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 : JUNE 2, 1998
APPLE RESIDENTIAL INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 0-23983 54-1816010
(State of incorporation) (Commission (IRS Employer
File Number) Identification No.)
306 East Main Street 23219
Richmond, Virginia (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including area code:
(804) 643-1761
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC.
FORM 8-K/A
INDEX
PAGE
NUMBER
------
Item 7. Financial Statements, Pro Forma Financial Information Exhibits
a. Independent Auditors' Report
(Summer Tree Apartments) 4
Historical Statement of Income and
Direct Operating Expenses
(Summer Tree Apartments) 5
Note to Historical Statement of
Income and Direct Operating
Expenses (Summer Tree Apartments) 6
b. Pro Forma Consolidated Statement of Operations
for the Year ended December 31, 1997
(unaudited)
Pro Forma Consolidated Statement of Operations
for the three month period ended March 31, 1998
(unaudited)
Pro Forma Consolidated Balance Sheet as of
March 31, 1998 (unaudited)
c. Exhibits
23.1 Consent of Independent Auditors
(Summer Tree Apartment)
-2-
<PAGE>
ITEM 7.A.
-3-
<PAGE>
[L.P. MARTIN & COMPANY LETTERHEAD]
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 Summer Tree Apartments located in Dallas, Texas for the twelve
month period ended May 31, 1998. This statement is the responsibility of the
management of Summer Tree 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 expense of Summer Tree
Apartments (as defined above) for the twelve month period ended May 31, 1998, in
conformity with generally accepted accounting principles.
/s/ L.P. Martin & Co., P.C.
Richmond, Virginia
July 16, 1998
-4-
<PAGE>
SUMMER TREE APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED MAY 31, 1998
INCOME
Rental and Other Income .................... $1,212,080
----------
DIRECT OPERATING EXPENSES
Administrative and Other ................... 163,234
Insurance .................................. 32,628
Repairs and Maintenance .................... 217,870
Taxes, Property ............................ 118,845
Utilities .................................. 104,723
----------
Total Direct Operating Expenses ....... 637,300
----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property ........................ $ 574,780
==========
See accompanying notes to the financial statement.
-5-
<PAGE>
SUMMER TREE APARTMENTS
NOTES TO THE STATEMENT OF INCOME AND DIRECT OPERATING EXPENSE
EXCLUSIVE OF ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTH PERIOD ENDED MAY 31, 1998
NOTE 1 -- ORGANIZATION
Summer Tree Apartments is a 232 unit garden style apartment complex located on
approximately 5.97 acres in Dallas, Texas. The assets comprising the property
were owned by Sunrise Enterprises, Inc., a Texas Corporation unaffiliated with
Apple Residential Income Trust, Inc., during the financial statement period.
Apple Residential Income Trust, Inc. purchased the property on June 1, 1998.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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, amortization, legal fees,
management fees and franchise taxes.
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 replacement are
capitalized.
Advertising -- Advertising costs are expensed in the period incurred.
-6-
<PAGE>
ITEM 7.B.
NOTE: The pro forma financial statements reflect, as applicable, property
acquisitions of the registrant occurring on or before the date of filing of this
report.
-7-
<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 13 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 Company's
respective historical financial statements and notes thereto.
