UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) January 21, 1998
U.S. RESTAURANT PROPERTIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 1-13089 75-2687420
(STATE OF OTHER (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION OR
ORGANIZATION)
5310 Harvest Hill Rd.
Suite 270, LB 168
Dallas, Texas 75230
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
972-387-1487
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
1
<PAGE>
EXPLANATORY NOTE
U.S. Restaurant Properties, Inc., (the "Registrant") a fully integrated,
self-administered and self-managed real estate investment trust hereby amends
its Form 8-K dated January 21, 1998 as filed with the Securities and Exchange
Commission on February 4, 1998 as follows:
The Company hereby submits the financial statements required for the properties
acquired and included in this Form 8-K/A and pro forma information as shown on
Item 7 and as further described in Item 2.
Item 2. Acquisition or Disposition of Assets
On January 9, 1998, U.S. Restaurant Properties, Inc. (the "Registrant") acquired
four Wendy's restaurant properties located in Illinois, Maryland and Virginia.
The acquisition was done pursuant to one purchase and sale agreement. The net
purchase price equaled $940,000 in cash and other capitalized costs of
approximately $32,000. The selling entity was The Penn Mutual Life Insurance
Company, a Pennsylvania mutual insurance corporation. The acquisition was funded
by the Registrant's bank line of credit.
On January 21, 1998, the Registrant acquired 20 El Chico restaurant properties
and one other property, located in Alabama, Arkansas, Kentucky, Louisiana,
Oklahoma, Tennessee and Texas. The acquisition was done pursuant to one purchase
and sales agreement. The purchase price equaled $27,300,000 in cash and other
capitalized costs of approximately $380,000. The selling entity was El Chico
Restaurants, Inc., a Texas corporation. The acquisition was funded by the
Registrant's bank line of credit.
On February 18, 1998, the Registrant acquired two Burger King properties located
in Illinois. The acquisition was done pursuant to one purchase and sale
agreement. The purchase price equaled $1,966,926 in cash and other capitalized
costs of approximately $17,000. The selling entity was National Restaurant
Enterprises, Inc., a Delaware corporation. The acquisition was funded by the
Registrant's bank line of credit.
On various dates from January 1, 1998 through February 28, 1998, the Registrant
acquired five properties consisting of one Schlotzsky's, one Fazoli's and three
other regional brands located in Georgia, Illinois, Indiana, Oregon and Texas.
The properties were acquired pursuant to five purchase and sale agreements. The
purchase price for these properties equaled $3,117,700 in cash and other
capitalized costs of approximately $24,000. These restaurant properties
represent newly developed properties and properties yet to be developed, which
do not have any historical operations. The selling entities were Terrell
Partners, L.P., a Texas limited partnership, FZ Development, L.L.C., an Illinois
limited liability company, Post 70 partners, L.P., an Indiana limited
partnership, Restaurant Properties, L.L.C., a Kentucky limited liability company
and Eugene F. Burrill Lumber Co., an Oregon corporation. These acquisitions were
funded by the Registrant's bank line of credit.
In addition, to the above acquisitions, three other properties (the "Other
Properties") were acquired during the period January 1, 1998 and February 28,
1998. These properties consist of two McAlister's restaurant properties and one
Chevron gas station property. The properties were purchased from JME Inc., a
Mississippi corporation, Albany Properties, L.L.C., a Mississippi limited
liability company and B.C. Oil Ventures, LLC, a California limited liability
company. These properties were purchased for an aggregate cash purchase price of
approximately $2,083,000 and were funded by the Registrant's bank line of
credit.
2
<PAGE>
The transaction on January 21, 1998 in combination with restaurant properties
acquired between January 1, 1998 and January 21, 1998 (date of reportable
event), which are unaudited, are deemed significant in aggregate to the
Registrants total assets as previously reported on Form 10-K. Other transactions
subsequent to the date of the reportable event through February 28, 1998 have
been included. The Sellers of all properties are not affiliated with the
Registrant, any director or officer of the Registrant or any associate of any
such director or officer.
The purchase prices, which were negotiated with the Sellers, were determined
through internal analysis by the Registrant of historical cash flows and fair
market values of the acquired Properties.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a)(3)
Combined Statement of Revenues of Selected Properties Sold to U.S.
Restaurant Properties, Inc. (Wendy's Acquisition) for the year
ended December 31, 1997
Financial information related to the acquisition of 21 properties by
U.S. Restaurant Properties, Inc. from El Chico Restaurants, Inc.
