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: April 25, 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>
APPLE RESIDENTIAL INCOME TRUST, INC.
FORM 8-K/A
Index
Page No.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibit
a. Independent Auditors' Report
(The Arbors on Forest Ridge Apartments)
Historical Statement of Income and
Direct Operating Expenses
(The Arbors on Forest Ridge Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (The Arbors on Forest Ridge
Apartments)
b. Pro Forma Statement of Operations for
the Three Months ended
March 31, 1997 (unaudited)
Pro Forma Balance Sheet as of March 31, 1997
(unaudited)*
Pro Forma Statement of Operations
for the Year ended December 31, 1996
(unaudited)
c. Exhibit
23.1 Consent of Independent Auditors
-2-
<PAGE>
The Company hereby amends Items 7.a., 7.b. and 7.c. of its Current
Report on Form 8-K dated April 25, 1997 as follows:
-3-
<PAGE>
ITEM 7.a.
<PAGE>
[L.P. MARTIN & COMPANY LETTERHEAD]
L.P. MARTIN & COMPANY
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Apple Residential 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 The Arbors on Forest Ridge Apartments located in
Bedford, Texas for the twelve month period ended February 28, 1997. This
statement is the responsibility of the management of The Arbors on Forest Ridge
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 Apple Residential 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 The Arbors on
Forest Ridge Apartments (as defined above) for the twelve month period ended
February 28, 1997, in conformity with generally accepted accounting principles.
Richmond, Virginia
June 4, 1997 /s/ L.P. MARTIN & CO., P.C.
<PAGE>
THE ARBORS ON FOREST RIDGE APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTH PERIOD ENDED FEBRUARY 28, 1997
INCOME
Rental and Other Income $1,381,014
----------
DIRECT OPERATING EXPENSES
Administrative and Other 111,636
Insurance 34,263
Repairs and Maintenance 109,577
Taxes, Property 147,923
Utilities 85,182
----------
TOTAL DIRECT OPERATING EXPENSES 488,581
----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 892,433
==========
See accompanying note to the financial statement.
<PAGE>
THE ARBORS ON FOREST RIDGE 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 MONTH PERIOD ENDED FEBRUARY 28, 1997
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
The Arbors on Forest Ridge Apartments is a 210 unit garden style apartment
complex located on 8.913 acres in Bedford, Texas.
The assets comprising the property were owned by Western Rim Investors 1992-5,
L.P., an entity unaffiliated with Apple Residential Income Trust, Inc., during
the financial statement period. Apple Residential Income Trust, Inc.
subsequently purchased the property.
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 property depreciation, amortization, professional fees and
management fees.
<PAGE>
ITEM 7.b.
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
The accompanying Unaudited Pro Forma Statement of Operations for the three
months ended March 31, 1997 is presented as if (a) the Company had acquired the
properties shown below on January 1, 1997; (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 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 three months ended March 31, 1997 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 Mill Crossing
Statement of Pro Forma Pro Forma Pro Forma Pro Forma
Operations Adjustments Adjustments Adjustments Adjustments
--------------------------------------------------------------------
<S> <C>
Date of Acquisitions - 1/31/97 1/31/97 1/31/97 2/28/97
Rental income $1,155,766 $99,879 $266,385 $100,023 $151,389
Expenses
Utilities 98,538 7,722 25,425 12,431 24,712
Repairs and maintenance 59,600 14,519 31,593 29,313 36,083
Taxes and insurance 106,098 12,720 36,546 12,099 19,230
Property management fee 60,663 - - - -
Advertising 33,475 2,547 4,429 2,475 4,272
Other operating expenses 92,970 - - - -
General and administrative 77,502 - - - -
Depreciation of real estate 137,689 - - - -
Amortization 8,476 - - - -
Other 9,434 7,642 13,288 7,424 12,815
--------------------------------------------------------------------
684,445 45,150 111,281 63,742 97,112
Income before interest income 471,321 54,729 155,104 36,281 54,277
Interest income 84,934 - - - -
--------------------------------------------------------------------
Net income $556,255 $54,729 $155,104 $36,281 $54,277
====================================================================
Net income per share $0.16
============
Weighted average number of shares outstanding 3,403,759
============
</TABLE>
<TABLE>
<CAPTION>
Polo Run Wildwood Toscana The Arbors 1997
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Total
Adjustments Adjustments Adjustments Adjustments Adjustments Pro Forma
------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 03/31/97 03/31/97 03/31/97 4/30/97
Rental income $326,137 $202,389 $270,812 $345,254 - $2,918,034
Expenses
Utilities 32,231 19,734 21,222 21,296 - 263,311
Repairs and maintenance 64,401 30,868 29,279 27,394 - 323,050
Taxes and insurance 40,508 25,216 35,674 45,547 - 333,638
Property management fee - - - - 97,016 (A) 157,679
Advertising 6,338 6,877 8,055 6,977 - 75,445
Other operating expenses - - - - - 92,970
General and administrative - - - - 23,184 (B) 100,686
Depreciation of real estate - - - - 280,938 (C) 418,627
Amortization - - - - - 8,476
Other 19,013 20,632 24,166 20,932 - 135,346
------------------------------------------------------------------------------
162,491 103,327 118,396 122,146 401,138 1,909,228
Income before interest income 163,646 99,062 152,416 223,108 (401,138) 1,008,806
Interest income - - - - - 84,934
------------------------------------------------------------------------------
Net income $163,646 $99,062 $152,416 $223,108 ($401,138) $1,093,740
==============================================================================
Net income per share $0.14
==========
Weighted average number of shares outstanding 7,917,475
==========
</TABLE>
The pro forma information reflects adjustments for the actual rental income and
rental expenses for the properties for the period in 1997 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
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>
PRO FORMA BALANCE SHEET AS OF MARCH 31, 1997 (UNAUDITED) The accompanying
Unaudited Pro Forma Balance Sheet as of March 31, 1997 is presented as if the
Company had owned the following properties held on March 31, 1997. 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 March 31, 1997, 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.