<TABLE>
<CAPTION>
HISTORICAL PRO FORMA MAIN PARK TIMBERGLEN
STATEMENT OF 1997 PRO FORMA BEFORE 1998 PRO FORMA PRO FORMA
OPERATIONS ACQUISITONS(F) ADJUSTMENTS ACQUISITIONS ADJUSTMENTS ADJUSTMENTS
- ---------------------------- ------------- ----------------- --------------- ---------------- --------------- -------------
DATE OF ACQUISITION -- -- -- -- 2/4/98 2/13/98
<S> <C> <C> <C> <C> <C> <C>
Rental income $12,005,968 $ 5,392,558 -- $ 17,398,526 $ 1,469,496 $ 1,954,938
Rental expenses:
Property and maintenance 3,571,484 1,982,189 -- 5,553,673 536,090 477,771
Taxes and insurance 1,765,741 706,939 -- 2,472,680 225,564 258,159
Property management 656,267 -- $ 295,813 (A) 952,080 -- --
General and administrative 351,081 -- 67,262 (B) 418,343 -- --
Amortization 28,490 -- -- 28,490 -- --
Depreciation of rental
property 1,898,003 -- 792,074 (C) 2,690,077 -- --
--------- ----------- ----------- --------- ----------- -----------
Total expenses 8,271,066 2,689,128 1,155,149 12,115,343 761,654 735,930
Income before interest
income (expense) 3,734,902 2,703,430 (1,155,149) 5,283,183 707,842 1,219,008
Interest income 222,676 -- -- 222,676 --
Interest expense (458,384) -- -- (458,384) --
----------- ----------- ----------- ------------ ----------- -----------
Net income $ 3,499,194 $ 2,703,430 ($ 1,155,149) $ 5,047,475 $ 707,842 $ 1,219,008
Basic and diluted earnings
per common share $ 0.54 $ 0.53
Wgt. avg. number of common
shares outstanding 6,493,114 3,106,405 (E) 9,599,519
<CAPTION>
COPPER BITTER SUMMER PARK HAYDEN'S PACE'S
RIDGE CREEK TREE VILLAGE COTTONWOOD CROSSING POINT
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
- ---------------------------- --------------- ------------- ------------- ------------- ------------ ------------ -------------
DATE OF ACQUISITION 3/31/98 5/8/98 6/1/98 7/1/98 7/9/98 7/24/98 7/17/98
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income $ 914,447 $ 2,629,983 $ 1,212,080 $ 1,282,097 $ 1,130,293 $ 920,520 $ 2,001,209
Rental expenses:
Property and maintenance 589,618 926,213 485,827 448,932 433,721 322,981 598,984
Taxes and insurance 119,708 295,801 151,473 159,700 148,133 105,530 245,347
Property management -- -- -- -- -- -- --
General and administrative -- -- -- -- -- -- --
Amortization -- -- -- -- -- -- --
Depreciation of rental
property -- -- -- -- -- -- --
------- ---------- ----------- ---------- ---------- -------- ------------
Total expenses 709,326 1,222,014 637,300 608,632 581,854 428,511 844,331
Income before interest
income (expense) 205,121 1,407,969 574,780 673,465 548,439 492,009 1,156,878
Interest income -- -- -- -- -- -- --
Interest expense -- -- -- -- -- -- --
------- ---------- ----------- ---------- ---------- --------- ------------
Net income $ 205,121 $ 1,407,969 $ 574,780 $ 673,465 $ 548,439 $ 492,009 $ 1,156,878
Basic and diluted earnings
per common share
Wgt. avg. number of common
shares outstanding
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEPPER EMERALD
SQUARE NEWPORT OAKS ESTRADA
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA TOTAL
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENT ADJUSTMENTS PRO FORMA
- ---------------------------- ------------- ------------- ------------- -------------- ------------- --------------
DATE OF ACQUISITION 7/17/98 7/24/98 7/24/98 7/27/98 -- --
<S> <C> <C> <C> <C>
Rental income $ 915,474 $ 1,177,562 $ 1,793,934 $ 1,650,389 -- $36,450,948
Rental expenses:
Property and maintenance 267,618 403,047 488,345 482,765 12,015,585
Taxes and insurance 130,185 188,357 229,570 $ 214,029 -- 4,944,236
Property management -- -- -- -- 1,047,121(A) 1,999,201
General and administrative -- -- -- -- 204,500(B) 622,843
Amortization -- -- -- -- -- 28,490
Depreciation of rental
property -- -- -- -- 3,155,180(C) 5,845,257
-------- ---------- ---------- ---------- ----------- ----------
Total expenses 397,803 591,404 717,915 696,794 4,406,801 25,455,612
Income before interest
income (expense) 517,671 586,158 1,076,019 953,595 (4,406,801) 10,995,336
Interest income -- -- -- -- -- 222,676
Interest expense -- -- -- -- (1,833,108)(E) (2,291,492)
--------- ------------ ----------- ----------- -------------- ------------
Net income $ 517,671 $ 586,158 $ 1,076,019 $ 953,595 ($ 6,239,909) $ 8,926,520
Basic and diluted earnings
per common share $ 0.47
Wgt. avg. number of common
shares outstanding
9,402,287 (D) 19,001,806
</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 the interest expense for 5 of the 13 properties for the period
in which the properties were not owned for the three months period ended
March 31, 1998, interest was computed based on interest rates on the
properties debt that was assumed at acquisition.