Financial information related to the acquisition of two restaurant
properties by U.S. Restaurant Properties, Inc. from National Restaurant
Enterprises, Inc., a wholly-owned subsidiary of AmeriKing, Inc.
b) Pro forma Financial Information
c) Exhibits
23 (a) Consent of Deloitte & Touche LLP
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
U.S. Restaurant Properties, Inc.
We have audited the accompanying combined statement of revenues of Selected
Properties Sold to U.S. Restaurant Properties, Inc. (Wendy's Acquisition) for
the year ended December 31, 1997. This financial statement is the responsibility
of the management of U.S. Restaurant Properties, Inc. 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 combined statement of revenues and certain expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying combined statement of revenues was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Form 8-K of U.S. Restaurant Properties, Inc..
Material amount of expenses, described in Note 1 to the combined statement of
revenues, that would not be comparable to those resulting from the proposed
future operations of the properties sold to U.S. Restaurant Properties, Inc. are
excluded and the statement is not intended to be a complete presentation of the
revenues and expenses of these properties.
In our opinion, such combined statement of revenues presents fairly, in all
material respects, the combined revenues, as defined above, of Selected
Properties Sold to U.S. Restaurant Properties, Inc. (Wendy's Acquisition) for
the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Dallas, Texas
March 17, 1998
<PAGE>
SELECTED PROPERTIES SOLD TO
U.S. RESTAURANT PROPERTIES, INC. (WENDY'S ACQUISITION)
COMBINED STATEMENT OF REVENUES
YEAR ENDED DECEMBER 31, 1997
RENTAL INCOME - MINIMUM $ 176,094
=================
See Accompanying Notes to the Combined Statement of Revenues.
<PAGE>
NOTES TO THE SELECTED PROPERTIES SOLD TO U.S. RESTAURANT PROPERTIES, INC.
(WENDY'S ACQUISITION) COMBINED STATEMENT OF REVENUES
1. Summary Of Significant Accounting Policies
Nature Of Operations
The accompanying Combined Statement of Revenues includes four properties
acquired by U.S. Restaurant Properties, Inc. from The Penn Mutual Life
Insurance Company, a Pennsylvania mutual insurance corporation (the
"Company"). The statement does not include any revenues or expenses related
to any other properties owned or managed by the Company. The properties
acquired are operated as Wendy's restaurants. In accordance with the
Securities and Exchange Commission Rule 3-14, the statement does not
include expenses not comparable to the proposed future operations of the
property such as depreciation, interest, or any other costs that are not
directly associated with the properties and accordingly, it is not intended
to be a complete presentation of revenues and expenses of the properties.
There are no continuing operating expenses of the properties for 1997 which
were incurred by the lessor.
2. Use Of Estimates
The preparation of this combined statement of revenues in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
certain expenses during a reporting period. Actual results could differ
from those estimates.
3. Rental Income
The property leases are "triple net" leases which require the lessee to
pay all property taxes, assessments, insurance, maintenance costs and other
charges related to maintenance, repair and operation of the property.
Certain information regarding the property leases is set forth in the table
below.
<TABLE>
<CAPTION>
MINIMUM
ANNUAL PERCENTAGE TERMINATION
LOCATION RENTAL RENTAL DATE
- ----------------------- ------------------------------------------- ---------- ---------------
<S> <C> <C> <C>
Woodbridge, VA $ 51,191 Per year through 5/17/98 None May 1998 with two
option terms. The
first such term is
five years and the
second term is four
years and eleven
months.
Landover, MD 41,947 Per year through 8/11/98 None August 1998 with two
option terms. The
first such term is
five years and the
second term is four
years and eleven
months.
Suitland, MD 41,870 Per year through 12/15/98 None December 1998 with
two five-year renewal
options.
Belleville, IL 41,086 Per year through 5/17/98 None May 1998 with two
option terms. The
first such term is
five years and the
second term is four
years and eleven
months.
The following is a schedule of minimum rental income on the
non-cancelable leases as of December 31, 1997:
1998 $ 100,491
--------------
$ 100,491
==============
</TABLE>
6
<PAGE>
Financial information related to the acquisition of 21 properties by U.S.
Restaurant Properties, Inc. from El Chico Restaurants, Inc. ("El Chico").
