SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
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 28, 1998
(May 13, 1998)
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Wellsford Real Properties, Inc.
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(Exact name of registrant as specified in its charter)
1-12917 13-3926898
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(Commission File Number) (IRS Employer Identification No.)
Maryland
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(State or other jurisdiction of incorporation)
610 Fifth Avenue, New York, New York 10020
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(Address of principal executive offices)
(Zip Code)
(212) 333-2300
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(Registrant's telephone number, including area code)
<PAGE>
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K
dated April 28, 1998, as set forth below:
Item 7. Financial Statements, Proforma Financial Information and Exhibits
(a) Financial Statements
Saracen Portfolio Financial Statement:
Independent Auditors' Report of Ernst & Young LLP dated
April 9, 1998.
Combined Statement of Revenue and Certain Expenses for the year
ended December 31, 1997.
(b) Proforma Financial Information
Wellsford Real Properties, Inc. and Subsidiaries Proforma Financial
Statements:
Proforma Consolidated Income Statement for the year ended
December 31, 1997 (unaudited) and related footnotes.
Proforma Consolidated Balance Sheet as of December 31, 1997
(unaudited) and related footnotes.
(c) Exhibits
None.
<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 hereunto duly authorized.
Wellsford Real Properties, Inc.
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(Registrant)
Date May 13, 1998 By: /s/ Gregory F. Hughes
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Gregory F. Hughes
Chief Financial Officer
<PAGE>
Combined Statement of Revenues
and Certain Expenses
The Saracen Properties
Year Ended December 31, 1997
with Report of Independent Auditors
<PAGE>
The Saracen Properties
Combined Statement of Revenues and Certain Expenses
Year Ended December 31, 1997
Contents
Report of Independent Auditors . . . . . . . . . . . . . . . . . . 1
Combined Statement of Revenues and Certain Expenses. . . . . . . . 2
Notes to Combined Statement of Revenues and Certain Expenses . . . 3
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Wellsford Real Properties, Inc.
We have audited the combined statement of revenues and certain expenses of
the properties known as 333 Elm Street (Norfolk), Dedham Place Office, 128
Technology Center, 201 University Avenue, 7/57 Wells Avenue, 75/85/95 Wells
Avenue (Research Center), 70 Wells Avenue, 160 Wells Avenue, 2331 Congress
Street, 60 Turner Street, 74 Turner Street, 150 Wells Avenue, 72 River Park
and 100 Wells Avenue (collectively, the "Saracen Properties"), to be
acquired by Wellsford/Whitehall Properties, L.L.C., as described in Note 1,
for the year ended December 31, 1997. This financial statement is the
responsibility of the Saracen Properties' 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
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in Form 8-K of Wellsford
Real Properties, Inc. and is not intended to be a complete presentation of
the Saracen Properties' revenues and expenses.
In our opinion, the financial statement referred to above presents fairly,
in all material respects, the combined revenues and certain expenses of the
Saracen Properties as described in Note 1 for the year ended December 31,
1997, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
New York, New York
April 9, 1998
<PAGE>
The Saracen Properties
Combined Statement of Revenues and Certain Expenses
(Note 1)
Year Ended December 31, 1997
Revenues:
Base rents $18,822,788
Tenant escalations and reimbursements 1,630,548
Other income 170,996
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Total revenues 20,624,332
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Certain expenses:
Property operating expenses 5,758,196
Real estate taxes 2,273,275
Management fees 793,910
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Total certain expenses 8,825,381
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Revenues in excess of certain expenses $11,798,951
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See accompanying notes.
