes thereto. UNITED DOMINION REALTY TRUST, INC. UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA)
Acquisition of Option Properties, Texas Properties Acquisition of and Florida Texas Properties Historical (1) Portfolio (2) Adjustments (3) ---------------- ------------------ ------------------- Revenues Rental income $ 386,672 $ 6,690 473 Interest and other non-property income 1,123 ------------ ------------- ------------- 387,795 6,690 473 Expenses Rental expenses: Utilities 24,861 454 36 Repairs and maintenance 54,607 865 53 Real estate taxes 30,961 619 55 Property management 12,203 310 18 Other rental expenses 41,099 821 48 Real estate depreciation 76,688 Interest 79,004 General and administrative 7,075 Acquisition related expenses Other depreciation and amortization 2,084 Impairment loss on real estate held for disposition 1,400 ------------ --------------- ----------- 329,982 3,069 210 Income from gains on sales of mortgage assets Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership 57,813 3,621 263 Gains on sales of investments 12,664 Minority interest of unitholders in operating partnership (278) ------------ ---------------- ---------- Income before extraordinary item 70,199 3,621 263 Extraordinary items-early extinguishment of debt (50) ------------ ---------------- ---------- Net income 70,149 3,621 263 Dividends to preferred shareholders (17,345) ------------ ---------------- ---------- Net income available to common shareholders $ 52,804 3,621 263 ============ ================ ========== Basic earnings per common share $ 0.61 ============ Diluted earnings per common share 0.60 ============ Dividends declared per common share $ 1.01 ============ Weighted average number of common shares-basic 87,145 Weighted average number of common shares - -diluted 87,339
Option Properties, Texas Properties Acquisition and Florida of Houston Portfolio Portfolio and Pro Forma Waterside at Adjustments Ironbridge (7) - --------------- ------------------------- Revenues Rental income $ $ 8,773 Interest and other non-property income ------- ------------------------- 8,773 Expenses Rental expenses: Utilities 609 Repairs and maintenance 1,418 Real estate taxes 929 Property management (92) (4) 361 Other rental expenses 1,133 Real estate depreciation 1,059 (5) Interest 2,801 (6) General and administrative Acquisition related expenses Other depreciation and amortization Impairment loss on real estate held for disposition ------- ------------------------- 3,768 4,450 Income from gains on sales of mortgage assets Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership (3,768) 4,323 Gains on sales of investments Minority interest of unitholders in operating partnership ------- ------------------------- Income before extraordinary item (3,768) 4,323 Extraordinary items-early extinguishment of debt ------- ------------------------- Net income (3,768) 4,323 Dividends to preferred shareholders ------- ------------------------- Net income available to common shareholders (3,768) 4,323 ======= ========================= Basic earnings per common share Diluted earnings per common share Dividends declared per common share Weighted average number of common shares-basic Weighted average number of common shares - -diluted
Acquisition of Houston Portfolio and Waterside at Ironbridge Pro Forma Adjustments (8) Adjustments ----------------------- ------------ Revenues Rental income $ 1,127 $ Interest and other non-property income -------------------- ------------ 1,127 Expenses Rental expenses: Utilities 76 Repairs and maintenance 183 Real estate taxes 118 Property management 46 (103) (9) Other rental expenses 143 Real estate depreciation 1,437 (10) Interest 3,304 (11) General and administrative Acquisition related expenses Other depreciation and amortization Impairment loss on real estate held for disposition ----------------- --------------- 566 4,638 Income from gains on sales of mortgage assets Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership 561 (4,638) Gains on sales of investments Minority interest of unitholders in operating partnership (331) (12) ----------------- -------------- Income before extraordinary item 561 (4,969) Extraordinary items-early extinguishment of debt ----------------- -------------- Net income 561 (4,969) Dividends to preferred shareholders ----------------- --------------- Net income available to common shareholders 561 (4,969) ================= =============== Basic earnings per common share Diluted earnings per common share Dividends declared per common share Weighted average number of common shares-basic Weighted average number of common shares - -diluted
