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) May 26, 1994
UNITED DOMINION REALTY TRUST, INC.
(Exact name of registrant as specified in its charter)
Virginia 1-10524 54-0857512
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation of organization) File Number) Identification No.)
10 South Sixth Street, Suite 203, Richmond, Virginia 23219-3802
(Address of principal executive offices)
Registrant's telephone number, including area code (804) 780-2691
NO CHANGE
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets
On April 1, 1994, the registrant, United Dominion Realty Trust, Inc.
(the "Trust") signed 25 separate contracts to acquire a portfolio of 25
apartment communities, located primarily in the Southeast, in separate but
related transactions from certain affiliates of Clover Financial Corporation, a
New Jersey corporation for $162,997,000, including estimated closing costs (the
"Portfolio Acquisition"). The proposed acquisition will be financed through
several sources of cash which include (i) the net proceeds from a public
offering of 7,000,000 shares of Common Stock, estimated to be $98,700,000, (ii)
the assumption of two mortgage loans encumbering two properties in the Portfolio
Acquisition totaling $11,700,000, and (iii) senior unsecured debt comprised of a
combination of bank line borrowings and term debt. The 25 apartment communities
consist of 5,170 total units located on a total of 365 acres, built at various
times between 1964 and 1987.
ITEM 5. Other Events
The Trust anticipates financing a portion of its 1994 property
acquisitions, including the Portfolio Acquisition, through the issuance of $75
million to $100 million of 7 to 10 year senior unsecured debt during the third
quarter of 1994. To mitigate the risks of rising interest rates, on May 18,
1994, the Trust entered into an interest rate hedge agreement with Goldman,
Sachs & Co., a New York limited partnership, which agreement has the effect of
limiting the Trust's exposure to an increase in the 10-year Treasury Rate to a
maximum of 7.197% for $75,000,000 of its debt to be issued on or before
September 15, 1994.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
Description Location
(a) Financial Statements of Businesses Acquired 5 through 14
(b) Pro Forma Financial Information 14 through 23
(c) Exhibits
(23) Consents of Independent Auditors 25 through 26
(99) Rate Hedge Agreement, dated May 18,
1994, between United Dominion Realty
Trust, Inc. and Goldman, Sachs & Co. 27 through 33
<PAGE>
Report of Independent Certified Public Accountants
Holly Tree Park Apartments,
Knolls at Newgate and
Mallard Green Apartments
Merchantville, New Jersey
We have audited the accompanying combined historical summary of gross income
and direct operating expenses of Holly Tree Park Apartments, Knolls at
Newgate and Mallard Green Apartments, as defined in Note 2, for the year
ended December 31, 1993. This combined historical summary is the responsi-
bility of the management of Holly Tree Park Apartments, Knolls at Newgate and
Mallard Green Apartments. Our responsibility is to express an opinion on
this combined historical summary 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 combined historical summary is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined historical
summary. An audit also includes assessing the basis of accounting used and
the significant estimates made by management, as well as evaluating the
overall presentation of the combined historical summary. We believe that our
audit provides a reasonable basis for our opinion.
The accompanying combined historical summary was prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission as described in Note 1 and is not intended to be a complete
presentation of the gross income and direct operating expenses of Holly Tree
Park Apartments, Knolls at Newgate and Mallard Green Apartments.
In our opinion, the combined historical summary referred to above presents
fairly, in all material respects, the combined gross income and combined
direct operating expenses described in Note 2 of Holly Tree Park Apartments,
Knolls at Newgate and Mallard Green Apartments for the year ended Decem-
ber 31, 1993, in conformity with generally accepted accounting principles.
/s/ BDO Seidman
February 4, 1994
<PAGE>
Combined Historical Summary of Gross
Income and Direct Operating Expenses
Year ended
December 31,
1993
Gross income
Net revenue $2,628,734
Direct operating expenses
Real estate taxes 151,878
Repairs and maintenance 322,839
Utilities 296,193
Property management fees 128,486
Other operating expenses 427,649
Total direct operating expenses 1,327,045
Gross income in excess of direct
operating expenses $1,301,689
See accompanying notes to combined historical summary of gross income and
direct operating expenses.
<PAGE>
Notes to Combined Historical Summary of
Gross Income and Direct Operating Expenses
1. Basis of Presentation
The Holly Tree Park Apartments, Knolls at Newgate and Mallard Green
Apartments (the "Properties") consist of three residential apartment
properties located in Maryland, Virginia and North Carolina, respectively,
together with the existing leases and property management agreements. The
assets that comprise the Properties have been held as an investment of Clover
Income Properties, L.P., Clover Income Properties II, L.P. and Clover Income
Properties III, L.P., respectively (the "Owner"), throughout the period ended
December 31, 1993. The accompanying financial statement presents the
combined results of the Properties as a stand-alone entity.
2. Summary of Significant Accounting Policies
Revenue and Expense Recognition
The accompanying financial statement has been prepared using the accrual
method of accounting. Rental revenue is recognized when earned and
represents potential billings, net of vacancies and bad debts. Certain ex-
penses such as depreciation, income taxes, interest expense and corporate
expenses are not reflected in the financial statement, as required by Rule
3-14 of Regulation S-X of the Securities and Exchange Commission.
Repairs and Maintenance
Repairs and maintenance costs are expensed as incurred, while significant
improvements, renovations and replacements (including appliances and
carpeting) are capitalized.
