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):
March 31, 1999
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.) (IRS 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)
<PAGE> 2
ITEM 5. OTHER EVENTS
CV Reit, Inc. (the "Company") previously reported its acquisition of the
Lakewood Plaza Shopping Center in the Current Report on Form 8-K filed with the
Securities and Exchange Commission on April 9, 1999. The Company is filing this
Current Report on Form 8-K/A to include financial statements of Lakewood-9
Investors, L.P. and ARC-Lakewood-9, L.L.C. 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:
Lakewood-9 Investors, L.P. and ARC-Lakewood-9, L.L.C:
Page No.
Report of Independent Certified
Public Accountant 4
Statement of Revenues and Certain
Expenses 5
Notes to Statement of Revenues and
Certain Expenses 6-8
(b) Pro Forma financial information required pursuant to Article 11 of
Regulation S-X:
Unaudited Pro Forma Condensed Consolidated Balance Sheet - March 31, 1999*
<PAGE> 3
Unaudited Pro Forma Condensed Consolidated Statement of Income - Year ended
December 31, 1998
*No Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1999 is filed
since the acquisition of the Acquired Property is reflected in the actual
balance sheet of CV Reit, Inc. as of March 31, 1999.
(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: May 19, 1999
<PAGE> 4
Report of Independent Accountants
To the Board of Directors and Shareholders of CV REIT, Inc.
West Palm Beach, Florida
We have audited the accompanying Statement of Revenues and Certain Expenses
for the property known as the Lakewood Plaza Shopping Center for the year ended
December 31, 1998. The financial statement is the responsibility of Lakewood
Plaza Shopping Center'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 financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenues and Certain Expenses was prepared as
described in Note 2, 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/A of CV REIT, Inc. and is not intended to be a complete presentation of
the Lakewood Plaza Shopping Center's revenues and expenses.
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 the Lakewood Plaza Shopping Center for the year ended December 31,
1998, in conformity with generally accepted accounting principles.
/S/ SCHONBRAUN SAFRIS McCANN BEKRITSKY & CO., L.L.C.
Roseland, New Jersey
May 10, 1999
<PAGE> 5
Lakewood Plaza Shopping Center
Statement of Revenues and Certain Expenses
Year Ended December 31, 1998
Revenues (Note 3):
Base rents ............................................... $2,300,077
Tenant reimbursements .................................... 683,096
Other .................................................... 11,915
----------
2,995,088
----------
Certain Expenses:
General and administrative ............................... 59,604
Real estate taxes ........................................ 335,376
Operating (Note 4) ....................................... 496,951
----------
891,931
----------
Revenues in Excess of Certain Expenses ..................... $2,103,157
==========
The accompanying notes are an integral part of the financial statement.
<PAGE> 6
Lakewood Plaza Shopping Center
Notes to Statement of Revenues and Certain Expenses
Year Ended December 31, 1998
1. ORGANIZATION
Lakewood-9 Investors, L.P., a New Jersey limited partnership and
ARC-Lakewood-9 L.L.C., a New Jersey limited liability company (the
"Partnership"), owned and operated Lakewood Plaza Shopping Center (the
"Property") located in Lakewood, New Jersey. The Property consists of
various retail shops and certain office space with approximately
202,000 square feet of rentable space. The Partnership's activities
consist of the operation of the Property and the leasing of space to
various tenants.
Lakewood Plaza 9 Associates, L.P., a Pennsylvania limited partnership,
purchased the Property on March 31, 1999. CV REIT, Inc. (the
"Registrant") has an indirect ownership interest in the Property
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 84% of the
limited partner interest in, Montgomery CV Realty, L.P. (the "Operating
Partnership"). The Operating Partnership is the sole member of Lakewood
Plaza 9, L.L.C., a Delaware limited liability company which is the sole
general partner of Lakewood Plaza 9 Associates, L.P.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Presentation
The accompanying 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 that certain information with respect
to real estate acquired by a registrant be included with
certain filings with the SEC. The accompanying Statement of
Revenues and Certain Expenses includes the historical revenues
and expenses of the Property, exclusive of certain items of
expenses which are not comparable to the proposed future
operations of the Property, such as interest, depreciation,
amortization and certain legal, accounting and administrative
expenses.
<PAGE> 7
Lakewood Plaza Shopping Center
Notes to Statement of Revenues and Certain Expenses
Year Ended December 31, 1998
2. Revenue Recognition
Base rents are recognized over the lease term on a
straight-line basis. 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, which are
in excess of certain base amounts as stipulated in tenant
leases.
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.
3. LEASING ACTIVITIES
The Partnership leases space to tenants under non-cancellable operating
leases. Leases generally provide for minimum rents, as well as
reimbursement of certain operating expenses and real estate taxes. Base
rent billed to tenants during 1998 exceeded rent recorded under the
straight-line method in the accompanying Statement of Revenues and
Certain Expenses by approximately $140,000. The approximate future
minimum rentals on the existing long-term non-cancellable operating
leases, excluding tenant reimbursements of operating expenses, as of
December 31, 1998, are as follows:
Year ending December 31:
1999 $ 2,523,000
2000 2,461,000
2001 2,280,000
2002 1,907,000
2003 1,518,000
Thereafter 8,292,000
-----------
$18,981,000
===========
During 1998, one tenant accounted for approximately 41% of total
base rental revenue.
