<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------
FORM 8-K
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 1,1998
LEXFORD RESIDENTIAL TRUST
(Exact Name of Registrant as Specified in Charter)
MARYLAND 0-21670 31-4427382
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
41 SOUTH HIGH STREET, SUITE 2410 COLUMBUS, OHIO 43215
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (614)242-3850
Page 1 of 28 Pages
Exhibit Index on Page 6
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
------------------------------------
This Current Report on Form 8-K is being filed in order to report the
acquisition by Lexford Residential Trust (the "Registrant") of all third party
partners' interests in 37 limited partnerships, owning 39 apartment communities
(collectively, the "Consolidating Partnerships") previously held by partners
unrelated to the Registrant (collectively, the "Outside Partner Interests").
Each of the Consolidating Partnerships owns and operates a multi-family
residential apartment community developed by the Registrant's predecessor,
Cardinal Industries, Inc. A list of the Consolidating Partnerships involved in
the subject transactions and data concerning the apartment communities owned by
each such Consolidating Partnership are set forth in Table 1 appearing
hereinbelow.
The Consolidating Partnerships' real estate assets include 2,574
apartment units which, collectively, generated about $13.5 million in Total
Revenue, and approximately $8.0 million in net operating income, for the year
ended December 31, 1997, according to unaudited results. The aggregate mortgage
debt of the Consolidating Partnerships is approximately $45.9 million, of which,
as of April 1, 1998, over $14.8 million is prepayable without substantial
penalty or premium. Combined with the Registrant's other wholly-owned real
estate assets, the Registrant now has outstanding approximately $174.8 million
of prepayable mortgage debt on a consolidated basis.
The Registrant and/or one or more of its wholly owned subsidiary
corporations serves as the managing general partner of each Consolidating
Partnership. The acquisition of the Outside Partner Interests in the
Consolidating Partnerships was accomplished by a merger of a general or limited
partnership in which the Registrant and its wholly owned subsidiary, Cardinal
Industries Development Corporation, were the sole partners formed solely for the
purpose of effecting the merger (in each case, a "Merger Partnership"). In each
instance, the Merger Partnership was merged with and into the subject
Consolidating Partnership with the subject Consolidating Partnership surviving
the merger.
Pursuant to the terms of the agreement of merger governing each such
merger, the Outside Partner Interest held by each partner of the subject
Consolidating Partnership, other than the Registrant and its wholly owned
affiliates, was canceled and thereafter represented the right solely to receive
a cash payment.
Table 1 also sets forth the merger consideration paid or payable in
respect of each unit of limited Outside Partner Interest, as well as the general
Outside Partner Interest, if any, held by any third party co-general partner in
each Consolidating Partnership. The Registrant and its affiliates have funded,
or will fund, the merger consideration payable to holders of Outside Partner
Interests from internal working capital and the proceeds of borrowings under the
Registrant's revolving credit facility with The Provident Bank.
2
<PAGE> 3
<TABLE>
<CAPTION>
TABLE 1
Total
Limited Merger Voluntary Payments to
Transaction Apartment Partner Consideration Payment Co-GP Outside
Date Partnership Name units Units per LP Unit per unit Payment Partners
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 4/1/98 Plumwood Apartments, Ltd. 109 104 2,584 370 - 306,625
2 4/1/98 Amhurst Apartments of Dayton, Ltd. 73 90 1,017 339 - 122,040
3 4/1/98 Ketwood Apartments, Ltd. 94 90 1,181 539 - 154,757
4 4/1/98 Hickory Mill Apartments of Columbus, Ltd. 60 860 190 23 - 183,210
5 4/1/98 Amhurst Apartments of Dayton, II, Ltd. 74 90 2,815 418 - 290,955
6 4/1/98 Chelsea Court Apartments of Sandusky, Ltd. 62 90 4,162 291 12,485 413,239
7 4/1/98 Camellia Court Apartments of Columbus, Ltd. 64 35 11,711 798 - 437,817
8 4/1/98 Woodbine Apartments of Cuyahoga Falls, Ltd. 55 35 13,064 1,053 20,321 514,406
9 4/1/98 Parkville Apartments of Englewood, Ltd. 48 35 10,456 655 13,720 402,605
10 4/1/98 Applegate Apartments of Columbus, Ltd. 58 35 9,194 1,057 14,301 373,078
11 4/1/98 Dover Place Apartments of Eastlake, Ltd. 64 35 20,635 1,312 32,099 800,241
12 4/1/98 Beckford Place Apartments of The Plains, Ltd. 60 35 5,812 858 - 233,439
13 4/1/98 Larkspur Apartments of Columbus, Ltd. 60 35 6,701 799 - 262,506
14 4/1/98 Springwood Apartments of Columbus, Ltd. 64 35 - 848 - 29,680
15 4/1/98 Meadowood Apartments of Jackson County, Ltd. 47 35 2,748 560 - 104,209
16 4/1/98 Amhurst Apartments of Toledo, Ltd. 58 35 3,709 692 - 154,036
17 4/1/98 Cedarwood Apartments of Goshen, Ltd. 43 20 15,571 418 6,921 326,710
18 4/1/98 Beckford Place Apartments of North Canton, Ltd. 60 35 7,374 813 11,471 298,030
19 4/1/98 Plumwood Apartments of Columbus, III, Ltd. 34 35 3,090 568 - 128,035
20 4/1/98 Willowood Apartments of Columbus, Ltd. 51 35 7,821 718 - 298,865
21 4/1/98 Woodlands Apartments of Zelienople, Ltd. 50 35 2,872 755 - 126,935
22 4/1/98 Ridgewood Apartments of Westland, Ltd. 56 37 5,061 532 - 206,941
23 4/1/98 Dover Place Apartments of Eastlake, II, Ltd. 65 18 19,937 2,163 - 397,792
24 4/1/98 Dover Place Apartments of Eastlake, III, Ltd. 30 17 11,482 1,025 6,506 219,122
25 4/1/98 Cedargate Apartments of Bloomington, Ltd. 68 35 10,186 856 11,883 398,353
26 4/1/98 Slate Run Apartments of Indianapolis, Ltd. 90 35 8,621 1,034 - 318,613
27 4/1/98 Ridgewood Apartments of Lexington, Ltd. 62 35 1,896 777 2,212 95,769
28 4/1/98 Cedarwood Apartments of Goshen II, Ltd. 47 20 - 1,399 - 27,980
29 4/1/98 Old Archer Court Apartments, Ltd. 72 90 1,590 299 - 170,163
