-----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, I+FWX77CywTGyFIPGSk/ehE/clVD6AAxnK2Q3n+n1swFJ+vdnWwmj/6xlf0d0nDI wxYKh4I8riRzXrAapx7PUA== 0000950131-97-003740.txt : 19970602 0000950131-97-003740.hdr.sgml : 19970602 ACCESSION NUMBER: 0000950131-97-003740 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970520 ITEM INFORMATION: Acquisition or disposition of assets ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970530 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: EQUITY RESIDENTIAL PROPERTIES TRUST CENTRAL INDEX KEY: 0000906107 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 363877868 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12252 FILM NUMBER: 97617471 BUSINESS ADDRESS: STREET 1: TWO N RIVERSIDE PLZ STREET 2: STE 400 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124661300 MAIL ADDRESS: STREET 1: TWO N RIVERSIDE PLAZA STREET 2: SUITE 450 CITY: CHICAGO STATE: IL ZIP: 60606 8-K 1 FORM 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 MAY 20, 1997 (Date of Report) EQUITY RESIDENTIAL PROPERTIES TRUST (Exact Name of Registrant as Specified in its Charter) 1-12252 (Commission File No.) Maryland 36-3877868 (State or Other Jurisdiction (I.R.S. Employer of Incorporation) Identification No.) Two North Riverside Plaza, Chicago, Illinois 60606 (Address of Principal Executive Offices) (Zip Code) (312) 474-1300 (Registrant's Telephone Number, Including Area Code) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS ACQUISITIONS Equity Residential Properties Trust and its subsidiaries (the "Company") has acquired 18 multifamily properties during the period from January 2, 1997 through May 20, 1997. The cash portion of these transactions was financed primarily through the December 1996 Common Share Offerings and the March 1997 Common Share Offerings. Descriptions of the acquired properties are as follows. The Company has also made commitments to acquire an additional seven properties which are discussed in Item 5 (the "1997 Probable Properties"). Capitalized terms not defined herein are used as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by Form 10-K/A, and the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 1997. TOWN CENTER APARTMENTS, KINGSWOOD, TEXAS On January 2, 1997, the Company acquired a multifamily property located in Kingwood, Texas ("Town Center"). Town Center was approximately 95% occupied as of May 1, 1997. The property consists of 258 units in 14 residential buildings and one leasing office/clubhouse on approximately 10 acres. Amenities include a clubhouse, swimming pool, picnic area with barbecue grills, covered parking, 50 garages, full-size washers and dryers in all units, microwaves and frost-free refrigerators in all units and fireplaces in select units. The property was constructed in 1994. Property management services are being provided by the Company. Terms of Purchase Town Center was purchased from an unaffiliated third party for approximately $12.8 million. HARBORVIEW APARTMENTS, SAN PEDRO, CALIFORNIA On January 21, 1997, the Company acquired a multifamily property located in San Pedro, California ("Harborview"). Harborview was approximately 100% occupied as of May 1, 1997. The property consists of 160 units in 23 residential buildings on approximately seven acres. Amenities include a community center, swimming pool, access gates, covered parking, washer/dryer in each unit and fireplaces in each unit. The property was constructed in 1985. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Harborview was purchased from an unaffiliated third party for approximately $19 million, which included the assumption of mortgage indebtedness of approximately $12.7 million. 2 THE CARDINAL APARTMENTS, GREENSBORO, NORTH CAROLINA On January 31, 1997, the Company acquired a multifamily property located in Greensboro, North Carolina ("The Cardinal"). The Cardinal was approximately 93% occupied as of May 1, 1997. The property consists of 256 units in 11 three story residential buildings on approximately 17 acres. Amenities include a clubhouse, swimming pool, fitness room, tennis courts, washer/dryer hookups, microwaves, ceiling fans and mini-blinds. The property was constructed in 1994. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase The Cardinal was purchased from an unaffiliated third party for approximately $12.8 million, which included the assumption of mortgage indebtedness of approximately $7.5 million. TRAILS AT DOMINION APARTMENTS, HOUSTON, TEXAS On February 12, 1997, the Company acquired a multifamily property located in Houston, Texas ("Trails at Dominion"). Trails at Dominion was approximately 91% occupied as of May 1, 1997. The property consists of 843 units in 44 two and three story residential buildings and three one-story office/clubhouses on approximately 55 acres. Amenities include three clubhouses, a fitness center, five swimming pools, three spas, four tennis courts, a sand volleyball court, fireplaces in select units, washer/dryer connections in every unit, washer/dryers in select units and microwaves in every unit. The property was constructed in phases between 1992 and 1995. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Trails at Dominion was purchased from an unaffiliated third party for approximately $38.3 million, which included the assumption of mortgage indebtedness of approximately $26.2 million. DARTMOUTH WOODS APARTMENTS, LAKEWOOD, COLORADO On February 25, 1997, the Company acquired a multifamily property located in Lakewood, Colorado ("Dartmouth Woods"). Dartmouth Woods was approximately 96% occupied as of May 1, 1997. The property consists of 201 units in six two, three and four story residential buildings on approximately 13 acres. Amenities include a clubhouse with fitness center, swimming pool, jacuzzi, garages and covered parking, microwaves in every unit, washer/dryer hookups in every unit and gas fireplaces in some units. The property was constructed in 1990. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Dartmouth Woods was purchased from an unaffiliated third party for approximately $12.4 million, which included the assumption of mortgage indebtedness of approximately $4.4 million. 3 RINCON APARTMENTS, HOUSTON, TEXAS On February 28, 1997, the Company acquired a multifamily property located in Houston, Texas ("Rincon"). Rincon was approximately 100% occupied as of May 1, 1997. The property consists of 288 units in nine three story residential buildings, one two story clubhouse and a four-level parking structure on approximately five acres. Amenities include a clubhouse with business center, fitness center, spa, swimming pool, barbecue grills, washer/dryers in all units, crown molding, microwaves and lockable storage closets. The property was constructed in 1996. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Rincon was purchased from an unaffiliated third party for approximately $20.9 million. WATERFORD AT THE LAKES APARTMENTS, KENT, WASHINGTON On February 28, 1997, the Company acquired a multifamily property located in Kent, Washington ("Waterford at the Lakes"). Waterford at the Lakes was approximately 97% occupied as of May 1, 1997. The property consists of 344 units in 35 two and three story residential buildings on approximately 18 acres. Amenities include a clubhouse, two swimming pools, indoor/outdoor spa, tanning salon, daycare center, playground, fitness room and washer/dryers in each unit. The property was constructed in 1990. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Waterford at the Lakes was purchased from an unaffiliated third party for approximately $18.9 million. JUNIPERS OF YARMOUTH APARTMENTS, YARMOUTH, MAINE On March 17, 1997, the Company acquired a multifamily property located in Yarmouth, Maine ("Junipers of Yarmouth"). Junipers of Yarmouth was approximately 99% occupied as of May 1, 1997. The property consists of 225 units in 13 two, three and four story residential buildings and one office/clubhouse on approximately nine acres. Amenities include a clubhouse, leasing office, swimming pool and fitness center. The property was constructed in 1970. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Junipers of Yarmouth was purchased from an unaffiliated third party for approximately $9.2 million. 4 LINCOLN HARBOUR APARTMENTS, FT. LAUDERDALE, FLORIDA On March 20, 1997, the Company acquired a multifamily property located in Ft. Lauderdale, Florida ("Lincoln Harbour"). Lincoln Harbour was approximately 95% occupied as of May 1, 1997. The property consists of 324 units in 15 three story residential buildings on approximately 14 acres. Amenities include a clubhouse, swimming pool, fitness center, basketball court, two indoor racquetball courts and boat dockage. The property was constructed in 1989. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Lincoln Harbour was purchased from an unaffiliated third party for approximately $22 million, which included the assumption of mortgage indebtedness of $10 million. SEDONA RIDGE APARTMENTS, PHOENIX, ARIZONA On March 24, 1997, the Company acquired a multifamily property located in Phoenix, Arizona ("Sedona Ridge"). Sedona Ridge was approximately 94% occupied as of May 1, 1997. The property consists of 250 units in 16 two story residential buildings on approximately 17 acres. Amenities include two swimming pools, two whirlpools, indoor racquetball/walleyball court, car service center, tennis court, basketball court and sand volleyball court. The property was constructed in 1988. Property management services are being provided by the Company. Terms of Purchase Sedona Ridge was purchased from an affiliate of the Company, Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership ("Zell/Merrill I"), for approximately $15.2 million. KNIGHT'S CASTLE APARTMENTS, WILSONVILLE, OREGON On March 28, 1997, the Company acquired a multifamily property located in Wilsonville, Oregon ("Knight's Castle"). Knight's Castle was approximately 93% occupied as of May 1, 1997. The property consists of 296 units in 21 two and three story residential buildings on approximately 22 acres. Amenities include a clubhouse, fitness center, outdoor pool, whirlpool spa, built-in closet organizer, patio/balconies, microwaves, dishwashers, free basic cable, washer/dryers and reserved covered parking. The property was constructed in 1991. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Knight's Castle was purchased from an unaffiliated third party for $15 million. 5 CLUB AT THE GREEN APARTMENTS, BEAVERTON, OREGON On March 28, 1997, the Company acquired a multifamily property located in Beaverton, Oregon ("Club at the Green"). Club at the Green was approximately 93% occupied as of May 1, 1997. The property consists of 254 units in 14 two and three story residential buildings on approximately 15 acres. Amenities include a clubhouse, indoor swimming pool, sauna, jacuzzi, weight room, playground, washer/dryers in all units and wood burning fireplaces. The property was constructed in 1991. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Club at the Green was purchased from an unaffiliated third party for approximately $14.7 million. COUNTRY GABLES APARTMENTS, BEAVERTON, OREGON On April 4, 1997, the Company acquired a multifamily property located in Beaverton, Oregon ("Country Gables"). Country Gables was approximately 95% occupied as of May 1, 1997. The property consists of 288 units in 26 residential buildings on approximately 15 acres. Amenities include a clubhouse, indoor and outdoor swimming pools, spa, sauna, racquetball court, fitness facility, washer/dryers, vaulted ceilings in select units and wood burning fireplaces. The property was constructed in 1991. Property management services are being provided by the Company. Terms of Purchase Country Gables was purchased from an affiliate of the Company, Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership II ("Zell/Merrill II") for $17.0 million, which included the assumption of mortgage indebtedness of approximately $8.6 million. INDIGO SPRINGS APARTMENTS, KENT, WASHINGTON On April 4, 1997, the Company acquired a multifamily property located in Kent, Washington ("Indigo Springs"). Indigo Springs was approximately 99% occupied as of May 1, 1997. The property consists of 278 units in 25 two and three story residential buildings and one clubhouse on approximately 24 acres. Amenities include a swimming pool, fitness room, computer room, clubhouse, washer/dryers and fireplaces. The property was constructed in 1991. Property management services are being provided by the Company. Terms of Purchase Indigo Springs was purchased from Zell/Merrill II for $12.7 million, which included the assumption of mortgage indebtedness of approximately $8.2 million. 6 WATERMARK SQUARE APARTMENTS, PORTLAND, OREGON On April 4, 1997, the Company acquired a multifamily property located in Portland, Oregon ("Watermark Square"). Watermark Square was approximately 95% occupied as of May 1, 1997. The property consists of 390 units in 21 garden- style residential buildings and two recreational buildings on approximately 12 acres. Amenities include two fitness centers, two indoor pools, spa, sauna, wood-burning fireplaces, private decks or patios and full-size washer/dryers in each unit. The property was constructed in 1990. Property management services are being provided by the Company. Terms of Purchase Watermark Square was purchased from Zell/Merrill II for $15.8 million, which included the assumption of mortgage indebtedness of approximately $8.7 million. SUMMIT CHASE APARTMENTS, CORAL SPRINGS, FLORIDA On April 29, 1997, the Company acquired a multifamily property located in Coral Springs, Florida ("Summit Chase"). Summit Chase was approximately 94% occupied as of May 20, 1997. The property consists of 140 units in 10 two story garden style residential buildings on approximately nine acres. Amenities include a leasing/management office, swimming pool, jacuzzi and tennis court. The property was constructed in 1985. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Summit Chase was purchased from an unaffiliated third party for approximately $5.5 million. WILLOW BROOK APARTMENTS, DURHAM, NORTH CAROLINA On May 13, 1997, the Company acquired a multifamily property located in Durham, North Carolina ("Willow Brook"). Willow Brook was approximately 96% occupied as of May 20, 1997. The property consists of 176 units in 13 two story and two three story residential buildings on approximately 21 acres. Amenities include a clubhouse, swimming pool, tennis courts, basketball courts, sand volleyball courts, fireplaces and in-unit washer/dryers. The property was constructed in 1986. Property management services are being provided by the Company since the date of acquisition. Terms of Purchase Willow Brook was purchased from an unaffiliated third party for approximately $8.5 million. 7 THE WILLOWS APARTMENTS, KNOXVILLE, TENNESSEE On May 15, 1997, the Company acquired a multifamily property located in Knoxville, Tennessee ("The Willows"). The Willows was approximately 96% occupied as of May 1, 1997. The property consists of 250 units in 12 two and three story residential buildings and one clubhouse on approximately 19 acres. Amenities include a swimming pool, whirlpool, tennis court, car wash, sport court, fitness room, clubhouse and laundry facilities. The property was constructed between 1987 and 1988. Property management services are being provided by the Company. Terms of Purchase The Willows was purchased from Zell/Merrill I for $11 million, which included the assumption of mortgage indebtedness of approximately $8.1 million. DISPOSITION On March 28, 1997, the Company sold the Plantation Apartments, a 200-unit multifamily property located in Monroe, Louisiana, for a sales price of $4.8 million to an unaffiliated third party. For financial statement purposes, the Company recorded a gain of approximately $3.6 million. 8 ITEM 5. OTHER EVENTS On April 28, 1997, the Company made an $88 million investment in six mortgage loans which are collateralized by five multifamily properties. The Company has entered into a letter of intent to purchase an additional seven multifamily properties from Zell Merrill I (the "1997 Probable Properties") for an aggregate purchase price of $90.7 million, which includes $17.1 million in cash and the assumption of mortgage indebtedness of $73.6 million. The Company plans to fund the purchase of these properties primarily from the Company's working capital. The descriptions of the 1997 Probable Properties are discussed below. HIGHLINE OAKS APARTMENTS, DENVER, COLORADO Highline Oaks Apartments ("Highline Oaks") is a multifamily property located in Denver, Colorado. The property consists of 220 units in 11 residential buildings and one community building on approximately 10 acres. Amenities include a swimming pool, fitness room, jacuzzi, sport courts, clubhouse, monitored alarm system, washer/dryers and fireplaces in each unit. The property was constructed in 1986. The Company currently provides property management services for this property. MOUNTAIN BROOK APARTMENTS, CHATTANOOGA, TENNESSEE Mountain Brook Apartments ("Mountain Brook") is a multifamily property located in Chattanooga, Tennessee. The property consists of 280 units in 19 two and three story garden style residential buildings on approximately 43 acres. Amenities include a clubhouse, outdoor