-----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, MWZShedrXvoHdLoftffnS+cDQsBlbwf/eZ8S6RlncCYRQX+e7V736X5I7YFlU5D3 YBslQsULrmtIV6IYkz4rQw== 0001047469-98-026999.txt : 19980714 0001047469-98-026999.hdr.sgml : 19980714 ACCESSION NUMBER: 0001047469-98-026999 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980625 ITEM INFORMATION: ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980710 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: 98664653 BUSINESS ADDRESS: STREET 1: TWO N RIVERSIDE PLZ STREET 2: STE 400 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3124741300 MAIL ADDRESS: STREET 1: TWO N RIVERSIDE PLAZA STREET 2: SUITE 450 CITY: CHICAGO STATE: IL ZIP: 60606 8-K 1 8-K As filed with the Securities and Exchange Commission on July 10, 1998 - -------------------------------------------------------------------------------- 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 JUNE 25, 1998 (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 (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 Capitalized terms used but not defined in this Current Report on Form 8-K are as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, as amended by Form 10-K/A, and the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998. ACQUISITIONS As used herein, the term "Company" means Equity Residential Properties Trust ("EQR") and its subsidiaries as the survivor of the mergers between EQR and each of Wellsford Residential Property Trust ("Wellsford") (the "Wellsford Merger") and Evans Withycombe Residential, Inc. ("EWR") (the "EWR Merger"). The Company acquired 37 multifamily properties during the period from January 1, 1998 to June 25, 1998 (the "Acquired Properties"). The Company has also entered into contracts to acquire an additional 42 multifamily properties. The cash portion of these transactions was or will be primarily financed through the January 1998 Common Share Offering, the February 1998 Common Share Offerings, the March 1998 Common Share Offering, offerings completed in April 1998 and amounts available on the Company's line of credit. In April 1998, the Operating Partnership issued 6.63% unsecured notes due April 13, 2015 (the "2015 Notes") in a public debt offering. The Operating Partnership received net proceeds of approximately $298.1 million in connection with this issuance. On April 29, 1998, the Company completed an offering of 946,565 publicly registered Common Shares, which were sold at a price of $46.5459 per share (the "April 1998 Common Share Offering"). The Company received net proceeds of approximately $44.1 million in connection therewith. The terms of purchase and descriptions of the Acquired Properties follow. Expected terms of purchase and descriptions of the additional 42 multifamily properties (the "Probable Properties") are discussed in Item 5. DESCRIPTIONS OF PROPERTIES CITYSCAPE APARTMENTS, ST. LOUIS PARK, MINNESOTA On January 7, 1998, the Company acquired a multifamily property located in St. Louis Park, Minnesota ("Cityscape"). Cityscape was approximately 99% occupied as of June 22, 1998. The property consists of 156 units in a four-story residential building on approximately four acres. Amenities include a community room with fireplace, kitchen and large screen color TV, exercise room, outdoor swimming pool with sun deck plaza, gas grill picnic area, bay windows in master bedrooms, balconies/patios, full size washers/dryers, vaulted ceilings in select units, heated underground parking, and sprinkler systems. The property was constructed in 1990. TERMS OF PURCHASE Cityscape was purchased from an unaffiliated third party for approximately $12.3 million. 2 740 RIVER DRIVE APARTMENTS, ST. PAUL, MINNESOTA On January 9, 1998, the Company acquired a multifamily property located in St. Paul, Minnesota ("740 River Drive"). 740 River Drive was approximately 97% occupied as of June 22, 1998. The property consists of 162 units in a 23-story residential building on approximately two acres. Amenities include a party room with kitchen, exercise facility, swimming pool with sundeck, underground parking, furnished lobby, laundry room, and stackable washers/dryers in select units. The property was constructed in 1962. TERMS OF PURCHASE 740 River Drive was purchased from an unaffiliated third party for approximately $12.8 million, which included the assumption of approximately $7 million of mortgage indebtedness. PROSPECT TOWERS APARTMENTS, HACKENSACK, NEW JERSEY On January 13, 1998, the Company acquired a multifamily property located in Hackensack, New Jersey ("Prospect Towers"). Prospect Towers was approximately 97% occupied as of June 22, 1998. The property consists of 157 units in an 18-story residential building on approximately two acres and a vacant land parcel. Amenities include a health club, outdoor swimming pool with sauna, clubhouse, underground parking, 24-hour fire alarm system, and washers/dryers in each unit. The property was constructed in 1995. TERMS OF PURCHASE Prospect Towers was purchased from an unaffiliated third party for approximately $36.3 million, which included the assumption of approximately $14.9 million of mortgage indebtedness. PARK PLACE APARTMENTS, HOUSTON, TEXAS On January 16, 1998, the Company acquired a multifamily property located in Houston, Texas ("Park Place"). Park Place was approximately 98% occupied as of June 22, 1998. The property consists of 229 units in 12 two and three-story residential buildings on approximately 12 acres. Amenities include a clubhouse, swimming pool with sundeck area, fitness center, barbeque area, attached garages/carports, washers/dryers in all units, fireplaces in select units, built in bookshelves and work areas, and extra phone/fax/computer modem lines. The property was constructed in 1996. TERMS OF PURCHASE Park Place was purchased from an unaffiliated third party for approximately $13.6 million, which included the assumption of approximately $10.2 million of mortgage indebtedness. 3 PARK WESTEND APARTMENTS, RICHMOND, VIRGINIA On January 16, 1998, the Company acquired a multifamily property located in Richmond, Virginia ("Park Westend"). Park Westend was approximately 96% occupied as of June 22, 1998. The property consists of 312 units in 24 two-story residential buildings on approximately 18 acres. Amenities include a clubhouse, swimming pool, jacuzzi, two lighted tennis courts, basketball court, two car wash areas, washer/dryer connections in select units, fireplaces in select units, vaulted ceilings in select units, and ceiling fans in select units. The property was constructed in 1985. TERMS OF PURCHASE Park Westend was purchased from an unaffiliated third party for $13.3 million, which included the assumption of approximately $7.2 million of mortgage indebtedness. EMERALD BAY AT WINTER PARK APARTMENTS, WINTER PARK, FLORIDA On January 29, 1998, the Company acquired a multifamily property located in Winter Park, Florida ("Emerald Bay"). Emerald Bay was approximately 96% occupied as of June 22, 1998. The property consists of 432 units in 28 two-story residential buildings on approximately 23 acres. Amenities include a clubhouse, three swimming pools, fitness center, tennis court, playground, supervised children's activity center, three laundry centers, car wash area, sand volleyball court, and carports. The property was constructed in 1972 and renovated in 1996. TERMS OF PURCHASE Emerald Bay was purchased from an unaffiliated third party for approximately $15.7 million. FARNHAM PARK APARTMENTS, HOUSTON, TEXAS On February 5, 1998, the Company acquired a multifamily property located in Houston, Texas ("Farnham Park"). Farnham Park was approximately 95% occupied as of June 22, 1998. The property consists of 216 units in 17 two-story residential buildings on approximately 13 acres. Amenities include a clubhouse, fitness center, swimming pool with sundeck area, barbeque area, attached garages, washers/dryers, fireplaces in select units, built in bookshelves and work areas, and extra phone/fax/computer modem lines. The property was constructed in 1996. TERMS OF PURCHASE Farnham Park was purchased from an unaffiliated third party for approximately $15.7 million, which included the assumption of approximately $11.5 million of mortgage indebtedness. 4 PLANTATION APARTMENTS, HOUSTON, TEXAS On February 25, 1998, the Company acquired a multifamily property located in Houston, Texas ("Plantation"). Plantation was approximately 87% occupied as of June 22, 1998. The property consists of 232 units in 36 two-story residential buildings on approximately seven acres. Amenities include a clubhouse, three swimming pools, fitness center, laundry care, lounge area with a sunroom, remote access gates, washer/dryer connections, and cathedral ceilings in select units. The property was constructed in 1969. TERMS OF PURCHASE Plantation was purchased from an unaffiliated third party for $10 million. BALCONES CLUB APARTMENTS, AUSTIN, TEXAS On February 27, 1998, the Company acquired a multifamily property located in Austin, Texas ("Balcones Club"). Balcones Club was approximately 98% occupied as of June 22, 1998. The property consists of 312 units in 32 two and three-story residential buildings on approximately 14 acres. Amenities include a clubhouse, two swimming pools, washer/dryer connections, fireplaces in select units, vaulted ceilings in upstairs units, and select units with golf course views. The property was constructed in 1984. TERMS OF PURCHASE Balcones Club was purchased from an unaffiliated third party for $12.3 million. COACH LANTERN APARTMENTS, SCARBOROUGH, MAINE On March 2, 1998, the Company acquired a multifamily property located in Scarborough, Maine ("Coach Lantern"). Coach Lantern was approximately 99% occupied as of June 22, 1998. The property consists of 90 units in 21 two and three-story residential buildings on approximately 46 acres. Amenities include a playground, washer/dryer connections, dishwashers, and disposals. The property was constructed in 1971 and renovated in 1981. TERMS OF PURCHASE Coach Lantern was purchased from an unaffiliated third party for $4.7 million. 5 FOXCROFT APARTMENTS, SCARBOROUGH, MAINE On March 2, 1998, the Company acquired a multifamily property located in Scarborough, Maine ("Foxcroft"). Foxcroft was approximately 99% occupied as of June 22, 1998. The property consists of 104 units in 15 two-story residential buildings on approximately 26 acres. Amenities include a playground, washer/dryer connections, dishwashers, and disposals. The property was constructed between 1977 and 1979. TERMS OF PURCHASE Foxcroft was purchased from an unaffiliated third party for $4.9 million. YARMOUTH WOODS APARTMENTS, YARMOUTH, MAINE On March 2, 1998, the Company acquired a multifamily property located in Yarmouth, Maine ("Yarmouth Woods"). Yarmouth Woods was approximately 99% occupied as of June 22, 1998. The property consists of 138 units in 19 two-story residential buildings on approximately 31 acres. Amenities include on site laundry facilities, washer/dryer connections, playground, dishwashers, and garbage disposals. The property was constructed in phases between 1972 and 1978. TERMS OF PURCHASE Yarmouth Woods was purchased from an unaffiliated third party for $6.6 million. ROLIDO PARQUE APARTMENTS, HOUSTON, TEXAS On March 20, 1998, the Company acquired a multifamily property located in Houston, Texas ("Rolido Parque"). Rolido Parque was approximately 99% occupied as of June 22, 1998. The property consists of 369 units in 17 two and three-story residential buildings on approximately nine acres. Amenities include a clubhouse, two outdoor swimming pools, two jacuzzis, fitness center, two tennis courts, lounge area with sunroom, remote access gates, video library, washer/dryer connections, and cathedral ceilings in select units. The property was constructed in 1978. TERMS OF PURCHASE Rolido Parque was purchased from an unaffiliated third party for approximately $10.8 million, which included the assumption of approximately $7.2 million of mortgage indebtedness. THE TRAILS OF VALLEY RANCH APARTMENTS, IRVING, TEXAS On March 26, 1998, the Company acquired a multifamily property located in Irving, Texas ("Trails of Valley Ranch"). Trails of Valley Ranch was approximately 92% occupied as of June 22, 1998. The property consists of 216 units in 29 two-story residential buildings on approximately 11 acres. Amenities include a clubhouse, swimming pool, fitness center, sauna, jacuzzi, wet bars and vaulted ceilings in select units, fireplaces, washers/dryers, covered parking, and alarm systems. The property was constructed in 1986. 