-----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, TxTud2Lxpa8oYDk0UR/WlkJ/D3wk+3cQX1q2L1FyTz9kTKTzqSY643rHrc9Sbhl9 qRjzg103+fSJv6kPpRHtnA== 0000950134-98-002289.txt : 19980324 0000950134-98-002289.hdr.sgml : 19980324 ACCESSION NUMBER: 0000950134-98-002289 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980211 ITEM INFORMATION: FILED AS OF DATE: 19980323 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT INC CENTRAL INDEX KEY: 0000778437 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 756335572 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-09016 FILM NUMBER: 98571118 BUSINESS ADDRESS: STREET 1: 6210 N BELTLINE RD STREET 2: STE 170 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 9727566000 MAIL ADDRESS: STREET 1: 6220 N BELTLINE ROAD STREET 2: SUITE 205 CITY: IRVING STATE: TX ZIP: 75063 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT DATE OF NAME CHANGE: 19931203 FORMER COMPANY: FORMER CONFORMED NAME: TRAMMELL CROW REAL ESTATE INVESTORS DATE OF NAME CHANGE: 19931203 8-K/A 1 AMENDMENT NO.2 TO FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 2 TO 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 11, 1998 AMERICAN INDUSTRIAL PROPERTIES REIT (Exact Name of Registrant as Specified in its Charter)
TEXAS 1-9016 75-6335572 (State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Incorporation or Organization) Identification Number)
6210 NORTH BELTLINE ROAD, SUITE 170, IRVING, TEXAS 75063 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (972) 756-6000 2 The undersigned Registrant hereby amends its Current Report on Form 8-K dated February 11, 1998, which was filed with the Securities and Exchange Commission on February 25, 1998, to include the financial statements required by Item 7 (a) and the pro forma financial information required by Item 7 (b). ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements: See Index to Financial Statements and Pro Forma Financial Information appearing on page F-1 of this Form 8-K/A. (b) Pro Forma Financial Information: See Index to Financial Statements and Pro Forma Financial Information appearing on page F-1 of this Form 8-K/A. 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN INDUSTRIAL PROPERTIES REIT By: /s/ CHARLES W. WOLCOTT ------------------------------ Charles W. Wolcott President and Chief Executive Officer March 23, 1998 4 INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION FINANCIAL STATEMENTS SPRING VALLEY #6 INDUSTRIAL PROPERTY Report of Independent Auditors................................... F-2 Historical Summary of Gross Income and Direct Operating Expenses............................................. F-3 Notes to Historical Summary of Gross Income and Direct Operating Expenses...................................... F-4 PRO FORMA FINANCIAL INFORMATION........................................... F-6 Pro forma condensed consolidated balance sheet as of December 31, 1997.............................................. F-8 Pro forma condensed consolidated statement of operations for the year ended December 31, 1997........................... F-10
F-1 5 Report of Independent Auditors Board of Trust Managers American Industrial Properties REIT We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses (the "Historical Summary") of the Spring Valley #6 Industrial Property (the "Property"), as described in Note 1 for the years ended December 31, 1997 and 1996. This Historical Summary is the responsibility of the Property's management. Our responsibility is to express an opinion on this Historical Summary based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audits provide a reasonable basis for our opinion. The Historical Summary has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Current Report on Form 8-K of American Industrial Properties REIT, as described in Note 1 and is not intended to be a complete presentation of the income and expenses of the Property. In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses of Spring Valley #6 Industrial Property, as described in Note 1, for the years ended December 31, 1997 and 1996, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP Ernst & Young LLP Dallas, Texas February 13, 1998 F-2 6 Spring Valley #6 Industrial Property Historical Summary of Gross Income and Direct Operating Expenses
YEAR ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 1996 1997 ----------- ------------ GROSS INCOME Rental $ 707,280 $ 707,280 Reimbursements 246,486 295,160 Other 3,414 4,991 ---------- ---------- Total gross income 957,180 1,007,431 DIRECT OPERATING EXPENSES Repairs and maintenance 61,624 131,837 Utilities and other property operating 50,717 53,756 Real estate taxes 100,954 133,680 Management fees 38,418 37,496 ---------- ---------- Total direct operating expenses 251,713 356,769 ---------- ---------- Excess of gross income over direct operating expenses $ 705,467 $ 650,662 ========== ==========