pool and Jacuzzi, sport court, car wash, picnic areas with grills, laundry facilities, individual alarm systems, washer/dryer hook-ups, mountain views and wood-burning fireplaces in select units. The property was constructed in 1987. The Company currently provides property management services for this property. RIDGEMONT APARTMENTS, CHATTANOOGA, TENNESSEE Ridgemont Apartments ("Ridgemont") is a multifamily property located in Chattanooga, Tennessee. The property consists of 226 units in 12 two and three story garden style residential buildings and one clubhouse on approximately 21 acres. Amenities include a swimming pool, whirlpool, fitness room, sauna, clubhouse, tennis court, laundry facilities, washer/dryer hook-ups and wood burning fireplaces. The property was constructed in 1988. The Company currently provides property management services for this property. PRESTON BEND APARTMENTS, DALLAS, TEXAS Preston Bend Apartments ("Preston Bend") is a multifamily property located in Dallas, Texas. The property consists of 255 units in 10 garden style residential buildings and one community building on approximately nine acres. Amenities include a swimming pool, spa, car wash area, clubhouse, fitness room, tennis court, playground, sport court, in-unit washer/dryers and fireplaces in select units. The property was constructed in 1986. The Company currently provides property management services for this property. 9 SPINNAKER COVE APARTMENTS, NASHVILLE, TENNESSEE Spinnaker Cove Apartments ("Spinnaker Cove") is a multifamily property located in Nashville, Tennessee. The property consists of 278 units in 16 two and three story garden style residential buildings and one clubhouse on approximately 21 acres. Amenities include a clubhouse, fitness center, steam room, two whirlpools, a two-level swimming pool with a fountain, two lighted tennis courts, car wash, sand volleyball court, picnic area with grills and tables, courtesy business center and fenced boat storage area. The property was constructed in 1986. The Company currently provides property management services for this property. WINDEMERE APARTMENTS, MESA, ARIZONA Windemere Apartments ("Windemere") is a multifamily property located in Mesa, Arizona. The property consists of 224 units in 18 two story residential buildings and one clubhouse on approximately 13 acres. Amenities include a spa, dry sauna, fitness facility, volleyball court, basketball court, playground, clubhouse, car wash center, gas barbecue grills, two pools and two tennis courts. The property was constructed in 1986. The Company currently provides property management services for this property. WYNDRIDGE II & III APARTMENTS, MEMPHIS, TENNESSEE Wyndridge II & III Apartments ("Wyndridge II & III") is a multifamily property located in Memphis, Tennessee. The property consists of 568 units in 27 two and three story residential buildings and two clubhouses on approximately 59 acres. Amenities include three swimming pools, three whirlpools, two lighted tennis courts, a fitness center, playground, jogging path, barbecue areas, indoor racquetball court, sand volleyball court, car wash area and laundry facilities. The property was constructed in 1988. The Company currently provides property management services for this property. 10 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS C. EXHIBITS 24.1 Consent of Ernst & Young LLP No information is required under Items 1, 3, 4, and 6, and these items have therefore been omitted. 11 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED STATEMENTS Required under Item 7(b) of Form 8-K 12 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Capitalized terms not defined herein are used as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by Form 10-K/A, and the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 1997. The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1997 and Statements of Operations for the three months ended March 31, 1997 and for the year ended December 31, 1996 have been presented as if the March 1997 Common Share Offerings, the acquisition of 18 multifamily properties, the probable acquisition of seven properties and the disposition of one multifamily property had occurred on January 1, 1997 or January 1, 1996 (or March 31, 1997 for balance sheet purposes). Twelve of the acquired properties are included in the Company's Historical Balance Sheet as of March 31, 1997 and six of the properties, which were acquired subsequent to March 31, 1997, are included on a Pro Forma basis as described in Note A of the Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1997. The unaudited Pro Forma Condensed Consolidated Financial Statements are not necessarily indicative of the results of future operations, nor the results of historical operations, had all the transactions occurred as described above on either January 1, 1996 or January 1, 1997. The Pro Forma Condensed Consolidated Financial Statements should be read in conjunction with the accompanying Notes to the Pro Forma Condensed Consolidated Financial Statements, the Company's Annual Report on Form 10-K for the year ended December 31, 1996, as amended by Form 10-K/A, and the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 1997 and Statements of Revenue and Certain Expenses for certain of the acquired properties and the 1997 Probable Properties (included elsewhere herein). 13 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1997 (UNAUDITED) (Amounts in thousands)
1997 Most Recent 1997 Acquired Probable Historical Properties (A) Properties (B) ---------- -------------- -------------- ASSETS Rental property, net $ 2,873,260 $ 70,914 $ 90,705 Investment in mortgage notes, net 86,895 -- -- Cash and cash equivalents 84,829 (37,262) (17,142) Rents receivable 1,351 -- -- Deposits-restricted 9,007 -- -- Escrows deposits-mortgage 17,582 -- -- Deferred financing costs, net 14,425 -- -- Other assets 25,886 -- -- ----------- -------------- -------------- Total assets $ 3,113,235 $ 33,652 $ 73,563 =========== ============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 795,723 $ 33,652 $ 73,563 Line of credit -- -- -- Notes, net 498,918 -- -- Accounts payable and accrued expenses 31,243 -- -- Accrued interest payable 15,447 -- -- Due to affiliates 656 -- -- Rents received in advance and other liabilities 18,904 -- -- Security deposits 15,123 -- -- Distributions payable 47,220 -- -- ----------- -------------- -------------- Total liabilities 1,423,234 33,652 73,563 ----------- -------------- -------------- Commitments and contingencies Minority Interests 144,264 -- -- ----------- -------------- -------------- Shareholders' equity: Common shares 537 -- -- Preferred shares 393,000 -- -- Employee notes (5,229) -- -- Paid in capital 1,243,736 -- -- Distributions in excess of accumulated earnings (86,307) -- -- ----------- -------------- -------------- Total shareholders' equity 1,545,737 -- -- ----------- -------------- -------------- Total liabilities and shareholders' equity $ 3,113,235 $ 33,652 $ 73,563 =========== ============== ==============
Pro Forma ----- ASSETS Rental property, net $ 3,034,879 Investment in mortgage notes, net 86,895 Cash and cash equivalents 30,425 Rents receivable 1,351 Deposits-restricted 9,007 Escrows deposits-mortgage 17,582 Deferred financing costs, net 14,425 Other assets 25,886 ----------- Total assets $ 3,220,450 =========== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 902,938 Line of credit -- Notes, net 498,918 Accounts payable and accrued expenses 31,243 Accrued interest payable 15,447 Due to affiliates 656 Rents received in advance and other liabilities 18,904 Security deposits 15,123 Distributions payable 47,220 ----------- Total liabilities 1,530,449 ----------- Commitments and contingencies Minority Interests 144,264 ----------- Shareholders' equity: Common shares 537 Preferred shares 393,000 Employee notes (5,229) Paid in capital 1,243,736 Distributions in excess of accumulated earnings (86,307) ----------- Total shareholders' equity 1,545,737 ----------- Total liabilities and shareholders' equity $ 3,220,450 ===========
(A) Reflects the most recent multifamily property acquisitions, which include Country Gables, Indigo Springs, Watermark Square, The Willows, Summit Chase and Willow Brook (acquired in April and May 1997) (collectively the "1997 Most Recent Acquired Properties"). In connection with such acquisitions the amounts presented include the initial purchase price as well as subsequent closing costs incurred and capital improvements required as identified in the acquisition process and the assumption of $33.7 million of mortgage indebtedness secured by four of the 1997 Most Recent Acquired Properties. (B) Reflects the probable acquisitions of Highline Oaks, Mountain Brook, Ridgemont, Preston Bend, Spinnaker Cove, Windemere, Wyndridge II and III (collectively the "1997 Probable Properties"). In connection with the 1997 Probable Properties the amounts presented include the initial purchase price and the assumption of $73.6 million of mortgage indebtedness secured by the 1997 Probable Properties. 14 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the three months ended March 31, 1997 (UNAUDITED) (Amounts in thousands except for share data)
