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): APRIL 8, 1998
OCWEN ASSET INVESTMENT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
VIRGINIA 000-22389 65-0736120
(STATE OR OTHER (COMMISSION (I.R.S. EMPLOYER
JURISDICTION FILE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION)
THE FORUM, SUITE 1000
1675 PALM BEACH LAKES BOULEVARD, WEST PALM BEACH, FLORIDA 33401
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE)
(561) 681-8000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
PAGE 1 OF 16
EXHIBIT INDEX ON PAGE 4
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Current Report on Form 8-K/A amends the Current Report on Form 8-K filed by
Ocwen Asset Investment Corp. (the "Company") on April 23, 1998 solely to add the
financial statements of the property acquired as required by Item 7 (a) and the
pro forma financial information as required by Item 7 (b).
As previously reported on a Current Report on Form 8-K filed on April 23, 1998,
on April 8, 1998, Ocwen Asset Investment Corp. (the "Company") acquired an
existing 536,000 square foot, 22-story Class-A office building located at 225
Bush Street in the financial district of San Francisco, California for $100.2
million in cash. The building was purchased from Pacific Resources Development,
Inc. an unaffiliated third party (the "Seller"), by Ocwen Capital Corporation
("OCC") on behalf of the Company. OCC manages the Company's operations and is a
wholly-owned subsidiary of Ocwen Financial Corporation. The purchase price was
determined through arms length negotiations between the Seller and OCC, and the
source of funds for this purchase by OAIC was a $75.0 million loan from Salomon
Brothers Realty Corp. and cash reserves on hand. OAIC intends to continue to use
the building for rentals.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The financial statements related to this property are attached hereto,
and incorporated herein by reference, as Exhibit 99.1.
(b) The pro forma financial information related to this property is
attached hereto, and incorporated herein by reference, as Exhibit 99.2.
(c) Exhibits
The following exhibits are filed as part of this report:
2.1 Purchase and Sale Agreement between Ocwen Capital Corporation and
Pacific Resources Development, Inc. as of March 3, 1998. (1)
2.2 Assignment and Assumption Agreement, dated April 7, 1998, by and
between Ocwen Capital Corporation and OAIC Bush Street, LLC. (1)
10.1 Loan Agreement between OAIC Bush Street, LLC and Salomon Brothers
Realty Corp as of April 7, 1998. (1)
- -------------------
(1) Incorporated by reference to the similarly described exhibit filed in
connection with the Company's Current Report on Form 8-K as filed with the
Commission on April 23, 1998.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned, hereunto duly authorized.
OCWEN ASSET INVESTMENT CORP.
(Registrant)
By: /s/ MARK S. ZEIDMAN
--------------------------------------------
Mark S. Zeidman
Senior Vice President and
Chief Financial Officer
Date: June 12, 1998
3
<PAGE>
INDEX TO EXHIBIT
Exhibit Description Page
------- ----------- ----
99.1 Financial statements of property acquired. 5
------------------------------------------
(1) 225 Bush Street
Statements of Revenue and Certain Expenses
for the year ended December 31, 1997 and
the three months ended March 31, 1998
(unaudited), and Independent Auditors'
Report.
99.2 Pro forma financial information. 12
--------------------------------
(1) Unaudited Pro Forma Consolidated Statement
of Financial Condition at March 31, 1998.
(2) Unaudited Condensed Pro Forma Consolidated
Statement of Operations for the Period May
14, 1997 to December 31, 1997.
(3) Unaudited Condensed Pro Forma Consolidated
Statement of Operations for the Three
Months Ended March 31, 1998.
(4) Unaudited Condensed Pro Forma Consolidated
Statement of Operations for the Period May
14, 1997 to March 31, 1998.
4
Exhibit 99.1
225 BUSH STREET
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED
DECEMBER 31, 1997 AND THE THREE
MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
5
<PAGE>
225 BUSH STREET
INDEX TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
- --------------------------------------------------------------------------------
PAGE
Report of Independent Accountants....................................... 7
Statements of Revenue and Certain Expenses
For the year ended December 31,1997................................ 8
For the three months ended March 31, 1998 (unaudited).............. 9
Notes to Statements of Revenue and Certain Expenses................ 10
6
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of
Ocwen Asset Investment Corp.