30 4/1/98 University Square Apartments, Ltd. 81 90 956 289 - 112,074
31 4/1/98 Meadowood Apartments II, Ltd. 54 65 4,596 308 - 318,769
32 4/1/98 Wingwood Apartments, Ltd. 86 90 3,942 361 19,711 407,000
33 4/1/98 Meadowood Apartments of Norcross, Ltd. 61 43 22,136 890 - 990,098
34 4/1/98 Cedargate Apartments of Lawrenceville, Ltd. 55 164 3,598 148 - 513,202
35 4/1/98 Willow Run Apartments of DeKalb County, Ltd. 73 35 3,718 906 3,615 165,458
36 4/1/98 Ridgewood Apartments of DeKalb County, Ltd. 63 35 3,005 956 - 138,644
37* 4/1/98 CIIP II 323 3,475 985 - - 3,417,950
----- ---------------------------------------------
37 Partnerships comprising 39 Properties 2,574 234,416 25,827 155,245 13,859,346
===== =============================================
</TABLE>
* Single Partnership that owns three Apartment communities.
3
<PAGE> 4
Pursuant to the terms of the agreement of limited partnership of each
Consolidating Partnership (and, when applicable, a separate agreement between
the managing general partner and third party co-general partner(s)) the
Registrant or its wholly owned affiliate, as managing general partner, solicited
the consent (in each case, the "Consent Solicitation") of the holders of the
Outside Partner Interests to effect the merger.
In accordance with the terms of the Consent Solicitation, holders of
Outside Partner Interests who executed and delivered their consent by the date
specified in the Consent Solicitation materials became entitled to a voluntary
payment from the Registrant separate and apart from the merger consideration
payable to all holders of Outside Partner Interests. The amount of voluntary
payment per unit of limited Outside Partner Interest payable to consenting
holders is set forth in Table 1. The Registrant has funded, or will fund, all
such voluntary payments from internal working capital and the proceeds of
borrowings under the Registrant's revolving credit facility with The Provident
Bank.
The agreement of limited partnership of the remaining Consolidating
Partnerships (the "Non Consent Partnerships") authorized the managing general
partner to transfer the Property owned by the Non Consent Partnership without
soliciting the consent of the holders of Outside Partner Interests. In the case
of the Non Consent Partnerships, each holder of Outside Partner Interests
received, or will receive, the merger consideration per unit shown on Table 1,
which amount the Registrant believes is in excess of such holder's allocable
ownership interest in the Non Consent Partnership's equity in the Non Consent
Partnership's property. The Registrant provided each holder of Outside Partner
Interests in the Non Consent Partnerships with advance notice of its intent to
cause the transfer of such Partnership's property by letter substantially in the
form attached as Exhibit 2.3 to the Registrant's Form 8-K previously filed on
March 2, 1998 and incorporated herein by reference.
The acquisitions reported in this Form 8-K are a part of the
Registrant's plan (the "Consolidation Plan") to acquire third party limited
partner or other equity interests in substantially all real estate limited
partnerships in which it has general partner interests, which plan the
Registrant previously announced in its press release dated November 12, 1997,
and in its joint proxy statement/prospectus for its special shareholders meeting
held on March 3, 1998. This is the third Form 8-K the Registrant has filed in
connection with the transactions consummated pursuant to the Consolidation Plan.
The Registrant filed its first related Form 8-K on February 17, 1998, in order
to report its acquisition of outside partner interests in 180 limited
partnerships. The Registrant filed its second related Form 8-K on March 2, 1998
in order to report its acquisition of Outside Partner Interests in an additional
107 limited partnerships.
Accordingly, through the date of the last transaction reported on this
Form 8-K, the Registrant has acquired the Outside Partner Interests in an
aggregate of 324 limited partnerships that own an agregate of 326 apartment
communities. The Registrant may pursue additional transactions under the
Consolidation Plan in the future. The Registrant intends to further consider the
potential acquisition of third party limited partner or other equity interests
in the remaining 66 real estate limited partnerships originated by its
predecessor, Cardinal Industries, Inc., in which the Registrant continues to own
a minority equity interest. The Registrant intends
4
<PAGE> 5
to continue the ownership and operation of the apartment communities owned by
each of the Consolidating Partnerships in substantially the same manner as
previously conducted.
The foregoing information set forth in this Item 2 includes certain
forward looking statements regarding the Registrant's plans to acquire equity
interests in additional limited partnerships in which it currently owns only a
minority equity interest, as well as a resulting increase in amounts of
consolidated, prepayable mortgage indebtedness associated with such limited
partnerships. All such forward looking statements are subject to uncertainty.
There can be no assurance that the Registrant will be successful in
consolidating the equity ownership of any such limited partnerships. Actual
results may differ from the forward looking statements due to, among other
things, unavailability or unattractive terms of potential financing necessary to
consolidate the ownership of the additional limited partnerships, as well as the
Registrant's potential inability to obtain the requisite consent of the current
holders of equity interests in, or current mortgage lenders to, such additional
limited partnerships.
5
<PAGE> 6
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL INFORMATION AND EXHIBITS
-----------------------------------------------------------------
(a)(3) The Registrant files herewith the financial statements and
proforma financial information specified by Rule 3-14 of Regulation S-X.
