-----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, IVfe8KwmnCWCr+QcFu4C8lx+Lfziw2ZPL7xQTDoLL9tEIATFpz7fpCrvlHcwx/Dn 1QW1Pn6V3aHbDnu0OD5+Ew== 0000927016-98-001544.txt : 19980417 0000927016-98-001544.hdr.sgml : 19980417 ACCESSION NUMBER: 0000927016-98-001544 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970416 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980416 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BAY APARTMENT COMMUNITIES INC CENTRAL INDEX KEY: 0000915912 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 770404318 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12672 FILM NUMBER: 98595815 BUSINESS ADDRESS: STREET 1: 4340 STEVENS CREEK BLVD STREET 2: STE 275 CITY: SAN JOSE STATE: CA ZIP: 95129 BUSINESS PHONE: 4089831500 MAIL ADDRESS: STREET 1: 4340 STEVENS CREEK BLVD STREET 2: STE 275 CITY: SAN JOSE STATE: CA ZIP: 95129 8-K 1 FORM 8-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 _______________________________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 __________________________________ Date of Report (Date of earliest event reported): APRIL 16, 1998 BAY APARTMENT COMMUNITIES, INC. (Exact name of Registrant as specified in charter) MARYLAND 1-12672 77-0404318 - ---------------------------- ------------------------ --------------------- (State or other jurisdiction (Commission file number) (IRS employer of incorporation) identification no.) 4340 STEVENS CREEK BOULEVARD, SUITE 275, SAN JOSE, CA 95129 --------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (408) 983-1500 -------------- (Registrant's telephone number, including area code) ITEM 5. OTHER EVENTS. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION. This Current Report on Form 8-K of Bay Apartment Communities, Inc. (the "Company") contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are statements that involve risks and uncertainties, including, but not limited to, the demand for apartment homes, the effects of economic conditions, the impact of competition and competitive pricing, changes in construction costs, the results of financing efforts, potential acquisitions under agreement, the effects of the Company's accounting policies and other risks detailed in the Company's filings with the Securities and Exchange Commission (the "Commission"). As previously reported in a Current Report on Form 8-K filed with the Commission on March 11, 1998, the Company and Avalon Properties, Inc. ("Avalon") entered into an Agreement and Plan of Merger (the "Merger Agreement") on March 9, 1998. Pursuant to the Merger Agreement, Avalon will merge (the "Merger") with and into the Company, with the Company being the surviving corporation. Pursuant to the Merger Agreement, at the effective time of the Merger each outstanding share of common stock of Avalon (the "Avalon Common Stock") will be converted into the right to receive 0.7683 of a share (the "Exchange Ratio") of common stock of the Company (the "Company Common Stock"). Holders of preferred stock of Avalon will receive shares of comparable preferred stock of the Company on a share-for-share basis. In connection with the Merger, the Company also will assume Avalon's existing indebtedness. This Current Report on Form 8-K is filed for the purpose of filing unaudited pro forma condensed financial information giving effect to the Merger. The unaudited pro forma condensed financial information (1) does not necessarily indicate what the actual condensed consolidated financial position or results of operations of the Company and Avalon would have been as of its dates or for the periods presented if the Merger had actually occurred as of those dates, (2) does not purport to represent the future condensed consolidated financial position or results of operations of the Company and Avalon at any future date or for any future periods, and (3) must be read in conjunction with the audited consolidated financial statements and the notes thereto and other financial information contained in (a) the Company's Annual Report on Form 10-K for the year ended December 31, 1997, as amended by Amendment No. 1 on Form 10-K/A and (b) Avalon's Annual Report on Form 10-K for the year ended December 31, 1997, as amended and restated by Amendment No. 1 on Form 10-K/A, all of which are incorporated in this Current Report by reference. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Businesses Acquired Not applicable (b) Pro Forma Financial Statements 2 UNAUDITED PRO FORMA FINANCIAL STATEMENTS AVALON BAY COMMUNITIES, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 1997 (UNAUDITED) The following unaudited Pro Forma Condensed Consolidated Balance Sheet of Avalon Bay Communities, Inc. ("Avalon Bay") as of December 31, 1997 gives effect to the proposed Merger as if the Merger had occurred on December 31, 1997, under the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. The Avalon Properties, Inc. ("Avalon") Pro Forma Balance Sheet as of December 31, 1997 assumes the acquisition, as of December 31, 1997, of two Minneapolis metropolitan area communities (Carriage Green and Summer Place). The Bay Apartment Communities, Inc. ("Bay") Pro Forma Balance Sheet as of December 31, 1997 assumes the acquisition, as of December 31, 1997, of five communities (Warner Oaks, Amberway, Arbor Park, Laguna Brisas and Cabrillo Square). The unaudited Pro Forma Condensed Consolidated Balance Sheet is presented for informational purposes only and is not necessarily indicative of what the actual condensed consolidated financial position of Avalon Bay would have been as of December 31, 1997, nor does it purport to represent the future condensed consolidated financial position of Avalon Bay. This information should be read in conjunction with the audited consolidated financial statements and other financial information contained in Avalon's Annual Report on Form 10-K, as amended and restated by Amendment No. 1 on Form 10-K/A, and Bay's Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A, in each case for the year ended December 31, 1997, respectively, including the notes thereto, both of which are incorporated by reference herein. 3 AVALON BAY COMMUNITIES, INC. PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET DECEMBER 31, 1997 (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE INFORMATION)
AVALON BAY AVALON BAY PRO FORMA PRO FORMA PRO FORMA PRO FORMA CONSOLIDATED CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ----------- ------------ ASSETS Real estate, net............ $1,492,775 $1,373,908 $535,530 $3,402,213 Cash and cash equivalents... 6,722 3,188 -- 9,910 Cash in escrow.............. 4,109 1,597 -- 5,706 Resident security deposits.. 7,812 -- -- 7,812 Investments in joint ven- tures...................... 18,315 -- -- 18,315 Deferred financing costs, net........................ 10,022 7,960 (10,022) 7,960 Deferred development costs.. 7,207 3,843 -- 11,050 Other assets................ 10,462 6,578 -- 17,040 ---------- ---------- -------- ---------- TOTAL ASSETS.............. $1,557,424 $1,397,074 $525,508 $3,480,006 ========== ========== ======== ========== LIABILITIES AND STOCKHOLD- ERS' EQUITY Notes payable and Unsecured Facilities................. $ 533,850 $ 577,224 $ 25,000 $1,136,074 Payables for construction... 16,311 4,511 -- 20,822 Accrued expenses and other liabilities................ 18,507 9,411 -- 27,918 Resident security deposits.. 9,589 6,200 -- 15,789 ---------- ---------- -------- ---------- TOTAL LIABILITIES......... 578,257 597,346 25,000 1,200,603 ---------- ---------- -------- ---------- Minority interest in Operat- ing Partnerships........... 18,157 9,133 -- 27,290 ---------- ---------- -------- ---------- Stockholders' equity: Preferred Stock............ 88 83 (27) 144 Common Stock............... 420 261 (71) 610 Additional paid-in capital. 987,540 823,520 476,833 2,287,893 Deferred compensation...... (3,265) -- -- (3,265) Distributions in excess of accumulated earnings...... (23,773) (33,269) 23,773 (33,269) ---------- ---------- -------- ---------- STOCKHOLDERS' EQUITY...... 961,010 790,595 500,508 2,252,113 ---------- ---------- -------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY..... $1,557,424 $1,397,074 $525,508 $3,480,006 ========== ========== ======== ==========
4 AVALON BAY COMMUNITIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET 1.BASIS OF PRESENTATION The Avalon Pro Forma Consolidated Balance Sheet as of December 31, 1997 represents Avalon's historical Condensed Consolidated Balance Sheet adjusted to give effect to the purchase of two apartment communities purchased by Avalon in January 1998 as if these communities had been acquired as of December 31, 1997. The Bay Pro Forma Consolidated Balance Sheet as of December 31, 1997 represents Bay's historical Condensed Consolidated Balance Sheet adjusted to give effect to the purchase of five apartment communities purchased by Bay in January, February and March 1998 as if these communities had been acquired as of December 31, 1997. 2.PRO FORMA ADJUSTMENTS i. Real estate, net: The adjustment reflects the increase in book value of Avalon's real estate assets based upon the Bay purchase of (1) the common stock of Avalon (assuming Bay common stock is valued at $38.6333 per share) based upon the exchange of each outstanding share of common stock of Avalon for .7683 shares of Bay common stock, and (2) the conversion of Avalon preferred stock for substantially equivalent preferred stock of Bay as follows: Issuance of 32,249,577 shares of Bay Common Stock (assumed value of $38.6333 per share) based on an exchange ratio of .7683 shares of Bay Common Stock for each share of Avalon Common Stock........................................... $1,245,908 Issuance of Bay Preferred Stock in exchange for Avalon Pre- ferred Stock (liquidation price of $25.00 for 8,755,000 shares of preferred stock).................................... 218,875 Estimated costs associated with the merger..................... 25,000 ---------- Purchase Price................................................. 1,489,783 Less: Historical book basis of Avalon's net assets acquired (excludes deferred financing costs, net and deferred compensation)................................................. (954,253) ---------- Real estate, net Pro Forma Adjustment.......................... $ 535,530 ==========
