UNITES STATES
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): Commission File Number:
December 9, 1998 0-20707
COLONIAL REALTY LIMITED PARTNERSHIP
(Exact name of registrant as specified in its charter)
Alabama 63-1098468
(State of organization) (IRS Employer Identification Number)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive offices)
(205) 250-8700
(Registrant's telephone number, including area code)
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
Item 5. Other Events
Colonial Realty Limited Partnership (CRLP), a Delaware limited partnership, is
the Operating Partnership of Colonial Properties Trust, an Alabama real estate
investment trust whose common shares are listed on the New York Stock Exchange
under the symbol CLP. CRLP owns and operates commercial real estate in the
southern United States. CRLP has acquired a regional shopping mall and entered
into two joint ventures since the filing of CRLP's Form 10-Q on November 13,
1998. The following is a summary of the material terms of the transactions.
In accordance with Rule 3-14 of Regulation S-X, financial statements with
respect to the Acquired Property are being filed to appropriately update CRLP's
shelf registration statement.
Description of Property
Acquired Property
Bel Air Mall---Mobile, Alabama
On December 29, 1998, CRLP acquired Bel Air Mall, a 1.4 million square
foot regional shopping mall located in Mobile, Alabama. Bel Air is the second
largest mall in the state of Alabama and was 92% leased at the time of
acquisition. Bel Air is anchored by Parisian, Dillard's, Sears, JC Penney, and
Target; major in-line tenants include The Gap, Limited, Eddie Bauer and
Gymboree. Dillard's and JC Penney have recently completed major renovations to
their stores and Sears completed a 90,000 square foot expansion and renovation
of its store in 1997. The purchase price of $89.1 million was funded through the
proceeds received in connection with the formation of the Orlando Fashion Square
joint venture and an advance on CRLP's unsecured line of credit.
Joint Ventures
Parkway City Mall Joint Venture-Huntsville, Alabama
On December 9, 1998, CRLP and CBL & Associates Properties formed a joint
venture to acquire Parkway City Mall, a 414,000 square foot mall located in
Huntsville, Alabama, for $11.4 million. In addition to the purchase of the
property, the joint venture will redevelop the mall, with all related costs
being shared equally by both venture partners. Parkway City Mall is anchored by
Parisian and McRae's and was 86% leased at the time of the acquisition.
Orlando Fashion Square Joint Venture-Orlando, Florida
On December 29, 1998, CRLP and Prudential Real Estate Investors
(Prudential) entered into a joint venture to own Orlando Fashion Square. Orlando
Fashion Square is a super-regional mall with 1.1 million square feet located in
the affluent Winter Park area of Orlando, Florida. The mall is anchored by
Burdine's, Sears, Dillard's, and JC Penney. In connection with the formation of
the joint venture, Prudential acquired a 50% interest in Orlando Fashion Square
from CRLP for $52 million. Subsequent to formation, the joint venture
leveraged the property with a $65 million note and the proceeds from the
issuance of the note were distributed equally to the joint venture partners.
CRLP used the proceeds from the formation of the joint venture to fund the
acquisition of Bel Air Mall.
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired or to be Acquired
Page
Historical Summary of Revenues and Direct
Operating Expenses of Bel Air Mall................................5
(b) Pro Forma Financial Information...................................8
(c) Exhibits
23.1 Letter re: Consent of Independent Accountants.............17
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
Colonial Properties Trust
We have audited the Historical Summary of Revenues and Direct Operating Expenses
of Bel Air Mall (the Property) as defined in Note 1 for the year ended December
31, 1997. This Historical Summary is the responsibility of the Property's
management. Our responsibility is to express an opinion on the Historical
Summary 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 Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe our
audit provides a reasonable basis for our opinion.
The accompanying Historical Summary of Revenues and Direct Operating Expenses
was prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Forms 8-K of Colonial
Properties Trust and Colonial Realty Limited Partnership, and is not intended to
be a complete presentation of the revenues and expenses of the Property.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses of Bel Air Mall
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
February 4, 1999
<PAGE>
BEL AIR MALL
HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
_____________________
For the
Year Ended
December 31, 1997
------------------------
Revenues
Base and percentage rents $ 7,596,863
CAM reimbursements 2,392,717
Other 515,434
------------------------
$ 10,505,014
------------------------
Direct operating expenses:
General operating expenses 1,199,863
Salaries and benefits 879,003
Repairs and maintenance 285,032
Taxes, licenses, and insurance 723,658
------------------------
3,087,556
------------------------
Excess of revenues over direct
operating expenses $ 7,417,458
========================
See Notes to Historical Summary of Revenues and Direct Operating Expenses.