(E) 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.
(F) Represents properties during 1997 for the period of time during 1997 not
owned by the company, see page 60.
-8-
<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 ASPEN HILLS MILL CROSSING POLO RUN WILDWOOD
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
------------- ------------- ------------- --------------- ------------- -------------
DATE OF ACQUISITIONS 1/31/97 1/31/97 1/31/97 2/28/97 03/31/97 03/31/97
<S> <C> <C> <C> <C> <C> <C>
Rental income $99,879 $266,385 $100,023 $151,389 $326,137 $202,389
Expenses
Property and maintenance 32,430 74,735 51,643 77,882 121,983 78,111
Taxes and insurance 12,720 36,546 12,099 19,230 40,508 25,216
Property management -- -- -- -- -- --
General and administrative -- -- -- -- -- --
Depreciation of real estate -- -- -- -- -- --
Amortization -- -- -- -- -- --
------- -------- -------- -------- ------- -------
45,150 111,281 63,742 97,112 162,491 103,327
Income before interest income 54,729 155,104 36,281 54,277 163,646 99,062
Interest income -- -- -- -- -- --
Interest expense -- -- -- -- -- --
------- -------- -------- -------- -------- --------
Net income $54,729 $155,104 $ 36,281 $ 54,277 $163,646 $ 99,062
<CAPTION>
COPPER
TOSCANA THE ARBORS PACES COVE CHAPAROSA RIVERHILL CROSSING
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA TOTAL
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
------------- ------------- ------------- ------------- ------------- ------------- -------------
DATE OF ACQUISITIONS 03/31/97 4/25/97 6/30/97 8/6/97 8/6/97 11/25/97
<S> <C> <C> <C> <C> <C> <C> <C>
Rental income $270,812 $460,338 $916,348 $ 801,713 $ 892,295 $ 904,850 $5,392,558
Expenses
Property and maintenance 82,722 102,132 314,521 286,943 338,906 420,181 1,982,189
Taxes and insurance 35,674 60,729 128,306 97,242 124,028 114,641 706,939
Property management -- -- -- -- -- -- 0
General and administrative -- -- -- -- -- -- 0
Depreciation of real estate -- -- -- -- -- -- 0
Amortization -- -- -- -- -- -- 0
------- -------- -------- -------- -------- -------- ---------
118,396 162,861 442,827 384,185 462,934 534,822 2,689,128
Income before interest income 152,416 297,477 473,521 417,528 429,361 370,028 2,703,430
Interest income -- -- -- -- -- -- 0
Interest expense -- -- -- -- -- -- 0
-------- -------- -------- --------- --------- --------- ----------
Net income $152,416 $297,477 $473,521 $ 417,528 $ 429,361 $ 370,028 $2,703,430
</TABLE>
-9-
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED
MARCH 31, 1998 (UNAUDITED)
The Unaudited Pro Forma Consolidated Statement of Operations for the three month
period ended March 31, 1998 is presented as if the three property acquisitions
on or prior to March 31, 1998, and the ten property acquisitions after March 31,
1998, had occurred on January 1, 1998. 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 three month period ended March
31, 1998 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
Company's respective historical financial statements and notes thereto.
