-----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, Eh8gvKGu599x9Xb+qnn1uhnIhI9ihoh6gGfDG6LGOwxuLFtd2bqcYWnRcQmmwrt+ KxpUdPdkbxT6qgoSuzF9JQ== 0000950131-97-005646.txt : 19970922 0000950131-97-005646.hdr.sgml : 19970922 ACCESSION NUMBER: 0000950131-97-005646 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970917 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19970918 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: SEC FILE NUMBER: 001-12252 FILM NUMBER: 97682529 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 As filed with the Securities and Exchange Commission on September 18,1997 - -------------------------------------------------------------------------------- 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 SEPTEMBER 17, 1997 (Date of Report) EQUITY RESIDENTIAL PROPERTIES TRUST (Exact Name of Registrant as Specified in its Charter) 1-12252 (Commission File No.) MARYLAND 13-3675988 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation) 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") acquired two multi-family properties on August 27, 1997. The cash portion of this transaction was financed primarily through the June 1997 Common Share Offerings. Descriptions of the acquired properties follow. The Company has also entered into a contract to acquire an additional 17 properties which are discussed in Item 5. 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 quarterly period ended June 30, 1997. PACES STATION APARTMENTS AND PACES ON THE GREEN APARTMENTS, ATLANTA, GEORGIA On August 27, 1997, the Company acquired two multifamily properties located in Atlanta, Georgia ("Paces Station" and "Paces on the Green"). Paces Station was approximately 94% occupied as of June 30, 1997. The property consists of 400 units in 37 two and three story residential buildings and one office/clubhouse on approximately 32 acres. Amenities include a clubhouse, two swimming pools, jacuzzi, wood burning fireplaces with gas starters, mini blinds, laundry facilities, microwaves, breakfast bars, pantries, built-in bookshelves in select units, and washer/dryer connections in all units. The property was constructed in phases from 1984-1988. Property management services are being provided by the Company since the date of acquisition. Paces on the Green was approximately 98% occupied as of June 30, 1997. The property consists of 210 units in 14 two and three story residential buildings and one clubhouse on approximately nine acres. Amenities include a clubhouse, two swimming pools, jacuzzi, lighted tennis courts, croquet and putting green, car wash facilities, microwaves, washer/dryer hook-ups in all units, mini blinds, and fireplaces in select units. The property was constructed in 1989. Property management services are being provided by the Company since the date of acquisition. TERMS OF PURCHASE Paces Station and Paces on the Green were purchased from an unaffiliated third party for $37.3 million. 2 ITEM 5. OTHER EVENTS THE AMERITECH TRANSACTION The Company entered into a contract with an unaffiliated third party to acquire 17 multifamily properties. Below are the expected terms of purchase and the descriptions of the properties which the Company deems to be probable acquisitions (the "Ameritech Pension Trust Probable Properties" or the "Probable Properties"). The descriptions and terms of purchase for the Probable Properties are discussed below. 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 quarterly period ended June 30, 1997. EXPECTED TERMS OF PURCHASE The aggregate purchase price of the Probable Properties is $292.4 million, which includes the assumption of approximately $136 million of mortgage indebtedness and the issuance of Common Shares in the amount of approximately $156.4 million. DESCRIPTIONS OF PROPERTIES AUTUMN CREEK APARTMENTS, CORDOVA, TENNESSEE Autumn Creek Apartments ("Autumn Creek") is a 210-unit multifamily property located in Cordova, Tennessee. Autumn Creek was approximately 92% occupied as of July 28, 1997. The property consists of 20 two and three story buildings and a clubhouse/leasing office on approximately 14 acres. Amenities include a leasing office/clubhouse, lighted tennis court, swimming pool, sauna, whirlpool, fitness center, vaulted ceilings, and washer/dryers in all units. The property was constructed in 1991. 