As Filed With the Securities and Exchange Commission on October 19, 1998
UNITED STATES
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 28, 1998
UNITED DOMINION REALTY TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C>
Virginia 1-10524 54-0857512
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
</TABLE>
10 South Sixth Street, Richmond, Virginia 23219-3802
(Address of Principal Executive Offices - Zip Code)
(804) 780-2691
Registrant's Telephone Number, Including Area Code
Item 2. Acquisition or Disposition of Assets
On May 28, 1998, UDR Western Residential, a Virginia corporation and
wholly-owned subsidiary of United Dominion Realty Trust, Inc. (United
Dominion), acquired Rancho Mirage Apartments from Rancho Properties L.P. for
$38.5 million, including closing costs, all cash. Rancho Mirage Apartments,
located in Phoenix, Arizona, is a 856 home garden style apartment community
located on 19.3 acres and was constructed in two phases in 1984 and 1985.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits
Description Location
------------- --------------
(a) Financial Statements of Businesses Acquired 4 through 8
(b) Pro Forma Financial Information 9 through 21
(c) Exhibits
(23) Consent of Independent Public Accountants 22
L.P. MARTIN & COMPANY LETTERHEAD
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Independent Auditors' Report
To the Owners of
Rancho Mirage Apartments
We have audited the accompanying statement of rental operations (as
defined in Note 2) of Rancho Mirage Apartments for the year ended December 31,
1997. This financial statement is the responsibility of the management of Rancho
Mirage Apartments. Our responsibility is to express an opinion on this 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 statement was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission (for inclusion in a
Current Report on Form 8-K of United Dominion Realty Trust, Inc.), as described
in Note 4, and is not intended to be a complete presentation of Rancho Mirage
Apartments' revenues and expenses.
In our opinion, the statement referred to above presents fairly, in all
material respects, the revenues and operating expenses, as described in Note 2,
of Rancho Mirage Apartments for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
/s/ L. P. Martin & Company, P.C.
L. P. Martin & Company, P.C.
Certified Public Accountants
Richmond, Virginia
July 9, 1998
RANCHO MIRAGE APARTMENTS
STATEMENT OF RENTAL OPERATIONS
YEAR ENDED DECEMBER 31, 1997
REVENUES FROM RENTAL PROPERTY $ 5,208,687
-------------
RENTAL PROPERTY EXPENSES:
Real Estate Taxes 186,565
Repairs and Maintenance 919,197
Utilities 308,745
Property Management Fees 207,927
Other Operating Expenses 516,301
-------------
TOTAL RENTAL PROPERTY EXPENSES 2,138,735
-------------
INCOME FROM RENTAL OPERATIONS $ 3,069,952
=============
The accompanying notes are integral part of this statement.
RANCHO MIRAGE APARTMENTS
NOTES TO THE STATEMENT OF RENTAL OPERATIONS
YEAR ENDED DECEMBER 31, 1997
NOTE 1 - BASIS OF PRESENTATION
Rancho Mirage Apartments (The Property) consists of a 856 unit residential
apartment community located in Phoenix, Arizona, together with the existing
leases. The assets that comprise the Property have been held as an investment of
Rancho Properties, L.P., a Delaware limited partnership (the Owner), throughout
the year ended December 31, 1997. The accompanying financial statement presents
the results of rental operations of the Property as a stand-alone entity.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue and Expense Recognition - The accompanying statement of rental
operations has been prepared using the accrual method of accounting. Certain
expenses such as depreciation, amortization, income taxes, mortgage interest
expense and entity expenses 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.
Repairs and Maintenance - Repairs and maintenance costs are expensed as
incurred, while significant improvements, renovations and replacements are
capitalized.
Advertising - Advertising costs are expensed when incurred.
Estimates - The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
NOTE 3 - PROPERTY MANAGEMENT FEES
Property management services were provided through Heitman Properties Ltd. Fees
for such services were 4% of gross receipts from operations.
NOTE 4 - SALE OF PROPERTY
The property was sold to UDR Western Residential, Inc., a wholly owned
subsidiary of United Dominion Realty Trust, Inc. on May 28, 1998. This statement
of rental operations has been prepared to be included in a Current Report on
Form 8-K to be filed by United Dominion Realty Trust, Inc.
