UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) February 17, 1998
--------------------------------
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) File Number) Identification No.)
10 South Sixth Street, 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 5. Other Events
On December 19, 1997, the United Dominion Realty Trust, Inc, (United Dominion)
announced the execution of a definitive merger agreement pursuant to which ASR,
Inc. ("ASR") would be merged with and into a wholly-owned subsidiary of United
Dominion (the "Merger ") which would continue the geographic expansion of the
United Dominion into the Western region of the United States. At December 31,
1997, ASR owned and operated 41 apartment communities containing 7,725 apartment
homes in the Southwest and Pacific Northwest. Pursuant the Merger, each share of
the ASR's common stock will be exchanged for 1.575 shares of United Dominion.
The Merger has been structured as a tax-free transaction and will be treated as
a purchase for accounting purposes. The Merger is subject to ASR's shareholders
and customary regulatory and other conditions. There can be no assurances that
the transaction will be consummated.
United Dominion filed a Form S-4 Amendment No. 1 with the Securities and
Exchange Commission (Registration No. 333-45305) which included the Unaudited
Pro Forma Combined Financial Statements of United Dominion and ASR as if the
Merger had occurred on January 1, 1996.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(c) Exhibits
99.1 Unaudited Combined Pro Forma Financial Statements
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf by the undersigned
hereunto duly authorized.
UNITED DOMINION REALTY TRUST, INC.
Date: February 17, 1998 /s/ James Dolphin
------------------ -----------------------------------
James Dolphin, Executive Vice President
and Chief Financial Officer
Date February 17, 1998 /s/ Jerry A. Davis
------------------ -----------------------------------
Jerry Davis, Vice President
and Corporate Controller
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996
and the Nine Months Ended September 30, 1997
BASIS OF PRESENTATION
The Unaudited Pro Forma Combined Statements of Operations for the year ended
December 31, 1996 and the nine months ended September 30, 1997 are presented as
if the Merger had occurred on January 1, 1996. The Unaudited Pro Forma Combined
Statements of Operations give effect to the Merger under the purchase method of
accounting in accordance with Accounting Standards Board Opinion No. 16, and the
combined entity qualifying as a REIT, distributing at least 95% of its taxable
income, and therefore, incurring no federal income tax liability for the periods
presented. In addition to the Merger, the United Dominion Pro Forma Statements
of Operations give effect to the following acquisitions as if they had occurred
on January 1, 1996: (i) the acquisition of a portfolio of 18 apartment
communities in August 1996, (ii) the acquisition of two apartment communities in
May 1996, (iii) the acquisition of South West Property Trust Inc. (44 apartment
communities) on December 31, 1996 and (iv) the acquisition of 17 apartment
communities during 1997 (See Note (A) to the Unaudited Pro Forma Combined
Statements of Operations). In the opinion of management, all adjustments
necessary to reflect the effects of these transactions have been made. The ASR
Pro Forma Statements of Operations give effect to the following acquisitions as
if they had occurred on January 1, 1996: (i) the acquisition of the Winton
Properties and Winton and Associates on April 30, 1997, (ii) the acquisition of
Pima Mortgage L.P. and Pima Realty Advisors, Inc. on April 30, 1997, (iii) the
acquisition of London Park Apartments in March 1997, (iv) the acquisition of the
remaining 85% interest in La Privada Apartments L.L.C. and the related sale of
ASR's interest in the other five joint ventures on April 30, 1997, (v) the
acquisition of Ivystone/Woodsedge Apartments and The Court Apartments in April
1997, (vi) the acquisition of Gentry Place Apartments, Smith Summit Apartments,
Park on Preston Apartments and On The Boulevard Apartments in September 1997,
and (viii) the acquisition of Arbor Terrace Apartments in October 1997 (see Note
(B) to the Unaudited Pro Forma Combined Statements of Operations).
The Unaudited Pro Forma Combined Statements of Operations are presented for
comparative purposes only and are not necessarily indicative of what the actual
combined results of United Dominion and ASR would have been for the year ended
December 31, 1996 and the nine months ended September 30, 1997 if the Merger and
other acquisitions had occurred on January 1, 1996, nor do they purport to be
indicative of the results of operations in future periods. The Unaudited Pro
Forma Combined Statements of Operations should be read in conjunction with, and
are qualified in their entirety by, the respective historical financial
statements and notes thereto of United Dominion and ASR.