6 TERMS OF PURCHASE Trails of Valley Ranch was purchased from an unaffiliated third party for $10.7 million. FAIRFIELD APARTMENTS, STAMFORD, CONNECTICUT On March 26, 1998, the Company acquired a multifamily property located in Stamford, Connecticut ("Fairfield"). Fairfield was approximately 99% occupied as of June 22, 1998. The property consists of 263 units in two four-story residential buildings on approximately five acres. Amenities include a swimming pool, health club/fitness room, parking structure with secured access, gourmet eat-in kitchen, washers/dryers, fireplaces in select units, and vaulted ceilings in select units. The property was constructed in 1996. TERMS OF PURCHASE Fairfield was purchased from an unaffiliated third party for $45.5 million, which included the assumption of approximately $35.6 million of mortgage indebtedness. HARBOR POINTE APARTMENTS, MILWAUKEE, WISCONSIN On April 1, 1998, the Company acquired a multifamily property located in Milwaukee, Wisconsin ("Harbor Pointe"). Harbor Pointe was approximately 94% occupied as of June 22, 1998. The property consists of 595 units in 41 three-story residential buildings on approximately 33 acres. Amenities include a clubhouse, indoor swimming pool, jacuzzi, sauna, bar and lounge, three party rooms, health club/fitness center, underground parking, attached garages in select units, washers/dryers in select units, sand volleyball court, two tennis courts, playground, gas fireplaces in select units, and vaulted ceilings in select units. The property was constructed in 1970 and renovated in 1990. TERMS OF PURCHASE Harbor Pointe was purchased from an unaffiliated third party for approximately $24 million, which included $12 million of mortgage indebtedness and the issuance of 46,291 OP units having a value of approximately $2.3 million. SONTERRA AT FOOTHILL RANCH APARTMENTS, FOOTHILL RANCH, CALIFORNIA On April 1, 1998, the Company acquired a multifamily property located in Foothill Ranch, California ("Sonterra"). Sonterra was approximately 97% occupied as of June 22, 1998. The property consists of 300 units in 13 three-story residential buildings on approximately 14 acres. Amenities include a clubhouse, business resource center, swimming pool, spa, fitness center, washer/dryer hook-ups, walk in closets, central laundry facility, fireplaces in select units, security access gates, and extended balconies. The property was constructed in 1997. TERMS OF PURCHASE Sonterra was purchased from an unaffiliated third party for $31.5 million. 7 VISTA POINTE AT THE VALLEY APARTMENTS, IRVING, TEXAS On April 7, 1998, the Company acquired a multifamily property located in Irving, Texas ("Vista Pointe"). Vista Pointe was approximately 94% occupied as of June 22, 1998. The property consists of 231 units in 19 two-story residential buildings on approximately 14 acres. Amenities include a clubhouse, two swimming pools, fitness center, sports court, sand volleyball court, controlled access gate, attached direct-access garages in select units, wood burning fireplaces, and washer/dryer connections. The property was constructed during 1996. TERMS OF PURCHASE Vista Pointe was purchased from an unaffiliated third party for $18.6 million. EMERSON PLACE APARTMENTS, BOSTON, MASSACHUSETTS On April 23, 1998, the Company acquired a multifamily property located in Boston, Massachusetts ("Emerson Place"). Emerson Place was approximately 98% occupied as of June 22, 1998. The property consists of 462 units in one 17-story, one 24-story and 2 two-story residential buildings on approximately 48 acres. Amenities include a laundry facility, intercom system, garage parking, and dishwashers. The property was constructed in 1962. TERMS OF PURCHASE Emerson Place was purchased from an unaffiliated third party for $72.5 million. SIERRA CANYON APARTMENTS, CANYON COUNTRY, CALIFORNIA On May 13, 1998, the Company acquired a multifamily property located in Canyon Country, California ("Sierra Canyon"). Sierra Canyon was approximately 97% occupied as of June 22, 1998. The property consists of 232 units in 16 two-story residential buildings on approximately eight acres. Amenities include a clubhouse with fireplace, heated swimming pool, spa, fitness center, and two laundry facilities. The property was constructed in 1987. TERMS OF PURCHASE Sierra Canyon was purchased from an unaffiliated third party for approximately $15.9 million, which included the issuance of 90,445 OP units having a value of approximately $4.5 million. NORTHRIDGE APARTMENTS, PLEASANT HILL, CALIFORNIA On May 14, 1998, the Company acquired a multifamily property located in Pleasant Hill, California ("Northridge"). Northridge was approximately 98% occupied as of June 22, 1998. The property consists of 221 units in 15 two and three-story residential buildings on approximately 15 acres. Amenities include a clubhouse, two swimming pools, jacuzzi, two spas, garages, fireplaces, and washers/dryers in select units. The property was constructed in 1974. 8 TERMS OF PURCHASE Northridge was purchased from an unaffiliated third party for $20 million. THE ARBORETUM APARTMENTS, CANTON, MASSACHUSETTS On May 22, 1998, the Company acquired a multifamily property located in Canton, Massachusetts ("Arboretum"). Arboretum was approximately 98% occupied as of June 22, 1998. The property consists of 156 units in six residential buildings on approximately 40 acres. Amenities include a clubhouse, swimming pool, washer/dryer connections, and laundry rooms. The property was constructed in 1989. TERMS OF PURCHASE Arboretum was purchased from an unaffiliated third party for $15.2 million. TOWNHOMES OF MEADOWBROOK APARTMENTS, AUBURN HILLS, MICHIGAN On May 28, 1998, the Company acquired a multifamily property located in Auburn Hills, Michigan ("Townhomes of Meadowbrook"). Townhomes of Meadowbrook was approximately 94% occupied as of June 22, 1998. The property consists of 230 units in 23 two-story residential buildings on approximately eight acres. Amenities include a clubhouse, swimming pool with sundeck, jogging trail, sand volleyball court, washers/dryers, vaulted ceilings, fireplaces, and loft bedrooms in select units. The property was constructed in 1988. TERMS OF PURCHASE Townhomes of Meadowbrook was purchased from an unaffiliated third party for $13.7 million, which included the assumption of approximately $10.2 million of mortgage indebtedness. WOODRIDGE APARTMENTS, EAGAN, MINNESOTA On May 28, 1998, the Company acquired a multifamily property located in Eagan, Minnesota ("Woodridge"). Woodridge was approximately 100% occupied as of June 21, 1998. The property consists of 200 units in two three-story residential buildings on approximately 13 acres. Amenities include a party room, exercise room, whirlpool and sauna in each building, and heated underground parking. The property was constructed in 1986. TERMS OF PURCHASE Woodridge was purchased from an unaffiliated third party for approximately $11.6 million, which included the assumption of $7.8 million of mortgage indebtedness. BROOKSIDE APARTMENTS, BOULDER, COLORADO On June 1, 1998, the Company acquired a multifamily property located in Boulder, Colorado ("Brookside"). Brookside was approximately 97% occupied as of June 20, 1998. The property 9 consists of 144 units in six residential buildings on approximately five acres. Amenities include a swimming pool with sundeck, clubhouse, stackable washer/dryer units, and fireplaces in most units. The property was constructed in 1993. TERMS OF PURCHASE Brookside was purchased from an unaffiliated third party for $13.8 million. GREYSTONE APARTMENT HOMES, ATLANTA, GEORGIA On June 10, 1998, the Company acquired a multifamily property located in Atlanta, Georgia ("Greystone"). Greystone was approximately 89% occupied as of June 22, 1998. The property consists of 150 units in 25 residential buildings on approximately nine acres. Amenities include an outdoor swimming pool, laundry room, playground, and enclosed patios. The property was constructed in 1960 and renovated in 1997. TERMS OF PURCHASE Greystone was purchased from an unaffiliated third party for approximately $7.4 million. COCONUT PALM CLUB APARTMENT HOMES, COCONUT CREEK, FLORIDA On June 11, 1998, the Company acquired a multifamily property located in Coconut Creek, Florida ("Coconut Palm Club"). Coconut Palm Club was approximately 90% occupied as of June 21, 1998. The property consists of 300 units in 14 residential buildings on approximately 16 acres. Amenities include a swimming pool, racquetball court, volleyball court, picnic area, clubhouse and car wash area. The property was constructed in 1992. TERMS OF PURCHASE Coconut Palm Club was purchased from an unaffiliated third party for approximately $20.3 million. PORTSIDE TOWERS APARTMENTS, JERSEY CITY, NEW JERSEY On June 11, 1998, the Company acquired a multifamily property located in Jersey City, New Jersey ("Portside Towers"). Portside Towers was approximately 99% occupied as of June 22, 1998. The property consists of 527 units in two high-rise residential buildings on approximately six acres. Amenities include a fitness center, sauna, indoor playroom, outdoor tot lot, two tennis courts, one sport court, washers/dryers, and laundry rooms. The property was constructed in phases between 1992 and 1997. TERMS OF PURCHASE Portside Towers was purchased from an unaffiliated third party for approximately $119 million, which included the assumption of mortgage indebtedness of approximately $58.5 million . 10 DEFOOR VILLAGE APARTMENTS, ATLANTA, GEORGIA On June 16, 1998, the Company acquired a multifamily property located in Atlanta, Georgia ("Defoor Village"). Defoor Village was approximately 100% occupied as of June 29, 1998. The property consists of 156 units in four residential buildings on approximately five acres. Amenities include a clubhouse, fitness center, central laundry room, and a resident business center. The property was constructed in 1997. TERMS OF PURCHASE Defoor Village was purchased from an unaffiliated third party for $13.5 million, which included the issuance of 14,588 OP units with a value of approximately $0.7 million. PLANTATION RIDGE APARTMENTS, MARIETTA, GEORGIA On June 16, 1998, the Company acquired a multifamily property located in Marietta, Georgia ("Plantation Ridge"). Plantation Ridge was approximately 95% occupied as of June 29, 1998. The property consists of 454 units in 46 residential buildings on approximately 33 acres. Amenities include a clubhouse, car wash, six lighted tennis courts, picnic area, boat storage, bi-level waterfall swimming pool, and laundry facilities. The property was constructed in 1975. TERMS OF PURCHASE Plantation Ridge was purchased from an unaffiliated third party for $23.2 million, which included the issuance of 43,798 OP units with a value of approximately $2.1 million. WYNBROOK APARTMENTS, NORCROSS, GEORGIA On June 18, 1998 the Company acquired a multifamily property located in Norcross, Georgia ("Wynbrook"). Wynbrook was approximately 93% occupied as of June 29, 1998. The property consists of 318 units in 30 residential buildings on approximately 25 acres. Amenities include two swimming pools, playground, two laundry facilities, car wash, and picnic area. The property was constructed in phases between 1972 and 1976. TERMS OF PURCHASE Wynbrook was purchased from an unaffiliated third party for $13.5 million, which included the issuance of 4,700 OP units with a value of approximately $0.2 million. THE TCRS PORTFOLIO TRANSACTION This acquisition consisted of the following five properties. DESCRIPTION OF PROPERTIES 11 THE GATES AT CARLSON CENTER APARTMENTS, MINNETONKA, MINNESOTA On April 1, 1998, the Company acquired a multifamily property located in Minnetonka, Minnesota ("Gates at Carlson"). Gates at Carlson was approximately 100% occupied as of June 22, 1998. The property consists of 435 units in six three-story residential buildings on approximately 32 acres. Amenities include a clubhouse with exercise room, swimming pool, spa, washers/dryers, tennis court, elevators, fireplaces and vaulted ceilings in select units, and sub-surface parking. The property was constructed in 1989. GLENGARRY CLUB APARTMENTS, BLOOMINGTON, ILLINOIS On April 1, 1998, the Company acquired a multifamily property located in Bloomington, Illinois ("GlenGarry Club"). GlenGarry Club was approximately 97% occupied as of June 22, 1998. The property consists of 250 units in nine