L.P. MARTIN & COMPANY LETTERHEAD
A PROFESSIONAL CORPORATION
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Independent Accountants' Compilation Report
To the Owners of
Rancho Mirage Apartments
We have compiled the accompanying statement of rental operations exclusive
of mortgage interest expense, depreciation, amortization, income taxes and
entity expenses of Rancho Mirage Apartments for the four months ended April 30,
1998, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of the management and owners. We have not
audited or reviewed the accompanying financial statement and, accordingly, do
not express an opinion or any other form of assurance on it.
Management has elected to omit substantially all of the disclosures
required by generally accepted accounting principles. If the omitted disclosures
were included in the financial statement, they might influence the user's
conclusions about the results of operations. Accordingly, this financial
statement is not designed for those who are not informed about such matters.
/s/ L. P. Martin & Company, P.C.
L. P. Martin & Company, P.C.
Certified Public Accountants
Richmond, Virginia
July 9, 1998
RANCHO MIRAGE APARTMENTS
STATEMENT OF RENTAL OPERATIONS
FOUR MONTHS ENDED APRIL 30, 1998
(See Independent Accountants' Compilation Report)
REVENUES FROM RENTAL PROPERTY $ 1,767,596
------------
RENTAL PROPERTY EXPENSES:
Real Estate Taxes 62,189
Repairs and Maintenance 301,377
Utilities 92,617
Property Management Fees 70,113
Other Operating Expenses 167,277
------------
TOTAL RENTAL PROPERTY EXPENSES 693,573
------------
INCOME FROM RENTAL OPERATIONS $ 1,074,023
============
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED CONSOLIDATED PRO FORMA CONDENSED FINANCIAL STATEMENTS
The unaudited Balance Sheet at June 30, 1998 is not presented as all
of the acquisitions reported on were purchased prior to June 30, 1998 and are
reflected in United Dominion's unaudited Balance Sheet at June 30, 1998
included in United Dominion's quarterly report on Form 10-Q for the quarter
then ended.
The following unaudited Consolidated Pro Forma Condensed Statements of
Operations for the twelve months ended December 31, 1997 and the six months
ended June 30, 1998 give effect to the following 1998 acquisitions as if they
occurred on January 1, 1997: (i) the January 9, 1998 portfolio acquisition of
three apartment communities (collectively the Tennessee Portfolio) which
consists of The Trails at Kirby Parkway Apartments and The Trails at Mount
Moriah Apartments (which run as one community under the name The Trails) and
Cinnamon Trails Apartments, (ii) the acquisition of Dogwood Creek Apartments
on February 6, 1998, (iii) the acquisition of 39 apartment communities with
7,550 apartment homes owned by ASR Investment Corporation that were merged
with and into a wholly-owned subsidiary of United Dominion, in a statutory
merger on March 27, 1998, (iv) the April 16, 1998 portfolio acquisition of
eight apartment communities (collectively the San Antonio Portfolio) which
consists of Audubon Apartments, Carmel Apartments, Cimarron Apartments, Grand
Cypress Apartments, Kenton Place Apartments, Peppermill Apartments, The Crest
Apartments and Villages of Thousand Oaks Apartments and (v) the May 28, 1998
acquisition of Rancho Mirage Apartments.
In addition, the unaudited Consolidated Pro Forma Condensed Statements
of Operations for the twelve months ended December 31, 1997 give effect to
the following 1997 acquisitions as if they had occurred on January 1, 1997:
(i) the acquisition of Crosswinds Apartments (formerly Tradewinds
Apartments), Stoney Pointe Apartments (formerly Stoneybrooke Apartments) and
Dominion Trinity Place Apartments, (formerly Trinity Place Apartments) on
February 28, 1997, (ii) the acquisition of Anderson Mill Oaks Apartments
acquired on March 25, 1997, Oak Ridge Apartments (formerly Post Oak Ridge
Apartments) acquired on March 27, 1997, and Green Oaks Apartments (formerly
Pineloch Apartments) and Skyhawk Apartments (formerly Seahawk Apartments)
acquired on May 8, 1997, (iii) the July 1, 1997 portfolio acquisition of five
apartment communities which consists of Lakeside Apartments, Mallards of
Brandywine Apartments, Lotus Landing Apartments, Orange Oaks Apartments and
Forest Creek Apartments, (iv) the acquisition of Greenhouse Patio Apartments
(formerly Pecan Grove Apartments) and Braesridge Apartments acquired on
September 26, 1997, Bammelwood Apartments acquired on October 30, 1997 and
Camino Village Apartments acquired on November 20, 1997 and (v) the
acquisition of Waterside at Ironbridge Apartments on September 29, 1997.
