<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 to
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 15, 1996
BRE PROPERTIES, INC.
- ------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Maryland 0-5305 94-1722214
- ------------------------------- ------------------------- ------------------
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, California 94104-5525
- ------------------------------------------ ----------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(415) 445-6530
- ------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(b) PRO FORMA FINANCIAL INFORMATION
Included in this amendment is the pro forma financial information
required to be filed in connection with the merger of Real Estate Investment
Trust of California into the Registrant, which was not available at the time
of the filing of the report being amended hereby.
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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.
BRE PROPERTIES, INC.
(Registrant)
Date: April 23, 1997 /s/LeRoy E. Carlson
-------------- -------------------
LeRoy E. Carlson
Executive Vice President,
Chief Financial Officer and Secretary
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BRE Properties, Inc.
Preface to Unaudited Pro Forma Condensed Statements of Operations
for the Six Months ended January 31, 1996
and the Year ended July 31, 1995
On March 15, 1996 (the "Effective Date"), BRE Properties, Inc., a Delaware
corporation ("BRE"), and Real Estate Investment Trust of California, a
California real estate investment trust ("RCT"), concluded a series of
transactions resulting in the merger of RCT with and into BRE (the "Merger")
in accordance with the terms and conditions of the Agreement and Plan of
Merger, dated October 2, 1995, among BRE on behalf of itself and BRE
Properties, Inc., a Maryland corporation and a wholly owned subsidiary of BRE
("BRE Maryland"), RCT and Real Estate Investment Trust of Maryland, a
Maryland real estate investment trust, as amended (the "Merger Agreement").
The Merger was unanimously approved by the boards of both companies and by
the requisite vote of the shareholders of both.
Under the terms of the Merger Agreement, each share of beneficial interest of
RCT ("RCT Merger Shares") issued and outstanding immediately prior to the
Merger was converted into the right to receive 0.57 of a share of the Class A
Common Stock of BRE Delaware ("BRE Delaware Stock") in a tax-free
transaction. In order to effect such conversion, 5,342,218 shares (prior to
the 100% stock dividend payable June 27, 1996) of the BRE Delaware Stock were
issued to those persons who were holders of RCT Merger Shares (the "RCT
Shareholders") immediately prior to the effectiveness of the Merger.
Also on the Effective Date and immediately after the effectiveness of the
Merger, BRE changed its state of incorporation from Delaware to Maryland
pursuant to a reincorporation merger with and into BRE Maryland (the
"Reincorporation Merger"). As a result of the Reincorporation Merger, each
share of BRE Delaware Stock issued and outstanding immediately after the
Merger and immediately prior to the Reincorporation Merger, including those
shares held by the former RCT Shareholders as a result of the Merger, was
converted into the right to receive one share of the Common Stock of BRE
Maryland in a tax-free transaction.
The following unaudited pro forma statements of operations for BRE are
presented as if the Merger had been consummated on August 1, 1994. This data
further assumes that BRE was reincorporated in Maryland, distributed at least
95% of its taxable income and met all other requirements to qualify as a REIT
and, therefore, incurred no federal or state income tax expense during the
period from August 1, 1994 to January 31, 1996. The data also presents the
effects of the Amended and Restated Non-Employee Director Stock Option Plan
as of August 1,1994. The Merger will be accounted for as an acquisition by
BRE under the purchase method of accounting in accordance with Accounting
Principles Board Opinion No. 16. In the opinion of BRE's management, all
material adjustments necessary to reflect the effects of these transactions
have been made.
The unaudited pro forma statements of operations are presented for
comparative purposes only and are not necessarily indicative of what the
actual results of operations of BRE would have been for the periods presented
had the Merger occurred on those dates, nor do they purport to represent the
results for future periods. The unaudited pro forma condensed statements of
operations should be read in conjunction with, and are qualified in their
entirety by, the respective historical financial statements and notes thereto
of BRE and RCT.