El Chico is a publicly owned corporation. With respect to El Chico, as reported
by its management, net loss totaled $(3,062,000) for the year ended December 31,
1996 and unaudited net income totaled $1,966,000 for the nine months ended
September 30, 1997. El Chico reported total assets of $47,662,000 and
stockholders' equity of $26,285,000 as of December 31, 1996 and unaudited total
assets of $48,673,000 and stockholders' equity of $28,417,000 as of September
30, 1997. Persons interested in receiving copies of El Chico's publicly issued
financial statements for the year ended December 31, 1996 and for the nine
months ended September 30, 1997 can do so by contacting El Chico Restaurants,
Inc. at: 12200 Stemmons Freeway, Suite 100, Dallas, TX 75234 or by accessing the
Securities and Exchange Commission's EDGAR archives through their web site
located at: http://www.sec.gov.
7
<PAGE>
Financial information related to the acquisition of two restaurant properties by
U. S. Restaurant Properties, Inc. from National Restaurant Enterprises, Inc. a
wholly-owned subsidiary of AmeriKing, Inc. ("King").
King is a public registrant with the Securities and Exchange Commission. With
respect to King, as reported by its management, net loss totaled $(7,997,000)
for the year ended December 30, 1996 and unaudited net loss totaled $(367,000)
for the nine months ended September 29, 1997. King reported total assets of
$155,037,000 and stockholders' equity of $433,000 as of December 30, 1996 and
unaudited total assets of $209,781,000 and stockholders' deficit of $(3,063,000)
as of September 29, 1997. Persons interested in receiving copies of King's
publicly issued financial statements for the year ended December 30, 1996 and
for the nine months ended September 29, 1997 can do so by contacting AmeriKing,
Inc. at: 2215 Enterprise Drive, Suite 1502, Westchester, IL 60154 or by
accessing the Securities and Exchange Commission's EDGAR archives through their
web site located at: http://www.sec.gov
8
<PAGE>
PRO FORMA FINANCIAL INFORMATION
The following December 31, 1997 unaudited Pro Forma Consolidated
Balance Sheet of U.S. Restaurant Properties, Inc. (the "Company") consists of
the Company's December 31, 1997 historical balance sheet adjusted on a pro forma
basis to reflect as of December 31, 1997: (a) the acquisition of 30 operating
properties for $32,718,000, (b) the acquisition of one newly constructed and
four undeveloped properties for $3,142,000, (c) the additional borrowings
required to purchase the properties acquired. The unaudited Pro Forma
Consolidated Balance Sheet is not necessarily indicative of what the actual
financial position of the Company would have been at December 31, 1997 had all
of these transactions occurred as of such date and it does not purport to
represent the future financial position of the Company.
The unaudited Pro Forma Condensed Consolidated Statement of Income for the
year ended December 31, 1997 is presented as if the following had occurred as of
January 1, 1997: (a) the acquisition of 277 properties for $182,396,000
including the value of 680,695 shares issued in connection with acquisitions and
the sale of eight properties for $5,822,000 on various dates between January 1,
1997 and December 31, 1997, (b) the acquisition of 30 operating properties for
$32,718,000 acquired between January 1, 1998 and February 28, 1998, (c) the
acquisition of one newly constructed and four undeveloped properties for
$3,142,000, between January 1, 1998 and February 28, 1998, (d) the issuance of
1,434,831 shares in five separate transactions to individual investors with net
proceeds of $25,000,000, (e) the additional borrowings of $94,865,000 required
to purchase the properties acquired, (f) the preferred stock dividends required
and the reduction of interest expense as a result of the offering based on the
offering proceeds to reduce the total debt outstanding by $87,622,000, and (g)
the three-for-two stock split on October 30, 1997. Proceeds from the property
sales and stock issuances were used to finance the property acquisitions. The
unaudited Pro Forma Condensed Consolidated Statement of Income is not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the transactions described above had been completed as
of January 1, 1997, nor do they purport to represent the results of operations
for future periods.