<PAGE>
<TABLE>
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996
(In thousands, except per share data)
<CAPTION>
United
United Disposition Pro Forma Dominion
Dominion ASR of Mortgage Merger Pro Forma
Pro Forma (A) Pro Forma (B) Assets (C) Adjustments Combined
------------- ------------- ---------- ----------- --------
<S> <C>
Income
Rental income................................. $377,580 $44,759 $422,339
Interest and other non-property
income...................................... 2,683 2,683
----- -----
380,263 44,759 425,022
Expenses
Rental expenses:
Utilities................................... 26,744 3,541 30,285
Repairs and maintenance..................... 58,365 5,712 64,077
Real estate taxes........................... 30,706 4,139 34,845
Property management......................... 8,948 1,481 $(372) (E) 10,057
Other rental expenses....................... 39,486 5,769 45,255
Depreciation of real estate owned............. 73,220 9,839 (390) (D) 82,669
Interest...................................... 85,109 13,429 (1,229) (F) 97,309
General and administrative.................... 7,113 3,158 (2,605) (G) 7,666
Other depreciation and amortization........... 1,629 438 (70) (H) 1,997
Impairment loss on real estate
owned....................................... 290 290
--- ---
331,610 47,506 (4,666) 374,450
------- ------ ------- -------
Income from and gains on sales or
redemptions of mortgage assets................ 12,103 $(12,103)
------ ---------
Income before gains on sales of
investments and minority interest of
unitholders in operating partnership.......... 48,653 9,356 (12,103) 4,666 50,572
Gains on sales of investments.................. 4,346 4,346
Minority interest of unitholders in
operating partnership......................... (582) (573) (1,155)
----- ----- -------
Net income..................................... 52,417 8,783 (12,103) 4,666 53,763
Dividends to preferred shareholders............ 9,713 9,713
----- -----
Net income available to common
shareholders.................................. $42,704 $8,783 $(12,103) $4,666 $44,050
======= ====== ========= ====== =======
Net income per common share.................... $0.52 $0.49
===== =====
Distributions declared per common
share......................................... $0.96 $0.96
===== =====
Weighted average number of common
shares outstanding............................ 81,505 7,859 (I) 89,364
====== ========= ======
See accompanying notes.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
For the Nine Months Ended September 30, 1997
(In thousands, except per share data)
United
United ASR Disposition Pro Forma Dominion
Dominion Pro of Mortgage Merger Pro Forma
Pro Forma(A) Forma(B) Assets(C) Adjustments Combined
------------ -------- --------- ----------- --------
Income
Rental income............................... $300,752 $34,417 $335,169
Interest and other non-property
income.................................... 867 464 1,331
--- --- -----
301,619 34,881 336,500
Expenses
Rental expenses:
Utilities................................. 19,429 2,569 21,998
Repairs and maintenance................... 43,139 3,819 46,958
Real estate taxes......................... 24,682 3,389 28,071
Property management....................... 9,679 1,065 $(279) (E) 10,465
Other rental expenses..................... 32,134 4,981 37,115
Depreciation of real estate owned........... 57,487 7,330 (143) (D) 64,674
Interest.................................... 64,212 10,075 (853) (F) 73,434
General and administrative.................. 5,271 2,506 (2,374) (G) 5,403
Acquisition related expense................. 6,215 6,215
Other depreciation and amortization......... 1,339 207 (24) (H) 1,522
Impairment loss on real estate
owned..................................... 1,400 1,400
----- -----
258,772 42,156 (3,673) 297,255
------- ------ ------- -------
Income from and gains on sales or
redemptions of mortgage assets............ 17,265 $(17,265)
------ ---------
Income before gains on sales of
investments and minority interest of
unitholders in operating partnership 42,847 9,990 (17,265) 3,673 39,245
Gains on sales of investments............... 12,682 474 13,156
Minority interest of unitholders in
operating partnership..................... (443) (374) (817)
----- ----- -----
Net income.................................. 55,086 10,090 (17,265) 3,673 51,584
Dividends to preferred shareholders......... 11,692 11,692
------ ------
Net income available to common
shareholders.............................. $43,394 $10,090 $(17,265) $3,673 $39,892
======= ======= ========= ====== =======
Net income per common share................. $0.50 $0.42
===== =====
Distributions declared per common
share..................................... $0.7575 $0.7575
======= =======
Weighted average number of common
