-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qiFQwpttc7rwojwdjSiCyor3g2Vf+7DUa7BM+Tp8AzZjSIbKGBspK0A8FPhO7M2N 06HW16tky/zm1OoUfjiYNg== 0000801124-94-000055.txt : 19940908 0000801124-94-000055.hdr.sgml : 19940908 ACCESSION NUMBER: 0000801124-94-000055 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19940817 ITEM INFORMATION: Acquisition or disposition of assets FILED AS OF DATE: 19940901 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VANGUARD REAL ESTATE FUND I /MA/ CENTRAL INDEX KEY: 0000801124 STANDARD INDUSTRIAL CLASSIFICATION: 6798 IRS NUMBER: 236861048 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-10820 FILM NUMBER: 94547700 BUSINESS ADDRESS: STREET 1: P O BOX 2600 VM V34 CITY: VALLEY FORGE STATE: PA ZIP: 19482 BUSINESS PHONE: 6106696289 8-K 1 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): August 17, 1994 Vanguard Real Estate Fund I, A Sales-Commission-Free Income Properties Fund - - --------------------------------------------------------------------------- (Exact name of the registrant as specified in its character) Massachusetts 0-16785 23-6861048 - - ------------- ------- ----------- (State of other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) Vanguard Financial Center, Malvern, PA 19355 - - -------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant s telephone number, including area code (610) 669-1000 INDEX Cover Page. . . . . . . . . . . . . . . . . . . . . . . . . - Index . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ITEM NO. Item 1.Change in Control of Registrant . . . . . . . . . . .2 Item 2.Acquisition or Disposition of Assets. . . . . . . . .2 Item 3.Bankruptcy or Receivership. . . . . . . . . . . . . .2 Item 4.Changes in Registrant s Certifying Accountant . . . .2 Item 5.Other Events. . . . . . . . . . . . . . . . . . . . .2 Item 6.Resignation of Registrant s Directors . . . . . . . .2 Item 7.Financial Statements and Exhibits Pro forma Statement of Operations, year ended December 31, 1993 . . . . . . . . . . . . . . . .3 Notes to pro forma Statement of Operations, year ended December 31, 1993 . . . . . . . . . . . . .4 Pro forma Statement of Operations, six-months ended June 30, 1994 . . . . . . . . . . . . . . .5 Notes to pro forma Statement of Operations, six-months ended June 30, 1994. . . . . . . . . .6 Pro forma Balance Sheet at June 30, 1994 . . . . .7 Notes to pro forma Balance Sheet at June 30, 1994 . . . . . . . . . . . . . . . . . .8 Item 8.Change in Fiscal Year . . . . . . . . . . . . . . . .2 Signatures. . . . . . . . . . . . . . . . . . . . . . . . . 9 Item 1.Change in Control of Registrant None Item 2.Acquisition or Disposition of Assets On August 17, 1994, Vanguard Real Estate Fund I (the "Fund") sold the Arden Hills building in its Minnesota Portfolio for $5,550,000. Arden Hills, purchased in February 1988 for $7,275,000, is the largest of the three office buildings in the Minnesota Portfolio. In accordance with the terms of the advisory agreement between the Fund and Aldrich, Eastman and Waltch (AEW), the Fund paid an acquisition fee of $145,500, representing 2% of the purchase price, and will pay a dispo- sition fee of $111,000, representing 2% of the sales price, in connec- tion with its investment in the Arden Hills building. The Fund also, at closing, paid a brokerage commission of $111,000. The Fund expects to realize a capital loss of approximately $1,200,000 on the sale of the Arden Hills building, substantially all of which was recognized via a write-down of the investment s carrying value in the second quarter of 1994. Item 3.Bankruptcy or Receivership None Item 4.Changes in Registrant s Certifying Accountant None Item 5.Other Events None Item 6.Resignation of Registrant s Directors None Item 7.Financial Statements and Exhibits Unaudited pro forma statements of operations for the year ended Decem- ber 31, 1993 and for the six-months ended June 30, 1994, respectively, and an unaudited pro forma balance sheet at June 30, 1994, are filed as part of this report. Item 8.Change in Fiscal Year None 2 The following unaudited pro forma statement of operations presents the results of operations of Vanguard Real Estate Fund I ("VREF I") as of December 31, 1993, as if the August 17, 1994 disposition of the Arden Hills