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
November 24, 1998 (September 19, 1998)
Date of Report (Date of earliest event reported)
Baron Capital Trust
Exact name of registrant as specified in its charter
Delaware 333-35063 31-1574856
State or other jurisdiction Commission File Number IRS Employer
of incorporation Identification No.
Baron Capital Trust
7826 Cooper Road
Cincinnati, Ohio 45242
Address of principal executive offices, zip code
513-984-5001
Registrant's telephone number,
including area code
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Item 2. Acquisition or Disposition of Assets
On September 19, 1998, Baron Capital Properties, L.P. (the "Partnership"),
a Delaware limited partnership of which the Registrant is the sole general
partner and a limited partner, acquired 100% of the limited partnership interest
in Riverwalk Enterprises, Ltd., a Florida limited partnership ("Riverwalk"),
which owns fee simple title to a 50-unit residential apartment property located
at 47 Jacaranda Cay Court, New Smyrna Beach, Florida 32169 (the "Property").
Simultaneously, an affiliate of the Partnership, Baron Riverwalk, LC, a Florida
limited liability company (the "General Partner"), acquired 100% of the general
partnership interest in Riverwalk. Baron Riverwalk, LC was organized for the
express purpose of acquiring such general partnership interest. Gregory K.
McGrath, the Chief Executive Officer of the Registrant, is the manager of the
General Partner. The Partnership owns 99% of the membership interests in the
General Partner. The remaining 1% membership interest is nominally held by the
Managing Shareholder of the Registrant, as agent for the Partnership.
The Property, completed in 1986, consists of 50 two bedroom units.
Forty-five units have two bathrooms and five have one bathroom. The Property is
located directly on the intracoastal waterway and was originally built for
condominium sale. The Partnership will operate the Property as a rental
community for the indefinite future. As of September 1, 1998, the Property was
95% occupied. The average year to date occupancy has been 98%. The average
monthly occupancy for 1997 was 95%. The Property has 51,024 square feet of
rentable space, or approximately 1,020 square feet per unit. The current rent
per square foot is approximately $.55. The average monthly rental rate is
approximately $565 per unit.
The Partnership acquired the Riverwalk limited partnership interests from
12 unaffiliated individuals. The General Partner acquired the Riverwalk general
partnership interest from Riverwalk Enterprises, Inc., whose principal was
Michael Green. Mr. Green is not affiliated with the Registrant or the
Partnership. The sale was subject to a first mortgage of approximately
$1,330,000, held by TMG Life Insurance Company. The mortgage matures in November
2004 and has a current interest rate of 8.75%. The holder of the first mortgage
has a right to adjust the rate in October 1999 for the remaining five years of
the loan, to a rate equal to 200 basis points above the then current rate for
five-year treasury notes. Prepayment is permitted at any time, subject however
to a yield maintenance termination fee calculated in accordance with the terms
of the loan.
The total cost of the acquisition to the Partnership was approximately
$655,000 above the then current principal balance of the underlying first
mortgage loan, which includes costs of the transaction, including a $200,000
commission paid to Prime One Realty Inc. An affiliate of Mr. McGrath received
one-half of the commission from Prime One Realty Inc. The Partnership borrowed
$575,000 from I. Stanley Levine, Trustee, of Miami, Florida, in order to
complete the acquisition. The Levine loan matures in December 1998 (subject to
the right of the Partnership to extend the maturity date up to 60 days as long
as the Partnership is not in default), requires current interest payments only
at the annual rate of 18%, and is secured by a pledge of the general and limited
partnership interests acquired in the transaction. The Partnership funded the
acquisition and will satisfy the Levine loan from the net proceeds of the
Registrant's sale of Common Shares in an ongoing public offering which commenced
in May 1998. The purchase price was determined by the parties in an arms-length
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negotiation. The Partnership relied upon an appraisal of the Property updated as
of July 17, 1998 prepared by Rex-McGill, Inc, an independent appraisal firm,
which valued the Property at $2,200,000.
The transaction was unanimously approved by the Independent Trustees of the
Registrant prior to closing of the acquisition.
Item 7. Financial Statements and Exhibits.
The financial statements required by this item are set forth below.