3 BLUE SWAN APARTMENTS, SAN ANTONIO, TEXAS Blue Swan Apartments ("Blue Swan") is a 285-unit multifamily property located in San Antonio, Texas. Blue Swan was approximately 87% occupied as of June 20, 1997. The property consists of 28 two and three story residential buildings and two clubhouses on approximately 12 acres. Amenities include two clubhouses, two swimming pools, two jacuzzis, fitness room, cabana, perimeter fencing with card operated access gates, and washer/dryer connections in 261 units. The property was constructed between 1985 and 1994. BROOKRIDGE APARTMENTS, CENTREVILLE, VIRGINIA Brookridge Apartments ("Brookridge") is a 252-unit multifamily property located in Centreville, Virginia. Brookridge was approximately 97% occupied as of June 18, 1997. The property consists of 25 three and four story residential buildings and a clubhouse/leasing office on approximately 15 acres. Amenities include a clubhouse, swimming pool, fitness center, lighted tennis court, washer/ dryers in each unit, fireplaces in select units, vaulted ceilings, biking and jogging trails, and built in microwave ovens. The property was constructed in 1989. CHANTECLEER LAKES APARTMENTS, NAPERVILLE, ILLINOIS Chantecleer Lakes Apartments ("Chantecleer Lakes") is a 304-unit multifamily property located in Naperville, Illinois. Chantecleer Lakes was approximately 92% occupied as of June 19, 1997. The property consists of 16 two story residential buildings and a single-story clubhouse on approximately 19 acres. Amenities include a swimming pool, clubhouse, health club with spa, washers and dryers in each unit, three spring fed lakes, sunken living rooms, built-in microwaves in each unit, and an intercom entry system. The property was constructed in 1986. CRESCENT AT CHERRY CREEK APARTMENTS, DENVER, COLORADO Crescent at Cherry Creek Apartments ("Crescent at Cherry Creek") is a 216-unit multifamily property located in Denver, Colorado. Crescent at Cherry Creek was approximately 93% occupied as of July 23, 1997. The property consists of nine three-story residential buildings and a single-story clubhouse. Amenities include a clubhouse, swimming pool, spa, exercise/fitness facility, controlled access gates, individual garages with openers, washer/dryer connections, and fireplaces. The property was constructed in 1994. GOVERNOR'S POINT APARTMENTS, ROSWELL, GEORGIA Governor's Point Apartments ("Governor's Point") is a 468-unit multifamily property located in Roswell, Georgia. Governor's Point was approximately 93% occupied as of July 22, 1997. The property consists of 48 two story residential buildings and two clubhouses on approximately 34 acres. Amenities include two clubhouses, two swimming pools, spa, four lighted tennis courts, exercise room, tot lot, washer/dryer connections, and fireplaces. The property was constructed between 1982 and 1986. 4 HIDDEN PALMS APARTMENTS, TAMPA, FLORIDA Hidden Palms Apartments ("Hidden Palms") is a 256-unit multifamily property located in Tampa, Florida. Hidden Palms was approximately 88% occupied as of July 7, 1997. The property consists of 15 two and three story residential buildings and a single story clubhouse/leasing office on approximately 14 acres. Amenities include a leasing office/ clubhouse, swimming pool, fitness center, two jacuzzis, washer/dryer connections in all units, washer/dryers in select units, vaulted ceilings, and picnic areas. The property was constructed in 1986. IDLEWOOD APARTMENTS, INDIANAPOLIS, INDIANA Idlewood Apartments ("Idlewood") is a 320-unit multifamily property located in Indianapolis, Indiana. Idlewood was approximately 94% occupied as of June 30, 1997. The property consists of 20 two and three story residential buildings and a one story clubhouse on approximately 29 acres. Amenities include a clubhouse, swimming pool, playground, exercise room, sauna, carports and garages. The property was constructed in 1991. JEFFERSON AT WALNUT CREEK APARTMENTS, AUSTIN, TEXAS Jefferson at Walnut Creek ("Jefferson at Walnut Creek") is a 342-unit multifamily property located in Austin, Texas. Jefferson at Walnut Creek was approximately 96% occupied as of June 18, 1997. The property consists of 15 three story residential buildings, one clubhouse, and one pool house on approximately 20 acres. Amenities include a clubhouse, two swimming pools, fitness center, spa, covered parking and garages, perimeter fence with access gates, intrusion alarms, microwaves, fireplaces in some units, and washer/dryer hookups. The property was constructed in 1994. KIRBY PLACE APARTMENTS, HOUSTON, TEXAS Kirby Place Apartments ("Kirby Place") is a 362-unit multifamily property located in Houston, Texas. Kirby Place was approximately 97% occupied