We have audited the accompanying statement of revenue and certain expenses for
the property known as 225 Bush Street for the year ended December 31, 1997. This
financial statement is the responsibility of the property's management. Our
responsibility is to express an opinion on this financial 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 financial statement 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 presentation of the financial
statement. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses was prepared using
the basis described in Note 2, for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in the
current report on Form 8-K of Ocwen Asset Investment Corp.) and is not intended
to be a complete presentation of the revenues and expenses of the property known
as 225 Bush Street.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses for 225 Bush Street on
the basis described in Note 2 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ PRICE WATERHOUSE LLP
- -----------------------------------------
Price Waterhouse LLP
San Francisco, California
June 3, 1998
7
<PAGE>
225 BUSH STREET
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
REVENUES
Base rents (Note 3) ....................................... $ 7,918,726
-----------
CERTAIN EXPENSES
Real estate and property taxes ............................ 381,580
Utilities ................................................. 929,404
Janitorial ................................................ 591,437
Other operating expenses .................................. 750,387
Property management and administrative expenses (Note 4) .. 415,857
-----------
3,068,665
-----------
Revenue in excess of certain expenses ........................ $ 4,850,061
===========
See accompanying notes to financial statements.
8
<PAGE>
225 BUSH STREET
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
REVENUES
Base rents (Note 3) .......................................... $ 2,231,098
-----------
CERTAIN EXPENSES
Real estate and property taxes ............................... 93,772
Utilities .................................................... 185,957
Janitorial ................................................... 147,241
Other operating services ..................................... 157,978
Property management and administrative expenses (Note 4) ..... 98,695
-----------
683,643
-----------
Revenue in excess of certain expenses ........................... $ 1,547,455
===========
See accompanying notes to financial statements.
9
<PAGE>
225 BUSH STREET
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
- --------------------------------------------------------------------------------
1. ORGANIZATION AND OPERATION OF PROPERTY
For the purpose of the accompanying statements of revenue and certain expenses,
225 Bush Street (the "Property") is an office building located in San Francisco,
CA., which was acquired by Ocwen Asset Investment Corp. (the "Company") on April
8, 1998.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying statements of revenue and certain expenses have been prepared
on the accrual basis of accounting.
The accompanying financial statements are not representative of the actual
operations for the periods presented, as certain revenues and expenses which may
not be comparable to the revenues and expenses to be earned or incurred by the
Company in the future operations of the Property have been excluded. Revenues
excluded consist of interest and other revenues unrelated to the continuing
operations of the Property. Expenses excluded consist of interest and other
finance changes, depreciation of the building and improvements, and amortization
of organization and other intangible costs and other expenses not directly
related to the future operations of the Property.
INTERIM STATEMENTS
The interim financial data for the three months ended March 31, 1998 is
unaudited. However, in the opinion of the Property's management, the interim
data includes all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim period. The
results for the period presented are not necessarily indicative of the results
to be expected for the full year or any other period.
USE OF 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 period. Actual
results could differ from those estimates.
REVENUE RECOGNITION
Base rents are recognized on a cash basis which does not significantly vary from
the straight-line basis required under generally accepted accounting principles.
REPAIRS AND MAINTENANCE
Expenditures for maintenance and repairs are charged to operations as incurred.
Betterments which improve or extend the life of the asset beyond its original
condition are capitalized.
3. LEASES
Leases for the Property have various remaining lease terms of up to sixteen
years with options to certain tenants for renewal. In addition to base rents,
the leases provide for the tenants to pay their proportionate share of real
estate taxes and operating expenses over base year amounts.
10
<PAGE>
225 BUSH STREET
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
- --------------------------------------------------------------------------------
Future minimum rents to be received from tenants as of December 31, 1997 are as
follows:
1998........................................................ $ 8,134,798
1999........................................................ 7,270,286
2000........................................................ 6,277,296
2001........................................................ 5,752,548
2002........................................................ 4,426,674
Thereafter.................................................. 15,305,257
------------
$ 47,166,859
============
For the year ended December 31, 1997, Chevron USA, Inc. ("Chevron") was the
lessee responsible for 43% of total base rents. For the three months ended March
31, 1998, Chevron was the lessee responsible for 34% (unaudited) of total base
rents.
4. PROPERTY MANAGEMENT AND ADMINISTRATIVE EXPENSES
The Property incurs salary and benefit expenses for full-time employees. In
addition, the Property incurred management fees which totaled $66,000 for the
year ended December 31, 1997 and $18,000 for the three months ended March 31,
1998 (unaudited).
11
Exhibit 99.2
OCWEN ASSET INVESTMENT CORP.