ii. Deferred financing costs, net: The adjustment reflects the elimination of Avalon deferred financing costs which have no future value to Avalon Bay. iii. Notes payable and Unsecured Facilities: The adjustment reflects additional borrowings for the payment of the estimated fees and other expenses relating to the Merger, including, but not limited to, investment banking fees, legal and accounting fees, printing, filing and other related costs. 5 iv. Stockholders' Equity: The adjustments to stockholders' equity reflect the issuance of 32,249,577 shares of Bay Common Stock, par value $.01 per share, the exchange of Avalon Preferred Stock for substantially equivalent preferred stock of Bay, and the conversion of Bay Series A Preferred Stock and Bay Series B Preferred Stock for Bay common stock, as follows:
DISTRIBUTIONS PAID-IN PAID-IN IN EXCESS OF PREFERRED COMMON CAPITAL CAPITAL DEFERRED ACCUMULATED STOCK STOCK (PREFERRED) (COMMON) COMPENSATION EARNINGS (000'S) (000'S) (000'S) (000'S) (000'S) (000'S) --------- ------- ----------- ---------- ------------ ------------- Issuance of Bay Common Stock.................. $ --- $ 322 $ -- $1,245,586 $ -- $ -- Avalon Historical Stockholders' Equity... (88) (420) (218,787) (768,753) 3,265 23,773 Issuance of Bay Preferred Stock in exchange for Avalon Preferred Stock........ 88 -- 218,787 -- -- -- Bay assumption of Avalon deferred compensation.. -- -- -- -- (3,265) -- Bay conversion of Series A Preferred Stock and Series B Preferred Stock.................. (27) 27 (67,818) 67,818 -- -- ----- ----- --------- ---------- ------- ------- Stockholders' Equity Pro Forma Adjustments...... $ (27) $ (71) $ (67,818) $ 544,651 $ -- $23,773 ===== ===== ========= ========== ======= =======
6 AVALON BAY COMMUNITIES, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) The following unaudited Pro Forma Condensed Consolidated Statement of Income of Avalon Bay for the year ended December 31, 1997 gives effect to the proposed Merger as if the Merger had occurred as of January 1, 1997 under the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. The Avalon Pro Forma Income Statement for the year ended December 31, 1997 assumes that all 1997 and 1998 acquisitions occurred as of January 1, 1997. The Bay Pro Forma Income Statement for the year ended December 31, 1997 assumes that all 1997 and 1998 acquisitions occurred as of January 1, 1997. The unaudited Pro Forma Condensed Consolidated Statement of Income is presented for informational purposes only and is not necessarily indicative of what the actual consolidated operating results of Avalon Bay would have been for the year ended December 31, 1997, nor does it purport to represent the future condensed consolidated financial results of Avalon Bay. This information should be read in conjunction with the audited consolidated financial statements and other financial information contained in Avalon's Annual Report on Form 10-K, as amended and restated by Amendment No. 1 on Form 10-K/A, and Bay's Annual Report on Form 10-K, as amended by Amendment No. 1 on Form 10-K/A, in each case for the year ended December 31, 1997, respectively, including the notes thereto, both of which are incorporated by reference herein. 7 AVALON BAY COMMUNITIES, INC. PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) (DOLLARS IN THOUSANDS EXCEPT PER SHARE INFORMATION)
AVALON BAY AVALON BAY PRO FORMA PRO FORMA PRO FORMA PRO FORMA CONSOLIDATED CONSOLIDATED ADJUSTMENTS CONSOLIDATED ------------ ------------ ----------- ------------ Revenue Rental income............. $ 197,081 $ 172,081 $ -- $ 369,162 Management fees........... 2,065 -- -- 2,065 Other income.............. 928 4,961 -- 5,889 ---------- ---------- ------- ---------- Total revenue............ 200,074 177,042 -- 377,116 ---------- ---------- ------- ---------- Expenses Operating expenses........ 75,589 53,522 -- 129,111 Interest expense.......... 27,263 25,486 1,575 54,324 Depreciation and amortiza- tion..................... 33,859 41,881 4,281 80,021 General and administra- tive..................... 5,093 6,308 -- 11,401 ---------- ---------- ------- ---------- Total expenses........... 141,804 127,197 5,856 274,857 ---------- ---------- ------- ---------- Equity in income of joint ventures.................. 5,689 -- -- 5,689 Interest income............ 