Pro Forma Before 1998 ASR ASR Pro Forma Acquisitions Historical (13) Adjustments (14) -------------------------- ------------------- ------------------- Revenues Rental income 403,735 $ 33,034 $ 13,640 Interest and other non-property income 1,123 732 (162) --------------- -------------- ------------- 404,858 33,766 13,478 Expenses Rental expenses: Utilities 26,036 2,351 1,061 Repairs and maintenance 57,126 3,126 1,782 Real estate taxes 32,682 2,972 1,520 Property management 12,743 1,320 240 Other rental expenses 43,244 5,308 1,498 Real estate depreciation 79,184 6,335 3,299 Interest 85,109 9,642 3,847 General and administrative 7,075 3,114 (55) Acquisition related expenses - 6,684 Other depreciation and amortization 2,084 412 24 Impairment loss on real estate held for disposition 1,400 --------------- -------------- ------------- 346,683 41,264 13,216 Income from gains on sales of mortgage assets 17,213 52 Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership 58,175 9,715 314 Gains on sales of investments 12,664 474 Minority interest of unitholders in operating partnership (609) (355) --------------- -------------- ------------- Income before extraordinary item 70,230 9,834 314 Extraordinary items-early extinguishment of debt (50) --------------- -------------- ------------- Net income 70,180 9,834 314 Dividends to preferred shareholders (17,345) --------------- -------------- -------------- Net income available to common shareholders 52,835 9,834 314 ================ ============== ============== Basic earnings per common share Diluted earnings per common share Dividends declared per common share Weighted average number of common shares-basic Weighted average number of common shares - -diluted
Pro Forma United Dominion Disposition of Merger 1998 Pro Forma Mortgage Assets (15) Adjustments ASR acquisition only ----------------- ----------------- ---------------------- Revenues Rental income $ $ $ 450,409 Interest and other non-property income 1,693 ---------------- ----------------- -------------- 452,102 Expenses Rental expenses: Utilities 29,448 Repairs and maintenance 62,034 Real estate taxes 37,174 Property management (486) (16) 13,817 Other rental expenses 50,050 Real estate depreciation (194) (17) 88,624 Interest (1,624) (18) 96,974 General and administrative (2,432) (19) 7,702 Acquisition related expenses 6,684 Other depreciation and amortization (24) (20) 2,496 Impairment loss on real estate held for disposition 1,400 ---------------- ----------------- ------------ (4,760) 396,403 Income from gains on sales of mortgage assets (17,265) Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnershi (17,265) 4,760 55,699 Gains on sales of investments 13,138 Minority interest of unitholders in operating partnership (964) ---------------- ----------------- ------------ Income before extraordinary item (17,265) 4,760 67,873 Extraordinary items-early extinguishment of debt (50) ---------------- ----------------- ------------ Net income (17,265) 4,760 67,823 Dividends to preferred shareholders (17,345) ------------------- ----------------- ------------ Net income available to common shareholders (17,265) 4,760 50,478 =================== ================= ============ Basic earnings per common share Diluted earnings per common share Dividends declared per common share Weighted average number of common shares-basic 7,859 (22) Weighted average number of common shares - -diluted 9,389 (22)
Acquisition of Tennessee Portfolio, Dogwood Creek Acquisition of and San Antonio Rancho Mirage Portfolio (23) Apartments (24) ----------------- ----------------- Revenues Rental income $ 21,123 5,209 Interest and other non-property income ----------------- ----------------- 21,123 5,209 Expenses Rental expenses: Utilities 845 309 Repairs and maintenance 2,411 919 Real estate taxes 1,862 187 Property management 928 208 Other rental expenses 2,821 516 Real estate depreciation Interest General and administrative Acquisition related expenses Other depreciation and amortization Impairment loss on real estate held for disposition --------------- -------------- 8,867 2,139 Income from gains on sales of mortgage assets Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership 12,256 3,070 Gains on sales of investments Minority interest of unitholders in operating partnership --------------- -------------- Income before extraordinary item 12,256 3,070 Extraordinary items-early extinguishment of debt --------------- -------------- Net income 12,256 3,070 Dividends to preferred shareholders -------------------- ------------- Net income available to common shareholders 12,256 3,070 ==================== ============= Basic earnings per common share Diluted earnings per common share Dividends declared per common share Weighted average number of common shares-basic Weighted average number of common shares - -diluted
Tennessee Properties, Dogwood Creek, San Antonio Portfolio & Rancho Mirage United Dominion Apartments Pro Forma Pro Forma Adjustments Combined -------------------------- ---------------- Revenues Rental income $ $ 476,741 Interest and other non-property income 1,693 ------------------------- ---------------- 0 478,434 Expenses Rental expenses: Utilities 30,602 Repairs and maintenance 65,364 Real estate taxes 39,223 Property management (277) (26) 14,676 Other rental expenses 53,387 Real estate depreciation 5,271 (27) 93,895 Interest 10,768 (28) 107,742 General and administrative 7,702 Acquisition related expenses 6,684 Other depreciation and amortization 2,496 Impairment loss on real estate held for disposition 1,400 ------------------------ ------------------ 15,762 423,171 Income from gains on sales of mortgage assets Income before gains (losses) on sales of investments and minority interest of unitholders in operating partnership (15,762) 55,263 Gains on sales of investments 13,138 Minority interest of unitholders in operating partnership (941) (29) (1,905) ------------------------ ------------------ Income before extraordinary item (16,703) 66,496 Extraordinary items-early extinguishment of debt (50) ------------------------ ------------------ Net income (16,703) 66,446 Dividends to preferred shareholders (17,345) ------------------------- ----------------- Net income available to common shareholders (16,703) 49,101 ========================= ================= Basic earnings per common share 0.51 ================= Diluted earnings per common share 0.50 ================= Dividends declared per common share 1.01 ================= Weighted average number of common shares-basic 481 (30) 95,485 Weighted average number of common shares - -diluted 1,635 (30) 98,363
