UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________ to ____________
Commission File Number 333-10635
APPLE RESIDENTIAL INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1816010
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
306 EAST MAIN STREET
RICHMOND, VIRGINIA 23219
(Address of principal executive offices) (Zip Code)
(804) 643-1761
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address, and former fiscal
year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
At April 20, 1999, there were outstanding 30,495,187 shares of common stock, no
par value, of the registrant.
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - March 31, 1999 3
and December 31, 1998
Consolidated Statements of Operations - 4
Three months ended March 31, 1999
and March 31, 1998
Consolidated Statement of Shareholders' Equity - 5
Three months ended March 31, 1999
Consolidated Statements of Cash Flows - 6
Three months ended March 31, 1999
and March 31, 1998
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis 11
of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings (not applicable).
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities
(not applicable).
Item 4. Submission of Matters to a Vote of
Security Holders (not applicable).
Item 5. Other Information (not applicable)
Item 6. Exhibits and Reports on Form 8-K 15
</TABLE>
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------------- ---------------
<S> <C> <C>
ASSETS
Investment in rental property:
Land $ 42,150,935 $ 40,761,281
Buildings and property improvements 217,067,397 197,807,725
Furniture and fixtures 3,781,247 3,190,919
------------- -------------
262,999,579 241,759,925
Less accumulated depreciation (9,999,170) (7,686,479)
------------- -------------
253,000,409 234,073,446
Cash and cash equivalents 45,705,746 40,073,198
Prepaid expenses 198,152 339,605
Other assets 5,264,649 7,360,903
------------- -------------
Total Assets $ 304,168,956 $ 281,847,152
============= =============
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Mortgage notes payable $ 32,038,329 $ 25,165,861
Accounts payable 2,445,788 1,565,453
Accrued expenses 1,956,577 4,883,852
Rents received in advance 50,922 150,351
Tenant security deposits 877,096 882,014
------------- -------------
Total Liabilities 37,368,712 32,647,531
Shareholders' equity
Common stock, no par value, authorized 50,000,000
shares; issued and outstanding 30,495,187 shares
and 28,331,274 shares, respectively 271,283,376 251,890,553
Class B convertible stock, no par value, authorized
200,000 shares; issued and outstanding 200,000 shares 20,000 20,000
Net income less than distributions (4,503,132) (2,710,932)
------------- -------------
Total Shareholders' Equity 266,800,244 249,199,621
------------- -------------
Total Liabilities and Shareholders' Equity $ 304,168,956 $ 281,847,152
============= =============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1999 1998
---------------------------------
<S> <C> <C>
REVENUE:
Rental income $ 11,416,283 $ 4,928,751
EXPENSES:
Property and maintenance 2,812,974 1,236,828
Taxes and insurance 1,680,693 738,151
Property management 622,695 257,038
General and administrative 187,278 162,873
Amortization expense 126,544 8,484
Depreciation of rental property 2,330,543 889,545
------------ ------------
Total expenses 7,760,727 3,292,919
------------ ------------
Income before interest income (expense) 3,655,556 1,635,832
Interest income 388,121 336,387
Interest expense (402,995) (12,501)
------------ ------------
Net income $ 3,640,682 $ 1,959,718
============ ============
Basic and diluted earnings per common share $ 0.12 $ 0.14
============ ============
Distributions per common share $ 0.21 $ 0.20
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Convertible Class B Stock
--------------------------------------------------------- Net Income Total
Number Number Less Than Shareholders'
of Shares Amount of Shares Amount Distributions Equity
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 28,331,274 $ 251,890,553 200,000 $ 20,000 $ (2,710,932) $ 249,199,621
Net proceeds from the sale of shares 1,849,175 16,560,184 - - - 16,560,184
Net income - - - - 3,640,682 3,640,682
Cash distributions declared to
shareholders ($.207 per share) - - - - (5,432,882) (5,432,882)