The unaudited Consolidated Pro Forma Condensed Statements of Operations
have been prepared by the management of United Dominion. The unaudited
Consolidated Pro Forma Condensed Statements of Operations are not necessarily
indicative of the results that would have occurred had the acquisitions been
completed on the dates indicated, nor are purported to be indicative of
future results. The unaudited Consolidated Pro Forma Condensed Statements of
Operations should be read in conjunction with the accompanying Notes to the
unaudited Consolidated Pro Forma Condensed Statements of Operations, United
Dominion's audited consolidated financial statements for the twelve months
ended December 31, 1997 (included in United Dominion's Form 10-K for the
twelve months ended December 31, 1997) and its unaudited consolidated
financial statements for the six months ended June 30, 1998 (included in
United Dominion's Form 10-Q for the quarterly period ended June 30, 1998) and
the accompanying notes thereto.
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Acquisition of
Option Properties,
Texas Properties Acquisition of
and Florida Texas Properties
Historical (1) Portfolio (2) Adjustments (3)
---------------- ------------------ -------------------
<S> <C>
Revenues
Rental income $ 386,672 $ 6,690 473
Interest and other non-property income 1,123
------------ ------------- -------------
387,795 6,690 473
Expenses
Rental expenses:
Utilities 24,861 454 36
Repairs and maintenance 54,607 865 53
Real estate taxes 30,961 619 55
Property management 12,203 310 18
Other rental expenses 41,099 821 48
Real estate depreciation 76,688
Interest 79,004
General and administrative 7,075
Acquisition related expenses
Other depreciation and amortization 2,084
Impairment loss on real estate held for disposition 1,400
------------ --------------- -----------
329,982 3,069 210
Income from gains on sales of mortgage assets
Income before gains (losses) on sales of investments and
minority interest of unitholders in operating partnership 57,813 3,621 263
Gains on sales of investments 12,664
Minority interest of unitholders in operating partnership (278)
------------ ---------------- ----------
Income before extraordinary item 70,199 3,621 263
Extraordinary items-early extinguishment of debt (50)
------------ ---------------- ----------
Net income 70,149 3,621 263
Dividends to preferred shareholders (17,345)
------------ ---------------- ----------
Net income available to common shareholders $ 52,804 3,621 263
============ ================ ==========
Basic earnings per common share $ 0.61
============
Diluted earnings per common share 0.60
============
Dividends declared per common share $ 1.01
============
Weighted average number of common
shares-basic 87,145
Weighted average number of common shares
- -diluted 87,339
</TABLE>
<TABLE>
<CAPTION>
Option Properties,
Texas Properties Acquisition
and Florida of Houston
Portfolio Portfolio and
Pro Forma Waterside at
Adjustments Ironbridge (7)
- --------------- -------------------------
<S> <C>
Revenues
Rental income $ $ 8,773
Interest and other non-property income
------- -------------------------
8,773
Expenses
Rental expenses:
Utilities 609
Repairs and maintenance 1,418
Real estate taxes 929
Property management (92) (4) 361
Other rental expenses 1,133
Real estate depreciation 1,059 (5)
Interest 2,801 (6)
General and administrative
Acquisition related expenses
Other depreciation and amortization
Impairment loss on real estate held for disposition
------- -------------------------
3,768 4,450
Income from gains on sales of mortgage assets
Income before gains (losses) on sales of investments and
minority interest of unitholders in operating partnership (3,768) 4,323
Gains on sales of investments
Minority interest of unitholders in operating partnership
------- -------------------------
Income before extraordinary item (3,768) 4,323
Extraordinary items-early extinguishment of debt
------- -------------------------
Net income (3,768) 4,323
Dividends to preferred shareholders
------- -------------------------
Net income available to common shareholders (3,768) 4,323
======= =========================
Basic earnings per common share
