-----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, K3JTfv/CMdDVn6J9UL7DNsmGGcCnvNFzgPgYe/CdytA0qgOxVGzlYuSQaS5HWHUM XEwXU+5mk6RYBeNh40N8Ow== 0000926861-98-000011.txt : 19980629 0000926861-98-000011.hdr.sgml : 19980629 ACCESSION NUMBER: 0000926861-98-000011 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980626 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST WASHINGTON REALTY TRUST INC CENTRAL INDEX KEY: 0000926861 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 521879972 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25230 FILM NUMBER: 98654902 BUSINESS ADDRESS: STREET 1: 4350 EAST WEST HWY - STE 400 CITY: BETHESDA STATE: MD ZIP: 20814 BUSINESS PHONE: 3019077800 MAIL ADDRESS: STREET 1: 4350 EAST WEST HIGHWAY SUITE 400 STREET 2: 4350 EAST WEST HIGHWAY SUITE 400 CITY: BETHESDA STATE: MD ZIP: 20814 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report June 26, 1998 (date of earliest event reported) (June 17, 1998) FIRST WASHINGTON REALTY TRUST, INC. (Exact name of registrant as specified in its Charter) State of Maryland 0-25230 52-1879972 (State or other jurisdiction (Commission (I.R.S. Employer of incorporated) File No.) Identification No.) 4350 East-West Highway, Suite 400 Bethesda, Maryland 20814 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (301) 907-7800 No change (Former name or address, if changed since last report) ITEM 5. Other Events Risk Factors All capitalized terms used herein but not defined shall have the meanings assigned to them in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997. Environmental Matters General. Under various federal, state and local laws, ordinances and regulations, an owner or operator of real estate may be required to investigate and clean up hazardous or toxic substances or petroleum product releases at such property and may be held liable to a governmental entity or to third parties for property damage and for investigation and clean-up costs incurred by such parties in connection with contamination. The cost of investigation, remediation or removal of such substances may be substantial, and the presence of such substances, or the failure to properly remediate such substances, may adversely affect the owner's ability to sell or rent such property or to borrow using such property as collateral. In connection with the ownership (direct or indirect), operation, management and development of real properties, the Company, the Operating Partnership or the Management Company, as the case may be, may be considered an owner or operator of such properties or as having arranged for the disposal or treatment of hazardous or toxic substances and, therefore, potentially liable for removal or remediation costs, as well as certain other related costs, including governmental fines and injuries to persons and property. All of the Properties have been subject to a Phase I or similar environmental audit (which involves general inspections without soil sampling or groundwater analysis) completed by independent environmental consultants. These environmental audits revealed the following additional potential environmental liabilities: Parkville Shopping Center. Petroleum has been detected in the soil below Parkville Shopping Center arising from a release from gasoline underground storage tanks formerly located at the site. Testing conducted at the site indicates that the contamination is limited and is unlikely to have any effect on human health. In addition, the previous owner of Parkville Shopping Center has provided an indemnification for all costs and expenses to obtain closure from the responsible regulatory authority. The Village Shopping Center. Petroleum and a dry cleaning solvent have been detected in the soil and groundwater below The Village Shopping Center. Testing done at the site indicates that the contamination is limited and is unlikely to have any effect on human health. In addition, the previous owner of the property has provided an indemnification for all costs and expenses to obtain closure from the responsible regulatory authority. Management of the Company believes that environmental studies have not revealed significant environmental liabilities that would have a material adverse effect on the Company's business, results of operations and liquidity; however, no assurances can be given that existing environmental studies with respect to any of Properties reveal all environmental liabilities, that any prior owner of a Property did not create any material environmental condition not known to the Company, or that a material environmental condition does not otherwise exist (or may exist in the future) as to any one or more Properties. If such a material environmental condition does in fact exist (or exists in the future), it could have a significant adverse impact upon the Company's financial condition, results of operations and liquidity. 