as of June 18, 1997. The property consists of 15 three story and two four story residential buildings on approximately nine acres. Amenities include a clubhouse with conference/film room, business center, fitness room and aerobics room, guard house, swimming pool, mountain bikes, nine foot ceilings, crown molding, and washer/dryers in all units. The property was constructed in 1994. LARKSPUR WOODS APARTMENTS, SACRAMENTO, CALIFORNIA Larkspur Woods Apartments ("Larkspur Woods") is a 232-unit multifamily property located in Sacramento, California. Larkspur Woods was approximately 97% occupied as of June 20, 1997. The property consists of 27 two story residential buildings and one clubhouse on approximately 16 acres. Amenities include a heated outdoor swimming pool and spa, wood burning fireplaces, clubhouse with business center and library, exercise room, gated entrance, basketball half court, full size washer/dryers in each unit, picnic area, sauna, and attached garages. The property was constructed in phases between 1989 and 1993. 5 NORTHWOODS VILLAGE APARTMENTS, CARY, NORTH CAROLINA Northwoods Village Apartments ("Northwoods Village") is a 228-unit multifamily property located in Cary, North Carolina. Northwoods Village was approximately 97% occupied as of June 30, 1997. The property consists of 23 two story residential buildings and one clubhouse/leasing office on approximately 14 acres. Amenities include a leasing office/clubhouse, two swimming pools, lighted tennis court, sand volleyball court, full size washer/dryers in each unit, vaulted ceilings, and fireplaces. The property was constructed in 1986. ORCHARD OF LANDEN APARTMENTS, MAINEVILLE, OHIO Orchard of Landen Apartments ("Orchard of Landen") is a 312-unit multifamily property located in Maineville, Ohio. Orchard of Landen was approximately 97% occupied as of July 25, 1997. The property consists of 39 two story residential buildings on approximately 33 acres. Amenities include a clubhouse, swimming pool and spa, exercise room, membership to Pine Ridge Recreation Association, jogging trails, and washer/dryers hook ups. The property was constructed between 1985 and 1988. PREAKNESS APARTMENTS, ANTIOCH, TENNESSEE Preakness Apartments ("Preakness") is a 260-unit multifamily property located in Antioch, Tennessee. Preakness was approximately 90% occupied as of June 20, 1997. The property consists of 15 three story residential buildings and one clubhouse/leasing office on approximately 13 acres. Amenities include a leasing office/clubhouse, swimming pool, fitness center, indoor jacuzzi, lighted tennis court, sand volleyball court, barbecue/picnic area, woodburning fireplaces, large private balconies, and washer/dryer connections in each unit. The property was constructed in 1986. RIVERSIDE PARK APARTMENTS, TULSA, OKLAHOMA Riverside Park Apartments ("Riverside Park") is a 288-unit multifamily property located in Tulsa, Oklahoma. Riverside Park was approximately 97% occupied as of July 22, 1997. The property consists of 12 three story residential buildings and one clubhouse. Amenities include a clubhouse, swimming pool, spa, washer/dryer connections, washer/dryers and vaulted ceilings in select units, and fireplaces. The property was constructed in 1994. SYCAMORE CREEK APARTMENTS, SCOTTSDALE, ARIZONA Sycamore Creek Apartments ("Sycamore Creek") is a 350-unit multifamily property located in Scottsdale, Arizona. Sycamore Creek was approximately 86% occupied as of July 22, 1997. The property consists of 20 two story residential buildings and two clubhouses on approximately 19 acres. Amenities include two clubhouses, two swimming pools, two spas, two lighted tennis courts, exercise room, sauna, washer/dryer connections, and fireplaces. The property was constructed in 1984. 6 TRINITY LAKES APARTMENTS, CORDOVA, TENNESSEE Trinity Lakes Apartments ("Trinity Lakes") is a 330-unit multifamily property located in Cordova, Tennessee. Trinity Lakes was approximately 97% occupied as of July 28, 1997. The property consists of 20 three story residential buildings and one clubhouse/leasing office on approximately 26 acres. Amenities include a leasing office/clubhouse, swimming pool, two lighted tennis courts, jacuzzi, sauna, racquetball court, vaulted ceilings, washer/dryers and built in microwaves in each unit, and fireplaces in select units. The property was constructed in 1985. The Company expects to provide property management services for the Probable Properties. The closings of the Probable Properties are subject to certain contingencies and conditions, therefore, there can be no assurance that any or all of these transactions will be consummated, or that the final terms thereof will not differ in material respects from those summarized above. 