3. The Properties
The Properties are located in Maryland, Virginia and North Carolina. There
are 364 apartment units contained within the Properties.
The apartments, which are typically garden-style units with one, two or three
bedrooms, are managed by Allstate Management Corporation, an affiliate of the
owner of the properties. The apartments are generally leased for terms of
six months to one year. Average occupancy of the Properties was approxi-
mately 93% during 1993.
4. Property Management Fees
Property management services are provided through Allstate Management
Corporation, an affiliate of the owner of the Properties. Fees for such
services were 5% of gross receipts from operations, as defined in the
applicable property management agreements.
5. Commitments and Contingencies
The Knolls at Newgate Apartments was acquired subject to an existing ground
lease from an unaffiliated third party which expires April 12, 2039.
Lease payments of $1,440 ($17,280 per annum) are paid monthly. Additional
rent, which is defined as 10% of all collections from tenants in excess of
$316,000 for each calendar year, is payable within 90 days after the close of
the calendar year. Additional rent payable at December 31, 1993 was $65,987.
<PAGE>
Report of Independent Auditors
To the Board of Directors
United Dominion Realty Trust, Inc.
We have audited the accompanying combined statement of rental operations of
Clover Financial Partnership Properties, as defined in Note 2, for the year
ended December 31, 1993. This combined statement is the responsibility of
the management of Clover Financial Partnership Properties. Our
responsibility is to express an opinion on this combined statement based on
our audit. We did not audit the statement of rental operations of Crossroads
I, II, and III, Overlook, Park I and II, and Hunting Ridge Apartment
Communities, which statements reflect total revenues of $5,638,277 for the
year ended December 31, 1993. Those statements were audited by other
auditors whose report has been furnished to us, and our opinion, insofar as
it relates to the amounts included for Crossroads I, II and III, Overlook,
Park I and II and Hunting Ridge Apartment Communities, is based solely on the
report of the other auditors.
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 combined statement is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the combined statement.
An audit also includes assessing the basis of accounting used and the
significant estimates made by management, as well as evaluating the overall
presentation of the combined statement. We believe that our audit provides
a reasonable basis for our opinion.
The accompanying combined statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion on a Current Report on Form 8-K of United Dominion Realty Trust as
described in Note 1 and is not intended to be a complete presentation of the
gross income and direct operating expenses of Clover Financial Partnership
Properties.
<PAGE>
Page 2
In our opinion, based on our audit and the report of other auditors, the
combined statement referred to above presents fairly, in all material
respects, the combined gross income and combined direct operating expenses
described in Note 2 of Clover Financial Partnership Properties for the year
ended December 31, 1993, in conformity with generally accepted accounting
principles.
/s/ ALLOY, SILVERSTEIN, SHAPIRO, ADAMS, MULFORD & CO.
ALLOY, SILVERSTEIN, SHAPIRO, ADAMS, MULFORD & CO.
May 19, 1994
<PAGE>
CLOVER FINANCIAL PARTNERSHIP PROPERTIES
COMBINED STATEMENT OF RENTAL OPERATIONS
YEAR ENDED DECEMBER 31, 1993
REVENUES FROM RENTAL PROPERTY $ 25,715,828
RENTAL PROPERTY EXPENSES
Real Estate Taxes $ 1,823,358
Repairs and Maintenance 4,115,651
Utilities, Water and Sewer 2,165,124
Property Management Fees 1,284,581
Other Operating Expenses 4,061,508
TOTAL RENTAL PROPERTY EXPENSES 13,450,222
INCOME FROM RENTAL OPERATIONS $ 12,265,606
The accompanying notes are an integral part of this statement.
Page 3
<PAGE>
CLOVER FINANCIAL PARTNERSHIP PROPERTIES
NOTES TO THE COMBINED STATEMENT OF RENTAL OPERATIONS
YEAR ENDED DECEMBER 31, 1993
1. Basis of Presentation
The Clover Financial Partnership Properties consist of residential
apartment communities together with the existing leases and property
management agreements. The assets that comprise the Properties have been
held as investments of Partnerships affiliated with Clover Financial
Corp. throughout the year ended December 31, 1993. The accompanying
financial statement presents the results of the combined rental
operations of the Properties as a single entity. The residential
apartment communities included in the financial statement are as follows:
Apartment Community Location # of Units
Crossroads I, II and III Columbia, South Carolina 622
Overlook Greenville, South Carolina 237
Park I and II Columbia, South Carolina 292
Dover Country Club Dover, Delaware 224
Excalibur Charlotte, North Carolina 240
Great Oaks Ellicott City, Maryland 300
Grove Park Raleigh, North Carolina 65
Hampton Forest Greenville, South Carolina 130
Harris Pond Charlotte, North Carolina 170
Hunting Ridge Greenville, South Carolina 152
Huntingwood Lynchburg, Virginia 114
Indian Hills Anniston, Alabama 140
Landing Greenville, South Carolina 224
Marina Park North Miami, Florida 88
Royal Oaks Savannah, Georgia 228
Somerset Summerville, South Carolina 240
St. Andrews Columbia, South Carolina 232
Three Fountains Montgomery, Alabama 242
Twin Coves Glen Burnie, Maryland 132
Waterford Columbia, South Carolina 268
West Knoll Newark, Delaware 100
Woodside Glen Burnie, Maryland 366
2. Summary of Significant Accounting Policies
Revenue and Expense Recognition
The accompanying combined statement of rental operations has been
prepared using the accrual method of accounting. Certain expenses such
as depreciation, amortization, income taxes and mortgage interest expense
are not reflected in the statement of rental operations, as required by
Rule 3-14 of Regulation S-X of the Securities and Exchange Commission.