<TABLE>
<CAPTION>
COPPER BITTER
HISTORICAL MAIN PARK TIMBERGLEN RIDGE CREEK
STATEMENT OF PRO FORMA PRO FORMA PRO FORMA PRO FORMA
OPERATIONS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
-------------- ------------- ------------- ------------- -------------
DATE OF ACQUISITION -- 2/4/98 2/13/98 3/31/98 5/8/98
<S> <C> <C> <C> <C> <C>
Rental income $ 4,928,751 $ 122,458 $ 162,912 $ 228,612 $ 657,496
Rental expenses:
Property and maintenance 1,236,828 44,674 39,814 147,405 231,553
Taxes and insurance 738,151 18,797 21,513 29,927 73,950
Property management 257,038 -- -- -- --
General and administrative 162,873 -- -- -- --
Amortization 8,484 -- -- -- --
Depreciation of rental property 889,545 -- -- -- --
------------ -------- -------- -------- ---------
Total expenses 3,292,919 63,471 61,327 177,332 305,503
Income before interest income
(expense) 1,635,832 58,987 101,585 51,280 351,993
Interest income 336,387 -- -- -- --
Interest expense (12,501) -- -- -- --
----------- --------- --------- --------- ---------
Net income $ 1,959,718 $ 58,987 $ 101,585 $ 51,280 $ 351,993
Basic and diluted earnings per
common share $ $0.14
Wgt. avg. number of common
shares outstanding 13,882,117
<CAPTION>
SUMMER PARK HAYDEN'S PACE'S PEPPER
TREE VILLAGE COTTONWOOD CROSSING POINT SQUARE
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
------------- ------------- ------------- ------------- ------------- -------------
DATE OF ACQUISITION 6/1/98 7/1/98 7/9/98 7/24/98 7/17/98 7/17/98
<S> <C> <C> <C> <C> <C> <C>
Rental income $ 303,020 $ 320,524 $ 282,573 $ 230,130 $ 500,302 $ 228,869
Rental expenses:
Property and maintenance 121,457 112,233 108,430 80,745 149,746 66,905
Taxes and insurance 37,868 39,925 37,033 26,383 61,337 32,546
Property management -- -- -- -- -- --
General and administrative -- -- -- -- -- --
Amortization -- -- -- -- -- --
Depreciation of rental property -- -- -- -- -- --
--------- --------- --------- --------- -------- --------
Total expenses 159,325 152,158 145,463 107,128 211,083 99,451
Income before interest income
(expense) 143,695 168,366 137,110 123,002 289,219 129,418
Interest income -- -- -- -- -- --
Interest expense -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net income $ 143,695 $ 168,366 $ 137,110 $ 123,002 $ 289,219 $ 129,418
Basic and diluted earnings per
common share
Wgt. avg. number of common
shares outstanding
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EMERALD
NEWPORT OAKS ESTRADA
PRO FORMA PRO FORMA PRO FORMA PRO FORMA TOTAL
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
------------- ------------- ------------- -------------------- -------------
DATE OF ACQUISITION 7/24/98 7/24/98 7/27/98 -- --
<S> <C> <C> <C> <C> <C>
Rental income $ 294,391 $ 448,484 $ 412,597 -- $ 9,121,119
Rental expenses:
Property and maintenance 100,762 122,086 120,691 -- 2,683,329
Taxes and insurance 47,089 57,393 53,507 -- 1,275,419
Property management -- -- -- $ 230,763 (A) 487,801
General and administrative -- -- -- 42,625 (B) 205,498
Amortization -- -- -- -- 8,484
Depreciation of rental property -- -- -- 683,457 (C) 1,573,002
--------- -------- --------- ----------- ----------
Total expenses 147,851 179,479 174,198 956,845 6,233,533
Income before interest income
(expense) 146,540 269,005 238,399 (956,845) 2,887,586
Interest income -- -- -- (300,000)(D) 36,387
Interest expense -- -- -- (458,277)(E) (470,778)
--------- --------- --------- ----------- -----------
Net income $ 146,540 $ 269,005 $ 238,399 ($ 1,715,122) $ 2,453,195
Basic and diluted earnings per
common share $ 0.13
Wgt. avg. number of common
shares outstanding 5,080,448 (F) 18,962,565
</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 reduction of interest income to reflect use of cash ($24
million) used to purchase properties, based on Company's actual investment
income rate of 5%.