<PAGE>
BEL AIR MALL
NOTES TO HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
1. Accounting Policies
Description-The accompanying Historical Summary consists of the revenues
and direct operating expenses of the Bel Air Mall (the Property), a retail
mall located in Mobile, Alabama. Colonial Properties Trust, through
Colonial Realty Limited Partnership, purchased the Property on December 30,
1998 for a total of approximately $89.1 million.
Basis of Presentation-The Historical Summary of Revenues and Direct
Operating Expenses includes gross operating revenues, exclusive of interest
income, and direct operating expenses, exclusive of mortgage and other
interest expense, depreciation, amortization, management fees,
non-recurring administrative expenses, and federal, state, and local income
taxes, if any.
Income Recognition-Rental income is recognized as earned pursuant to the
terms of tenant leases. Anticipated losses, if any, are recognized when
such amounts become known.
Use of Estimates-The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the report period. Actual results could differ from those
estimates.
2. Leasing Operations
Minimum base rentals to be received in future periods under noncancelable
operating leases extending beyond one year at December 31, 1997, are as
follows:
1998 $ 6,908,694
1999 6,550,595
2000 5,897,069
2001 5,348,344
2002 5,176,951
Thereafter 20,549,985
------------------
$ 50,431,638
==================
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
September 30, 1998
(Unaudited)
The following unaudited pro forma consolidated condensed balance sheet reflects
significant transactions effected by CRLP after September 30, 1998,
including the purchase of the Acquired Property and two joint venture
transactions mentioned elsewhere herein.
This unaudited pro forma consolidated condensed balance sheet is not necessarily
indicative of the actual financial position of CRLP had the transactions been
completed as of September 30, 1998, nor does it purport to represent the future
financial position of CRLP. The unaudited pro forma consolidated condensed
balance sheet and related notes should be read in conjunction with the
information appearing in CRLP's 1997 Financial Statements as filed with the
Securities and Exchange Commission on Form 10-K and the notes thereto and with
CRLP's September 30, 1998 Quarterly Report as filed with the Securities and
Exchange Commission on Form 10-Q and with the financial statements included
therein and the notes thereto. In management's opinion, all adjustments
necessary to reflect the effects of these transactions have been made.
<PAGE>
<TABLE>
Colonial Realty Limited Patnership
Pro Forma Consolidated Condensed Balance Sheet
September 30, 1998
(In Thousands)
(Unaudited)
<CAPTION>
Colonial Realty Colonial Realty
Limited Pro Limited
Partnership Forma Partnership
Historical Adjustments Pro Forma
----------- ----------- -----------
(A) (B)
<S> <C> <C> <C>
ASSETS
Land, buildings, & equipment, net $ 1,586,098 $ (14,900) $ 1,571,198
Undeveloped land and CIP 89,275 89,275
Cash and equivalents 2,890 2,890
Restricted cash 2,886 2,886
Accounts receivable, net 8,967 8,967
Prepaid expenses 2,671 2,671
Deferred debt and lease costs 6,837 6,837
Other assets 7,666 25,200 32,866
=========== =========== ===========
$ 1,707,290 $ 10,300 $ 1,717,590
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable $ 855,292 $ 10,300 $ 865,592
Accounts payable 6,801 6,801
Accrued interest 10,379 10,379
Accrued expenses 15,737 15,737
Tenant deposits 4,197 4,197
Unearned rent 3,567 3,567
----------- ----------- -----------
Total liabilities 895,973 10,300 906,273
----------- ----------- -----------
Minority interest in consolidated
operating property 4,321 -0- 4,321
----------- ----------- -----------
Redeemable units, at redemption value 298,692 -0- 298,692
----------- ----------- -----------
Partners' capital, excluding
redeemable units 508,304 -0- 508,304
----------- ----------- -----------
$ 1,707,290 $ 10,300 $ 1,717,590
=========== =========== ===========
</TABLE>
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
(Unaudited)
(A) Reflects the historical financial position of CRLP as of September 30,
1998, as presented in CRLP's Form 10-Q as filed with the Securities and
Exchange Commission.
(B) Includes the acquisition of the Bel Air Mall for a purchase price of $89.1
million, and the formation of the Orlando Fashion Square joint venture and
the Parkway City joint venture. The property acquisition and the formation
of the joint ventures were financed through advances on CRLP's unsecured
line of credit and proceeds received from the sale of certain property
related to the formation of the Orlando Fashion Square joint venture.