(c)
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION SEQUENTIAL PAGE
----------- ----------- ---------------
2.1 Representative form of consent Incorporated by reference
solicitation materials furnished to from Form 8-K filed
holders of Outside Partner Interests February 17, 1998
2.2 Representative form of agreement Incorporated by reference
and plan of merger from Form 8-K filed
February 17, 1998
2.3 Representative form of notice of Incorporated by reference
Intent to transfer to holders of from Form 8-K filed
Outside Partner Interests in March 2, 1998
Non Consent Partnerships
99.1 Financial statements and proforma 8
financial information
6
<PAGE> 7
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.
Lexford Residential Trust
By: /s/ Mark D. Thompson
----------------------------------
Mark D. Thompson
Executive Vice President and
Chief Financial Officer
Date: April 20, 1998
7
<PAGE> 1
Exhibit 99.1
LEXFORD RESIDENTIAL TRUST
INDEX TO FINANCIAL STATEMENTS
Page
----
CONSOLIDATING PROPERTIES:
Report of Independent Auditors .......................................... F-2
Combined Statements of Revenue and Certain Expenses for the years ended
December 31, 1997, 1996 and 1995 ...................................... F-3
Notes to Combined Statements of Revenue and Certain Expenses ............ F-4
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED):
Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1997 .. F-15
Notes to Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1997 ..................................................... F-16
Pro Forma Condensed Consolidated Statement of Income for the year ended
December 31, 1997 ....................................................... F-18
Notes to Pro Forma Condensed Consolidated Statement of Income for the
year ended December 31, 1997 .......................................... F-19
<PAGE> 2
REPORT OF INDEPENDENT AUDITORS
To the Shareholders and Board of Trustees
Lexford Residential Trust
We have audited the accompanying Combined Statements of Revenue and Certain
Expenses of the Consolidating Properties as described in Notes 1 and 2, for each
of the three years in the period ended December 31, 1997. These Combined
Statements of Revenue and Certain Expenses are the responsibility of the
Properties' management. Our responsibility is to express an opinion on the
Combined Statements of Revenue and Certain Expenses based on our audits.
We conducted our audits 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 Statements of Revenue and
Certain Expenses are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the Combined
Statements of Revenue 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 Combined Statements of Revenue and
Certain Expenses. We believe that our audits provide a reasonable basis for our
opinion.
The accompanying Combined Statements of Revenue and Certain Expenses were
prepared 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 Lexford Residential Trust as described in Note 1 and are not intended to
be a complete presentation of the Consolidating Properties' revenues and
expenses.
In our opinion, the Combined Statements of Revenue and Certain Expenses referred
to above present fairly, in all material respects, the combined revenue and
certain expenses of the Consolidating Properties described in Notes 1 and 2 for
each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Columbus, Ohio
April 1, 1998
F-2
<PAGE> 3
CONSOLIDATING PROPERTIES
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
(AMOUNTS IN THOUSANDS)
1997 1996 1995
======== ======= =======
Revenue
Rental Revenues $102,806 $99,769 $94,351
Certain Expenses
Property Operating and Maintenance 33,354 33,322 31,498
Real Estate Taxes and Insurance 9,006 9,132 9,257
-------- ------- -------
42,360 42,454 40,755
-------- ------- -------
Revenue in Excess of Certain Expenses $ 60,446 $57,315 $53,596
======== ======= =======
SEE NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
F-3
<PAGE> 4
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying Combined Statements of Revenue and Certain Expenses
for each of the three years in the period ended December 31, 1997 relate to the
operations of 324 partnerships which own 326 apartment communities (the
"Consolidating Properties") in which Lexford Residential Trust (the "Trust"),
and its predecesor, Lexford, Inc., acquired all of the third party partner
interests at various dates through April 1, 1998 . Prior to and after such
acquisition, the Company or its successor, the Trust, owned general partner
interests in each of the 324 partnerships. The accompanying Combined Statements
of Revenue and Certain Expenses have been prepared for purposes of complying
with the rules and regulations of the Securities and Exchange Commission
relating to the Trust's Current Reports on Form 8-K. The accompanying combined
financial statements are not representative of the actual operations of the 324
partnerships for the periods presented nor indicative of future operations as
certain expenses, primarily depreciation, amortization, interest expense,
management fee expense, and gains and losses on debt restructuring, which may
not be comparable to the expenses expected to be incurred by the Trust in future
operations of the Consolidating Properties, have been excluded.
USE OF ESTIMATES
In preparation of the Combined Statements of Revenue and Certain
Expenses in conformity with generally accepted accounting principles, management
makes estimates and assumptions that effect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
INCOME RECOGNITION
Rental income attributable to residential leases is recorded when due
from residents over the term of the related leases, which are generally for a
period of one year or less.
RELATED PARTY TRANSACTIONS
During each of the years presented, substantially all of the
Consolidating Properties were managed by a wholly owned subsidiary of the
Company. Management fees, typically five percent of gross receipts, and other
administrative and service fees have been excluded from the Combined Statements
of Revenue and Certain Expenses.
F-4
<PAGE> 5
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)
In addition, the Consolidating Properties purchased maintenance
materials and supplies from the Company in 1995 and 1996 at amounts above the
Company's cost, and purchased similar items from third party vendors in 1997,
from which the Company received volume discounts. The accompanying statements
include such parts and supplies at the price paid by the Consolidating
Properties.
