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: November 24, 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 Exhibits
a. Independent Auditors' Report
(Copper Crossing Apartments)
Historical Statement of Income
and Direct Operating Expenses
(Copper Crossing Apartments)
Note to Historical Statement of Income
and Direct Operating Expenses
(Copper Crossing Apartments)
b. Pro Forma Statement of Operations for the Nine Months ended
September 30, 1997 (unaudited)
Pro Forma Balance Sheet as of
September 30, 1997 (unaudited)
Pro Forma Statement of Operations
for the year ended December 31, 1996
(unaudited)
c. Exhibit
23.1 Consent of Independent Auditors
(Copper Crossing Apartments)
<PAGE>
The Company hereby amends Items 7.a., 7.b. and 7.c. of its Current Report
on Form 8-K dated November 24, 1997 as follows:
<PAGE>
ITEM 7.a.
<PAGE>
[L.P. MARTIN & COMPANY 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
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 Copper Crossing Apartments located in Fort Worth, Texas for the
twelve month period ended October 31, 1997. This statement is the
responsibility of the management of Copper Crossing 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 2 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 Copper Crossing Apartments
(as defined above) for the twelve month period ended October 31, 1997, in
conformity with generally accepted accounting principles.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
December 16, 1997
<PAGE>
COPPER CROSSING 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 OCTOBER 31, 1997
INCOME
Rental and Other Income $ 987,109
-----------
DIRECT OPERATING EXPENSES
Administrative and Other 138,305
Insurance 32,363
Repairs and Maintenance 210,279
Taxes, Property 92,700
Utilities 109,793
-----------
TOTAL DIRECT OPERATING EXPENSES 583,440
===========
Operating income exclusive of
items not comparable to the
proposed future operations
of the property $ 403,669
==========
see accompanying notes to the financial statement.
<PAGE>
COPPER CROSSING APARTMENTS
NOTES 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 OCTOBER 31, 1997
NOTE 1 - ORGANIZATION
Copper Crossing Apartments is a 200 unit garden style apartment complex located
on 6.91 acres in Fort Worth, Texas. The assets comprising the property were
owned by Copper Crossing Investors, Ltd., an entity unaffiliated with Apple
Residential Income Trust, Inc., during the financial statement period. Apple
Residential Income Trust, Inc. subsequently purchased the property.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICES
Revenue and Expense Recognition - The accompanying statement of rental
operations has been prepared using the accrual method of accounting. In
accordance with Rule 3-14 of Regulations 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, management
fees and entity expenses.
Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management of make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Repairs and Maintenance - Repairs and maintenance costs are expensed as
incurred, while significant improvements, renovations and replacements are
capitalized.
Advertising - Advertising costs are expensed in the period incurred.
<PAGE>
ITEM 7.b.
<PAGE>
Pro Forma Statement of Operations for the nine months ended September 30,
1997 (unaudited) The accompanying Unaudited Pro Forma Statement of Operations
for the nine months ended September 30, 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 (c) the Company had used proceeds from its best efforts
offering to acquire the properties. In the opinion of management, all
adjustments necessary to reflect the effects of these transactions have been
made.
