FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-10635
STICKER SUPPLEMENT TO SUPPLEMENT NO.8
DATED FEBRUARY 13, 1998; SUPPLEMENT
NO.8 DATED FEBRUARY 13, 1998 IS TO BE
USED IN CONJUNCTION WITH SUPPLEMENT
NO.7 DATED FEBRUARY 4, 1998 AND
PROSPECTUS DATED NOVEMBER 19, 1996
================================================================================
SUMMARY OF SUPPLEMENTS TO PROSPECTUS
(SEE THE SUPPLEMENTS FOR ADDITIONAL INFORMATION):
Supplement No. 7 dated February 2, 1998 (incorporating Supplements No. 1, No. 2,
No. 3, No. 4, No. 5 and No. 6):
(1) Reports on the acquisition by the Company of twelve apartment complexes.
(2) Reports on the granting to Cornerstone Realty Income Trust, Inc. of a
right to acquire up to 9.8% of the Company's outstanding Shares, and on
certain other relationships with Cornerstone Realty Income Trust, Inc.
(3) Reports on the transfer of all of the Company's properties to a limited
partnership subsidiary indirectly wholly-owned by the Company (the
"Reorganization") and the adoption of certain amendments to the Company's
Bylaws related to the Reorganization.
(4) Reports on the Company obtaining an unsecured line of credit to
facilitate property acquisitions.
(5) Provides certain other updated information concerning the Company and its
properties.
As of December 31, 1997 the Company had closed the sale of 2,084,444 Shares
at $9 per Share, and 10,287,373 Shares at $10 per Share, representing aggregate
gross proceeds to the Company of $121,633,726, and proceeds net of selling
commissions and marketing expenses of $109,846,358. The Company endeavors
continually to invest proceeds in the acquisition of additional apartment
communities as promptly as practicable after the receipt of such proceeds. As of
December 31, 1997, substantially all of the proceeds of the offering available
for investment in properties had been so invested.
Supplement No. 8 dated February 13, 1998 reports on the acquisition by the
Company of two additional apartment complexes.
Cornerstone Realty Income Trust, Inc. will receive fees and expense
reimbursements in connection with the Company's acquisitions and the management
of the properties and the Company. In connection with the property acquisitions
described in the Supplement, Apple Realty Group, Inc., an Affiliate of the
Advisor, or Cornerstone Realty Income Trust, Inc., as successor-in-interest to
Apple Realty Group, Inc., received property acquisition fees totaling
$2,057,917.
<PAGE>
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NO. 333-10635
SUPPLEMENT NO.8 DATED FEBRUARY 13,
1998 IS TO BE USED IN CONJUNCTION
WITH SUPPLEMENT NO.7 DATED FEBRUARY
4, 1998 AND PROSPECTUS DATED NOVEMBER
19, 1996
================================================================================
SUPPLEMENT NO. 8 DATED FEBRUARY 13, 1998
TO PROSPECTUS DATED NOVEMBER 19, 1996
APPLE RESIDENTIAL INCOME TRUST, INC.
The following information supplements the Prospectus of Apple Residential
Income Trust, Inc. dated November 19, 1996 and Supplement No. 7 dated February
2, 1998, and is part of such Prospectus. PROSPECTIVE INVESTORS SHOULD CAREFULLY
REVIEW THE PROSPECTUS, SUPPLEMENT NO. 7 AND THIS SUPPLEMENT.
The Prospectus and Supplements thereto contain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Such forward-looking statements include, without
limitation, statements as to anticipated renovations to Company properties and
anticipated improvements in property operations from completed and planned
property renovations, and the possible acquisition by Cornerstone Realty Income
Trust, Inc. of Shares in the Company or the business or assets of the Company.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from the results of
operations or plans expressed or implied by such forward-looking statements.