NOTE 2 - DESCRIPTION OF PROPERTIES
The following sets forth certain information as of December 31, 1997 regarding
the 326 Consolidating Properties included in the accompanying Combined
Statements of Revenue and Certain Expenses:
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Wood Valley Of Calhoun Cty Anniston AL 69
---------------
1 Property 69
Amberwood Lake City FL 50
Applewood Deland FL 69
Applewood II Deland FL 93
Bayside Sebring FL 59
Bel Aire Miami FL 69
Berry Pines Milton FL 64
Branchwood Winter Park FL 117
Brandywyne East Winter Haven FL 38
Candlelight Brooksville FL 51
Candlelight II Brooksville FL 60
Cedarwood Ocala FL 55
Cedarwood II Ocala FL 39
Clearlake Pines II Cocoa FL 51
Countryside Daytona Beach FL 59
Countryside II Daytona Beach FL 96
Cypress Panama City Bch FL 70
Deerwood Eustis FL 50
Driftwood Atlantic Beach FL 63
Elmwood West Palm Beach FL 52
Elmwood II West Palm Beach FL 50
Garden Terrace II Tampa FL 65
Hickory Place Gainesville FL 70
Hidden Pines Casselberry FL 56
High Points New Port Richey FL 95
Hillcrest Villa Crestview FL 65
Holly Ridge Pembroke Park FL 98
</TABLE>
F-5
<PAGE> 6
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Holly Sands Ft. Walton Bch FL 72
Meadowood II Altamonte Sprngs FL 54
Morningside II Titusville FL 182
Mosswood Winter Springs FL 57
Mosswood II Winter Springs FL 89
Nova Glen Daytona Beach FL 61
Nova Glen II Daytona Beach FL 81
Novawood Daytona Beach FL 57
Novawood II Daytona Beach FL 61
Oak Ridge Clermont FL 63
Oak Shade Orange City FL 82
Oakwood Manor Hollywood FL 63
Old Archer Court Gainesville FL 72
Palatka Oaks Palatka FL 34
Palatka Oaks II Palatka FL 23
Palm Bay/Windwood II Palm Bay FL 64
Palm Place Sarasota FL 80
Pine Lake Tampa FL 41
Pine Meadows Ft. Myers FL 60
Pine Terrace Callaway FL 80
Pine Terrace II Callaway FL 68
Pinellas Pines Pinellas Park FL 68
Ranchside New Port Richey FL 76
Rivers End Jacksonville FL 66
Sandpiper II Ft. Pierce FL 66
Sanford Court Investors Sanford FL 106
Shadow Bay Jacksonville FL 53
Shadow Bay II Jacksonville FL 59
Shadow Ridge Tallahassee FL 62
Shadowood Sarasota FL 69
Shadowood II Sarasota FL 70
Silver Forest Ocala FL 51
Sky Pines Orlando FL 88
Spring Gate Springfield FL 66
Strawberry Place Plant City FL 55
Sugartree New Smyrna Beach FL 60
Sutton Place Lakeland FL 55
Terrace Trace Tampa FL 87
The Landings Winter Haven FL 60
</TABLE>
F-6
<PAGE> 7
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Turkscap Brandon FL 49
Turkscap III Brandon FL 50
University Square Tampa FL 81
Westcreek Jacksonville FL 86
Wingwood Orlando FL 86
Winter Woods Winter Garden FL 57
Woodland Orlando FL 92
Woodland II Orlando FL 77
----------------
73 Properties 4,943
Barrington Of Dekalb Cty Clarkston GA 47
Camden Way Kingsland GA 61
Camden Way II Kingsland GA 57
Carriage Hills Of Dublin Dublin GA 60
Cedargate Of Lawrenceville Lawrenceville GA 55
Countryside Manor Of Douglasville Douglasville GA 82
Elmwoods Of Marietta Marietta GA 48
Forest Ridge Of Richmond Cty Augusta GA 74
Forest Village Of Bibb Cty Macon GA 83
Gentian Oaks Of Columbus Columbus GA 62
Harbinwood Of Gwinnett Cty Norcross GA 73
Hillandale Manor Of Dekalb Cty Lithonia GA 48
Hillside Manor Of Americus Americus GA 60
Holly Park Of Columbus Columbus GA 66
Iris Glen Of Rockdale Cty Conyers GA 79
Link Terrace Hinesville GA 54
Marsh Landing Brunswick GA 57
Meadowland Of Clarke Cty Bogart GA 60
Meadowood Of Norcross Norcross GA 61
Meadowood Of Norcross II Norcross GA 51
Morgan Trace Of Union City Union City GA 80
Northridge Of Carrollton Carrollton GA 77
Oakley Woods Of Union City Union City GA 60
Oakwood Village Of Richmond Cty Augusta GA 70
Pine Knoll Of Clayton Cty Jonesboro GA 46
Quail Call Albany GA 55
Ramblewood II Valdosta GA 28
Redan Village Of Dekalb Cty Decatur GA 78
Redan Village Of Dekalb Cty II Decatur GA 76
</TABLE>
F-7
<PAGE> 8
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Ridgewood Of Dekalb Cty Decatur GA 63
Ridgewood Of Dekalb Cty II Decatur GA 52
Shadow Trace Of Dekalb Cty Stone Mountain GA 81
Skyridge Woodstock GA 120
Stillwater Savannah GA 53
Stratford Lane Of Columbus Columbus GA 67
Sunnyside Tifton GA 72
Timberwoods Of Perry Perry GA 60
Valleyfield Of Dekalb Cty Decatur GA 66
Valleyfield Of Dekalb Cty II Decatur GA 66
Waterbury Of Clarke Cty Athens GA 53
Westway Brunswick GA 70
Whisperwood Of Cordele Cordele GA 50
Willow Creek Of Griffin Griffin GA 53
Willow Run Of Dekalb Cty Stone Mountain GA 73
Willowood Of Milledgeville Milledgeville GA 61
Wood Trail Of Newman Newnan GA 61
Woodcliff Of Lilburn Lilburn GA 71
Woodcliff Of Lilburn II Lilburn GA 72
Woodcrest Of Warner Robins Warner Robins GA 66
Woodside Valdosta GA 52
----------------
50 Properties 3,190
Ansley Oaks O'Fallon O'Fallon IL 69