two and three-story residential buildings on approximately 15 acres. Amenities include a clubhouse with exercise room, swimming pool, two tennis courts, basketball court, volleyball court, garages, and fireplaces in select units. The property was constructed in 1989. PLUM TREE I, II, AND III APARTMENTS, HALES CORNERS, WISCONSIN On April 1, 1998, the Company acquired a multifamily property located in Hales Corners, Wisconsin ("Plum Tree"). Plum Tree was approximately 97% occupied as of June 23, 1998. The property consists of 332 units in 36 two-story residential buildings on approximately 17 acres. Amenities include a clubhouse with exercise room, swimming pool, spa, washers/dryers, wood-burning fireplaces in select units, and garages. The property was constructed in 1989. RAVINIA APARTMENTS, GREENFIELD, WISCONSIN On April 1, 1998, the Company acquired a multifamily property located in Greenfield, Wisconsin ("Ravinia"). Ravinia was approximately 97% occupied as of June 22, 1998. The property consists of 206 units in 12 two-story residential buildings on approximately 18 acres. Amenities include a clubhouse with exercise room, swimming pool, garages, washers/dryers, and wood burning fireplaces in select units. The property was constructed in 1991. WOODLANDS APARTMENTS, BROOKFIELD, WISCONSIN On April 1, 1998, the Company acquired a multifamily property located in Brookfield, Wisconsin ("Woodlands"). Woodlands was approximately 98% occupied as of June 23, 1998. The property consists of 148 units in 34 two-story residential buildings on approximately 35 acres. Amenities include a clubhouse with exercise room, swimming pool, attached garages, washers/dryers, and wood burning fireplaces. The property was constructed in 1990. TERMS OF PURCHASE The aggregate purchase price of the TCRS Portfolio was approximately $95.7 million, which included $50 million of mortgage indebtedness and the issuance of 124,398 OP units with a value of approximately $6.3 million. 12 CROSS CREEK APARTMENTS, MATTHEWS, NORTH CAROLINA On June 24, 1998, the Company acquired a multifamily property located in Matthews, North Carolina ("Cross Creek"). Cross Creek was approximately 91% occupied as of June 26, 1998. The property consists of 420 units in 20 two and three-story residential buildings on approximately 35 acres. Amenities include a clubhouse, two swimming pools, two tennis courts, fitness center, sand volleyball court, fireplaces in select units, and a playground. The property was constructed in 1989. TERMS OF PURCHASE Cross Creek was purchased from an unaffiliated third party for $23.4 million. The Company is currently providing management services for all of the Acquired Properties. ITEM 5. OTHER EVENTS The Company entered into various contracts with unaffiliated third parties to acquire 42 multifamily properties. Below are the expected terms and the descriptions of the properties which the Company deems to be probable acquisitions (the "Probable Properties"). LEXINGTON VILLAGE APARTMENTS, ALPHARETTA, GEORGIA Lexington Village ("Lexington Village") is a 352-unit multifamily property located in Alpharetta, Georgia. The property consists of 24 residential buildings on approximately 36 acres. Amenities include a clubhouse, activity center, car wash, swimming pool, tennis courts, volleyball court, fitness center, laundry facility, and a resident business center. The property was constructed in 1995. EXPECTED TERMS OF PURCHASE Lexington Village is expected to be purchased from an unaffiliated third party for approximately $24.5 million, which will include the assumption of approximately $18.8 million of mortgage indebtedness and the issuance of approximately 25,000 OP Units with a value of approximately $1.3 million. MARTINS LANDING APARTMENTS, ATLANTA, GEORGIA Martins Landing ("Martins Landing") is a 300-unit multifamily property located in Roswell, Georgia. The property consists of 24 three-story residential buildings on approximately 20 acres. Amenities include a swimming pool, fitness center, tennis court, clubhouse, playground, jogging trails, and a basketball court. The property was constructed in 1972 and renovated in 1992. EXPECTED TERMS OF PURCHASE Martins Landing is expected to be purchased from an unaffiliated third party for approximately $18.1 million, which will include the assumption of approximately $13 million of mortgage indebtedness. 13 THE LAKES AT VININGS APARTMENTS, ATLANTA, GEORGIA Lakes at Vinings ("Lakes at Vinings") is a 464-unit multifamily property located in Atlanta, Georgia. The property consists of 31 two and three-story residential buildings on approximately 38 acres. Amenities include a swimming pool, fitness center, tennis court, clubhouse, volleyball court, jogging trails, and picnic areas. The property was constructed in phases between 1972 and 1975, and renovated in 1994. EXPECTED TERMS OF PURCHASE Lakes at Vinings is expected to be purchased from an unaffiliated third party for approximately $27.9 million, which will include the assumption of approximately $22.5 million of mortgage indebtedness. THE LINCOLN PROPERTY TRANSACTION This probable acquisition includes the following 25 properties. DESCRIPTIONS OF PROPERTIES ALDERWOOD PARK APARTMENTS, LYNWOOD, WASHINGTON Alderwood Park Apartments ("Alderwood Park") is a 188-unit multifamily property located in Lynwood, Washington. The property consists of 14 two-story residential buildings on approximately 10 acres. Amenities include a swimming pool, spa, clubhouse with lounge, modern exercise facility, suntan salon, sport court, playground, private patios/decks, fireplaces, and washers/dryers in select units. The property was constructed in 1982. BELLEVUE MEADOWS APARTMENTS, BELLEVUE, WASHINGTON Bellevue Meadows Apartments ("Bellevue Meadows") is a 180-unit multifamily property located in Bellevue, Washington. The property consists of 15 two-story residential buildings on approximately nine acres. Amenities include a heated swimming pool, exercise/weight room, tanning room, tennis court, clubhouse, game room, indoor spa, volleyball court, washers/dryers, private patios/decks, wood-burning brick fireplaces, cable TV, dishwashers, and covered parking. The property was constructed in 1983. BRAMBLEWOOD APARTMENTS, SAN JOSE, CALIFORNIA Bramblewood Apartments ("Bramblewood") is a 108-unit multifamily property located in San Jose, California. The property consists of 10 two and three-story residential buildings on approximately five acres. Amenities include a swimming pool, spa, covered parking, barbecue area, patios/balconies, and washer/dryer hook-ups. The property was constructed in 1986. BRIARWOOD APARTMENTS, SUNNYVALE, CALIFORNIA Briarwood Apartments ("Briarwood") is a 192-unit multifamily property located in Sunnyvale, California. The property consists of nine residential buildings on approximately eight acres. Amenities include a clubhouse, swimming pool, spa, playground, basketball court, barbecue 14 area, covered parking, private patios/balconies, washer/dryer connections, air conditioning, and dishwashers. The property was constructed in 1985. CEDAR POINTE APARTMENTS, SAN RAMON, CALIFORNIA Cedar Pointe Apartments ("Cedar Pointe") is a 248-unit multifamily property located in San Ramon, California. The property consists of 16 two-story residential buildings on approximately 12 acres. Amenities include a swimming pool, spa, fitness center, two playground areas, covered parking, private patios/decks, ceiling fans, washer/dryer connections, air conditioning, and dishwashers. The property was constructed in 1984. CHELSEA SQUARE APARTMENTS, REDMOND, WASHINGTON Chelsea Square Apartments ("Chelsea Square") is a 113-unit multifamily property located in Redmond, Washington. The property consists of six 2 and one half-story residential buildings on approximately four acres. Amenities include a swimming pool, exercise room, suntan room, hot tub spa, fireplaces, breakfast bars, washers/dryers, volume ceilings, and a clubhouse with wet bar, TV and meeting lounge. The property was constructed in 1991. CREEKSIDE APARTMENTS, SAN MATEO, CALIFORNIA Creekside Apartments ("Creekside") is a 192-unit multifamily property located in San Mateo, California. The property consists of 13 two-story residential buildings on approximately seven acres. Amenities include a clubhouse, barbecue area, swimming pool, spa, tanning salon, security parking, covered and garage parking, playground, balconies/patios, and washer/dryer. The property was constructed in 1985. GRANDVIEW APARTMENTS, LAS VEGAS, NEVADA Grandview Apartments ("Grandview") is a 456-unit multifamily property located in Las Vegas, Nevada. The property consists of 26 two-story residential buildings on approximately 19 acres. Amenities include a swimming pool, volleyball court, spa, clubhouse, two laundry facilities, playground, tennis court, ceiling fans, private patio/balconies, and covered parking. The property was constructed in 1980. GREENHAVEN APARTMENTS, UNION CITY, CALIFORNIA Greenhaven Apartments ("Greenhaven") is a 250-unit multifamily property located in Union City, California. The property consists of 16 one, two, and three-story residential buildings on approximately ten acres. Amenities include a solar heated pool, therapy spa, covered parking, exercise studio, three laundry rooms, and private patios/balconies. The property was constructed in 1983. LINCOLN GREEN I AND II APARTMENTS, SUNNYVALE ,CALIFORNIA Lincoln Green I and II Apartments ('Lincoln Green I and II") is a 174-unit multifamily property located in Sunnyvale, California. The property consists of nine two-story residential buildings on approximately seven acres. Amenities include a swimming pool, spa, exercise/weight room, 15 covered parking, and private patios/decks. The property was constructed in two phases in 1979. LINCOLN VILLAGE I AND II APARTMENTS, LARKSPUR, CALIFORNIA Lincoln Village I and II Apartments ("Lincoln Village I and II")is a 342-unit multifamily property located in Larkspur, California. The property consists of 16 two and three-story residential buildings on approximately 17 acres. Amenities include two solar heated pools, clubhouse, tennis court, jacuzzi spa, fitness center, dry saunas, covered parking, corporate/furnished suites, 24 hour emergency service, vaulted ceilings, and private balconies/patios. The property was constructed in 1980. MOUNTAIN SHADOWS APARTMENTS, LAS VEGAS, NEVADA Mountain Shadows Apartments ("Mountain Shadows") is a 300-unit multifamily property located in Las Vegas, Nevada. The property consists of 19 two-story residential buildings on approximately 12 acres. Amenities include a clubhouse, swimming pool, playground, tennis court, basketball court, barbecue area, laundry room, ceiling fans in select units, and patios/balconies. The property was constructed in 1979. NORTH CREEK APARTMENTS, EVERETT, WASHINGTON North Creek Apartments ("North Creek") is a 264-unit multifamily property located in Everett, Washington. The property consists of 26 two-story residential buildings on approximately 17 acres. Amenities include a heated pool, jacuzzi, clubhouse, covered parking, basketball court, washers/dryers in select units, wood burning fireplaces, and private patios/balconies. The property was constructed during 1986. OLDE REDMOND PLACE APARTMENTS, REDMOND, WASHINGTON Olde Redmond Place Apartments ("Olde Redmond Place") is a 192-unit multifamily property located in Redmond, Washington. The property consists of 16 three-story residential buildings on approximately 14 acres. Amenities include a heated swimming pool, indoor spa, tanning salon, cabana, exercise/weight room, tennis court, playground, brick fireplaces, washers/dryers, cathedral ceilings, private patios/decks, and covered parking. The property was constructed in 1986. PARKSIDE APARTMENTS, UNION CITY, CALIFORNIA Parkside Apartments ("Parkside") is a 208-unit multifamily property located in Union City, California. The property consists of 16 two-story residential buildings on approximately seven acres. Amenities include a swimming pool, sauna, covered parking, fully equipped laundry rooms, and private patios/balconies. The property was constructed in 1979. SKYLARK APARTMENTS, UNION CITY, CALIFORNIA Skylark Apartments ("Skylark") is a 174-unit multifamily property located in Union City, California. The property consists of nine one, two, and three-story residential buildings on approximately seven acres. Amenities include a free-form pool and spa, recreation center, 16 covered and underground