Historical The Arbors
Balance Pro Forma Total
Sheet Adjustments Pro Forma
-------------------------------------
ASSETS
Investment in rental property
Land $8,686,051 $711,350 $9,397,401
Building 40,821,725 7,192,535 48,014,260
Property improvements 130,343 - 130,343
Furniture and fixtures 80,257 - 80,257
-------------------------------------
49,718,376 7,903,885 57,622,261
Less accumulated depreciation (137,689) - (137,689)
-------------------------------------
49,580,687 7,903,885 57,484,572
Cash and cash equivalents 1,383,740 - 1,383,740
Prepaid expenses 132,486 - 132,486
Other assets 738,614 - 738,614
-------------------------------------
Total Assets $51,835,527 $7,903,885 $59,739,412
=====================================
LIABILITIES
Notes payable $10,000,000 - $10,000,000
Accounts payable 508,843 - 508,843
Accrued expenses 643,364 - 643,364
Rents received in advance 19,241 - 19,241
Tenant security deposits 214,087 - 214,087
-------------------------------------
11,385,535 - 11,385,535
SHAREHOLDERS' EQUITY
Common stock, no par value 39,893,737 7,903,885 47,797,622
Class B Convertible Stock, no par value 20,000 - 20,000
Receivable from principal shareholder (20,000) - (20,000)
Net income 556,255 - 556,255
-------------------------------------
40,449,992 7,903,885 48,353,877
Total Liabilities and Shareholders' Equity $51,835,527 $7,903,885 $59,739,412
=====================================
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 year 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 Mill Crossing
Statement of Pro Forma Pro Forma Pro Forma Pro Forma
Operations Adjustments Adjustments Adjustments Adjustments
--------------------------------------------------------------------
<S> <C>
Date of Acquisitions - 1/31/97 1/31/97 1/31/97 2/28/97
Rental income - $1,198,543 $3,196,618 $1,200,270 $908,336
Expenses
Utilities - 92,664 305,101 149,166 148,270
Repairs and maintenance - 174,233 379,120 351,750 216,500
Taxes and insurance - 152,636 438,546 145,184 115,377
Property management fee - - - - -
Advertising - 30,567 53,153 29,695 25,631
Other operating expenses - - - - -
General and administrative - - - - -
- - - - -
Depreciation of real estate - - - - -
Amortization - - - - -
Other - 91,702 159,460 89,086 76,891
--------------------------------------------------------------------
541,802 1,335,380 764,881 582,669
Income before interest income - 656,741 1,861,238 435,389 325,667
Interest income - - - - -
--------------------------------------------------------------------
Net income - $656,741 $1,861,238 $435,389 $325,667
====================================================================
Net income per share -
===========
Weighted average number of shares outstanding -
===========
</TABLE>
<TABLE>
<CAPTION>
Polo Run Wildwood Toscana The Arbors 1997
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Total
Adjustments Adjustments Adjustments Adjustments Adjustments Pro Forma
-------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 03/31/97 03/31/97 03/31/97 4/25/97
Rental income $1,304,547 $809,555 $1,083,249 $1,381,014 - $11,082,132
Expenses
Utilities 128,924 78,937 84,886 85,182 - 1,073,130
Repairs and maintenance 257,602 123,470 117,117 109,577 - 1,729,369
Taxes and insurance 162,030 100,862 142,695 182,186 - 1,439,516
Property management fee - - - - 610,687 (A) 610,687
Advertising 25,350 27,509 32,221 27,909 - 252,035
Other operating expenses - - - - - -
General and administrative - - - - 142,044 (B) 452,044
- - - - 310,000 (D) -
Depreciation of real estate - - - - 1,684,364 (C) 1,684,364
Amortization - - - - - -
Other 76,050 82,526 96,663 83,727 - 756,105
-------------------------------------------------------------------------------
649,956 413,304 473,582 488,581 2,747,095 7,997,250
Income before interest income 654,591 396,251 609,667 892,433 (2,747,095) 3,084,882
Interest income - - - - - -
-------------------------------------------------------------------------------
Net income $654,591 $396,251 $609,667 $892,433 ($2,747,095) $3,084,882
===============================================================================
Net income per share $0.46
==========
Weighted average number of shares outstanding 6,705,113
==========
</TABLE>
The pro forma information reflects adjustments for the actual rental income and
rental expenses for the properties for the period in 1997 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
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; (D) increase in general and
administrative expenses related to operations as a public REIT consisting of
directors and officers insurance, investor relations, corporate accounting,
legal and director expenses.
<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: July __, 1997 By: /s/ Glade M. Knight
-------------------
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 April 25, 1997
Exhibit Number Exhibit Page Number
- -------------- ------- -----------
23.1 Consent of Independent Auditors
Exhibit 23.1
<PAGE>
[L.P. MARTIN & COMPANY LETTERHEAD]
L.P. MARTIN & COMPANY
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Consent of Independent Auditors'
The Board of Directors
Apple Residential Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated June 4, 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 The Arbors on
Forest Ridge Apartments for the twelve month period ended February 28, 1997, for
inclusion in a form 8K filing with the Securities and Exchange Commission by
Apple Residential Income Trust, Inc.
Richmond, Virginia
July 3, 1997 /s/ L.P. MARTIN & CO., P.C.