Shares issued through Additional
Share Option 314,738 2,832,639 - - - 2,832,639
--------------------------------------------------------------------------------------------
30,495,187 $ 271,283,376 200,000 $ 20,000 $ (4,503,132) $ 266,800,244
============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1999 1998
------------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 3,640,682 $ 1,959,718
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 2,439,239 898,029
Amortization of deferred financing costs 2,000 12,501
Amortization of mortgage notes payable premium (52,230) -
Changes in operating assets and liabilities:
Prepaid expenses 141,453 51,797
Other assets 1,967,710 (351,234)
Accounts payable 880,335 (180,386)
Accrued expenses (2,942,881) (69,296)
Rent received in advance (99,429) (46,149)
Tenant security deposits (39,375) (962)
------------ ------------
Net cash provided by operating activities 5,937,504 2,274,018
Cash flow from investing activities:
Acquisitions of rental property, net of liabilities assumed (8,758,501) (25,160,351)
Capital improvements (5,438,309) (1,595,174)
------------ ------------
Net cash used in investing activities (14,196,810) (26,755,525)
Cash flow from financing activities:
Repayments of mortgage notes payable (68,087) -
Net proceeds from issuance of shares 19,392,823 38,958,096
Cash distributions paid to shareholders (5,432,882) (2,038,051)
------------ ------------
Net cash provided by financing activities 13,891,854 36,920,045
Increase in cash and cash equivalents 5,632,548 12,438,538
Cash and cash equivalents, beginning of year 40,073,198 24,162,572
------------ ------------
Cash and cash equivalents, end of period $ 45,705,746 $ 36,601,110
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
APPLE RESIDENTIAL INCOME TRUST, INC
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1999
(1) General Information and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
required by generally accepted accounting principles. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1999. These financial statements should be read in conjunction with
the Company's December 31,1998 Annual Report on Form 10-K.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 98-5, "Reporting the Costs of Start-up
Activities". The SOP is effective beginning on January 1, 1999, and
requires that start-up costs capitalized prior to January 1, 1999 be
written off and any future start-up costs to be expensed as incurred. The
unamortized balance of organization costs of $126,544 was written off as a
cumulative effect of an accounting change as of January 1, 1999, and is
included amortization expense. This write off did not change reported
earnings per common share amounts.
Certain previously reported amounts have been reclassified to conform
with the current financial statement presentation.
The Company did not have any items of comprehensive income requiring
separate reporting and disclosure for the periods presented.
On March 30, 1999, the Company's Board of Directors approved a merger with
Cornerstone Realty Income Trust, Inc. ("Cornerstone") subject to, among
other requirements, an affirmative vote of the Company's shareholders. The
transaction is valued at approximately $310 million. Under the terms of
the merger agreement, the Company's shareholder will receive .4 of a share
of Cornerstone's $25 Series A convertible preferred stock for each
share of the Company's common stock. The Series A Preferred Stock will
have a first year dividend yield of 8.5%, which will increase to 9% in the
second year and 9.5% in the third year and thereafter. Each share of
Series A Preferred Stock carries a $25 per share liquidation preference
and is convertible into 1.5823 shares of Cornerstone's common stock, which
reflects a conversion price of $15.80 for Cornerstone's common stock.
After five years, the Series A Preferred Stock will be redeemable at $25
per share plus any accrued dividends, at the option of Cornerstone, in
whole or in part, for cash or stock, subject to certain conditions. In
addition, Cornerstone will assume approximately $32.1 million of the
Company's debt with an average interest rate of approximately 6.475%. The
transaction has been structured as a tax-free reorganization and will be
accounted for under the purchase method of accounting.