1997 1997 Previously Most Recent 1997 Acquired Acquired Probable Historical Properties (A) Properties (B) Properties (C) ---------- -------------- -------------- -------------- REVENUES Rental income $134,235 $4,645 $2,890 $3,696 Fee and asset management 1,578 -- -- -- Interest income - investment in mortgage notes 3,683 -- -- -- Interest and other income 1,891 -- -- -- -------- ------ ------ ------ Total revenues 141,387 4,645 2,890 3,696 -------- ------ ------ ------ EXPENSES Property and maintenance 32,334 1,225 935 1,186 Real estate taxes and insurance 13,911 517 292 265 Property management 5,671 -- -- -- Fee and asset management 967 -- -- -- Depreciation 28,877 -- -- -- Interest: Expense incurred 23,293 -- -- -- Amortization of deferred financing costs 603 -- -- -- General and administrative 2,975 -- -- -- -------- ------ ------ ------ Total expenses 108,631 1,742 1,227 1,451 -------- ------ ------ ------ Income before gain on disposition of properties and allocation to Minority Interests 32,756 $2,903 $1,663 $2,245 ====== ====== ====== Gain on disposition of properties 3,632 -------- Income before allocation to Minority Interests 36,388 (Income) allocated to Minority Interests (F) (3,426) -------- Net income 32,962 Preferred distributions 9,061 ------- Net income available to Common Shares $ 23,901 ======== Net income per weighted average Common Share outstanding $ 0.46 ======== Weighted average Common Shares outstanding 51,791 ========
1997 Disposed Pro Property (D) Adjustments (E) Forma ------------ --------------- -------- REVENUES Rental income $(222) $ -- $145,244 Fee and asset management -- -- 1,578 Interest income - investment in mortgage notes -- -- 3,683 Interest and other income -- (1,094) 797 ----- ------- -------- Total revenues (222) (1,094) 151,302 ----- ------- -------- EXPENSES Property and maintenance (93) (594) 34,993 Real estate taxes and insurance (14) -- 14,971 Property management (12) 248 5,907 Fee and asset management -- -- 967 Depreciation (38) 2,756 31,595 Interest: Expense incurred -- 2,232 25,525 Amortization of deferred financing costs -- 603 General and administrative -- -- 2,975 ----- ------- -------- Total expenses (157) 4,642 117,536 ----- ------- -------- Income before gain on disposition of properties and allocation to Minority Interests (65) (5,736) 33,766 ===== ======= -- ------- Gain on disposition of properties Income before allocation to Minority Interests 33,766 (Income) allocated to Minority Interests (F) (2,972) -------- Net income 30,794 Preferred distributions 9,061 -------- Net income available to Common Shares $ 21,733 ======== Net income per weighted average Common Share outstanding $ 0.40 ======== Weighted average Common Shares outstanding (G) 53,713 ========
(A) Reflects the results of operations for Town Center, Harborview, The Cardinal, Trails at Dominion, Dartmouth Woods, Rincon, Waterford at the Lakes, Junipers at Yarmouth, Lincoln Harbor, Sedona Ridge, Club at the Green and Knight's Castle (acquired from January through March 1997) (collectively the "1997 Previously Acquired Properties"). The amounts presented represent the historical amounts for certain revenues and expenses for the periods from January 1, 1997 through the respective acquisition dates for each property. (B) Reflects the results of operations for the 1997 Most Recent Acquired Properties. The amounts presented for rental revenues, property and maintenance and real estate taxes and insurance are based on the revenues and certain expenses of the 1997 Most Recent Acquired Properties for the three months ended March 31, 1997. (C) Reflects the results of operations for the 1997 Probable Properties. The amounts presented for rental revenues, property and maintenance and real estate taxes and insurance are based on the revenues and certain expenses of the 1997 Probable Properties for the three months ended March 31, 1997. 15
(D) Reflects the elimination of the results of operations for the Plantation Apartments (the "1997 Disposed Property") for the period from January 1, 1997 through the disposition date for the property. (E) Reflects the following adjustments to the 1997 Previously Acquired Properties and the 1997 Most Recent Acquired Properties results of operations as follows: Interest and other income: Reduction of interest income due to the use of working capital for property acquisitions $(1,094) ====== Property and maintenance: The elimination of third-party management fees where the Company is providing onsite property management services $ (594) ====== Property management: Incremental cost associated with self management of the 1997 Most Recent Acquired Properties and the 1997 Probable Properties for the three months ended March 31, 1997 and the 1997 Previously Acquired Properties for the period from January 1, 1997 through the respective acquisition dates for each property. $ 248 ====== Depreciation: Reflects depreciation based on the expected total investment of $161.6 million for the 1997 Most Recent Acquired Properties and the 1997 Probable Properties and the expected total investment of $214.4 million for the 1997 Previously Acquired Properties less 10% allocated to land and depreciated over a 30-year life for real property. Depreciation for the 1997 Previously Acquired Properties reflect amounts from January 1, 1997 through the respective acquisition dates for each property. $ 2,756 ====== Interest: Expense incurred: Interest on mortgage indebtedness for certain of the 1997 Previously Acquired Properties, the 1997 Most Recent Acquired Properties and the 1997 Probable Properties (H) $ 2,232 ======
(F) A portion of income was allocated to Minority Interests representing interests in the Operating Partnership not owned by the Company. The pro forma allocation to Minority Interests (represented by OP Units) is based upon the percentage owned by such Minority Interests as a result of the pro forma transactions. (G) Pro Forma weighted average Common Shares outstanding for the three months ended March 31, 1997 was 53.7 million, which includes 53.7 million Common Shares outstanding as of March 31, 1997. The Common Shares outstanding does not include any shares issued in a private or public offering that have not been used or are not intended to be used for acquisitions or repayment of debt directly incurred in an acquisition. (H) Detail of interest expense on mortgage indebtedness for certain of the 1997 Previously Acquired Properties, the 1997 Most Recent Acquired Properties and and the 1997 Probable Properties:
Mortgage Interest Interest Property Indebtedness Rate Expense ------------------------------- ------------ -------- -------- Harborview (1) $ 12,688 8.85% $ 62 The Cardinal (1) 7,532 8.63% 52 Trails at Dominion (1) 9,100 8.78% 90 Trails at Dominion (1) 10,391 9.00% 101 Trails at Dominion (1) 6,698 7.70% 57 Dartmouth Woods (1) 4,442 8.25% 55 Lincoln Harbor (1) 10,000 6.68% 111 Highline Oaks 7,100 6.75% 120 Preston Bend 8,664 6.50% 141 Spinnaker Cove 14,205 4.45% 158 Wyndridge II & III 24,990 4.25% 265 Mountain Brook 6,553 6.25% 102 Ridgemont 5,582 6.25% 87 The Willows 8,110 9.75% 198 Country Gables 8,648 7.71% 167 Indigo Springs 8,186 8.00% 164 Watermark Square 8,708 8.68% 189 Windemere 6,469 7.00% 113 -------- ------ Totals $168,066 $2,232 ======== ======
(1) The amounts presented for these properties represent the historical amounts for the periods from January 1, 1997 through the respective acquisition dates for each property. 16 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the year ended December 31, 1996 (UNAUDITED) (Amounts in thousands except for share data)