Page 4
<PAGE>
CLOVER FINANCIAL PARTNERSHIP PROPERTIES
NOTES TO THE COMBINED STATEMENT OF RENTAL OPERATIONS
YEAR ENDED DECEMBER 31, 1993
(Continued)
2. Summary of Significant Accounting Policies
Repairs and Maintenance
Repairs and maintenance costs were expensed as incurred, while
significant improvements, renovations and replacements were capitalized.
3. Property Management Fees
Property management services were provided through affiliates of Clover
Financial Corp. Fees for such services vary by apartment community, as
defined in the applicable property management agreements. Property
management fees for the year ended December 31, 1993 are summarized as
follows:
Apartment Community % of Gross Receipts Amount
Crossroads I, II and III 4% $ 124,111
Overlook 4% 35,530
Park I and II 4% 44,987
Dover Country Club 6% 84,484
Excalibur Apartments 5% 65,788
Great Oaks 6% 129,550
Grove Park 5% 18,466
Hampton Forest 5% 28,688
Harris Pond - (a) 60,000
Hunting Ridge 5% 27,261
Huntingwood 5% 32,657
Indian Hills 5% 37,032
Landing 5% 51,995
Marina Park 5% 32,453
Royal Oaks - (b) 107,143
Somerset 6% 59,892
St. Andrews 5% 65,069
Three Fountains 3% 38,842
Twin Coves 5% 36,592
Waterford 3% 38,145
West Knoll 5% 32,453
Woodside 6% 133,443
Total $ 1,284,581
(a) Annual fee of $60,000
(b) Seven year agreement for $750,000 ($107,143 annually)
Page 5
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
CERTAIN PROPERTIES PROPOSED TO BE ACQUIRED
SUMMARY OF REVENUES AND CERTAIN RENTAL EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1993
(IN THOUSANDS OF DOLLARS)
Rental income $28,345
Rental expenses (excluding depreciation):
Utilities $2,461
Repairs and maintenance 4,439
Real estate taxes 1,975
Property management 1,413
Other rental expenses 4,489 14,777
Excess of revenues over certain rental expenses $13,568
CERTAIN PROPERTIES PROPOSED TO BE ACQUIRED
SUMMARY OF REVENUES AND CERTAIN RENTAL EXPENSES
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(IN THOUSANDS OF DOLLARS)
Rental income $ 7,149
Rental expenses (excluding depreciation):
Utilities $ 737
Repairs and maintenance 1,174
Real estate taxes 511
Property management 357
Other rental expenses 1,127 3,906
Excess of revenues over certain rental expenses $ 3,243
<PAGE>
NOTES TO SUMMARY OF REVENUES
AND CERTAIN RENTAL EXPENSES
The summaries of revenues and certain rental expenses reflect the
operations of the Portfolio Acquisition (the "property") for the year ended
December 31, 1993 based upon the audited statement of rental operations of
the properties appearing elsewhere herein and for the three month period
ended March 31, 1994 based upon the unaudited statement of rental operations
of the property.
The summaries have been prepared on the accrual method of accounting.
Rental expenses include repair and maintenance expenses, utilities, real
estate taxes, insurance and certain other expenses. In accordance with the
regulations of the Securities and Exchange Commission, mortgage interest
expenses, depreciation, and general and administrative costs have been
excluded from operating expenses, as they are dependent upon a particular
owner, purchase price or financial arrangement.
In assessing the properties, management considered the existing and
potential tenant base, expected job growth in the area, occupancy rates, the
competitive nature of the market and comparative rental rates. Furthermore,
current and anticipated maintenance and repair costs, real estate taxes and
anticipated capital improvements were assessed.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
PRO FORMA CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
The following balance sheet at March 31, 1994 gives effect to the
proposed acquisition by the Trust of the 25 apartment communities included in
the Portfolio Acquisition from certain affiliates of the Clover Financial
Corporation, a New Jersey corporation.
The pro forma condensed statements of operations for the year ended
December 31, 1993 and the three months ended March 31, 1994 assume the
acquisition of the property as if it had occurred at the beginning of each
period presented.