<PAGE>
(2) Investment in Rental Property
The Company purchased two properties located in the Dallas/ Fort Worth
area of Texas and San Antonio, Texas for $15,167,000. The following is a
summary of rental property acquired during the three months ended March
31, 1999:
Initial Date
Description Acquisition Cost Acquisition
----------- ---------------- -----------
Sierra Ridge $ 5,817,000 January, 1999
Grayson Square 9,350,000 February, 1999
(3) Notes Payable
The Company assumed one mortgage loan with a value of $6,992,795 in
connection with the acquisition of Grayson Square Apartments during the
first quarter of 1999. As of March 31, 1999, the Company had assumed
$31,151,804 in mortgage loans in connection with the acquisitions of the
six properties. The mortgage notes assumed in 1998 (principal amount of
$24,159,019) were recorded at a fair value of $25,418,421 at the date of
assumption. The difference between the fair value and principal balance is
being amortized as an adjustment to interest expense over the term of the
respective notes. At March 31, 1999, the balance of the mortgage notes
payable was $32,038,329 (inclusive of $1,102,713 unamortized premium).
Mortgage notes payable are due in monthly installments, including
principal and interest.
The aggregate maturities of mortgage notes payable subsequent to March
31, 1999 are as follows:
Year Amount
---- ------
1999 456,120
2000 658,434
2001 691,472
2002 726,976
2003 7,953,572
Thereafter 21,551,755
----------
32,038,329
----------
(4) Shareholders' Equity
During March 1999, the Company completed its "best efforts" offering. The
Company received gross proceeds of $21,639,165 from the sale of 2,163,913
shares, including shares sold through the reinvestment of distributions,
during the first quarter ended March 31, 1999. The net proceeds of the
offering, after deducting selling commissions and other offering expenses,
were $19,392,823.
(5) Related Parties
Prior to March 1, 1997, the Company had contracted with Apple Residential
Management Group, Inc. (the "Management Company") to manage the acquired
properties, Apple Residential Advisors, Inc. (the "Advisor") to advise and
provide the Company with day to day management, and Apple Realty Group,
Inc. to acquire and dispose of real estate assets held by the Company.
Through March 1, 1997, the Company paid the Management Company a
management fee equal to 5% of rental income plus reimbursement of certain
expenses in the amount of $52,375. The Company paid the Advisor a fee
equal to .25% of total contributions received by the Company in the amount
of $14,894. The Company paid Apple Realty Group, Inc. a fee of 2% of the
purchase price of the acquired properties in the amount of $624,382.
<PAGE>
Effective March 1, 1997, with the approval of the Company, Cornerstone,
for which Glade M. Knight (Chief Executive Officer and Chairman of the
Board of the Company) also serves as Chief Executive Officers and
Chairman, entered into subcontract agreements with the Management Company
and Advisor whereby Cornerstone will provide advisory and property
management services to the Company in exchange for fees and expense
reimbursement per the same terms described above. On January 1, 1999, the
subcontract arrangements were terminated and the Company contracted with
Cornerstone directly to provide management and advisory services. For the
three months ended March 31, 1999 and 1998, the Company paid Cornerstone
$747,803 and $351,534, respectively, under the agreement.
During 1997, with the consent of the Company, Cornerstone acquired all the
assets of Apple Realty Group, Inc. The sole material asset of the company
was the acquisition/disposition agreement with the Company. Cornerstone
paid $350,000 in cash and issued 150,000 common shares (valued at $11 per
common share for a total of $1,650,000) in exchange for the assignment of
the rights to the acquisition/disposition agreement. Cornerstone is
entitled, under the terms of the acquisition/disposition agreement, to a
real commission equal to 2% of the gross purchase price of the Company's
properties. For the three months ended March 31, 1999 and 1998, the
Company paid Cornerstone approximately $313,484 and $490,500,
respectively, under the agreement.
During the first quarter of 1997, the Company granted Cornerstone a
continuing right to acquire up to 9.8% of the common shares of the Company
at the market price, net of selling commissions. In April 1997,
Cornerstone purchased 417,778 common shares of the Company at $9 per share
for approximately $3.76 million. Cornerstone owns approximately 1.4% of
the total common shares of the Company outstanding as of March 31, 1999.