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Statement of Operations
Six Months ended January 31, 1996
<TABLE>
<CAPTION>
BRE RCT Pro Forma
Historical Historical Merger BRE as
(A) (B) Adjustments Adjusted
------------------------------------------------------------------------------
(Unaudited) (Unadudited)
<S> <C> <C> <C> <C>
(Dollars in thousands, except per share data)
Revenues:
Rental $32,305 $16,491 $ - $48,796
Interest and other 1,489 662 - 2,151
------------------------------------------------------------------------------
Total revenue 33,794 17,153 - 50,947
------------------------------------------------------------------------------
Expenses:
Real estate expenses 11,322 5,818 147 (D) 17,287
Depreciation and amortization 3,947 2,747 67 (E) 6,761
Interest expense 4,273 3,507 (77) (F) 7,703
General and administrative 1,773 429 (649) (G) 1,553
------------------------------------------------------------------------------
Total expenses 21,315 12,501 (512) 33,304
------------------------------------------------------------------------------
Income before gain on sales of investments 12,479 4,652 512 17,643
Net gain (loss) on sales of investments (899) 9,378 - 8,479
------------------------------------------------------------------------------
Net income $11,580 $14,030 $512 $26,122
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Net income per share $1.05 $1.60
------------------ -------------
Weighted average shares outstanding (H) 10,996 - - 16,353
</TABLE>
[Footnotes appear on following pages]
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Statement of Operations
Year ended July 31, 1995
<TABLE>
<CAPTION>
BRE RCT Pro Forma
Historical Historical Merger BRE as
(A) (C) Adjustments Adjusted
------------------------------------------------------------------------------
(Audited) (Unadudited)
<S> <C> <C> <C> <C>
(Dollars in thousands, except per share data)
Revenues:
Rental $60,158 $32,050 $ - $92,208
Interest and other 2,436 1,360 - 3,796
------------------------------------------------------------------------------
Total revenues 62,594 33,410 - 96,004
------------------------------------------------------------------------------
Expenses:
Real estate expenses 19,643 10,234 326 (D) 30,203
Depreciation and amortization 7,658 5,059 124 (E) 12,841
Interest expense 7,117 6,836 (196) (F) 13,757
General and administrative 4,991 1,013 (1,296) (G) 4,708
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Total expenses 39,409 23,142 (1,042) 61,509
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Income before gain on sales of investments 23,185 10,268 1,042 34,495
Net gain on sales of investments 2,370 - - 2,370
Provision for possible investment losses (2,000) - - (2,000)
------------------------------------------------------------------------------
Net income $23,555 $10,268 $1,042 $34,865
------------------------------------------------------------------------------
Net income per share $2.15 $2.14
------------------ -------------
------------------ -------------
Weighted average shares outstanding (H) 10,941 - - 16,264
</TABLE>
[Footnotes appear on following pages]
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Statement of Operations
Pro Forma Merger Adjustments
(A) Historical operating results of BRE for the periods indicated.
(B) Historical operating results of RCT for the six months ended January 31,
1996 (to correspond to BRE's year-to-date results for the period ending
January 31, 1996).
(C) Historical operating results of RCT for the twelve-month period from
August 1, 1994 to July 31, 1995 (to correspond to BRE's fiscal year ended
July 31, 1995).
(D) Net increase in real estate expenses as a result of the Merger as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
---------- ----------
<S> <C> <C>
Property management fees paid to outside firms by BRE $ (740) $ (1,450)
Labor and related costs from internalization of property
management which would have been incurred by BRE 356 713
Elimination of amortization of prepaid leasing commissions
eliminated by purchase accounting (39) (77)
Cost of additional earthquake insurance for RCT properties 85 170
Unit enhancement costs (for items such as carpets and
draperies) capitalized by RCT which would have been
expensed under BRE's accounting policy 425 850
Property tax increase due to California Proposition 13
reassessments of RCT properties acquired by BRE 60 120
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Pro forma adjustment $ 147 $ 326
---------- ----------
---------- ----------
</TABLE>
The foregoing data constitutes forward-looking information. Certain of the
pro forma adjustments are based on operating synergies and other cost savings
expected to be realized from the Merger. The cost and timing of integrating
the operations of the two companies are contingencies which are not fully
within the control of Management. Accordingly, it cannot be estimated with
any certainty as to when the expected cost savings will be realized, and
there may be differences between the expected savings and the actual results,
which differences could be material.
