SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 20, 2000
CNL HEALTH CARE PROPERTIES, INC.
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<CAPTION>
<S> <C>
Florida 333-47411 59-3491443
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
450 South Orange Avenue 32801
Orlando, Florida (Zip Code)
(Address of principal executive offices)
</TABLE>
Registrant's telephone number, including area code: (407) 650-1000
<PAGE>
Item 2. Acquisition or Disposition of Assets.
Brighton Gardens(R) by Marriott(R) located in Orland Park, Illinois. On
April 20, 2000, the Company acquired a Brighton Gardens assisted living Property
located in Orland Park, Illinois (the "Orland Park Property") for $13,848,900
from Marriott Senior Living Services, Inc. The Company, as lessor, has entered
into a long-term lease agreement relating to this Property. The general terms of
the lease agreement are described in the section of the Prospectus entitled
"Business -- Description of Property Leases." The principal features of the
lease are as follows:
o The initial term of the lease expires in 15 years.
o At the end of the initial lease term, the tenant will have four
consecutive renewal options of five years each.
o The lease will require minimum rent payments of $1,350,268 per year for
the first and second lease years and $1,384,890 for each lease year
thereafter.
o In addition to minimum rent, the lease will require percentage rent
equal to seven percent of gross revenues in excess of the "Baseline
Gross Revenues." The Baseline Gross Revenues will be established when
the facility achieves average occupancy of 93% for four consecutive
quarters.
o A security deposit equal to $553,956 will be retained by the Company as
security for the tenant's obligations under the lease.
o The tenant has established a reserve fund which will be used for the
replacement and renewal of furniture, fixtures and equipment relating
to the assisted living Property (the "FF&E Reserve"). Deposits to the
FF&E Reserve are made every four weeks as follows: 1% of gross receipts
for the first through fourth lease year; 2% of gross receipts for the
fifth through eighth lease year; and 3% of gross receipts every lease
year thereafter.
o Marriott International, Inc. will, with certain limitations, guarantee
the tenant's obligation to pay minimum rent under the lease. The
guarantee terminates on the earlier of the end of the fifth lease year
or at such time as the net operating income from the Property exceeds
minimum rent due under the lease by 25% for any trailing 12-month
period. The maximum amount of the guarantee is $2,769,780.
The estimated federal income tax basis of the depreciable portion of
the Orland Park Property is approximately $12.5 million.
Orland Park Property. The Orland Park Property, which opened in October
1999, is a newly constructed Brighton Gardens by Marriott located in Orland
Park, Illinois. The Orland Park Property includes 82 assisted living units and
24 special care units for residents with Alzheimer's and related memory
disorders. The facility provides assistance with daily living activities such as
bathing, dressing and medication reminders. Special amenities include a common
activities room and common dining room, a private dining area, library and
garden. The assisted living community, which is located southwest of Chicago, is
approximately six miles from two medical facilities, Palos Community Hospital
and Oak Forest Community Hospital, and less than two miles from the Orland
Square Shopping Center. According to a report published by Project Market
Decision and Claritas, a research and data collection firm, the greater Chicago
area is the third largest seniors market in the country with more than 263,800
seniors age 75 and older. The number of seniors in the ten-mile area surrounding
<PAGE>
the Property is expected to grow by 11% between 1999 and 2004. Other senior
living facilities located in proximity to the Orland Park Property include
Victorian Village, Sunrise of Palos Park, Peace Memorial Village and Arden
Courts of Manor Drive. The average occupancy rate and the revenue per available
unit for the period the assisted living facility has been operational are as
follows:
Orland Park Property
----------------------------------------------------
Average Revenue
Occupancy per Available
Year Rate Unit
- ------------ -------------- ----------------
*1999 23.30% $118.11
**2000 36.30% $109.89
* Data for the Orland Park Property represents the period October 11, 1999
through December 31, 1999.
**Data for 2000 represents the period January 1,
2000 through March 24, 2000.
The Company believes that the results achieved by the Property for 1999
and year-to-date 2000, are not indicative of its long-term operating potential,
as the Property had been open for less than six months during the reporting
period.
