-----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, BjSN8jNJcCoVryMzT/jtFtB5yhgZBspGk53kGPAk3efYgE+FnEbAJLfxa0ICOHhF g7mKQd+LSzZZB+KbG8ujpg== /in/edgar/work/20000814/0001050502-00-001030/0001050502-00-001030.txt : 20000921 0001050502-00-001030.hdr.sgml : 20000921 ACCESSION NUMBER: 0001050502-00-001030 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERIVEST PROPERTIES INC CENTRAL INDEX KEY: 0000927102 STANDARD INDUSTRIAL CLASSIFICATION: [6798 ] IRS NUMBER: 841240264 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-14462 FILM NUMBER: 697267 BUSINESS ADDRESS: STREET 1: 1800 GLENARM PLACE STREET 2: SUITE 500 CITY: DENVER, STATE: CO ZIP: 80202 BUSINESS PHONE: 3032971800 MAIL ADDRESS: STREET 1: 7100 GRANDVIEW AVE STREET 2: SUITE 1 CITY: ARVADA STATE: CO ZIP: 80002 10QSB 1 0001.txt 10QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended June 30, 2000. OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period from to ---------------- ------------------- Commission file number 1-14462 AmeriVest Properties Inc. -------------------------- (Exact name of small business issuer as specified in its charter.) Maryland 84-1240264 -------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1800 Glenarm Place, Suite 500 Denver, Colorado 80202 - ---------------------------------- --------------------- (Zip Code) (303) 297-1800 ---------------------------------------------- (Issuer's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No As of August 11, 2000 the Registrant had outstanding 2,493,260 shares of common stock, par value $.001. Transitional Small Business Disclosure Format (check one): Yes No X ------- ------- AMERIVEST PROPERTIES INC. AND SUBSIDIARIES FORM 10-QSB JUNE 30, 2000 Table of Contents ----------------- Page No. Part I Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets as of June 30, 2000 (Unaudited) and December 31, 1999 3 Condensed Consolidated Statements of Operations for the Three Months and Six Months ended June 30, 2000 and 1999 (Unaudited) 4 Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2000 and 1999 (Unaudited) 5 Notes to Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Part II Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 2
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS ASSETS June 30, December 31, 2000 1999 ------ ------ (Unaudited) ASSETS Investment in real estate Land $ 7,098,379 $ 6,052,418 Buildings and improvements 32,575,927 27,643,666 Furniture, fixtures and equipment 322,312 323,838 Tenant improvements 718,557 670,267 Less accumulated depreciation and amortization (7,165,288) (6,610,743) ------------ ------------ Net Investment in Real Estate 33,549,887 28,079,446 Cash and cash equivalents 491,374 458,336 Escrow deposit -- 509,556 Tenant accounts receivable 40,153 61,886 Straight-line rents receivable 126,279 -- Deferred financing costs, net 570,615 547,609 Tenant leasing commissions, net 460,966 52,005 Prepaid expenses and other assets 628,530 605,620 ------------ ------------ $ 35,867,804 $ 30,314,458 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Mortgage loans and notes payable $ 27,790,393 $ 22,467,915 Accounts payable and accrued expenses 496,516 186,802 Accrued interest 144,987 142,551 Accrued real estate taxes 509,381 624,880 Prepaid rents and security deposits 709,691 366,072 Dividends payable 267,462 267,462 ------------ ------------ Total Liabilities 29,918,430 24,055,682 ------------ ------------ STOCKHOLDERS' EQUITY Preferred stock, $.001 par value Authorized - 5,000,000 shares Issued and outstanding - none -- -- Common stock, $.001 par value Authorized - 15,000,000 shares Issued and outstanding - 2,228,850 shares 2,229 2,229 Capital in excess of par value 8,179,723 8,179,723 Distributions in excess of accumulated earnings (2,232,578) (1,923,176) ------------ ------------ Total Stockholders' Equity 5,949,374 6,258,776 ------------ ------------ $ 35,867,804 $ 30,314,458 ============ ============ The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 3