<PAGE>
(5) Earnings Per Share
The following table sets forth the computation of basic and diluted
earnings per share in accordance with FAS 128:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1999 March 31, 1998
-------------- ---------------
<S> <C> <C>
Numerator:
Net income $ 3,640,682 $ 1,959,718
Numerator for basic and diluted earnings 3,640,682 1,959,718
Denominator:
Denominator for basic
earnings per share-weighted-
average shares 29,243,930 13,882,117
Effect of dilutive securities:
Stock options - -
- ---------------------------------------------------------------------------------------------
Denominator for diluted earnings
per share-adjusted weighted-
average shares and assumed
conversions
29,243,930 13,882,117
- ---------------------------------------------------------------------------------------------
Basic and diluted earnings per
common share $ 0.12 $ 0.14
- ---------------------------------------------------------------------------------------------
</TABLE>
(6) Subsequent Events
During April 1999, the Company distributed to its shareholders
approximately $5,843,616 (20.7 cents per share).
During April 1999, the Company purchased Hunter's Creek Apartments, a
240-unit apartment community for $7,750,000.
On April 15, 1999, the Board of Directors of the Company and Cornerstone
agreed to modify Cornerstone's right of first refusal to purchase the
Company's common shares or business and the service contracts between the
Company and Cornerstone to allow for termination of such agreements in the
event of a change of control of Cornerstone. The Company has agreed to pay
Cornerstone $1.5 million for the contract modifications. The Company will
expense the payment made to obtain these contract modifications
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1993, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include, without limitation, statements concerning anticipated
improvements in financial operations from completed and planned property
renovations. Such 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 or the
properties or Apple, as the case may be, adverse changes in the real
estate markets and general and local economies and business conditions and
Year 2000 issues. Although the Company believes that the assumptions
underlying the forward-looking statements contained herein are reasonable,
any of the assumptions could be inaccurate, and therefore there can be no
assurance that such statements included in this quarterly report will
prove to be accurate. In light of the significant uncertainties inherent
in the forward-looking statements included herein, 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
statements or the objectives and plans of the Company will be achieved.
On March 30, 1999, the Company's Board of Directors approved a merger
with Cornerstone subject to, among other requirements, an affirmative
vote of the Company's shareholders. The transaction is valued at
approximately $310 million. Under the terms of the merger agreement, the
Company's shareholder will receive .4 of a share of the Cornerstone's $25
Series A convertible preferred stock for each share of the Company's
common stock. The Series A Preferred Stock will have a first year
dividend yield of 8.5%, which will increase to 9% in the second year and
9.5% in the third year and thereafter. Each share of Series A Preferred
Stock carries a $25 per share liquidation preference and is convertible
into 1.5823 shares of the Cornerstone's common stock, which reflects a
conversion price of $15.80 for Cornerstone's common stock. After five
years, the Series A Preferred Stock will be redeemable at $25 per share
plus any accrued dividends, at the option of the Cornerstone, in whole or
in part, for cash or stock, subject to certain conditions. In addition,
the Cornerstone will assume approximately $32.1 million of the Company's
debt with an average interest rate of approximately 6.475%. The
transaction has been structured as a tax-free reorganization and will be
accounted for under the purchase method of accounting.
Results of Operations
Income and occupancy
The results of the Company's property operations for three months ended
March 31, 1999 include the results of operations from the properties
acquired before 1999 and from the 2 properties acquired in 1999 from their
respective acquisition dates. The increased rental income and operating
expenses from the first quarter 1999 over the first quarter 1998 is
primarily due to a full quarter of operation of the 1998 acquisitions as
well as the incremental effect of the 1999 acquisitions.
Substantially all of the Company's income is from the rental operation of
apartment communities. Rental income for the first three months increased
132% to $11,416,283 in 1999 from $4,928,751 in 1998 due to the factors
stated above.
Overall economic occupancy for the Company's properties was 90% and 92%
for the three months ended March 31, 1999 and 1998, respectively. Overall,
the average rental rates for the portfolio was $587 and $588 per month at
March 31, 1999 and 1998, respectively.
<PAGE>
The Company's other source of income is the investment of its cash and
cash reserves. Interest income for the three months ended March 31, 1999
and 1998 was $388,121 and $336,387, respectively. The increase during the
three months ended March 31, 1999 is due to the Company's investment
balance held pending acquisitions. It is anticipated the interest income
will decrease with future acquisitions.
