<PAGE> 1
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) December 21, 1994
------------------------------
IRT Property Company
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(Exact name of registrant as specified in its charter)
Georgia 1-7859 58-1366611
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
200 Galleria Parkway, Suite 1400, Atlanta, GA 30339
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 955-4406
-----------------------------
N/A
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(Former name or former address, if changed since last report)
<PAGE> 2
AMENDMENT NO. 2
The undersigned registrant hereby amends the following items,
financial statements, exhibits or other portions of its December 21, 1994
Report on Form 8-K filed on January 5, 1995, as amended under Form 8-K/A dated
January 20, 1995, as set forth in the pages attached hereto:
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
The following financial statements, pro forma financial information and
exhibits are a part of this report.
(a) Financial Statements. Combined statement of revenues and
certain continuing expenses of the Thirteen Centers listed
below for the year ended December 31, 1994 (audited).
Ambassador Row, Lafayette, Louisiana
Ambassador Courtyard, Lafayette, Louisiana
Bluebonnet Village, Baton Rouge, Louisiana
The Boulevard, Lafayette, Louisiana
The Crossing, Slidell, Louisiana
Millervillage, Baton Rouge, Louisiana
Pinhook Plaza, Lafayette, Louisiana
Plaza Acadienne, Eunice, Louisiana
Sherwood South, Baton Rouge, Louisiana
Siegen Village, Baton Rouge, Louisiana
Village at Northshore, Slidell, Louisiana
Country Club Plaza, Slidell, Louisiana
Tarpon Heights, Galliano, Louisiana
(b) Pro Forma Financial Information (unaudited).
(i) Pro forma combined balance sheet of the Registrant as
of December 31, 1994, (with the combined balance
sheet reflecting the assets and liabilities of the
Eleven Centers purchased in 1994 and the pro forma
adjustments reflecting the assets and liabilities of
the Two Centers purchased in 1995) and pro forma
statements of earnings of the Registrant for the year
ended December 31, 1994 (assuming acquisition of the
aforesaid Thirteen Centers as of January 1, 1994).
(ii) Estimated pro forma earnings from operations and
funds from operations of the Thirteen Centers.
(c) Exhibits.
(i) Agreement for Purchase and Sale dated November 23,
1994 between Maurin-Ogden Limited Partnership,
Sherwood South General Partnership, Pinhook Plaza
Limited Partnership, Gause 11 Limited Partnership
and the Company (exclusive of exhibits thereto), as
amended by the First Amendment to Agreement for
Purchase and Sale dated December 1, 1994 and the
Second Amendment to Agreement for Purchase and Sale
dated December 20, 1994 (previously filed under cover
of Form 8-K dated January 5, 1995).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
IRT PROPERTY COMPANY
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Date: March 1, 1995 By:/s/ Mary M. Thomas
-------------------------------
Mary M. Thomas
Executive Vice President &
Chief Financial Officer
<PAGE> 3
THE THIRTEEN CENTERS
COMBINED STATEMENT OF REVENUES AND
CERTAIN CONTINUING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1994
TOGETHER WITH
AUDITORS' REPORT
<PAGE> 4
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
IRT Property Company:
We have audited the accompanying combined statement of revenues and certain
continuing expenses of THE THIRTEEN CENTERS identified in Note 1 of the notes
to the combined statement of revenues and certain continuing expenses for the
year ended December 31, 1994. This financial statement is the responsibility
of the management of the Thirteen Centers. 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 combined statement of revenues and certain continuing expenses
was prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of IRT
Property Company, as described in Note 2, and is not intended to be a complete
presentation of the Thirteen Centers' revenues and certain continuing expenses.