See accompanying notes. F-3 7 Spring Valley #6 Industrial Property Notes to Historical Summary of Gross Income and Direct Operating Expenses Years Ended December 31, 1997 and 1996 1. ORGANIZATION AND BASIS OF PRESENTATION The Spring Valley #6 Industrial Property (the "Property") is a commercial office building containing approximately 94,300 square feet located in Richardson, Texas. As of December 31, 1997 the property was 100% leased to one tenant, Northern Telecommunications, NORTEL. The accompanying Historical Summary has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Current Report on Form 8-K of American Industrial Properties REIT. The Historical Summary is not intended to be a complete presentation of income and expenses of the Property for the years ended December 31, 1997 and 1996, as certain costs such as depreciation, amortization, interest, and other debt service costs have been excluded. These costs are not considered to be direct operating expenses. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES USE OF ESTIMATES The preparation of the Historical Summary in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts included in the Historical Summary and accompanying notes thereto. Actual results could differ from those estimates. REVENUE RECOGNITION Minimum rents are recognized on a straight-line basis; as such, the rental revenues for leases which contain rent abatements and contractual increases are recognized on a straight-line basis over the initial term of the related lease. Property operating cost recoveries from tenants of common area maintenance, real estate taxes and other recoverable costs, are recognized in the period when the recoveries are earned. F-4 8 Spring Valley #6 Industrial Property Notes to Historical Summary of Gross Income and Direct Operating Expenses (continued) 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) CAPITALIZATION POLICY Ordinary repairs and maintenance are expensed as incurred; major replacements and improvements are capitalized. 3. MANAGEMENT FEES The Property is managed by a third party. The management fee is 4.0% of cash receipts per year. 4. OPERATING LEASES The Property's operating lease with NORTEL expires on January 31, 2001. The minimum future rentals under the operating lease as of December 31, 1997 are as follows: 1998 $ 707,280 1999 707,280 2000 707,280 2001 58,940 ---------- $2,180,780 ==========
5. TRANSACTIONS WITH RELATED PARTIES Insurance coverage is provided by the owner of the Property. Amounts incurred for insurance for the years ended December 31, 1997 and 1996 were $11,778 and $11,434, respectively. 6. SUBSEQUENT EVENT On January 12, 1998, the Property was sold for a purchase price of $7.2 million to American Industrial Properties REIT. F-5 9 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT SHARE DATA) The following Pro Forma Condensed Consolidated Balance Sheet of the Trust as of December 31, 1997 has been prepared as if each of the following transactions had occurred as of December 31, 1997: (i) the acquisition, through AIP Operating, L.P., a limited partnership in which the Trust has a 99% controlling ownership interest, of Spring Valley #6 on February 11, 1998 (the "1998 Acquisition"); (ii) the private placements with three investors of 1,376,245 shares of Common Shares of Beneficial Interest of the Trust (the "Common Shares") with net proceeds of $18,750 in February 1998 (the "1998 Private Placements"); and (iii) the Trust's repurchase of 6,700 Common Shares, for an aggregate cost of $89 (the "Common Share Repurchase"). The following Pro Forma Condensed Consolidated Statement of Operations of the Trust for the year ended December 31, 1997 has been prepared as if each of the following transactions had occurred as of January 1, 1997: (i) the acquisition of 15 industrial real estate properties (the "1997 Acquisitions"); (ii) the sale of 2 industrial real estate properties (the "1997 Dispositions"); (iii) the merger (the "Merger") with four publicly traded real estate limited partnerships (the "RELPs"); and (iv) the 1998 Acquisition. The Pro Forma Financial Information of the Trust has been prepared using the purchase method of accounting for the Merger, whereby the assets and liabilities of the RELPs were adjusted to estimated fair market value, based upon preliminary estimates, which are subject to change as additional information is obtained. The allocations of purchase costs are subject to final determination based upon estimates and other evaluations of fair market value. Therefore, the allocations reflected in the following Pro Forma Financial Information may differ from the amounts ultimately determined. Such Pro Forma Financial Information is based in part upon (i) the Consolidated Financial Statements of the Trust for the year ended December 31, 1997, incorporated by reference herein; (ii) the Financial Statements of USAA Real Estate Income Investments I Limited Partnership for the year ended December 31, 1997 filed with Amendment No. 1 to the Trust's Current Report on Form 8-K, dated January 20, 1998, incorporated by reference herein; (iii) the Financial Statements of USAA Real Estate Income Investments II Limited Partnership for the year ended June 30, 1997 and the six months ended December 31, 1997 (unaudited) filed with Amendment No. 1 to the Trust's Current Report on Form 8-K, dated January 20, 1998, incorporated by reference herein; (iv) the Financial Statements of USAA Income Properties III Limited Partnership for the year ended December 31, 1997 filed with Amendment No. 1 to the Trust's Current Report on Form 8-K, dated January 20, 