1,346 375 -- 1,721 Other income............... 253 -- -- 253 ---------- ---------- ------- ---------- Income before gain on sale of community, extraordi- nary item and minority in- terest.................... 65,558 50,220 (5,856) 109,922 Gain on sale of community.. 677 -- -- 677 ---------- ---------- ------- ---------- Income before extraordinary item and minority inter- est....................... 66,235 50,220 (5,856) 110,599 Extraordinary item......... (1,183) -- -- (1,183) ---------- ---------- ------- ---------- Income before minority in- terest.................... 65,052 50,220 (5,856) 109,416 Minority interest in oper- ating partnerships........ (936) (674) -- (1,610) ---------- ---------- ------- ---------- Net income................. 64,116 49,546 (5,856) 107,806 Dividends attributable to preferred stock........... (19,656) (16,063) 4,640 (31,079) ---------- ---------- ------- ---------- Net income available to common stockholders....... $ 44,460 $ 33,483 $(1,216) $ 76,727 ========== ========== ======= ========== Income per share before extraordinary item--basic. $ 1.24 $ 1.29 $ -- $ 1.28 ========== ========== ======= ========== Income per share before ex- traordinary item--diluted. $ 1.23 $ 1.28 $ -- $ 1.27 ========== ========== ======= ========== Net income per share of common stock--basic....... $ 1.21 $ 1.29 $ -- $ 1.26 ========== ========== ======= ========== Net income per share of common stock--diluted..... $ 1.20 $ 1.28 $ -- $ 1.25 ========== ========== ======= ========== Weighted average number of shares of common stock-- basic..................... 36,762,781 25,929,349 -- 60,892,748 ========== ========== ======= ========== Weighted average number of shares of common stock-- diluted................... 37,006,148 26,251,442 -- 61,458,208 ========== ========== ======= ==========
8 AVALON BAY COMMUNITIES, INC. NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME 1.PRO FORMA ADJUSTMENTS i. Interest expense: The adjustment is attributable to the interest incurred on funds obtained from the Unsecured Facilities used to pay estimated merger costs. ii. Depreciation and amortization: The adjustment results from (1) the net increase in real estate owned as a result of recording the Avalon real estate assets at fair value versus historical cost and (2) conforming the depreciation methodology of Bay to the policies of Avalon Bay. Depreciation is computed on the straight-line method based on an estimated life of 40 years and an allocation of the stepped-up basis to land and building of 20% and 80%, respectively. Depreciation on Step-up Adjustment............................. $10,711 Avalon deferred financing amortization......................... (968) Adjustment to Bay Historical Pro Forma depreciation to reflect the depreciation methods of Avalon Bay........................ (5,462) ------- Depreciation Pro Forma Adjustment.............................. $ 4,281 =======
iii. Weighted Average number of Common shares outstanding: The Pro Forma weighted average number of common shares outstanding for the year ended December 31, 1997 are computed as follows: Bay Pro Forma Weighted Average Shares Outstanding............ 25,929,349 Issuance of Bay stock at an exchange ratio of .7683 shares of Bay common stock for each outstanding share of Avalon common stock....................................................... 32,249,577 Conversion of Bay Series A Preferred Stock and Series B Preferred Stock for Bay common stock at an exchange ratio of 1 share of preferred stock for 1 share of common stock...... 2,713,822 ---------- Pro Forma Weighted Average shares Common Stock--Avalon Bay... 60,892,748 ==========
9 (c) Exhibits 23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Company has duly caused this report to be filed on its behalf by the undersigned thereunto duly authorized. BAY APARTMENT COMMUNITIES, INC. /s/ JEFFREY B. VAN HORN Dated: April 16, 1998 By: ---------------------------- Name: Jeffrey B. Van Horn Title: Vice President, Chief Financial Officer and Secretary 11 EX-23.1 2 CONSENT OF COOPERS & LYBRAND EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in (a) this Current Report on Form 8-K of Bay Apartment Communities, Inc. and (b) the Registration Statement on Form S-3, SEC File No. 333-41511, of Bay Apartment Communities, Inc., of our report dated January 13, 1998, except for Note 14 as to which the date is March 25, 1998, on our audits of the consolidated financial statements and financial statement schedule of Avalon Properties, Inc. as of December 31, 1997 and 1996, and for each of the years in the three year period ended December 31, 1997, which report is included in the Annual Report on Form 10-K of Avalon Properties, Inc., as amended and restated by Amendment No. 1 thereto on Form 10-K/A. Coopers & Lybrand L.L.P. New York, New York April 16, 1998 -----END PRIVACY-ENHANCED MESSAGE-----