See accompanying notes
UNITED DOMINION REALTY TRUST, INC. UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS For the Six Months Ended June 30, 1998 (In thousands, except per share data) UNITED DOMINION UNITED ASR PRO FORMA PRO FORMA DOMINION HISTORICAL MERGER COMBINED HISTORICAL (1) (13) ADJUSTMENTS WITH (ASR) --------------- ------------- ------------- ------------- INCOME Rental income $ 222,275 $ 11,730 $ $ 234,005 Interest and non-property income 2,159 252 2,411 --------------- ------------- ------------- ------------- 224,434 11,982 236,416 EXPENSES Rental expenses: Utilities 11,945 744 12,689 Repairs and maintenance 28,035 1,043 29,078 Real estate taxes 19,341 1,177 20,518 Property management 7,920 368 (114) (16) 8,174 Other rental expenses 23,031 1,890 24,921 Depreciation of real estate owned 46,476 2,613 (253) (17) 48,836 Interest 48,561 3,452 (474) (18) 51,539 General and administrative 4,618 1,273 (993) (19) 4,898 Other depreciation and amortization 1,541 189 (18) (20) 1,712 --------------- ------------- ------------- ------------- 191,468 12,749 (1,852) 202,365 --------------- ------------- ------------- ------------- Income before gains on sales of investments and minority interest of unitholders in operating partnership 32,966 (767) 1,852 34,051 Gains on sales of investments 20,461 20,461 Minority interest of unitholders in operating partnership (1,122) (363) (1,485) Extraordinary items (116) (7,053) 7,053(21) (116) --------------- ------------- ------------- ------------- Net income 52,189 (8,183) 8,905 52,911 Dividends to preferred shareholders (11,303) (11,303) --------------- ------------- ------------- ------------- Net income available to common shareholders $ 40,886 $ (8,183) $ 8,905 $ 41,608 =============== ============= ============= ============= Basic earnings per common share $ 0.42 =============== Diluted earnings per common share $ 0.42 =============== Distributions declared per common share $ 0.0525 =============== Weighted average number of common shares outstanding-basic 96,244 3,679(22) Weighted average number of common shares outstanding-diluted 98,666 4,406(22)
ACQUISITION OF TENNESSEE PORTFOLIO, DOGWOOD CREEK ACQUISITION OF APARTMENTS, DOGWOOD CREEK ACQUISITION OF SAN ANTONIO PORTFOLIO, APARTMENTS & SAN RANCHO MIRAGE & RANCHO MIRAGE ANTONIO PORTFOLIO APARTMENTS APARTMENTS (23) (24) ADJUSTMENTS (25) ------------------ --------------- ------------------------- INCOME Rental income $ 3,150 $ 1,768 $ 1,095 Interest and non-property income ------------------ --------------- ------------------------- 3,150 1,768 1,095 EXPENSES Rental expenses: Utilities 161 93 52 Repairs and maintenance 368 301 144 Real estate taxes 371 62 86 Property management 126 70 46 Other rental expenses 504 167 138 Depreciation of real estate owned Interest General and administrative Other depreciation and amortization ------------------ --------------- ------------------------- 1,530 693 466 ------------------ --------------- ------------------------- Income before gains on sales of investments and minority interest of unitholders in operating partnership 1,620 1,075 629 Gains on sales of investments Minority interest of unitholders in operating partnership Extraordinary items ------------------ --------------- ------------------------- Net income 1,620 1,075 629 Dividends to preferred shareholders ------------------ --------------- ------------------------- Net income available to common shareholders $ 1,620 $ 1,075 $ 629 ================== =============== ========================= Basic earnings per common share Diluted earnings per common share Distributions declared per common share Weighted average number of common shares outstanding-basic Weighted average number of common shares outstanding-diluted
ACQUISITION OF TENNESSEE PORTFOLIO, DOGWOOD CREEK APARTMENTS & SAN ANTONIO PORTFOLIO PRO FORMA UNITED DOMINION ADJUSTMENTS PRO FORMA ---------------------- ------------------ INCOME Rental income $ $ 240,018 Interest and non-property income 2,411 ---------------------- ------------------ 242,429 EXPENSES Rental expenses: Utilities 12,995 Repairs and maintenance 29,891 Real estate taxes 21,037 Property management (32)(26) 8,384 Other rental expenses 25,730 Depreciation of real estate owned 1,023 (27) 49,859 Interest 2,322 (28) 53,861 General and administrative 4,898 Other depreciation and amortization 1,712 ---------------------- ------------------ 3,313 208,367 ---------------------- ------------------ Income before gains on sales of investments and minority interest of unitholders in operating partnership (3,313) 34,062 Gains on sales of investments 20,461 Minority interest of unitholders in operating partnership (405)(29) (1,890) Extraordinary items (116) ---------------------- ------------------ Net income (3,718) 52,517 Dividends to preferred shareholders (11,303) ---------------------- ------------------ Net income available to common shareholders $ (3,718) $ 41,214 ====================== ================== Basic earnings per common share $ 0.41 ================== Diluted earnings per common share $ 0.40 ================== Distributions declared per common share $ 0.5250 ================== Weighted average number of common shares outstanding-basic 282 (30) 100,205 Weighted average number of common shares outstanding-diluted 907 (30) 103,979