The pro forma condensed statements have been prepared by the management
of the Trust. The pro forma condensed financial statements of operations may
not be indicative of the results that would have occurred had the
acquisitions been completed on the dates indicated. Also, they necessarily
are not indicative of future results. The pro forma condensed financial
statements should be read in conjunction with the Trust's audited financial
statements for the year ended December 31, 1993 (included in the Trust's Form
10-K for the year ended December 31, 1993) and the unaudited financial
statements as of March 31, 1994 and for the three months then ended (included
in the Trust's Form 10-Q for the periods ended March 31, 1994) and the
accompanying notes.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
PRO FORMA BALANCE SHEET
MARCH 31, 1994
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITIONS
PREVIOUSLY
REPORTED ON
PORTFOLIO FORM 8-K DATED
HISTORICAL (A) ACQUISITION APRIL 15, 1994
<S> <C> <C> <C>
BALANCE SHEET
ASSETS
Real estate owned
Apartments............................................................. $532,227 $ 162,997(B) $ 21,198(G)
Shopping centers....................................................... 74,450
Office and Industrial.................................................. 4,593
611,270 162,997 21,198
Less accumulated depreciation.......................................... 97,150
514,120 162,997 21,198
Cash and cash equivalents................................................ 10,489
Other assets............................................................. 10,993
$535,602 $ 162,997 $ 21,198
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable................................................... $ 72,660 $ 11,700(C)
Notes payable............................................................ 188,101 52,597(D) $ 21,198(H)
Accounts payable, accrued expenses and other............................. 7,259
Tenants' deposits and rents paid in advance.............................. 3,372
Distributions payable to shareholders.................................... 8,130
279,522 64,297 21,198
Shareholders' equity
Common stock, $1 par value; 60,000,000 shares authorized 41,703,785
shares
issued and outstanding (48,703,785 in pro forma)..................... 41,704 7,000(E)
Additional paid in capital............................................. 302,981 91,700(F)
Notes receivable from office shareholders.............................. (4,096)
Distributions in excess of earnings.................................... (84,509)
Total shareholders' equity............................................. 256,080 98,700 --
$535,602 $ 162,997 $ 21,198
<CAPTION>
PRO
FORMA
<S> <C>
BALANCE SHEET
ASSETS
Real estate owned
Apartments............................................................. $716,422
Shopping centers....................................................... 74,450
Office and Industrial.................................................. 4,593
795,465
Less accumulated depreciation.......................................... 97,150
698,315
Cash and cash equivalents................................................ 10,489
Other assets............................................................. 10,993
$719,797
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage notes payable................................................... $ 84,360
Notes payable............................................................ 261,896
Accounts payable, accrued expenses and other............................. 7,259
Tenants' deposits and rents paid in advance.............................. 3,372
Distributions payable to shareholders.................................... 8,130
365,017
Shareholders' equity
Common stock, $1 par value; 60,000,000 shares authorized 41,703,785
shares
issued and outstanding (48,703,785 in pro forma)..................... 48,704
Additional paid in capital............................................. 394,681
Notes receivable from office shareholders.............................. (4,096)
Distributions in excess of earnings.................................... (84,509)
Total shareholders' equity............................................. 354,780
$719,797
</TABLE>
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO PRO FORMA BALANCE SHEET
MARCH 31, 1994
(UNAUDITED)
(A) Represents the Trust's Historical Balance Sheet contained in the
Trust's Quarterly Report on Form 10-Q for the quarter ended March 31, 1994.
(B) Represents the initial purchase price of $161,950,000 for the 25
properties proposed to be acquired in the Portfolio Acquisition plus estimated
closing costs of $1,047,000.
(C) Represents the assumption of two mortgage loans encumbering two
properties included in the Portfolio Acquisition as follows:
<TABLE>
<CAPTION>
LOAN INTEREST
PROPERTY NAME AMOUNT RATE
<S> <C> <C>
Harris Pond Apartments................................................... $5,200,000 8.75%
Royal Oaks Apartments.................................................... 6,500,000 8.50%
</TABLE>
(D) Represents assumed additional borrowings of $52,597,000 necessary to
fund a portion of the Portfolio Acquisition.
(E) Represents the issuance of 7,000,000 shares in the Offering.
(F) Represents the net proceeds from the Offering attributable to
Additional Paid in Capital. In determining net proceeds, underwriting discounts
and other offering costs equal to 6% of gross proceeds, or $6,300,000, have been
assumed.
(G) Represents the aggregate purchase price of $21,198,000 of two apartment
communities purchased on April 8, 1994 and April 14, 1994, as previously
reported on Form 8-K dated April 15, 1994.
(H) Represents assumed additional borrowings of $21,198,000 on unsecured
notes payable necessary to fund the acquisitions of the properties in (G).
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITIONS
PREVIOUSLY
REPORTED ON PRO
PORTFOLIO FORM 8-K DATED FORMA
HISTORICAL (A) ACQUISITION (B) APRIL 15, 1994 (C) ADJUSTMENTS
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income........................................... $ 26,706 $ 7,149 $1,421
Property expenses:
Utilities............................................. 2,712 737 81
Repairs & maintenance................................. 3,716 1,174 257
Real estate taxes..................................... 1,802 511 64
Property management................................... 921 357 72 $ (177)(E)
Other operating expenses.............................. 2,234 1,127 283 (139)(F)
Depreciation of real estate owned..................... 5,706 1,168(G)
17,091 3,906 757 852
Income from property operations........................... 9,615 3,243 664 (852)
Interest income........................................... 114
9,729 3,243 664 (852)
EXPENSES
Interest................................................ 4,655 1,581(I)
General and administrative.............................. 1,474
Other depreciation and amortization..................... 185
6,314 -- -- 1,581
Income before gains (losses) on investments............... 3,415 3,243 664 (2,433)
Gains (losses) on sale of investments.....................