shares outstanding........................ 86,602 7,859 (I) 94,461
====== ========= ======
</TABLE>
See accompanying notes.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS
OF OPERATIONS OR THE YEAR ENDED DECEMBER 31, 1996
AND THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(A) The United Dominion Pro Forma Statements of Operations reflect the
historical results of United Dominion adjusted to reflect the operations of:
(i) 18 apartment communities acquired in an August 15, 1996 portfolio
acquisition as previously reported on Form 8-K dated August 15, 1996 filed
with the Securities and Exchange Commission on August 31, 1996 (subsequently
updated to reflect results of operations for the twelve months ended December
31, 1996 on Form 8-K/A filed March 17, 1997), (ii) the acquisition of two
apartment communities in May 1996, as previously reported on Form 8-K dated
October 31, 1996 filed with the Securities and Exchange Commission on November
15, 1996 (subsequently updated to reflect results of operations for the twelve
months ended December 31, 1996 on Form 8-K/A filed on March 17, 1997, (iii)
the acquisition of 44 apartment communities owned by South West Property Trust
Inc. on December 31, 1996, as previously reported on Form 8-K dated December
31, 1996 filed with the Securities and Exchange Commission on January 15,
1997, including Form 8-K/A filed on March 17, 1997, (iv) the acquisition of 12
apartment communities as previously reported on Form 8-K dated July 1, 1997,
including Form 8-K/A filed September 15, 1997 (subsequently amended to reflect
the results of operations for the nine months ended September 30, 1997 on Form
8-K/A filed on December 31, 1997), and (v) the acquisition of five apartment
communities during the third quarter of 1997 as previously reported on Form
8-K dated October 21, 1997 filed with the Securities and Exchange Commission
on November 5, 1997, including Form 8-K/A filed on December 31, 1997, all
incorporated by reference into this Registration Statement, for the periods
not owned by United Dominion.
(B) The ASR Pro Forma Statements of Operations reflect the historical results
of ASR adjusted to reflect the following 1997 transactions. The pro forma
adjustments for these transactions have been reported in the Current Reports
on Form 8-K filed by ASR with the Securities and Exchange Commission: (a) (i)
the acquisition of the Winton Properties and Winton & Associates on April 30,
1997, (ii) the acquisition of Pima Mortgage L.P. and Pima Realty Advisors,
Inc. on April 30, 1997, (iii) the acquisition of London Park Apartments in
March 1997, (iv) the acquisition of the remaining 85% interest in La Privada
Apartments L.L.C. and the related sale of the Company's interests in the other
five joint ventures on April 30, 1997, and (v) the acquisition of
Ivystone/Woodsedge Apartments and The Court Apartments in April 1997, all as
previously reported on Form 8-K filed on May 15, 1997, as amended on Form
8-K/A filed on June 16, 1997; (b) the acquisition of three apartment
communities in September 1997 as previously reported on Form 8-K filed on
September 18, 1997; (c) the acquisition of On The Boulevard Apartments in
September, 1997 and the acquisition of Arbor Terrace Apartments in October,
1997, as previously reported on Form 8-K filed on November 6, 1997, as amended
on Form 8-K/A filed on January 6, 1998. Certain reclassifications have been
made to ASR's pro forma statements of operations to conform to United
Dominion's financial statement presentations. The reclassifications consist
primarily of reporting minority interest consistent with United Dominion's
presentation.
(C) Represents the elimination of the income from and gains on sales or
redemptions of mortgage assets reported by ASR during the periods presented.
Beginning in 1996, ASR implemented a strategic plan to divest its mortgage
asset portfolio and reinvest the net proceeds in the acquisition of apartment
communities. ASR completed the sale of its remaining mortgage asset portfolio
in June 1997, the net proceeds of which were primarily used to acquire
apartment communities. The income from and gains on sales of mortgage assets
is eliminated since these assets will not have a continuing impact on results
of operations for the combined entity.
(D) Represents the net decrease in depreciation of real estate owned as a
result of recording the ASR real estate assets at fair value versus historical
cost and using United Dominion's depreciable lives. Depreciation is computed
on a straight-line basis over the estimated useful lives of the related assets
which have an estimated weighted average useful life of approximately 26.8
years. Buildings have been depreciated over 35 years and other assets over 5,
10 or 20 years depending on the useful life of the related asset.
