SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Original Report: January 28, 1997
APPLE RESIDENTIAL INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 333-10635 54-1816010
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
306 East Main Street
Richmond, Virginia 23219
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(804) 643-1761
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
FORM 8-K/A
Index
Page No.
--------
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
a. Independent Auditors' Report
(Brookfield Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Brookfield Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Brookfield Apartments)
b. Independent Auditors' Report
(Eagle Crest I & II Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Eagle Crest I & II Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Eagle Crest I & II Apartments)
c. Independent Auditors' Report
(Tahoe Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Tahoe Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Tahoe Apartments)
d. Pro Forma Balance Sheet as of
December 31, 1996 (unaudited)
Pro Forma Statement of Operations
for the Year ended December 31, 1996
(unaudited)
-2-
<PAGE>
e. Exhibits
23.1 Consent of Independent Auditors
23.2 Consent of Independent Auditors
23.3 Consent of Independent Auditors
-3-
<PAGE>
The Company hereby amends and restates Item 7.a., 7.b., 7.c., and 7.d.
of its Current Report on Form 8-K dated January 28, 1997 as follows:
-4-
<PAGE>
ITEM 7.A.
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We have audited the accompanying statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Eagle Crest Apartments located in Irving, Texas for
the twelve month period ended December 31, 1996. This statement is the
responsibility of the management of Eagle Crest Apartments. Our responsibility
is to express an opinion on this 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 accounting principles 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 a filing by Cornerstone Realty Income Trust, Inc.) and excludes
material expenses, described in Note 1 to the statement, that would not be
comparable to those resulting from the proposed future operations of the
property.
In our opinion, the statement referred to above presents fairly, in all
material respects, the income and direct operating expenses of Eagle Crest
Apartments (as defined above) for the twelve month period ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
March 27, 1997
<PAGE>
EAGLE CREST APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED DECEMBER 31, 1996
INCOME
- ------
Rental and Other Income $3,196,618
----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 212,613
Insurance 93,379
Repairs and Maintenance 379,120
Taxes, Property 345,167
Utilities 305,101
----------
TOTAL DIRECT OPERATING EXPENSES 1,335,380
----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $1,861,238
----------
See accompanying note to the financial statement.
<PAGE>
EAGLE CREST APARTMENTS
NOTE TO THE STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES
EXCLUSIVE OF ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
- -----------------------------------------------
Eagle Crest Apartments is a residential garden style apartment complex
consisting of two phases totaling 484 units located on 17.88 acres in Irving,
Texas. Living space totals 429,300 square feet.
During the financial statement period, the assets comprising the property were
owned by entities not affiliated with Cornerstone Realty Income Trust, Inc.
Cornerstone Realty Income Trust, Inc. purchased the property on January 30,
1997.
In accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission, the statement of income and direct operating expenses excludes
interest and non rent related income and expenses not considered comparable to
those resulting from the proposed future operations of the property. Excluded
expenses are mortgage interest, property depreciation, amortization, legal and
professional and management fees.
<PAGE>
ITEM 7.B.
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We have audited the accompanying statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Brookfield Apartments located in Dallas, Texas for
the twelve month period ended December 31, 1996. This statement is the
responsibility of the management of Brookfield Apartments. Our responsibility is
to express an opinion on this 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 accounting principles 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 a filing by Cornerstone Realty Income Trust, Inc.) and excludes
material expenses, described in Note 1 to the statement, that would not be
comparable to those resulting from the proposed future operations of the
property.
In our opinion, the statement referred to above presents fairly, in all
material respects, the income and direct operating expenses of Brookfield
Apartments (as defined above) for the twelve month period ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
March 19, 1997
<PAGE>
BROOKFIELD APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED DECEMBER 31, 1996
INCOME
- ------
Rental and Other Income $1,198,543
----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 122,269
Insurance 18,936
Repairs and Maintenance 174,233
Taxes, Property 133,700
Utilities 92,664
----------
TOTAL DIRECT OPERATING EXPENSES 541,802
----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 656,741
----------
See accompanying note to the financial statement.
<PAGE>
BROOKFIELD APARTMENTS
NOTE TO THE STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES
EXCLUSIVE OF ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
- -----------------------------------------------
Brookfield Apartments is a 232 unit residential garden style apartment complex
located on 6.936 acres in Dallas, Texas. Living space totals 165,544 square
feet.
During the financial statement period, the assets comprising the property were
owned by Paragon Group, L.P., an entity non-affiliated with Cornerstone Realty
Income Trust, Inc. Cornerstone Realty Income Trust, Inc. purchased the property
in January, 1997.
In accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission, the statement of income and direct operating expenses excludes
interest and non rent related income and expenses not considered comparable to
those resulting from the proposed future operations of the property. Excluded
expenses are mortgage interest, property depreciation, amortization and
management fees.
<PAGE>
ITEM 7.C.
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE (804) 346-2626
FAX: (804) 346-9311
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We have audited the accompanying statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Tahoe Apartments located in Arlington, Texas for the
twelve month period ended December 31, 1996. This statement is the
responsibility of the management of Tahoe Apartments. Our responsibility is to
express an opinion on this 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 accounting principles 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 a filing by Cornerstone Realty Income Trust, Inc.) and excludes
material expenses, described in Note 1 to the statement, that would not be
comparable to those resulting from the proposed future operations of the
property.
In our opinion, the statement referred to above presents fairly, in all
material respects, the income and direct operating expenses of Tahoe Apartments
(as defined above) for the twelve month period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/S/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
April 11, 1997
<PAGE>
TAHOE APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED DECEMBER 31, 1996
INCOME
Rental and Other Income $ 1,200,270
-----------
DIRECT OPERATING EXPENSES
Administrative and Other 118,781
Insurance 30,606
Repairs and Maintenance 351,750
Taxes, Property 114,578
Utilities 149,166
-----------
TOTAL DIRECT OPERATING EXPENSES 764,881
-----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 435,389
===========
See accompanying note to the financial statement.
<PAGE>
TAHOE APARTMENTS
NOTE TO THE STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES
EXCLUSIVE OF ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED DECEMBER 31, 1996
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Tahoe Apartments is a 240 unit residential garden style apartment complex
located on 9.81 acres in Arlington, Texas. Living space totals 160,928 square
feet.
During the financial statement period, the assets comprising the property were
owned by two separate entities, neither of which was affiliated with Cornerstone
Realty Income Trust, Inc. Cornerstone Realty Income Trust, Inc. purchased the
property on January 31, 1997.
In accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission, the statement of income and direct operating expenses excludes
interest and non rent related income and expenses not considered comparable to
those resulting from the proposed future operations of the property. Excluded
expenses are mortgage interest, property depreciation, legal fees and management
fees. Also, excluded are certain employee bonuses paid by one of the former
owners in connection with the sale of the apartment project.
<PAGE>
ITEM 7.D.
<PAGE>
Pro Forma Balance Sheet as of December 31, 1996 (unaudited) The accompanying
Unaudited Pro Forma Balance Sheet as of December 31, 1996 is presented as if the
Company had owned the following properties held on December 31, 1996. In the
opinion of management, all adjustments necessary to reflect the effects of the
Offering have been made.
The Unaudited Pro Forma Balance Sheet is presented for comparative purposes
only, and is not necessarily indicative of what the actual financial position of
the Company would have been at December 31, 1996, nor does it purport to
represent the future financial position of the Company. This Unaudited Pro
Forma Balance Sheet should be read in conjunction with, and is qualified in its
entirety by, the respective historical financial statements and notes thereto of
the Company. The Pro Forma column assumes the Company used the proceeds from
its offerings to acquire certain properties.
<TABLE>
<CAPTION>
Historical Brookfield Eagle Crest Tahoe
Balance Pro Forma Pro Forma Pro Forma Total
Sheet Adjustments Adjustments Adjustments Pro Forma
------------------------------------------------------------
<S> <C>
ASSETS
Investment in rental property
Land - $1,169,208 $3,032,970 $1,102,830 $5,305,008
Building - 4,398,447 12,930,030 4,701,541 22,030,018
------------------------------------------------------------
- 5,567,655 15,963,000 5,804,371 27,335,026
Less accumulated depreciation - - - - -
------------------------------------------------------------
- 5,567,655 15,963,000 5,804,371 27,335,026
Cash and cash equivalents $100 - - - 100
------------------------------------------------------------
Total Assets $100 $5,567,655 $15,963,000 $5,804,371 $27,335,126
============================================================
SHAREHOLDERS' EQUITY
Common stock, no par value $100 $5,567,655 $15,963,000 $5,804,371 $27,335,126
Class B Convertible Stock, no par value 20,000 - - - $20,000
Receivable from principal shareholder (20,000) - - - ($20,000)
------------------------------------------------------------
Total Shareholders' equity $100 $5,567,655 $15,963,000 $5,804,371 $27,335,126
============================================================
</TABLE>
Notes to Pro Forma Balance Sheet
Pro Forma adjustments represents the purchase price of the related property,
including the 2% acquisition fee to Apple Realty Group, Inc. allocated between
land and building. Adjustments to common stock reflect the net proceeds from
sales of common stock from the Company's continuous offering.