7 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. 8 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS REQUIRED UNDER ITEM 7(b) OF FORM 8-K 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 quarterly period ended June 30, 1997. The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1997 and Statements of Operations for the six months ended June 30, 1997 and for the year ended December 31, 1996 have been presented as if the June 1997 Common Share Offerings and the acquisition or probable acquisition of 19 multifamily properties had occurred on June 30, 1997 with respect to the June 30, 1997 balance sheet, January 1, 1997 with respect to the statement of operations for the six months ended June 30, 1997 and January 1, 1996 with respect to the statement of operations for the year ended December 31, 1996. All of these properties are included on a pro forma basis as described in Note A of the Pro Forma Condensed Consolidated Balance Sheet as of June 30, 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, the Company's Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1997 and the Combined Statements of Revenue and Certain Expenses for the acquired and for the probable properties (included elsewhere herein). 10 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 (UNAUDITED) (AMOUNTS IN THOUSANDS)
MOST RECENT PROBABLE ACQUIRED PRO HISTORICAL PROPERTIES (A) PROPERTIES (B) FORMA --------------- ------------------ ----------------- ------------ ASSETS Rental property, net $ 4,124,835 $ 297,502 $ 37,940 $ 4,460,277 Real estate held for disposition 3,947 -- -- 3,947 Investment in mortgage notes, net 174,764 -- -- 174,764 Cash and cash equivalents 311,358 (5,102) (37,940) 268,316 Rents receivable 2,078 -- -- 2,078 Deposits-restricted 6,112 -- -- 6,112 Escrows deposits-mortgage 28,698 -- -- 28,698 Deferred financing costs, net 14,306 -- -- 14,306 Other assets 72,636 -- -- 72,636 --------------- ------------------ ----------------- ------------ Total assets $ 4,738,734 $ 292,400 $ -- $ 5,031,134 =============== ================== ================= ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 960,879 $ 136,000 $ -- $ 1,096,879 Line of credit -- -- -- -- Notes, net 754,508 -- -- 754,508 Accounts payable and accrued expenses 43,001 -- -- 43,001 Accrued interest payable 22,210 -- -- 22,210 Due to affiliates 649 -- -- 649 Rents received in advance and other liabilities 31,844 -- -- 31,844 Security deposits 19,231 -- -- 19,231 Distributions payable 64,506 -- -- 64,506 --------------- ------------------ ----------------- ------------ Total liabilities 1,896,828 136,000 -- 2,032,828 --------------- ------------------ ----------------- ------------ Commitments and contingencies Minority Interests 179,222 -- -- 179,222 --------------- ------------------ ----------------- ------------ Shareholders' equity: Common shares 736 34 -- 770 Preferred shares 725,495 -- -- 725,495 Employee notes (5,202) -- -- (5,202) Paid in capital 2,050,152 156,366 -- 2,206,518 Distributions in excess of accumulated earnings (108,497) -- -- (108,497) --------------- ------------------ ----------------- ------------ Total shareholders' equity 2,662,684 156,400 -- 2,819,084 --------------- ------------------ ----------------- ------------ Total liabilities and shareholders' equity $ 4,738,734 $ 292,400 $ -- $ 5,031,134 =============== ================== ================= ============
(A) Reflects the probable acquisitions of Hidden Palms, Idlewood, Riverside Park, Sycamore Creek, Blue Swan, Autumn Creek, Governor's Point, Northwoods Village, Preakness, Trinity Lakes, Larkspur Woods, Brookridge, Chantecleer Lakes, Orchard of Landen, Crescent at Cherry Creek, Jefferson at Walnut Creek and Kirby Place (collectively the "Probable Properties"). In connection with such probable acquisitions: (i) the amounts presented include the initial purchase price as well as subsequent closing costs anticipated to be incurred and capital improvements anticipated to be required as identified in the acquisition process; (ii) the expected assumption of $136 million of mortgage indebtedness; and (iii) the expected issuance of Common Shares with an expected value of approximately $156.4 million. (B) Reflects the most recent multifamily property acquisitions, which include Paces on the Green and Paces Station (collectively the "Most Recent Acquired Properties"). 11 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT FOR SHARE DATA)