1 Property 69
Acadia Court Bloomington Bloomington IN 97
Annhurst Indianapolis Indianapolis IN 83
Applegate Columbus Columbus IN 58
Applegate Delaware Cty Muncie IN 53
Ashgrove Indianapolis Indianapolis IN 57
Beckford Place New Castle New Castle IN 41
Brandon Court Bloomington Bloomington IN 78
Cambridge Commons Indianapolis Indianapolis IN 86
Cambridge Commons Indianapolis II Indianapolis IN 75
Cedargate Bloomington Bloomington IN 68
Cedargate Bloomington II Bloomington IN 58
Cedargate Michigan City Michigan City IN 53
Cedarwood Goshen Goshen IN 43
</TABLE>
F-8
<PAGE> 9
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Cedarwood Goshen II Goshen IN 47
Clearview Greenwood Greenwood IN 71
Clearview Greenwood II Greenwood IN 80
Concord Square Kokomo Kokomo IN 49
Concord Square Lawrenceburg Lawrenceburg IN 48
Dogwood Glen Marion Cty II Indianapolis IN 77
Hampshire Bluffton Bluffton IN 45
Hartwick Tipton Tipton IN 44
Heathmoore Evansville Evansville IN 74
Heathmoore Indianapolis Indianapolis IN 55
Laurelwood Court Bedford Bedford IN 50
Meadowood Crawfordsville Crawfordsville IN 64
Meadowood Franklin Franklin IN 51
Meadowood Logansport Logansport IN 42
Meadowood Warrick Cty Newburgh IN 65
Olivewood Indianapolis Indianapolis IN 62
Olivewood Indianapolis II Indianapolis IN 67
Parkville Gas City Gas City IN 49
Plumwood Chesterfield Chesterfield IN 39
Plumwood Ft. Wayne Fort Wayne IN 55
Princeton Court Evansville Evansville IN 62
Ridgewood Bedford Bedford IN 48
Rosewood Commons Indianapolis Indianapolis IN 96
Slate Run Indianapolis Indianapolis IN 90
Slate Run Lebanon Lebanon IN 61
Springwood New Haven New Haven IN 48
Stonehenge Indianapolis Indianapolis IN 60
Stonehenge Jasper Jasper IN 40
Stonehenge Richmond Richmond IN 59
Waterbury Greenwood Greenwood IN 44
Westwood Rochester Rochester IN 42
Willow Run New Albany New Albany IN 64
Willowood Columbus Columbus IN 51
Willowood East Indianapolis II Indianapolis IN 60
----------------
47 Properties 2,809
</TABLE>
F-9
<PAGE> 10
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Ashgrove Jefferson Cty Louisville KY 60
Camellia Court Carrollton Carrollton KY 55
Cedargate Bowling Green Bowling Green KY 59
Cedargate Shelby Cty Shelbyville KY 58
Forsythia Court Jefferson Cty Louisville KY 98
Heathmoore Jefferson Cty Louisville KY 62
Longwood Lexington Lexington KY 60
Meadowood Flatwoods Flatwoods KY 52
Meadowood Lexington Lexington KY 50
Meadowood Nicholasville Nicholasville KY 67
Ridgewood Lexington Lexington KY 62
Ridgewood Russelville Russellville KY 52
Rosewood Jefferson Cty Louisville KY 77
Slate Run Bardstown Bardstown KY 54
Slate Run Hopkinsville Hopkinsville KY 57
Slate Run Jefferson Cty Louisville KY 65
Slate Run Jefferson Cty II Louisville KY 63
Stonehenge Glasgow Glasgow KY 54
Stonehenge Jefferson Cty Louisville KY 61
Valleyfield Lexington Lexington KY 83
Willow Run Madisonville Madisonville KY 71
Willowood Frankfort Frankfort KY 57
Willowood Frankfort II Frankfort KY 53
Willowood Owensboro Owensboro KY 55
Winthrop Court Frankfurt Frankfort KY 77
Woodlands Franklin Franklin KY 56
----------------
26 Properties 1,618
Forsythia Court Of Harford Cty Abingdon MD 76
----------------
1 Property 76
Amberidge Roseville Roseville MI 45
Apple Run Hillsdale Hillsdale MI 39
Ashgrove Calhoun Cty Marshall MI 51
Ashgrove Sterling Heights Sterling Hts. MI 115
Ashgrove Sterling Heights II Sterling Hts. MI 89
Foxton Monroe Cty Monroe MI 51
Heathmoore Macomb Cty Clinton Twp. MI 72
Heathmoore Wayne Cty II Canton MI 51
</TABLE>
F-10
<PAGE> 11
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Meadowood Jackson Cty Jackson MI 47
Meadowood Monroe Cty Temperance MI 57
Montgomery Court Ingham Cty Haslett MI 59
Newberry Eaton Cty Lansing MI 62
Ridgewood Westland Westland MI 56
Roanoke Oakland Cty Rochester Hills MI 88
Sterling Heights Olivewood Sterling Hts. MI 151
Stonehenge Tecumseh Tecumseh MI 48
Waterbury Westland Westland MI 100
Wentworth Roseville Roseville MI 75
----------------
18 Properties 1,256
Amhurst Dayton OH 73
Amhurst Dayton II Dayton OH 74
Amhurst Toledo Toledo OH 58
Andover Court Mt. Vernon Mt. Vernon OH 51
Apple Ridge Circleville III Circleville OH 30
Apple Run Columbus II Columbus OH 50
Apple Run Trumbull Cty Warren OH 48
Applegate Chillicothe II Chillicothe OH 41
Applegate Lordstown Lordstown OH 39
Ashgrove Franklin Franklin OH 63
Beckford Place North Canton North Canton OH 60
Beckford Place North Canton II North Canton OH 60
Beckford Place The Plains The Plains OH 60
Beckford Place Wapakoneta Wapakoneta OH 40
Berea Tabor Ridge Berea OH 97
Camellia Court Columbus Columbus OH 64
Camellia Court Columbus II Columbus OH 40
Camellia Court Dayton Dayton OH 58
Camellia Court Dayton II Dayton OH 53