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Statement of Operations
Pro Forma Merger Adjustments (continued)
(E) Increase in depreciation charges due to recording the properties
acquired from RCT at BRE's purchase price, and the related depreciation
utilizing an estimated useful life of 40 years and a cost basis of
approximately $259 million (allocated 80% to buildings and improvements in
accordance with BRE's accounting policies), as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
---------- ----------
<S> <C> <C>
Pro forma depreciation expense on cost of depreciable assets
acquired $ 2,814 $ 5,183
Less: RCT historical depreciation (2,747) (5,059)
---------- ----------
67 124
---------- ----------
---------- ----------
(F) Decrease in interest expense as follows:
SIX MONTHS
ENDED YEAR ENDED
---------- ----------
Elimination of amortization of loan fees included in interest
expense related to deferred loan fees eliminated by
purchase accounting $ 77 $ 196
---------- ----------
Pro forma adjustment $ 77 $ 196
---------- ----------
---------- ----------
</TABLE>
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Statement of Operations
Pro Forma Merger Adjustments (continued)
(G) Net general and administrative cost savings derived from the actual
historical costs for those items which are expected to be eliminated or
reduced as a result of the Merger, the internalization of property
management for BRE multifamily and commercial investments, and the
changes in the BRE Amended and Restated Non-Employee Director Stock
Option Plan, as follows:
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED
---------- ----------
<S> <C> <C>
Costs related to internal property management charged to
real estate expenses above $ 185 $ 369
Professional fees 54 108
Elimination of RCT's corporate office 100 200
Salaries and benefits 82 165
Trustees' fees 60 119
Franchise taxes (assumed reincorporation in Maryland) 75 150
Shareholder reporting 38 75
Other 55 110
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Pro forma adjustment $ 649 $ 1,296
---------- ----------
---------- ----------
(H) Share amounts shown do not include the effect of the 100% stock dividend payable June 27, 1996.
</TABLE>
The foregoing data constitutes forward-looking information. Certain of the
pro forma adjustments are based on operating synergies and other cost savings
expected to be realized from the Merger. The cost and timing of integrating
the operations of the two companies are contingencies which are not fully
within the control of Management. Accordingly, it cannot be estimated with
any certainty as to when the expected cost savings will be realized, and
there may be differences between the expected savings and the actual results,
which differences could be material.
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BRE Properties, Inc.
Preface to Unaudited Pro Forma Condensed Balance Sheet
January 31, 1996
The following unaudited pro forma condensed balance sheet is presented as if
the Merger had been consummated on January 31, 1996. The Merger will be
accounted for as an acquisition by BRE under the purchase method of
accounting in accordance with Accounting Principles Board Opinion No. 16. In
the opinion of BRE's management, all material adjustments necessary to
reflect the effects of this transaction have been made as explained in the
notes to the condensed balance sheet.
The unaudited pro forma condensed balance sheet is presented for comparative
purposes only and is not necessarily indicative of what the actual financial
position of BRE would have been at January 31, 1996, nor does it purport to
represent the future financial position of BRE. The unaudited pro forma
condensed balance sheet should be read in conjunction with, and is qualified
in its entirety by, the respective historical financial statements and notes
thereto of BRE and RCT.
