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: March 31, 1998
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 Ridge Apartments)
Historical Statement of Income
and Direct Operating Expenses
(Copper Ridge Apartments)
Note to Historical Statement of Income
and Direct Operating Expenses
(Copper Ridge Apartments)
b. Pro Forma Consolidated Balance Sheet as of
December 31, 1997 (unaudited)
Pro Forma Consolidated Statement of Operations
for the year ended December 31, 1997
(unaudited)
c. Exhibit
23.1 Consent of Independent Auditors
(Copper Ridge Apartments)
<PAGE>
The Company hereby amends Items 7.a., 7.b. and 7.c. of its Current
Report on Form 8-K dated March 31, 1998 as follows:
<PAGE>
ITEM 7.a.
<PAGE>
[L.P. MARTIN & COMPANY LETTERHEAD]
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 Copper Ridge Apartments located in Fort Worth, Texas
for the twelve month period ended February 28, 1998. This statement is the
responsibility of the management of Copper 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 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 Ridge
Apartments (as defined above) for the twelve month period ended February 28,
1998, in conformity with generally accepted accounting principles.
Richmond, Virginia
April 14, 1998
/s/ L.P. Martin & Co., P.C.
<PAGE>
COPPER 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, 1998
INCOME
Rental and Other Income $ 914,447
---------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 147,011
Insurance 19,847
Repairs and Maintenance 282,042
Taxes, Property 99,861
Utilities 160,565
--------
TOTAL DIRECT OPERATING EXPENSES 709,326
--------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 205,121
=========
See accompanying notes to the financial statement.
<PAGE>
COPPER RIDGE 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 FEBRUARY 28, 1998
NOTE 1 - ORGANIZATION
Copper Ridge Apartments is a 200 unit garden style apartment complex located on
approximately 7.0 acres in Fort Worth, Texas. The assets comprising the property
were owned by Copper Limited Partnership, an entity unaffiliated with Apple
Residential Income Trust, Inc., during the financial statement period. Apple
Residential Income Trust, Inc. purchased the property March 31, 1998.
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 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, and management fees.
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
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.
NOTE 3 - RELATED PARTY TRANSACTIONS
Repairs and maintenance includes $25,963 paid to an affiliate for various work
performed at the property by the affiliate's employee staff.
<PAGE>
ITEM 7.b.
<PAGE>
Pro Forma Consolidated Balance Sheet as of December 31, 1997 (unaudited) The
Unaudited Pro Forma Consolidated Balance Sheet gives effect to the 3
property acquisitions during 1998 as having occurred on December 31, 1997.
The Unaudited Pro Forma Consolidated 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,
1997, nor does it purport to represent the future financial position of
the Company. This Unaudited Pro Forma Consolidated Balance Sheet should be
read in conjunction with, and is qualified in its entirety by, the respective
historical financial statements.
<TABLE>
<CAPTION>
Copper
Historical Main Park Timberglen Ridge
Balance Pro Forma Pro Forma Pro Forma Total
Sheet Adjustments Adjustments Adjustments Pro Forma
----------------------------------------------------------------------------
Date of acquisition 2/4/98 2/13/98 3/31/98
<S> <C>
ASSETS
Investment in rental property
Land $ 15,396,823 $ 571,200 $ 2,448,000 $ 784,635 $ 19,200,658
Building and improvements 73,113,886 7,588,800 9,792,000 3,830,865 94,325,551
Furniture and fixtures 1,123,639 - - - 1,123,639
-----------------------------------------------------------------------------
89,634,348 8,160,000 12,240,000 4,615,500 114,649,848
Less accumulated depreciation (1,898,003) - - - (1,898,003)
-----------------------------------------------------------------------------
87,736,345 8,160,000 12,240,000 4,615,500 112,751,845
Cash and cash equivalents 24,162,572 (8,160,000) (12,240,000) - 3,762,572
Prepaid expenses 142,581 - - - 142,581
Other assets 444,022 - - - 444,022
-----------------------------------------------------------------------------
24,749,175 (8,160,000) (12,240,000) - 4,349,175
-----------------------------------------------------------------------------
Total Assets $ 112,485,520 $ - $ - $ 4,615,500 $ 117,101,020
=============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Accounts payable $ 536,324 - - - $ 536,324
Accrued expenses 2,143,888 - - - 2,143,888
Rents received in advance 70,051 - - - 70,051
Tenant security deposits 394,702 - - - 394,702
-----------------------------------------------------------------------------
3,144,965 - - - 3,144,965
Shareholders' equity
Common stock 109,090,459 - - $ 4,615,500 113,705,959
Class B convertible stock 20,000 - - - 20,000
Receivable from officer-shareholder (20,000) - - - (20,000)
Distributions greater than net income 250,096 - - - 250,096
-----------------------------------------------------------------------------
109,340,555 - - 4,615,500 113,956,055
-----------------------------------------------------------------------------
Total Liabilities and Shareholders' Equity $ 112,485,520 $ - $ - $ 4,615,500 $ 117,101,020
=============================================================================
</TABLE>
Notes to Pro Forma Balance Sheet
Pro Forma adjustments represent 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 cash and common stock
reflect the use of net proceeds from sales of common stock from the Company's
continuous offering.