Diluted earnings per common share
Dividends declared per common share
Weighted average number of common
shares-basic
Weighted average number of common shares
- -diluted
</TABLE>
<TABLE>
<CAPTION>
Acquisition of
Houston Portfolio
and Waterside at
Ironbridge Pro Forma
Adjustments (8) Adjustments
----------------------- ------------
<S> <C>
Revenues
Rental income $ 1,127 $
Interest and other non-property income
-------------------- ------------
1,127
Expenses
Rental expenses:
Utilities 76
Repairs and maintenance 183
Real estate taxes 118
Property management 46 (103) (9)
Other rental expenses 143
Real estate depreciation 1,437 (10)
Interest 3,304 (11)
General and administrative
Acquisition related expenses
Other depreciation and amortization
Impairment loss on real estate held for disposition
----------------- ---------------
566 4,638
Income from gains on sales of mortgage assets
Income before gains (losses) on sales of investments and
minority interest of unitholders in operating partnership 561 (4,638)
Gains on sales of investments
Minority interest of unitholders in operating partnership (331) (12)
----------------- --------------
Income before extraordinary item 561 (4,969)
Extraordinary items-early extinguishment of debt
----------------- --------------
Net income 561 (4,969)
Dividends to preferred shareholders
----------------- ---------------
Net income available to common shareholders 561 (4,969)
================= ===============
Basic earnings per common share
Diluted earnings per common share
Dividends declared per common share
Weighted average number of common
shares-basic
Weighted average number of common shares
- -diluted
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Before 1998 ASR ASR Pro Forma
Acquisitions Historical (13) Adjustments (14)
-------------------------- ------------------- -------------------
<S> <C>
Revenues
Rental income 403,735 $ 33,034 $ 13,640
Interest and other non-property income 1,123 732 (162)
--------------- -------------- -------------
404,858 33,766 13,478
Expenses
Rental expenses:
Utilities 26,036 2,351 1,061
Repairs and maintenance 57,126 3,126 1,782
Real estate taxes 32,682 2,972 1,520
Property management 12,743 1,320 240
Other rental expenses 43,244 5,308 1,498
Real estate depreciation 79,184 6,335 3,299
Interest 85,109 9,642 3,847
General and administrative 7,075 3,114 (55)
Acquisition related expenses - 6,684
Other depreciation and amortization 2,084 412 24
Impairment loss on real estate held for disposition 1,400
--------------- -------------- -------------
346,683 41,264 13,216
Income from gains on sales of mortgage assets 17,213 52
Income before gains (losses) on sales of investments and
minority interest of unitholders in operating partnership 58,175 9,715 314
Gains on sales of investments 12,664 474
Minority interest of unitholders in operating partnership (609) (355)
--------------- -------------- -------------
Income before extraordinary item 70,230 9,834 314
Extraordinary items-early extinguishment of debt (50)
--------------- -------------- -------------
Net income 70,180 9,834 314
Dividends to preferred shareholders (17,345)
--------------- -------------- --------------
Net income available to common shareholders
52,835 9,834 314
================ ============== ==============
Basic earnings per common share
Diluted earnings per common share
Dividends declared per common share
Weighted average number of common
shares-basic
Weighted average number of common shares
- -diluted
</TABLE>
<TABLE>
<CAPTION>
Pro Forma United Dominion
Disposition of Merger 1998 Pro Forma
Mortgage Assets (15) Adjustments ASR acquisition only
----------------- ----------------- ----------------------
<S> <C>
Revenues
Rental income $ $ $ 450,409
Interest and other non-property income 1,693
---------------- ----------------- --------------
452,102
Expenses
Rental expenses:
Utilities 29,448
Repairs and maintenance 62,034
Real estate taxes 37,174
Property management (486) (16) 13,817
Other rental expenses 50,050
Real estate depreciation (194) (17) 88,624
Interest (1,624) (18) 96,974
General and administrative (2,432) (19) 7,702
Acquisition related expenses 6,684
Other depreciation and amortization (24) (20) 2,496