Net income................................................ $ 3,415 $ 3,243 $ 664 $(2,433)
Net income per share...................................... $ 0.08
Distributions declared per share.......................... .195
Weighted average number of shares outstanding............. 41,688 7,000
<CAPTION>
PRO
FORMA
<S> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income........................................... $35,276
Property expenses:
Utilities............................................. 3,530
Repairs & maintenance................................. 5,147
Real estate taxes..................................... 2,377
Property management................................... 1,173
Other operating expenses.............................. 3,505
Depreciation of real estate owned..................... 6,874
22,606
Income from property operations........................... 12,670
Interest income........................................... 114
12,784
EXPENSES
Interest................................................ 6,236
General and administrative.............................. 1,474
Other depreciation and amortization..................... 185
7,895
Income before gains (losses) on investments............... 4,889
Gains (losses) on sale of investments.....................
Net income................................................ $ 4,889
Net income per share...................................... $ 0.10
Distributions declared per share.......................... .195
Weighted average number of shares outstanding............. 48,688
</TABLE>
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACQUISITIONS ACQUISITIONS
PREVIOUSLY PREVIOUSLY
REPORTED ON REPORTED ON PRO
PORTFOLIO FORM 8-K DATED FORM 8-K DATED FORMA
HISTORICAL (A) ACQUISITION (B) APRIL 15, 1994 (C) DECEMBER 31, 1993 (D) ADJUSTMENTS
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income..................... $ 89,084 $28,345 $6,990 $ 9,424
Property expenses:
Utilities....................... 7,838 2,461 379 846
Repairs & maintenance........... 13,950 4,439 773 1,407
Real estate taxes............... 5,777 1,975 565 780
Property management............. 2,782 1,413 297 422 $ (816)(E)
Other operating expenses........ 7,512 4,489 1,236 1,552 (554)(F)
Depreciation of real estate
owned......................... 19,764 6,878(G)
57,623 14,777 3,250 5,007 5,508
Income from property operations..... 31,461 13,568 3,740 4,417 (5,508)
Interest income..................... 708 (438)(H)
32,169 13,568 3,740 4,417 (5,946)
EXPENSES
Interest.......................... 16,938 8,183(I)
General and administrative........ 3,349
Other depreciation and
amortization.................... 596
20,883 -- -- -- 8,183
Income before gains (losses) on
investments....................... 11,286 13,568 3,740 4,417 (14,129)
Gains (losses) on sale of
investments....................... (89)
Net income.......................... $ 11,197 $13,568 $3,740 $ 4,417 $ (14,129)
Net income per share................ $ 0.29
Distributions declared per share.... 0.70
Weighted average number of shares
outstanding....................... 38,202 7,000
<CAPTION>
PRO
FORMA
<S> <C>
STATEMENT OF OPERATIONS
INCOME
Property operations:
Rental income..................... $133,843
Property expenses:
Utilities....................... 11,524
Repairs & maintenance........... 20,569
Real estate taxes............... 9,097
Property management............. 4,098
Other operating expenses........ 14,235
Depreciation of real estate
owned......................... 26,642
86,165
Income from property operations..... 47,678
Interest income..................... 270
47,948
EXPENSES
Interest.......................... 25,121
General and administrative........ 3,349
Other depreciation and
amortization.................... 596
29,066
Income before gains (losses) on
investments....................... 18,882
Gains (losses) on sale of
investments....................... (89 )
Net income.......................... $ 18,793
Net income per share................ $ 0.42
Distributions declared per share.... 0.70
Weighted average number of shares
outstanding....................... 45,202
</TABLE>
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO PRO FORMA STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND
THE YEAR ENDED DECEMBER 31, 1993
(UNAUDITED)
(A) Represents the Trust's Historical Statements of Operations contained in
its Quarterly Report on Form 10-Q for the three months ended March 31, 1994 and
its Annual Report on Form 10-K for the year ended December 31, 1993.
(B) Represents actual rental income and related operating expenses of the
proposed Portfolio Acquisition, as reported elsewhere herein.
(C) Represents rental income and related operating expenses of four
apartment acquisitions, as previously reported on Form 8-K dated April 15, 1994.
(D) Reflects the net adjustments required to allow for a full year of
rental income and operating expenses for the year ended December 31, 1993, for
the Trust's acquisitions reported on Form 8-K during 1993.
(E) Reflects the net decrease in property management fees for the Portfolio
Acquisition and the Trust's 1993 and 1994 acquisitions. The Trust internally
manages its apartment properties at a cost of approximately 3% of rental income.
(F) Reflects the net decrease in insurance expense to reflect that the
Trust insures its apartments for approximately $107 per unit less that the
historical insurance expense of the Portfolio Acquisition.
(G) Represents the net adjustments to depreciation expense as outlined in
the table below. Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets. Buildings have been depreciated
over 35 years and other improvements over 15 years based upon an assumed
allocation of the estimated initial cost of the Portfolio Acquisition.
<TABLE>
<CAPTION>
3 MONTHS ENDED 12 MONTHS ENDED
MARCH 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
Increase related to the Portfolio
Acquisition $1,022,000 $ 4,088,000
Increase related to the acquisitions
previously reported on Form 8-K dated
April 15, 1994 146,000 1,280,000
Increase related to the acquisitions
previously reported on Form 8-K dated
December 31, 1993 -- 1,510,000
Total $1,168,000 $ 6,878,000
</TABLE>
<PAGE>
(H) Reflects the reduction of interest income associated with the use of
short-term investments to acquire the properties at assumed interest rates in
effect at the time of each respective acquisition for the year ended December
31, 1993, for the Trust's 1993 acquisitions reported on Form 8-K during 1993.