Marriott Brands. Brighton Gardens by Marriott is a quality-tier
assisted living concept which generally has 90 assisted living suites, and in
certain locations, 30 to 45 nursing beds in a community. In some communities,
separate on-site centers also provide specialized care for residents with
Alzheimer's or other memory-related disorders. According to Marriott
International, Inc.'s 1999 Form 10-K, Marriott Senior Living Services, Inc.,
which is a wholly owned subsidiary of Marriott International, Inc., operates 99
assisted senior living communities principally under the names "Brighton Gardens
by Marriott," "Village Oaks," and "Marriott MapleRidge," and 45 independent
living communities. Marriott Senior Living Services, Inc. is one of the largest
participants in the seniors' housing industry with $559 million in sales for
1999. The communities are designed in a comfortable, home-like setting and
provide residents with a sense of community through a variety of activities,
restaurant-style dining, on-site security, weekly housekeeping and scheduled
transportation. The communities are distinguished by an innovative wellness
program that enables residents to remain as independent as possible for as long
as possible, while providing a personally tailored program of services and care.
Marriott Senior Living Services, Inc. has provided seniors with excellent
service and quality care since 1984. In 1999, the American Seniors Housing
Association, a seniors housing trade association, ranked Marriott Seniors Living
Services, Inc. as the nation's second largest manager of senior housing.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
BEFORE DIVIDENDS PAID DEDUCTION
PROPERTIES ACQUIRED FROM INCEPTION
THROUGH APRIL 20, 2000
For the Year Ended December 31, 1999 (Unaudited)
The following schedule presents unaudited estimated taxable operating
results before dividends paid deduction of the Property acquired by the Company
as of April 20, 2000 The statement presents unaudited estimated taxable
operating results for the Property as if it had been acquired and operational on
January 1, 1999 through December 31, 1999. The schedule should be read in light
of the accompanying footnotes.
These estimates do not purport to present actual or expected operations
of the Company for any period in the future. The estimates were prepared on the
basis described in the accompanying notes which should be read in conjunction
herewith.
Brighton Gardens by Marriott
Orland Park Property
---------------------------------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction:
Rental Income (1) $1,350,268
FF&E Reserve Income (2) 32,476
Asset Management Fees (3) (83,093)
Interest Expense (4) (708,750)
General and Administrative
Expenses (5) (110,422)
-----------
Estimated Cash Available from
Operations 480,479
Depreciation and Amortization
Expense (6) (7) (441,243)
-----------
Estimated Taxable Operating
Results Before Dividends
Paid Deduction $ 39,236
===========
See Footnotes
<PAGE>
FOOTNOTES:
(1) Rental income does not include percentage rents which will become due
if specified levels of gross receipts are achieved.
(2) Reserve funds will be used for the replacement and renewal of
furniture, fixtures and equipment related to the Orland Park Property
("FF&E Reserve"). The funds in the FF&E Reserve and all property
purchased with the funds from the FF&E Reserve will be paid, granted
and assigned to the Company. In connection therewith, FF&E Reserve
income will be earned at 1% of gross receipts for lease years one
through four and has been estimated based on projected gross revenues.
(3) The Properties will be managed pursuant to an advisory agreement
between the Company and CNL Health Care Corp. (the "Advisor"), pursuant
to which the Advisor will receive monthly asset management fees in an
amount equal to one-twelfth of .60% of the Company's Real Estate Asset
Value as of the end of the preceding month as defined in such
agreement. See "Management Compensation."
(4) Estimated at 8.75% per annum based on the bank's base rate as of April
20, 2000.
(5) Estimated at 8% of gross rental income, based on the previous
experience of Affiliate of the Advisor with another public REIT.
(6) The estimated federal tax basis of the depreciable portion of the
property and the number of years the assets have been depreciated on
the straight-line method is as follows:
<TABLE>
<CAPTION>
<S> <C>
Furniture and
Buildings Fixtures
(39 years) (5-15 years)
-------------- -----------------
Orland Park Property $11,507,105 $1,023,320
</TABLE>
(7) Loan costs of $55,917 (.5% origination fee on the $8.1 million from
borrowings on the Line of Credit, legal fees and closing costs)
amortized under the straight-line method over a period of five years.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial statements of health care property acquired.