1 ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. Explanatory Note: Pursuant to Item 7 (a)(4) of Form 8-K, this Form 8-K/A amends the Company's Form 8-K filed on June 17, 1998 to include the historical financial statements and proforma financial information required by Item 7(a) and (b) with respect to a substantial majority of the properties acquired by the Company since January 1, 1998 referred to in such Form 8-K. (a) Financial Statements Applicable to Real Estate Properties Acquired. Acquired Properties o Report of Independent Accountants o Combined Statements of Revenues and Certain Expenses for the year ended December 31, 1997. o Notes to Combined Statements of Revenues and Certain Expenses (b) Pro Forma Financial Information. Pro Forma (unaudited): o Pro Forma Consolidated Statements of Operations for the year ended December 31, 1997 and the three months ended March 31, 1998. o Notes and Management's Assumptions to the Pro Forma Consolidated Financial Statements (c) Exhibits 23.1 Consent of independent accountants 2 SIGNATURE 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 hereunto duly authorized. FIRST WASHINGTON REALTY TRUST, INC. (Registrant) By: /s/ James G. Blumenthal James G. Blumenthal Executive Vice President Chief Financial Officer Date: June 25, 1998 3 INDEX TO FINANCIAL STATEMENTS Acquired Properties: Page o Report of Independent Accountants..................................F-2 o Combined Statements of Revenues and Certain Expenses for the year ended December 31, 1997..................................................F-3 o Notes to Combined Statements of Revenues and Certain Expenses......F-4 First Washington Realty Trust, Inc. and Subsidiaries Pro Forma (unaudited): o Pro Forma Consolidated Statements of Operations for the year ended December 31, 1997 and the three months ended March 31, 1998........F-6 o Notes and Management's Assumptions to the Pro Forma Consolidated Financial Statements..................................F-8 o Consent of Independent Accountants..................... ...........F-10 F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of First Washington Realty Trust, Inc. We have audited the combined statement of revenues and certain expenses of the Acquired Properties (as defined in footnote 1 of this statement) for the year ended December 31, 1997. This financial statement is the responsibility of the Acquired Properties' management. Our responsibility is to express an opinion on this financial statement 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 combined statement of revenues and certain expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined statement of revenues and certain expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in the Form 8-K/A of First Washington Realty Trust, Inc., and is not intended to be a complete presentation of the Acquired Properties' revenues and expenses and may not be comparable to results from future operations of the Acquired Properties. In our opinion, the financial statement referred to above presents fairly, in all material respects, the combined revenues and certain expenses as described in Note 1 of the Acquired Properties for the year ended December 31, 1997, in conformity with generally accepted accounting principles. Washington, D.C. June 25, 1998 F-2 Acquired Properties Combined Statements of Revenues and Certain Expenses (dollars in thousands) Year Ended December 31, 1997 Minimum Base Rents $2,694 Tenant Reimbursement Income 630 Percentage Rents 202 Other Income 5 Total Revenues 3,531 Real Estate Tax Expense 293 Recoverable Operating Expenses 368 Total Certain Expenses 661 Revenues in Excess of Certain Expenses $2,870 ======
The accompanying notes are an integral part of the statements of revenues and certain expenses. F-3 NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES (dollars in thousands) 1. Basis of Presentation The combined statements of revenues and certain expenses (the "Statement") relate to the operations of the two shopping center properties ( the "Acquired Properties") which have been acquired by First Washington Realty Limited Partnership (the "Company"), whose general partner is First Washington Realty Trust, Inc. The accompanying combined statement include certain accounts of the following properties: Percent Location of GLA Leased Significant Tenants Name Property Area (sf) 3/31/98 Lease Expiration Date Bowie Plaza Bowie, MD 104,036 98.3% Giant(2002),CVS(1998) Watkins Park Plaza Mitchellville, MD 112,143 98.7% Safeway(2007),CVS(2001) ------- ----- Total/Average 216,179 98.5% ======== ====== Revenues and expenses are recorded using the accrual basis of accounting. The accompanying combined statement is not representative of the actual operations for the year presented as certain expenses which may not be comparable to the expenses expected to be incurred by the Company in the proposed future operations of the Acquired Properties have been excluded. The Company is not aware of any material factors relating to the Acquired Properties that would cause the reported financial information not to be necessarily indicative of future operating results. Expenses excluded