(I) Reflects the additional interest expense associated with the increase
in bank lines of credit and the assumption of two mortgage notes assumed to have
been incurred by the Trust to purchase (i) the Portfolio Acquisition at interest
rates and maturities which are currently available to the Trust, (ii) the 1994
apartment acquisitions through May 13, 1994 at interest rates under the Trust's
bank lines of credit on the date of purchase, and (iii) the 1993 apartment
acquisitions made by the Trust at interest rates and maturities that were
available at the time of each acquisition as follows:
<TABLE>
<CAPTION>
3 MONTHS ENDED 12 MONTHS ENDED
MARCH 31, 1994 DECEMBER 31, 1993
<S> <C> <C>
Increase related to the Portfolio
Acquisition $1,192,000 $ 4,769,000
Increase related to the acquisitions
previously reported on Form 8-K
dated April 15, 1994 389,000 1,871,000
Increase related to the acquisitions
previously reported on Form 8-K
dated December 31, 1993 -- 1,543,000
Total $1,581,000 $ 8,183,000
</TABLE>
<PAGE>
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.
UNITED DOMINION REALTY TRUST, INC.
Date: May 26, 1994 /s/ James Dolphin
James Dolphin, Senior Vice President
Chief Financial Officer
Date: May 26, 1994 /s/ Jerry A. Davis
Jerry A. Davis, Vice President
Controller
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
United Dominion Realty Trust, Inc.
Richmond, Virginia
We consent to the incorporation by reference in the previously filed
Registration Statement Form S-3 No. 33-40433, Registration Statement Form S-3
No. 33-32930, Registration Statement Form S-8 No. 33-47926 and Registration
Statement Form S-8 No. 33-48000 of United Dominion Realty Trust, Inc. of our
report dated February 4, 1994, with respect to the combined Historical Summary
of Gross Income and Direct Operating Expenses of Holly Tree Park Apartments,
Knolls at Newgate and Mallard Green Apartments for the year ended December 31,
1993 included in this Form 8-K dated May 26, 1994.
/s/ BDO SEIDMAN
Philadelphia , Pennsylvania
May 26, 1994
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
United Dominion Realty Trust, Inc.
We consent to the incorporation by reference in the previously filed
Registration Statement Form S-3 No. 33-40433, Registration Statement Form S-3
No. 33-32930, Registration Statement Form S-8 No. 33-47926 and Registration
Statement Form S-8 No. 33-48000 of United Dominion Realty Trust, Inc. of our
report dated May 19, 1994, with respect to the Statement of Rental Operations of
Clover Financial Partnership Properties for the year ended December 31, 1993,
included in this Form 8-K dated May 26, 1994.
/s/ Alloy, Silverstein, Shapiro, Adams, Mulford & Co.
Alloy, Silverstein, Shapiro, Adams, Mulford & Co.
Certified Public Accountants
May 24, 1994
Exhibit 99
RATE HEDGE AGREEMENT
This Agreement is made the 18th of May, 1994, between United Dominion
Realty Trust, a Virginia corporation (the "Customer"), and Goldman, Sachs &
Co., a New York limited partnership ("Goldman Sachs").
WHEREAS, the Customer intends to issue, within the term of this
Agreement, its debt Securities ("Debt"), with a maturity of approximately
1O years, and wishes to enter into a notional principal contract in the
amount of $75MM to hedge itself against the risk that the general level of
interest rates for securities with similar maturities might rise from their
current level during the term of this Agreement; and
WHEREAS, the Customer intends this Agreement to qualify as a hedging
transaction within the meaning of Section 1256(e)(2) of the Internal
Revenue Code of 1986 as amended:
NOW, THEREFORE, THIS AGREEMENT WITNESSETH:
1. Definitions. For the purposes of this Agreement, the following terms
shall have the meanings indicated:
(a) "Adjustment Price": the number determined in accordance with the
formula set forth in paragraph 3 of Schedule A hereto.
(b) "Agreement Date": the date set forth in the first paragraph
hereof.
(c) "Alternate Takedown Price": the price (stated in percent)
determined in accordance with Section 2(c) hereof.
(d) "Base Treasury Price": the price, expressed in percent, set
forth in paragraph 1 of Schedule A hereto.
(e) "Base Treasury Securities": the securities set forth in
paragraph 2 of Schedule A hereto.
(f) "Business Day": each Monday, Tuesday, Wednesday, Thursday, and
Friday which is not a day on which Goldman Sachs, the Customer, or the
Federal Reserve Bank of New York are closed or banking institutions in the
State of New York are authorized or obligated by law or executive order to
close.
(g) "Determination Date": the date on which the Takedown Price shall
be accepted, or deemed to be accepted, by the Customer.
(h) "Price Differential": the amount obtained by multiplying (i) the
difference (stated in percent) between the Base Treasury Price and the
Takedown Price, times (ii) the Base Treasury Securities.
(i) "Readjustment Factor": the number determined in accordance with
the formula set forth in paragraph 3(b) of Schedule A hereto.
(j) "Takedown Price": the price (stated in percent) determined in
accordance with Sections 2 and 3 hereof and Schedule A hereto.
(k) "Termination Date": the date set forth in paragraph 4 of
Schedule A hereto.
2. Selection of a Takedown Price.
(a) On any Business Day, between the hours of 9:00 a.m. and 3:00 p.m.