parking, exercise room, and on-site ice machines. The property was constructed in 1986. SOUTHWOOD APARTMENTS, PALO ALTO, CALIFORNIA Southwood Apartments ("Southwood") is a 99-unit multifamily property located in Palo Alto, California. The property consists of five two and three-story residential buildings on approximately four acres. Amenities include units with double master suites, washer/dryer connections, and private patios/balconies. The property was constructed in 1985. SUMMERWOOD APARTMENTS, HAYWARD, CALIFORNIA Summerwood Apartments ("Summerwood") is a 162-unit multifamily property located in Hayward, California. The property consists of 12 two-story residential buildings on approximately six acres. Amenities include a solar-heated pool, sauna, fitness center, covered parking, laundry facilities, private balconies/ patios, and outdoor storage closets. The property was constructed in 1982. SURREY DOWNS APARTMENTS, BELLEVUE, WASHINGTON Surrey Downs Apartments ("Surrey Downs") is a 122-unit multifamily property located in Bellevue, Washington. The property consists of 13 two and three-story residential buildings on approximately seven acres. Amenities include a heated swimming pool, spa, sports court, clubhouse, exercise room, indoor sauna, brick fireplaces, private patios/decks with storage closets, washers/dryers, private pond, and a courtyard fountain. The property was constructed in 1986. TIMBERWOOD APARTMENTS, AURORA, COLORADO Timberwood Apartments ("Timberwood") is a 336-unit multifamily property located in Aurora, Colorado. The property consists of 22 two-story residential buildings on approximately 15 acres. Amenities include free covered parking, two heated swimming pools, two tennis courts, indoor jacuzzi, volleyball court, clubhouse, playgrounds, four laundry rooms, washer/dryer, private patios, and brick fireplaces. The property was constructed in 1983. TURF CLUB APARTMENTS, LITTLETON, COLORADO Turf Club Apartments ("Turf Club") is a 324-unit multifamily property located in Littleton, Colorado. The property consists of 15 three-story residential buildings on approximately 12 acres. Amenities include an exercise room, indoor spa, swimming pool, fireplace, washer/dryer, private balconies/patios and a business center equipped with internet accessing computer, fax machine and copy machine. The property was constructed in 1986. WILLOWICK APARTMENTS, AURORA, COLORADO Willowick Apartments ("Willowick") is a 100-unit multifamily property located in Aurora, Colorado. The property consists of seven two-story residential building on approximately five acres. Amenities include covered parking, heated swimming pool, clubhouse/activity center, 17 play area for children, laundry facilities, fireplaces, and private patios. The property was constructed in 1980. WOODLAKE APARTMENTS, KIRKLAND, WASHINGTON Woodlake Apartments ("Woodlake") is a 288-unit multifamily property located in in Kirkland, Washington. The property consists of 18 two-story residential buildings on approximately 24 acres. Amenities include a clubhouse, heated swimming pool, poolside cabana, spa, exercise room, tanning room, sauna, tennis court, sport/basketball court, playground, covered parking, dishwashers, disposals, and vaulted ceilings in select units. The property was constructed in 1984. WOODLEAF APARTMENTS, CAMPBELL, CALIFORNIA Woodleaf Apartments ("Woodleaf") is a 178-unit multifamily property located in Campbell, California. The property consists of nine two and three-story residential buildings on approximately seven acres. Amenities include a swimming pool, jacuzzi, fitness center, tanning salon, billiards table, media center, and private patios/balconies. The property was constructed in 1984. WOODRIDGE APARTMENTS, AURORA, COLORADO Woodridge Apartments ("Woodridge") is a 584-unit multifamily property located in Aurora, Colorado. The property consists of 42 two-story residential buildings on approximately 29 acres. Amenities include five heated swimming pools, basketball and tennis courts, children's play areas, picnic and barbecue areas, fireplaces, and private patios/balconies. The property was constructed in three phases between 1980 and 1982. EXPECTED TERMS OF PURCHASE The aggregate purchase price of the 25 properties included in the Lincoln Property Transaction ("Lincoln Probable Properties") is approximately $465.3 million, which includes the assumption of mortgage indebtedness of approximately $60.7 million and the issuance of approximately 2.2 million OP units having a value of approximately $109.7 million. THE MAGNUM TRANSACTION This probable acquisition consists of the following ten properties. DESCRIPTIONS OF PROPERTIES THE BROADWAY APARTMENTS, GARLAND, TEXAS The Broadway Apartments ("Broadway") is a 288-unit multifamily property located in Garland, Texas. The property consists of 20 two-story residential buildings on approximately 12 acres. Amenities include a clubhouse, two swimming pools, laundry facility, ceiling fans, balconies/patios, washer/dryer connections, and fireplaces in select units. The property was 18 constructed in 1983. CEDAR RIDGE APARTMENTS, ARLINGTON, TEXAS Cedar Ridge Apartments ("Cedar Ridge") is a 121-unit multifamily property located in Arlington, Texas. The property consists of 50 two-story residential buildings on approximately 12 acres. Amenities include two swimming pools, ceiling fans, washer/dryer connections, fireplaces in select units, security patrol, and garage parking. The property was constructed in 1980. FIELDER CROSSING APARTMENTS, ARLINGTON, TEXAS Fielder Crossing Apartments ("Fielder Crossing") is a 119-unit multifamily property located in Arlington, Texas. The property consists of 14 two-story residential buildings on approximately three acres. Amenities include a clubhouse, jacuzzi, private alarms, and balconies/patios in each unit. The property was constructed in 1980. LAKESHORE AT PRESTON APARTMENTS, PLANO, TEXAS Lakeshore at Preston Apartments ("Lakeshore at Preston") is a 302-unit multifamily property located in Plano, Texas. The property consists of 14 two and three-story residential buildings on approximately 19 acres. Amenities include a clubhouse, two swimming pools, jacuzzi, fitness center, sand volleyball court, jogging trail, fountained lake, outdoor grills, access gates, private alarms, and balconies/patios in each unit. The property was constructed in 1992. LAKEWOOD GREENS APARTMENTS, DALLAS, TEXAS Lakewood Greens Apartments ("Lakewood Greens") is a 252-unit multifamily property located in Dallas, Texas. The property consists of 23 two and three-story residential buildings on approximately 10 acres. Amenities include a clubhouse, swimming pool, jacuzzi, fitness center, access gates, two laundry rooms, security patrols, and balconies/patios in each unit. The property was constructed in 1986. PLEASANT RIDGE APARTMENTS, ARLINGTON, TEXAS Pleasant Ridge Apartments ("Pleasant Ridge") is a 63-unit multifamily property located in Arlington, Texas. The property consists of 16 one-story residential buildings on approximately four acres. Amenities include a swimming pool, jacuzzi, ceiling fans, balconies/patios, washer/dryer connections, and fireplaces. The property was constructed in 1982. RIVER PARK APARTMENTS, FORT WORTH, TEXAS River Park Apartments ("River Park") is a 280-unit multifamily property located in Fort Worth, Texas. The property consists of 29 two and three-story residential buildings on approximately 10 acres. Amenities include a clubhouse, swimming pool, jacuzzi, two laundry facilities, private alarms, balconies/patios, washer/dryer connections, and fireplaces in select units. The property was constructed in 1984. 19 SANDSTONE AT BEAR CREEK APARTMENTS, EULESS, TEXAS Sandstone at Bear Creek Apartments ("Sandstone") is a 40-unit multifamily property located in Euless, Texas. The property consists of eight one-story residential buildings on approximately five acres. Amenities include a swimming pool, monitored alarm system, fireplaces, balconies or patios, washer/dryer connections, and volume/cathedral ceilings in select units. The property was constructed in 1988. VILLAS OF JOSEY RANCH APARTMENTS, CARROLLTON, TEXAS Villas of Josey Ranch Apartments ("Villas of Josey Ranch") is a 198-unit multifamily property located in Carrollton, Texas. The property consists of 22 two-story residential buildings on approximately 12 acres. Amenities include a clubhouse, two swimming pools, two laundry facilities, private alarms, washer /dryer connections, and balconies/patios in each unit. The property was constructed in 1986. WIMBLEDON OAKS APARTMENTS, ARLINGTON, TEXAS Wimbledon Oaks Apartments ("Wimbledon Oaks") is a 248-unit multifamily property located in Arlington, Texas. The property consists of 14 two and three-story residential buildings on approximately nine acres. Amenities include a clubhouse, swimming pool with fountain, exercise room, jacuzzi, sauna, access gate, picnic area with grills, balconies or patios, washer/dryer connections, and fireplaces in select units. The property was constructed in 1985. EXPECTED TERMS OF PURCHASE The aggregate purchase price of the 10 properties included in the Magnum Transaction ("Magnum Probable Properties") is approximately $82.4 million, which includes the assumption of approximately $59.5 million of mortgage indebtedness. THE FREDERICK TRANSACTION This probable acquisition includes the following four properties. DESCRIPTIONS OF PROPERTIES OVERLOOK MANOR I & II APARTMENTS, FREDERICK, MARYLAND Overlook Manor I & II Apartments ("Overlook Manor I & II") is a 290-unit multifamily property located in Frederick, Maryland. The property consists of 23 three-story residential buildings on approximately 17 acres. Amenities include two swimming pools, two playgrounds, two tennis courts, and laundry facilities. The property was constructed in phases between 1980 and 1985. TILLMAN PLACE APARTMENTS, FREDERICK, MARYLAND Tillman Place Apartments ("Tillman Place") is a 64-unit multifamily property located in Frederick, Maryland. The property consists of nine two-story residential buildings on 20 approximately two acres. Amenities include a swimming pool, tennis court, and day care. The property was constructed in 1986. THE WILLOWS APARTMENTS, FREDERICK, MARYLAND The Willows Apartments ("The Willows") is a 204-unit multifamily property located in Frederick, Maryland. The property consists of 13 four-story residential buildings on approximately 11 acres. Amenities include a clubhouse, swimming pool, car wash facility, and three playgrounds. The property was constructed in 1979. EXPECTED TERMS OF PURCHASE The aggregate purchase price of the four properties included in the Frederick Transaction ("Frederick Probable Properties") is approximately $26.9 million, which includes the assumption of approximately $5.9 million of mortgage indebtedness. The Company expects to provide property management services for the Probable Properties subsequent to the date of acquisition by the Company. 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. 21 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
C. EXHIBITS 23 CONSENT OF ERNST & YOUNG LLP
No information is required under Items 1, 3, 4, and 6, and these items have therefore been omitted. 22 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED STATEMENTS REQUIRED UNDER ITEM 7(b) OF FORM 8-K 23 EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Capitalized terms used but not defined in this Current Report on Form 8-K are as defined in the Company's Annual Report on Form 10-K for the year ended December 31, 1997, as amended by Form 10-K/A, and the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998. The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998 and Statements of Operations for the three months ended March 31, 1998 and for the year ended December 31, 1997 have been presented as if the January 1998 Common Share Offering, the February 1998 Common Share Offerings, the March 1998 Common Share Offering, the issuance of $300,000,000 of 6.63% unsecured notes due April 13, 2015 (the "2015 Notes"), the sale of 946,565 Common Shares at $46.5459 (the "April Common Share Offering") and the acquisition or expected acquisition of 79 multifamily properties, including the related assumption of $412.6 million of mortgage indebtedness, had occurred on March 31, 1998 with respect to the March 31, 1998 balance sheet, January 1, 1998 with respect to the statement of operations for the three months ended March 31, 1998 and January 1, 1997 with respect to the statement of operations for the year ended December 31, 1997. Fifteen of the Acquired Properties are included in the Company's Historical Balance Sheet as of March 31, 1998 and all of the remaining properties are included on a pro forma basis as described in Note A and Note B of the Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998. 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, 1997 or January 1, 1998. 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, 1997, as amended by Form 10-K/A, the Company's Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998 and the Statements of Revenue and Certain Expenses for certain of the acquired and probable properties (included elsewhere herein). 24
EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1998 MOST RECENT 1998 ACQUIRED PROBABLE PRO HISTORICAL PROPERTIES (A) PROPERTIES (B) OFFERINGS (C) FORMA ------------ -------------- -------------- ------------- ------------ ASSETS Rental property, net $ 6,854,535 $ 553,288 $ 645,684 $ -- $ 8,053,507 Investment in mortgage notes, net 175,532 (88,184) -- -- 87,348 Cash and cash equivalents 77,575 (310,318) (111,275) 350,258 6,240 Rents receivable 3,798 -- -- -- 3,798 Deposits-restricted 39,645 -- -- -- 39,645 Escrows deposits-mortgage 45,314 -- -- -- 45,314 Deferred financing costs, net 23,283 -- -- -- 23,283 Other assets 109,660 -- -- -- 109,660 ------------ ---------- ---------- ---------- ------------ Total assets $ 7,329,342 $ 154,786 $ 534,409 $ 350,258 $ 8,368,795 ------------ ---------- ---------- ---------- ------------ ------------ ---------- ---------- ---------- ------------ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage notes payable $ 1,655,635 $ 138,566 $ 180,450 $ -- $ 1,974,651 Line of credit -- -- 243,000 -- 243,000 Notes, net 1,130,461 -- -- 306,200 1,436,661 Accounts payable and accrued expenses 66,787 -- -- -- 66,787 Accrued interest payable 35,514 -- -- -- 35,514 Rents received in advance and other liabilities 41,417 -- -- -- 41,417 Security deposits 29,711 -- -- -- 29,711 Distributions payable 89,015 -- -- -- 89,015 ------------ ---------- ---------- ---------- ------------ Total liabilities 3,048,540 138,566 423,450 306,200 3,916,756 ------------ ---------- ---------- ---------- ------------ Commitments and contingencies Minority Interests 282,240 16,220 70,857 -- 369,317 ------------ ---------- ---------- ---------- ------------ Shareholders' equity: Common shares 964 -- -- 9 973 Preferred shares 1,041,700 -- -- -- 1,041,700 Employee notes (4,987) -- -- -- (4,987) Paid in capital 3,122,344 -- 40,102 44,049 3,206,495 Distributions in excess of accumulated earnings (161,459) -- -- -- (161,459) ------------ ---------- ---------- ---------- ------------ Total shareholders' equity 3,998,562 -- 40,102 44,058 4,082,722 ------------ ---------- ---------- ---------- ------------ Total liabilities and shareholders' equity $ 7,329,342 $ 154,786 $ 534,409 $ 350,258 $ 8,368,795 ------------ ---------- ---------- ---------- ------------ ------------ ---------- ---------- ---------- ------------
(A) Reflects the most recent multifamily property acquisitions, which include The Gates at Carlson Center, Glengarry Club, Ravinia, Plum Tree, The Woodlands, Harbor Pointe, Sonterra at Foothill Ranch, Vista Pointe at the Valley, Emerson Place, Sierra Canyon, Northridge, The Arboretum, Townhomes of Meadowbrook, Woodridge, Brookside, Greystone, Coconut Palm Club, Portside Towers, Defoor Village, Plantation Ridge, Wynbrook and Cross Creek (collectively the "1998 Most Recent Acquired Properties"). In connection with such : (i) the amounts presented include the initial purchase price as well as subsequent closing costs anticipated to be incurred; (ii) the assumption of approximately $138.6 million of mortgage indebtedness; (iii) the issuance of approximately 324,000 OP Units with a value of approximately $16.2 million and (iv) the elimination of the investment in mortgage loans collateralized by five of the 1998 Most Recent Acquired Properties due to the acquisition of such properties. (B) Reflects the probable acquisitions of Lakes at Vinings, Martins Landing, Lexington Village, Alderwood Park, Bellevue Meadows, Bramblewood, Briarwood, Cedar Pointe, Chelsea Square, Creekside, Grandview I & II, Greenhaven, Lincoln Green I & II, Lincoln Village I & II, Mountain Shadows, North Creek, Olde Redmond Place, Parkside, Skylark, Southwood, Summerwood, Surrey Downs, Timberwood, Turf Club, Willowick, Woodlake, Woodleaf, Woodridge I, II, III, Broadway, Cedar Ridge, Fielder Crossing, Lakeshore at Preston, Lakewood Greens, Pleasant Ridge, River Park, Sandstone, Villas at Josey Ranch, Wimbledon Oaks, Overlook Manor I, Overlook Manor II, Tilman Place and Willows (collectively the "1998 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; (ii) the expected assumption of approximately $180.5 million of mortgage indebtedness and the expected draw of approximately $243 million on the line of credit and (iii) the expected issuance of approximately 2.3 million OP Units with a value of approximately $111 million. (C) Reflects the additional issuance of 946,565 Common Shares at a price of $46.5459 per share (the "April 1998 Common Share Offering"). Also included are the net proceeds of approximately $298.1 raised through the issuance of the 2015 Notes and approximately $8.1 million from the sale of an option to remarket the 2015 notes in April 2005. 25
EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT FOR SHARE DATA) 1998 1998 PREVIOUSLY MOST RECENT 1998 ACQUIRED ACQUIRED PROBABLE PRO HISTORICAL PROPERTIES (A) PROPERTIES (B) PROPERTIES (C) ADJUSTMENTS (D) FORMA ---------- -------------- -------------- -------------- --------------- ---------- REVENUES Rental income $ 277,226 $ 4,051 $ 17,825 $ 20,852 $ -- $ 319,954 Fee and asset management 1,360 -- -- -- -- 1,360 Interest income - investment in mortgage notes 4,931 -- -- -- (1,873) 3,058 Interest and other income 2,824 -- -- -- (791) 2,033 ---------- -------- --------- --------- -------- ---------- Total revenues 286,341 4,051 17,825 20,852 (2,664) 326,405 ---------- -------- --------- --------- -------- ---------- EXPENSES Property and maintenance 66,713 970 4,696 5,940 (2,006) 76,313 Real estate taxes and insurance 27,443 350 2,299 1,834 -- 31,926 Property management 11,579 -- -- -- 1,014 12,593 Fee and asset management 1,052 -- -- -- -- 1,052 Depreciation 64,390 -- -- -- 9,783 74,173 Interest: -- Expense incurred 50,254 -- -- -- 13,382 63,636 Amortization of deferred financing costs 624 -- -- -- -- 624 General and administrative 4,880 -- -- -- -- 4,880 ---------- -------- --------- --------- -------- ---------- Total expenses 226,935 1,320 6,995 7,774 22,173 265,197 ---------- -------- --------- --------- -------- ---------- Income before gain on disposition of properties and allocation to Minority Interests 59,406 $ 2,731 $ 10,830 $ 13,078 $ (24,837) 61,208 -------- --------- --------- -------- -------- --------- --------- -------- Gain on disposition of properties 1,869 -- ---------- ---------- Income before allocation to Minority Interests 61,275 61,208 (Income) allocated to Minority Interests (E) (3,688) (4,406) ---------- ---------- Net income 57,587 56,802 Preferred distributions 21,692 21,692 ---------- ---------- Net income available to Common Shares $ 35,895 $ 35,110 ---------- ---------- ---------- ---------- Net income per weighted average Common Share outstanding $ 0.38 $ 0.36 ---------- ---------- ---------- ---------- Weighted average Common Shares outstanding 93,361 (F) 97,063 ---------- ---------- ---------- ---------- Net income per weighted average Common Share outstanding - assuming dilution $ 0.38 $ 0.36 ---------- ---------- ---------- ----------
(A) Reflects the results of operations for Cityscape, 740 River Drive, Prospect Towers, Park Place (TX), Park Westend, Emerald Bay, Farnham Park, Plantation (TX), Balcones Club, Coach Lantern, Foxcroft, Yarmouth Woods, Rolido Parque, Trails at Valley Ranch, The Fairfield (acquired from January through March 1998) (collectively the "1998 Previously Acquired Properties). The amounts presented represent the historical amounts for certain revenues and expenses for the periods from January 1, 1998 through the respective acquisition dates for each property. (B) Reflects the results of operations for the 1998 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 1998 Most Recent Acquired Properties for the three months ended March 31, 1998. (C) Reflects the results of operations for the 1998 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 1998 Probable Properties for the three months ended March 31, 1998. 26
(D) Reflects the following adjustments to the Previously Acquired, Most Recent Acquired and Probable Properties' results of operations as follows: Interest income - investment in mortgage notes: Reduction of interest income on investment in mortgage loans collateralized by five of the Most Recent Acquired Properties to the extent amounts are already included in the Company's historical financial results. $ (1,873) --------- --------- Interest and other income: Reduction of interest income due to the use of working capital for property acquisitions. $ (791) --------- --------- Property and maintenance: The elimination of third-party management fees where the Company is providing onsite property management services. $ (2,006) --------- --------- Property management: Incremental cost associated with self management of the Previously Acquired, Most Recent Acquired and Probable Properties for the three months ended March 31, 1998. $ 1,014 --------- --------- Depreciation: Reflects depreciation based on the expected total investment of approximately $1.4 billion for the Previously Acquired, Most Recent Acquired and Probable Properties less 10% allocated to land and depreciated over a 30-year life for real property. Depreciation for the 1998 Previously Acquired Properties reflect amounts from January 1, 1998 through the respective acquisition date for each property. $ 9,783 --------- --------- Interest: Expense incurred: Interest on mortgage indebtedness for the Previously Acquired, Most Recent Acquired and Probable Properties (G). $ 5,414 Interest on $50 million of mortgage indebtedness for five of the Most Recent Acquired Properties. 849 Interest and fees on a $243 million draw on the line of credit at a LIBOR rate of 5.71875% plus 45 basis points. 2,289 Interest associated with the issuance of the 2015 Notes. 4,830 --------- $ 13,382 --------- ---------
(E) 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. (F) Pro Forma weighted average Common Shares outstanding for the three months ended March 31, 1998 was 97 million, which assumes the Common Shares issued in connection with the January 1998 Common Share Offering, February 1998 Common Share Offerings and March Common Share Offering were outstanding as of January 1, 1998 and includes approximately 0.9 million Common Shares issued in connection with the April 1998 Common Share Offering. 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 the Previously Acquired, Most Recent Acquired and Probable Properties:
MORTGAGE INTEREST INTEREST PROPERTY INDEBTEDNESS RATE EXPENSE ----------- ------------- ---------- -------- 740 River Drive (1) $ 6,967 7.75% $ 12 Alderwood Park 4,379 7.75% 85 Briarwood 12,800 4.00% 128 Briarwood 2nd 1,513 7.73% 29 Broadway 6,298 8.35% 131 Cedar Pointe 10,931 7.00% 191 Cedar Ridge 3,750 8.13% 76 Farnham Park (1) 11,546 8.00% 86 Fielder Crossing 2,218 10.79% 60 Greenhaven 10,966 4.00% 110 Harbor Pointe 12,000 6.56% 197 Lakes at Vinings 22,531 7.00% 394 Lakeshore at Preston 13,300 7.60% 253 Lakewood Greens 8,480 7.61% 161 Lexington Village 18,750 8.25% 387 Martins Landing 12,982 7.00% 227 North Creek 8,347 7.79% 163 Overlook Manor II 5,930 7.00% 104 Park Place (TX) (1) 10,177 7.46% 32 Park West End (1) 7,168 7.79% 25 Pleasant Ridge 1,692 8.29% 35 Portside Towers 58,500 8.00% 1,170 Prospect Towers (1) 14,913 7.74% 38 River Park 7,888 7.86% 155 Rolido Parque (1) 7,246 7.96% 96 Sandstone 1,400 7.47% 26 Skylark 11,790 4.00% 118 The Fairfield (1) 35,600 3.65% 301 Townhomes of Meadowbrook 10,242 8.54% 219 Villas at Josey Ranch 6,880 7.81% 134 Wimbledon Oaks 7,625 7.80% 149 Woodridge 7,824 6.29% 122 ------------- -------- Totals $ 362,633 $5,414 ------------- -------- ------------- -------- (1) The amounts presented for these properties represent historical amounts for the periods from January 1, 1998 through the respective acquisition dates for each property.
