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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
June 25, 1998
CV REIT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-8073 59-0950354
(Commission File No.) (I.R.S. Employer
Identification No.)
100 Century Blvd.
West Palm Beach, Florida 33417
(Address of principal executive offices)
(561) 640-3155
Registrant's telephone number, including area code
Not Applicable
(Former name or former address,
if changed since last report)
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ITEM 5. OTHER EVENTS
CV Reit, Inc. (the "Company") previously reported its acquisition
of the Marlton Crossing Shopping Center - Phase II in the Current
Report on Form 8-K filed with the Securities and Exchange
Commission on July 10, 1998. The Company is filing this Current
Report on Form 8-K/A to include financial statements of Marlton
KDA Limited Partnership and pro forma financial information of
the Company.
After reasonable inquiry, the Company is not aware of any
material factors relating to the Property that would cause the
financial information reported herein not to be necessarily
indicative of future operating results.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
The following financial statement and pro forma financial
information are filed as part of this report:
(a) Financial statement of real estate operations acquired,
prepared pursuant to Rule 3.14 of Regulation S-X:
Marlton KDA Limited Partnership: Page No.
Report of Independent Certified
Public Accountant 4
Statement of Revenues and Certain
Expenses 5
Notes to Statement of Revenues and
Certain Expenses 6
(b) Pro Forma financial information required pursuant to Article
11 of Regulation S-X:
Unaudited Pro Forma Condensed Consolidated Balance Sheet -
June 30, 1998*
Unaudited Pro Forma Condensed Consolidated Statement
of Income - Six months ended June 30, 1998
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Unaudited Pro Forma Condensed Consolidated Statement of
Income - Year ended December 31, 1997
* No Pro Forma Condensed Consolidated Balance Sheet as of
June 30, 1998 is filed since the acquisition of the Acquired
Property is reflected in the actual balance sheet of CV Reit,
Inc. as of June 30, 1998.
(c) Exhibits: None
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act
of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
CV REIT, INC.
/s/ ELAINE HAUFF
___________________________
Elaine Hauff, Vice President
Date: September 4, 1998
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FINANCIAL STATEMENTS AND REPORT OF
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
MARLTON KDA LIMITED PARTNERSHIP
(A Limited Partnership)
December 31, 1997
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Report of Independent Certified Public Accountants
Partners
Marlton KDA Limited Partnership
We have audited the accompanying statement of revenues and
certain expenses of Marlton KDA Limited Partnership (a limited
partnership) for the year ended December 31, 1997. The financial
statement is the responsibility of the Partnership's management.
Our responsibility is to express an opinion on this financial
statement based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the 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.
We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenues and certain expenses
was prepared for the purposes of complying with the rules and
regulations of the Securities and Exchange Commission for
inclusion in the Current Report on Form 8-K of CV Reit, Inc. and
excludes certain material amounts, as described in Note B, that
would not be comparable to those resulting from the proposed
future operations of the property.
In our opinion, the statement of revenues and certain
expenses referred to above presents fairly, in all material
respects, the revenues and certain expenses of Marlton KDA
Limited Partnership for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
Philadelphia, Pennsylvania
August 10, 1998
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Marlton KDA Limited Partnership
(A Limited Partnership)
STATEMENT OF REVENUES AND CERTAIN EXPENSES
Year ended December 31, 1997
REVENUES
Base rents $ 1,107,606
Tenant reimbursements 305,458
Percentage rent 8,571
Other 3,540
-----------
1,425,175
-----------
CERTAIN EXPENSES
General operating 165,683
Real estate taxes 262,814
Repairs and maintenance 120,961
Utilities 28,035
-----------
577,493
-----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 847,682
===========
The accompanying notes are an integral part of this statement.
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Marlton KDA Limited Partnership
(A Limited Partnership)
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
December 31, 1997
NOTE A - ORGANIZATION
Marlton KDA Limited Partnership (the Partnership), a New
Jersey limited partnership, owns and operates Marlton Crossing
Shopping Center - Phase II (the Shopping Center) in Burlington
County, New Jersey. The shopping center consists of various
retail shops with approximately 142,000 square feet of rentable
space.