1998, incorporated by reference herein; (v) the Financial Statements of USAA Income Properties IV Limited Partnership for the year ended December 31, 1997 filed with Amendment No. 1 to the Trust's Current Report on Form 8-K, dated January 20, 1998, incorporated by reference herein; (vi) the unaudited Combined Historical F-6 10 Summary of Merit Texas Properties Portfolio for the nine months ended September 30, 1997 filed with Amendment No. 1 to the Trust's Current Report on Form 8-K, dated October 17, 1997, incorporated by reference herein; (vii) the unaudited Historical Summary of Commerce Center for the year ended May 31, 1997 and the three months ended August 31, 1997 filed with Amendment No. 2 to the Trust's Current Report on Form 8-K, dated November 25, 1997, incorporated by reference herein; (viii) the Historical Summary of Spring Valley #6 Industrial Property for the year ended December 31, 1997 filed with Amendment No. 2 to the Trust's Current Report on Form 8-K, dated February 11, 1998, incorporated by reference herein; (ix) the unaudited Combined Historical Summary of Skyway and Central Park Industrial Properties for the six months ended June 30, 1997 filed with the Trust's Current Report on Form 8-K, dated March 23, 1998 incorporated by reference herein; (x) the unaudited Historical Summary of Inverness Industrial Property for the nine months ended September 30, 1997 filed with the Trust's Current Report on Form 8-K, dated March 23, 1998 incorporated by reference herein; (xi) the unaudited Combined Statement of Revenues and Certain Expenses of Corporex Plaza I and Presidents' Plaza Business Center for the nine months ended September 30, 1997 filed with the Trust's Current Report on Form 8-K, dated March 23, 1998, incorporated by reference herein; and (xii) the unaudited Historical Summary of Avion Industrial Property for the nine months ended September 30, 1997 filed with the Trust's Current Report on Form 8-K, dated March 23, 1998, incorporated by reference herein. The Pro Forma Financial Information is presented for information purposes only and is not necessarily indicative of the financial position or results of operations of the Trust that would have occurred if such transactions had been completed on the dates indicated, nor does it purport to be indicative of future financial position or results of operations. In the opinion of the Trust's management, all material adjustments necessary to reflect the effect of these transactions have been made. F-7 11 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (IN THOUSANDS) (UNAUDITED)
Trust Recent Pro Historical (A) Transactions (B) Forma ------------ -------------- --------- ASSETS Real estate, net $ 239,791 $ 9,259 (C) $ 249,050 Cash - unrestricted 11,683 (1,974) (C) 18,002 (D) (89) (E) 27,622 Cash - restricted 2,121 0 2,121 Other assets, net 4,800 65 (C) 4,865 --------- --------- --------- $ 258,395 $ 25,263 $ 283,658 ========= ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage notes payable $ 114,226 $ 6,475 (C) $ 120,701 Notes payable to affiliates 7,200 0 7,200 Accrued interest payable 269 0 269 Accounts payable, accrued expenses and other 7,231 0 7,231 Tenant security deposits 1,254 0 1,254 --------- --------- --------- 130,180 6,475 136,655 Minority interests 6,444 875 (C) 7,319 Shareholders' equity: Common Shares of beneficial interest ($0.10 par value) 982 138 (D) 1,120 Additional paid-in capital 224,989 17,864 (D) 242,853 Less Common Shares in treasury, at cost (626) (89) (E) (715) Accumulated distributions (58,456) 0 (58,456) Accumulated loss from operations and extraordinary gains (losses) (48,429) 0 (48,429) Accumulated net realized gain on sales of real estate 3,311 0 3,311 --------- --------- --------- 121,771 17,913 139,684 --------- --------- --------- $ 258,395 $ 25,263 $ 283,658 ========= ========= =========
F-8 12 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1997 (IN THOUSANDS) (UNAUDITED) (A) Represents the historical financial position of the Trust as of December 31, 1997. (B) Represents adjustments for the 1998 Acquisition, the 1998 Private Placements and the Common Share Repurchase. (C) Represents adjustments for the 1998 Acquisition, including closing and transaction costs, of $9,259, comprised of cash of $1,974, borrowings on the Trust's acquisition line of credit (the "Credit Facility") of $6,475, deferred loan costs of $65, and the issuance of 58 limited partnership units in AIP Operating, L.P. with a value of $875. The Credit Facility bears interest at the 30-day LIBOR rate plus 2%, with a maturity of one year. (D) Represents adjustments for the 1998 Private Placements. (E) Represents adjustments for the Common Share Repurchase. F-9 13 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Trust Recent RELPS Historical (A) Transactions (B) Historical (C) -------------------- -------------------- -------------------- INCOME Rents and tenant reimbursements $ 12,201 $ 8,574 (D) $ 11,888 (730)(E) Equity in earnings of joint venture - - (108) Interest and other income 546 25 (D) 527 (164)(E) -------------------- -------------------- -------------------- 12,747 7,705 12,307 -------------------- -------------------- -------------------- EXPENSES Property operating expenses 4,315 2,649 (D) 5,560 (201)(E) Depreciation