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Balance Sheet
January 31, 1996
<TABLE>
<CAPTION>
BRE RCT Pro Forma
Historical Historical Merger BRE as
(A) (C) Adjustments Adjusted
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Equity investments in real estate, net $321,552 $191,221 $68,975 (C) $581,748
Other assets, including cash 34,936 15,910 (4,897) (C)
(942) (C)
(2,781) (D) 42,226
------------------------------------------------------------------------------
Total assets $356,488 $207,131 $60,355 $623,974
------------------------------------------------------------------------------
Liabilities
Accounts payable and other liabilities 3,494 2,419 2,300 (C) 8,213
Mortgages and other notes payable 112,176 91,712 - 203,888
------------------------------------------------------------------------------
Total liabilities 115,670 94,131 2,300 212,101
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Shareholders' equity
Common shares 109 - 54 (E) 163
Additional paid-in capital 212,246 116,140 57,642 (E)
(2,781) (D) 383,247
Distributions less than/(in excess of)
earnings and realized gain on sales of
properties 28,463 (3,140) 3,140 (E) 28,463
------------------------------------------------------------------------------
Total shareholders' equity 240,818 113,000 58,055 411,873
------------------------------------------------------------------------------
Total liabilities and shareholders' equity $356,488 $207,131 $60,355 $623,974
------------------------------------------------------------------------------
</TABLE>
[Footnotes appear on following pages]
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Balance Sheet
Pro Forma Merger Adjustments
(A) Historical Balance Sheet of BRE as of January 31, 1996.
(B) Historical Balance Sheet of RCT as of January 31, 1996.
(C) Adjustments to record the assets acquired and liabilities assumed in the
Merger in accordance with the purchase method of accounting, based upon a
purchase price of $275.2 million, which assumes a value of $32.54 per share
(prior to the 100% stock dividend payable June 27, 1996) of BRE Common
Stock issued as consideration, as follows:
<TABLE>
<CAPTION>
Purchase
Price
Prior Basis Adjustment Total
----------------------------------------------------------
<S> <C> <C> <C>
Issuance of shares of BRE Common Stock $ - $ 173,836 $ 173,836
Assumption of mortgage and other notes payable 91,712 - 91,712
Other liabilities assumed or incurred 2,419 2,300 4,719
Property acquisition costs, including title, legal and
environmental due diligence - 4,897 4,897
----------------------------------------------------------
Basis in acquired assets $ 94,131 $ 181,033 275,164
Less historical cost of $207,131 net of $942 of unamortized
leasing costs and loan fees eliminated by purchase
accounting (206,189)
-------------
Excess of basis in net assets acquired over historical cost $ 68,975
-------------
-------------
Composition of pro forma adjustment:
Equity investment in real estate, net $ 68,975
Payment of property acquisition costs
(assumed paid on merger date) (4,897)
Other liabilities incurred (2,300)
Elimination of unamortized leasing costs and loan fees (942)
-------------
Net equity resulting from acquisition $ 60,836
-------------
</TABLE>
(D) Adjustment to record payment of $2,781 of the costs of stock issuance
charged to equity.
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BRE Properties, Inc.
Unaudited Pro Forma Condensed Balance Sheet
Pro Forma Merger Adjustments (continued)
(E) Adjustments to BRE capital accounts to record the issuance of 5,342,218
shares of BRE Common Stock at $32.54 per share (prior to the 100% stock
dividend payable June 27, 1996), in exchange for all of the outstanding
RCT Shares.
<TABLE>
<CAPTION>
Distributions
Common Paid-In in Excess of
Shares Capital Earnings Total
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Issuance of BRE Common Stock $ 54 $ 173,782 $ - $ 173,836
RCT Shares - (116,140) 3,140 (113,000)
-----------------------------------------------------------------
$ 54 $ 57,642 $ 3,140 60,836
----------------------------------------------
Less: costs of stock issuance (2,781)
-------------
Net adjustment to shareholders' equity $ 58,055
-------------
</TABLE>
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