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 nine months ended September 30, 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
Statement of Pro Forma Pro Forma
Operations Adjustments Adjustments
---------------------------------------------------------
<S> <C>
Date of Acquisitions - 1/31/97 1/31/97
Rental income $7,771,744 $99,879 $266,385
Expenses
Utilities 796,570 7,722 25,425
Repairs and maintenance 581,796 14,519 31,593
Taxes and insurance 1,176,182 12,720 36,546
Property management 403,479 - -
Advertising 194,785 2,547 4,429
General and administrative 391,837 - -
Depreciation of real estate 25,444 - -
Amortization 1,086,111 - -
Other operating expenses 602,517 7,642 13,288
---------------------------------------------------------
5,258,721 45,150 111,281
Income before interest income 2,513,023 54,729 155,104
Interest income 107,584 - -
Interest expense (377,154) - -
---------------------------------------------------------
Net income $2,243,453 $54,729 $155,104
=========================================================
Net income per share $0.44
===================
Weighted average number of shares outstanding 5,053,423
===================
</TABLE>
<TABLE>
<CAPTION>
Tahoe Mill Crossing Polo Run
Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments
---------------------------------------------------
<S> <C>
Date of Acquisitions 1/31/97 2/28/97 03/31/97
Rental income $100,023 $151,389 $326,137
Expenses
Utilities 12,431 24,712 32,231
Repairs and maintenance 29,313 36,083 64,401
Taxes and insurance 12,099 19,230 40,508
Property management - - -
Advertising 2,475 4,272 6,338
General and administrative - - -
Depreciation of real estate - - -
Amortization - - -
Other operating expenses 7,424 12,815 19,013
---------------------------------------------------
63,742 97,112 162,491
Income before interest income 36,281 54,277 163,646
Interest income - - -
Interest expense - - -
---------------------------------------------------
Net income $36,281 $54,277 $163,646
===================================================
Net income per share
Weighted average number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
Wildwood Toscana The Arbors Paces Cove
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments
---------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 03/31/97 03/31/97 4/25/97 6/30/97
Rental income $202,389 $270,812 $460,338 $916,348
Expenses
Utilities 19,734 21,222 28,394 59,454
Repairs and maintenance 30,868 29,279 36,526 136,551
Taxes and insurance 25,216 35,674 60,729 128,306
Property management - - - -
Advertising 6,877 8,055 9,303 29,629
General and administrative - - - -
Depreciation of real estate - - - -
Amortization - - - -
Other operating expenses 20,632 24,166 27,909 88,887
------------------------------------------------------------------------
103,327 118,396 162,861 442,827
Income before interest income 99,062 152,416 297,477 473,521
Interest income - - - -
Interest expense - - - -
------------------------------------------------------------------------
Net income $99,062 $152,416 $297,477 $473,521
========================================================================
Net income per share
Weighted average number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
Chaparosa Riverhill Copper Crossing
Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments
------------------------------------------------------------
<S> <C>
Date of Acquisitions 8/6/97 8/6/97 11/25/97
Rental income $ 801,713 $ 892,295 $ 740,332
Expenses
Utilities 45,622 67,516 82,345
Repairs and maintenance 132,132 148,439 157,709
Taxes and insurance 97,242 124,028 93,797
Property management - - -
Advertising 27,298 30,738 25,932
General and administrative - - -
Depreciation of real estate - - -
Amortization - - -
Other operating expenses 81,892 92,214 77,797
------------------------------------------------------------
384,186 462,935 437,580
Income before interest income 417,527 429,360 302,752
Interest income - - -
Interest expense - - -
------------------------------------------------------------
Net income $417,527 $429,360 $302,752
============================================================
Net income per share
Weighted average number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
1997
Pro Forma Total
Adjustments Pro Forma
-----------------------------------------
<S> <C>
Date of Acquisitions
Rental income - $12,999,784
Expenses
Utilities - 1,223,378
Repairs and maintenance - 1,429,210
Taxes and insurance - 1,862,277
Property management 286,587 (A) 690,066
Advertising - 352,678
General and administrative 65,243 (B) 457,080
Depreciation of real estate 767,996 (C) 793,440
Amortization - 1,086,111
Other operating expenses - 1,076,196
--------------------- --------------
1,119,826 8,970,436
Income before interest income (1,119,826) 4,029,348
Interest income - 107,584
Interest expense - (377,154)
--------------------- --------------
Net income ($1,119,826) $3,759,778
===================== ==============
Net income per share $0.41
==============
Weighted average number of shares outstanding 4,030,153 (D) 9,083,576
==================== ==============
</TABLE>
(A) Represents the property management fees of 5% of rental income and
processing costs equal to $2.50 per apartment per month charged by the
external management company for the period of time not owned by the company.
(B) Represents the advisory fee of .25% of accumulated capital contributions
under the "best efforts" offering for the period of time not owned by the
company.
(C) Represents the depreciation expense of the properties acquired based on
the purchase price, excluding amounts allocated to land, of the properties
for the period of time not owned by the company. The weighted average life of
the property depreciated was 27.5 years.
(D) Represents additional common shares assuming the properties were acquired
on January 1, 1997 with the "best efforts" offering of $9 per share for the
first $15 million and $10 per share above $15 million.