<PAGE>
Pro Forma Consolidated Statement of Operations for the year ended December 31,
1997 (unaudited)
The Unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1997 is presented as if the 12 property acquisitions during 1997
and the 3 property acquisitions during 1998 had occurred on January 1, 1997. The
Unaudited Pro Forma Consolidated Statement of Operations assumes the Company
qualifying as a REIT, distributing at least 95% of its taxable income, and,
therefore, incurring no federal income tax liability for the period presented.
In the opinion of management, all adjustments necessary to reflect the effects
of these transactions have been made.
The Unaudited Pro Forma Consolidated 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, 1997 if
the acquisitions 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 Consolidated 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 1997
Statement of Acquisitions Pro Forma
Operations Adjustments Adjustments
--------------------------------------------------------------
Date of Acquisition - - -
<S> <C>
Rental income $12,005,968 $ 5,392,558 -
Rental expenses:
Property and maintenance 3,571,484 1,982,189 -
Taxes and insurance 1,765,741 706,939 -
Property management 656,267 - $ 295,813 (A)
General and administrative 351,081 - 67,262 (B)
Amortization 28,490 - -
Depreciation of rental property 1,898,003 - 792,074 (C)
--------------------------------------------------------------
Total expenses 8,271,066 2,689,128 1,155,149
Income before interest income (expense) 3,734,902 2,703,430 (1,155,149)
Interest income 222,676 - -
Interest expense (458,384) - -
--------------------------------------------------------
Net income $3,499,194 $ 2,703,430 ($1,155,149)
Basic and diluted earnings per common share $0.54
======
Wgt. avg. number of common shares outstanding 6,493,114 3,106,405 (D)
========== ====================
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Main Park Timberglen
Before 1998 Pro Forma Pro Forma
Acquisitions Adjustments Adjustments
-----------------------------------------------------------
Date of Acquisition - 2/4/98 2/13/98
<S> <C>
Rental income $17,398,526 $ 1,469,496 $ 1,954,938
Rental expenses:
Property and maintenance 5,553,673 536,090 477,771
Taxes and insurance 2,472,680 225,564 258,159
Property management 952,080 - -
General and administrative 418,343 - -
Amortization 28,490 - -
Depreciation of rental property 2,690,077 - -
------------- ------------------------------------
Total expenses 12,115,343 761,654 735,930
Income before interest income (expense) 5,283,183 707,842 1,219,008
Interest income 222,676 - -
Interest expense (458,384) - -
------------- ------------------------------------
Net income $5,047,475 $707,842 $1,219,008
Basic and diluted earnings per common share $0.53
======
Wgt. avg. number of common shares outstanding 9,599,519
===========
</TABLE>
<TABLE>
<CAPTION>
Copper
Ridge
Pro Forma Pro Forma Total
Adjustments Adjustments Pro Forma
----------------------------------------------------------------
Date of Acquisition 3/31/98 - -
<S> <C>
Rental income $914,447 - $21,737,407
Rental expenses:
Property and maintenance 589,618 - 7,157,152
Taxes and insurance 119,708 - 3,076,111
Property management - $ 237,824 (A) 1,189,904
General and administrative - 62,539 (B) 480,882
Amortization - - 28,490
Depreciation of rental property - 771,333 (C) 3,461,410
----------------------------------------------------------------
Total expenses 709,326 1,071,696 15,393,949
Income before interest income (expense) 205,121 (1,071,696) 6,343,458
Interest income - - 222,676
Interest expense - - (458,384)
-------------------------------------- --------------
Net income $205,121 ($1,071,696) $6,107,750
Basic and diluted earnings per common share $0.49
=====
Wgt. avg. number of common shares outstanding 2,875,345 (D) 12,474,864
===================== ===========
</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 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, 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 net proceeds from the "best efforts" offering of $9
per share (net $7.83 per share) for the first $15 million and $10 per
share (net $8.70 per share) above $15 million.