PRO FORMA FINANCIAL INFORMATION
12
<PAGE>
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
AT MARCH 31, 1998
(DOLLARS IN THOUSANDS)
Historical Pro Forma Total
Company Adjustments Pro Forma
------------- ------------- -------------
ASSETS
<S> <C> <C> <C>
Cash and amounts due from depository institutions ............. $ 373 $ 373
Interest bearing deposits ..................................... 7,236 7,236
Securities held for trading ................................... 42,545 42,545
Securities available for sale, at market value ................ 157,992 157,992
Loan portfolio, net ........................................... 144,605 144,605
Discount loan portfolio, net .................................. 27,108 27,108
Investment in real estate, net ................................ 58,866 $ 100,150 (1) 159,016
Principal and interest receivable ............................. 5,083 5,083
Deposits on pending asset acquisitions ........................ 3,004 3,004
Other assets .................................................. 913 913
----------- -----------
$ 447,725 $ 547,875
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Securities sold under agreements to repurchase ................ $ 85,274 $ 85,274
Obligation outstanding under lines of credit .................. 81,890 $ 100,150 (1) 182,040
Dividends and distributions payable ........................... 4,825 4,825
Accrued expenses, payables and other liabilities .............. 5,625 5,625
----------- -----------
177,614 277,764
----------- -----------
Minority interest ............................................. 5,754 5,754
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; 25,000,000 shares authorized;
0 shares issued and outstanding ............................. -- --
Common Stock, $.01 par value; 200,000,000 shares authorized;
19,125,000 shares issued; 18,965,000 shares outstanding ..... 191 191
Additional paid-in capital .................................... 283,497 283,497
Distributions in excess of earnings ........................... (17,353) (17,353)
Unrealized gain on securities available for sale .............. 1,017 1,017
Treasury stock at cost (160,000 shares) ....................... (2,995) (2,995)
----------- -----------
Total shareholders' equity .................................. 264,357 264,357
----------- -----------
$ 447,725 $ 547,875
=========== ===========
</TABLE>
(1) Represents the purchase of the Bush Street Property for $100.2 million,
which was funded by a $75.0 million loan from Salomon Brothers Realty
Corp. at LIBOR plus 175 basis points (7.44 % at April 8, 1998) and from
$25.2 million of borrowings from other sources at approximately the same
rate.
13
<PAGE>
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
May 14, 1997 TO December 31, 1997
(Dollars in thousands)
Historical
Bush
Historical Street Pro Forma Total
Company (1) Property (1) Adjustment Pro Forma
----------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Interest Income ......................................... $ 13,462 $ -- $ 13,462
Interest Expense ........................................ -- -- $ 4,697 (3) 4,697
---------- ---------- ----------
Net interest income before provision for loan losses .... 13,462 -- 8,765
Provision for loan losses ............................... -- -- --
---------- ---------- ----------
Net interest income after provision for loan losses ... 13,462 -- 8,765
Operating income:
Real estate investments ............................... 2,210 5,196 7,406
Other ................................................. 13 -- 13
---------- ---------- ----------
2,223 (2) 5,196 7,419
Operating expenses ...................................... 3,883 (2) 1,936 1,300 (4) 7,119
Loss on securities held for trading ..................... -- -- --
---------- ---------- ----------
Income before minority interest ......................... 11,802 3,260 9,065
Minority interest in net income of operating partnership. (9) -- (9)
---------- ---------- ----------
Net income .............................................. $ 11,793 $ 3,260 $ 9,056
========== ========== ==========
Funds from Operations ................................... $ 11,971 $ 10,534
========== ==========
</TABLE>
(1) Historical results are based upon actual results of operations from May
14, 1997 through December 31, 1997.
(2) For purposes of this pro forma statement, historical operating expenses of
the Company include approximately $728,000 of expenses which are included
in operating income in the Company's Consolidated Statement of Operations
for the period from May 14, 1997 to December 31, 1997.
(3) Represents interest expense on the $75.0 million loan from Salomon
Brothers Realty Corp. at LIBOR plus 175 basis points (7.44% at April 8,
1998) and from $25.2 million of borrowings from other sources at
approximately the same rate. If the LIBOR rate were to change by 12.5
basis points, interest expense would change by approximately $123,000
during a one-year period.
(4) Represents depreciation expense on an $81.2 million valuation of the
building for financial reporting purposes and a 39 year useful life.