<PAGE>
<TABLE>
Calculation of the fair value of depreciable real estate assets at September 30,
1997:
<S> <C>
Purchase price (See Pro Forma Combined Balance Sheet Note
(C))................................................................................. $334,616
Less: Purchase price allocated to cash and
cash equivalents..................................................................... 8,284
Purchase price allocated to other assets......................................................... 10,130
Purchase price allocated to land................................................................. 47,290
Purchase price allocated to real estate under
development...................................................................................... 925
Purchase price allocated to real estate held for
disposition...................................................................................... 14,830
------
Pro forma basis of ASR's depreciable real estate held for
investment at fair value............................................................. $253,157
========
Calculation of depreciation of real estate owned for the year ended December 31,
1996 and the nine months ended September 30, 1997 are as follows:
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1996 1997
---- ----
Depreciation expense based upon an estimated
weighted average useful life of
approximately 26.8 years................................... $9,449 $7,187
Less: ASR's pro forma depreciation of real
estate owned............................................... (9,839) (7,330)
------- -------
Pro forma adjustment.......................................... $(390) $(143)
====== ======
(E) Reflects the net estimated reduction of property management costs of $372
and $279 for the year ended December 31, 1996 and the nine months ended
September 30, 1997, respectively, based upon the identified historical costs of
certain items which are anticipated to be eliminated or reduced as a result of
the Merger, as follows:
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1996 1997
---- ----
Net reduction in salary, benefits and other
compensation due to the termination of all
ASR employees prior to the Merger in
accordance with the Merger Agreement............................ $(249) $(187)
Net reduction in travel and entertainment......................... (20) (15)
Net reduction in professional services............................ (34) (25)
Net reduction in other expenses................................... (69) (52)
---- ----
Pro forma adjustment.............................................. $(372) $(279)
====== ======
<PAGE>
(F) Represents the net adjustment to interest expense for the year ended
December 31, 1996 and the nine months ended September 30, 1997, as follows:
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1996 1997
---- ----
To adjust amortization of ASR's deferred financing
costs which would be eliminated in the Merger....................... $(368) $(207)
To reflect the amortization of the premium required
to record ASR's mortgage notes payable at fair
value............................................................... (1,196) (897)
To reflect the additional borrowings of $5,492 (See
Note (G) of the Pro Forma Combined Balance Sheet) at current market
interest rates available to
United Dominion of 6.1%............................................. 335 251
--- ---
Pro forma adjustment................................................. $(1,229) $(853)
======== ======
(G) Represents the net reduction to general and administrative expenses of
$2,605 and $2,374 for the year ended December 31, 1996 and the nine months ended
September 30, 1997, respectively, based upon the identified historical costs of
certain items which are anticipated to be eliminated or reduced as a result of
the Merger, as follows:
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1996 1997
---- ----
Salary, benefits and other compensation due to the termination
of all ASR employees prior to the Merger in accordance
with the Merger Agreement................................................ ($2,155) ($1,954)
Duplicate public company expenses......................................... (64) (28)
Professional services..................................................... (238) (273)
Other expenses............................................................ (148) (119)
----- -----
Pro forma adjustment...................................................... ($2,605) ($2,374)
======== ========
(H) Represents the elimination of the pro forma amortization of goodwill
included in the ASR Pro Forma Statements of Operations which would be eliminated
in the Merger.
(I) The pro forma weighted average shares outstanding for the year ended
December 31, 1996 and the nine months ended September 30, 1997 are computed as
follows:
<CAPTION>
Nine Months
Year Ended Ended
December 31, September 30,
1996 1997
---- ----
ASR's pro forma weighted average common shares and
operating partnership units outstanding................................ 5,961 5,961
Less: units in the operating partnership................................ (971) (971)
----- -----
ASR pro forma weighted average common shares outstanding 4,990 4,990
===== =====
United Dominion pro forma weighted average common shares
outstanding............................................................ 81,505 86,602
Increase in United Dominion common stock at an the
Exchange Ratio of 1.575 for the ASR pro forma weighted
average common shares outstanding**.................................... 7,859 7,859
----- -----
Pro forma combined shares............................................... 89,364 94,461
====== ======
</TABLE>
** Weighted average pro forma adjusted ASR common shares outstanding multiplied
by the Exchange Ratio.
<PAGE>
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
BASIS OF PRESENTATION
The Unaudited Pro Forma Combined Balance Sheet gives effect to the proposed
Merger of United Dominion and ASR as if the Merger had occurred on September 30,
1997. In addition, The Unaudited Pro Forma Combined Balance Sheet gives effect
to the acquisition by United Dominion of two apartment communities during the
fourth quarter of 1997 as previously reported on Form 8-K dated October 21, 1997
filed with the Securities and Exchange Commission on November 5, 1997, including
Form 8-K/A filed on December 31, 1997, and the acquisition by ASR of one
apartment community on October 27, 1997, as previously reported on Form 8-K
dated October 27, 1997 filed with the Securities and Exchange Commission on
November 6, 1997, including Form 8-K/A filed on January 6, 1998. The Unaudited
Pro Forma Combined Balance Sheet gives effect to the Merger under the purchase
method of accounting in accordance with Accounting Standards Board Opinion No.