Such factors include, among other things, unanticipated adverse business
developments affecting the Company, the properties or Cornerstone Realty Income
Trust, Inc., as the case may be, adverse changes in the real estate markets and
general and local economic and business conditions. Investors should review the
more detailed risks and uncertainties set forth under the caption "Risk Factors"
in the Prospectus. Although the Company believes that the assumptions underlying
the forward-looking statements contained in the Prospectus and the Supplements
are reasonable, any of the assumptions could be inaccurate, and therefore there
can be no assurance that the forward-looking statements included in the
Prospectus and Supplements will prove to be accurate. In light of the
significant uncertainties inherent in the forward-looking statements included in
the Prospectus and the Supplements, the inclusion of such information should not
be regarded as a representation by the Company or any other person that the
results or conditions described in such forward-looking statements or the
objectives and plans of the Company will be achieved.
PROPERTY ACQUISITIONS
On February 4, 1998, the Company acquired the Main Park Apartments in
Duncanville, outside of Dallas, Texas. On February 13, 1998, the Company
acquired the Timberglen Apartments in Dallas, Texas. Additional information on
these properties is provided below.
MAIN PARK APARTMENTS
DUNCANVILLE, TEXAS
On February 4, 1998, the Company purchased the Main Park Apartments located
at 1303 South Main Street in Duncanville (southwest of Dallas), Texas (The
"Property").
The Property comprises 192 apartment units. The purchase price for the
Property was $8,000,000. The seller was MGW Apartments Partnership, a Texas
limited partnership which is not affiliated with the Company, Apple Residential
Advisors, Inc. or their Affiliates. The entire purchase price was paid using
proceeds from the sale of Company common shares. Title to the Property was
conveyed to the Company by limited warranty deed.
LOCATION. The Property is located on South Main Street in Duncanville,
southwest of Dallas, within the greater Dallas/Fort Worth Consolidated
Metropolitan Statistical Area, or as it is called locally, "The Metroplex." For
information on The Metroplex, see under "Brookfield Apartments" in Supplement
No. 7.
<PAGE>
The immediate area surrounding the Property consists of other multi-family,
single-family, commercial and retail development. The Property is located near
restaurants, businesses, schools, and churches, and is readily accessible from
Interstate 20 and Highway 67. The Property is an approximately 20-minute drive
from downtown Dallas.
DESCRIPTION OF THE PROPERTY. The Property consists of 192 garden-style
apartment units in 24 two-story buildings on approximately 10.4 acres of land.
The Property was constructed in 1984.
The Property offers eight different unit types. The unit mix and rents
being charged new tenants as of February, 1998 are as follows:
<TABLE>
<CAPTION>
APPROXIMATE
INTERIOR MONTHLY
QUANTITY TYPE SQUARE FOOTAGE RENTAL
- ---------- --------------------------------------- ---------------- --------
<S> <C> <C> <C>
49 One bedroom/one bathroom 757 $579
11 One bedroom/one bathroom (view) 757 609
22 One bedroom/one bathroom w/den 901 689
8 One bedroom/one bathroom w/den (view) 901 709
39 Two bedrooms/two bathrooms 1,056 749
15 Two bedrooms/two bathrooms (view) 1,056 769
38 Two bedrooms/two bathrooms 1,058 769
10 Two bedrooms/two bathrooms (view) 1,058 789
</TABLE>
The apartments provide a total of approximately 180,000 square feet of net
rentable area.
The Company believes that the Property has generally been well maintained
and is in good condition. The Company has budgeted approximately $144,000 for
additional capital improvements to the Property. These improvements will include
clubhouse renovations, exterior painting and interior upgrades.
Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased. As an example, a
two-bedroom, two-bathroom apartment unit (1,058 square feet) rented for $608 in
1993, $618 in 1994, $655 in 1995, $683 in 1996 and $702 in 1997. The average
effective annual rental per square foot at the Property for 1993, 1994, 1995,
1996 and 1997 was $7.08, $7.20, $7.63, $7.96, and $8.18, respectively.
The buildings are wood-frame construction with a combination of brick
veneer and masonite hardboard siding on reinforced concrete slab foundations.
Roofs are sloped fiberglass shingled on plywood.
The Property has two outdoor swimming pools, a jacuzzi, two laundry
facilities and a wooded creek view. There is also a clubhouse which includes a
kitchen, entertainment area and leasing office. There is ample paved parking for
the tenants.
