<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to
FORM 8K/A
Amendment to Application or Report
Filed pursuant to Section 12, 13 or 15(d)
of the Securities Exchange Act of 1934
BRE PROPERTIES, INC.
- -------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
The undersigned hereby amends the following items, financial statements,
exhibits or other portions of its Current Report on Form 8-K and Amendment No. 1
to Form 8-K/A as set forth in the pages attached hereto:
Item 7. Financial statements, Pro Forma Information and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
BRE PROPERTIES, INC.
Date: April 23, 1997 By: /s/ LeRoy E. Carlson
----------------------------------------
LeRoy E. Carlson
Executive Vice President and
Chief Financial and Accounting Officer
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA INFORMATION AND EXHIBITS
BRE PROPERTIES, INC.
PRO FORMA STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1996
This unaudited pro forma statement of operations reflects the results of
operations of BRE Properties, Inc. ("BRE") for the year ended December 31,
1996, giving effect to the acquisition by BRE of Promontory Point Apartments,
San Ramon, California for $43,700,000 (completed on December 31, 1996), as if
this acquisition had occurred on January 1, 1996. In addition, the pro forma
data assumes that this acquisition was financed in part with proceeds from
BRE's lines of credit (totaling $150,000,000), as if such borrowings had
occurred on January 1, 1996. In addition, this proforma statement of
operations reflects the merger of BRE with Real Estate Investment Trust of
California ("RCT") (the "Merger") completed on March 15, 1996 as if the
Merger had occurred on January 1, 1996 and the acquisition of Foster's
Landing Apartments (completed on September 27, 1996) as if the acquisition
had occurred on January 1, 1996. In the opinion of management all
adjustments necessary to present fairly such pro forma data have been made.
The unaudited pro forma statement of operations should be read in
conjunction with the financial statements and notes thereto filed as part of
the transition Form 10-K for the year ended December 31, 1996. The unaudited
pro forma statement of operations is not necessarily indicative of what the
actual results of operations of BRE would have been for the period had the
transactions occurred at the beginning of the period nor does it purport to
indicate the results of future periods.
<PAGE>
BRE PROPERTIES, INC.
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
BRE Subtotal Foster's
As RCT RCT Landing
reported period period period
Year ended January 1- Pro forma January 1- January 1- Pro forma
(In thousands, except December March 15, Adjust- March 15, September Adjust-
per share amounts) 31, 1996 1996 ments 1996 27, 1996 ments
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Rental $93,135 $7,956 $7,956 $4,994
Other 8,516 503 503 66
------------------------------ -----------------------------------
101,651 8,459 8,459 5,060
Expenses:
Depreciation 13,283 1,159 (16) (a) 1,143 882 (d)
Interest 16,325 1,352 (41) (b) 1,311 2,878 (e)
Other 35,029 2,307 (92) (c) 2,215 1,423
------------------------------ -----------------------------------
64,637 4,818 (149) 4,669 1,423 3,760
Net Income before gain
on sales of investments 37,014 3,641 149 3,790 3,637 (3,760)
Gains on sales of
investments 52,825
------------------------------ -----------------------------------
Net income (Loss) $89,839 3,641 $149 $3,790 3,637 ($3,760)
------------------------------ -----------------------------------
------------------------------ -----------------------------------
Net income per share $2.94
----------
----------
Weighted average shares
outstanding 30,520 2,226 2,226
---------- ------ ------
---------- ------ ------
<CAPTION>
Promon- Pro forma
Pro forma tory Point results of
results of twelve the
the months acquisition
acquisition ended Pro forma of
(In thousands, except of Foster's December adjust- Promon- Pro forma
per share amounts Landing 31,1996 ments tory Point results
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental $ 4,994 $4,450 $4,450 $110,535
Other 66 160 160 9,245
---------------------------------------------------------
5,060 4,610 4,610 119,780
---------------------------------------------------------
Expenses:
Depreciation 882 874 (f) 874 16,182
Interest 2,878 2,884 (g) 2,884 23,398
Other 1,423 1,272 1,272 39,939
---------------------------------------------------------
5,183 1,272 3,758 5,030 79,519
Net Income before gain
on sales of investments (123) 3,338 (3,758) (420) 40,261
Gains on sales of
investments 52,825
--------------------------------------------------------
Net income (Loss) ($123) $3,338 ($3,758) ($ 420) 93,086
--------------------------------------------------------
--------------------------------------------------------
Net income per share $2.84
---------
---------
Weighted average shares
outstanding 32,746
---------
---------
</TABLE>
See notes and assumptions to unaudited pro forma statement of operations.
<PAGE>
BRE PROPERTIES, INC.
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(a) 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 $274
million (allocated 80% to buildings and improvements in accordance with
BRE's accounting policies), as follows:
For the period
January 1- March 15, 1996
-------------------------
Pro forma depreciation expense on cost
of depreciable assets acquired $1,143
Less: RCT historical depreciation (1,159)
-------------------------
Pro forma adjustment (16)
-------------------------
-------------------------
(b) Decrease in interest expense as follows:
For the period
January 1- March 15, 1996
-------------------------
Elimination of amortization of loan fees
included in interest expense related to
deferred loan fees eliminated by purchase
accounting from RCT historical data $ 41
-------------------------
Pro forma adjustment $ 41
-------------------------
-------------------------
(c) The net increase in other costs as a result of the Merger, including
savings from internalizing property management, professional and trustee
fees, franchise taxes, shareholder reporting and the elimination of
corporate the office of RCT. Such savings are offset in part by
reassessed property taxes and unit enhancement costs which were
capitalized by RCT and are expensed by BRE. Amounts are 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 commerical investments, and
the changes in the BRE Amended and Restated Non-Employee Director Stock
Option Plan.