9
<PAGE>
U.S. RESTAURANT PROPERTIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1997
(Unaudited)
(Dollars In thousands)
<TABLE>
<CAPTION>
Operating Newly
Historical Property Constructed
12/31/97 Acquisitions (a) Acquisitions (b) Pro Forma
-------------- ------------- -------------- ------------
<S> <C> <C> <C> <C>
Property, net
Land $ 109,515 $ 10,405 $ 2,031 $ 121,951
Building and leasehold 211,200 22,313 1,111 234,624
improvements
Machinery and equipment 4,813 4,813
Less: Accumulated Depreciation (13,438) (13,438)
Cash and cash equivalents 1,104 1,104
Cash restricted -- 700 700
Rent and other receivables, net 4,791 4 4,795
Prepaid expenses and purchase 1,967 (118) (303) 1,546
deposits
Notes receivable 8,518 8,518
Mortgage note receivable 5,947 5,947
Net investment in direct financing
leases 13,764 13,764
Intangibles, net 10,968 10,968
-------------- ------------- -------------- ------------
$ 359,149 $ 33,304 $ 2,839 $ 395,292
============== ============= ============== ============
Accounts payable and accrued $ 4,193 $ 976 $ 12 $ 5,181
liabilities
Deferred gain on sale of property 642 642
Lines of credit 89,196 32,328 2,827 124,351
Notes payable 40,000 40,000
Capitalized lease obligations 170 170
Minority interest in operating 19,536 19,536
partnership
Stockholders' Equity 205,412 205,412
-------------- ------------- -------------- ------------
$ 359,149 $ 33,304 $ 2,839 $ 395,292
============== ============= ============== ============
</TABLE>
See Notes to Pro Forma Consolidated Balance Sheet.
10
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
(a) Reflects pro forma adjustments for certain 1998 acquisitions completed
since December 31, 1997 which consist of the purchase of 30 operating
properties and the borrowings required to complete the purchase of these
properties as follows:
Number of
Properties
--------------- ----------------
El Chico 21 $ 27,680
Wendy's 4 971
Burger King 2 1,984
Other 3 2,083
---- ----------------
30 32,718
====
Add restricted cash 700
Add rent receivable and other 4
Less December 31, 1997 prepaid
expenses and purchase deposits
relating to acquisitions (118)
Less tenant security deposit and escrows (976)
received ----------------
Increase in line of credit and notes payable $ 32,328
================
Costs of the acquisitions are allocated as follows:
Land $ 10,405
Buildings and leasehold improvements 22,313
----------------
$ 32,718
================
The respective purchase price for the properties has been allocated between land
and buildings and leasehold improvements, on a preliminary basis. Final
determination of the proper allocation between these accounts will be made prior
to finalizing the financial statements for the year ended December 31, 1998.
Management does not expect material adjustments to occur.
(b) Reflects pro forma adjustments for certain 1998 acquisitions completed
since December 31, 1997 which consist of the purchase of one newly
constructed and four undeveloped properties and the borrowings required to
complete the purchase of these properties as follows:
Number of
Properties
-------------- ---------------
Schlotzsky's 1 $ 223
Other 4 2,919
---- ---------------
5 3,142
====
Less December 31, 1997 prepaid
expenses and purchase deposits
relating to acquisitions (303)
Less tenant security deposit and escrow
received (12)
---------------
Increase in line of credit and notes payable $ 2,827
===============
Costs of the acquisitions are allocated as follows:
Land $ 2,031
Buildings and leasehold improvements 1,111
---------------
$ 3,142
===============
The respective purchase price for the properties has been allocated
between land and buildings and leasehold improvements, on a preliminary basis.