SEE ACCOMPANYING NOTES. UNITED DOMINION REALTY TRUST, INC. UNAUDITED NOTES TO CONSOLIDATED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND THE TWELVE MONTHS ENDED DECEMBER 31, 1997 Basis of Presentation The unaudited Consolidated Pro Forma Condensed Statements of Operations on this Form 8-K reflect the historical results of United Dominion adjusted to reflect the operations of: (i) 39 apartment communities with 7,550 apartment homes owned by ASR that were merged with and into a wholly-owned subsidiary of United Dominion, in a statutory merger on March 27, 1998, (as previously reported on Form 8-K dated March 27, 1998 and subsequently amended on Form 8-K/A No.1 dated March 27, 1998 which was filed with the Securities and Exchange Commission on June 12, 1998), (ii) a portfolio of three apartment communities (collectively the "Tennessee Portfolio") acquired on January 9, 1998 which consists of The Trails at Kirby Parkway Apartments and The Trails at Mount Moriah Apartments (which run as one community under the name The Trails), and Cinnamon Trails Apartments (as previously reported on Form 8-K dated June 9, 1998 which was filed with the Securities and Exchange Commission on June 24, 1998), (iii) Dogwood Creek Apartments acquired on February 6, 1998 (as previously reported on Form 8-K dated June 9, 1998 which was filed with the Securities and Exchange Commission on June 24, 1998), (iv) a portfolio of eight apartment communities (collectively the San Antonio Portfolio) acquired on April 16, 1998 which consists of Audubon Apartments, Carmel Apartments, Cimarron Apartments, Grand Cypress Apartments, Kenton Place Apartments, Peppermill Apartments, The Crest Apartments and Villages of Thousand Oaks Apartments (as previously reported on Form 8-K dated June 9, 1998 which was filed with the Securities and Exchange Commission on June 24, 1998), (v) Rancho Mirage Apartments acquired on May 28, 1998, (vi) 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, (collectively 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), (vii) 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, (collectively 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), (viii) 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), (ix) a portfolio of four apartment communities (collectively 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, (as previously reported on Form 8-K dated October 21, 1997 and subsequently amended on Form 8-K/A No. 1 dated October 21, 1997 which was filed with the Securities and Exchange Commission on December 31, 1997) and (x) Waterside at Ironbridge Apartments acquired on September 29, 1997, (as previously reported on Form 8-K dated October 21, 1997 and subsequently amended on Form 8-K/A No. 1 dated October 21, 1997 which was filed with the Securities and Exchange Commission on December 31, 1997). The above referenced acquisitions are shown as if they had occurred on January 1, 1997. The unaudited Consolidated Pro Forma Condensed Statements of Operations assume the Merger with ASR occurred on January 1, 1997. 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 March 27, 1998 and the results of operations are included from the date of acquisition. In connection with the Merger, United Dominion issued 7,742,839 million shares of United Dominion's common stock at $14 per share for all of the outstanding common stock of ASR for an aggregate equity value of $108.4 million plus the issuance of 1,529,990 Units in the ASR Operating Partnership valued at $21.4 million. United Dominion acquired real estate assets of $313.7 million plus other operating assets of $8.8 million, respectively. In addition, United Dominion assumed mortgage debt totaling $179.4 million, at fair value and other liabilities of $13.6 million. The unaudited Consolidated Pro Forma Condensed Statements of Operations on this Form 8-K assume the 1998 acquisition of 13 communities containing 4,318 apartment homes for an aggregate purchase price of approximately $182.6 million, including closing costs as referenced in sections (ii) through (v) of the above paragraphs. These acquisitions are assumed to have been purchased with bank line borrowings aggregating $47.6 million with a weighted average interest rate of 6.22%, the assumption of eleven mortgage notes payable aggregating $81.6 million with a weighted average interest rate of 8.12%, the issuance of 1,154,148 Operating Partnership Units and 481,251 shares of common stock at $14.75 per unit/share for an aggregate value of $24.2 million and the use of $29.2 million of cash proceeds from the sale of properties held in escrow. These acquisitions are shown as if the acquisitions occurred on January 1, 1997. In addition, the unaudited Consolidated Pro Forma Condensed Statements of Operations on this Form 8-K assume the 1997 acquisition of 17 communities containing 5,394 apartment homes for an aggregate purchase price of approximately $218.5 million, including closing costs as referenced in sections (vi) through (x) of the above paragraphs. 