1997 1997 1997 Acquired Probable Disposed Pro Historical Properties (A) Properties (B) Property (C) Adjustments (D) Forma ---------- -------------- -------------- ------------ --------------- ------- REVENUES Rental income $454,412 $40,638 $14,021 $(915) $ -- $508,156 Fee and asset management 6,749 -- -- -- -- 6,749 Interest income - investment in mortgage notes 12,819 -- -- -- -- 12,819 Interest and other income 4,405 -- -- -- (2,942) 1,463 -------- ------- ------- ----- -------- -------- Total Revenues 478,385 40,638 14,021 (915) (2,942) 529,187 -------- ------- ------- ----- -------- -------- EXPENSES Property and maintenance 127,172 10,723 6,014 (343) (2,427) 141,139 Real estate taxes and insurance 44,128 4,841 1,112 (58) -- 50,023 Property management 17,512 -- -- (47) 1,367 18,832 Fee and asset management 3,837 -- -- -- -- 3,837 Depreciation 93,253 -- -- (156) 10,569 103,666 Interest: Expense incurred 81,351 -- -- -- 11,873 93,224 Amortization of deferred financing costs 4,242 -- -- -- -- 4,242 General and administrative 9,857 -- -- -- -- 9,857 -------- ------- ------- ----- - -------- -------- Total expenses 381,352 15,564 7,126 (604) 21,382 424,820 -------- ------- ------- ----- -------- -------- Income before gain on disposition of properties 97,033 $25,074 $ 6,895 $(311) $(24,324) 104,367 Gain on disposition of properties 22,402 ======= ======= ===== ======== -- -------- -------- Income before extraordinary item 119,435 104,367 Extraordinary item: Write-off of unamortized costs on refinanced debt (3,512) -- -------- -------- Income before allocation to Minority Interests 115,923 104,367 (Income) allocated to Minority Interests(E) (14,299) (12,343) -------- -------- Net income 101,624 92,024 Preferred distributions 29,015 29,015 -------- -------- Net income available to Common Shares $ 72,609 $ 63,009 ======== ======== Net income per weighted average Common Share outstanding $ 1.70 $ 1.42 ======== ======== Weighted average Common Shares outstanding 42,586 (F)44,507 ======== ========
(A) Reflects the results of operations of the 1997 Previously Acquired Properties and the 1997 Most Recent Acquired Properties (collectively the "1997 Acquired Properties"). The amounts presented for rental revenues, property and maintenance and real estate taxes and insurance are based on the revenues and certain expenses of the 1997 Acquired Properties for the year ended December 31, 1996. (B) Reflects the results of operations of the 1997 Probable Properties. The amounts presented for rental revenues, property and maintenance and real estate taxes and insurance are based on the revenues and certain expenses of the 1997 Probable Properties for the year ended December 31, 1996. (C) Reflects the elimination of the results of operations for the 1997 Disposed Property for the year ended December 31, 1996. 17
(D) Reflects the following adjustments: Interest and other income: Reduction of interest income due to the use of working capital for property acquisitions $(2,942) ====== Property and maintenance: The elimination of third-party management fees where the Company is providing onsite property management services $(2,427) ====== Property management: Incremental cost associated with self management of the 1997 Acquired Properties and the 1997 Probable Properties for the year ended December 31, 1996 $ 1,367 ====== Depreciation: Reflects depreciation based on the expected total investment of $376 million for the 1997 Acquired Properties and the 1997 Probable Properties less amounts allocated to land, generally 10%, and depreciated over a 30-year life for real property. $10,569 ====== Interest: Expense incurred: Interest on mortgage indebtedness for certain of the 1997 Acquired Properties and the 1997 Probable Properties (G) $11,873 ======
(E) A portion of income/loss was allocated to Minority Interests representing interests in the Operating Partnership not owned by the Company. The pro forma allocation to Minority Interests (represented by OP Units) is based upon the percentage owned by such Minority Interests as a result of the pro forma transactions. (F) Pro Forma weighted average Common Shares outstanding for the year ended December 31, 1996 was 44.5 million, which includes 42.6 million weighted average Common Shares outstanding as of December 31, 1996 plus the issuance of 1.9 million Common Shares in connection with the March 1997 Common Share Offerings. The Common Shares outstanding does not include any shares issued in a private or public offering that have not been used or are not intended to be used for acquisitions or repayment of debt directly incurred in an acquisition. (G) Detail of interest expense on mortgage indebtedness for certain of the 1997 Acquired Properties and the 1997 Probable Properties:
Mortgage Interest Interest Property Indebtedness Rate Expense ----------------------- ------------ -------- -------- Harborview $ 12,688 8.85% $ 1,123 The Cardinal 7,532 8.63% 649 Trails at Dominion 9,100 8.78% 799 Trails at Dominion 10,391 9.00% 935 Trails at Dominion 6,698 7.70% 516 Dartmouth Woods 4,442 8.25% 366 Lincoln Harbor 10,000 6.68% 668 Highline Oaks 7,100 6.75% 479 Preston Bend 8,664 6.50% 563 Spinnaker Cove 14,205 4.45% 632 Wyndridge II & III 24,990 4.25% 1,062 Mountain Brook 6,553 6.25% 410 Ridgemont 5,582 6.25% 349 The Willows 8,110 9.75% 791 Country Gables 8,648 7.71% 667 Indigo Springs 8,186 8.00% 655 Watermark Square 8,708 8.68% 756 Windemere 6,469 7.00% 453 -------- ------- Totals $168,066 $11,873 ======== =======
18 STATEMENTS OF REVENUE AND CERTAIN EXPENSES Required under Item 7(a) of Form 8-K 19 REPORT OF INDEPENDENT AUDITORS The Board of Trustees of Equity Residential Properties Trust We have audited the accompanying combined Statements of Revenue and Certain Expenses of the Zell/Merrill Properties (the Properties) described in Note 2 for each of the three years in the period ended December 31, 1996. These combined Statements of Revenue and Certain Expenses are the responsibility of the Properties' management. Our responsibility is to express an opinion on the combined Statements of Revenue and Certain Expenses based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the Statements of Revenue and Certain Expenses are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statements of Revenue and Certain Expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Statements of Revenue and Certain Expenses. We believe that our audits provide a reasonable basis for our opinion. The accompanying combined Statements of Revenue and Certain Expenses were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Equity Residential Properties Trust's Current Report on Form 8-K as described in Note 1, and are not intended to be a complete presentation of the Properties' revenue and expenses. In our opinion, the combined Statements of Revenue and Certain Expenses referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 for each of the three years in the period ended December 31, 1996 in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois March 25, 1997 20 ZELL/MERRILL PROPERTIES COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (amounts in thousands)
For the Three Months Ended For the For the For the March 31, 1997 Year Ended Year Ended Year Ended (Unaudited) December 31, 1996 December 31, 1995 December 31, 1994 ------------------ ----------------- ----------------- ----------------- REVENUE Rental Income $ 6,191 $ 25,212 $ 24,038 $ 23,198 ------------------ ----------------- ----------------- ----------------- CERTAIN EXPENSES Property operating and maintenance 1,744 6,899 7,018 6,782 Real estate taxes and insurance 516 2,100 2,008 2,242 Management fees 310 1,269 1,235 1,119 ------------------ ----------------- ----------------- ----------------- 2,570 10,268 10,261 10,143 ------------------ ----------------- ----------------- ----------------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 3,621 $ 14,944 $ 13,777 $ 13,055 ================== ================= ================= =================
See accompanying notes. 21 ZELL/MERRILL PROPERTIES NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES Note 1 - Summary of Significant Accounting Policies The accompanying combined statements of revenue and certain expenses for the three years ended December 31, 1996 and the three months ended March 31, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements are not representative of the actual operations of the Zell/Merrill Properties for the periods presented as certain expenses, which may not be comparable to the expenses to be incurred by Equity Residential Properties Trust and its subsidiaries (the "Company") in the proposed future operations of the Zell/Merrill Properties, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of the Zell/Merrill Properties. In preparation of the Company's Combined Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential leases is recorded when due from tenants, generally on a straight line basis. Expenses are recognized in the period in which they are incurred. Note 2 - Description of Properties The following properties are included in the combined statements of revenue and certain expenses:
Date Property Name Location Seller (A) Acquired ------------- -------- ---------- -------- Sedona Ridge Phoenix, AZ Zell/Merrill I 3/24/97 Country Gables Beaverton, OR Zell/Merrill II 4/4/97 Indigo Springs Kent, WA Zell/Merrill II 4/4/97 Watermark Square Portland, OR Zell/Merrill II 4/4/97 The Willows Knoxville, TN Zell/Merrill I 5/15/97 Highline Oaks Denver, CO Zell/Merrill I (C) Mountain Brook Chattanooga, TN Zell/Merrill I (C) Ridgemont Chattanooga, TN Zell/Merrill I (C) Preston Bend Dallas, TX Zell/Merrill I (C) Spinnaker Cove Nashville, TN Zell/Merrill I (C) Windemere Mesa, AZ Zell/Merrill I (C) Wyndridge II & III Memphis, TN Zell/Merrill I (C)
Number Total Property Name of Units Investment (B) ------------- -------- -------------- Sedona Ridge 250 $ 15,200,000 Country Gables 288 17,000,000 Indigo Springs 278 12,700,000 Watermark Square 390 15,800,000 The Willows 250 11,000,000 Highline Oaks 220 10,700,000 Mountain Brook 280 7,600,000 Ridgemont 226 7,600,000 Preston Bend 255 11,000,000 Spinnaker Cove 278 14,205,000 Windemere 224 9,600,000 Wyndridge II & III 568 30,000,000 -------- -------------- 3,507 $ 162,405,000 ======== ==============
Notes: (A) The Zell/Merrill Properties have been presented on a combined basis because all of the properties are commonly managed by the Company and because the selling entities, Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership ("Zell/Merrill I") and Zell/Merrill Lynch Real Estate Opportunity Partners Limited Partnership II ("Zell/Merrill II"), are all ultimately controlled by Mr. Samuel Zell, Chairman of the Board of the Company. (B) Includes initial purchase price. (C) The Company has a commitment to acquire this property or has reached an agreement in principle and is in the final stages of documenting the acquisition of this property. 22 Note 3 - Related Party Transactions During the years ended December 31, 1996 and 1995 and during the unaudited interim period from January 1, 1997 to March 31, 1997, the Zell/Merrill Properties were managed by the Company. During the year ended December 31, 1994, all of the Zell/Merrill Properties, except for Country Gables, Indigo Springs and Watermark Square, were managed by the Company. Of the management fees paid during 1994, approximately $827,000 were paid to the Company. The management agreements provided for a fee based on a percentage of gross receipts, as defined by each of the Zell/Merrill Properties' individual management agreements. Insurance premiums of approximately $359,000, $249,000 and $268,000 for the years ended December 31, 1994, 1995 and 1996, respectively, were incurred from and coverage was provided by an affiliate of the Seller. The general partner of the entities that own the Zell/Merrill Properties are ultimately controlled by Mr. Samuel Zell, who is also Chairman of the Board of the Company. 23 REPORT OF INDEPENDENT AUDITORS The Board of Trustees of Equity Residential Properties Trust We have audited the accompanying Statement of Revenue and Certain Expenses of Harborview (the Property) for the year ended December 31, 1996. The Statement of Revenue and Certain Expenses is the responsibility of the Property's management. Our responsibility is to express an opinion on the Statement of Revenue and Certain Expenses 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 Statement of Revenue and Certain Expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures made in the Statement of Revenue and Certain Expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Statement of Revenue and Certain Expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement of Revenue and Certain Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Equity Residential Properties Trust's Current Report on Form 8-K as described in Note 1, and is not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the Statement of Revenue and Certain Expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 16, 1997 24 HARBORVIEW STATEMENT OF REVENUE AND CERTAIN EXPENSES (amounts in thousands)
For the Year Ended December 31, 1996 ----------------- REVENUE Rental Income $ 2,325 ----------------- CERTAIN EXPENSES Property operating and maintenance 440 Real estate taxes and insurance 199 Management fees 74 ----------------- 713 ----------------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 1,612 =================
See accompanying notes. 25 HARBORVIEW NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES Note 1 - Summary of Significant Accounting Policies The accompanying statement of revenue and certain expenses for the year ended December 31, 1996 was prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying financial statement is not representative of the actual operations of Harborview for the period presented as certain expenses, which may not be comparable to the expenses to be incurred by Equity Residential Properties Trust and its subsidiaries (the "Company") in the proposed future operations of Harborview, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Harborview. In preparation of the Company's Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential leases is recorded when due from tenants, generally on a straight line basis. Harborview had a management agreement with a management company unaffiliated with the Company through the acquisition date to maintain and manage the operations of the apartment complex. Management fees were based on 4% of gross receipts. In 1996, all of the management fees were paid to an affiliate of the seller. Upon acquisition of Harborview by the Company, such management contract was cancelled at which time the Company began to manage Harborview. Note 2 - Description of Property The following property is included in the statement of revenue and certain expenses:
Date Number Total Property Name Location Acquired of Units Investment (A) ------------- -------------- -------- -------- -------------- Harborview San Pedro, CA 1/21/97 160 $19,115,000
Notes: (A) Includes initial purchase price, closing costs, start up costs and amounts specified at date of purchase for future capital improvements. 26 REPORT OF INDEPENDENT AUDITORS The Board of Trustees of Equity Residential Properties Trust We have audited the accompanying Statement of Revenue and Certain Expenses of Trails at Dominion (the Property) for the year ended December 31, 1996. The Statement of Revenue and Certain Expenses is the responsibility of the Property's management. Our responsibility is to express an opinion on the Statement of Revenue and Certain Expenses 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 Statement of Revenue and Certain Expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement of Revenue and Certain Expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Statement of Revenue and Certain Expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement of Revenue and Certain Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Equity Residential Properties Trust's Current Report on Form 8-K as described in Note 1, and is not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the Statement of Revenue and Certain Expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 6, 1997 27 TRAILS AT DOMINION STATEMENTS OF REVENUE AND CERTAIN EXPENSES (amounts in thousands)
For the Period January 1, 1997 - For the February 12, 1997 Year Ended (Unaudited) December 31, 1996 ------------------- ----------------- REVENUE Rental Income $988 $6,537 ---- ------ CERTAIN EXPENSES Property operating and maintenance 225 1,587 Real estate taxes and insurance 147 1,273 Management fees 37 326 ---- ------ 409 3,186 ---- ------ REVENUE IN EXCESS OF CERTAIN EXPENSES $579 $3,351 ==== ======
See accompanying notes. 28 TRAILS AT DOMINION NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES Note 1 - Summary of Significant Accounting Policies The accompanying statements of revenue and certain expenses for the year ended December 31, 1996 and the three months ended March 31, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements are not representative of the actual operations of Trails at Dominion for the periods presented as certain expenses, which may not be comparable to the expenses to be incurred by Equity Residential Properties Trust and its subsidiaries (the "Company") in the proposed future operations of Trails at Dominion, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Trails at Dominion. In preparation of the Company's Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential leases is recorded when due from tenants, generally on a straight line basis. Trails at Dominion had a management agreement with a management company unaffiliated with the Company through the acquisition date to maintain and manage the operations of the apartment complex. Management fees were based on 5% of gross receipts. In 1996, all of the management fees were paid to an affiliate of the seller. Upon acquisition of Trails at Dominion by the Company, such management contract was cancelled at which time the Company began to manage Trails at Dominion. Note 2 - Description of Property The following property is included in the statements of revenue and certain expenses:
Date Number Total Property Name Location Acquired of Units Investment (A) ------------------ ----------- -------- -------- -------------- Trails at Dominion Houston, TX 2/12/97 843 $38,750,000
Notes: (A) Includes initial purchase price, closing costs, start up costs and amounts specified at date of purchase for future capital improvements. 29 REPORT OF INDEPENDENT AUDITORS The Board of Trustees of Equity Residential Properties Trust We have audited the accompanying Statement of Revenue and Certain Expenses of Rincon (the Property) for the year ended December 31, 1996. The Statement of Revenue and Certain Expenses is the responsibility of the Property's management. Our responsibility is to express an opinion on the Statement of Revenue and Certain Expenses 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 Statement of Revenue and Certain Expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement of Revenue and Certain Expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Statement of Revenue and Certain Expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement of Revenue and Certain Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Equity Residential Properties Trust's Current Report on Form 8-K as described in Note 1, and is not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the Statement of Revenue and Certain Expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 7, 1997 30 RINCON STATEMENTS OF REVENUE AND CERTAIN EXPENSES (amounts in thousands)
For the Period January 1, 1997- For the February 28, 1997 Year Ended (Unaudited) December 31, 1996 -------------------- --------------------- REVENUE Rental Income $ 403 $ 1,183 -------------------- --------------------- CERTAIN EXPENSES Property operating and maintenance 112 425 Real estate taxes and insurance 44 123 Management fees 25 57 -------------------- --------------------- 181 605 -------------------- --------------------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 222 $ 578 ==================== ===================== See accompanying notes.
31 RINCON NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES Note 1 - Summary of Significant Accounting Policies The accompanying statements of revenue and certain expenses for the year ended December 31, 1996 and the three months ended March 31, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements are not representative of the actual operations of Rincon for the period presented as certain expenses, which may not be comparable to the expenses to be incurred by Equity Residential Properties Trust and its subsidiaries (the "Company") in the proposed future operations of Rincon, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Rincon. In preparation of the Company's Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential leases is recorded when due from tenants, generally on a straight line basis. Rincon had a management agreement with a management company unaffiliated with the Company through the acquisition date to maintain and manage the operations of the apartment complex. Management fees were based on 5% of gross receipts. In 1996, all of the management fees were paid to an affiliate of the seller. Upon acquisition of Rincon by the Company, such management contract was cancelled at which time the Company began to manage Rincon. Note 2 - Description of Property The following property is included in the statements of revenue and certain expenses:
Date Number Total Property Name Location Acquired of Units Investment (A) ------------- -------- -------- -------- -------------- Rincon Houston, TX 2/28/97 288 $ 21,175,000
Notes: (A) Includes initial purchase price, closing costs, start up costs and amounts specified at date of purchase for future capital improvements. Rincon consists of 8 buildings which were all under development during a portion of 1996. As a result, the accompanying statement only reflects the certain expenses of each building subsequent to the date each building was placed in service in September 1996. 32 REPORT OF INDEPENDENT AUDITORS The Board of Trustees of Equity Residential Properties Trust We have audited the accompanying Statement of Revenue and Certain Expenses of Waterford at the Lakes (the Property) for the year ended December 31, 1996. The Statement of Revenue and Certain Expenses is the responsibility of the Property's management. Our responsibility is to express an opinion on the Statement of Revenue and Certain Expenses 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 Statement of Revenue and Certain Expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement of Revenue and Certain Expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Statement of Revenue and Certain Expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement of Revenue and Certain Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Equity Residential Properties Trust's Current Report on Form 8-K as described in Note 1, and is not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the Statement of Revenue and Certain Expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 12, 1997 33 WATERFORD AT THE LAKES STATEMENTS OF REVENUE AND CERTAIN EXPENSES (amounts in thousands)
For the Period January 1, 1997- For the February 28, 1997 Year Ended (Unaudited) December 31, 1996 ------------------ ----------------- REVENUE Rental Income $ 447 $ 2,661 ------------------ ----------------- CERTAIN EXPENSES Property operating and maintenance 173 641 Real estate taxes and insurance 53 268 Management fees 22 132 ------------------ ------------------ 248 1,041 ------------------ ------------------ REVENUE IN EXCESS OF CERTAIN EXPENSES $ 199 $ 1,620 ================== ==================
See accompanying notes. 34 WATERFORD AT THE LAKES NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES Note 1 - Summary of Significant Accounting Policies The accompanying statements of revenue and certain expenses for the year ended December 31, 1996 and the three months ended March 31, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements are not representative of the actual operations of Waterford at the Lakes for the periods presented as certain expenses, which may not be comparable to the expenses to be incurred by Equity Residential Properties Trust and its subsidiaries (the "Company") in the proposed future operations of Waterford at the Lakes, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Waterford at the Lakes. In preparation of the Company's Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential leases is recorded when due from tenants, generally on a straight line basis. Waterford at the Lakes had a management agreement with a management company unaffiliated with the Company through the acquisition date to maintain and manage the operations of the apartment complex. Management fee were based on 5% of gross receipts. In 1996, all of the management fees were paid to an affiliate of the seller. Upon acquisition of Waterford at the Lakes by the Company, such management contract was cancelled at which time the Company began to manage Waterford at the Lakes. Note 2 - Description of Property The following property is included in the statements of revenue and certain expenses:
Date Number Total Property Name Location Acquired of Units Investment (A) ------------- -------- -------- -------- -------------- Waterford at the Lakes Kent, WA 2/28/97 344 $ 19,152,000
Notes: (A) Includes initial purchase price, closing costs, start up costs and amounts specified at date of purchase for future capital improvements. 35 REPORT OF INDEPENDENT AUDITORS The Board of Trustees of Equity Residential Properties Trust We have audited the accompanying Statement of Revenue and Certain Expenses of Lincoln Harbour (the Property) for the year ended December 31, 1996. The Statement of Revenue and Certain Expenses is the responsibility of the Property's management. Our responsibility is to express an opinion on the Statement of Revenue and Certain Expenses 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 Statement of Revenue and Certain Expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Statement of Revenue and Certain Expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Statement of Revenue and Certain Expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying Statement of Revenue and Certain Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Equity Residential Properties Trust's Current Report on Form 8-K as described in Note 1, and is not intended to be a complete presentation of the Property's revenue and expenses. In our opinion, the Statement of Revenue and Certain Expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 16, 1997 36 LINCOLN HARBOUR STATEMENTS OF REVENUE AND CERTAIN EXPENSES (amounts in thousands)