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Ended Six Months Ended June 30, June 30, (Unaudited) (Unaudited) 2000 1999 2000 1999 ---------- ---------- ---------- ---------- REAL ESTATE OPERATING REVENUE Rental Revenue Commercial properties $1,415,504 $ 958,412 $2,713,186 $1,959,514 Storage properties 329,132 352,936 644,327 680,638 ---------- ---------- ---------- ---------- 1,744,636 1,311,348 3,357,513 2,640,152 ---------- ---------- ---------- ---------- REAL ESTATE OPERATING EXPENSES Property operating expenses Operating expenses 478,525 375,255 890,698 709,296 Real estate taxes 173,172 127,414 330,251 267,059 Management fees 81,114 22,126 159,967 44,224 General and administrative 109,728 157,318 243,549 311,236 Interest 517,267 357,080 954,760 720,644 Depreciation and amortization 281,779 246,537 569,657 490,318 ---------- ---------- ---------- ---------- 1,641,585 1,285,730 3,148,882 2,542,777 ---------- ---------- ---------- ---------- OTHER INCOME Interest income 7,817 5,376 16,891 5,376 ---------- ---------- ---------- ---------- 7,817 5,376 16,891 5,376 ---------- ---------- ---------- ---------- NET INCOME $ 110,868 $ 30,994 $ 225,522 $ 102,751 ========== ========== ========== ========== NET INCOME PER COMMON SHARE: BASIC $ 0.05 $ 0.02 $ 0.10 $ 0.06 ========== ========== ========== ========== DILUTED $ 0.05 $ 0.02 $ 0.10 $ 0.06 ========== ========== ========== ========== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC 2,228,850 1,658,770 2,228,850 1,658,770 ========= ========= ========== ========== DILUTED 2,229,687 1,664,145 2,229,830 1,664,145 ========= ========= ========== ========== The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 4
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, 2000 1999 ----------- ----------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 225,522 $ 102,751 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 595,670 490,318 Mortgage interest expense accrual 46,836 -- (Increase) in straight-line rents receivable (126,279) -- Changes in assets and liabilities Decrease in Tenant accounts receivable 21,733 393 (Increase) decrease in prepaid expenses & other assets (26,865) 84,324 Increase in accounts payable 309,715 62,985 Increase (decrease) in accrued liabilities 230,556 (195,832) ----------- ----------- Net cash provided by operating activities 1,276,888 544,939 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Release of escrow deposit 509,556 -- Increase in leasing commissions (419,937) (9,557) Additions to investments in real estate (6,025,167) (88,592) ----------- ----------- Net cash flows from investing activities (5,935,548) (98,149) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Additions to mortgages and notes payable 5,444,860 -- Payments on mortgage loans (169,218) (118,808) Increase in loan financing costs (49,020) -- Dividends paid (534,924) (398,104) ----------- ----------- Net cash flows from financing activities 4,691,698 (516,912) ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 33,038 (70,122) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 458,336 441,316 ----------- ----------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 491,374 $ 371,194 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest during the period $ 879,564 $ 714,435 =========== =========== The accompanying notes to condensed consolidated financial statements are an integral part of these statements. 5
AMERIVEST PROPERTIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SIX MONTHS ENDED JUNE 30, 2000 1. General ------- The unaudited financial statements included herein were prepared from the records of the Company in accordance with generally accepted accounting principles in the United States and reflect all adjustments which are, in the opinion of management, necessary to provide a fair statement of the results of operations and financial position for the interim periods. Such financial statements generally conform to the presentation reflected in the Company's Form 10-KSB filed with the Securities and Exchange Commission for the year ended December 31,1999. The current interim period reported herein should be read in conjunction with the Company's Form 10-KSB for the year ended December 31, 1999. The results of operations for the six months ended June 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. 2. Agreement with Sheridan Realty Advisors, LLC -------------------------------------------- Effective January 1, 2000, all of the Company's properties are managed under an agreement with Sheridan Realty Advisors, LLC ("Sheridan"), which also manages day-to-day operations of the Company and assists and advises the Board of Directors on real estate acquisitions and investment opportunities. Certain senior members of Sheridan are members of the Company's management team and of the Company's Board of Directors. Sheridan receives an administrative fee and a property management and accounting fee for these services. Our agreement with Sheridan provides that the cost for these services in fiscal year 2000 will be no greater than the costs incurred by us for providing these services ourselves, or from obtaining them from other outside sources, in fiscal year 1999. In addition, Sheridan may receive incentive compensation in the form of five-year warrants to purchase up to 750,000 shares of our common stock at $5.00 per share and an advisory fee based on new property acquisitions. Issuance of the warrants was approved by the shareholders at the annual meeting on June 6, 2000. According to the agreement, 225,000 of these warrants were granted and vested on the approval date. The vested warrants have an estimated fair value of $6,712, which are being amortized over the life of this agreement. 