<PAGE>
* Amounts are 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.
(d) Depreciation for the period January 1, 1996 to September 27, 1996, based
upon a 40 year life and a purchase price of $58,800,000, of which
$47,040,000 is allocated to depreciable improvements.
(e) Interest expense for the period January 1, 1996 to September 27, 1996, on
borrowed funds of $58,800,000 under BRE's lines of credit at an interest
rate of 6.6%. If the interest rate were 1/8 of 1% higher or lower, the
pro forma results would change as follows:
<TABLE>
<CAPTION>
With an With a decrease
increase in the in the interest
interest rate of rate of 1/8 of
(in thousands, except per share) As Stated 1/8 of 1% 1%
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Interest expense $23,398 $23,453 $23,343
- -----------------------------------------------------------------------------------
Net income $93,086 $93,031 $93,141
- -----------------------------------------------------------------------------------
Net income per share $2.84 $2.84 $2.84
- -----------------------------------------------------------------------------------
</TABLE>
(f) Depreciation for the period January 1, 1996 to December 31, 1996, based
upon a 40 year life and a purchase price of $43,700,000, of which
$34,960,000 is allocated to depreciable improvements.
(g) Interest expense for the period January 1, 1996 to December 31, 1996, on
borrowed funds of $43,700,000 under BRE's lines of credit at an interest
rate of 6.6%. If the interest rate were 1/8 of 1% higher or lower, the
pro forma results would change as follows:
<TABLE>
<CAPTION>
With an With a decrease
increase in the in the interest
interest rate of rate of 1/8 of
(in thousands, except per share) As Stated 1/8 of 1% 1%
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------
Interest expense $23,398 $23,453 $23,343
- -----------------------------------------------------------------------------------
Net income $93,086 $93,031 $93,141
- -----------------------------------------------------------------------------------
Net income per share $2.84 $2.84 $2.84
- -----------------------------------------------------------------------------------
</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.
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To BRE Properties, Inc.
We have audited the accompanying statement of Gross Income and Direct Operating
Expenses of Promontory Point Apartments for the year ended December 31, 1996.
This Statement is the responsibility of the Company's management. Our
responsibility is to express an opinion on the 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 Statement is free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the Statement. 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. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying Statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission for inclusion in
the amendment to Form 8K filed by BRE Properties, Inc. as described in Note 2,
and is not intended to be a complete presentation of the Company's revenue and
expenses.
In our opinion, the Statement referred to above presents fairly, in all material
respects, the gross income and direct operating expenses described in Note 2 of
Promontory Point Apartments for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
Ernst and Young, LLP
San Francisco, California
February 10, 1997
<PAGE>
PROMONTORY POINT APARTMENTS
STATEMENT OF GROSS INCOME
AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
(Amounts in thousands)
GROSS INCOME
Rental income . . . . . . . . . . . . . . . . $4,450
Other income... . . . . . . . . . . . . . . . 160
--------------
4,610
DIRECT OPERATING EXPENSES - NOTE 2
Property taxes. . . . . . . . . . . . . . . . 394
Salaries and wages... . . . . . . . . . . . . 325
Utilities . . . . . . . . . . . . . . . . . . 112
Repairs and maintenance . . . . . . . . . . . 153
Management fees . . . . . . . . . . . . . . . 163
Insurance.... . . . . . . . . . . . . . . . . 60
General and administrative. . . . . . . . . . 65
--------------
1,272
--------------
TOTAL GROSS INCOME AND DIRECT OPERATING EXPENSES $3,338
--------------
--------------
See report of independent auditors and accompanying notes to the statement of
gross income and direct operating expenses.
<PAGE>
PROMONTORY POINT APARTMENTS
NOTES TO STATEMENT OF GROSS INCOME
AND DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
NOTE 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICY
BRE Properties, Inc. ("BRE") acquired Promontory Point Apartments ("the
Property") on December 31, 1996 from an unrelated party. The Property is a 400-
unit apartment community located in San Ramon, California.
Expenditures for repairs, maintenance and minor renewals are charged to expense
as incurred, while those expenditures that improve or extend the estimated
useful life of the Property are capitalized.
NOTE 2. BASIS OF PRESENTATION
The Statement of Gross Income and Direct Operating Expenses excludes the
following expenses which are not comparable with those resulting from the
proposed future operations of the Property:
- - Depreciation and amortization expense
- - Mortgage interest expense
Property taxes have not been adjusted to reflect the estimated reassessed value
of the Property after acquisition by BRE.
BRE has not provided for federal income taxes because it believes it qualifies
as a real estate investment trust under Section 856-860 of the Internal Revenue
Code and similar California statutes and distributes substantially all of its
taxable income to its shareholders.
BRE is not aware of any material factors relating to the Property that would
cause the reported financial information not to be indicative of future
operating results.
