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: February 4, 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
(Main Park Apartments)
Historical Statement of Income
and Direct Operating Expenses
(Main Park Apartments)
Note to Historical Statement of Income
and Direct Operating Expenses
(Main Park Apartments)
b. Pro Forma Balance Sheet as of
December 31, 1997 (unaudited)
Pro Forma Statement of Operations
for the year ended December 31, 1997
(unaudited)
c. Exhibit
23.1 Consent of Independent Auditors
(Main Park Apartments)
<PAGE>
The Company hereby amends Items 7.a., 7.b. and 7.c. of its Current Report
on Form 8-K dated February 4,1998 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 Main Park Apartments located in Duncanville, Texas
for the twelve month period ended December 31, 1997. This statement is the
responsibility of the management of Main Park 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 Main Park
Apartments (as defined above) for the twelve month period ended December
31, 1997, in conformity with generally accepted accounting principles.
Richmond, Virginia /s/ L.P. Martin & Co., P.C.
March 25, 1998
<PAGE>
MAIN PARK 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 DECEMBER 31, 1997
INCOME
Rental and Other Income $ 1,469,496
---------
DIRECT OPERATING EXPENSES
Administrative and Other 86,833
Insurance 32,072
Repairs and Maintenance 242,402
Taxes, Property 193,492
Utilities 206,855
-------
TOTAL DIRECT OPERATING EXPENSES 761,654
-------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 707,842
=========
See accompanying notes to the financial statement.
<PAGE>
MAIN PARK 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 DECEMBER 31, 1997
NOTE 1 - ORGANIZATION
Main Park Apartments is a 192 unit garden style apartment complex located on
10.44 acres in Duncanville, Texas. The assets comprising the property were
owned by an entity unaffiliated with Apple Residential Income Trust, Inc. during
the financial statement period. Apple Residential Income Trust, Inc. purchased
the property in February, 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, professional fees and
management fees.
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 Consolidated Balance Sheet as of December 31, 1997 (unaudited)
The Unaudited Pro Forma Consolidated Balance Sheet gives effect to the property
acquisition on February 4, 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.
Historical Main Park
Balance Pro Forma Total
Sheet Adjustments Pro Forma
----------------------------------------
Date of acquisition 2/4/98
ASSETS
Investment in rental property
Land $ 15,396,823 $ 560,000 $ 15,956,823
Building and improvements 73,113,886 7,440,000 80,553,886
Furniture and fixtures 1,123,639 - 1,123,639
----------------------------------------
89,634,348 8,000,000 97,634,348
Less accumulated depreciation (1,898,003) - (1,898,003)
----------------------------------------
87,736,345 8,000,000 95,736,345
Cash and cash equivalents 24,162,572 - 24,162,572
Prepaid expenses 142,581 - 142,581
Other assets 444,022 - 444,022
----------------------------------------
24,749,175 0 24,749,175
----------------------------------------
Total Assets $ 112,485,520 $ 8,000,000 $ 120,485,520
========================================
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 0 3,144,965
Shareholders' equity
Common stock 109,090,459 $ 8,000,000 117,090,459
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 8,000,000 117,340,555
----------------------------------------
Total Liabilities and
Shareholders' Equity $ 112,485,520 $ 8,000,000 $ 120,485,520
========================================
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 common stock reflect the 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 1998 property acquisition 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,
incurred 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
----------------------------------------------------------------------------
<S> <C>
Date of Acquisition - - -
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)
Basis and diluted earnings per common share $ 0.54
=====
Wgt. avg. number of shares outstanding 6,493,114 3,106,405 (D)
========= =========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Main Park
Before 1998 Pro Forma
Acquisition Adjustments
-------------------------------------------------------
<S> <C>
- 2/4/98
Date of Acquisition
$ 17,398,526 $ 1,469,496
Rental income
Rental expenses:
Property and maintenance 5,553,673 536,090
Taxes and insurance 2,472,680 225,564
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
Income before interest income (expense) 5,283,183 707,842
Interest income 222,676 -
Interest expense (458,384) -
-------------------------------------------------------
Net income $ 5,047,475 $ 707,842
Basis and diluted earnings per common share $ 0.53
=====
Wgt. avg. number of shares outstanding 9,599,519
=========
</TABLE>
<TABLE>
<CAPTION>
Pro Forma Total
Adjustments Pro Forma