All apartment units have wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen, bath, entry and utility areas. Each apartment unit
has a cable television hook-up and an individually controlled heating and air
conditioning unit. Each kitchen is equipped with a refrigerator/freezer,
electric range and oven, dishwasher and garbage disposal. Each apartment unit
has a fireplace, washer/dryer connections, miniblinds, exterior storage and a
private balcony or patio. All upstairs units have vaulted ceilings. The owner of
the Property pays for cold water, gas usage for hot water, sewer service and
trash removal. Tenants pay for their own electricity service, which includes
cooking, lighting, heating and air conditioning.
There are at least four apartment properties that compete with the
Property. All offer similar amenities and generally have rents that are
comparable to those of the Property. Based on a recent telephone survey, the
Advisor estimates that occupancy in the nearby competing properties now averages
approximately 94%.
2
<PAGE>
According to information provided by the seller, physical occupancy at the
Property averaged approximately 94% in 1993, 95% in 1994, 96% in 1995, 96% in
1996, and 96% in 1997. As of February 4, 1998, the Property was 95% occupied.
The tenants are a mix of white-collar workers, blue-collar workers, students and
retired persons.
The following table sets forth the 1997 real estate tax information of the
Property:
<TABLE>
<CAPTION>
ASSESSED
JURISDICTION VALUE RATE TAX
- --------------------------------- ------------- ------------- ----------------
<S> <C> <C> <C>
County of Dallas ......... $6,850,180 $ 2.80107 $ 191,878.34
</TABLE>
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $7,458,550) will generally be depreciated
over 27.5 years on a straight-line basis. The basis of the personal property
portion will be depreciated in accordance with the modified accelerated cost
recovery system of the Code. Amounts to be spent by the Company on repairs and
improvements will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.
The Advisor and the Company believe that the Property is and will continue
to be adequately covered by property and liability insurance.
ACQUISITION AND MANAGEMENT SERVICES AND FEES. In consideration of services
rendered to the Company in connection with the selection and acquisition of the
Property, the Company paid Cornerstone Realty Income Trust, Inc., a property
acquisition fee equal to 2% of the purchase price of the Property, or $160,000.
Cornerstone Realty Income Trust, Inc. will serve as property manager for the
Property and for its services will be paid by the Company a monthly management
fee equal to 5% of the gross revenues of the Property plus reimbursement of
certain expenses.
TIMBERGLEN APARTMENTS
DALLAS, TEXAS
On February 13, 1998, the Company purchased the Timberglen Apartments
located at 3773 Timberglen Road in Dallas, Texas (The "Property"). The Property
comprises 304 apartment units.
The purchase price for the Property was $12,000,000. The seller was
Timberglen Apartments, Ltd., a Texas limited partnership which is not affiliated
with the Company, Apple Residential Advisors, Inc. or their Affiliates. The
entire purchase price was paid using proceeds from the sale of Company common
shares. Title to the Property was conveyed to the Company by limited warranty
deed.
LOCATION. The Property is located in the north area of Dallas, within the
greater Dallas/Fort Worth Consolidated Metropolitan Statistical Area, or as it
is called locally, "The Metroplex." For information on The Metroplex, see under
"Brookfield Apartments" in Supplement No. 7.
The immediate area surrounding the Property consists of other multi-family,
commercial and retail development. The Property is located near restaurants,
businesses, schools, and churches, and is readily accessible from Interstate 35,
the North Dallas Tollway, Central Expressway and LBJ Freeway. The Property is an
approximately 15-minute drive from downtown Dallas.
DESCRIPTION OF THE PROPERTY. The Property consists of 304 garden and
townhouse style apartment units in 28 two-story and three-story buildings on
approximately 10.5 acres of land. The Property was constructed in 1984.
3
<PAGE>
The Property offers five different unit types. The unit mix and rents being
charged new tenants as of February, 1998 are as follows:
<TABLE>
<CAPTION>
APPROXIMATE
INTERIOR MONTHLY
QUANTITY TYPE SQUARE FOOTAGE RENTAL
- ---------- -------------------------------------- ---------------- --------
<S> <C> <C> <C>
120 One bedroom/one bathroom 512 $485
80 One bedroom/one bathroom 743 570
32 One bedroom/one bathroom w/den 841 650
48 Two bedrooms/two bathrooms 983 710
24 Two bedrooms/two bathrooms/studio TH 1,100 810
</TABLE>
The apartments provide a total of approximately 221,000 square feet of net
rentable area.
