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): May 18, 1998
LNR PROPERTY CORPORATION
(Exact name of Registrant as Specified in its Charter)
Delaware 1-13223 65-0777234
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification Number)
Incorporation)
760 Northwest 107th Avenue
Miami, Florida 33172
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(305) 485-2000
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Form 8-K/A updates the Form 8-K filed on May 18, 1998 and the Form
8-K/A filed on July 14, 1998, to report the acquisition of the Affordable
Housing Group. This Form 8-K/A includes our unaudited pro forma consolidated
condensed statement of earnings and those of the Affordable Housing Group for
the nine months ended August 31, 1998.
On February 18, 1998, we entered into an agreement (the "Purchase and
Sale Agreement") to purchase from Pacific Harbor Capital, Inc., a wholly-owned
subsidiary of PacifiCorp, controlling interests in a group of entities as well
as certain direct partnership interests, known as the Affordable Housing Group
("AHG"), which own multi-family and senior housing properties, many of which
qualify for low-income housing tax credits under Section 42 of the Internal
Revenue Code.
On May 1, 1998, we completed the purchase of certain interests in
entities which own 36 of the properties. Acquisitions of interests in entities
which own four out of the remaining six properties closed effective June 1, 1998
and the final two properties closed effective September 1, 1998. The aggregate
amount of consideration was $81 million, subject to certain post-closing
adjustments, plus the assumption of approximately $45 million of future equity
commitments. The source of funds for the acquisition was our unsecured revolving
credit facility.
The attached unaudited pro forma consolidated condensed financial
information updates our unaudited pro forma consolidated condensed statement of
earnings through August 31, 1998 and incorporates the third quarter financial
information from the two properties which closed effective September 1, 1998 in
the pro forma information.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(B) PRO FORMA FINANCIAL INFORMATION
(1) Unaudited Pro Forma Consolidated Condensed Financial Information
(2) Unaudited Pro Forma Consolidated Condensed Statement of Earnings for
the Nine Months Ended August 31, 1998
(3) Notes to Unaudited Pro Forma Consolidated Condensed Financial Statement
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL INFORMATION
Our unaudited pro forma consolidated condensed statement of earnings
for the nine months ended August 31, 1998, has been prepared to reflect our
acquisition of AHG and has been prepared assuming that all of AHG (all interests
relative to the 42 properties) has been acquired.
The statement for the nine month period ended August 31, 1998 has been
prepared as if the acquisition had occurred on December 1, 1997. The statement
has been prepared utilizing the accounting policies outlined in our historical
financial statements included in our Annual Report on Form 10-K for the year
ended November 30, 1997. The acquisition is accounted for using the purchase
method.
The statement has been prepared under the SEC rules. As a result, the
pro forma acquisition adjustments assume interest expense was incurred for the
nine month period ended August 31, 1998 on the full amount of consideration paid
for AHG. Although the SEC requires that interest expense be included on the full
amount of consideration paid, this amount would have been lower had AHG been
acquired by us at the beginning of the period presented due to the amount of tax
credits that were available to purchase at that time. Therefore, we believe that
the accompanying pro forma statement of earnings is not indicative of the
results that AHG is expected to achieve as a result of the acquisition.
The following information should be read in conjunction with our
consolidated financial statements and the notes thereto, Management's Discussion
and Analysis of Financial Condition and Results of Operations and other
financial information included in our Annual Report on Form 10-K for the year
ended November 30, 1997 and our Quarterly Report on Form 10-Q for the quarter
ended August 31, 1998. The statement does not necessarily reflect what the
results of operations and financial position would have been had the acquisition
occurred as assumed in preparing our unaudited pro forma consolidated condensed
financial statements, nor does it necessarily reflect our future results or
financial position.
<PAGE>
<TABLE>
<CAPTION>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED AUGUST 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THE COMPANY AHG PRO FORMA TOTAL
HISTORICAL HISTORICAL(G) ADJUSTMENTS PRO FORMA
----------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues
Rental income $ 49,887 12,678 (4,714)(a) 57,851
Equity in earnings of partnerships 40,640 -- (1,078)(a) 39,562
Interest income 54,830 307 55,137
Gains on sales of:
Real estate 21,439 -- 21,439
Investment securities 1,386 -- 1,386
Management fees 6,898 -- 6,898
Other, net 822 1,762 (84)(a) 2,500
(1,392)(e) (1,392)
-------- ------- ------- --------
Total revenues 175,902 14,747 (7,268) 183,381
-------- ------- ------- --------
Costs and expenses
Cost of rental operations 31,439 6,768 (2,284)(a) 35,923
General and administrative 20,578 1,648 250 (d) 22,476
Minority interests 1,567 (828) 160 (a) 899
Depreciation 8,412 4,580 (1,682)(a) 11,310
300 (c) 300
-------- ------- ------- --------
Total costs and expenses 61,996 12,168 (3,256) 70,908
-------- ------- ------- --------
Operating earnings/(loss) 113,906 2,579 (4,012) 112,473
Interest expense 34,260 6,560 (2,042)(a) 38,778
2,337 (b) 2,337
(1,137)(c) (1,137)
(76)(e) (76)
-------- ------- ------- --------
Earnings/(loss) before income taxes 79,646 (3,981) (3,094) 72,571
Income tax benefit/(expense) (26,974) 9,005 (579)(a) (17,341)
1,207 (f)
-------- ------- ------- --------
Net earnings/(loss) $ 52,672 $ 5,024 $(2,466) $ 55,230
======== ======= ======= ========
Net earnings per share:
Basic $1.46 $1.53
======== ========
Diluted $1.44 $1.51
======== ========
Weighted average pro forma
shares outstanding:
Basic 36,138 36,138
======== ========
Diluted 36,472 36,472
======== ========
</TABLE>
See accompanying notes to unaudited pro forma consolidated condensed financial
statement.
<PAGE>
LNR PROPERTY CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENT
(a) Represents adjustments to reflect the interests in ten properties which
are accounted for by the equity method that were consolidated in the
AHG financial statements. This also includes the removal of one
property which was part of AHG's historical financial statements which
was not acquired by us.
(b) Represents interest expense on debt incurred in connection with the
acquisition of AHG.
(c) Represents the elimination of interest expense from AHG's former parent
company on intercompany balances.
(d) Represents incremental costs associated with establishing certain
administrative and support activities that were previously provided by
AHG's former parent company.
(e) Represents the income statement effect of the adjustment of the
carrying value of AHG's assets and liabilities to fair market value on
the acquisition date.
(f) Represents the estimated income tax effect of the pro forma adjustments
at our effective tax rate of 39.0%, before consideration of the tax
credits.
(g) The AHG historical column includes the results of operations from the
42 properties for the period during the nine months ended August, 31,
1998 which was prior to their acquisition by us. For the 36 properties
acquired on May 1, 1998, this column includes financial results through
April 30, 1998. In the case of the properties acquired effective June
1, 1998, this column includes financial results through May 31, 1998.
For the two properties acquired effective September 1, 1998, this
column includes financial results through August 31, 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.
/S/ SHELLY RUBIN
---------------------------------------
Name: Shelly Rubin
Title: Chief Financial Officer
(Principal Financial Officer)
Date: January 12, 1999