<PAGE>
The Saracen Properties
Notes to Combined Statement of Revenues and Certain Expenses
Year Ended December 31, 1997
1. Basis of Presentation
Presented herein is the combined statement of revenues and certain expenses
related to the operations of fourteen commercial real estate properties
known as 333 Elm Street (Norfolk), Dedham Place Office, 128 Technology
Center, 201 University Avenue, 7/57 Wells Avenue, 75/85/95 Wells Avenue
(Research Center) 70 Wells Avenue, 160 Wells Avenue, 2331 Congress Street,
60 Turner Street, 74 Turner Street, 150 Wells Avenue, 72 River Park and 100
Wells Avenue (collectively, the "Saracen Properties"). The Saracen
Properties are not a legal entity, but are a combination of the operations
of the real estate properties owned and managed by the Saracen Companies
("Saracen") and expected to be contributed to Wellsford/Whitehall
Properties, L.L.C. ("Wellsford Office") by Saracen, in exchange for
operating units of Wellsford Office and cash. Wellsford Real Properties,
Inc. has a 50.1% interest in Wellsford Office.
The Saracen Properties are all located in the suburbs of Boston,
Massachusetts, with the exception of 2331 Congress Street, which is located
in Portland, Maine.
The accompanying financial statement has been prepared in accordance with
applicable rules and regulations of the Securities and Exchange Commission
for the acquisition of real estate properties. Accordingly, the financial
statement excludes certain expenses that may not be comparable to those
expected to be incurred by Wellsford Office in the proposed future
operations of the Saracen Properties. Expenses excluded consist of
interest, depreciation, amortization, and general and administrative
expenses not directly related to the future operations.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
2. Lease and Revenue Recognition
The Saracen Properties are being leased to tenants under operating leases.
Minimum rental income is generally recognized on a straight-line basis over
the term of the lease. The excess of amounts due pursuant to the underlying
leases over amounts recognized on a straight-line basis amounted to
approximately $650,000 for the year ended December 31, 1997. Lease
agreements for certain of the Saracen Properties contain provisions which
provide for reimbursements of real estate taxes and operating expenses over
base year amounts, as well as fixed increases in rent.
Prior to September 1, 1997, 70 Wells Avenue was net leased in its entirety
to a single tenant user. Commencing September 1, 1997, 70 Wells Avenue was
converted to a gross leased property and two tenants signed leases,
representing 100% of 70 Wells Avenue's rentable space.
3. Management and Leasing Agreements
The Saracen Properties are managed and leased by an affiliate. The
affiliate provides management and leasing services at a rate of 3.75% to 5%
of gross cash receipts.
4. Property Operating Expenses
Property operating expenses for the year ended December 31, 1997 include
approximately $156,000 for insurance, $3,120,000 for utilities, $139,000
for general and administrative expenses, $2,072,000 in repair and
maintenance costs and $271,000 for payroll costs.
5. Related Party Transactions
In addition to management and leasing services, affiliates provide
construction services and electrical contracting services to the Saracen
Properties. An affiliate leased space from the Saracen Properties in 1997.
Rental income earned from this lease approximated $102,000 for the year
ended December 31, 1997.
6. Significant Tenants
Three tenants accounted for approximately 23%, 18% and 10% of the combined
1997 base rents on a straight line basis, respectively.
7. Tenants Leases
The Saracen Properties, other than 74 Turner Street, are principally multi-
tenant office buildings with leases expiring at various dates over the next
sixteen years. 74 Turner Street is a parcel of vacant land adjacent to 128
Technology Center and 60 Turner Street. Minimum future fixed base rents
under noncancelable leases as of December 31, 1997 are as follows:
Year ending December 31:
1998 $20,651,000
1999 16,858,000
2000 9,636,000
2001 7,476,000
2002 2,827,000
Thereafter 10,230,000
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$67,678,000
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<PAGE>
Wellsford Real Properties, Inc.