<PAGE>
Pro Forma Statement of Operations for the twelve months ended December 31, 1996
(unaudited)
The accompanying Unaudited Pro Forma Statement of Operations for the twelve
months ended December 31, 1996 is presented as if (a) the Company had acquired
the properties shown below on January 1, 1996; (b) the Company had qualified as
a REIT , distributed at least 95% of its taxable income and, therefore, incurred
no federal income tax liability for the period presented; and (b) the Company
had used proceeds from its best efforts offering to acquire the properties. The
Company had no operations during the period ending December 31, 1996.
Accordingly, the Company had no revenue or operating profits or loss.
The Unaudited Pro Forma Statement of Operations is presented for comparative
purposes only and is not necessarily indicative of what the actual results of
the Company would have been for the year ended December 31, 1996 if the
acquisitions and Offering had occurred at the beginning of the period presented,
nor does it purport to be indicative of the results of operations in future
periods. The Unaudited Pro Forma Statement of Operations should be read in
conjunction with, and is qualified in its entirety by, the respective historical
financial statements and notes thereto of the Company.
<TABLE>
<CAPTION>
Historical Brookfield Eagle Crest Tahoe 1997
Statement of Pro Forma Pro Forma Pro Forma Pro Forma Total
Operations Adjustments Adjustments Adjustments Adjustments Pro Forma
---------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions - 1/1/97 1/1/97 1/1/97 - -
Rental income - $1,198,543 $3,196,618 $1,200,270 - 5,595,431
Expenses
Utilities - 92,664 305,101 149,166 - 546,931
Repairs and maintenance - 174,233 379,120 351,750 - 905,103
Taxes and insurance - 152,636 438,546 145,184 - 736,366
Property management fee - - - - 282,162 (A) 282,162
Advertising - 30,567 53,153 29,695 - 113,415
General and administrative - - - - 68,338 (B) 68,338
Depreciation of real estate - - - - 801,092 (C) 801,092
Other - 91,702 159,460 89,086 - 340,248
--------------------------------------------------------------------------------
- 541,802 1,335,380 764,881 1,151,591 3,793,654
Net income - $656,741 $1,861,238 $435,389 ($1,151,591) $1,801,777
Net income per share - $0.54
============= ==========
Weighted average number of shares outstanding - 3,308,624
============= ==========
</TABLE>
The pro forma information reflects adjustments for the actual rental income and
rental expenses for the properties for the period in 1996 prior to their
acquisition by the Company. Net income has been adjusted as follows: (A)
property management and advisory expenses have been adjusted based on the on
the Company's contractual arrangements of 5% of revenues from rental income plus
reimbursement of certain expenses estimated to be $2.50 per unit; (B) advisory
expenses have been adjusted based on the Company's contractual arrangement of
.25% of gross proceeds from sales of common stock; (C) depreciation has been
adjusted based on the Company's allocation of purchase price to buildings over
an estimated useful life of 27.5 years.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report on Form 8-K/A to be signed on its behalf
by the undersigned hereunto duly authorized.
Apple Residential Income Trust, Inc.
Date: April __, 1997 By:_______________________________
Glade M. Knight
President of
Apple Residential Income
Trust, Inc.
<PAGE>
EXHIBIT INDEX
Apple Residential Income Trust, Inc.
Form 8-K/A for Form 8-K dated January 28, 1997
Exhibit Number Exhibit Page Number
- -------------- ------- -----------
23.1 Consent of Independent Auditors
23.2 Consent of Independent Auditors
23.3 Consent of Independent Auditors
Exhibit 23.1
<PAGE>
[Letterhead]
L.P. MARTIN & COMPANY
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Consent of Independent Auditors'
--------------------------------
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated March 19, 1997 with respect
to the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Brookfield
Apartments for the twelve month period ended December 31, 1996, for inclusion in
a form 8K filing with the Securities and Exchange Commission by Cornerstone
Realty Income Trust, Inc.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
March 19, 1997
Exhibit 23.2
<PAGE>
[Letterhead]
L.P. MARTIN & COMPANY
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Consent of Independent Auditors'
--------------------------------
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated March 27, 1997 with respect
to the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Eagle Crest
Apartments for the twelve month period ended December 31, 1996, for inclusion in
a form 8K filing with the securities and Exchange Commission by Cornerstone
Realty Income Trust, Inc.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
March 27, 1997
Exhibit 23.3
<PAGE>
[Letterhead]
L.P. MARTIN & COMPANY
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Consent of Independent Auditors'
-------------------------------
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated April 11, 1997 with respect
to the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Tahoe Apartments
for the twelve month period ended December 31, 1996, for inclusion in a form 8K
filing with the Securities and Exchange Commission by Cornerstone Realty Income
Trust, Inc.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
April 11, 1997