MOST RECENT PROBABLE ACQUIRED ACQUIRED PRO HISTORICAL PROPERTIES (A) PROPERTIES (B) ADJUSTMENTS (C) FORMA ---------- -------------- -------------- --------------- --------- REVENUES Rental income $ 290,799 $ 19,907 $ 2,531 $ -- $ 313,237 Fee and asset management 3,110 -- -- -- 3,110 Interest income - investment in mortgage notes 8,011 -- -- -- 8,011 Interest and other income 4,404 -- -- (2,411) 1,993 ----------- ------------- ------------- --------------- ---------- Total revenues 306,324 19,907 2,531 (2,411) 326,351 ----------- ------------- ------------- --------------- ---------- EXPENSES Property and maintenance 70,760 6,409 954 (926) 77,197 Real estate taxes and insurance 29,667 2,388 254 -- 32,309 Property management 11,819 -- -- 561 12,380 Fee and asset management 1,569 -- -- -- 1,569 Depreciation 62,775 -- -- 5,032 67,807 Interest: -- Expense incurred 50,924 -- -- 4,420 55,344 Amortization of deferred financing costs 1,220 -- -- 1,220 General and administrative 6,206 -- -- -- 6,206 ---------- ------------- ------------- --------------- ---------- Total expenses 234,940 8,797 1,208 9,087 254,032 ---------- ------------- ------------- --------------- ---------- Income before gain on disposition of properties and allocation to Minority Interests 71,384 $ 11,110 $ 1,323 $ (11,498) 72,319 ============= ============= =============== Gain on disposition of properties 3,632 -- ---------- ---------- Income before allocation to Minority Interests 75,016 72,319 (Income) allocated to Minority Interests (D) (6,345) (5,102) ---------- ---------- Net income 68,671 67,217 Preferred distributions 20,939 20,939 ---------- ---------- Net income available to Common Shares $ 47,732 $ 46,278 ========== ========== Net income per weighted average Common Share outstanding $ 0.86 $ 0.69 ========== ========== Weighted average Common Shares outstanding 55,385 (E) 67,110 ========== ==========
(A) Reflects the results of operations for the Probable Properties. The amounts presented represent the historical amounts for certain revenues and expenses for the six months ended June 30, 1997. (B) Reflects the results of operations for the 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 Most Recent Acquired Propertie s for the six months ended June 30, 1997. 12 (C) Reflects the following adjustments to the Probable Properties and 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 $ (2,411) ============ Property and maintenance: The elimination of third-party management fees where the Company is providing onsite property management services $ (926) ============ Property management: Incremental cost associated with self management of the Probable Properties and the Most Recent Acquired Properties for the six months ended June 30, 1997 $ 561 ============ Depreciation: Reflects depreciation based on the expected total investment of $335.4 million for the Probable Properties and the Most Recent Acquired Properties less 10% allocated to land and depreciated over a 30-year life for real property. Depreciation for the Probable Properties and the Most Recent Acquired Properties reflect amounts for the six months ended June 30,1997. $ 5,032 ============ Interest: Expense incurred: Interest on mortgage indebtedness for the Probable Properties. (F) 4,420 ============
(D) 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 after giving effect to the pro forma transactions. (E) Pro Forma weighted average Common Shares outstanding for the six months ended June 30, 1997 was 67.1 million, which assumes the Common Shares issued in connection with the June 1997 Common Share Offerings were outstanding as of January 1, 1997 and includes approximately 3.4 million Common Shares issued in connection with the acquisition of the Probable Properties. 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. (F) Detail of interest expense on mortgage indebtedness for the Probable Properties:
Mortgage Interest Interest Property Indebtedness Rate Expense - ------------------------------ --------------- ------------- ---------- Hidden Palms $ 4,174 6.50% $ 136 Idlewood 6,574 6.50% 214 Riverside Park 6,900 6.50% 224 Sycamore Creek 10,093 6.50% 328 Blue Swan 4,199 6.50% 136 Autumn Creek 4,958 6.50% 161 Governor's Point 13,226 6.50% 430 Northwoods Village 6,004 6.50% 195 Preakness 4,299 6.50% 140 Trinity Lakes 7,916 6.50% 257 Larkspur Woods 9,523 6.50% 309 Brookridge 8,100 6.50% 263 Cantecleer Lakes 10,203 6.50% 332 Orchard of Landen 9,229 6.50% 300 Crescent at Cherry Creek 8,335 6.50% 271 Jefferson at Walnut Creek 8,358 6.50% 272 Kirby Place 13,909 6.50% 452 --------------- ---------- Totals $ 136,000 $ 4,420 =============== ==========