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 acquisitions occurred on January 1, 1997. The unaudited Consolidated Pro Forma Condensed Statements of Operations are not necessarily indicative of what United Dominion's results would have been for the twelve months ended December 31, 1997 and the six months ended June 30, 1998 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 of United Dominion in future periods. (1) Represents United Dominion's Historical Statements of Operations contained in its Quarterly Report on Form 10-Q for the six months ended June 30, 1998 as filed with the Securities and Exchange Commission on August 14, 1998 and its Annual Report on Form 10-K for the twelve months ended December 31, 1997 as filed with the Securities and Exchange Commission on March 31, 1998. (2) Represents the actual results of operations of the Option Properties, the Texas Properties and the Florida Portfolio as previously reported in the unaudited combined results of operations as appearing on Form 8-K/A No. 1 dated July 1, 1997 filed with the Securities and Exchange Commission on September 15, 1997. (3) Represents the 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 United Dominion during 1997 (based on the operating statements of the properties for the stub period January 1, 1997 to February 28, 1997). Represents operations of Pineloch Apartments and Seahawk Apartments, (for the 7 day period from May 1, 1997 to May 7, 1997), which represents the period the properties were not owned by United Dominion during 1997 (based on the operating statements of the properties for the stub period January 1, 1997 to April 30, 1997). (4) Reflects the net reduction in property management fees for the Option Properties, Texas Properties and Florida Portfolio. United Dominion internally managed its apartment portfolio at an assumed cost of approximately 3.4% of rental income (based on 1997 actual information) 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. United Dominion used 96% of the amount reported as rental income in calculating the property management fee, as approximately 4% (based on 1997 actual information) of the amount reported as rental income is assumed to be other income which is not subject to management fee. (5) Reflects the net adjustments to record depreciation expense for the Option Properties, Texas Properties and Florida Portfolio as if the transactions had occurred on January 1, 1997. 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. United Dominion'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 Useful Life Depreciation Purchase Price In Years Expense Adjustments * -------------- ------------- ------------------ Buildings $ 118,714 35 $ 814 Other Improvements 7,822 7.67 245 Land 24,612 n/a -- ----------- ------- Total $ 151,148 $ 1,059 =========== ======= * 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. (6) Reflects the additional interest expense associated with the acquisition of the Option Properties, Texas Properties and Florida Portfolio 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 Weighted Average Interest Expense Acquisition Type of Debt Amount Interest Rate Adjustment ------------- ----------- ------- --------------- -------------- Option Properties Bank Lines $ 36,774 6.058% $ 360 ** Option Properties Secured Debt 22,063 8.389% 299 ** Texas Properties Bank Lines 56,311 6.291% 998 *** Florida Portfolio Bank Lines 36,000 6.410% 1,144 **** ---------- ------------ $ 151,148 $ 2,801 =========== ============
** Includes a pro forma adjustment for 59 out of 365 days. *** Includes a pro forma adjustment for 103 out of 365 days. **** Includes a pro forma adjustment for 181 out of 365 days. (7) Represents the actual results of operations of the Houston Portfolio and Waterside at Ironbridge Apartments as previously reported in the unaudited combined results of operations as appearing on Form 8-K/A No. 1 dated October 21, 1997 filed with the Securities and Exchange Commission on December 31, 1997. (8) Represents the 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 United Dominion during 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). In addition, this represents the operations of Bammelwood Apartments (for the 30 day period from October 1, 1997 to October 30, 1997) and Camino Village Apartments (for the 50 day period from October 1, 1997 to November 20, 1997 ) which represents the period the properties were not owned by United Dominion during 1997. The unaudited combined statements of rental operations for these properties was for the stub period from January 1, 1997 to September 30, 1997. (9) Reflects the net reduction in property management fees for the Houston Properties and Waterside at Ironbridge Apartments. United Dominion internally managed its apartment portfolio at an assumed cost of approximately 3.2% of rental income (based on 1997 actual information). United Dominion used 96% of the amount reported as rental income in calculating the property management fee, as approximately 4% (based on 1997 actual information) of the amount reported as rental income is assumed to be other income which is not subject to management fee. (9) Reflects the net adjustments to record depreciation expense for the Houston Properties and Waterside at Ironbridge Apartments, as if the transactions had occurred on January 1, 1997. 