<PAGE>
COLONIAL REALTY LIMITED PARNTERSHIP
PRO FORMA CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997 and
the Nine Months Ended September 30, 1998
(Unaudited)
The following unaudited pro forma consolidated condensed statements of
operations reflect significant transactions effected by CRLP during 1997 and
1998 which includes the purchase of the Acquired Property and the formation of
the two joint ventures mentioned elsewhere herein. In addition to the Acquired
Property and the two joint ventures, the following significant transactions are
reflected in the unaudited pro forma consolidated condensed statements of
operations: (i) CRLP's acquisition activity for the first three quarters of 1998
which is discussed in CRLP's filings on Forms 10-Q filed on May 6, 1998, August
12, 1998, and November 13, 1998 (ii) CRLP's cash contributions received from
Colonial Properties Trust's equity offerings completed in February, March, April
and May 1998, and January, July, November and December 1997 (iii) CRLP's debt
offerings completed in January, July, August and September 1997 (iv) CRLP's 1997
acquisition and disposition activity, which included the acquisition of 25
properties, the disposition of seven properties, and the purchase of additional
interests in two properties (the 1997 Properties) which are discussed in CRLP's
filings on Forms 8-K filed on July 21, 1997, September 17, 1997, and December
10, 1997. The pro forma effects of all such transactions are included in the
unaudited pro forma consolidated condensed statements of operations assuming the
transactions had occurred as of January 1, 1997 and assuming CRLP used the
proceeds of its debt offerings and Colonial Properties Trust's equity offerings
to repay outstanding indebtedness (see notes to unaudited pro forma consolidated
condensed statements of operations).
These unaudited pro forma consolidated condensed statements of operations are
not necessarily indicative of the actual results of operations had the
transactions been completed as of January 1, 1997, nor do they purport to
represent the future results of the operations of CRLP. CRLP is not aware of any
material factors relating to the Acquired Property and the two joint ventures,
other than as disclosed in the footnotes to the unaudited pro forma consolidated
condensed statements of operations, which would cause the historical summaries
of revenues and direct operating expenses not to be necessarily indicative of
future operating results.
The unaudited pro forma consolidated condensed statements of operations and
related notes should be read in conjunction with the information appearing in
CRLP's 1997 Financial Statements as filed with the Securities and Exchange
Commission on Form 10-K and the notes thereto and with CRLP's September 30, 1998
Quarterly Report as filed with the Securities and Exchange Commission on Form
10-Q and with the financial statements included therein and the notes thereto.
In management's opinion, all adjustments necessary to reflect the effects of
these transactions have been made.
<PAGE>
<TABLE>
Colonial Realty Limited Partnership
Pro Forma Consolidated Condensed Statements of Operations
For the year ended December 31, 1997
(In Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the year ended December 31, 1997
Colonial Realty Colonial Realty
Limited Pro Limited
Partnership Forma Partnership
Historical Adjustments Pro Forma
--------- --------- ---------
(A) (B)
<S> <C> <C> <C>
Revenues:
Rent $ 178,158 $ 64,838 $ 242,996
Other 5,968 1,749 7,717
--------- --------- ---------
Total revenue 184,126 66,587 250,713
--------- --------- ---------
Property operating expenses:
General operating expenses 12,603 6,282 18,885
Salaries and benefits 10,283 3,464 13,747
Repairs and maintenance 18,669 6,284 24,953
Taxes, licenses and insurance 15,578 4,708 20,286
General and administrative 6,448 1,227 7,675
Depreciation 31,956 12,416 44,372
Amortization 1,322 (2) 1,320
--------- --------- ---------
Total operating expenses 96,859 34,379 131,238
--------- --------- ---------
Income from operations 87,267 32,208 119,475
--------- --------- ---------
Other income (expense):
Interest expense (40,496) (9,517) (50,013)
Income from equity investments 502 1,686 2,188
Gains from sales of property 2,567 (2,567) -0-
--------- --------- ---------
Total other expense (37,427) (10,398) (47,825)
--------- --------- ---------
Income before extraordinary items 49,840 21,810 71,650
Extraordinary loss from debt
extinguishment (3,650) 3,650 -0-
--------- --------- ---------
Net income 46,190 25,460 71,650
Dividends to preferred unitholders 1,671 9,267 10,938
--------- --------- ---------
Net income available to
unitholders $ 44,519 $ 16,193 $ 60,712
========= ========= =========
Net income per unit $ 1.55 $ 1.66
========= =========
Units outstanding 28,719 36,595
========= =========
</TABLE>
<PAGE>
<TABLE>
Colonial Realty Limited Partnership
Pro Forma Consolidated Condensed Statements of Operations
For the nine months ended September 30, 1998
(In Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the nine months ended September 30, 1998
Colonial Realty Colonial Realty
Limited Pro Limited
Partnership Forma Partnership
Historical Adjustments Pro Forma
--------- --------- ---------
(A) (B)
<S> <C> <C> <C>
Revenues:
Rent $ 175,071 $ 9,709 $ 184,780
Other 10,753 858 11,611
--------- --------- ---------
Total revenue 185,824 10,567 196,391
--------- --------- ---------
Property operating expenses:
General operating expenses 14,543 884 15,427
Salaries and benefits 9,065 1,056 10,121
Repairs and maintenance 17,931 370 18,301
Taxes, licenses and insurance 16,035 477 16,512
General and administrative 6,124 -0- 6,124
Depreciation 32,897 2,562 35,459
Amortization 1,208 -0- 1,208
--------- --------- ---------
Total operating expenses 97,803 5,349 103,152
--------- --------- ---------
Income from operations 88,021 5,218 93,239
--------- --------- ---------
Other income (expense):
Interest expense (38,108) (3,056) (41,164)
Income (loss)from equity
investments (1) 1,551 1,550
Gains (losses)from sales of
property 17 (17) -0-
--------- --------- ---------
Total other expense (38,092) (1,522) (39,614)
--------- --------- ---------
Income before extraordinary items 49,929 3,696 53,625
Extraordinary loss from
debt extinguishment (401) 401 -0-
--------- --------- ---------
Net income 49,528 4,097 53,625
Distribution to preferred unitholders 8,203 -0- 8,203
--------- --------- ---------
Net income available to
unitholders $ 41,235 $ 4,097 $ 45,422
========= ========= =========
Net income per unit $ 1.20 $ 1.24
========= =========
Units outstanding 34,353 36,595
========= =========
</TABLE>
<PAGE>
COLONIAL REALTY LIMITED PARTNERSHIP
NOTES TO PRO FORMA CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(A) Reflects CRLP's historical results of operations for the year ended
December 31, 1997, as presented in CRLP's 1997 Financial Statements as
filed with the Securities and Exchange Commission on Form 10-K and CRLP's
historical results of operations for the nine months ended September 30,
1998 as presented in CRLP's September 30, 1998 Quarterly Report as
filed with the Securities and Exchange Commission on Form 10-Q.
(B) Reflects the operating results of the Acquired Property and the two joint
ventures, all properties and additional phases of existing properties
acquired during 1998, as discussed in CRLP's filings on Forms 10-Q filed on
May 6, 1998, August 12, 1998, and November 13, 1998, and the operating
results of the 1997 Properties, as discussed in CRLP's filings on Forms 8-K
filed on July 21, 1997, September 17, 1997, and December 10, 1997. The
results included as pro forma adjustments for these properties include
those operating results of the properties for the respective periods during
which CRLP did not own the properties. This column also reflects the net
effect of the application of CRLP'S debt offering and Colonial Properties
Trust's equity offering proceeds to repay the revolving debt incurred in
the acquisition of properties and mortgage debt. The interest saved from
this repayment of debt is shown net of interest expense incurred in
connection with the debt offerings.
Included elsewhere herein is the Historical Summary of Revenues and Direct
Operating Expenses for the Acquired Property. The pro forma statements of
operations include certain adjustments made to these historical summaries
as presented in the following table.
For the
Year Ended
December 31, 1997
(in thousands)
--------------------
Excess of revenues over direct
Operating expenses (1)
Bel Air Mall $ 7,417
Other properties 37,205
--------------------
44,622
Less (Plus):
Depreciation and amortization of
property (2) 12,414
Interest on acquisition financing, net
of Savings from debt and equity
offerings (3) 9,517
Preferred distributions 9,267
Other adjustments (2,769)
--------------------
Pro forma income $16,193
====================
<PAGE>
(1) The excess of revenues over direct operating expenses is based upon
historical operations for the properties acquired during 1998 for the
year ended December 31, 1997, as contained in the Historical Summary
of Revenues and Direct Operating Expenses included or incorporated by
reference elsewhere herein for the properties whose December 31, 1997
financial results have been audited.
(2) The asset basis used in the computation of depreciation includes a
preliminary allocation of the purchase price to land, land
improvements, building, and personal property, plus acquisition costs
to date. Such allocation may be adjusted pending receipt of additional
information. Depreciation has been computed using the straight line
method with cost recovery periods of 7 to 40 years.
(3) Includes interest expense incurred from sources of funds used to
finance the acquisition of the Acquired Property and other
acquisitions including advances on CRLP's unsecured line of credit,
net of the effect of the application of the equity and debt offering
proceeds to repay the revolving debt incurred in the acquisition of
properties and mortgage debt. The interest saved from this repayment
of debt is shown net of interest expense incurred in connection with
the debt offerings.
<PAGE>
SIGNATURES
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 hereunto duly authorized.
COLONIAL REALTY LIMITED PARTNERSHIP,
a Delaware limited partnership
By: Colonial Properties Trust
its general partner
Date: February 25, 1999 /s/ Howard B. Nelson, Jr.
---------------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statement
of Colonial Realty Limited Partnership on Form S-3 related to the Shelf
Registration dated December 11, 1997 (File No. 333-42049) of our report
dated February 4, 1999 on our audit of the Historical Summary of Revenues
and Direct Operating Expenses of Bel Air Mall, which report is included in
this Form 8-K.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Birmingham, Alabama
February 24, 1999