16. In the opinion of management, all significant adjustments necessary to
reflect the effects of the Merger have been made.
The Unaudited Pro Forma Combined Balance Sheet is presented for comparative
purposes only and is not necessarily indicative of what the actual combined
financial position of United Dominion and ASR would have been at September 30,
1997, nor does it purport to represent the future combined financial position of
United Dominion and ASR. This Unaudited Pro Forma Combined Balance Sheet should
be read in conjunction with, and is qualified in its entirety by, the respective
historical financial statements and notes thereto of United Dominion and ASR.
<PAGE>
<TABLE>
UNITED DOMINION REALTY TRUST, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 1997
(Amounts in thousands, except for share data)
<CAPTION>
United
United ProForma Dominion
Dominion ASR Merger Pro Forma
Pro Forma (A) Pro Forma (B) Adjustments Combined
------------- ------------- ----------- --------
<S> <C>
ASSETS
Real estate owned:
Real estate held for investment......................... $2,236,520 $273,780 $26,667 (D) $2,536,967
Less: accumulated depreciation.......................... (200,538) (11,539) 11,539 (D) (200,538)
--------- -------- ---------- ---------
2,035,982 262,241 38,206 2,336,429
Real estate under development........................... 33,628 925 34,553
Real estate held for disposition........................ 131,576 14,830 (D) 146,406
Cash and cash equivalents................................ 5,383 8,284 13,667
Other assets............................................. 65,639 14,363 (4,233)(E) 75,769
------ ------ ----------- ------
Total assets........................................ $2,272,208 $285,813 $48,803 $2,606,824
========== ======== ======= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes payable-secured.................................... $424,295 $175,118 $8,220 (F) $607,633
Notes payable-unsecured.................................. 691,219 5,492 (G) 696,711
Distributions payable to common shareholders............. 22,261 22,261
Accounts payable and other liabilities................... 62,361 10,047 72,408
------ ------ ------
Total liabilities................................... 1,200,136 185,165 13,712 1,399,013
Minority interest of unitholders in operating
partnership............................................. 14,570 19,527 1,893 (H) 35,990
Shareholders' equity:
Preferred stock, no par value; $25 liquidation
preference, 25,000,000 shares authorized;
4,200,000 shares 9.25% Series A Cumulative
Redeemable............................................ 105,000 105,000
6,000,000 shares 8.60% Series B
Cumulative Redeemable............................... 150,000 150,000
Common stock............................................ 88,162 51 7,808 (I) 96,021
Additional paid-in capital.............................. 893,701 1 91,155 (84,695)(I) 1,000,161
Notes receivable from officer shareholders.............. (9,168) (317) 317 (I) (9,168)
Distributions in excess of earnings..................... (170,193) (109,768) 109,768 (I) (170,193)
--------- --------- ----------- ---------
Total shareholders' equity.............................. 1,057,502 81,121 33,198 1,171,821
--------- ------ ------ ---------
Total liabilities and shareholders' equity.......... $2,272,208 $285,813 $48,803 $2,606,824
========== ======== ======= ==========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
UNITED DOMINION REALTY TRUST, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(A) The Unaudited Pro Forma Balance Sheet reflects the historical results of
United Dominion adjusted to reflect the acquisition of two apartment communities
during the fourth quarter of 1997 as previously reported on Form 8-K dated
October 21, 1997 filed with the Securities and Exchange Commission on November
5, 1997, including Form 8-K/A filed on December 31, 1997.
(B) The Unaudited Pro Forma Balance Sheet reflects the historical results of ASR
adjusted to reflect the acquisition of one apartment community acquired on
October 27, 1997 as previously reported on Form 8-K dated October 27, 1997 filed
by ASR with the Securities and Exchange Commission on November 6, 1997, as
amended on Form 8-K/A filed on January 6, 1998. Certain reclassifications have
been made to ASR's historical balance sheet to conform to United Dominion's
balance sheet presentation. The reclassifications consist primarily of reporting
minority interest consistent with United Dominion's presentation.