building ("Arden Hills") and the 1993 dispositions of Carmel Office Park ("Carmel") and Citadel II each occurred on January 1, 1993. Such pro forma information is based upon the historical results of operations for VREF I, Arden Hills, Carmel and Citadel II for the year ended December 31, 1993, giving effect to the pro forma adjustments relating only to those items which will have a continuing impact on the Fund's Statement of Operations described below. This statement does not purport to be indicative of results of operations that actually would have resulted if VREF I had disposed of Arden Hills, Carmel, and Citadel II on January 1, 1993. This statement should be read in conjunction with the financial statements of VREF I included in its 1993 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. VANGUARD REAL ESTATE FUND I, A SALES-COMMISSION-FREE INCOME PROPERTIES FUND PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1993 (7) (Unaudited)
Pro Forma Pro Forma Adjustments Historical Adjustments 1993 Pro Forma VREF I Arden Hills Dispositions Results (000) (000) (000) (000) REAL ESTATE INCOME Rental Income $7,517 ($908) (1) ($1,273) (5) $5,336 Mortgage Interest Income 1,279 - - 1,279 Net Income from In-Substance Foreclosed Assets 2,499 - (915) (5) 1,584 ------- ------- -------- ------- 11,295 (908) (2,188) 8,199 ------- ------- -------- ------- REAL ESTATE EXPENSES Mortgage Interest Expense 1,030 - (778) (5) 252 Real Estate Taxes 823 (226) (1) (178) (5) 419 Property Operating Expenses 1,042 (42) (1) (432) (5) 568 Depreciation and Amortization 1,503 (162) (1) (430) (5) 911 Provision for Possible Losses 2,798 - (298) (6) 2,500 ------- ------- -------- ------- 7,196 (430) (2,116) 4,650 ------- ------- -------- ------- INCOME FROM REAL ESTATE 4,099 (478) (72) 3,549 INVESTMENT INCOME FROM SHORT-TERM INVESTMENTS 367 - (2) (169) (2) 198 ------- ------- -------- ------- 4,466 (478) (241) 3,747 ------- ------- -------- ------- ADMINISTRATIVE EXPENSES Investment Advisory Fee 421 (28) (3) (67) (3) 326 Administrative Fee 350 (25) (4) (47) (4) 278 Other Administrative Expenses 357 - - 357 ------- ------- -------- ------- 1,128 (53) (114) 961 ------- ------- -------- ------- NET INCOME $3,338 ($425) ($127) $2,786 ======= ======= ======== ======= Weighted Average Shares Outstanding 11,039,590 11,039,590 ========== ========== Net Income per Share $0.30 $0.25 ====== ======
The accompanying notes are an integral part of this statement. 3 NOTES TO PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1993 (1) To record decreases in rental income, real estate taxes, property operating expenses, and depreciation and amortization based on the historical operating results of Arden Hills included in VREF I's historical results of operations for the year ended December 31, 1993. (2) The Fund currently anticipates that the net proceeds of the Arden Hills transaction will be paid out with its year-end 1994 distribution to shareholders. For purposes of pro forma presentation of the Fund's operating results for the year ended December 31, 1993, Fund manage- ment has assumed that the net proceeds made available from the Arden Hills and Carmel transactions were immediately distributed to share holders on January 1, 1993, and, accordingly, (i) no investment earn- ings have been imputed on the Arden Hills net proceeds and (ii) a pro forma adjustment to decrease short-term investment income by $169,000 has been recorded to reverse income earned during the last five months of 1993 on the funds received from the payoff of the Carmel mortgage loan investment. (3) To record a decrease in the investment advisory fee based upon the decrease in real estate assets held by the Fund. (4) To record a decrease in the administrative fee based upon the decrease in assets held by the Fund. (5) To record decreases in rental income, net income from in-substance foreclosed assets, mortgage interest expense, real estate taxes, property operating expenses, and depreciation and amortization based on the historical operating results of Citadel II and Carmel included in VREF I s historical results of operations for the year ended Decem- ber 31, 1993. (6) To reverse the amount recorded in the provision for possible losses in 1993 related to Carmel and Citadel