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. United Dominion'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 Useful Life Depreciation Purchase Price In Years Expense Adjustments * -------------- ------------ ---------------------- Buildings $ 50,828 35 $ 1,027 Other Improvements 4,415 7.72 410 Land 12,120 n/a -- ------------ -------- Total $ 67,363 $ 1,437 ============ ========
* Includes a pro forma adjustment for approximately 8.48 months (8 months for Greenhouse Patio Apartments, Braesridge Apartments and Waterside at Ironbridge Apartments and 10 months for Camino Village Apartments and 9 months for Bammelwood Apartments) out of 12 months. (11) Reflects the additional interest expense associated with the acquisition of the Houston Properties and Waterside at Ironbridge Apartments 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 Weighted Average Interest Expense Acquisition Type of Debt Amount Interest Rate Adjustment ------------ ------------ ---------------- --------------- ---------------- Houston Properties Bank Lines $ 6,877 6.089% $ 340 ** Houston Properties Secured Debt 32,874 8.685% 2,245 ** Waterside Bank Lines 9,949 6.087% 451 *** Waterside Secured Debt 5,133 7.000% 268 *** ---------------- ------- $ 54,833 $3,304 ================ =======
** Includes a pro forma adjustment for approximately 297 out of 365 days. *** Includes a pro forma adjustment for approximately 272 out of 365 days (12) Reflects the additional minority interest expense associated with the acquisition of the Houston Properties. In connection with the acquisition of the Houston Properties, United Dominion 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 on January 1, 1997 the minority interest ownership would have been 10.6339% for the twelve months ended December 31, 1997. (13) Represents ASR's Historical Consolidated Statement of Operations for the twelve months ended December 31, 1997 as appearing in Form 8-K/A No. 1 dated March 27, 1998 filed with the Securities and Exchange Commission on June 12, 1998 and the actual results of operations of ASR for the period January 1,1998 through March 27, 1998. Certain reclassifications have been made to ASR's historical consolidated statements of operations to conform to United Dominion's presentation. (14) Represents the cumulative pro forma adjustments reported by ASR on Form 8-K/A No. 1 dated October 27, 1997 filed with the Securities and Exchange Commission on January 6, 1998 to reflect the actual results of operations and the pro forma adjustments for ASR's 1997 acquisitions which included 22 communities with 4,208 apartment homes at a total cost of approximately $176.1 million. (15) Represents the elimination of the income from the gains on sales or redemptions of mortgage assets reported by ASR during the period ended December 31, 1997. Beginning in 1996, ASR implemented a strategic plan to divest its mortgage assets 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 the gains on sales of mortgage assets is eliminated since these assets will not have a continuing impact on the results of operations for the combined entity. (16) Reflects the net estimated reduction of property management costs of $486 and $114 for the twelve months ended December 31, 1997 and the six months ended June 30, 1998, respectively, based upon the identified historical costs of certain items which are anticipated to be eliminated or reduced as a result of the Merger with ASR, as follows (in thousands of dollars):
Twelve Months Six Months Ended Ended December 31, 1997 June 30, 1998 ----------------- ------------- Net reduction in salary, benefits and other compensation due to the termination of ASR employees prior to the Merger in accordance with the Merger Agreement $ 377 $ 75 Net reduction in travel and entertainment 25 6 Net reduction in professional services 34 15 Net reduction in other expenses 50 18 ------ ----- Pro forma adjustment $ 486 $ 114 ====== =====
(17) Represents the net decrease in depreciation of real estate owned as a result of recording the ASR real estate 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 27.5 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 March 27, 1998 (in thousands of dollars): Purchase price $ 323,155 Less: Purchase price allocated to cash and cash equivalents (5,934) Purchase price allocated to other assets (3,521) Purchase price allocated to land (47,782) Purchase price allocated to real estate under development (925) Purchase price allocated to real estate held for disposition (5,000) ------------ Pro forma basis of ASR's depreciable real estate held for investment at fair value $ 259,993 ============
Calculation of depreciation of real estate owned for the twelve months ended December 31,1997 and the three months ended March 31, 1998 (in thousands of dollars):
Twelve Months Six Months Ended Ended December 31, 1997 June 30, 1998 ----------------- ------------- Depreciation expense based upon an estimated weighted average useful life of approximately 27.5 years $ 9,440 $ 2,360 Less: ASR's pro forma depreciation of real estate owned (9,634)** (2,613) --------- --------- Pro forma adjustment $ (194) $ (253) ========= =========