(C) Represents adjustments to record the Merger in accordance with the purchase
method of accounting, based upon the assumed purchase price of $334,616,
assuming a market value of $14.00 per share of United Dominion common stock, as
follows:
<S> <C>
Issuance of 7,859 shares of United Dominion common stock based
on the 1.575 exchange ratio in exchange for 4,990 shares of
ASR common stock at an assumed price of
$14.00 per share........................................................................ $110,031
Adjustment to record the fair value of the 971 ASR LP Units
not acquired by United Dominion which are convertible to
1.575 shares at an assumed price of $14.00 per share.................................... 21,420
Assumption of ASR liabilities............................................................. 185,165
Adjustment to record ASR mortgage notes payable at fair
value................................................................................... 8,220
Adjustment to record ASR stock options at fair value
(353 stock options convertible to 1.575 shares of United
Dominion common stock at a fair value of $7.875)........................................ 4,378
Merger costs (see calculation below)...................................................... 5,402
-----
Total adjustment.......................................................................... $334,616
========
The following is an estimate of the fees and other expenses related to the
Merger:
Advisory fees.................................................... $1,100
Legal and accounting fees........................................ 800
Severance and other compensation................................. 3,187
Other............................................................ 315
---
Total adjustment................................................. $5,402
======
<PAGE>
(D) Increase of $53,036 in the net book value of ASR's real estate assets based
upon United Dominion's purchase price and the adjustment to eliminate ASR's pro
forma accumulated depreciation of $11,539, as follows:
Purchase price (See Note (C)).................................................... $334,616
Less basis of ASR's assets assumed:
Real estate held for investment, net of accumulated
depreciation.............................................................. $262,241
Real estate held for development............................................. 925
Cash and cash equivalents.................................................... 8,284
Other assets (See Note (E)).................................................. 10,130
------
281,580
Pro forma adjustment -- step up to record fair value of ASR's
real estate assets............................................................ 53,036
Less: Reclass of real estate held for disposition**.............................. 14,830
------
Pro forma adjustments real estate held for investment............................ $38,206
=======
** United Dominion intends to sell three apartment communities and one office
building included in the ASR portfolio. Consequently, the assumed fair value
less the estimated costs to sell aggregating $14,830 would be reclassified to
real estate held for disposition.
(E) To adjust the pro forma basis of ASR's other assets to eliminate deferred
financing and similar costs in the aggregate amount of $4,233, which would be
eliminated in connection with the Merger.
(F) To record the $8,220 premium required to adjust the ASR fixed-rate mortgage
notes payable to estimated fair value based on interest rates believed to be
available to United Dominion for issuance of mortgage debt with similar terms
and remaining maturities.
(G) Represents the additional borrowings of $5,492 of variable-rate bank debt
incurred by United Dominion to fund Merger costs of $5,402 (See Note (C)) and
registration costs of $90 (See Note (I)).
(H) Adjustment to record the fair value of 971 ASR LP Units convertible to 1.575
shares of United Dominion Common Stock pursuant to the Merger Agreement at an
assumed price of $14.00 per share, as follows:
ASR LP Units............................................................. 971
Exchange Ratio........................................................... 1.575
-----
Adjusted ASR LP Units.................................................... 1,530
Assumed price per Unit................................................... $14.00
------
Value of ASR LP Units.................................................... $21,420
Less: ASR pro forma minority interest.................................... 19,527
------
Pro forma adjustment..................................................... $1,893
======
(I) To adjust ASR's pro forma shareholders' equity to reflect the issuance of
7,859 shares of United Dominion common stock at an assumed price of $14.00 per
share (at an exchange ratio of 1.575), in exchange for all of the 4,990
outstanding shares of ASR's common stock, to record the estimated Registration
Costs in connection with the Merger of $90 and to record the fair value of the
ASR Stock Options of $4,378 (see Note (C)), as follows:
<CAPTION>
Additional Notes Receivable Distributions
Common Paid-In Officer In Excess
Stock Capital Shareholders Of Earnings
----- ------- ------------ -----------
Issuance of United Dominion common stock.............. $7,859 $102,172 $-- $--
Registration costs incurred in connection with the
Merger.............................................. (90)
Record the fair value of the ASR Stock Options (See
Note (C))............................................. 4,378
ASR's pro forma shareholders' equity.................. (51) (191,155) 317 109,768
---- --------- --- -------
Pro forma adjustments................................. $7,808 $(84,695) $317 $109,768
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</TABLE>