<PAGE>
Pro Forma Balance Sheet as of September 30, 1997 (unaudited) The accompanying
Unaudited Pro Forma Balance Sheet as of September 30, 1997 is presented as if
the Company had owned the properties included in the table below as of
September 30, 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 September 30, 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 columns assumes the Company used the
proceeds from its "best efforts" offerings to acquire the properties.
<TABLE>
<CAPTION>
Copper
Historical Crossing
Balance Pro Forma Total
Sheet Adjustments Pro Forma
---------------------------------------------------------------
<S> <C>
ASSETS
Investment in rental property
Land $13,504,976 $872,100 $14,377,076
Building 67,365,012 3,972,900 71,337,912
Property improvements 1,683,878 - 1,683,878
Furniture and fixtures 489,322 - 489,322
---------------------------------------------------------------
83,043,188 4,845,000 87,888,188
Less accumulated depreciation (1,086,111) - (1,086,111)
---------------------------------------------------------------
81,957,077 4,845,000 86,802,077
Cash and cash equivalents 1,350,305 - 1,350,305
Prepaid expenses 161,391 - 161,391
Other assets 561,464 - 561,464
---------------------------------------------------------------
Total Assets $84,030,237 $4,845,000 $88,875,237
===============================================================
LIABILITIES
Notes payable $5,132,702 - $ 5,132,702
Accounts payable 411,069 - 411,069
Accrued expenses 1,647,832 - 1,647,832
Rents received in advance 25,969 - 25,969
Tenant security deposits 371,794 - 371,794
---------------------------------------------------------------
7,589,366 - 7,589,366
SHAREHOLDERS' EQUITY
Common stock, no par value 76,005,921 4,845,000 80,850,921
Class B Convertible Stock, no par value 20,000 - 20,000
Receivable from principal shareholder (20,000) - (20,000)
Net income 434,950 - 434,950
---------------------------------------------------------------
76,440,871 4,845,000 81,285,871
Total Liabilities and Shareholders' Equity $84,030,237 $4,845,000 $88,875,237
===============================================================
</TABLE>
Notes to Pro Forma Balance Sheet
Pro Forma adjustments represents the purchase price of the related property,
including the 2% acquisition fee to Cornerstone Realty Income Trust, 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 (c) 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. In the opinion of management, all adjustments
necessary to reflect the effects of these transactions have been made.
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
Statement of Pro Forma Pro Forma
Operations Adjustments Adjustments
----------------------------------------------------------
<S> <C>
Date of Acquisitions - 1/31/97 1/31/97
Rental income - $1,198,543 $3,196,618
Expenses
Utilities - 92,664 305,101
Repairs and maintenance - 174,233 379,120
Taxes and insurance - 152,636 438,546
Property management fee - - -
Advertising - 30,567 53,153
Other operating expenses - - -
General and administrative - - -
- - -
Depreciation of real estate - - -
Amortization - - -
Other - 91,702 159,460
----------------------------------------------------------
541,802 1,335,380
Income before interest income - 656,741 1,861,238
Interest income - - -
----------------------------------------------------------
Net income - $656,741 $1,861,238
==========================================================
Net income per share -
====================
Weighted average number of shares outstanding -
====================
</TABLE>
<TABLE>
<CAPTION>
Tahoe Mill Crossing Polo Run
Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments
----------------------------------------------------------
<S> <C>
Date of Acquisitions 1/31/97 2/28/97 03/31/97
Rental income $1,200,270 $908,336 $1,304,547
Expenses
Utilities 149,166 148,270 128,924
Repairs and maintenance 351,750 216,500 257,602
Taxes and insurance 145,184 115,377 162,030
Property management fee - - -
Advertising 29,695 25,631 25,350
Other operating expenses - - -
General and administrative - - -
- - -
Depreciation of real estate - - -
Amortization - - -
Other 89,086 76,891 76,050
----------------------------------------------------------
764,881 582,669 649,956
Income before interest income 435,389 325,667 654,591
Interest income - - -
----------------------------------------------------------
Net income $435,389 $325,667 $654,591
==========================================================
Net income per share
Weighted average number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
Wildwood Toscana The Arbors Paces Cove
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments
------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 03/31/97 03/31/97 4/25/97 6/30/97
Rental income $809,555 $1,083,249 $1,381,014 $1,832,695