The Company believes that the Property has generally been well maintained
and is in good condition. The Company has budgeted approximately $228,000 for
additional capital improvements to the Property. These improvements will include
clubhouse renovations, landscaping and interior upgrades.
Leases at the Property are generally for terms of one year or less. Average
rental rates for the past five years have generally increased. As an example, a
one-bedroom, one-bathroom apartment unit (743 square feet) rented for $410 in
1993, $420 in 1994, $440 in 1995, $485 in 1996 and $510 in 1997. The average
effective annual rental per square foot at the Property for 1993, 1994, 1995,
1996 and 1997 was $6.97, $7.14, $7.48, $8.25, and $8.67, respectively.
The buildings are wood-frame construction with a combination of brick
veneer, stucco and masonite hardboard siding on reinforced concrete slab
foundations. Roofs are sloped fiberglass shingled on plywood.
The Property has a two-tiered outdoor swimming pool, two laundry facilities
and an access gate to the Property. There is also a clubhouse which includes a
kitchen, entertainment area and a leasing office. There is ample paved parking
for the tenants.
All apartment units have wall-to-wall carpeting in the living areas and
vinyl floors in the kitchen and baths. Each apartment unit has a cable
television hook-up and an individually controlled heating and air conditioning
unit. Each kitchen is equipped with a refrigerator/freezer, electric range and
oven, dishwasher, microwave and garbage disposal. Each apartment unit (other
than the smallest one-bedroom unit) has a fireplace and washer/dryer
connections. Sixteen units substitute a dry bar for the fireplace. Each
apartment unit (other than the largest two-bedroom unit) has a large patio with
exterior storage. All of the upper level units have vaulted ceilings. The owner
of the Property pays for cold water, gas usage for hot water, sewer service and
trash removal. Tenants pay for their own electricity service, which includes
cooking, lighting, heating and air conditioning.
There are at least 10 apartment properties that compete with the Property.
All offer similar amenities and generally have rents that are comparable to
those of the Property. Based on a recent telephone survey, the Advisor estimates
that occupancy in the nearby competing properties now averages approximately
95%.
According to information provided by the seller, physical occupancy at the
Property averaged approximately 94% in 1993, 95% in 1994, 97% in 1995, 97% in
1996, and 97% in 1997. As of February 12, 1998, the Property was 97% occupied.
The tenants are a mix of white-collar workers, blue-collar workers, students and
retired persons.
4
<PAGE>
The following table sets forth the 1997 real estate tax information of the
Property:
<TABLE>
<CAPTION>
ASSESSED
JURISDICTION VALUE RATE TAX
- --------------------------------------------- ------------- ------------- ---------------
<S> <C> <C> <C>
City of Dallas ....................... $9,423,870 $ 0.65160 $ 61,405.94
County of Denton ..................... 9,500,000 0.25590 24,310.50
Carollton-Farmers Branch ISD ......... 9,423,870 1.49610 140,990.52
------------
$ 226,706.96
</TABLE>
The basis of the depreciable residential real property portion of the
Property (currently estimated at about $9,600,176) will generally be depreciated
over 27.5 years on a straight-line basis. The basis of the personal property
portion will be depreciated in accordance with the modified accelerated cost
recovery system of the Code. Amounts to be spent by the Company on repairs and
improvements will be treated for tax purposes as permitted by the Code based on
the nature of the expenditures.
The Advisor and the Company believe that the Property is and will continue
to be adequately covered by property and liability insurance.
ACQUISITION AND MANAGEMENT SERVICES AND FEES. In consideration of services
rendered to the Company in connection with the selection and acquisition of the
Property, the Company paid Cornerstone Realty Income Trust, Inc., a property
acquisition fee equal to 2% of the purchase price of the Property, or $240,000.
Cornerstone Realty Income Trust, Inc. will serve as property manager for the
Property and for its services will be paid by the Company a monthly management
fee equal to 5% of the gross revenues of the Property plus reimbursement of
certain expenses.
5