consist of interest, depreciation and amortization, leasing commission and management fees which in the opinion of management, are not directly related to the future operations of the properties. The unaudited interim combined statements of revenues and certain expenses of the Acquired Properties are prepared pursuant to the Securities and Exchange Commission's rules and regulations and generally accepted accounting principles applicable to interim financial statements. In the opinion of management, all adjustments, consisting solely of normal recurring adjustments, necessary for fair presentation of the combined statements of revenues and certain expenses for the interim period have been included. The current period's results of operations are not necessarily indicative of results which ultimately may be achieved for the year. F-4 Operating Leases In addition to the minimum rent, certain tenant leases provide for the reimbursement of certain operating expenses and/or percentage rent in the amount of a percentage of annual gross sales in excess of a specified base sales amount. Minimum rents presented for the year ended December 31, 1997 contain straight-line adjustments for rental revenue increases or abatements in accordance with generally accepted accounting principles. The aggregate rental revenue increases resulting from the straight-line adjustments for the year ended December 31, 1997 were $36. The following tenant accounted for 10% or more of the total rents for 1997: Safeway. . . . . . . . . . $ 359 The properties are leased to tenants under operating leases with expiration dates extending to the year 2014. Minimum future base rentals under noncancelable operating leases as of December 31, 1997 are approximately as follows: 1998 . . . . . . . . . . . . . . . $2,714 1999 . . . . . . . . . . . . . . . . 2,355 2000 . . . . . . . . . . . . . . . . 2,198 2001 . . . . . . . . . . . . . . . . 1,749 2002 . . . . . . . . . .. . . . . . 1,331 2003 and thereafter . . .. . 4,921 ----- $15,268 F-5 FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share amounts) For three months ended March 31, 1998 Acquired Historical Properties Adjustments Pro Forma (A) (unaudited) Revenue: Minimum rents $12,928 $347 $ $13,275 Tenant reimbursements 3,088 76 - 3,164 Percentage rents 396 31 - 427 Other income 228 (2) - 226 ------- ---------- -------- --------- Total revenues 16,640 452 - 17,092 ------ -------- -------- ------- Expenses: Property operating and maintenance 4,143 82 11 (C) 4,236 General and administrative 837 - - 837 Interest 4,851 165 (D) 5,016 Depreciation and amortization 3,265 - 93 (E) 3,358 ------ --------- -------- -------- Total expenses 13,096 82 269 13,447 ------ -------- ------- ------- Income before gain on sale of properties, income from Management Company,extraordinary item, minority interest and distribution to Preferred Stockholders 3,544 370 (269) 3,645 Gain on sale of properties 1,683 - - 1,683 Income from Management Company 280 - - 280 ------ -------- --------- ------- Income before extraordinary item, minority interest and distributions to Preferred Stockholders 5,507 370 (269) 5,608 Extraordinary item - loss on early extinguishment of debt (358) - - (358) -------- ---------- --------- --------- Income before minority interest and distributions to Preferred Stockholders 5,149 370 (269) 5,250 Income allocated to minority interest(1,065) - 46 (F) (1,019) ------- ---------- ------- -------- Income before distributions to Preferred Stockholders 4,084 370 (223) 4,231 Distributions to Preferred Stockholders (1,410) - - (1,410) ------- ---------- ----------- -------- Income allocated to Common Stockholders $2,674 $370 ($223) $2,821 ========= ======= ======== ======== Earnings per Common Share - Basic Income before extraordinary item $0.41 $0.43 Extraordinary item (0.05) (0.05) ----------- ----------- Net income $0.36 $0.38 ========== ========== Earnings per Common Share - Diluted Income before extraordinary item $0.41 $0.43 Extraordinary item (0.05) (0.05) ---------- ---------- Net income $0.36 $0.38 ========= ========== Shares of Common Stock, in thousands - Basic 7,380 7,380 Dilutive effect of employee stock option 101 101 ---------- ----------- Shares of Common Stock, in thousands - Diluted 7,481 7,481 ========= ==========