The Partnership's activities consist of the operation of the
shopping center and the leasing of retail stores to various
tenants. Tenant reimbursements represent property operating
expenses billed to tenants, including common area maintenance,
real estate taxes and other recoverable costs. Tenant
reimbursements are recognized in the period the expenses are
incurred. All leases are classified as operating leases and
expire at various times thorough 2005.
NOTE B - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
1. Basis of Presentation
Marlton Plaza Associates, L.P., a Delaware limited
partnership, purchased the Shopping Center on June 25, 1998. CV
Reit, Inc. (the Registrant) has an indirect ownership interest in
the shopping center through Montgomery CV Realty Trust (the
Trust), a Delaware business trust of which the Registrant is the
100% beneficial owner. The Trust holds the general partner
interest in, and approximately 82% of the limited partner
interest in, Montgomery CV Realty, L.P. (the Operating
Partnership). The Operating Partnership is the sole member of
Marlton Plaza LLC, a Delaware limited liability company which is
the sole general partner of Marlton Plaza Associates, L.P. The
statement of revenues and certain expenses has been prepared for
the purpose of complying with Regulation S-X, Rule 3-14 of the
Securities and Exchange Commission (SEC), which requires certain
information with respect to real estate operations be included
with certain filings with the SEC. The statement of revenues and
expenses includes the historical revenues and expenses of the
shopping center, exclusive of certain items of expenses which are
not comparable to the proposed future operations of the shopping
center, such as interest, depreciation, amortization, and certain
legal and accounting expenses. Upon the purchase of the shopping
center, Marlton Plaza Associates, L.P. began operating the
shopping center under its policies and procedures.
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2. Revenue Recognition
Lease revenue is recognized over the lease term on a
straight-line basis as it is earned. Revenue from reimbursements
by tenants of costs incurred on their behalf is recognized when
the expenses are incurred. These expenses include property
taxes, common area maintenance costs, and other recoverable
costs.
3. Use of 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 revenues and expenses during the period. Actual results could
differ from those estimates.
NOTE C - LEASING ACTIVITIES
The Partnership leases space to tenants under operating
leases. Leases generally provide for minimum rents, as well as
reimbursement of the lessor for certain operating expenses and
real estate taxes. The approximate minimum future rentals on the
existing long-term noncancellable operating leases, excluding
tenant reimbursements of operating expenses, as of December 31,
1997, are as follows:
1998 $ 1,052,000
1999 1,045,000
2000 1,016,000
2001 918,000
2002 619,000
Thereafter 1,252,000
-----------
$ 5,902,000
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During 1997, one tenant accounted for approximately 49% of
total base rental revenue.
NOTE D - RELATED PARTY TRANSACTIONS
The Partnership employs the use of Drexel Realty, Inc.,
which is indirectly owned by the Operating Partnership, as its
rent collection agent. A 5% management fee on rent collected is
paid to the parent company. Total management fee paid in 1997
was approximately $74,000, which is included in general operating
expenses on the statement of revenues and certain expenses.
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CV REIT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
On June 25, 1998, Montgomery CV Realty L.P. (the "Operating
Partnership") (indirectly 81.7% owned by CV Reit, Inc.)
indirectly acquired 100% of the Marlton Crossing Shopping Center
- - Phase II (the "Acquired Property"), an approximately 141,795
square foot retail shopping center located in New Jersey, from
Marlton KDA Limited Partnership (the "Seller"). The purchase
price amounted to $12,544,000, including transaction costs,
consisting of $3,206,000 paid in cash and $9,338,000 of
liabilities incurred, principally mortgage indebtedness. The
cash was principally borrowed under the Company's $100 million
line of credit.
The acquisition was accounted for as a purchase, with assets
acquired and liabilities incurred recorded at fair value,
effective June 25, 1998. Operating results of the Acquired
Property have been included in the Company's consolidated
financial statements, effective June 25, 1998.