Pro Forma Consolidated Income Statement
Year Ended December 31, 1997
(In thousands except per share data)
(Unaudited)
Saracen
Pro Forma
Historical Adjustments Pro Forma
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REVENUE
Rental income $1,291 $1,291
Interest income 7,780 (360) (A) 7,420
Joint Venture income 15 (470) (B) (455)
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Total Revenue 9,086 (830) 8,256
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EXPENSES
Property operating and maint. 241 241
Real estate taxes 106 106
General and administrative 3,160 3,160
Depreciation 295 295
Interest 0 0
Property management 18 18
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Total Expenses 3,820 0 3,820
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Income before income taxes 5,266 (830) 4,436
Provision for income taxes 2,213 (371) (C) 1,842
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Net income $3,053 ($459) $2,594
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Net income per common
share, basic $0.18 $0.15
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Weighted average common
shares outstanding 16,922 16,922
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<PAGE>
Wellsford Real Properties, Inc.
Notes to Pro Forma Consolidated Income Statement
Year Ended December 31, 1997
(Unaudited)
(A) Represents one year of interest income on the cash contributed in
connection with the acquisition of the Saracen Properties.
(B) Represents one year of operations of the Saracen Properties and
related items as follows:
(In thousands)
Operations $12,181 *
Depreciation expense (3,163) One year utilizing a 40
year estimated useful life.
Interest expense - BOB (2,796) Represents interest on the
$35.8 million draws on the
Bank of Boston term loan
and revolver for one year
at approximately 7.8%
(LIBOR + an average of
2.2%).
Interest expense - Nomura (5,498) Represents interest on the
$68.4 million loan from
Nomura Asset Capital Corp.
for one year at 8.035%.
General and administrative (516) Represents the asset
management fee payable to
Saracen for one year based
on 2.5% of the gross
revenues of the Saracen
Properties.
Preferred return (1,200) Represents preferred return
-------- payable to Saracen.
(992)
Company interest 47.40% After the issuance of units
-------- to Saracen.
($470)
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* Represents historical operating revenues and expenses of these assets
for the year ended December 31, 1997.
(C) Represents the Company's estimated provision for (benefit from)
federal
and state income taxes at rates of 35% and 15%, respectively.
<PAGE>
Wellsford Real Properties, Inc.
Pro Forma Consolidated Balance Sheet
December 31, 1997
(In thousands)
(Unaudited)
Saracen
Pro Forma
Historical Adjustments Pro Forma
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ASSETS
Real estate assets, at cost:
Land $5,225 $5,255
Buildings and improvements 36,338 36,338
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41,563 0 41,563
Less, accumulated
depreciation 0 0
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41,563 0 41,563
Construction in process 17,178 17,178
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58,741 0 58,741
Notes receivable 105,632 105,632
Investment in joint venture 44,780 9,009 (A) 53,789
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Total real estate assets 209,153 9,009 218,162
Cash and cash equivalents 29,895 (9,009) (A) 20,886
Restricted cash 7,696 7,696
Other assets 3,230 3,230
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Total Assets $249,974 $0 $249,974
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LIABILITIES AND EQUITY
Liabilities:
Tax exempt mortgage note
payable $14,755 $14,755
Mortgage payable 34,500 34,500
Credit facility 7,500 7,500
Other liabilities 9,763 9,763
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Total Liabilities 66,518 $0 66,518
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Commitments and contingencies -- -- --
Minority Interest 2,297 2,297
Equity:
Series A 8% Convertible Redeemable
Preferred Stock, 2,000,000 shares
authorized - no shares, $.01 par
value per share, issued and
outstanding -- --
Common Stock, 197,650,000 shares
authorized - 16,656,707 shares,
$.01 par value per share, issued
and outstanding 167 167
Class A Common Stock, 350,000
shares authorized - 339,806,
$.01 par value per share,
issued and outstanding 3 3
Paid in capital in excess of
par value 179,722 179,722
Retained earnings 1,942 1,942
Deferred Compensation (675) (675)
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Total Equity 181,159 0 181,159
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Total Liabilities and Equity $249,974 $0 $249,974
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<PAGE>
Wellsford Real Properties, Inc.
Notes to Pro Forma Consolidated Balance Sheet
December 31, 1997
(In thousands)
(Unaudited)
(A) Represents the Company's capital contribution in connection with the
acquisition of the Saracen Properties, including closing costs.