<PAGE> 8
Lakewood Plaza Shopping Center
Notes to Statement of Revenues and Certain Expenses
Year Ended December 31, 1998
4. RELATED PARTY TRANSACTIONS
The Partnership paid management fees of approximately $158,000 to a
related party management company, based on 5.0% of revenues, as
defined. These management fees are included within operating expenses
on the accompanying Statement of Revenues and Certain Expenses.
<PAGE> 9
CV REIT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
On March 31, 1999, Montgomery CV Realty L.P. (the "Operating Partnership")
(indirectly 84.1% owned by CV Reit, Inc.) indirectly acquired 100% of the
Lakewood Plaza Shopping Center (the "Acquired Property"), an approximately
202,499 square foot retail shopping center located in New Jersey, from
Lakewood-9 Investors, L.P. and ARC-Lakewood-9. L.L.C. (collectively, the
"Seller"). The purchase price amounted to $24,360,000, including transaction
costs, substantially all of which was financed under the Company's $100 million
line of credit. The Company was required to deposit an additional $1 million
with the lender in connection with future capital improvements.
The acquisition was accounted for as a purchase, with assets acquired and
liabilities assumed recorded at fair value, effective March 31, 1999. Operating
results of the Acquired Property will be included in the Company's consolidated
financial statements, effective April 1, 1999.
The following Unaudited Pro Forma Condensed Consolidated Statement of Income for
the three months ended March 31, 1999 and the year ended December 31, 1998 (the
"Pro Forma Financial Information") are derived from, and should be read in
conjunction with, the Company's historical Statements of Income for the three
months ended March 31, 1999 and the year ended December 31, 1998, respectively,
as presented in the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1999 and Annual Report on Form 10-K for the year ended December
31, 1998. It should also be read in conjunction with the Acquired Property's
historical Statement of Revenues and Certain Expenses for the year ended
December 31, 1998, included elsewhere herein.
The Pro Forma Financial Information gives effect to the acquisition as if it had
occurred as of January 1, 1998. 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, 1998, or which may be reported in the
future.
<PAGE> 10
CV REIT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
(dollars in thousands, except per share data)
THREE MONTHS ENDED MARCH 31, 1999
Historical
-------------------
Total
CV Reit, Acquired Pro Forma Pro Forma
Inc. Property Adjustments Consolidated
--------- -------- ----------- ------------
REVENUES:
Rent $ 5,569 $ 749 $ - $ 6,318
Interest, substantially
from mortgage notes 2,013 - - 2,013
------- ------ ------- -------
7,582 749 - 8,331
------- ------ ------- -------
EXPENSES:
Interest 2,466 - 424 (1) 2,890
Operating 1,708 223 (27)(2) 1,904
General and administrative 380 - - 380
Depreciation and
amortization 873 - 137 (3) 1,010
------- ------ ------- -------
5,427 223 534 6,184
------- ------ ------- -------
2,155 526 (534) 2,147
Equity in income of uncon-
solidated affiliates 17 - 32 (2) 49
Minority interests in income
of Operating Partnership (343) - (4)(4) (347)
------- ------ ------- -------
Net income $ 1,829 $ 526 $ (506) $ 1,849
======= ====== ======= =======
Net income per common share,
basic and diluted $ .23 $ .23
======= =======
Average common shares
outstanding, basic
and diluted 7,966,621 7,966,621
========= =========
<PAGE> 11
CV REIT, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
(dollars in thousands, except per share data)
YEAR ENDED DECEMBER 31, 1998
Historical
-------------------
Total
CV Reit, Acquired Pro Forma Pro Forma
Inc. Property Adjustments Consolidated
--------- -------- ----------- ------------
REVENUES:
Rent $17,155 $2,995 $ - $20,150
Interest, substantially
from mortgage notes 8,854 - - 8,854
------- ------ ------- -------
26,009 2,995 - 29,004
------- ------ ------- -------
EXPENSES:
Interest 8,355 - 1,721 (1) 10,076
Operating 5,184 892 (107)(2) 5,969
General and administrative 1,693 - - 1,693
Depreciation and
amortization 2,707 - 548 (3) 3,255
------- ------ ------- -------
17,939 892 2,162 20,993
------- ------ ------- -------
8,070 2,103 (2,162) 8,011
Equity in income of uncon-
solidated affiliates 547 - 126 (2) 673
Minority interests in income
of Operating Partnership (1,855) - (11)(4) (1,866)
Non-recurring costs,
principally settlement
of litigation (300) - - (300)
Gain on sale of real estate 2,347 - - 2,347
------- ------ ------- -------
Income before income tax
benefit 8,809 2,103 (2,047) 8,865
Income tax benefit (7,041) - - (7,041)
------- ------ ------- -------
Net income $15,850 $2,103 $(2,047) $15,906
======= ====== ======= =======
Net income per common share,
basic and diluted $ 1.99 $ 2.00
======= =======
Average common shares
outstanding, basic
and diluted 7,966,621 7,966,621
========= =========
<PAGE> 12
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF INCOME
PRO FORMA ADJUSTMENTS
The following pro forma adjustments for the three months ended March 31, 1999
and the year ended December 31, 1998 assume that the Acquired Property was
purchased on January 1, 1998.
(1) Represents additional interest expense on mortgage indebtedness arising from
the acquisition.
(2) Represents adjustment to:
(a) operating expenses for reduced insurance costs and management fees, and
(b) income of unconsolidated affiliates for additional management fee
income attributable to the acquisition.
(3) Represents additional depreciation expense resulting from allocating a
portion (10%) of the fair value of the Acquired Property to land and
depreciating the balance (90%) on a straight-line basis over 40 years.
(4) Reflects earnings attributable to minority interests.