See Index to Other Financial Statements on page 13.
(b) Pro forma financial information.
See Index to Pro Forma Financial Statements on page 7.
(c) Exhibits:
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be filed on its behalf by
the undersigned thereunto duly authorized.
CNL HOSPITALITY PROPERTIES, INC.
Dated: April 28, 2000 By: /s/ Robert A. Bourne
---------------------------
ROBERT A. BOURNE, President
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
INDEX TO PRO FORMAFINANCIAL STATEMENTS
Pro Forma Consolidated Financial Information (Unaudited):
Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1999
Unaudited Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1999
Notes to Unaudited Pro Forma Consolidated Financial Statements for the year
ended December 31, 1999
<PAGE>
PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Balance Sheet of CNL
Health Care Properties, Inc. and subsidiaries (the "Company") gives effect to
(i) the receipt of an initial capital contribution of $200,000 from the Advisor,
$5,200,283 in gross offering proceeds from the sale of 520,028 shares of common
stock for the period from inception through December 31, 1999, and the
application of such funds to pay offering expenses and miscellaneous acquisition
expenses, (ii) the receipt of $1,506,101 in gross offering proceeds from the
sale of 150,610 additional shares for the period January 1, 2000 through April
20, 2000 and the receipt of $8,100,000 from borrowings on a line of credit,
(iii) the application of such funds to purchase a property and to pay offering
expenses, acquisition fees and miscellaneous acquisition expenses, all as
reflected in the pro forma adjustments described in the related notes. The
Unaudited Pro Forma Consolidated Balance Sheet as of December 31, 1999, includes
the transactions described in (i) above, from its historical balance sheet,
adjusted to give effect to the transactions in (ii) and (iii) above as if they
had occurred on December 31, 1999.
The Unaudited Pro Forma Consolidated Statement of Operations for the
year ended December 31, 1999, includes the operating results of the property
described in (iii) above from the date the property became operational to the
end of the pro forma period presented.
This pro forma consolidated financial information is presented for
informational purposes only and does not purport to be indicative of the
Company's financial results or condition if the various events and transactions
reflected therein had occurred on the dates, or been in effect during the
periods, indicated. This pro forma consolidated financial information should not
be viewed as indicative of the Company's financial results or conditions in the
future.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
-------------- -------------- ---------------
<S> <C>
Land, buildings and equipment on operating
leases $ -- $ 14,610,170 (a) $ 14,610,170
Cash and cash equivalents 4,744,222 (4,232,890) (a) 511,332
Loan costs -- 55,917 (a) 55,917
Other assets 344,338 (312,210) (a) 32,128
============== ============== ===============
$ 5,088,560 $ 10,120,987 $ 15,209,547
============== ============== ===============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Line of credit $ -- $ 8,100,000 (a) $ 8,100,000
Accounts payable and accrued expenses 21,167 -- 21,167
Due to related parties 1,775,256 81,419 (a) 1,856,675
Security deposits -- 553,956 (a) 553,956
-------------- -------------- ---------------
Total liabilities 1,796,423 8,735,375 10,531,798
-------------- -------------- ---------------
Stockholders' equity:
Preferred stock, without par value.
Authorized and unissued 3,000,000 shares -- -- --
Excess shares, $0.01 par value per share.
Authorized and unissued 103,000,000
shares -- -- --
Common stock, $.01 par value per share.
Authorized 100,000,000 shares; issued and
outstanding 540,028 shares; issued and
outstanding, as adjusted, 690,638 shares 5,400 1,506 (a) 6,906
Capital in excess of par value 3,365,531 1,384,106 (a) 4,749,637
Accumulated deficit (78,794) -- (78,794)
-------------- -------------- ---------------
Total stockholders' equity 3,292,137 1,385,612 4,677,749
============== ============== ===============
$ 5,088,560 $ 10,120,987 $ 15,209,547
============== ============== ===============
See accompanying notes to unaudited pro forma consolidated financial statements.