Expenses
Utilities 78,937 84,886 85,182 118,907
Repairs and maintenance 123,470 117,117 109,577 273,102
Taxes and insurance 100,862 142,695 182,186 256,612
Property management fee - - - -
Advertising 27,509 32,221 27,909 59,257
Other operating expenses - - - -
General and administrative - - - -
- - - -
Depreciation of real estate - - - -
Amortization - - - -
Other 82,526 96,663 83,727 177,773
------------------------------------------------------------------------
413,304 473,582 488,581 885,651
Income before interest income 396,251 609,667 892,433 947,044
Interest income - - - -
------------------------------------------------------------------------
Net income $396,251 $609,667 $892,433 $947,044
========================================================================
Net income per share
Weighted average number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
Copper
Chaparosa Riverhill Crossing
Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments
--------------------------------------------------------------------
<S> <C>
Date of Acquisitions 8/6/97 8/6/97 11/25/97
Rental income $ 1,374,365 $ 1,529,649 $ 987,109
Expenses
Utilities 78,209 115,741 109,793
Repairs and maintenance 226,512 254,466 210,279
Taxes and insurance 166,700 212,619 125,063
Property management fee - - -
Advertising 46,796 52,694 34,576
Other operating expenses - - -
General and administrative - - -
- - -
Depreciation of real estate - - -
Amortization - - -
Other 140,387 158,081 103,729
--------------------------------------------------------------------
658,604 793,601 583,440
Income before interest income 715,761 736,048 403,669
Interest income - - -
--------------------------------------------------------------------
Net income $ 715,761 $ 736,048 $ 403,669
====================================================================
Net income per share
Weighted average number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Total
Adjustments Pro Forma
------------------- ---------------------
<S> <C>
Date of Acquisitions
Rental income - $16,805,950
Expenses
Utilities - 1,495,780
Repairs and maintenance - 2,693,728
Taxes and insurance - 2,200,510
Property management fee 923,578 (A) 923,578
Advertising - 445,358
Other operating expenses - -
General and administrative 211,386 (B) 521,386
310,000 (D) -
Depreciation of real estate 2,512,341 (C) 2,512,341
Amortization - -
Other - 1,336,075
------------------- ---------------------
3,957,305 12,128,755
Income before interest income (3,957,305) 4,677,195
Interest income - -
------------------- ---------------------
Net income ($3,957,305) $4,677,195
=================== =====================
Net income per share $0.47
=====================
Weighted average number of shares outstanding 9,885,561 (E) 9,885,561
===================== ====================
</TABLE>
(A) Represents the property management fees of 5% of rental income and
processing costs equal to $2.50 per apartment per month charged by the
external management company for the period of time not owned by the company.
(B) Represents the advisory fee of .25% of accumulated capital contributions
under the "best efforts" offering for the period of time not owned by the
company.
(C) Represents the depreciation expense of the properties acquired based on
the purchase price, excluding amounts allocated to land, of the properties
for the period of time not owned by the company. The weighted average life of
the property depreciated was 27.5 years.
(D) Represents the expenses related to operations as a public REIT, which
consists of directors and officers insurance, investor relations, corporate
accounting, legal and director expenses.
(E) Represents additional common shares assuming the properties were acquired
on January 1, 1996 with the "best efforts" offering of $9 per share for the
first $15 million and $10 per share above $15 million.
<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: January __, 1998 By:/s/ Glade M. Knight
-------------------
Glade M. Knight
President of Apple Residential
Realty Income Trust, Inc.
<PAGE>
EXHIBIT INDEX
Apple Residential Income Trust, Inc.
Form 8-K/A to Form 8-K dated November 24, 1997
Exhibit Number Exhibit Page Number
23.1 Consent of Independent Auditors
(Copper Crossing Apartments)
<PAGE>
ITEM 7.c.
<PAGE>
[L.P. MARTIN & COMPANY 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
Apple Residential Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated December 16, 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 Copper Crossing
Apartments for the twelve month period ended October 31, 1997, for inclusion in
a form 8K filing with the Securities and Exchange Commission by Apple
Residential Income Trust, Inc.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
December 16, 1997