** Represents ASR's historical depreciation expense for the twelve months ended December 31, 1997 plus the cumulative pro forma adjustments to depreciation expense reported by ASR on Form 8-K/A No. 1 dated October 27, 1997 filed with the Securities and Exchange Commission on January 6, 1998 to reflect the actual results of operations and the pro forma adjustments for ASR's 1997 acquisitions. (18) Represents the net adjustment to interest expense for the twelve months ended December 31, 1997 and the six months ended June 30, 1998 associated with the Merger with ASR, as follows (in thousands of dollars):
Twelve Months Six Months Ended Ended December 31, 1997 June 30, 1998 ----------------- ------------- To adjust amortization of ASR's deferred financing costs which were eliminated in the Merger $ (412) $ (171) To reflect amortization of the premium required to record ASR's mortgage notes payable at fair value (1,261) (315) To reflect additional borrowings of $792 under United Dominion's bank line borrowings at current market interest rates available to United Dominion of 6.14% 49 12 ---------- --------- Pro forma adjustment $ (1,624) $ (474) ========== =========
(19) Reflects the net estimated reduction of general and administrative expenses of $2,432 and $993 for the twelve months ended December 31, 1997 and the six months ended June 30, 1998, respectively, based upon the identified historical costs of certain items which are anticipated to be eliminated or reduced as a result of the Merger with ASR, as follows (in thousands of dollars):
Twelve Months Six Months Ended Ended December 31, 1997 June 30, 1998 ----------------- ------------- Net reduction in salary, benefits and other compensation due to the termination of ASR employees prior to the ASR Merger in accordance with the ASR Merger Agreement $ 1,909 $ 219 Net reduction in duplicative public company expenses 333 497 Net reduction in professional services 35 7 Net reduction in other expenses 155 270 ----------- -------- Pro forma adjustment $ 2,432 $ 993 =========== ========
(20) Represents the elimination of the amortization of goodwill included in the ASR historical and pro forma financial statements which were eliminated in connection with the Merger. (21) Represents the elimination of extraordinary items included in the ASR historical statement of operations for the period ended March 27, 1998 which relates to costs directly attributable to the Merger and are therefore non-recurring. (22) Represents the adjustment to the weighted average shares outstanding to reflect the Merger with ASR for the twelve months ended December 31, 1997 and the six months ended June 30, 1998. The ASR pro forma weighted average common shares outstanding were exchanged into 1.575 shares of United Dominion common stock in accordance with the Merger Agreement. (23) Represents the actual results of operations of the Tennessee Portfolio, Dogwood Creek Apartments and the San Antonio Portfolio as previously reported in the unaudited combined results of operations as appearing on Form 8-K/A No. 1 dated June 9, 1998 filed with the Securities and Exchange Commission on August 13, 1998. (24) Represents the actual results of operations of Rancho Mirage Apartments as reported elsewhere herein. (25) Represents the operations of the following 1998 acquisitions: (i) the operation of the Tennessee Portfolio (for the 8 day period from January 1, 1998 to January 8, 1998) which represents the period the properties were not owned by United Dominion during 1998 (based on the operating statements of the properties for the year ended December 31, 1997), (ii) the operations of Dogwood Creek Apartments (for the 5 day period from February 1, 1998 to February 5, 1998), which represents the period the property was not owned by United Dominion during 1998 (based on the operating statements of the properties for the stub period January 1, 1998 to January 31, 1998), (iii) the operations of the San Antonio Portfolio (for the 15 day period from April 1, 1998 to April 15, 1998), which represents period the property was not owned by. United Dominion during 1998) based on the operating statements of the properties for the stub period January 1, 1998 to March 31 1998) and (iv) the operations of Rancho Mirage Apartments (for the 27 day period from May 1 1998, to May 27, 1998), which represents the period the property was not owned by United Dominion during 1998 (based on the operating statements of the properties for the stub period January 1, 1998 to April 30, 1998). (26) Reflects the net reduction in property management fees for the Tennessee Portfolio, Dogwood Creek Apartments, the San Antonio Portfolio and Rancho Mirage Apartments. United Dominion internally managed its apartment portfolio at an assumed cost of approximately 3.6% of rental income for the six months ended June 30, 1998 and 3.4% for the twelve months ended December 31, 1997 (based on actual information during 1997 and 1998). United Dominion used 96% of the amount reported as rental income in calculating the property management fee, as approximately 4% (based on 1998 actual information) of the amount reported as rental income is assumed to be other income which is not subject to management fee. (27) Reflects the net adjustments to record depreciation expense for the Tennessee Portfolio, Dogwood Creek Apartments, the San Antonio Portfolio and Rancho Mirage Apartments as if the transactions occurred on January 1, 1997. 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. United Dominion's policy is to record a full month of depreciation in the month of acquisition. The weighted average life of other improvements is approximately 7.20 years based upon the initial cost of the properties of $182.6 million. The allocation and useful lives are as follows (in thousands of dollars):