(E) Represents the interest expense for 5 of the 13 properties for the period
in which the properties were not owned for the three months period ended
March 31, 1998, interest was computed based on interest rates on the
properties debt that was assumed at acquisition.
(F) Represents additional common shares, after consideration of cash, assuming
the properties were acquired on January 1, 1998 with the net proceeds
from the "best efforts" offering of $10 per share (net $8.70 per share)
(Also see note D).
-10-
<PAGE>
PRO FORMA CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998 (UNAUDITED)
The accompanying Unaudited Pro Forma Consolidated Balance Sheet as of March 31,
1998 is presented as if the Company had owned the properties included in the
table below as of March 31, 1998. In the opinion of management all adjustments
necessary to reflect the effects of the Offering have been made.
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 March 31, 1998, 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 Company's respective historical financial
statements and notes thereto.
<TABLE>
<CAPTION>
BITTER SUMMER PARK HAYDEN'S
HISTORICAL CREEK TREE VILLAGE COTTONWOOD CROSSING
BALANCE PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA
SHEET ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
---------------- ---------------- -------------- --------------- ----------------------------
DATE OF ACQUISITION 5/8/98 6/1/98 7/1/98 7/9/98 7/24/97
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in rental property
Land................................ $ 19,242,535 $ 3,168,273 $ 3,023,280 $ 856,800 $ 465,120 $ 1,042,283
Building and improvements .......... 95,914,449 10,606,827 2,790,720 6,283,200 5,348,880 3,695,369
Furniture and fixtures ............. 1,410,819 -- -- -- -- --
------------- ------------- ------------ ------------ ------------- -----------
116,567,803 13,775,100 5,814,000 7,140,000 5,814,000 4,737,652
Less accumulated depreciation....... (2,787,548) -- -- -- -- --
------------- ------------- ------------ ------------ ------------- -----------
113,780,255 13,775,100 5,814,000 7,140,000 5,814,000 4,737,652
Cash and cash equivalents .......... 36,601,110 (13,775,100) (5,814,000) (7,140,000) (5,814,000) --
Prepaid expenses ................... 90,784 -- -- -- -- --
Other assets ....................... 774,271 -- -- -- -- --
------------- ------------- ------------ ------------ ------------- -----------
37,466,165 (13,775,100) (5,814,000) (7,140,000) (5,814,000) --
------------- ------------- ------------ ------------ ------------- -----------
Total Assets ........................ $ 151,246,420 $ -- $ -- $ -- $ -- $ 4,737,652
============= ============= ============ ============ ============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Notes payable ...................... -- -- -- -- -- $ 3,072,399
Accounts payable ................... $ 355,938 -- -- -- -- --
Accrued expenses ................... 2,143,818 -- -- -- -- --
Rents received in advance .......... 23,902 -- -- -- -- --
Tenant security deposits ........... 492,175 -- -- -- -- --
------------- ------------- ------------ ------------ ------------- -----------
3,015,833 -- -- -- -- 3,072,399
Shareholders' equity
Common stock ....................... 148,058,824 -- -- -- -- 1,665,253
Class B convertible stock .......... 20,000 -- -- -- -- --
Receivable from officer-shareholder. (20,000) -- -- -- -- --
Distributions greater than net
income ............................ 171,763 -- -- -- -- --
------------- ------------- ------------ ------------ ------------- -----------
148,230,587 -- -- -- -- 1,665,253
------------- ------------- ------------ ------------ ------------- -----------
Total Liabilities and Shareholders'
Equity ............................ $ 151,246,420 $ -- $ -- $ -- $ -- $ 4,737,652
============= ============= ============ ============ ============= ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PACE'S PEPPER EMERALD