In our opinion, the combined statement of revenues and certain continuing
expenses referred to above presents fairly, in all material respects, the
revenues and certain continuing expenses of The Thirteen Centers for the year
ended December 31, 1994 prepared pursuant to the rules and regulations of the
Securities and Exchange Commission in conformity with generally accepted
accounting principles.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
January 25, 1995
<PAGE> 5
THE THIRTEEN CENTERS
COMBINED STATEMENT OF REVENUES AND
CERTAIN CONTINUING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1994
<TABLE>
<S> <C>
REVENUES:
Base rent $ 9,095,764
Percentage rent 105,881
Expense recoveries 1,204,241
------------
Total revenues 10,405,886
------------
CERTAIN CONTINUING EXPENSES:
Reimbursable operating expense 1,447,731
Nonreimbursable operating expense 108,623
Management fees 368,066
Interest expense 1,805,076
Ground rent 31,500
------------
Total certain continuing expenses 3,760,996
------------
REVENUES IN EXCESS OF CERTAIN CONTINUING EXPENSES $6,644,890
============
</TABLE>
The accompanying notes are an integral part of this combined statement.
<PAGE> 6
THE THIRTEEN CENTERS
NOTES TO COMBINED STATEMENT OF REVENUES AND
CERTAIN CONTINUING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1994
1. GENERAL
On November 23, 1994, IRT Property Company ("IRT" or the "Company"), a
real estate investment trust, entered into a contract to acquire 13
shopping centers (the "Thirteen Centers" or the "properties") from a
Massachusetts limited partnership and various related or affiliated
Louisiana partnerships. These properties are managed by Stirling
Properties, Inc., an affiliate of the sellers. Therefore, the
accompanying combined statement of revenues and certain continuing
expenses includes the results of operations of the following properties:
- Ambassador Row--Lafayette, Louisiana
- Ambassador Courtyard--Lafayette, Louisiana
- Bluebonnet Village--Baton Rouge, Louisiana
- The Boulevard--Lafayette, Louisiana
- The Crossing--Slidell, Louisiana
- Millervillage--Baton Rouge, Louisiana
- Pinhook Plaza--Lafayette, Louisiana
- Plaza Acadienne--Eunice, Louisiana
- Sherwood South--Baton Rouge, Louisiana
- Siegen Village--Baton Rouge, Louisiana
- Village at Northshore--Slidell, Louisiana
- Country Club Plaza--Slidell, Louisiana
- Tarpon Heights--Galliano, Louisiana
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statement is not representative of the actual
operations of the properties for the period presented. Certain expenses
may not be comparable to the expenses expected to be incurred by the
Company in the proposed future operations of the properties. The Company
is not aware of any material factors relating to the properties that
would cause the reported financial information not to be indicative of
future operating results. Excluded expenses consist of interest on debt
not assumed, depreciation and amortization, and other costs not directly
related to the future operations of the properties.
<PAGE> 7
- 2 -
REVENUE RECOGNITION
Expense recoveries are based on common area maintenance, property tax,
and insurance expenses, as defined in the leases, and are accrued on a
monthly basis. Percentage rents, based on tenants' sales volumes, are
recognized as revenue when received.
MANAGEMENT FEES
Management fees are included in the statement of revenues and certain
continuing expenses to the extent the charges conform to IRT's current
policy of charging 4% of base and percentage rents.
3. TENANT LEASE TERMS
The properties were leased to various tenants under operating leases that
expire at various dates. The occupancy levels during 1994 and other
leasing information were as follows:
<TABLE>
<CAPTION>
AVERAGE
PERCENT EXPIRATION EXPIRATION
AVERAGE LEASED TO DATES OF DATES OF
PERCENT ANCHOR ANCHOR OTHER
PROPERTY LEASED TENANTS TENANTS TENANTS
-------- ------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Ambassador Row 98% 69% 1996, 2002, 2006 1995-2002
Ambassador Courtyard 87 61 1996, 2004, 2011 1995-2007
Bluebonnet Village 100 54 1998, 2008 1995-2000
The Boulevard 84 50 1997, 2004 1995-1999
Country Club Plaza 80 65 1995, 2008 1996-1999
The Crossing 93 79 2003, 2009 1996-1997
Millervillage 90 75 2002, 2009 1995-1999
Pinhook Plaza 96 69 1999, 2005, 2007 1995-2000
Plaza Acadienne 96 85 2000, 2005 1995
Sherwood South 98 57 1997, 2002 1995-2011
Siegen Village 94 80 2012 1995-2004
Tarpon Heights 91 65 2003, 2008 1995-2001
Village at Northshore 95 84 2009, 2012, 2013 1996-2003
</TABLE>
<PAGE> 8
- 3 -
4. COMMITMENTS
The Company assumed preexisting mortgages on four properties totaling
approximately $18,264,000 maturing from 1998 to 2013 with certain call
provisions. Interest rates range from 9% to 11%.