Expenses
Total expenses for the first three months increased 136% to $7,760,727 in
1999 from $3,292,919 in 1998. The increase is due largely to the increase
in the number of apartments. The operating expense ratio (the ratio of
rental expenses, excluding general and administrative, amortization and
depreciation expense, to rental income) was 45% for the three months ended
March 31, 1999 and 1998, respectively.
General and administrative expenses totaled 1.6% of total rental income
for the three months ended March 31, 1999 and 3.3% for the same period in
1998. This percentage is expected to decrease as the Company's asset base
and rental income grow. These expenses represent the administrative
expenses of the Company as distinguished from the operations of the
Company's properties.
Depreciation expense for the three months has increased to $2,330,543 in
1999 from $889,545 in 1998. The increase is directly attributable to the
acquisition of additional apartment communities in 1999 and 1998.
Liquidity and Capital Resources
There was a significant change in the Company's liquidity during the three
months ended March 31, 1999, as the Company continued to raise equity to
acquire properties. During the three months ended March 31, 1999, the
Company closed the sale to investors of 2,163,913 shares representing
gross proceeds to the Company of $21,639,130 and net proceeds after
payment of brokerage fees and other offering-related costs of $19,392,823.
Using proceeds from the sale of common shares, the Company acquired 430
apartment units in two residential rental communities during first quarter
of 1999. The following is information on these two acquisitions:
Property Name Date Acquired Units Purchase Price Location
------------- ------------- ----- -------------- --------
Sierra Ridge January 1999 230 $ 5,817,000 San Antonio, TX
Grayson Square February 1999 200 9,350,000 Grapevine, TX
On April 9, 1999 the Company acquired Hunter's Creek, a 240-unit apartment
complex for $7,750,000.
Notes payable
The Company assumed one mortgage loan with a value of $6,992,795 in
connection with the acquisition of Grayson Square Apartments during the
first quarter of 1999. As of March 31, 1999, the Company had assumed $31
million in mortgage loans in connection with the acquisition of six
properties. The total of the mortgage loans at March 31, 1999 was $32
million which includes unamortized premium of $1.1 million.
<PAGE>
Cash and cash equivalents
Cash and cash equivalents totaled $45,705,746 at March 31, 1999. During
the first quarter in 1999, the Company distributed $5,432,882 to its
shareholders, of which $2,201,954 was reinvested in additional shares
through the Additional Share Option. The reinvested funds netted the
Company $2,832,639 after payment of brokerage fees. During this quarter,
the Company distributed $83,550 to Cornerstone on shares that had been
purchased by Cornerstone.
Capital requirements
The Company has an ongoing capital expenditure commitment to fund its
renovation program for recently acquired properties. In addition, the
Company is always assessing potential acquisitions and intends to acquire
additional properties during 1999. As of April 20, 1998, no material
definitive commitments existed for the purchase of additional properties.
The potential sources to fund the improvements and acquisitions include
additional equity and cash reserves.
The Company capitalized $5.4 million of improvements to its various
properties during the first quarter of 1999. It is anticipated that some
$10 million in additional capital improvements will be completed during
the next year on the current portfolio, which are expected to be funded
through cash reserves and dividend reinvestment.
The Company has short-term cash flow needs in order to conduct the
operation of its properties. The rental income generated from the
properties supplies sufficient cash to provide for the payment of these
operating expenses and distributions.
During March 1999, the Company completed its "best efforts" offering.
Capital resources are expected to grow with the future offering of its
shares and the cash flow from operations. Approximately 52% of all first
quarter 1999 distributions, $2,832,639, were reinvested in additional
common shares. In general, the Company's liquidity and capital resources
are expected to be adequate to meet its cash requirements in 1999.
Impact of Year 2000
The year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the
Company's computer programs or hardware that have date-sensitive software
or embedded chips may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.
There have been no significant changes to the Year 2000 disclosures
included in the 1998 Form 10-K.