POINT SQUARE NEWPORT OAKS ESTRADA
PRO FORMA PRO FORMA PRO FORMA PRO FORMA PRO FORMA TOTAL
ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS PRO FORMA
--------------- ------------- ------------ --------------- ------------- ---------------
DATE OF ACQUISITION 7/17/98 7/17/98 7/24/98 7/24/98 7/27/97
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investment in rental property
Land.................................. $ 1,951,401 $ 1,675,594 $ 511,658 $ 881,191 $ 1,812,030 $ 34,630,165
Building and improvements ............ 9,527,427 3,560,637 5,884,065 10,133,695 7,724,970 161,470,239
Furniture and fixtures ............... -- -- -- -- -- 1,410,819
------------ ----------- ----------- ------------ ----------- -------------
11,478,828 5,236,231 6,395,723 11,014,886 9,537,000 197,511,223
Less accumulated depreciation......... -- -- -- -- -- (2,787,548)
------------ ----------- ----------- ------------ ----------- -------------
11,478,828 5,236,231 6,395,723 11,014,886 9,537,000 194,723,675
Cash and cash equivalents ............ -- -- -- -- -- 4,058,010
Prepaid expenses ..................... -- -- -- -- -- 90,784
Other assets ......................... -- -- -- -- -- 774,271
------------ ----------- ----------- ------------ ----------- -------------
-- -- -- -- -- 4,923,065
------------ ----------- ----------- ------------ ----------- -------------
Total Assets .......................... $ 11,478,828 $ 5,236,231 $ 6,395,723 $ 11,014,886 $ 9,537,000 $ 199,646,740
============ =========== =========== ============ =========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Notes payable ........................ $ 7,713,617 $ 3,643,424 $ 3,043,873 $ 6,685,706 -- $ 24,159,019
Accounts payable ..................... -- -- -- -- -- 355,938
Accrued expenses ..................... -- -- -- -- -- 2,143,818
Rents received in advance ............ -- -- -- -- -- 23,902
Tenant security deposits ............. -- -- -- -- -- 492,175
------------ ----------- ----------- ------------ ----------- -------------
7,713,617 3,643,424 3,043,873 6,685,706 -- 27,174,852
Shareholders' equity
Common stock ......................... 3,765,211 1,592,807 3,351,850 4,329,180 9,537,000 172,300,125
Class B convertible stock ............ -- -- -- -- -- 20,000
Receivable from officer-shareholder .. -- -- -- -- -- (20,000)
Distributions greater than net
income ............................. -- -- -- -- -- 171,763
------------ ----------- ----------- ------------ ----------- -------------
3,765,211 1,592,807 3,351,850 4,329,180 9,537,000 172,471,888
------------ ----------- ----------- ------------ ----------- -------------
Total Liabilities and Shareholders'
Equity ............................. $ 11,478,828 $ 5,236,231 $ 6,395,723 $ 11,014,886 $ 9,537,000 $ 199,646,740
============ =========== =========== ============ =========== =============
</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 to purchase properties. Adjustments to notes payable
reflect the debt assumed on 5 of the 13 acquisitions.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities 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.
By: /s/ Glade M. Knight
------------------------------------
Glade M. Knight
President of Apple Residential
Income Trust, Inc.
Date: August 3, 1998
-12-
<PAGE>
EXHIBIT INDEX
APPLE RESIDENTIAL INCOME TRUST, INC.
FORM 8-K/A TO FORM 8-K DATED JUNE 2, 1998
EXHIBIT NUMBER EXHIBIT
-------------- -------
23.1 Consent of Independent Auditors
-13-
EXHIBIT 23.1
[L.P. MARTIN & COMPANY LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS'
The Board of Directors
Apple Residential Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated July 16, 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 Summer Tree
Apartments for the twelve month period ended May 31, 1998, for inclusion in a
form 8K filing with the Securities and Exchange Commission by Apple Residential
Income Trust, Inc.
Richmond, Virginia /s/ L.P. Martin & Co., P.C.
July 29, 1998