The following Unaudited Pro Forma Condensed Consolidated
Statements of Income for the six months ended June 30, 1998 and
the year ended December 31, 1997 (the "Pro Forma Financial
Information") are derived from, and should be read in conjunction
with, the Company's historical Statements of Income for the six
months ended June 30, 1998 and the year ended December 31, 1997,
respectively, as presented in the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1998 and Annual Report
on Form 10-K for the year ended December 31, 1997. It should
also be read in conjunction with the Seller's historical
Statement of Revenues and Certain Expenses for the year ended
December 31, 1997, included elsewhere herein.
The Pro Forma Financial Information for the six months ended June
30, 1998 and year ended December 31, 1997 gives effect to the
acquisition as if it had occurred as of January 1, 1997. The pro
forma adjustments are based on certain estimates and currently
available information. Such adjustments could change as
additional information becomes available, as estimates are
refined or as additional events occur.
The Pro Forma Financial Information does not purport to be
indicative of the results of operations which would have actually
been reported had the acquisition been consummated on January 1,
1997, or which may be reported in the future.
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CV REIT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
(dollars in thousands, except per share data)
Historical
-------------------
CV Reit, Acquired Pro-Forma
Inc. Property Consolidated
Six January 1, Six
Months 1998 Months
Ended Through Ended
June 30, June 24, Pro-Forma June 30,
1998 1998 Adjustments 1998
--------- --------- ----------- ------------
REVENUES:
Interest, substantially
from mortgage notes $ 4,704 $ - $ - $ 4,704
Rent 6,537 754 - 7,291
------- ------- ------ -------
11,241 754 - 11,995
------- ------- ------ -------
EXPENSES:
Interest 3,318 - 454 (1) 3,772
Operating 1,974 262 - 2,236
General and administrative 718 - - 718
Depreciation and
amortization 1,029 - 135 (2) 1,164
------- ------- ------ -------
7,039 262 589 7,890
------- ------- ------ -------
4,202 492 (589) 4,105
Equity in income of uncon-
solidated affiliates 253 - - 253
Gain on sale of real estate 2,347 - - 2,347
Minority interests in income
of Operating Partnership (1,245) - 18 (3) (1,227)
------- ------- ------ -------
Net income $ 5,557 $ 492 ($ 571) $ 5,478
======= ======= ====== =======
Net income per common
share, basic and
diluted $ .70 $ .69
======= =======
Average common shares
outstanding,
Basic 7,966,621 7,966,621
========= =========
Diluted 7,969,844 7,969,844
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CV REIT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
(dollars in thousands, except per share data)
YEAR ENDED DECEMBER 31, 1997
Historical
-------------------
CV Reit, Acquired Pro-Forma Pro-Forma
Inc. Property Adjustments Consolidated
--------- -------- ----------- ------------
REVENUES:
Interest, substantially
from mortgage notes $10,612 $ - $ - $10,612
Rent 2,703 1,425 - 4,128
------- ------- ------ -------
13,315 1,425 - 14,740
------- ------- ------ -------
EXPENSES:
Interest 3,306 - 939 (1) 4,245
Operating 870 577 - 1,447
General and administrative 654 - - 654
Depreciation and
amortization 409 - 280 (2) 689
------- ------- ------ -------
5,239 577 1,219 7,035
------- ------- ------ -------
8,076 848 (1,219) 7,705
Equity in income of uncon-
solidated affiliates 439 - - 439
Minority interests in income
of Operating Partnership - - 68 (3) 68
------- ------- ------ -------
Net income $ 8,515 $ 848 ($1,151) $ 8,212
======= ======= ====== =======
Net income per common
share, basic and
diluted $ 1.07 $ 1.03
======= =======
Average common shares
outstanding, basic
and diluted 7,966,621 7,966,621
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UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
PRO FORMA ADJUSTMENTS
The following pro forma adjustments for the six months ended June
30, 1998 and the year ended December 31, 1997 assume that the
Acquired Property was purchased on January 1, 1997:
(1) Represents additional interest expense, at 7.41% per annum,
on approximately $12.5 million mortgage indebtedness
incurred as a result of the acquisition.
(2) Represents additional depreciation expense resulting from
allocating 10% of the fair value of the Acquired Property to
land and depreciating the balance (90%) on a straight-line
basis over 40 years.
(3) Reflects earnings attributable to minority interests.