Camellia Court Washington Ch Washington C.H. OH 40
Cedargate Englewood Clayton OH 61
Cedargate Lancaster Lancaster OH 47
Cedarwood Belpre Belpre OH 44
Cedarwood Sabina Sabina OH 31
Charing Cross Bowling Green Bowling Green OH 67
Chelsea Court Sandusky Sandusky OH 62
Concord Square Ontario Ontario OH 41
</TABLE>
F-11
<PAGE> 12
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Concord Square Ontario II Ontario OH 31
Daniel Court Clermont Cty Cincinnati OH 114
Dartmouth Place Kent Kent OH 53
Dogwood Terrace Lancaster Lancaster OH 110
Dover Place Eastlake Eastlake OH 64
Dover Place Eastlake II Eastlake OH 65
Dover Place Eastlake III Eastlake OH 30
Dover Place Eastlake Iv Eastlake OH 72
Forest Park Meadowood Cincinnati OH 106
Foxton Dayton II Dayton OH 79
Greenglen Allen Cty II Lima OH 54
Greenglen Dayton Dayton OH 76
Greenglen Toledo II Toledo OH 59
Hampshire Elyria II Elyria OH 56
Hickory Mill Columbus Hilliard OH 60
Independence Village Reynoldsburg OH 124
Ketwood Kettering OH 94
Larkspur Columbus Hilliard OH 60
Larkspur Moraine Moraine OH 29
Larkspur Moraine II Moraine OH 16
Laurel Court Fremont Fremont OH 69
London Lamplight London OH 53
Meadowood Columbus Columbus OH 60
Meadowood Columbus II Columbus OH 23
Meadowood Cuyahoga Falls Cuyahoga Falls OH 59
Meadowood Mansfield Mansfield OH 49
Meldon Place Toledo Toledo OH 127
Millburn Dayton II Centerville OH 51
Millburn Stow Stow OH 52
Millston Aberdeen Aberdeen OH 54
Millston Aberdeen II Aberdeen OH 39
Montgomery Court Columbus Dublin OH 60
Montgomery Court Columbus II Dublin OH 57
Parkville Columbus OH 100
Parkville Englewood Englewood OH 48
Pickerington Meadows Pickerington OH 60
Plumwood Columbus OH 109
Plumwood Columbus III Columbus OH 34
Red Deer Fairborn Fairborn OH 68
</TABLE>
F-12
<PAGE> 13
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Ridgewood Columbus Columbus OH 60
Ridgewood Columbus II Columbus OH 58
Rosewood Columbus Columbus OH 90
Sandalwood Toledo Toledo OH 50
Sherbrook Columbus Columbus OH 60
Slate Run Miamisburg Miamisburg OH 48
Springwood Austingtown II Austintown OH 43
Springwood Columbus Columbus OH 64
Stonehenge Montgomery Cty Dayton OH 69
Stonehenge Ottawa Ottawa OH 36
Stonehenge Stark Cty Massillon OH 60
Suffolk Grove Grove City Grove City OH 71
The Birches Of Lima Lima OH 58
The Willows Delaware II Delaware OH 41
Timbercreek Toledo Toledo OH 77
Waterbury Clermont Cty Cincinnati OH 70
West Of Eastland Columbus Columbus OH 124
Westwood Newark Newark OH 13
Willow Run Willard Willard OH 61
Willowood Grove City Grove City OH 46
Willowood Grove City II Grove City OH 26
Willowood Wooster Wooster OH 51
Willowood Wooster II Wooster OH 53
Woodbine Cuyahoga Falls Cuyahoga Falls OH 55
Woodbine Portsmouth Portsmouth OH 41
Woodlands Columbus Columbus OH 88
Woodlands Columbus II Columbus OH 70
Woodlands Columbus III Columbus OH 93
Woodlands Streetsboro Streetsboro OH 60
Woodlands Streetsboro II Streetsboro OH 60
----------------
96 Properties 5,772
Allegheny Co. Valleyfield Bridgeville PA 77
Annhurst Allegheny Cty Clairton PA 97
Carleton Court Erie Cty Erie PA 60
Northrup Court Allegheny Cty Coraopolis PA 60
Northrup Court Allegheny Cty II Coraopolis PA 49
Woodlands Zelienople Zelienople PA 50
----------------
6 Properties 393
</TABLE>
F-13
<PAGE> 14
CONSOLIDATING PROPERTIES
NOTES TO COMBINED STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
Partnership/Property Name Location State Rentable Units
==================================== ========================== ============ ===============
<S> <C> <C> <C>
Knox Landing Of Knoxville Knoxville TN 85
Waterbury Clarksville Clarksville TN 54
Wycliffe Court Murfreesboro Murfreesboro TN 63
----------------
3 Properties 202
Brunswick Monongalia Cty Morgantown WV 101
Carleton Court Kanawha Cty Cross Lanes WV 73
Hickory Mill Hurrican Hurricane WV 48
Parkville Parkersburg Parkersburg WV 49
----------------
4 Properties 271
----------------
326 Properties Total 20,668
================
</TABLE>
F-14
<PAGE> 15
LEXFORD RESIDENTIAL TRUST
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated financial statements are
based upon a combination (giving effect to appropriate intercompany eliminations
and adjustments) of (a) the historical financial statements of the Company and
(b) the combined statements of revenue and certain expenses of the Consolidating
Properties, giving pro forma effect to the acquisition of the 326 Consolidating
Properties pursuant to the Consolidation Plan. The unaudited pro forma condensed
consolidated financial statements are presented as if the acquisition had
occurred as of December 31, 1997 for balance sheet data and as of January 1,
1997 for income statement data for the year then ended.