---------------------------------------------------------
<S> <C>
Date of Acquisition - -
Rental income - $ 18,868,022
Rental expenses:
Property and maintenance - 6,089,763
Taxes and insurance - 2,698,244
Property management 79,235 (A) 1,031,315
General and administrative 20,400 (B) 438,743
Amortization - 28,490
Depreciation of rental property 275,956 (C) 2,966,033
---------------------------------------------------------
Total expenses 375,591 13,252,588
Income before interest income (expense) (375,591) 5,615,434
Interest income - 222,676
Interest expense - (458,384)
---------------------------------------------------------
Net income ($375,591) $ 5,379,726
Basis and diluted earnings per common share $ 0.51
=====
Wgt. avg. number of shares outstanding 937,931 (D) 10,537,450
======== ==========
</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 "best efforts" offering of $9 per
share for the first $15 million and and $10 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
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments
-------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 1/31/97 1/31/97 1/31/97 2/28/97
Rental income $99,879 $266,385 $100,023 $151,389
Expenses
Property and maintenance 32,430 74,735 51,643 77,882
Taxes and insurance 12,720 36,546 12,099 19,230
Property management - - - -
General and administrative - - - -
Depreciation of real estate - - - -
Amortization - - - -
-------------------------------------------------------------------------------
45,150 111,281 63,742 97,112
Income before interest income 54,729 155,104 36,281 54,277
Interest income - - - -
Interest expense - - - -
-------------------------------------------------------------------------------
Net income $54,729 $155,104 $36,281 $54,277
===============================================================================
</TABLE>
<TABLE>
<CAPTION>
Polo Run Wildwood Toscana
Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments
---------------------------------------------------------------------
<S> <C>
Date of Acquisitions 03/31/97 03/31/97 03/31/97
Rental income $326,137 $202,389 $270,812
Expenses
Property and maintenance 121,983 78,111 82,722
Taxes and insurance 40,508 25,216 35,674
Property management - - -
General and administrative - - -
Depreciation of real estate - - -
Amortization - - -
---------------------------------------------------------------------
162,491 103,327 118,396
Income before interest income 163,646 99,062 152,416
Interest income - - -
Interest expense - - -
---------------------------------------------------------------------
Net income $163,646 $99,062 $152,416
=====================================================================
</TABLE>
<TABLE>
<CAPTION>
The Arbors Paces Cove Chaparosa Riverhill
Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments
----------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 4/25/97 6/30/97 8/6/97 8/6/97
Rental income $460,338 $916,348 $ 801,713 $ 892,295
Expenses
Property and maintenance 102,132 314,521 286,943 338,906
Taxes and insurance 60,729 128,306 97,242 124,028
Property management - - - -
General and administrative - - - -
Depreciation of real estate - - - -
Amortization - - - -
----------------------------------------------------------------------------
162,861 442,827 384,185 462,934
Income before interest income 297,477 473,521 417,528 429,361
Interest income - - - -
Interest expense - - - -
----------------------------------------------------------------------------
Net income $297,477 $473,521 $417,528 $429,361
============================================================================
</TABLE>
<TABLE>
<CAPTION>
Copper
Crossing
Pro Forma Total
Adjustments Pro Forma
----------------------------------------------
<S> <C>
Date of Acquisitions 11/25/97
Rental income $ 904,850 $5,392,558
Expenses
Property and maintenance 420,181 1,982,189
Taxes and insurance 114,641 706,939
Property management - 0
General and administrative - 0
Depreciation of real estate - 0
Amortization - 0
----------------------------------------------
534,822 2,689,128
Income before interest income 370,028 2,703,430
Interest income - 0
Interest expense - 0
----------------------------------------------
Net income $370,028 $2,703,430
==============================================
</TABLE>
<PAGE>
ITEM 7.c.
<PAGE>
EXHIBIT INDEX
Apple Residential Income Trust, Inc.
Form 8-K/A to Form 8-K dated February 4, 1998
Exhibit Number Exhibit Page Number
- -------------- ------- -----------
23.1 Consent of Independent Auditors
(Main Park 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 March 25, 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
Main Park Apartments for the twelve month period ended December 31, 1997, 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.
April 13, 1998
<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 17, 1998 By:/s/ Glade M. Knight
-------------------
Glade M. Knight
President of
Apple Residential Realty Income
Trust, Inc.