The Company assumed two ground leases expiring in 1998 and 2008 with
aggregate annual ground rental payments of $31,500 plus 15% of percentage
rentals received.
5. FUTURE MINIMUM RENTALS
Minimum base rentals on noncancelable operating leases for the Thirteen
Centers for the next five years and thereafter are as follows:
<TABLE>
<S> <C>
1995 $ 8,892,407
1996 8,134,848
1997 7,262,155
1998 6,882,062
1999 6,490,012
Thereafter 47,267,731
------------
$ 84,929,215
============
</TABLE>
<PAGE> 9
IRT PROPERTY COMPANY
PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1994
(Unaudited)
The following unaudited pro forma combined balance sheet sets forth,
on a pro forma basis, the effect of the acquisition by IRT Property Company
(the "Company") of the Thirteen Centers as if the transaction had been
consummated on December 31, 1994. Eleven of the Thirteen Centers (the "Eleven
Centers") were acquired on December 21, 1994. Thus, the audited financial
statements of the Company include the assets, liabilities and earnings from
operations of the Eleven Centers as of December 21, 1994 and for the eleven
days from December 21, 1994 through December 31, 1994. Reference is hereby
made to Item 2 of this Form 8-K for information regarding the purchase price
and mortgage debt assumed of the Eleven Centers. The acquisition of two of the
Thirteen Centers (the "Two Centers") purchased January 6, 1995 are reflected in
the pro forma adjustments.
This pro forma balance sheet should be read in conjunction with its
notes together with the financial statements of the Company included in its
Form 10-K for the year ended December 31, 1994.
<TABLE>
<CAPTION>
Pro Forma
Adjustments IRT Property
IRT PROPERTY Increase Company Pro
COMPANY (Decrease) Forma Combined
------------ ----------- ---------------
(Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
ASSETS
Real estate investments:
Rental properties, at cost $442,642,705 $ 6,901,007 (a) $449,543,712
Less-Accumulated depreciation (41,677,722) 37,078 (d) (41,640,644)
----------- ---------- -----------
400,964,983 6,938,085 407,903,068
Net investment in direct financing
leases 9,295,880 9,295,880
Mortgage loans, net 8,292,143 8,292,143
----------- ---------- -----------
Net real estate investments 418,553,006 6,938,085 425,491,091
Cash and cash equivalents 1,841,388 (4,248,156) (c) 426,539
(166,693) (d)
3,000,000 (e)
Accrued interest receivable 544,712 544,712
Prepaid expenses and other assets 7,640,249 5,193 (c) 7,645,442
----------- ---------- -----------
$428,579,355 $ 5,528,429 $434,107,784
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $105,107,084 $ 2,464,344 (b) $107,571,428
7.3% convertible subordinated
debentures 86,250,000 86,250,000
Indebtedness to bank 26,000,000 3,000,000 (e) 29,000,000
Accrued interest on debentures 2,378,583 2,378,583
Accrued expenses and other
liabilities 4,726,224 193,700 (c) 4,919,924
Deferred income taxes 1,079,000 1,079,000
----------- ----------- -----------
Total liabilities 225,540,891 5,658,044 231,198,935
----------- ----------- -----------
Shareholders' Equity:
Common Stock 25,420,747 25,420,747
Additional paid-in capital 197,937,465 197,937,465
Cumulative distributions in
excess of net earnings (20,319,748) (129,615) (d) (20,449,363)
----------- ----------- -----------
Total shareholders' equity 203,038,464 (129,615) 202,908,849
----------- ----------- -----------
$428,579,355 $ 5,528,429 $434,107,784
=========== =========== ===========
</TABLE>
<PAGE> 10
IRT PROPERTY COMPANY
NOTES TO PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1994
(Unaudited)
(a) Additions to Rental Properties
The increase in real estate investments is based on the initial
purchase price of the Two Centers plus the estimated costs of
acquisition.