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ELROY D. MIEDEMA
CERTIFIED PUBLIC ACCOUNTANT
6550 NORTH FEDERAL HIGHWAY
SUITE 220
FT. LAUDERDALE, FLORIDA 33308
954-491-7233 (T)
954-772-4330 (F)
INDEPENDENT AUDITOR'S REPORT
The Board of Baron Capital Trust:
I have audited the accompanying statement of revenues and certain expenses
(defined as being operating revenues less direct operating expenses) of the
Riverwalk Villas for the years ended December 31, 1996 and 1997. This financial
statement is the responsibility of the Company's management. My responsibility
is to express an opinion on this financial statement based upon my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audits to obtain reasonable
assurance about whether the 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 statement of revenues and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
presentation of the statement of revenues and certain expenses. I believe that
my audit provides a reasonable basis for my opinion.
The accompanying 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 the Registration Statement on Form SB-2 of
Baron Capital Trust, a Delaware business trust) and excludes material expenses
described in Note 1 to the statement of revenues and certain expenses, that
would not be comparable to those resulting from the proposed future operations
of the property.
In my opinion, the statement of revenues and certain expenses presents fairly,
in all material respects, the revenues and certain expenses, as defined above,
of the Riverwalk Villas for the years ended December 31, 1996 and 1997 in
conformity with generally accepted accounting principles.
Elroy D. Miedema
Certified Public Accountant
Ft. Lauderdale, Florida
August 6, 1998
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ELROY D. MIEDEMA
CERTIFIED PUBLIC ACCOUNTANT
6550 NORTH FEDERAL HIGHWAY
SUITE 220
FT. LAUDERDALE, FLORIDA 33308
954-491-7233 (T)
954-772-4330 (F)
INDEPENDENT AUDITOR'S REPORT
The Board of Baron Capital Trust:
I have audited the accompanying statement of revenues and certain expenses
(defined as being operating revenues less direct operating expenses) of the
Riverwalk Villas for the years ended December 31, 1996 and 1997. This financial
statement is the responsibility of the Company's management. My responsibility
is to express an opinion on this financial statement based upon my audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the 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 statement of revenues and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
presentation of the statement of revenues and certain expenses. I believe that
my audit provides a reasonable basis for my opinion.
The accompanying 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 the Registration Statement on Form S-4 of
Baron Capital Properties, L.P., a Delaware limited partnership) and excludes
material expenses described in Note 1 to the combined statement of revenues and
certain expenses, that would not be comparable to those resulting from the
proposed future operations of the property.
In my opinion, the statement of revenues and certain expenses presents fairly,
in all material respects, the revenues and certain expenses, as defined above,
of the Riverwalk Villas for the years ended December 31, 1996 and 1997 in
conformity with generally accepted accounting principles.
Elroy D. Miedema
Certified Public Accountant
Ft. Lauderdale, Florida
August 6, 1998
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RIVERWALK VILLAS
STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
December 31, December 31,
1997 1996
------------- ------------
REVENUES
Rental income $296,939 $302,218
Other income 4,877 6,398
-------- --------
Total revenues 301,816 308,616
-------- --------
CERTAIN EXPENSES
Personnel 31,446 26,262
Advertising and promotion 3,465 2,586
Utilities 5,446 7,658
Repairs and maintenance 43,145 57,855
Real estate taxes and insurance 45,785 41,822
Mortgage interest expense 120,194 121,834
Management fees 1,086 1,433
Other operating expenses 3,380 3,333
-------- --------
Total certain expenses 253,947 262,783
-------- --------
REVENUES IN EXCESS
OF CERTAIN EXPENSES $ 47,869 $ 45,833
======== ========
See Note to Statement of Revenues and Certain Expenses
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RIVERWALK VILLAS
NOTE TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
1. Descriptions and Summary of Significant Accounting Policies
Description
Riverwalk Villas consist of 50 units located in New Smyrna Beach, Florida.
The property was acquired during 1990 by Riverwalk Enterprises, Ltd. The
following percentage of units were occupied at the various period ending
dates:
December 31, 1996 90%
December 31, 1997 84%
Basis Of Presentation
Operating revenues and direct operating expenses are presented on the
accrual basis of accounting. The accompanying financial statement is not
representative of the actual operations for the period presented as certain
expenses, which may not be comparable to the expenses expected to be
incurred by Baron Capital Properties, L.P., a Delaware limited partnership
which will conduct the future real property operations of Baron Capital
Trust, have been excluded. Expenses excluded consist of depreciation due to
basis and method changes, professional fees, and other costs not directly
related to the future operations of the Riverwalk Villas.
Income Recognition
Rental income attributable to residential leases is recorded when due from
tenants.
Leases
Apartment units are rented under lease agreements with terms of one year or
less.
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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.
BARON CAPITAL TRUST
Date: November 24, 1998 By: /s/ Gregory K. McGrath
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Gregory K. McGrath,
Chief Executive Officer
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