and amortization 3,157 1,370 (D) 4,003 (87)(E) Interest expense 5,778 3,713 (D) 3,089 (256)(E) General and administrative 2,504 - 1,518 --------------------- -------------------- -------------------- Total expenses 15,754 7,188 14,170 Income (loss) before minority interest (3,007) 517 (1,863) Minority interest - - - -------------------- -------------------- -------------------- Income (loss) from operations $ (3,007) $ 517 $ (1,863) ==================== ==================== ==================== Income (loss) from operations per share: Basic and diluted $ (0.91) ==================== Weighted average number of Common Shares outstanding 3,317 ==================== RELPS Pro Forma Adjustments Adjustments Total --------------------- -------------------- ------------------- INCOME Rents and tenant reimbursements $ 2,036 (F) $ - (1,894) (G) $ 32,075 Equity in earnings of joint venture 264 (F) - (156) (H) - Interest and other income (527) (I) - 407 --------------------- -------------------- -------------------- (277) - 32,482 --------------------- -------------------- -------------------- EXPENSES Property operating expenses 43 (F) - (391) (G) 11,975 Depreciation and amortization 1,014 (F) (2,790) (J) (309) (G) 6,358 Interest expense 1,388 (F) (1,022) (K) (907) (G) 11,783 General and administrative 63 (F) 335 (L) (121) (G) 4,299 --------------------- -------------------- -------------------- Total expenses 780 (3,477) 34,415 Income (loss) before minority interest (1,057) 3,477 (1,933) Minority interest 208 (F) - 208 --------------------- -------------------- -------------------- Income (loss) from operations $ (849) $ 3,477 $ (1,725) ===================== ==================== ==================== Income (loss) from operations per share: Basic and diluted $ (0.15) ==================== Weighted average number of Common Shares outstanding 11,193 (M) ====================
F-10 14 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) (A) Represents the historical results of operations of the Trust for the year ended December 31, 1997. Certain reclassifications have been made to the historical statements of operations of the Trust to conform to the pro forma financial information presentation. In addition, excludes gain on sale of real estate of $2,163 and extraordinary gain on extinguishment of debt of $2,643. (B) Represents adjustments for the 1997 Acquisitions, the 1997 Dispositions, the Merger, and the 1998 Acquisition. (C) Represents the combined historical results of operations of the RELPs acquired in connection with the Merger. (D) Represents adjustments for the 1997 Acquisitions and the 1998 Acquisition, based on historical operating results. Depreciation is based on the preliminary allocation of the purchase price, with buildings depreciated using the straight-line method over a 40 year period. Interest expense is based on the borrowings incurred at the related interest rates, which range from 7.25% (fixed rate under a mortgage note payable) to 7.70% (the average 30-day LIBOR rate plus 2% during the year ended December 31, 1997). (E) Represents adjustments to remove the historical results of operations of the 1997 Dispositions. (F) Represents adjustments, based on historical operating results, for the investment in USAA Chelmsford Associates Joint Venture (the "Joint Venture"), accounted by the RELP on the equity method, which is consolidated by the Trust due to an amendment to the joint venture agreement subsequent to the Merger providing the Trust with control over the major decisions of the Joint Venture. (G) Represents adjustments to eliminate the historical results of operations of a real estate property which, in conjunction with the Merger, was sold by the RELP to an affiliate. (H) Represents adjustment to eliminate the equity in earnings of a joint venture. In connection with the Merger, the interest in the joint venture was sold by the RELP to an affiliate. (I) Represents adjustments to eliminate interest income as a result of cash distributions to the RELP limited partners prior to the Merger. F-11 15 (J) Represents adjustment to reduce the depreciation of real estate. This adjustment represents increased depreciation resulting from the allocation of purchase price, reduced by the use of a 40 year period by the Trust, rather than a 30 year period, as had been the practice by the RELPs. (K) Represents adjustment to eliminate interest expense accrued by the Trust related to the notes payable convertible into Common Shares. The amount of non-recurring interest expense represents the difference between the market trading price of $11.88 per Common Share on February 26, 1997, the date of issuance of the modified notes, which contained the convertibility option, and the $10.00 conversion price. (L) Represents adjustments for incremental general and administrative costs estimated to be incurred by the Trust as a result of the recent growth, including personnel costs. (M) The pro forma weighted average shares outstanding includes 9,817 Common Shares outstanding at December 31, 1997 and 1,376 Common Shares issued in the 1998 Private Placements. Diluted earnings per share are the same as basic earnings per share as the Trust has a loss from operations. F-12 -----END PRIVACY-ENHANCED MESSAGE-----