(New York City time), the Customer may request Goldman Sachs to quote a
Takedown Price. Within one hour of receipt by Goldman Sachs of such a
request, Goldman Sachs shall quote an unadjusted Takedown Price to the
Customer; provided, however, that Goldman Sachs may, but shall not be
obligated to, quote a Takedown Price (i) at any time within one hour before
an expected announcement of money supply data or other economic statistics
by the government of the United States of America or any agency thereof,
(ii) if an event (including an announcement of money supply data or other
economic statistics) shall have occurred that would, in the judgment of
Goldman Sachs, materially affect the quotation of a Takedown Price, or
(iii) if in the opinion of Goldman Sachs there does not at such time exist
an active dealer market for the Base Treasury Securities. Upon receipt by
the Customer of such quotation subject to paragraph (c) of this Section,
the Customer shall immediately accept or reject such unadjusted Takedown
Price. If the Customer shall not have accepted such unadjusted Takedown
Price, the Customer shall be deemed to have rejected such unadjusted
Takedown Price.
(b) If the Customer shall not have accepted a quoted Takedown Price,
and Goldman Sachs and the Customer shall not be deemed to have accepted an
Alternate Takedown Price, prior to 11:30 a.m. (New York City time) on the
Termination Date, Goldman Sachs shall quote an unadjusted Takedown Price to
the Customer at or prior to 4:00 p.m. (New York City time), and except as
provided in paragraph (c) of this Section the Customer shall be deemed to
have accepted such Takedown Price.
(c) Notwithstanding paragraphs (a) and (b) of this Section, if,
following the quotation by Goldman Sachs to the Customer of an unadjusted
Takedown Price pursuant to either such paragraph, the Customer immediately
rejects such unadjusted Takedown Price and notifies Goldman Sachs that the
Customer has received from another leading U.S. Government securities
dealer a firm bona fide offer to sell the Base Treasury Securities to the
Customer at a price (stated in percent) (an "Alternate Takedown Price"),
lower than the price quoted by Goldman Sachs, then Goldman Sachs shall
immediately quote a new unadjusted Takedown Price (which may be the same as
its previously quoted unadjusted Takedown Price) to the Customer, and the
Customer shall immediately accept or reject such new unadjusted Takedown
Price. If the Customer does not immediately accept such new unadjusted
Takedown Price, the Customer and Goldman Sachs shall be deemed to have
accepted the Alternate Takedown Price, provided, that in addition the
Customer shall be deemed to have agreed to sell to Goldman Sachs the Base
Treasury Securities at the Alternate Takedown Price. The settlement date
for such sale to Goldman Sachs shall be the next settlement date that, in
accordance with customary trade practices, would apply if the Base Treasury
Securities had been bought back on the Determination Date. The method of
settlement shall be the method that, in accordance with customary trade
practices, is employed with respect to the Base Treasury Securities.
3. Settlement Price. Upon acceptance pursuant to Section 2 hereof of the
unadjusted Takedown Price by the Customer, or of the Alternate Takedown
Price by Goldman Sachs, the following calculations and payments shall be
made:
(a) The Takedown Price or the Alternate Takedown Price (as the case may
be) established pursuant to Section 2 above shall be adjusted (up or down)
by adding thereto the Adjustment Price (positive or negative) determined in
accordance with paragraph 3(a) of Schedule A hereto, such Adjustment Price
to be modified by the Readjustment Factor determined pursuant to paragraph
3(b) of Schedule A if the Takedown Price (or Alternate Takedown Price) is
determined on a date prior to the Termination Date. The Takedown Price or
Alternate Takedown Price, as adjusted, shall be the "Takedown Price" for
purposes of determining the settlement price below.
(b) If the Takedown Price exceeds the Base Treasury Price, the Customer
shall owe Goldman Sachs the amount of the Price Differential. If the
Takedown Price is less than the Base Treasury Price, Goldman Sachs shall
owe the amount of the Price Differential to the Customer.
(c) The payment of the Price Differential shall be made in immediately
available federal funds by wire transfer on the Business Day immediately
following the Determination Date to the appropriate account of the
receiving party specified in paragraph 5 or 6 of Schedule A hereto.
(d) If the party required to pay the Price Differential hereunder fails to
do so in a timely manner, interest on such amount shall accrue from and
including the Determination Date through the date that such amount plus
interest is paid in full at an annual rate equal to 2% above the prime
brokers' loan rate. The prime brokers' loan rate will be determined by
Goldman Sachs for this purpose, in Goldman Sachs' sole discretion, in
accordance with prevailing money market conditions. It is understood that
in making such determination, Goldman Sachs will consider, among other
things, the rates quoted for brokers' loans by one or more New York banks
which are members of the New York Clearing House Association. Interest
shall be computed daily, using a 360 day base year.
4. Transfer. This Agreement may not be assigned or otherwise transferred
by either party hereto without the prior written consent of the other
party.
5. Representations and Warranties of the Customer. The Customer
represents and warrants to Goldman Sachs as follows:
(a) The Customer is a corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction in which it has been
incorporated.
(b) The Customer has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby, the persons giving instructions or confirming transactions
hereunder on behalf of the Customer shall be duly authorized to do so, and
this Agreement has been duly authorized, executed, and delivered by the
Customer and is enforceable against the Customer in accordance with its
terms.