</TABLE>
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
--------------- -------------- -------------
<S> <C>
Revenues:
Rental income from operating leases $ -- $ 307,964 (1) $ 307,964
FF&E reserve income -- 7,296 (2) 7,296
Interest and other income 86,231 (43,169 ) (3) 43,062
--------------- -------------- -------------
86,231 272,091 358,322
--------------- -------------- -------------
Expenses:
Interest -- 159,750 (4) 159,750
General operating and administrative 79,621 -- 79,621
Asset management fees to related party -- 13,849 (5) 13,849
Organizational costs 35,000 -- 35,000
Depreciation and amortization -- 99,983 (6) 99,983
--------------- -------------- -------------
114,621 273,582 388,203
-------------- -------------
---------------
Net Loss $ (28,390 ) $ (1,491 ) $ (29,881)
=============== ============== =============
Loss Per Share of Common Stock (Basic and
Diluted) (7) $ (.07 ) $ (.06)
===============
=============
Weighted Average Number of Shares of Common
Stock Outstanding 412,713 514,035
=============== =============
See accompanying notes to unaudited pro forma consolidated financial statements.
</TABLE>
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Balance Sheet:
(a) Represents gross proceeds of $1,506,101 from the sale of 150,610 shares
during the period January 1, 2000 through April 20, 2000, the receipt
of $8,100,000 on borrowings from the line of credit, the receipt of
$553,956 from the lessee as a security deposit and $4,232,890 of cash
and cash equivalents used (i) to acquire a property for $13,848,900,
(ii) to pay acquisition fees and costs of $301,788 ($234,013 of which
was accrued as due to related parties at December 31, 1999), (iii) to
pay selling commissions and offering expenses (syndication costs) of
$186,342 which have been netted against stockholders' equity ($65,853
of which was accrued and due to related parties at December 31, 1999)
and (iv) to pay loan costs of $55,917 related to the assumed borrowings
from the line of credit. Also represents the accrual of $381,285 of
acquisition fees and miscellaneous acquisition costs.
Unaudited Pro Forma Consolidated Statement of Operations:
(1) Represents adjustment to rental income from operating leases for the
property acquired by the Company as of April 20, 2000 (the "Pro Forma
Property"), for the period commencing the date the Pro Forma Property
became operational by the previous owner to the end of the pro forma
period presented. The date the Pro Forma Property is treated as
becoming operational as a rental property for purposes of the Pro Forma
Consolidated Statement of Operations was October 11, 1999.
The lease provides for the payment of percentage rent in addition to
base rental income; however, no percentage rent was due under the lease
for the Pro Forma Property during the portion of 1999 the Company was
assumed to have held the property.
(2) Represents reserve funds which will be used for the replacement and
renewal of furniture, fixtures and equipment relating to the Pro Forma
Property (the "FF&E Reserve"). The funds in the FF&E Reserve and all
property purchased with funds from the FF&E Reserve will be paid,
granted and assigned to the Company. In connection therewith, FF&E
Reserve income was earned at approximately $2,700 per month.
(3) Represents adjustment to interest income due to the decrease in the
amount of cash available for investment in interest bearing accounts
during the period commencing the date the Pro Forma Property became
operational by the previous owner through the end of the pro forma
period presented, as described in Note (1). The estimated pro forma
adjustment is based upon the fact that interest income from interest
bearing accounts was earned at a rate of approximately five percent per
annum by the Company during the year ended December 31, 1999.
(4) Represents adjustment to interest expense incurred at a rate of 8.75%
per annum in connection with the assumed borrowings from the line of
credit of $8,100,000 on October 11, 1999.
(5) Represents increase in asset management fees relating to the Pro Forma
Property for the period commencing the date the Pro Forma Property
became operational by the previous owners through the end of the pro
forma period presented, as described in Note (1). Asset management fees
are equal to 0.60% per year of the Company's Real Estate Asset Value as
defined in the Company's prospectus.