3. Stock Offering -------------- On March 29, 2000, our Registration Statement became effective with the Securities and Exchange Commission for an offering of units consisting of common stock and warrants. The offering was for a maximum of 300,000 units ($3 million), and the units were offered at a price of $10 each. Each unit consists of two shares of common stock and one redeemable common stock purchase warrant. 6 The offering period has been extended to August 31, 2000, but may be terminated earlier at the discretion of the Board. As of July 31, 2000, approximately $1,400,000 had been raised. The proceeds from the sale of these units, after payment of expenses of the offering, will be used to acquire real estate properties, to repay debt and/or to increase working capital. 4. Acquisitions and Dispositions ----------------------------- On February 24, 2000, the Company entered into an Agreement of Sale to purchase for $5.9 million a three-story office building containing approximately 62,000 square feet on approximately six acres of land in southeast Denver, Colorado. The transaction closed on May 25, 2000. Funds for closing included approximately $514,000 being held in escrow and on deposit as part of the "1031 Exchange" from the sale of the Broadway property, together with mortgage financing and short-term financing which was partially repaid in August 2000 with proceeds from the stock offering. On June 6, 2000, the Company entered into a contract to sell its four self-storage facilities for $8,400,000. This sale is expected to close on August 25, 2000 and the preliminary expected gain on this sale is approximately $2.4 million. The proceeds from this sale will be used to complete an IRS Section 1031 exchange into office assets. Item 2. Management's Discussion and Analysis of Financial Condition and --------------------------------------------------------------- Results of Operations. --------------------- The following discussion and analysis of the consolidated financial condition and results of operations should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company's Form 10-KSB and elsewhere. Results Of Operations --------------------- Three Months Ended June 30, 2000 Compared With Three Months Ended June 30, 1999. - -------------------------------------------------------------------------------- Revenues for second quarter 2000 increased approximately $433,000, and operating expenses, real estate taxes, interest, and depreciation and amortization increased approximately $103,000, $46,000, $160,000 and $35,000, respectively, for a total increase of $344,000 as compared with June 30, 1999. Such increases resulted primarily from inclusion of the operations of the Keystone Office Park as of July 1, 1999 and the operations of Panorama Falls office building for the month of June, 2000, offset by the elimination of income and expenses from the operations of the Broadway property which was sold on December 13, 1999. Revenues for the second quarter 2000 were increased by approximately $126,000 of straight-line rents, primarily from the Panorama Falls office building. Management fees increased by approximately $59,000 and general and administrative expenses decreased approximately $48,000, both of which were due primarily to the acquisition of Keystone Office Park and the management agreement with Sheridan Realty Advisors, LLC in 2000 versus internal management in 1999. The Company also had interest income of $7,818 for the 2000 period, as 7 compared with $5,376 for the 1999 period, primarily as a result of funds being held in escrow during the quarter from the sale of the Broadway property for an IRS Section 1031 exchange. Net income for the three months ended June 30, 2000 was $110,868, or $.05 per share (basic and diluted), as compared to $30,994, or $.02 per share (basic and diluted), for the three months ended June 30, 1999. Six Months Ended June 30, 2000 Compared With Six Months Ended June 30, 1999. - --------------------------------------------------------------------------- Revenues for the first six months of 2000 increased approximately $717,000, and operating expenses, real estate taxes, interest, and depreciation and amortization increased approximately $181,000, $63,000, $234,000 and $79,000, respectively, for a total increase of $557,000 as compared with June 30, 1999. Such increases resulted primarily from inclusion of the operations of the Keystone Office Park as of July 1, 1999 and the operations of Panorama Falls office building for the month of June, 2000, offset by the elimination of income and expenses from the operations of the Broadway property which was sold on December 13, 1999. Revenues for the period ended June 30, 2000 were increased by approximately $126,000 of straight-line rents, primarily from the Panorama Falls office building. Management fees increased by approximately $116,000 and general and administrative expenses decreased approximately $68,000, both of which were due primarily to the acquisition of Keystone Office Park and the management agreement with Sheridan Realty Advisors, LLC in 2000 versus internal management in 1999. The Company also had interest income of $16,891 for the 2000 period, as compared with $5,376 for the 1999 period, primarily as a result of funds being held in escrow from the sale of the Broadway property for an IRS Section 1031 exchange. Financial Condition, Liquidity And Capital Resources ---------------------------------------------------- IRS Section 1031 Exchange - ------------------------- On December 13, 1999, we completed the sale of our Broadway industrial office and showroom building in Denver, Colorado for $2.1 million, resulting in a gain on the sale of the property of approximately $720,000. On February 24, 2000, the Company entered into an Agreement of Sale to purchase for $5.9 million a three-story office building containing approximately 62,000 square feet on approximately six acres of land in southeast Denver, Colorado. The transaction closed on May 25, 2000. Funds for closing included approximately $514,000 being held in escrow and on deposit as part of the "1031 Exchange" from the sale of the Broadway property, together with mortgage financing and short-term financing which was partially repaid in August 2000 with proceeds from the stock offering. On June 6, 2000, the Company entered into a contract to sell its four self-storage facilities for $8,400,000. This sale is expected to close on August 25, 2000 and the preliminarily expected gain on this sale is approximately $2.4 million. The proceeds from this sale will be used to complete an IRS Section 1031 exchange into office building assets. 8 From December 31, 1999 to June 30, 2000, net investment in real estate increased approximately $5,470,500. The net increase was primarily due to the acquisition of the Panorama Falls office building plus other capitalized improvements of approximately $166,000, less normal depreciation for the six-month period of approximately $570,000. At June 30, 2000, the Company had approximately $491,000 of cash and cash equivalents, including approximately $267,500 of cash to be utilized for a stockholder dividend distribution, which was paid on July 17, 2000. Tenant receivables decreased by approximately $22,000 compared to 1999 due to normal collection procedures. Straight-line rents receivable increased by approximately $126,000 due primarily to the addition of the Panorama Falls office building. Deferred financing costs decreased approximately $23,000 due to normal amortization. Tenant leasing commissions increased by approximately $409,000 as a result of leasing activity at Keystone office Park and the Panorama Falls office building. Prepaid expenses and other assets increased by approximately $23,000 primarily as a result of normal business fluctuations. Mortgage loans payable increased by approximately $5,322,500 due to the addition of the mortgage on the Panorama Falls office building less scheduled principal payments. Accounts payable and accrued expenses, and prepaid rents and security deposits increased by approximately $310,000 and $343,500, respectively, due primarily to deferred leasing commissions on the major tenant at the Panorama Falls office building and a $335,000 security deposit from the same tenant. Accrued interest and dividends payable remained constant. Accrued real estate taxes decreased by approximately $115,500 due to the payment of 1999 real estate taxes in the first half of 2000, plus normal accruals of current taxes. The Company desires to acquire additional properties and, in order to do so, it will need to raise additional debt or equity capital. The Company also intends to obtain credit facilities for short and long-term borrowing with commercial banks or other financial institutions. The issuance of such securities or increase in debt for additional properties, of which there is no assurance on the ability to obtain additional debt or equity capital, could adversely