13 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)
MOST RECENT PROBABLE ACQUIRED PRO HISTORICAL PROPERTIES (A) PROPERTIES (B) ADJUSTMENTS (C) FORMA ---------- -------------- -------------- --------------- --------- REVENUES Rental income $ 454,412 $ 39,251 $ 5,368 $ -- $ 499,031 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 39,251 5,368 (2,942) 520,062 ---------- -------------- -------------- --------------- --------- EXPENSES Property and maintenance 127,172 12,696 1,558 (1,846) 139,580 Real estate taxes and insurance 44,128 4,531 482 -- 49,141 Property management 17,512 -- -- 1,115 18,627 Fee and asset management 3,837 -- -- -- 3,837 Depreciation 93,253 -- -- 10,063 103,316 Interest: Expense incurred 81,351 -- -- 8,840 90,191 Amortization of deferred financing costs 4,242 -- -- -- 4,242 General and administrative 9,857 -- -- -- 9,857 ---------- -------------- -------------- --------------- --------- Total expenses 381,352 17,227 2,040 18,172 418,791 ---------- -------------- -------------- --------------- --------- Income before gain on disposition of properties 97,033 $ 22,024 $ 3,328 $ (21,114) 101,271 ============== ============== =============== Gain on disposition of properties 22,402 -- ---------- --------- Income before extraordinary item 119,435 101,271 Extraordinary item: Write-off of unamortized costs on refinanced debt (3,512) -- ---------- --------- Income before allocation to Minority Interests 115,923 101,271 (Income) allocated to Minority Interests (D) (14,299) (9,805) ---------- --------- Net income 101,624 91,466 Preferred distributions 29,015 29,015 ---------- --------- Net income available to Common Shares $ 72,609 $ 62,451 ========== ========= Net income per weighted average Common Share outstanding $ 1.70 $ 1.14 ========== ========= Weighted average Common Shares outstanding 42,586 (E) 54,997 ========== =========
(A) Reflects the results of operations of the 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 Probable Properties for the year ended December 31, 1996. (B) Reflects the results of operations for the 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 Most Recent Acquired Properties for the year ended December 31, 1996. 14 (C) Reflects the following adjustments to the Probable Properties and 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 $ (2,942) ========== Property and maintenance: The elimination of third-party management fees where the Company is providing onsite property management services $ (1,846) ========== Property management: Incremental cost associated with self management of the Probable Properties and the Most Recent Acquired Properties for the year ended December 31, 1996 $ 1,115 ========== Depreciation: Reflects depreciation based on the expected total investment of $335.4 million for the Probable Properties and the Most Recent Acquired Properties less amounts allocated to land, generally 10%, and depreciated over a 30-year life for real property. $ 10,063 ========== Interest: Expense incurred: Interest on mortgage indebtedness for the Probable Properties. (F) $ 8,840 ==========
(D) 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 after giving effect to the pro forma transactions. (E) Pro Forma weighted average Common Shares outstanding for the year ended December 31, 1996 was 55 million, which includes 42.6 million weighted average Common Shares outstanding as of December 31, 1996 plus the issuance of 9 million Common Shares in connection with the June 1997 Common Share Offerings and the issuance of 3.4 million Common Shares in connection with the acquisition of the Probable Properties. 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. (F) Detail of interest expense on mortgage indebtedness for the Probable Properties:
Mortgage Interest Interest Property Indebtedness Rate Expense - ------------------------ ------------ -------------------------- Hidden Palms $ 4,174 6.50% $ 271 Idlewood 6,574 6.50% 427 Riverside Park 6,900 6.50% 449 Sycamore Creek 10,093 6.50% 656 Blue Swan 4,199 6.50% 273 Autumn Creek 4,958 6.50% 322 Governor's Point 13,226 6.50% 860 Northwoods Village 6,004 6.50% 390 Preakness 4,299 6.50% 279 Trinity Lakes 7,916 6.50% 515 Larkspur Woods 9,523 6.50% 619 Brookridge 8,100 6.50% 527 Cantecleer Lakes 10,203 6.50% 663 Orchard of Landen 9,229 6.50% 600 Crescent at Cherry Creek 8,335 6.50% 542 Jefferson at Walnut Creek 8,358 6.50% 543 Kirby Place 13,909 6.50% 904 ------------ ---------- Totals $ 136,000 $ 8,840 ============ ==========