<PAGE>
CNL HEALTH CARE PROPERTIES, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS - CONTINUED
FOR THE YEAR ENDED DECEMBER 31, 1999
Unaudited Pro Forma Consolidated Statement of Operations - Continued:
(6) Represents increase in depreciation expense of the building and the
furniture, fixture and equipment ("FF&E") portions of the Pro Forma
Property accounted for as operating leases using the straight-line
method. The building and FF&E are depreciated over useful lives of 40
and seven years, respectively. Also represents amortization of the loan
costs of $55,917 (.5% origination fee on the $8,100,000 from borrowings
on the line of credit, associated legal fees and closing costs)
amortized under the straight-line method over a period of five years.
(7) Historical earnings per share were calculated based upon the weighted
average number of shares of common stock outstanding during the year
ended December 31, 1999.
As a result of the Pro Forma Property being treated in the Pro Forma
Consolidated Statement of Operations as operational since October 11,
1999, the Company assumed approximately 670,638 shares of common stock
were sold, and the net offering proceeds were available for the
purchase of this property. Due to the fact that approximately 150,610
of these shares of common stock were actually sold subsequently, during
the period January 1, 2000 and April 20, 2000, the weighted average
number of shares outstanding for the pro forma period was adjusted.
<PAGE>
INDEX TO OTHER FINANCIAL STATEMENTS
The following financial information is provided in connection with the Company's
pending acquisition of the Orland Park Property. Due to the fact that the tenant
of the Company is a newly formed entity, the information presented represents
the historical financial information of the operations of the assisted living
facility. The Orland Park Property became operational on October 11, 1999. This
information was obtained from the seller of the Property. The Company intends to
acquire the Property and will not own any interest in the tenant's operations of
the assisted living facility. For information on the Property and the long-term,
triple-net lease in which the Company intends to enter, see the section of the
Prospectus entitled "Business --Pending Investments."
BRIGHTON GARDENS BY MARRIOTT
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
<TABLE>
<CAPTION>
<S> <C>
Audited Financial Statements:
Report of Independent Certified Public Accountants
Statement of Assets and Liabilities as of December 31, 1999
Statement of Revenues and Operating Expenses for the period October 11, 1999
(date of opening) through December 31, 1999
Statement of Excess of Assets Over Liabilities for the period October 11, 1999
(date of opening) through December 31, 1999
Statement of Cash Flows for the period October 11, 1999 (date of opening) through
December 31, 1999
Notes to Financial Statements for the period October 11, 1999 (date of opening) through
December 31, 1999
</TABLE>
<PAGE>
Report of Independent Certified Public Accountants
To the Board of Directors
Marriott Senior Living Services, Inc.
In our opinion, the accompanying statement of assets and liabilities and the
related statements of revenues and operating expenses, of excess of assets over
liabilities and of cash flows present fairly, in all material respects, the
financial position of Brighton Gardens by Marriott, Orland Park, Illinois (an
unincorporated division of Marriott Senior Living Services, Inc.) at December
31, 1999, and the results of its operations and its cash flows for the period
from October 11, 1999 (date of opening) to December 31, 1999 in conformity with
accounting principles generally accepted in the United States. These financial
statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
auditing standards generally accepted in the United States which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Orlando, Florida
March 20, 2000
<PAGE>
Brighton Gardens by Marrriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Statement of Assets and Liabilities
December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets
<S> <C>
Current Assets:
Cash $ 16,529
Accounts receivable 7,333
Other assets 7,759
------------
Total current assets 31,621
Property and Equipment, at cost, less
accumulated depreciation of $90,759 12,694,051
------------
$12,725,672
============
Liabilities and Excess of Assets Over Liabilities
Current Liabilities:
Accounts payable and accrued expenses $ 15,224
Due to Marriott Senior Living Services, Inc. 176,559
------------
Total current liabilities 191,783
Excess of Assets Over Liabilities 12,533,889
------------
$12,725,672
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Brighton Gardens by Marrriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Statement of Revenues and Operating Expenses
Period from October 11, 1999 (Date of Opening) through December 31, 1999
- --------------------------------------------------------------------------------
Revenue:
Resident fees $ 277,089
Other income 5,048
----------------
282,137
----------------
Expenses:
Operating, selling, general and administrative 442,299
Depreciation 90,759
----------------
533,058
----------------
Excess of Operating Expenses Over Revenues $ (250,921)
================
The accompanying notes are an integral part of these financial statements.