Initial purchase price $ 6,658,000
Estimated costs of acquisition 243,007
-----------
$ 6,901,007
===========
(b) Additions to Mortgage Notes Payable
The increase in mortgage note payable is based on the balance of first
mortgage financing assumed as a part of the acquisition price. This
mortgage was valued by the Company, for financial reporting purposes,
assuming current interest rates.
Balance of assumed mortgage financing $ 2,383,454
Mortgage premium 80,890
-----------
$ 2,464,344
===========
(c) Changes in Cash and Other Assets and Liabilities
The $4,248,156 decrease in cash reflects the payment of the purchase
price, net of mortgage financing assumed and normal prorations, plus
costs of acquisition. The increase in prepaid expenses and other
assets and in accrued expenses and other liabilities reflect the
normal prorations from the sellers.
(d) Changes to Accumulated Depreciation, Cash and Cummulative
Distributions in Excess of Net Earnings
The $37,078 decrease in accumulated depreciation, $166,693 decrease in
cash and $129,615 decrease in cumulative distributions in excess of
net earnings represent the reversal of the operations of the Eleven
Centers for the period from December 21, 1994 through December 31,
1994.
(e) Additions to Cash and Indebtedness to Bank
The $3,000,000 increase in both cash and indebtedness to bank reflects
estimated additional borrowings that would have been necessary to
acquire the Two Centers as of December 31, 1994.
<PAGE> 11
IRT PROPERTY COMPANY
PRO FORMA COMBINED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited)
The following unaudited pro forma combined statement of earnings for
the year ended December 31, 1994 has been prepared by combining the
consolidated statement of earnings of IRT Property Company (the "Company") with
the combined statement of revenues and certain continuing expenses, as
adjusted, of the Thirteen Centers for the period indicated.
The pro forma combined statement presented below assumes that the
purchase of the Thirteen Centers had been consummated as of January 1, 1994.
The pro forma combined statement of earnings does not necessarily
reflect operations as they would have been if IRT had owned the Centers during
such periods and should not be deemed to be necessarily indicative of the
future results of the Company after the purchase.
The pro forma combined statement of earnings should be read in
conjunction with its notes, together with the combined statement of revenues
and certain continuing operating expenses of the Thirteen Centers for the year
ended December 31, 1994, included as an exhibit herein, and the financial
statements of the Company included in its Form 10-K for the year ended December
31, 1994.