<PAGE>
Pro Forma Consolidated Statement of Operations for the year ended December 31,
1997 (unaudited)
The following schedule provides detail of 1997 acquisitions by property included
in the Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1997.
<TABLE>
<CAPTION>
Brookfield Eagle Crest Tahoe Mill Crossing Polo Run
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments Adjustments
---------------------------------------------------------------------------------
Date of Acquisitions 1/31/97 1/31/97 1/31/97 2/28/97 03/31/97
<S> <C>
Rental income $99,879 $266,385 $100,023 $151,389 $326,137
Expenses
Property and maintenance 32,430 74,735 51,643 77,882 121,983
Taxes and insurance 12,720 36,546 12,099 19,230 40,508
Property management - - - - -
General and administrative - - - - -
Depreciation of real estate - - - - -
Amortization - - - - -
------------------------------------------------------------------------------
45,150 111,281 63,742 97,112 162,491
Income before interest income 54,729 155,104 36,281 54,277 163,646
Interest income - - - - -
Interest expense - - - - -
------------------------------------------------------------------------------
Net income $54,729 $155,104 $36,281 $54,277 $163,646
==============================================================================
</TABLE>
<TABLE>
<CAPTION>
Wildwood Toscana The Arbors Paces Cove
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments
---------------------------------------------------------------------
Date of Acquisitions 03/31/97 03/31/97 4/25/97 6/30/97
<S> <C>
Rental income $202,389 $270,812 $460,338 $916,348
Expenses
Property and maintenance 78,111 82,722 102,132 314,521
Taxes and insurance 25,216 35,674 60,729 128,306
Property management - - - -
General and administrative - - - -
Depreciation of real estate - - - -
Amortization - - - -
---------------------------------------------------------------------
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
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
Copper
Chaparosa Riverhill Crossing
Pro Forma Pro Forma Pro Forma Total
Adjustments Adjustments Adjustments Pro Forma
-------------------------------------------------------------------
Date of Acquisitions 8/6/97 8/6/97 11/25/97
<S> <C>
Rental income $ 801,713 $ 892,295 $ 904,850 $5,392,558
Expenses
Property and maintenance 286,943 338,906 420,181 1,982,189
Taxes and insurance 97,242 124,028 114,641 706,939
Property management - - - 0
General and administrative - - - 0
Depreciation of real estate - - - 0
Amortization - - - 0
---------------------------------------------------------------
384,185 462,934 534,822 2,689,128
Income before interest income 417,528 429,361 370,028 2,703,430
Interest income - - -
Interest expense - - -
---------------------------------------------------------------
Net income $417,528 $429,361 $370,028 $2,703,430
===============================================================
</TABLE>
<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 30, 1998 By:/s/ Glade M. Knight
-------------------
Glade M. Knight
President of
Apple Residential Realty Income
Trust, Inc.
<PAGE>
ITEM 7.c.
<PAGE>
EXHIBIT INDEX
Apple Residential Income Trust, Inc.
Form 8-K/A to Form 8-K dated March 31, 1998
Exhibit Number Exhibit Page Number
- -------------- ------- ------------
23.1 Consent of Independent Auditors
(Copper Ridge Apartments)
[L.P. MARTIN & COMPANY LETTERHEAD]
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 April 14, 1998 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 Ridge Apartments for the twelve month period ended February 28, 1998, for
inclusion in a form 8K filing with the Securities and Exchange
Commission by Apple Residential Income Trust, Inc.
Richmond, Virginia
April 23, 1998 /s/ L.P. Martin & Co., P.C.