27
EQUITY RESIDENTIAL PROPERTIES TRUST PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT FOR SHARE DATA) 1998 1998 ACQUIRED PROBABLE PRO HISTORICAL PROPERTIES(A) PROPERTIES(B) ADJUSTMENTS(C) FORMA ----------- ------------- ------------- -------------- ---------- REVENUES Rental income $ 707,733 $ 92,203 $ 80,649 $ -- $ 880,585 Fee and asset management 5,697 -- -- -- 5,697 Interest income - investment in mortgage notes 20,366 -- -- (4,907) 15,459 Interest and other income 13,525 (6,666) 6,859 ----------- ------------- ------------- -------------- ---------- Total revenues 747,321 92,203 80,649 (11,573) 908,600 ----------- ------------- ------------- -------------- ---------- EXPENSES Property and maintenance 176,075 28,436 24,358 (7,803) 221,066 Real estate taxes and insurance 69,520 11,424 7,228 -- 88,172 Property management 26,793 -- -- 4,321 31,114 Fee and asset management 3,364 -- -- -- 3,364 Depreciation 156,644 -- -- 42,598 199,242 Interest: Expense incurred 121,324 -- -- 61,199 182,523 Amortization of deferred financing costs 2,523 -- -- -- 2,523 General and administrative 15,064 -- -- -- 15,064 ----------- ------------- ------------- -------------- ---------- Total expenses 571,307 39,860 31,586 100,315 743,068 ----------- ------------- ------------- -------------- ---------- Income before gain on disposition of properties and allocation to Minority Interests 176,014 $ 52,343 $ 49,063 $ (111,888) 165,532 ------------- ------------- -------------- ------------- ------------- -------------- Gain on disposition of properties 13,838 -- ----------- ---------- Income before allocation to Minority Interests 189,852 165,532 (Income) allocated to Minority Interests (D) (13,260) (12,857) ----------- ---------- Net income 176,592 152,782 Preferred distributions 59,012 59,012 ----------- ---------- Net income available to Common Shares $ 117,580 $ 93,663 ----------- ---------- ----------- ---------- Net income per weighted average Common Share outstanding $ 1.79 $ 1.28 ----------- ---------- ----------- ---------- Weighted average Common Shares outstanding 65,729 (E) 73,159 ----------- ---------- ----------- ---------- Net income per weighted average Common Share outstanding - assuming dilution $ 1.76 $ 1.26 ----------- ---------- ----------- ----------
(A) Reflects the results of operations of the 1998 Previously Acquired Properties and the 1998 Most Recent Acquired Properties (collectively the "1998 Acquired Properties"). The amounts presented represent the historical amounts for certain revenues and expenses for the year ended December 31, 1997. (B) Reflects the results of operations of the 1998 Probable Properties. The amounts presented represent the historical amounts for certain revenues and expenses for the year ended December 31, 1997. 28
(C) Reflects the following adjustments to the Acquired and Probable Properties' results of operations as follows: Interest income - investment in mortgage notes: Reduction of interest income on investment in mortgage loans collateralized by five of the Acquired Properties to the extent amounts are already included in the Company's historical financial results. $ (4,907) --------- --------- Interest and other income: Reduction of interest income due to the use of working capital for property acquisitions. $ (6,666) --------- --------- Property and maintenance: The elimination of third-party management fees where the Company is providing onsite property management services. $ (7,803) --------- --------- Property management: Incremental cost associated with self management of the Acquired and Probable Properties for the year ended December 31, 1997. $ 4,321 --------- --------- Depreciation: Reflects depreciation based on the expected total investment of approximately $1.4 billion for the Acquired and Probable Properties less amounts allocated to land, generally 10%, and depreciated over a 30-year life for real property. $ 42,598 --------- --------- Interest: Expense incurred: Interest on mortgage indebtedness for certain of the Acquired and Probable Properties (F). $ 25,111 Interest on $50 million of mortgage indebtedness for five of the Acquired Properties. 3,395 Interest and fees on a $243 million draw on the line of credit at a LIBOR rate of 5.5% plus 45 basis points. 13,373 Interest associated with the issuance of the 2015 Notes. 19,320 --------- $ 61,199 --------- ---------
(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 year ended December 31, 1997 was 73.1 million, which includes 65.7 million weighted average Common Shares outstanding as of December 31, 1997 plus the issuance of 4 million Common Shares in connection with the January 1998 Common Share Offering, the issuance of approximately 2 million Common Shares in connection with the February 1998 Common Share Offerings, the issuance of approximately 0.5 million Common Shares in connection with the March 1998 Common Share Offering and the issuance of approximately 0.9 million Common Shares in connection with the April 1998 Common Share Offering. 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 Acquired and Probable Properties:
MORTGAGE INTEREST INTEREST PROPERTY INDEBTEDNESS RATE EXPENSE -------- ------------ --------- -------- 740 River Drive $ 6,967 7.75% $ 540 Alderwood Park 4,379 7.75% 339 Briarwood 12,800 4.00% 512 Briarwood 2nd 1,513 7.73% 117 Broadway 6,298 8.35% 526 Cedar Pointe 10,931 7.00% 765 Cedar Ridge 3,750 8.13% 305 Farnham Park 11,546 8.00% 924 Fielder Crossing 2,218 10.79% 239 Greenhaven 10,966 4.00% 439 Harbor Pointe 12,000 6.56% 787 Lakes at Vinings 22,531 7.00% 1,577 Lakeshore at Preston 13,300 7.60% 1,011 Lakewood Greens 8,480 7.61% 645 Lexington Village 18,750 8.25% 1,547 Martins Landing 12,982 7.00% 909 North Creek 8,347 7.79% 650 Overlook Manor II 5,930 7.00% 415 Park Place (TX) 10,177 7.46% 759 Park West End 7,168 7.79% 558 Pleasant Ridge 1,692 8.29% 140 Portside Towers 58,500 8.00% 4,680 Prospect Towers 14,913 7.74% 1,154 River Park 7,888 7.86% 620 Rolido Parque 7,246 7.96% 577 Sandstone 1,400 7.47% 105 Skylark 11,790 4.00% 472 The Fairfield 35,600 3.65% 1,299 Townhomes of Meadowbrook 10,242 8.54% 875 Villas at Josey Ranch 6,880 7.81% 537 Wimbledon Oaks 7,625 7.80% 595 Woodridge 7,824 6.29% 493 ------------ -------- Totals $ 362,633 $25,111 ------------ -------- ------------ --------
29 STATEMENTS OF REVENUE AND CERTAIN EXPENSES REQUIRED UNDER ITEM 7(a) OF FORM 8-K 30 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 the Coconut Palm Club Apartments (the Property) for the year ended December 31, 1997. 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 11, 1998 31 Coconut Palm Club Apartments Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE MONTHS FOR THE ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------------ REVENUE Rental Income $714 $2,812 CERTAIN EXPENSES Property operating and maintenance 165 779 Real estate taxes and insurance 114 433 Management fees 29 113 ------------------------------------ 308 1,325 Revenue in excess of certain expenses $406 $1,487 ------------------------------------ ------------------------------------
SEE ACCOMPANYING NOTES. 32 Coconut Palm Club Apartments Notes to Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying financial statements are not representative of the actual operations of Coconut Palm Club Apartments 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 Coconut Palm Club Apartments, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Coconut Palm Club Apartments. In the preparation of the statements of revenue and certain expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. Coconut Palm Club Apartments had a management agreement with a management company unaffiliated with the property owner through the acquisition date. Management fees were based on 4% of total income. Upon acquisition of Coconut Palm Club Apartments by the Company, such management contract was canceled at which the Company will began to management Coconut Palm Club Apartments. 33 Coconut Palm Club Apartments Notes to Statements of Revenue and Certain Expenses (continued) NOTE 2. DESCRIPTION OF PROPERTY The following is a description of the multifamily property:
TOTAL DATE NUMBER OF INVESTMENT PROPERTY NAME LOCATION ACQUIRED UNITS (A) - ----------------------------------------------------------------------------------- Coconut Palm Club Coconut Creek, 6/11/98 300 $20,415,000 Apartments FL
NOTES (A) Includes initial purchase price and closing costs. 34 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 the Emerson Place Apartments (the Property) for the year ended December 31, 1997. 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 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 1, 1998 35 Emerson Place Apartments Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE MONTHS FOR THE ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 --------------------------------- REVENUE Rental income $1,912 $7,357 CERTAIN EXPENSES Property operating and maintenance 602 2,344 Real estate taxes and insurance 177 709 Management fees 107 552 --------------------------------- 886 3,605 --------------------------------- Revenue in excess of certain expenses $1,026 $3,752 --------------------------------- ---------------------------------
SEE ACCOMPANYING NOTES. 36 Emerson Place Apartments Notes to Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying financial statements are not representative of the actual operations of Emerson Place Apartments 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 Emerson Place Apartments, 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 Emerson Place Apartments. In the preparation of the statements of revenue and certain expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential and commercial leases is recorded when due from tenants, generally on a straight line basis. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. Emerson Place Apartments had an oral management agreement with a management company affiliated with the property owner through the acquisition date. In 1997, $551,736 of management fees were paid to an affiliate of the property owner. Upon acquisition of Emerson Place Apartments by the Company, such management contract was canceled at which time the Company began to manage Emerson Place Apartments. In 1997, rental income includes rents of $218,112 from affiliated entities for commercial office space and a parking facility. These affiliated entities lease the office and parking spaces to unrelated third parties. 37 Emerson Place Apartments Notes to Statements of Revenue and Certain Expenses (continued) 2. DESCRIPTION OF PROPERTIES The following is a description of the multifamily property:
TOTAL DATE NUMBER OF INVESTMENT PROPERTY NAME LOCATION ACQUIRED UNITS (A) - ----------------------------------------------------------------------------------- Emerson Place Apartments Boston, MA 4/23/98 462 $72,515,000
NOTES (A) Includes initial purchase price and closing costs. 38 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 The Fairfield (the Property) for the year ended December 31, 1997. 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 4, 1998 39 The Fairfield Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE PERIOD FROM JANUARY 1, 1998 FOR THE THROUGH MARCH YEAR ENDED 25, 1998 DECEMBER 31, (UNAUDITED) 1997 ---------------------------- REVENUE Rental Income $1,181 $4,489 CERTAIN EXPENSES Property operating and maintenance 179 811 Real estate taxes and insurance 129 378 Management fees 37 136 ---------------------------- 345 1,325 Revenue in excess of certain expenses $836 $3,164 ---------------------------- ----------------------------
SEE ACCOMPANYING NOTES. 40 The Fairfield Notes to Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying statements of revenue and certain expenses for the year ended December 31, 1997 and the period from January 1, 1998 through March 25, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying financial statements are not representative of the actual operations of The Fairfield 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 Fairfield, 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 Fairfield. In the preparation of the statements of revenue and certain expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. The Fairfield was managed by an affiliated management company through the acquisition date. Management fees were based on 3% of total income. The management fees paid in 1997 to the affiliate of the property owner amounted to $135,735. Upon acquisition of The Fairfield by the Company, such management contract was canceled at which time the Company began to manage The Fairfield. NOTE 2. DESCRIPTION OF PROPERTY The following is a description of the multifamily property:
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A) - ---------------------------------------------------------------------------------------- The Fairfield Stamford, CT 3/26/98 263 $45,550,000
Note: (A) Includes initial purchase price and closing costs. 41 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 Focus Group Properties (the Properties) described in Note 2 for the year ended December 31, 1997. 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 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 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 18, 1998 42 Focus Group Properties Combined Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE MONTHS FOR THE ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ----------------------------- REVENUE Rental income $2,646 $9,080 CERTAIN EXPENSES Property operating and maintenance 723 3,121 Real estate taxes and insurance 263 541 Management fees 114 368 ----------------------------- 1,100 4,030 ----------------------------- Revenue in excess of certain expenses $1,546 $5,050 ----------------------------- -----------------------------
SEE ACCOMPANYING NOTES. 43 Focus Group Properties Notes to Combined Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying combined statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying combined financial statements consist of three multifamily properties that the Company has acquired and one property that the Company has reached an agreement, in principle, to acquire and is in the final stages of documenting the acquisition (the "Focus Group Properties"). The closing of the pending transaction is subject to certain contingencies and conditions; therefore, there can be no assurance that this transaction will be consummated. The accompanying combined financial statements are not representative of the actual operations of the Focus Group 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 Focus Group 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 Focus Group 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 affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. The Focus Group Properties were or are expected to be managed by an affiliated management company through the acquisition date. Management fees of the properties were based upon 4% of total income. Upon acquisition of the properties by the Company, such management contracts were or will be canceled at which time the Company began or will begin to manage the properties. 44 Focus Group Properties Notes to Combined Statements of Revenue and Certain Expenses (continued) 2. DESCRIPTION OF PROPERTIES The following multifamily properties are included in the combined statements of revenue and certain expenses:
DATE NUMBER OF TOTAL PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT (B) - ------------------------------------------------------------------------------------------------- Defoor Village (D) Atlanta, GA (A) 6/16/98 156 $13,515,000 Lexington Village Alpharetta, GA (A) (C) 352 24,515,000 Plantation Ridge Marietta, GA (A) 6/16/98 454 23,215,000 Wynbrook Norcross, GA (A) 6/18/98 318 13,515,000 --------------------------- 1,280 $74,760,000 --------------------------- ---------------------------
NOTES (A) The Focus Group Properties have been presented on a combined basis because all of the properties were or are commonly managed by Focus Management, Inc. (B) Includes initial purchase price and closing costs. (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. (D) Operations for this property began in June 1997 upon substantial completion of construction. 45 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 Frederick Probable Properties (the Probable Properties) described in Note 2 for the year ended December 31, 1997. The combined Statement of Revenue and Certain Expenses is the responsibility of the Probable Properties' 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 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 29, 1998 46 Frederick Probable Properties Combined Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE FOR THE YEAR MONTHS ENDED ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------- REVENUE Rental Income $975 $3,712 CERTAIN EXPENSES Property operating and maintenance 234 1,030 Real estate taxes and insurance 112 428 Management fees 44 167 ------------------------------- 390 1,625 Revenue in excess of certain expenses $585 $2,087 ------------------------------- -------------------------------
SEE ACCOMPANYING NOTES. 47 Frederick Probable Properties Notes to Combined Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying combined statements of revenue and certain expenses for the year ended December 31, 1997 and for the three months ended March, 31 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying combined financial statements consist of three multifamily properties for which 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 documenting the acquisition of these properties (the "Frederick Probable Properties" or the "Probable Properties"). The closings 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 Frederick 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 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 the 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 affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. The Frederick Probable Properties are expected to be managed by an affiliated management company through the acquisition date. Management fees are based upon a percentage ranging from 4% to 5% of gross revenues. The management fees paid in 1997 to the affiliate of the property owner amounted to $167,362. 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. 48 Frederick Probable Properties Notes to Combined Statements of Revenue and Certain Expenses (continued) NOTE 2. DESCRIPTION OF PROPERTY The following multifamily properties are included in the combined statements of revenue and certain expenses:
DATE NUMBER OF TOTAL PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT(B) - ----------------------------------------------------------------------------------------------------------------------------- Overlook Manor I & II Frederick, MD (A) (C) 290 $ 13,403,000 Tillman Place Frederick, MD (A) (C) 64 3,858,000 The Willows Frederick, MD (A) (C) 204 9,649,000 -------------------------------- 558 $ 26,910,000 -------------------------------- --------------------------------
NOTE: (A) The Frederick Probable Properties have been presented on a combined basis because all of the Probable Properties are commonly owned by Frederick. (B) Includes initial purchase price and closing costs. (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. 49 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 Harbor Pointe (the Property) for the year ended December 31, 1997. 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 2, 1998 50 Harbor Pointe Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE FOR THE MONTHS ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------ REVENUE Rental Income $1,117 $ 4,511 CERTAIN EXPENSES Property operating and maintenance 356 1,541 Real estate taxes and insurance 167 647 Management fees 45 180 ------------------------------ 568 2,368 Revenue in excess of certain expenses $ 549 $ 2,143 ------------------------------ ------------------------------
SEE ACCOMPANYING NOTES. 51 Harbor Pointe Notes to Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying financial statements are not representative of the actual operations of Harbor Pointe 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 Harbor Pointe, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Harbor Pointe. In the preparation of the statements of revenue and certain expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. Harbor Pointe was managed by an affiliated management company through the acquisition date. Management fees were based on 4% of total income. The management fees paid in 1997 to the affiliate of the property were $180,348. Upon acquisition of Harbor Pointe by the Company, such management contract was canceled at which time the Company began to manage Harbor Pointe. NOTE 2. DESCRIPTION OF PROPERTY The following is a description of the multifamily property purchased by the Company:
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT(A) - -------------------------------------------------------------------------------------------------------------- Harbor Pointe Milwaukee, WI 4/1/98 595 $23,965,000
Note: (A) Includes initial purchase price and closing costs. 52 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 Lakes at Vinings Apartments and Martins Landing Apartments Probable Properties (the Probable Properties) described in Note 2 for the year ended December 31, 1997. The 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 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 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 4, 1998 53 The Lakes at Vinings Apartments and Martins Landing Probable Properties Combined Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE FOR THE YEAR MONTHS ENDED ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ----------------------------- REVENUE Rental income $ 1,698 $ 6,529 CERTAIN EXPENSES Property operating and maintenance 414 1,875 Real estate taxes and insurance 116 503 Management fees 67 257 ----------------------------- 597 2,635 ----------------------------- Revenue in excess of certain expenses $ 1,101 $ 3,894 ----------------------------- -----------------------------
SEE ACCOMPANYING NOTES. 54 The Lakes at Vinings Apartments and Martins Landing Probable Properties Notes to Combined Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying combined statements of revenue and certain expenses for the year ended December 31, 1997 and for the three months ended March, 31 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying combined financial statements consist of two multifamily properties for which the Company made a commitment to acquire or has reached an agreement, in principle, to acquire and the Company is in the final stages of documenting the acquisition of these properties ("The Lakes at Vinings Apartments and Martins Landing Apartments Probable Properties" or the "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 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 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 the 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 affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. The Probable Properties are expected to be managed by an affiliated management company through the acquisition date. Management fees were based on 4% of gross revenues. In 1997, $257,431 of management fees were paid to an affiliate of the property owner. 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 Probable Properties. 55 The Lakes at Vinings Apartments and Martins Landing Probable Properties Notes to Combined Statements of Revenue and Certain Expenses (continued) NOTE 2. DESCRIPTION OF PROPERTIES The following multifamily properties are included in the combined statements of revenue and certain expenses:
DATE NUMBER OF TOTAL PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT(B) - -------------------------------------------------------------------------------- Martins Landing Atlanta, GA (A) (C) 300 $18,093,000 The Lakes at Vinings Atlanta, GA (A) (C) 464 27,931,000 -------------------------- 764 $46,024,000 -------------------------- --------------------------
NOTE: (A) The Probable Properties have been presented on a combined basis because all of the Probable Properties are commonly owned. (B) Includes initial purchase price and closing costs. (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. 56 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 Lincoln Property Company Probable Properties (the Probable Properties) described in Note 2 for the year ended December 31, 1997. The 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois April 30, 1998 57 Lincoln Property Company Probable Properties Combined Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE MONTHS FOR THE ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------- REVENUE Rental income $13,999 $54,255 CERTAIN EXPENSES Property operating and maintenance 3,300 13,337 Real estate taxes and insurance 1,029 4,327 Management fees 673 2,638 ------------------------------- 5,002 20,302 ------------------------------- Revenue in excess of certain expenses $ 8,997 $33,953 ------------------------------- -------------------------------
SEE ACCOMPANYING NOTES. 58 Lincoln Property Company Probable Properties Notes to Combined Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying combined statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying combined financial statements consist of 25 multifamily properties for which 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 documenting the acquisition of these properties, (the "Lincoln Probable Properties" or the "Probable Properties"). The closings 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 Lincoln 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 Lincoln 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 the Lincoln 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 affect 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 Lincoln Probable Properties have been presented on a combined basis because all of the properties were either commonly owned or managed by Lincoln Property Company, the seller of the Probable Properties. The Lincoln Probable Properties are expected to be managed by an affiliated management company through the acquisition date. Management fees are based upon a percentage ranging from 3.75% 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. 59 Lincoln Property Company Probable Properties Notes to Combined Statements of Revenue and Certain Expenses (continued) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. Lincoln Residential Services of Colorado, Inc. and Southwest Landscape by Design perform landscaping services at certain of the Probable Properties. The Probable Properties paid approximately $210,000 to these affiliated companies during 1997 for the landscaping services rendered. Lincoln Check is a related party of the Probable Properties that performs credit verification services for certain of the Probable Properties. The Probable Properties paid Lincoln Check approximately $51,200 during 1997 for credit check services. The Probable Properties paid the affiliated management company approximately $4,400 during 1997 for cash management services. 2. DESCRIPTION OF PROPERTIES The 25 Probable Properties are multifamily properties and contain a total of 5,774 units. The properties range in size from 99 to 584 units. The Probable Properties are located in California, Colorado, Nevada and Washington. The Company's total investment for the Probable Properties, including initial purchase price and closing costs is expected to be approximately $465,695,000. 60 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 Magnum Probable Properties (the Probable Properties) described in Note 2 for the year ended December 31, 1997. The 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 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 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois May 1, 1998 61 Magnum Probable Properties Combined Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE FOR THE YEAR MONTHS ENDED ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------- REVENUE Rental Income $3,390 $13,309 CERTAIN EXPENSES Property operating and maintenance 835 3,586 Real estate taxes and insurance 478 1,867 Management fees 136 537 ------------------------------- 1,449 5,990 ------------------------------- Revenue in excess of certain expenses $1,941 $ 7,319 ------------------------------- -------------------------------
SEE ACCOMPANYING NOTES. 62 Magnum Probable Properties Notes to Combined Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying combined statements of revenue and certain expenses for the year ended December 31, 1997 and for the three months ended March, 31 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying combined financial statements consist of 10 multifamily properties for which 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 documenting the acquisition of these properties (the "Magnum Probable Properties" or the "Probable Properties"). The closings 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 Magnum 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 Magnum 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 the Magnum 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 affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. The Magnum Probable Properties had a management agreement with a management company affiliated with the property owner through the acquisition date. Management fees were based on 4% of gross revenues. In 1997, $536,512 of management fees were paid to an affiliate of the property owner. Upon acquisition of the Magnum Probable Properties by the Company, such management contracts will be canceled at which time the Company will begin to manage the properties. 63 Magnum Probable Properties Notes to Combined Statements of Revenue and Certain Expenses (continued) NOTE 2. DESCRIPTION OF PROPERTIES The following multifamily properties are included in the combined statements of revenue and certain expenses:
DATE NUMBER OF TOTAL PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT(B) - ------------------------------------------------------------------------------------------------------------------------------- Cedar Ridge Arlington, TX (A) (C) 121 $ 4,815,000 Lakewood Greens Dallas, TX (A) (C) 252 11,015,000 Pleasant Ridge Arlington, TX (A) (C) 63 2,415,000 Sandstone at Bear Creek Euless, TX (A) (C) 40 1,815,000 Villas at Josey Ranch Carrollton, TX (A) (C) 198 8,815,000 Wimbledon Oaks Arlington, TX (A) (C) 248 10,315,000 The Broadway Garland, TX (A) (C) 288 9,215,000 Fielder Crossing Arlington, TX (A) (C) 119 4,615,000 River Park Fort Worth, TX (A) (C) 280 11,015,000 Lakeshore at Preston Plano, TX (A) (C) 302 18,505,000 ----------------------------------- 1,911 $82,540,000 ----------------------------------- -----------------------------------
NOTE: (A) The Magnum Probable Properties have been presented on a combined basis because all of the properties were either commonly owned and managed by Magnum, the seller of the Probable Properties. (B) Includes initial purchase price and closing costs. (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. 64 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 TCRS Properties (the Properties) described in Note 2 for the year ended December 31, 1997. 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 10, 1998 65 TCRS Properties Combined Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE FOR THE MONTHS ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------ REVENUE Rental Income $ 3,548 $ 13,867 CERTAIN EXPENSES Property operating and maintenance 742 2,955 Real estate taxes and insurance 565 2,136 Management fees 160 630 ------------------------------ 1,467 5,721 Revenue in excess of certain expenses $ 2,081 $ 8,146 ------------------------------ ------------------------------
SEE ACCOMPANYING NOTES. 66 TCRS Properties Notes to Combined Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying combined statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying combined financial statements consist of five multifamily properties which the Company has purchased. The accompanying combined financial statements are not representative of the actual operations of the TCRS Properties (the "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 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 TCRS 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 affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. The TCRS Properties were managed by two affiliated management companies through the acquisition date. Management fees were based on 4.5% of total income. The management fees paid in 1997 to the affiliates of the property owner amounted to $629,727. Upon acquisition of the Properties by the Company, such management contracts were canceled at which time the Company began to manage the Properties. TCR Risk Management, an affiliate of the Properties, provided insurance services to all five of the Properties through the acquisition date. The Properties paid TCR Risk Management approximately $91,000 during 1997 related to such services. 67 TCRS Properties Notes to Combined Statements of Revenue and Certain Expenses (continued) 2. DESCRIPTION OF PROPERTIES The following multifamily properties are included in the combined statements of revenue and certain expenses:
Property Date Number of Total Name Location Seller Acquired Units Investment(B) - ------------------------------------------------------------------------------------------ --------------- Gates at Carlson Minnetonka, MN (A) 4/1/98 435 $27,640,000 GlenGarry Club Bloomington, IL (A) 4/1/98 250 18,448,000 Woodlands Brookfield, WI (A) 4/1/98 148 15,034,000 Ravinia Greenfield, WI (A) 4/1/98 206 12,840,000 Plumtree I, II, and III Hales Corners, WI (A) 4/1/98 332 21,813,000 ----------- --------------- 1,371 $95,775,000 ----------- --------------- ----------- ---------------
Notes (A) The TCRS Properties have been presented on a combined basis because all of the Properties are commonly owned and managed. (B) Includes initial purchase price and closing costs. 68 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 the Northridge Apartments (the Property) for the year ended December 31, 1997. 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 9, 1998 69 Northridge Apartments Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE FOR THE MONTHS ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------ REVENUE Rental Income $ 641 $ 2,359 CERTAIN EXPENSES Property operating and maintenance 154 658 Real estate taxes and insurance 51 211 Management fees 23 83 ------------------------------ 228 952 Revenue in excess of certain expenses $ 413 $ 1,407 ------------------------------ ------------------------------
SEE ACCOMPANYING NOTES. 70 Northridge Apartments Notes to Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying financial statements are not representative of the actual operations of Northridge Apartments 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 Northridge Apartments, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Northridge Apartments. In the preparation of the statements of revenue and certain expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. Northridge Apartments had a management agreement with a management company affiliated with the property owner through the acquisition date. Management fees were based on 3.5% of total income. In 1997, $82,882 of management fees were paid to an affiliate of the property owner. Upon acquisition of Northridge Apartments by the Company, such management contract was canceled at which time the Company began to manage Northridge Apartments. NOTE 2. DESCRIPTION OF PROPERTY The following is a description of the multifamily property:
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A) - -------------------------------------------------------------------------------------------------------------------------------- Northridge Apartments Pleasant Hill, CA 5/14/98 221 $20,015,000
Note: (A) Includes initial purchase price and closing costs. 71 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 the Portside Towers Apartments (the Property) for the year ended December 31, 1997. 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois June 11, 1998 72 Portside Towers Apartments Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE MONTHS FOR THE ENDED YEAR ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------ REVENUE Rental Income $3,039 $7,228 CERTAIN EXPENSES Property operating and maintenance 415 1,345 Real estate taxes and insurance 477 1,150 Management fees 94 300 ------------------------------ 986 2,795 Revenue in excess of certain expenses $2,053 $4,433 ------------------------------ ------------------------------
SEE ACCOMPANYING NOTES. 73 Portside Towers Apartments Notes to Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying statements of revenue and certain expenses for the year ended December 31, 1997 and the three months ended March 31, 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying financial statements are not representative of the actual operations of Portside Towers Apartments 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 Portside Towers Apartments, 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 Portside Towers Apartments. In the preparation of the statements of revenue and certain expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. Actual results could differ from these estimates. Rental income attributable to residential and commercial leases is recorded when due from tenants, generally on a straight line basis. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. Portside Towers Apartments had a management agreement with a management company affiliated with the property owner through the acquisition date. Management fees were based on 4% of total income. Upon acquisition of Portside Towers Apartments by the Company, such management contract was canceled at which time the Company began to manage Portside Towers Apartments. The Property had a security agreement with an affiliated company. Security services incurred during 1997 were $86,714. 74 Portside Towers Apartments Notes to Statements of Revenue and Certain Expenses (continued) NOTE 2. DESCRIPTION OF PROPERTY The following is a description of the multifamily property:
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS (B) TOTAL INVESTMENT (A) - --------------------------------------------------------------------------------------------------------------------------------- Portside Towers Jersey City, NJ 6/11/98 527 $119,095,000
Note: (A) Includes initial purchase price and closing costs. (B) In addition to the residential units, the property includes ground floor commercial space. 75 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 Sonterra at Foothill Ranch (the Property) for the year ended December 31, 1997. 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, 1997, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Chicago, Illinois April 30, 1998 76 Sonterra at Foothill Ranch Statements of Revenue and Certain Expenses (AMOUNTS IN THOUSANDS)
FOR THE THREE FOR THE YEAR MONTHS ENDED ENDED MARCH 31, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------------------ REVENUE Rental Income $ 840 $ 2,287 CERTAIN EXPENSES Property operating and maintenance 154 532 Real estate taxes and insurance 148 286 Management fees 34 132 ------------------------------ 336 950 Revenue in excess of certain expenses $ 504 $ 1,337 ------------------------------ ------------------------------
SEE ACCOMPANYING NOTES. 77 Sonterra at Foothill Ranch Notes to Statements of Revenue and Certain Expenses 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying statements of revenue and certain expenses for the year ended December 31, 1997 and for the three months ended March, 31 1998 (unaudited) were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, for inclusion in the Current Report on Form 8-K of Equity Residential Properties Trust (the "Company"). The accompanying financial statements are not representative of the actual operations of Sonterra at Foothill Ranch 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 Sonterra at Foothill Ranch, have been excluded. Expenses excluded consist of interest, depreciation and amortization, professional fees and other costs not directly related to the future operations of Sonterra at Foothill Ranch. In the preparation of the statements of revenue and certain expenses in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect 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. In the opinion of management, the interim financial statement of revenue and certain expenses for the quarter ended March 31, 1998, reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal, recurring nature. Sonterra at Foothill Ranch had a management agreement with a management company affiliated with the property owner through the acquisition date to maintain and manage the operations of the apartment complex. Management fees were based on 4% of gross revenues. Of the management fees paid in 1997, $132,397 were paid to an affiliate of the property owner. Upon acquisition of Sonterra at Foothill Ranch by the Company, such management contract was canceled at which time the Company began to manage Sonterra at Foothill Ranch. NOTE 2. DESCRIPTION OF PROPERTY The following is a description of the residential rental property:
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A) - --------------------------------------------------------------------------------------------------------------------------------- Sonterra at Foothill Ranch (B) Foothill Ranch, CA 4/1/98 300 $ 31,515,000
Note: (A) Includes initial purchase price and closing costs. (B) Operations for this property began in January 1997 and the property was substantially completed in May 1997. 78 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 July 9, 1998 By: /s/ Michael J. McHugh ------------------ ------------------------------------- (Date) Michael J. McHugh Executive Vice President, Chief Accounting Officer and Treasurer 79 EX-23 2 EXHIBIT 23 Consent of Independent Auditors We consent to the incorporation by reference in the Registration Statements (Forms S-3 No. 333-45533 and No. 333-39289 and Forms S-8 No. 333-56165 and No. 333-06869) of Equity Residential Properties Trust and in the related Prospectuses 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.
DATE OF AUDITORS' FINANCIAL STATEMENTS REPORT - -------------------------------------------------------------------------------- Statement of Revenue and Certain Expenses of Sonterra at April 30, 1998 Foothill Ranch for the year ended December 31, 1997 Combined Statement of Revenue and Certain Expenses of the April 30, 1998 Lincoln Property Company Probable Properties for the year ended December 31, 1997 Statement of Revenue and Certain Expenses of The Emerson May 1, 1998 Place Apartments for the year ended December 31, 1997 Combined Statement of Revenue and Certain Expenses of The May 1, 1998 Magnum Probable Properties for the year ended December 31, 1997 Combined Statement of Revenue and Certain Expenses of the May 29, 1998 Frederick Probable Properties for the year ended December 31, 1997 Statement of Revenue and Certain Expenses of Harbor Pointe June 2, 1998 for the year ended December 31, 1997 Statement of Revenue and Certain Expenses of The Fairfield June 4, 1998 for the year ended December 31, 1997 Combined Statement of Revenue and Certain Expenses of the June 4, 1998 Lakes at Vinings Apartments and Martins Landing Apartments Probable Properties for the year ended December 31, 1997 DATE OF AUDITORS' FINANCIAL STATEMENTS REPORT - -------------------------------------------------------------------------------- Statement of Revenue and Certain Expenses of the June 9, 1998 Northridge Apartments for the year ended December 31, 1997 Combined Statement of Revenue and Certain Expenses of TCRS June 10, 1998 Properties for the year ended December 31, 1997 Statement of Revenue and Certain Expenses of the Portside June 11, 1998 Towers Apartments for the year ended December 31, 1997 Statement of Revenue and Certain Expenses of The Coconut June 11, 1998 Palm Club Apartments for the year ended December 31, 1997 Combined Statement of Revenue and Certain Expenses of The June 18, 1998 Focus Group Properties for the year ended December 31, 1997
ERNST & YOUNG LLP Chicago, Illinois July 9, 1998 -----END PRIVACY-ENHANCED MESSAGE-----