15 STATEMENTS OF REVENUE AND CERTAIN EXPENSES REQUIRED UNDER ITEM 7(a) OF FORM 8-K 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 the Ameritech Pension Trust Probable Properties (the Probable Properties) described in Note 2 for the year ended December 31, 1996. This combined Statement of Revenue and Certain Expenses is the responsibility of the Probable 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 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 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 Probable Properties' combined 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 August 15, 1997 17 AMERITECH PENSION TRUST PROBABLE PROPERTIES COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (AMOUNTS IN THOUSANDS)
FOR THE SIX MONTHS ENDED FOR THE JUNE 30, 1997 YEAR ENDED (UNAUDITED) DECEMBER 31, 1996 ---------------- ----------------- REVENUE Rental Income $ 19,907 $ 39,251 ---------------- ----------------- CERTAIN EXPENSES Property operating and maintenance 5,585 11,064 Real estate taxes and insurance 2,388 4,531 Management fees 824 1,632 ---------------- ----------------- 8,797 17,227 ---------------- ----------------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 11,110 $ 22,024 ================ =================
See accompanying notes. 18 AMERITECH PENSION TRUST PROBABLE 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 year ended December 31, 1996 and the six months ended June 30, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying combined financial statements consist of 17 multifamily properties for which Equity Residential Properties Trust (the "Company") made a commitment to acquire or has reached an agreement, in principle, to acquire these properties and the Company is in the final stages of completing the acquisition of these properties, (the "Ameritech Pension Trust Probable Properties"). The closing of these pending transactions are subject to certain contingencies and conditions; therefore, there can be no assurance that these transactions will be consummated. The accompanying combined financial statements are not representative of the actual operations of the Ameritech Pension Trust Probable Properties for the periods presented as certain expenses, which may not be comparable to the expenses to be incurred by the Company in the proposed future operations of the Ameritech Pension Trust Probable 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 Ameritech Pension Trust Probable Properties. In the preparation of the 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 revenue 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. The Ameritech Pension Trust Probable Properties are expected to be managed by two unaffiliated management companies through the acquisition date to maintain and manage the operations of the Probable Properties. Management fees are based upon a percentage ranging from 2.5% to 5% of total income. Upon acquisition of the Probable Properties by the Company, such management contracts will be canceled at which time the Company will begin to manage the properties. 19 AMERITECH PENSION TRUST PROBABLE PROPERTIES NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (CONTINUED) 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 Seller Acquired of Units Investment (B) ------------------- -------------- -------------- -------------- ----------- ------------------- Autumn Creek Cordova, TN (A) (C) 210 $ 11,112,170 Blue Swan San Antonio, TX (A) (C) 285 9,164,020 Brookridge Centreville, VA (A) (C) 252 18,703,016 Chantecleer Lakes Naperville, IL (A) (C) 304 23,202,100 Crescent at Cherry Creek Denver, CO (A) (C) 216 17,841,960 Governor's Point Rosewell, CO (A) (C) 468 28,971,870 Hidden Palms Tampa, FL (A) (C) 256 8,678,519 Idlewood Indianapolis, IN (A) (C) 320 14,268,800 Jefferson at Walnut Creek Austin, TX (A) (C) 342 17,392,900 Kirby Place Houston, TX (A) (C) 362 29,619,460 Larkspur Woods Sacramento, CA (A) (C) 232 20,769,400 Northwoods Village Cary, NC (A) (C) 228 13,264,424 Orchard of Landen Maineville, OH (A) (C) 312 20,475,439 Preakness Antioch, TN (A) (C) 260 10,025,100 Riverside Park Tulsa, OK (A) (C) 288 14,380,400 Sycamore Creek Scottsdale, AZ (A) (C) 350 22,495,819 Trinity Lakes Cordova, TN (A) (C) 330 17,136,700 ------ ---------------- 5,015 $ 297,502,097 ====== ================