<PAGE>
Brighton Gardens by Marrriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Statement of Excess of Assets Over Liabilities
Period from October 11, 1999 (Date of Opening) through December 31, 1999
- --------------------------------------------------------------------------------
Balance at Beginning of Period $ --
Contribution of property and equipment 12,784,810
Excess of operating expenses over revenues (250,921)
------------
Excess of Assets Over Liabilities at December 31, 1999 $12,533,889
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
Brighton Gardens by Marrriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Statement of Cash Flows
Period from October 11, 1999 (Date of Opening) through December 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Cash Flows from Operating Activities:
Net loss $ (250,921)
Depreciation 90,759
Changes in assets and liabilities:
Decrease (increase) in assets:
Increase in accounts receivable (7,333)
Increase in other assets (7,759)
Increase (decrease) in liabilities:
Increase in accounts payable and accrued expenses 15,224
Increase in due to Marriott Senior Living Services, Inc. 176,559
-----------------
Net cash provided by operating activities 16,529
Cash at Beginning of Period --
-----------------
Cash at End of Period $ 16,529
=================
</TABLE>
Summary of Non-Cash Financing Transaction:
On October 11, 1999, the property became operational and property and
equipment with a cost of $12,784,810 were recognized as a contribution
from Marriott Senior Living Services, Inc.
The accompanying notes are an integral part of these financial statements.
<PAGE>
Brighton Gardens by Marrriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Notes to Financial Statements
Period from October 11, 1999 (Date of Opening) through December 31, 1999
- --------------------------------------------------------------------------------
1. Organization and Nature of Business:
Brighton Gardens by Marriott (the "Property") is an assisted-living
facility located in Orland Park, Illinois. The Property includes 82
assisted-living units and 24 Alzheimer's units. The Property is an
unincorporated division of Marriott Senior Living Services, Inc. (the
"Owner"), a subsidiary of Marriott International, Inc.
2. Summary of Significant Accounting Policies:
Significant accounting policies followed by the Property are described
below:
Basis of Presentation
The accompanying statements have been prepared to present only the
accounts which relate to the Property since it became operational.
Revenue Recognition
The Property charges fees to residents of its assisted-living
facilities pursuant to short-term operating lease agreements. Resident
fees are recognized as revenue ratably over the term of the related
leases. Other revenues are recognized as the related services are
performed.
Property and Equipment
Land is carried at cost. Buildings and improvements and equipment are
carried at cost less accumulated depreciation. Additions, improvements
and expenditures for repairs and maintenance that extend the life of
the assets are capitalized. Other expenditures for repairs and
maintenance are charged to expense.
Depreciation is computed by the straight-line method based on the
following estimated useful lives:
Buildings and improvements 40 years
Equipment 2-10 years
Income Taxes
The operations of the Property does not represent a legal entity for
income tax reporting purposes; therefore, all income and expenses of
the Property are combined into the operations of the Owner for the
filing of applicable tax returns.
Due to Marriott Senior Living Services, Inc.
Due to Marriott Senior Living Services, Inc. comprises short-term
working capital advances made by the Owner to the Property in the
normal course of business.
<PAGE>
Brighton Gardens by Marrriott
Orland Park, Illinois
(An Unincorporated Division of Marriott Senior Living Services, Inc.)
Notes to Financial Statements - Continued
Period from October 11, 1999 (Date of Opening) through December 31, 1999
- --------------------------------------------------------------------------------
2. Summary of Significant Accounting Policies - Continued:
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 assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual amounts could differ
from those estimates.
3. Property and Equipment:
Property and equipment is comprised of the following:
Land $ 1,437,429
Building and improvements 10,377,634
Equipment 969,747
------------------
12,784,810
Less accumulated depreciation (90,759)
------------------
$12,694,051
==================