II. (7) The estimated $1,200,000 loss on the sale of Arden Hills has not been included in the pro forma statement of operations for the year ended December 31, 1993 since such loss is a nonrecurring loss after income from continuing operations. Pursuant to the Fund s prospectus, the Fund may not reinvest the net proceeds received from sales in additional real estate investments after December 31, 1993. If cash available for investment (giving effect to Arden Hills and Carmel as if they had been disposed of on January 1, 1993) were assumed to have been invested in short-term money market instruments (it is, in the opinion of the Fund's manage ment, impracticable to assume that a suitable real estate investment consistent with the Fund s investment objectives would have been identified for the investment of such available cash) and not assumed to have been distributed on January 1, 1993, the Fund would have earned approximately an additional $399,000 in short-term investment income, using an average interest rate of 3.0%, on a pro forma basis for the year ended December 31, 1993, resulting in investment income from short-term investments of $766,000. 4 The following unaudited pro forma statement of operations presents the results of operations of Vanguard Real Estate Fund I ("VREF I") as of June 30, 1994, as if the disposition of the Arden Hills building ("Arden Hills") occurred on January 1, 1993. Such pro forma information is based upon the historical results of operations for VREF I and Arden Hills for the six- months ended June 30, 1994, giving effect to the pro forma adjustments described below. This statement does not purport to be indicative of results of operations that actually would have resulted if VREF I had disposed of Arden Hills on January 1, 1993. This statement should be read in conjunction with the financial statements of VREF I included in its 1993 Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. VANGUARD REAL ESTATE FUND I, A SALES-COMMISSION-FREE INCOME PROPERTIES FUND PRO FORMA STATEMENT OF OPERATIONS FOR THE SIX-MONTHS ENDED JUNE 30, 1994 (6) (Unaudited)
Pro Forma Historical Adjustments Pro Forma VREF I Arden Hills Results (000) (000) (000) REAL ESTATE INCOME Rental Income $3,638 ($473) (1) $3,165 Mortgage Interest Income 521 - 521 Net Income from In-SubstanceForeclosed Assets 341 - 341 ------ ------ ------ 4,500 (473) 4,027 ------ ------ ------ REAL ESTATE EXPENSES Mortgage Interest Expense 123 - 123 Real Estate Taxes 368 (107) (1) 261 Property Operating Expenses 485 (15) (1) 470 Depreciation and Amortization 597 (80) (1) 517 Provision for Possible Losses/ (Charge Offs) 780 (1,070) (2) (290) ------ ------ ------ 2,353 (1,272) 1,081 ------ ------ ------ INCOME FROM REAL ESTATE 2,147 799 2,946 INVESTMENT INCOME FROM SHORT-TERM INVESTMENTS 157 - (3) 157 ------ ------ ------ 2,304 799 3,103 ------ ------ ------ ADMINISTRATIVE EXPENSES Investment Advisory Fee 173 (14) (4) 159 Administrative Fee 149 (12) (5) 137 Other Administrative Expenses 163 - 163 ------ ------ ------ 485 (26) 459 ------ ------ ------ NET INCOME $1,819 $825 $2,644 ====== ====== ====== Weighted Average Shares Outstanding 11,019,978 11,019,978 ========== ========== Net Income per Share $0.17 $0.24 ===== =====
The accompanying notes are an integral part of this statement. 5 NOTES TO PRO FORMA STATEMENT OF OPERATIONS FOR THE SIX-MONTHS ENDED JUNE 30, 1994 (1) To record decreases in rental income, real estate taxes, property operating expenses, and depreciation and amortization based on the historical operating results of Arden Hills included in VREF I's historical results of operations for the six-months ended June 30, 1994. (2) To reverse the provision for possible losses recorded in the second quarter of 1994 to reduce the carrying value of the Arden Hills build ing to its estimated fair value minus selling costs. (3) The Fund currently anticipates that the net proceeds of the Arden Hills transaction will be paid out with its year-end 1994 distribution to shareholders. For purposes of pro forma presentation of the Fund's operating results for the six-months ended June 30, 1994, Fund manage- ment has assumed that the net proceeds made available from this trans- action were immediately distributed to shareholders