<TABLE>
<CAPTION> IRT
Pro Forma Property
Operations of Adjustments Company
IRT PROPERTY The Thirteen Increase Pro Forma
COMPANY Centers (Decrease) Combined
---------- --------------- ----------- ---------
(Audited) (Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1994
----------------------------
REVENUES:
Income from rental properties $44,681,220 $10,405,886 $ (166,693) (e) $54,920,413
Interest 3,267,486 (2,040,484) (a) 1,227,002
Interest on direct financing
leases 1,253,438 1,253,438
---------- ---------- ---------- ----------
49,202,144 10,405,886 (2,207,177) 57,400,853
---------- ---------- ---------- ----------
EXPENSES:
Operating expenses of rental
properties 10,318,596 1,955,920 (d) 12,274,516
Interest on mortgages 8,191,240 1,805,076 (20,792) (f) 9,975,524
Interest on debentures 6,202,025 6,202,025
Interest on indebtedness to
banks 159,603 636,000 (b) 795,603
Depreciation 8,214,192 1,500,686 (c) 9,714,878
Amortization of debt costs 446,454 446,454
General and administrative 2,881,111 (d) 2,881,111
---------- ---------- ---------- ----------
36,413,221 3,760,996 2,115,894 42,290,111
---------- ---------- ---------- ----------
Earnings before gain on sales
of properties and
extraordinary items $12,788,923 $ 6,644,890 $(4,323,071) $15,110,742
========== ========== ========== ==========
Per share earnings before gain on
sales of properties and
extraordinary items $0.50 $0.60
==== ====
Average shares outstanding 25,349,303 25,349,303
========== ==========
</TABLE>
<PAGE> 12
IRT PROPERTY COMPANY
NOTES TO PRO FORMA COMBINED STATEMENTS OF
EARNINGS FOR THE YEAR ENDED DECEMBER 31, 1994
(Unaudited)
Adjustments assuming that the acquisition of the Centers occurred at the
beginning of the period with the acquisition being funded by cash remaining
from the Company's 1993 stock and debenture offerings and additional borrowings
under the Company's revolving term loan:
(a) Decrease in interest income from short-term investments due to
utilization of an average of approximately $48,752,000 of cash for the
acquisition. Short-term investments earned an average interest rate
of approximately 4.19% for the year ended December 31, 1994.
(b) Increase in interest expense on bank indebtedness based on estimated
average borrowings for the year ended December 31, 1994 of
approximately $11,846,000 at 6.2% partially offset by lower
commitment fees.
(c) Increase in depreciation expense for the additional operating centers
in 1994 partially offset by actual depreciation recognized on the
Eleven Centers for the period of December 21, 1994 through December
31, 1994. The total annual depreciation expense for the Thirteen
Centers is $1,537,764.
(d) The operating expenses of rental properties for the Centers includes
management fees of $368,066 for the year ended December 31, 1994. It
is assumed that these fees would offset any increase in general and
administrative expenses required by an increase in personnel and
associated costs.
(e) Decrease in income from rental properties to reverse the actual income
recognized on the Eleven Centers for the period December 21, 1994
through December 31, 1994.
(f) Decrease in interest on mortgages as a result of the Company valuing
one of the assumed mortgages, for financial reporting purposes, based
on current interest rates at the date of acquisition.
<PAGE> 13
IRT PROPERTY COMPANY
ESTIMATED PRO FORMA COMBINED EARNINGS FROM OPERATIONS
AND FUNDS FROM OPERATIONS OF THE REGISTRANT
(Unaudited)
The following presents the estimated pro forma combined earnings from
operations and funds from operations of the Company for the year ended December
31, 1994 assuming that the purchase of the Thirteen Centers had been
consummated as of January 1, 1994. Earnings from operations is not taxable to
the Registrant because it qualifies as a real estate investment trust under the
Internal Revenue Code. Funds from operations is defined as net cash flows from
operating activities before changes in accrued assets and liabilities. These
estimated pro forma results do not purport to present expected results of
operations for these properties in the future and were prepared on the basis
described in the notes to the pro forma financial statements which should be
read in conjunction herewith.
<TABLE>
<CAPTION>
Pro Forma IRT Property
Operations of Adjustments Company Pro
IRT Property The Thirteen Increase Forma
Company Centers (Decrease) Combined
------------ ---------- ----------- ------------
(Audited) (Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Earnings from Operations $12,788,923 $6,644,890 $(4,323,071) $15,110,742
Depreciation 8,214,192 1,500,686 9,714,878
Amortization of debt costs 446,454 - - 446,454
Recovery of investment in
direct financing leases 166,019 - - 166,019
---------- --------- ---------- ----------
Funds from operations $21,615,588 $6,644,890 $(2,822,385) $25,438,093
========== ========= ========== ==========
</TABLE>