The unaudited pro forma condensed consolidated financial statements
include, in the opinion of management, all adjustments necessary to present
fairly the Company's pro forma results of operations and financial position and
are based upon available information and certain assumptions considered
reasonable under the circumstances. The unaudited pro forma condensed
consolidated financial statements do not purport to present what the Company's
financial position or results of operations would actually have been had such
events in fact occurred on the date or at the beginning of the periods indicated
above or to project the Company's financial position or results of operations
for any future date or period.
F-15
<PAGE> 16
LEXFORD RESIDENTIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL ADJUSTMENTS (A) PRO FORMA
---------- ----------- --- ---------
<S> <C> <C> <C> <C>
ASSETS:
Cash............................................... $ 2,569 $ (1,103) (B) $ 1,466
Funds held in escrow............................... 11,888 16,958 (C) 28,846
Accounts receivable................................ 4,899 1,038 (D) 5,937
Prepaids and other................................. 1,993 839 (C) 2,832
Rental properties:
Land............................................. 23,124 34,708 (E) 57,832
Buildings, improvements, furniture and
fixtures....................................... 138,245 401,064 (E) 539,309
Accumulated depreciation......................... (9,152) -- (9,152)
-------- -------- --------
152,217 435,772 587,989
-------- -------- --------
Furniture, fixtures and other, net................. 1,720 1,720
Investments in and advances to unconsolidated
partnerships..................................... 57,111 (46,967) (F) 10,144
Intangible assets.................................. 9,201 9,201
-------- -------- --------
TOTAL ASSETS..................................... $241,598 $406,537 $648,135
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable................................... $ 1,287 $ 242 (G) $ 1,529
Accrued interest, real estate and other taxes...... 3,720 8,284 (C) 12,004
Other accrued expenses............................. 8,241 5,733 (C) 13,974
Non recourse mortgages............................. 142,637 366,078 (H) 508,715
Corporate debt..................................... 7,362 26,200 (I) 33,562
Other liabilities.................................. 3,504 3,504
-------- -------- --------
TOTAL LIABILITIES................................ 166,751 406,537 573,288
-------- -------- --------
Common stock....................................... 85 85
Additional paid-in capital......................... 54,138 54,138
Retained earnings.................................. 20,624 20,624
-------- --------
SHAREHOLDERS' EQUITY............................. 74,847 74,847
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY....... $241,598 $406,537 $648,135
======== ======== ========
</TABLE>
See Notes to the Pro Forma Condensed Consolidated Balance Sheet.
F-16
<PAGE> 17
LEXFORD RESIDENTIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The pro forma condensed consolidated balance sheet gives effect to the
following adjustments:
(A) Reflects the acquisition of the 326 Consolidating Properties pursuant
to the Consolidation Plan, in each case as of December 31, 1997. Investment in
the Consolidating Properties will be recorded at the total of the Company's
historical cost of its interests in the partnerships owning the Consolidating
Properties, the debt assumed and the cash paid to acquire third party equity
interests in such partnerships and will be allocated to the assets and
liabilities acquired based upon their respective fair values in accordance with
the purchase method of accounting.
(B) Represents the operating cash related to the acquisition of the
Consolidating Properties, proceeds from borrowings under the corporate line of
credit and payments related to the acquisition of third party equity interests
in the Consolidating Properties as follows:
<TABLE>
<S> <C>
Operating cash acquired..................................... $ 8,897
Net borrowings under line of credit (See Note (I)).......... 26,200
Payments related to the acquisition (See Note (E)).......... (36,200)
---------
$ (1,103)
=========
</TABLE>
(C) Represents various operating assets and liabilities related to the
acquisition of the Consolidating Properties as follows:
<TABLE>
<S> <C>
Escrows and restricted cash................................. $ 16,958
Prepaids and other assets................................... $ 839
Accrued interest, real estate and other taxes............... $ 8,284
Other accrued expenses...................................... $ 5,733
</TABLE>
(D) Represents accounts receivable related to the acquisition of the
Consolidating Properties and the elimination of amounts due from the
Consolidating Properties as follows:
<TABLE>
<S> <C>
Accounts receivable acquired................................ $ 2,858
Amounts due from the Consolidating Properties (See Note
(G))...................................................... (1,820)
---------
$ 1,038
=========
</TABLE>
(E) Represents the purchase accounting allocations to land and buildings,
improvements and fixtures consisting of the Company's historical investments in
and advances to the Consolidating Properties, cash paid to
F-17
<PAGE> 18
LEXFORD RESIDENTIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET -- (CONTINUED)
acquire third party equity interests, and non recourse mortgage debt assumed,
net of amounts allocated to current operating assets and liabilities acquired as
follows:
<TABLE>
<S> <C>
Historical investments in and advances to the Consolidating
Properties (See Note (F))................................. $ 46,967
Cash paid to acquire third party equity interests........... 36,200
Non recourse mortgage debt assumed (See Note (H))........... 366,078
Allocation to current operating assets and liabilities...... (13,473)
---------
435,772
=========
Allocated to land........................................... $ 34,708
Allocated to buildings, improvements and fixtures........... 401,064
Current assets and liabilities consist of:
Cash (See Note (B))....................................... 8,897
Escrows and restricted cash (See Note (C))................ 16,958
Accounts receivable (See Note (D))........................ 2,858
Prepaids & other assets (See Note (C)).................... 839
Accounts payable (See Note (G))........................... (2,062)
Accrued interest and taxes (See Note (C))................. (8,284)
Other accruals and current liabilities (See Note (C))..... (5,733)
---------
$ 13,473
=========
</TABLE>
(F) Represents elimination of investments in and advances to Consolidating
Partnerships.