affect the amount of dividends paid to stockholders. Management believes that the cash flow from its properties, together with its existing bank line of credit, will be sufficient to meet the Company's working capital needs for the next year. The Company has a short-term revolving credit line from Norwest Bank Colorado in the amount of $300,000. At June 30, 2000, the Company had an outstanding balance on the line of credit of $300,000. This was used as a short-term loan to close the purchase of the Panorama Falls office building and was paid down completely in August 2000 from the initial proceeds of the Company's offering. Management believes that inflation should not have a material adverse effect on the Company. The Company's office leases require the tenants to pay increases in operating expenses, and the self-storage leases are short-term so 9 that there are no contractual restraints against increasing rents to attempt to respond to inflationary pressures, if any inflationary pressures should materialize. Year 2000 Compliance - -------------------- Year 2000 compliance is the ability of computer hardware and software to respond to the problems posed by the fact that computer programs traditionally have used two digits rather than four digits to define an applicable year. Problems related to year 2000 compliance could result in a system failure or miscalculations causing interruption of operations, including temporary inability to send invoices or engage in normal business activities or to operate equipment such as elevators and air conditioning units installed in our buildings. Prior to December 31, 1999, we evaluated all our systems that may have had year 2000 issues. We also surveyed our major vendors and suppliers for year 2000 compliance. Our cost of year 2000 compliance was not material. To date, neither we nor any of our service contractors have encountered any year 2000 problems. Our contingency plans if year 2000 issues arise include manual record keeping and use of alternate suppliers. New Accounting Principles - ------------------------- The FASB recently issued Statement of Financial Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"), which requires that companies recognize all derivatives as either assets or liabilities in the balance sheet at fair value. Under SFAS 133, accounting for changes in fair value of a derivative depends on its intended use and designation. SFAS 133 is effective for fiscal years beginning after June 15, 2000. The Company is currently assessing the effect of this new standard. In December 1999, the staff of the Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin No. 101 ("SAB 101") "Views on Selected Revenue Recognition Issues" which provides the staff's views in applying generally accepted accounting principles to selected revenue recognition issues. During July 2000, the SEC delayed the effective date of SAB 101 to the fourth quarter of 2000, retroactive to January 1, 2000. The Company is currently assessing the effect of implementing SAB 101. This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Exchange Act of 1934. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which the forward-looking statements are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. See the Company's Annual Report on Form 10-KSB for additional statements concerning important factors, including occupancy and rental rates and operating costs, that could cause actual results to differ materially from the Company's expectations. 10 Part II. Other Information Item 5. Other Information ----------------- None. Item 6. Exhibits And Reports On Form 8-K. --------------------------------- (a) The following Exhibit is filed as part of this Quarterly Report on Form 10-QSB: 27. Financial Data Schedule (b) On January 18, 2000, the Registrant filed a Current Report on Form 8-K describing the agreement with Sheridan Realty Advisors, LLC which became effective on January 1, 2000. (c) On April 7, 2000, the Registrant filed a Form 8-K describing the appointment of Arthur Andersen LLP as its auditors. (d) On June 9, 2000, the Registrant filed a Form 8-K describing the acquisition of the Panorama Falls office building on May 25, 2000. 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. AMERIVEST PROPERTIES INC. August 12, 2000 By: /s/ D. Scott Ikenberry ----------------------------- D. Scott Ikenberry Chief Financial Officer 11 EX-27 2 0002.txt FDS
5 6-MOS DEC-31-2000 JUN-30-2000 491,374 0 166,432 0 0 0 40,715,175 (7,165,288) 35,867,804 0 27,790,393 0 0 2,229 5,947,145 35,867,804 3,357,513 3,357,513 0 3,148,882 0 0 954,760 225,522 0 0 0 0 0 225,522 .10 .10
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