Final determination of the proper allocation between these accounts will be made
prior to finalizing the financial statements for the year ending December 31,
1998. Management does not expect material adjustments to occur.
11
<PAGE>
U.S. RESTAURANT PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited)
(In thousands, except per share/unit data)
<TABLE>
<CAPTION>
REIT
1997 Conversion
Acquisition Offering and
Historical and Minority National Newly Other Pro Forma PRO FORMA
12/31/97 Sales Interest Wendy's El Chico Restaurant Constructed Properties Adjustment 12/31/97
---------- ----------- ------------ ------- --------- ---------- ----------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Total Revenues $ 35,584 $ 12,614(a) $ -- $176(c) $3,718(d) $ 207(e) $ 265 (f) $ 281(g) $ -- $ 52,845
Expenses
Ground Lease
expense 2,488 514 -- -- -- -- -- -- -- 3,002
Depreciation
and
amortization 9,415 3,590 -- 25(h) 949(h) 74(h) 62(h) 67(h) -- 14,182
Taxes, G & A 3,590 609 -- -- -- -- -- -- -- 4,199
Interest
expense 10,011 5,930 (6,572)(b) -- -- -- -- -- 2,360(i) 11,729
---------- ----------- ------------- ------- --------- ---------- ----------- ---------- ---------- ---------
Total expenses 25,504 10,643 (6,572) 25 949 74 62 67 2,360 33,112
---------- ----------- ------------- ------- --------- ---------- ----------- ---------- ---------- ---------
Income before
gain on sale
of property
, minority
interest and
unusual items 10,080 1,971 6,572 151 2,769 133 203 214 (2,360) 19,733
---------- ----------- ------------- ------- --------- ---------- ----------- ---------- ---------- ---------
Minority
interest in
income (202) -- -- -- -- -- -- -- (200)(j) (402)
Gain on sale
of property 869 -- -- -- -- -- -- -- -- 869
Termination of
management
contract (19,220) -- -- -- -- -- -- -- -- (19,220)
REIT
conversion
costs (920) -- -- -- -- -- -- -- -- (920)
---------- ----------- ------------- ------- --------- ---------- ----------- ---------- ---------- ---------
Net income (9,393) $ 1,971 $ 6,572 $151 $2,769 $ 133 $ 203 $ 214 $ (2,560) 60
=========== ============= ======= ========= ========== =========== ========== ==========
Preferred
stock
dividend (868) (6,234)(b) (7,102)
----------- ------------- ---------
Net income
allocable to
Common Stock
/unitholders $ (10,261) $(7,042)
=========== =========
Avg no. of
shares/units
Basic 11,693 12,631
=========== =========
Diluted 11,693 12,631
=========== =========
Net income
per share
/unit
Basic $ (0.88) $(0.56)
=========== =========
Diluted $ (0.88) $(0.56)
=========== ==========
</TABLE>
See Notes to Pro Forma Consolidated Statement of Income.
12
<PAGE>
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(a) Reflects pro forma adjustment to operations relating to the period between
January 1, 1997 and the date of acquisition for base and percentage rent
for the 1997 acquisitions comprised of 277 properties acquired on various
dates from January 1, 1997 through December 31, 1997.
(b) Reflects pro forma adjustment for the issuance of preferred stock. Proceeds
of which were used to finance acquisitions.
(c) Reflects pro forma adjustment to operations relating to base rent based on
historical financial information for the Wendy's Acquisition comprised of
four properties acquired on January 9, 1998. See combined statement of
revenues included herein.
(d) Reflects pro forma adjustment to operations relating to base rent based on
executed lease information for the El Chico Restaurants, Inc. acquisition
comprised of 21 properties acquired on January 21, 1997.
(e) Reflects pro forma adjustment to operations relating to base rent based on
executed lease information for the National Restaurant Enterprises, Inc.
acquisition comprised of two properties acquired on February 18, 1998.
(f) Reflects pro forma adjustment to operations based on executed lease
information for the newly constructed and undeveloped acquisitions
comprised of five properties acquired on various dates from January 1, 1998
through February 28, 1998.
(g) Reflects pro forma adjustment to operations relating to base rent based on
newly executed lease and historical financial information for three other
properties acquired on various dates from January 1, 1998 through February
28, 1998.
(h) Reflects pro forma increase in depreciation expense related to the purchase
price of the respective properties or decrease in depreciation expense due
to the sale of the respective properties. Depreciation is computed using
the straight-line method over the estimated useful lives of building,
leasehold improvements, machinery and equipment which range from 10 to 20
years.
(i) Reflects the pro forma adjustment to interest expense as a result of the
purchase of the respective properties. Pro forma interest expense is based
on the increase in debt outstanding and borrowings for payment of
distributions on units issued on a pro forma basis using interest rates
based on the Company's credit arrangements which are as follows:
Principal Interest Rate
Series A Senior Secured
Guaranteed Notes $ 12,500,000 8.06%
Series B Senior Secured
Guaranteed Notes 27,500,000 8.30%
Line of credit 111,000,000 6.74%
Line of credit 26,200,000 8.03%
(j) Reflects pro forma allocation of operating income to minority interest.
13
<PAGE>
SIGNATURE
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.
Date: March 20, 1998 U.S. RESTAURANT PROPERTIES, INC
By: /s/ Robert J. Stetson
-----------------------------
Robert J. Stetson
President, Chief Executive Officer
14
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
333-34263 of U.S. Restaurant Properties, Inc. on Form S-3 of our report dated
March 17, 1998 with respect to the combined statement of revenues of Selected
Properties Sold to U.S. Restaurant Properties, Inc. (Wendy's Acquisition) for
the year ended December 31, 1997 appearing in the Current Report on Form 8-K/A
dated March 20, 1998 of U.S. Restaurant Properties, Inc.
DELOITTE & TOUCHE LLP
Dallas, Texas
March 20, 1998