(G) Represents accounts payable related to the acquisition of the
Consolidating Properties and the elimination of amounts due to the Company, as
follows:
<TABLE>
<S> <C>
Accounts payable acquired................................... $ 2,062
Amounts due to the Company.................................. (1,820)
---------
$ 242
=========
</TABLE>
(H) Represents non recourse debt assumed in connection with the acquisition
of the Consolidating Properties.
(I) Represents borrowings under the corporate line of credit to fund cash
payments to third party holders of equity interests in the Consolidating
Properties net of cash repayments.
F-18
<PAGE> 19
LEXFORD RESIDENTIAL TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CONSOLIDATING
HISTORICAL PROPERTIES (A) ADJUSTMENTS (B) PRO FORMA
---------- -------------- ----------- --- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Rental revenues.................. $ 41,851 $102,806 $ 144,657
Fee based, primarily from
affiliates..................... 15,847 $(8,040) (C) 7,807
Interest, principally from
unconsolidated partnerships.... 10,681 (8,561) (D) 2,120
Income from disposals of
assets -- net.................. 1,989 1,989
---------- -------- -------- ----------
Total.......................... 70,368 102,806 (16,601) 156,573
EXPENSES:
Property operating and
maintenance.................... 14,884 33,354 (3,088) (E) 45,150
Real estate taxes and
insurance...................... 4,060 9,006 13,066
Property management.............. 12,339 3,001 (F) 15,340
Administration................... 5,447 5,447
Performance equity plan.......... 6,281 6,281
Nonrecurring costs............... 827 827
Interest -- non recourse
mortgages...................... 13,770 31,353 (G) 45,123
Interest -- corporate debt....... 657 1,965 (H) 2,622
Depreciation and amortization.... 6,527 16,043 (I) 22,570
---------- -------- -------- ----------
Total.......................... 64,792 42,360 49,274 156,426
---------- -------- -------- ----------
INCOME (LOSS) BEFORE, INCOME TAXES
AND EXTRAORDINARY ITEM........... 5,576 60,446 (65,875) 147
Provision for income taxes:
Credited to additional paid-in
capital...................... 1,809 (1,761) (J) 48
Current........................ 380 (370) (J) 10
---------- -------- -------- ----------
INCOME/(LOSS) BEFORE EXTRAORDINARY
ITEM............................ 3,387 60,446 (63,744) 89
Extraordinary (loss), net of
income tax benefit............. (181) (181)
---------- -------- ----------
NET INCOME/(LOSS).................. $ 3,206 $ 60,446 $(63,744) $ (92)
========== ======== ======== ==========
BASIC EARNINGS/(LOSS) PER SHARE.... $ 0.40 $ (0.01)
========== ==========
DILUTED EARNINGS/(LOSS) PER SHARE.. $ 0.39 $ (0.01)
========== ==========
BASIC WEIGHTED SHARES
OUTSTANDING...................... 8,071,970 8,071,970
DILUTED WEIGHTED SHARES
OUTSTANDING...................... 8,313,992 8,313,992
</TABLE>
See Notes to Pro Forma Condensed Consolidated Statement of Income.
F-19
<PAGE> 20
LEXFORD RESIDENTIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The pro forma condensed consolidated statement of income gives effect to
the following adjustments:
(A) Reflects the historical revenues and certain expenses of the 326
Consolidating Properties.
(B) Reflects the acquisition of the 326 Consolidating Properties pursuant
to the consummation of the Consolidation Plan, in each case as of January 1,
1997.
(C) Represents the elimination of fee based revenues associated with
property management and other services provided to the 326 affiliated
partnerships constituting the Consolidating Properties, as follows:
<TABLE>
<S> <C>
Management fees........................................... 5,015
Bookkeeping fees.......................................... 1,234
Partnership fees.......................................... 935
Payroll processing fees................................... 169
Tax preparation and reporting fees........................ 350
Insurance administration fees............................. 250
Rebate income from preferred vendor program............... 758
Expenses of administering the preferred vendor program.... (671)
------
$8,040
======
</TABLE>
Remaining fees relate to services provided to properties in which the
Company continues to hold equity interests and revenues.
(D) Represents the elimination of interest income of $8,561 from loans and
advances to the Consolidating Properties.
F-20
<PAGE> 21
LEXFORD RESIDENTIAL TRUST
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME -- (CONTINUED)
(E) Represents the reclassification of expenses related to the management
of the Company's Wholly Owned Properties to property management expense and
reduction of property operating expenses resulting from the pass through of all
rebates earned under the preferred vendor program to the properties, as follows:
<TABLE>
<S> <C>
Reclassification of management expenses for Wholly-Owned
Properties................................................ $(2,330)
Expense reductions from rebates............................. (758)
-------
$(3,088)
=======
</TABLE>
(F) Represents the reclassification of expenses related to the management
of the Company's Wholly Owned Properties from property operating and maintenance
expenses; and the reclassification of administrative expenses relating to the
preferred vendor program, as follows:
<TABLE>
<S> <C>
Reclassification of management expenses for Wholly-Owned
Properties................................................ 2,330
Reclassification of preferred vendor administrative
expenses.................................................. 671
-------
$ 3,001
=======
</TABLE>
(G) Represents interest expense related to $366,078 in non recourse
mortgage loans assumed in connection with the acquisition of the Consolidating
Properties.
(H) Represents interest at a weighted average interest rate of 7.5% on
$26,200 of additional borrowings under the corporate line of credit to fund the
Consolidation Plan.
(I) Represents depreciation of 16,043 related to the cost of buildings,
improvements and fixtures of the Consolidating Properties over a 25 year useful
life.
(J) Represents adjustment of provision for Federal and state income taxes
resulting from the Company's acquisition of consolidated properties.
F-21