Twelve Month Six Month Useful Life Depreciation Depreciation Purchase Price In Years Expense Adjustment** Expense Adjustment* -------------- ------------- ------------------- ------------------- Buildings $ 144,709 35 $ 3,922 $ 756 Other Improvements 10,190 7.20 1,349 267 Land 27,671 n/a -- -- ------------ ---------- ----------- Total $ 182,570 $ 5,271 $ 1,023 ============ ========== ===========
* The six months ended June 30, 1998 includes a pro forma adjustment for 2.2 months (1 month for Dogwood Creek Apartments, 3 months for the San Antonio Portfolio and 4 months for Rancho Mirage Apartments) out of 12 months. ** The twelve months ended December 31, 1997 includes a pro forma adjustment for the full year for the Tennessee Properties, the San Antonio Portfolio and Rancho Mirage Apartments and a pro forma adjustment for 6 months for Dogwood Creek Apartments as the community was not in full lease-up for all of 1997. (28) Reflects the additional interest expense associated with the acquisition of the Tennessee Portfolio, Dogwood Creek Apartments, the San Antonio Portfolio and Rancho Mirage Apartments which consists of the following: (i) variable-rate bank debt aggregating approximately $47.6 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 6.22% and (ii) the assumption of approximately $81.6 million of fixed-rate mortgage debt with a weighted average interest rate of 8.12% as outlined below (in thousands of dollars):
Twelve Month Six Month Weighted Average Interest Expense Interest Expense Acquisition Type of Debt Amount Interest Rate Adjustment * Adjustment - ------------ ------------ -------- ----------------- ------------------ ----------------- Tennessee Portfolio Bank Lines $ 26,266 6.289% $ 1,652 $ 36 ** Tennessee Portfolio Secured Debt 28,047 7.649% 2,145 47 ** Dogwood Creek Bank Lines 6,522 6.164% 101 40 *** Dogwood Creek Secured Debt 10,000 8.000% 500 79 *** San Antonio Portfolio Bank Lines 5,472 6.107% 333 97 **** San Antonio Portfolio Secured Debt 43,603 8.444% 3,683 1,069 **** Rancho Mirage Bank Lines 38,538 6.107% 2,354 954***** --------- -------- ------- $ 158,448 $ 10,768 $ 2,322 ========= ========= ========
* The twelve months ended December 31, 1997 includes a pro forma adjustment for the full year for the Tennessee Portfolio, the San Antonio Portfolio and Rancho Mirage Apartments and a pro forma adjustment for 6 months for Dogwood Creek Apartments as the community was not in full lease-up for all of 1997. ** Includes a pro forma adjustment for 8 out of 365 days. *** Includes a pro forma adjustment for 36 out of 365 days. **** Includes a pro forma adjustment for 106 out of 365 days. ***** Includes a pro forma adjustment for 148 out of 365 days. (29) Reflects the additional minority interest expense associated with the acquisition of Dogwood Creek Apartments and the San Antonio Portfolio. In connection with the Dogwood Creek acquisition, United Dominion issued 130,416 Operating Partnership Units and in connection with the San Antonio Portfolio acquisition issued 1,023,732 Operating Partnership Units. Assuming the acquisition of Dogwood Creek Apartments and the San Antonio Portfolio on January 1, 1997, the weighted average Operating Partnership Units outstanding (as a percentage of all common stock and Operating Partnership Units) was 3.53% and 3.71% for the six months ended June 30,1998 and the twelve months ended December 31, 1997, respectively. (30) Represents the adjustment to record the pro forma weighted average shares of common stock and Operating Partnership Units outstanding as a result of the acquisition of Dogwood Creek Apartments and the San Antonio Portfolio. In connection with the Dogwood Creek acquisition, United Dominion issued 130,416 Operating Partnership Units and in connection with the San Antonio Portfolio acquisition issued 1,023,732 Operating Partnership Units and 481,251 shares of common stock. The common stock and Operating Partnership Units are assumed to have been outstanding since the beginning of each period presented. Signatures Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. UNITED DOMINION REALTY TRUST, INC. Date: September 19, 1998 /s/ James Dolphin --------------------------------------- James Dolphin, Senior Vice President Chief Financial Officer [L.P. MARTIN & COMPANY LETTERHEAD] 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. 33-47296, Registration Statement Form S-8 No. 33-48000, Registration Statement Form S-8 No. 33-58201, Registration Statement Form S-8 No. 333-32829, Registration Statement Form S-8 No. 333-42691, Registration Statement Form S-3 No. 333-44463, Registration Statement Form S-3 No. 333-48557, and Registration Statement Form S-3 No. 333-53401, of United Dominion Realty Trust, Inc. of our report dated July 9, 1998, with respect to the statement of rental operations of Rancho Mirage Apartments for the year ended December 31, 1997, included in this Form 8-K dated May 28, 1998. /s/ L.P. Martin & Company, P.C. L.P. Martin & Company, P.C. Certified Public Accountants Richmond, Virginia October 15, 1998 -----END PRIVACY-ENHANCED MESSAGE-----