For the Period January 1, 1997- For the March 20, 1997 Year Ended (Unaudited) December 31, 1996 ------------------ ----------------- REVENUE Rental Income $ 817 $ 3,062 ------------------ ----------------- CERTAIN EXPENSES Property operating and maintenance 183 871 Real estate taxes and insurance 120 447 Management fees 27 114 ------------------ ----------------- 330 1,432 ------------------ ----------------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 487 $ 1,630 ================== =================
See accompanying notes. 37 LINCOLN HARBOUR NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES Note 1 - Summary of Significant Accounting Policies The accompanying statements of revenue and certain expenses for the year ended December 31, 1996 and the three months ended March 31, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements are not representative of the actual operations of Lincoln Harbor for the periods presented as certain expenses, which may not be comparable to the expenses to be incurred by Equity Residential Properties Trust and its subsidiaries (the "Company") in the proposed future operations of Lincoln Harbor, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Lincoln Harbor. In preparation of the Company's Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential leases is recorded when due from tenants, generally on a straight line basis. Lincoln Harbor had a management agreement with a management company unaffiliated with the Company through the acquisition date to maintain and manage the operations of the apartment complex. Management fees were based on 3.75% of gross receipts. In 1996, all of the management fees were paid to an affiliate of the seller. Upon acquisition of Lincoln Harbor by the Company, such management contract was cancelled at which time the Company began to manage Lincoln Harbor. Note 2 - Description of Property The following property is included in the statements of revenue and certain expenses:
Date Number Total Property Name Location Acquired of Units Investment (A) ----------------- ------------------ -------- -------- -------------- Lincoln Harbour Ft. Lauderdale, FL 3/20/97 324 $22,285,000
Notes: (A) Includes initial purchase price, closing costs, start up costs and amounts specified at date of purchase for future capital improvements. 38 REPORT OF INDEPENDENT AUDITORS The Board of Trustees of Equity Residential Properties Trust We have audited the accompanying combined Statement of Revenue and Certain Expenses of Club at the Green and Knights Castle (the Properties) for the year ended December 31, 1996. The combined Statement of Revenue and Certain Expenses is the responsibility of the Properties' management. Our responsibility is to express an opinion on the combined Statement of Revenue and Certain Expenses 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 Statement of Revenue and Certain Expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures made in the Statement of Revenue and Certain Expenses. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Statement of Revenue and Certain Expenses. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined Statement of Revenue and Certain Expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Equity Residential Properties Trust's Current Report on Form 8-K as described in Note 1, and is not intended to be a complete presentation of the Properties' revenue and expenses. In our opinion, the combined Statement of Revenue and Certain Expenses referred to above presents fairly, in all material respects, the revenue and certain expenses described in Note 1 for the year ended December 31, 1996, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 9, 1997 39 CLUB AT THE GREEN AND KNIGHT'S CASTLE COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (amounts in thousands)
For the Three Months Ended For the March 31, 1997 Year Ended (Unaudited) December 31, 1996 ------------------ ----------------- REVENUE Rental Income $ 1,033 $ 4,090 ------------------ ----------------- CERTAIN EXPENSES Property operating and maintenance 251 960 Real estate taxes and insurance 111 397 Management fees 36 142 ------------------ ----------------- 398 1,499 ------------------ ----------------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 635 $ 2,591 ================== =================
See accompanying notes. 40 CLUB AT THE GREEN AND KNIGHT'S CASTLE NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES Note 1 - Summary of Significant Accounting Policies The accompanying combined statements of revenue and certain expenses for the year ended December 31, 1996 and the three months ended March 31, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying financial statements are not representative of the actual operations of Club at the Green and Knight's Castle for the period presented as certain expenses, which may not be comparable to the expenses to be incurred by Equity Residential Properties Trust and its subsidiaries (the "Company") in the proposed future operations of Club at the Green and Knight's Castle, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Club at the Green and Knight's Castle. In preparation of the Company's Combined Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that effect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential leases is recorded when due from tenants, generally on a straight line basis. Club at the Green and Knight's Castle had a management agreement with a management company unaffiliated with the Company through the acquisition dates to maintain and manage the operations of the apartment complexes. Management fees were based on 3.5% of gross receipts. In 1996, all of the management fees were paid to an affiliate of the seller. Upon acquisition of Club at the Green and Knight's Castle by the Company, such management contract was cancelled at which time the Company began to manage Club at the Green and Knight's Castle. Note 2 - Description of Properties The following properties are included in the combined statements of revenue and certain expenses:
Date Number Total Property Name Location Acquired of Units Investment (A) ----------------- --------------- -------- -------- -------------- Club at the Green Beaverton, OR 3/28/97 254 $ 14,925,000 Knight's Castle Wilsonville, OR 3/28/97 296 16,027,000 -------- -------------- 550 $ 30,952,000 ======== ==============
Notes: (A) Includes initial purchase price, closing costs, start up costs and amounts specified at date of purchase for future capital improvements. 41 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. EQUITY RESIDENTIAL PROPERTIES TRUST May 29, 1997 By: /s/ Michael J. McHugh - ------------ --------------------------------------- (Date) Michael J. McHugh Senior Vice President, Chief Accounting Officer and Treasurer 42 EX-24.1 2 CONSENT OF ERNST & YOUNG LLP CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-3 No. 333-12211) of Equity Residential Properties Trust and in the related Prospectus of our reports indicated below with respect to the financial statements indicated below included in this Current Report of Equity Residential Properties Trust on Form 8-K.
Financial Statements Date of Auditors Report - ---------------------------------------- ----------------------- Statement of Revenue and Certain Expenses of Harborview for the year ended December 31, 1996 May 16, 1997 Statement of Revenue and Certain Expenses of Trails at Dominion for the year ended December 31, 1996 May 6, 1997 Statement of Revenue and Certain Expenses of Rincon for the year ended December 31, 1996 May 7, 1997 Statement of Revenue and Certain Expenses of Waterford at the Lakes for the year ended December 31, 1996 May 12, 1997 Statement of Revenue and Certain Expenses of Lincoln Harbour for the year ended December 31, 1996 May 16, 1997 Combined Statement of Revenue and Certain Expenses of Knights Castle and Club at the Green for the year ended December 31, 1996 May 9, 1997 Combined Statement of Revenue and Certain Expenses of the Zell/Merrill Properties for the three years in the period ended December 31, 1996 March 25, 1997
Ernst & Young LLP Chicago, Illinois May 27, 1997 -----END PRIVACY-ENHANCED MESSAGE-----