(c) The Customer is entering into this Agreement in the ordinary
course of its business in order to hedge its exposure on a proposed debt
securities issuance and not for speculative purposes.
6. Representations and Warranties of Goldman Sachs. Goldman Sachs
represents and warrants to the Customer as follows:
(a) Goldman Sachs has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby, the persons giving instructions or confirming transactions
hereunder on behalf of Goldman Sachs shall be duly authorized to do so,
and this Agreement has been duly authorized, executed, and delivered by
Goldman Sachs and is enforceable against Goldman Sachs in accordance with
its terms.
(b) Goldman Sachs is entering into this Agreement in the ordinary course
of its business and not for speculative purposes.
7. Notices. Any notice hereunder may be given by telephone, telecopy,
telex, or other written instrument, in the case of telephone to be
confirmed in writing, delivered to the parties at their respective
addresses and in accordance with the telecommunications
instructions set forth below.
8. Governing Law and Jurisdiction. This Agreement shall be governed by
and construed in accordance with the law of the State of New York. The
Customer hereby irrevocably submits to the jurisdiction of the Supreme
Court of the State of New York and the United States District Court for
the Southern District of New York, in either case in the Borough
of Manhattan, The City of New York, in connection with any claim, suit,
action, or proceeding arising out of or relating to this Agreement.
9. Counterparts. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which, when taken
together, shall constitute one and the same instrument.
10. Amendments. This Agreement may be amended only by a written
instrument signed by each of the parties hereto.
11. No Waiver. No failure on the part of either party hereto to
exercise, and no delay in exercise of, any contractual right hereunder
shall operate as a waiver thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives.
United Dominion Realty Trust
Signature by: James Dolphin
Address: 10 South Sixth Street
Suite 203
Richmond, Virginia 23219
Attention: James Dolphin
Telecopy No.:(804) 644-4829
Telephone No.:(804) 780-2691
Goldman, Sachs & Co..
Signature By:
Address: 85 Broad Street
New York, NY 10004
Attention: James O. Rhodes
Telecopy No.: 212 902-0659
Telephone No.: 212-902-8376
Schedule A
1. Base Treasury Price (initial spot price): 101.59375%.
2. Base Treasury Securities: UST 7.25% of 5/15/2004.
3. Adjustment of Takedown Price:
(a) The Adjustment Price ("AP") shall be determined on the Agreement
Date as follows:
"AP" = (Coupon x a) (Principal x RP x a) = 1.245732%
------ - ---
2 c 360
where:
"Coupon" = Coupon rate of interest payable on Base Treasury
Security, expressed in percent= 7.25%.
"Principal" = BTP+I, where:
"BTP" = Base Treasury Price (expressed as a decimal)=1.0159375.
"I" = Accrued coupon interest (expressed as a decimal) on the
Base Treasury Security computed as of the Business Day
following the Agreement Date =.00078804.
"RP" = Term repurchase rate quoted by Goldman Sachs for
the Base Treasury Securities for the number of days
from and including the Business Day following the date
of this Agreement to the Business Day following the
Termination Date (stated in percent)=3.30%
"a" = The actual number of days in the period from the
Business Day following the Agreement Date, or the
Settlement Date of the Base Treasury Issue whichever
is later to the Business Day following the Termination
Date if the Base Treasury Security coupon date does not
fall in such period; otherwise, "a" means the actual
number of days in the period from the Business Day
following the Agreement Date to the Base Treasury
Security coupon date falling within such period =
120 Days.
"c" = The actual number of days in the period from and
including the last Base Treasury Security coupon date
falling before the period to but excluding the next
following Base Treasury Security coupon date = 184
Days.
(b) If the Determination Date occurs on a date other than the
Termination Date, the Adjustment Price shall be adjusted (up or down) by
subtracting from the Adjustment Price (not rounded up) a "Readjustment
Factor" ("RF") (positive or negative) determined as follows:
"RF" = (Coupon x f) - (P2 x RV x f)
----- - -
2 c 360
where:
"P2"=TP+ I2
"TP" = Takedown Price or Alternate Takedown Price, expressed as
a decimal.
"I2" = Accrued coupon interest on the Base Treasury Security on the
Business Day following the Determination Date.
"RV" = The term reverse repurchase rate quoted by Goldman Sachs for
the Base Treasury Security for the period from and including the Business
Day following the Determination Date to but excluding the Business Day
following the Termination Date, stated in percent. Goldman Sachs shall
quote a bid/ask spread in determining RV equal to no more than 50 basis
points.
"f" = The actual number of days in the period from the Business Day
following the Determination Date to the Business Day following the
Termination Date if the Base Treasury Security coupon date does not fall in
such period; otherwise "f" means the actual number of days in the period
from the Business Day following the Determination Date to the Base Treasury
Security coupon date falling within such period.
4. Termination Date: September 15, 1984
5. Payments to the Customer (unless the Customer notifies Goldman Sachs
otherwise in writing):
Institution: Signet Bank
ABA#: 051006778
Attention: United Dominion Realty Trust, Inc.
Account Number: # 5527629892
Location: Richmond, Virginia
6. Payments to Goldman Sachs (unless Goldman Sachs notifies the Customer
otherwise in writing):
Institution: The Chase Manhattan Bank
ABA #: 021-000021
Account: Goldman, Sachs & Co.
Account#: 930-1-011483
Location: One Chase Manhattan Plaza
New York, New York
-7-