The Company's external management company, which provides all significant
computer systems, believes it is devoting the resources necessary to
achieve year 2000 readiness in a timely manner.
<PAGE>
Part II, Item 2. Changes in Securities and Use of Proceeds
The following table set forth information concerning the Offering and the use
of proceeds from the Offering as of March 31, 1999:
<TABLE>
<CAPTION>
<S> <C> <C>
Common Shares Registered:
1,666,666.67 Common Shares $ 9 per Common Shares $ 15,000,000
28,500,000.00 Common Shares $10 per Common Shares $285,000,000
-------------
Totals: 30,166,666.67 Common Shares
-------------
Common Shares Sold:
1,666,666.67 Common Shares $ 9 per Common Share $ 15,000,000
28,410,732.33 Common Shares $10 per Common Share $284,107,323
------------- ------------
Totals: 30,077,399.00 Common Shares $299,107,323
-------------
Expenses of Issuance and Distribution of Common Shares
1. Underwriting discounts and commissions $ 29,910,732
2. Expenses of underwriters $ -
3. Direct or indirect payments to directors or officers
of the Company or their associates, to ten percent
shareholders, or to affiliates of the Company $ -
4. Fees and expenses of third parties $ 1,673,201
------------
Total Expenses of Issuance and Distribution of
Common Shares $267,523,390
Net Proceeds to the Company
1. Purchase of real estate (including repayment of
indebtedness incurred to purchase real estate) $196,622,916
2. Interest on indebtedness $ 1,599,254
3. Working capital $ 59,773,035
4. Fees to the following (all affiliates of officers of
the Company):
a. Apple Advisors, Inc. $ 14,894
b. Apple Realty Group, Inc. $ 624,382
c. Cornerstone Realty Income Trust, Inc. $ 8,888,909
5. Fees and expenses of third parties: $ -
a. Legal $ -
b. Accounting $ -
6. Other (specify________) $ -
------------
Total of Application of Net Proceeds to the
Company $267,523,390
</TABLE>
<PAGE>
Part II, Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - Exhibit 27- Financial Data Schedule
(b) Reports on Form 8-K
The following table lists the reports on Form 8-K filed by the Company
during the quarter ended March 31, 1999, the items reported and the financial
statements included in such filings.
Type and Date of Reports Items Reported Financial Statements Filed
- ------------------------ -------------- -------------------------
Form 8-K dated 2 None
January 20, 1999
Form 8-K dated 2 None
February 6, 1999
Form 8-K/A (date of 7 Historical Statement of
Income and Direct
Original Report: Operating Expenses of
October 28, 1998) Burney Oaks Apartments
and Cutter's Point
(formerly Brandywine
Park) for the twelve
months ended September
30, 1998
Form 8-K/A (date of 7 Historical Statement of
Original Report: Income and Direct
January 5, 1999) Operating Expenses of
Sierra Ridge Apartments
for the twelve months
ended December 15,
1998
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Apple Residential Income Trust, Inc.
------------------------------------
(Registrant)
DATE: 5-7-98 BY: /s/ Glade M. Knight
----------------------------------
Glade M. Knight
President
BY: /s/ Stanley J. Olander
----------------------------------
Stanley J. Olander
Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 45,705,746
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 262,999,579
<DEPRECIATION> 9,999,170
<TOTAL-ASSETS> 304,168,956
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 271,283,376
<OTHER-SE> (4,483,234)
<TOTAL-LIABILITY-AND-EQUITY> 304,168,956
<SALES> 0
<TOTAL-REVENUES> 11,416,283
<CGS> 0
<TOTAL-COSTS> 7,760,727
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 402,995
<INCOME-PRETAX> 3,640,682
<INCOME-TAX> 0
<INCOME-CONTINUING> 3,640,682
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,640,682
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
<FN>
<F1>Current Assets and Current Liabilities are not separated to conform with
industry standards.
<F2>Income is from rental income. There are no Sales or Cost of Goods Sold.
</FN>
</TABLE>