The accompanying notes and management assumptions are an integral part of these consolidated pro forma financial statements. F-6 FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in thousands, except per share amounts) Year Ending December 31, 1997 Acquired Other Historical Properties Adjustments Pro Forma (B) (unaudited) Revenues: Minimum rents $43,857 $2,694 $ - $46,551 Tenant reimbursements 9,506 630 - 10,136 Percentage rents 1,060 202 - 1,262 Other income 1,211 5 - 1,216 ----- ------ ------ -------- Total revenues 55,634 3,531 - 59,165 ------ ------- ------ ------- Expenses: Property operating and maintenance 13,522 661 87 (C) 14,270 General and administrative 3,363 - - 3,363 Interest 18,416 - 1,239 (D) 19,655 Depreciation and amortization 11,172 - 686 (E) 11,858 ------ ------- ------ -------- Total expenses 46,473 661 2,012 49,146 ------ -------- ------ -------- Income before gain on sale of properties, income from Management Company, extraordinary item, minority interest and distributions to Preferred Stockholders 9,161 2,870 (2,012) 10,019 Gain on sale of properties 549 - - 549 Income from Management Company 433 - - 433 ------ ------- ------ -------- Income before extraordinary item, minority interest and distributions to Preferred Stockholders 10,143 2,870 (2,012) 11,001 Extraordinary item - Loss on early extinguishment of debt (954) - - (954) --------- ------- -------- -------- Income before minority interest and distributions to Preferred Stockholders 9,189 2,870 (2,012) 10,047 Income allocated to minority interest (1,579) - (178) (F) (1,757) --------- -------- ------- -------- Income before distributions to Preferred Stockholders 7,610 2,870 (2,190) 8,290 Distributions to Preferred Stockholders (5,641) - - (5,641) --------- -------- ------- -------- Income allocated to Common Stockholders $1,969 $2,870 ($2,190) $2,649 ======= ======= ======== ======= Earnings per Common Share - Basic Income before extraordinary item $0.52 $0.64 Extraordinary item (0.17) (0.17) ------ -------- Net income $0.35 $0.47 ====== ====== Earnings per Common Share - Diluted Income before extraordinary item $0.51 $0.63 Extraordinary item (0.17) (0.17) ------- -------- Net income $0.34 $0.46 ====== ====== Shares of Common Stock, in thousands - Basic 5,663 5,663 Dilutive effect of employee stock options 67 67 ------- -------- Shares of Common Stock, in thousands - Diluted 5,730 5,730 ===== ======
The accompanying notes and management assumptions are an integral part of these consolidated pro forma financial statements. F-7 FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES NOTES AND MANAGEMENT'S ASSUMPTIONS TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (dollars in thousands) (unaudited) 1. Basis of Presentation: The accompanying unaudited Pro Forma Consolidated Statements of Operations are presented as if: (i) For the year ending December 31, 1997, a substantial majority of properties acquired in 1998, i.e., Bowie Plaza and Watkins Park Plaza (together the "Acquired Properties") had been consummated as of January 1, 1997; (ii)For the three months ending March 31, 1998, a substantial majority of the properties acquired in 1998, i.e., Bowie Plaza and Watkins Park Plaza (together the "Acquired Properties") had been consumated as of January 1, 1998. These pro forma consolidated financial statements should be read in conjunction with the historical financial statements and notes thereto. In management's opinion, all adjustments necessary to reflect the effects of the acquisition of the Acquired Properties have been made. The unaudited pro forma consolidated financial statements are not necessarily indicative of what the actual results of operations of the Company would have been assuming the acquisition of the Acquired Properties had been completed as of January 1, 1997, nor are they indicative of the results of operations for future periods. F-8 2 Adjustments to Pro Forma Consolidated Statement of Operations: (A) Reflects operations of the Acquired Properties prior to their acquisition by the company for the three months ended March 31, 1998. (B) Reflects the historical 1997 operations of the Acquired Properties. (C) Reflects the net increase in property operating maintenance costs relating to management fees to be incurred. (D) Reflects the increase in interest expense relating to the Mortgage Notes and line of credit draws used to finance the acquisition of the Acquired Properties. (E) Reflects the increase in depreciation and amortization. Depreciation is calculated using the straight-line method over 31.5 years. It is assumed that 80% of the acquisition cost basis is allocated to the building. (F) Reflects limited partner's interest in the Operating Partnership as follows: Three Months Ended Year Ended March 31, 1998 Dec 31, 1997 Pro forma income before distributions and minority interest $5,250 $10,047 ====== ======= Less: Distributions to Preferred Stockholders $1,410 $5,641 Less: Distributions to Preferred Unitholders 262 1,046 -------- --------- Income available to Common Shareholders $3,578 $3,360 ====== ====== Income allocated to common minority interest (21.2%) $757 $711 ======= ======= Total income allocated to minority interest $1,019 $1,757 ====== ======
F-9 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the registration statement of First Washington Realty Trust, Inc. and Subsidiaries on Form S-3 (File No. 333-24017) of our report dated June 25, 1998, on our audit of the combined Statement of Revenues and Certain Expenses for the Acquired Properties (as defined in footnote No. 1 of that statement) for the year ended December 31, 1997, which report is included in this Form 8-K/A. COOPERS & LYBRAND L.L.P. Washington, D.C. June 26, 1998 F-10 -----END PRIVACY-ENHANCED MESSAGE-----