on January 1, 1993, and, accordingly, no investment earnings have been imputed on the Arden Hills net proceeds. (4) To record a decrease in the investment advisory fee based upon the decrease in real estate assets held by the Fund. (5) To record a decrease in the administrative fee based upon a decrease in assets, resulting from the assumed January 1, 1993 distribution to shareholders of the net proceeds of the Arden Hills transaction, held by the Fund. (6) Pursuant to the Fund s prospectus, the Fund may not reinvest the net proceeds received from sales in additional real estate investments after December 31, 1993. If cash available for investment, giving effect to Arden Hills if it had been disposed of on January 1, 1993, were assumed to have been invested in short-term money market instru- ments for the first six months of 1994, and not assumed to have been distributed on January 1, 1993, the Fund would have earned approxi- mately $82,000 in short-term investment income, using an average interest rate of 3.0%, on a pro forma basis for the six-months ended June 30, 1994. 6 The following unaudited pro forma balance sheet presents the financial position of Vanguard Real Estate Fund I ("VREF I") as of June 30, 1994 as the disposition of the Arden Hills building ("Arden Hills") had occurred as of June 30, 1994. Such pro forma information is based upon the histor- ical balance sheet data of VREF I and Arden Hills as of that date, giving effect to the pro forma adjustments described below. This pro forma finan- cial information should be read in conjunction with the financial state- ments of VREF I included in its 1993 Annual Report on Form 10-K and Quar- terly Reports on Form 10-Q. VANGUARD REAL ESTATE FUND I, A SALES-COMMISSION-FREE INCOME PROPERTIES FUND PRO FORMA BALANCE SHEET JUNE 30, 1994 (Unaudited)
Pro Forma Historical Adjustments VREF I Arden Hills Pro Forma (000) (000) (000) ASSETS Investments in Real Estate:- Direct Ownership Investments: Land $15,766 ($870) (1) $14,896 Building and Improvements 42,823 (6,622) (1) 36,201 ------- ------- ------- 58,589 (7,492) 51,097 Less - Accumulated Depreciation 5,237 (1,040) (1) 4,197 ------- ------- ------- 53,352 (6,452) 46,900 Mortgage Loans Receivable 10,646 - 10,646 ------- ------- ------- Net Investment Portfolio 63,998 (6,452) 57,546 Short - Term Investments: Marketable Securities - REMICs 2,202 - 2,202 Vanguard Money Market Reserves - Prime Portfolio 1,982 5,434 (2) 7,416 Temporary Cash Investments 7,496 - 7,496 Other Assets 1,255 (74) (1) 1,181 ------- ------- ------- TOTAL ASSETS $76,933 ($1,092) $75,841 ======= ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage Loan $2,431 - $2,431 Due to Affiliates 161 111 (3) 272 Dividends Payable 1,653 - 1,653 Other Liabilities 434 (11) (1) 423 ------- ------- ------- TOTAL LIABILITIES 4,679 100 4,779 ------- ------- ------- Shares of Beneficial Interest, without par value, unlimited shares authorized 80,608 - 80,608 Accumulated Distributions in Excess of Net Income 8,354 1,192 (4) 9,546 ------- ------- ------- TOTAL SHAREHOLDERS' EQUITY 72,254 (1,192) 71,062 ------- ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $76,933 ($1,092) $75,841 ======= ======= =======
The accompanying notes are an integral part of this statement. 7 NOTES TO JUNE 30, 1994 PRO FORMA BALANCE SHEET (1) To record the reduction in land, building and improvements, accumu lated depreciation, other assets and other liabilities based on the historical financial position of Arden Hills included in VREF I's historical balance sheet at June 30, 1994. (2) To record the increase in short-term investments resulting from the investment of the estimated net proceeds of the Arden Hills disposi- tion. The Fund currently anticipates that the net proceeds of the Arden Hills transaction will be paid out with its year-end 1994 dis- tribution to shareholders. (3) To record the 2% disposition fee due the Fund's Adviser. (4) To record the estimated loss on the disposition of Arden Hills. 8 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 thereunto duly authorized. VANGUARD REAL ESTATE FUND I A SALES-COMMISSION-FREE INCOME PROPERTIES FUND DATE: September 1, 1994 BY: Ralph K. Packard Vice President & Controller 9 -----END PRIVACY-ENHANCED MESSAGE-----