Notes: (A) The Ameritech Pension Trust Probable Properties have been presented on a combined basis because all of the Probable Properties are commonly owned by Ameritech Pension Trust. (B) Includes initial purchase price, closing costs and amounts specified at date of purchase for future capital improvements. (C) The Company has made 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. 20 Report of Independent Auditors The Board of Trustees of Equity Office Properties Trust We have audited the accompanying combined Statement of Revenue and Certain Expenses of Paces on the Green and Paces Station (the Properties) for the year ended December 31, 1996. This 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 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' combined 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 September 5, 1997 21 PACES ON THE GREEN AND PACES STATION COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES (AMOUNTS IN THOUSANDS)
FOR THE PERIOD FROM JANUARY 1, 1997 FOR THE TO AUGUST 27, 1997 YEAR ENDED (UNAUDITED) DECEMBER 31, 1996 -------------------- ----------------- REVENUE Rental Income $ 3,430 $ 5,368 -------------------- ----------------- CERTAIN EXPENSES Property operating and maintenance 1,086 1,344 Real estate taxes and insurance 316 482 Management fees 137 214 -------------------- ----------------- 1,539 2,040 -------------------- ----------------- REVENUE IN EXCESS OF CERTAIN EXPENSES $ 1,891 $ 3,328 ==================== =================
See accompanying notes. 22 PACES ON THE GREEN AND PACES STATION 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 period from January 1, 1997 to August 27, 1997 (unaudited) were prepared for purposes of complying with the rules and regulations of the Securities and Exchange Commission. The accompanying combined financial statements are not representative of the actual operations of Paces on the Green and Paces Station (the "Properties") for the periods presented nor indicative of future operations as certain expenses, primarily depreciation, amortization and interest expense, which may not be comparable to the expenses expected to be incurred by Equity Residential Properties Trust (the "Company") in future operations of Properties, have been excluded. In preparation of the combined Statements of Revenue and Certain Expenses in conformity with generally accepted accounting principals, management makes estimates and assumptions that effect the reported amounts of revenue 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. The Properties were managed by an unaffiliated management company through the acquisition date to maintain and manage the operations of the Properties. Management fees were based on 4% of total income. Property management services are being provided by the Company since the date of acquisition. 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 Seller Acquired of Units Investment (B) ------------------- ------------ ------ -------- -------- -------------- Paces on the Green Atlanta, GA (A) 8/27/97 210 $ 13,061,000 Paces Station Atlanta, GA (A) 8/27/97 400 24,879,000 -------- -------------- 610 $ 37,940,000 ======== ==============
Notes: (A) These Properties have been presented on a combined basis because the Properties are commonly owned by the California Policeman and Fireman's Fund. (B) Includes initial purchase price, closing costs, start up costs and amounts specified at date of purchase for future capital improvements. 23 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 September 17, 1997 By: /s/ Michael J. McHugh - ------------------ --------------------------- (Date) Michael J. McHugh Senior Vice President, Chief Accounting Officer and Treasurer 24 EX-24.1 2 CONSENT OF ERNST & YOUNG LLP CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statements (Forms S-3 No. 333-32183, 333-12983, 333-06873, 33-97680 and 33-84974 and Forms S-8 No. 333-06867 and 333-06869) 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 Auditor's Report -------------------- ------------------------ Combined Statement of Revenue and Certain August 15, 1997 Expenses of the Ameritech Pension Trust Probable Properties for the year ended December 31, 1996 Combined Statement of Revenue and Certain Expenses of Paces on the Green and Paces September 5, 1997 Station for the year ended December 31, 1996 Ernst & Young LLP Chicago, Illinois September 18, 1997 -----END PRIVACY-ENHANCED MESSAGE-----