14
<PAGE>
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(DOLLARS IN THOUSANDS)
Historical
Bush
Historical Street Pro Forma Total
Company (1) Property (1) Adjustment Pro Forma
------------ ------------ ---------- -----------
<S> <C> <C> <C> <C>
Interest income ........................................... $ 4,353 $ -- $ 4,353
Interest expense .......................................... 694 -- $ 1,879 (3) 2,573
--------- -------- ---------
Net interest income before provision for loan losses ...... 3,659 -- 1,780
Provision for loan losses ................................. 105 -- 105
--------- -------- ---------
Net interest income after provision for loan losses. 3,554 -- 1,675
Operating income:
Real estate investments ................................. 2,034 2,231 4,265
Other ................................................... 8 -- 8
--------- -------- ---------
2,042 (2) 2,231 4,273
Operating expenses ........................................ 2,332 (2) 683 520 (4) 3,535
Loss on securities held for trading ....................... (13,958) -- (13,958)
--------- -------- ---------
Loss before minority interest ............................ (10,694) 1,548 (11,545)
Minority interest in net loss of operating partnership ... 190 -- 190
--------- -------- ---------
Net (loss) income ................................ $ (10,504) $ 1,548 $ (11,355)
========= ======== =========
Funds from operations ..................................... $ 3,758 $ 3,427
========= =========
</TABLE>
(1) Historical results are based upon actual results of operations for the
three months ended March 31, 1998.
(2) For purposes of this pro forma statement, historical operating expenses of
the Company include approximately $1.2 million of expenses which are
included in operating income in the Company's Consolidated Statement of
Operations for the period from January 1, 1998 through March 31, 1998.
(3) Represents interest expense on the $75.0 million loan from Salomon
Brothers Realty Corp. at LIBOR plus 175 basis points (7.44% at April 8,
1998) and from $25.2 million of borrowings from other sources at
approximately the same rate. If the LIBOR rate were to change by 12.5
basis points, interest expense would change by approximately $123,000
during a one-year period.
(4) Represents depreciation expense on an $81.2 million valuation of the
building for financial reporting purposes and a 39 year useful life.
15
<PAGE>
<TABLE>
<CAPTION>
OCWEN ASSET INVESTMENT CORP.
UNAUDITED CONDENSED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
May 14, 1997 to March 31, 1998
(Dollars in thousands)
Historical
Bush
Historical Street Pro Forma Total
Company (1) Property (1) Adjustment Pro Forma
------------ ------------ ---------- ----------
<S> <C> <C> <C> <C>
Interest Income ......................................... $ 17,815 $ -- $ 17,815
Interest Expense ........................................ 694 -- $ 6,576 (3) 7,270
-------- -------- --------
Net interest income before provision for loan losses .... 17,121 -- 10,545
Provision for loan losses ............................... 105 -- 105
-------- -------- --------
Net interest income after provision for loan losses ... 17,016 -- 10,440
Operating income:
Real estate investments ............................... 4,244 7,427 11,671
Other ................................................. 21 -- 21
-------- -------- --------
4,265 (2) 7,427 11,692
Operating expenses ...................................... 6,215 (2) 2,619 1,820 (4) 10,654
Loss on securities held for trading ..................... (13,958) -- (13,958)
-------- -------- --------
Income (loss) before minority interest .................. 1,108 4,808 (2,480)
Minority interest in net loss of operating partnership .. 181 -- 181
-------- -------- --------
Net income (loss) ............................. $ 1,289 $ 4,808 $ (2,299)
======== ======== ========
Funds from operations ................................... $ 15,729 $ 13,961
======== ========
</TABLE>
(1) Historical results are based upon actual results of operations for the
10.5 month period from May 14, 1997 through March 31, 1998.
(2) For purposes of this pro forma statement, historical operating expenses of
the Company include approximately $2.0 million of expenses which are
included in operating income in the Company's Consolidated Statement of
Operations for the period from May 14, 1997 through December 31, 1997 and
the period January 1, 1998 through March 31, 1998.
(3) Represents interest expense on the $75.0 million loan from Salomon
Brothers Realty Corp. at LIBOR plus 175 basis Points (7.44%at April 8,
1998) and from $25.2 million of borrowings from other sources at
approximately the same rate. If the LIBOR rate were to change by 12.5
basis points, interest expense would change by approximately $123,000
during a one year period.
(4) Represents depreciation expense on an $81.2 million valuation of the
building for financial reporting purposes and a 39 year useful life.
16