Impairment loss on real estate held for disposition 1,400
---------------- ----------------- ------------
(4,760) 396,403
Income from gains on sales of mortgage assets (17,265)
Income before gains (losses) on sales of investments and
minority interest of unitholders in operating partnershi (17,265) 4,760 55,699
Gains on sales of investments 13,138
Minority interest of unitholders in operating partnership (964)
---------------- ----------------- ------------
Income before extraordinary item (17,265) 4,760 67,873
Extraordinary items-early extinguishment of debt (50)
---------------- ----------------- ------------
Net income (17,265) 4,760 67,823
Dividends to preferred shareholders (17,345)
------------------- ----------------- ------------
Net income available to common shareholders (17,265) 4,760 50,478
=================== ================= ============
Basic earnings per common share
Diluted earnings per common share
Dividends declared per common share
Weighted average number of common
shares-basic 7,859 (22)
Weighted average number of common shares
- -diluted 9,389 (22)
</TABLE>
<TABLE>
<CAPTION>
Acquisition of
Tennessee Portfolio,
Dogwood Creek Acquisition of
and San Antonio Rancho Mirage
Portfolio (23) Apartments (24)
----------------- -----------------
<S> <C>
Revenues
Rental income $ 21,123 5,209
Interest and other non-property income
----------------- -----------------
21,123 5,209
Expenses
Rental expenses:
Utilities 845 309
Repairs and maintenance 2,411 919
Real estate taxes 1,862 187
Property management 928 208
Other rental expenses 2,821 516
Real estate depreciation
Interest
General and administrative
Acquisition related expenses
Other depreciation and amortization
Impairment loss on real estate held for disposition
--------------- --------------
8,867 2,139
Income from gains on sales of mortgage assets
Income before gains (losses) on sales of investments and
minority interest of unitholders in operating partnership 12,256 3,070
Gains on sales of investments
Minority interest of unitholders in operating partnership
--------------- --------------
Income before extraordinary item 12,256 3,070
Extraordinary items-early extinguishment of debt
--------------- --------------
Net income 12,256 3,070
Dividends to preferred shareholders
-------------------- -------------
Net income available to common shareholders
12,256 3,070
==================== =============
Basic earnings per common share
Diluted earnings per common share
Dividends declared per common share
Weighted average number of common
shares-basic
Weighted average number of common shares
- -diluted
</TABLE>
<TABLE>
<CAPTION>
Tennessee Properties,
Dogwood Creek,
San Antonio Portfolio &
Rancho Mirage United Dominion
Apartments Pro Forma
Pro Forma Adjustments Combined
-------------------------- ----------------
<S> <C>
Revenues
Rental income $ $ 476,741
Interest and other non-property income 1,693
------------------------- ----------------
0 478,434
Expenses
Rental expenses:
Utilities 30,602
Repairs and maintenance 65,364
Real estate taxes 39,223
Property management (277) (26) 14,676
Other rental expenses 53,387
Real estate depreciation 5,271 (27) 93,895
Interest 10,768 (28) 107,742
General and administrative 7,702
Acquisition related expenses 6,684
Other depreciation and amortization 2,496
Impairment loss on real estate held for disposition 1,400
------------------------ ------------------
15,762 423,171
Income from gains on sales of mortgage assets
Income before gains (losses) on sales of investments and
minority interest of unitholders in operating partnership (15,762) 55,263
Gains on sales of investments 13,138
Minority interest of unitholders in operating partnership (941) (29) (1,905)
------------------------ ------------------
Income before extraordinary item (16,703) 66,496
Extraordinary items-early extinguishment of debt (50)
------------------------ ------------------
Net income (16,703) 66,446
Dividends to preferred shareholders (17,345)
------------------------- -----------------
Net income available to common shareholders (16,703) 49,101
========================= =================
Basic earnings per common share 0.51
=================
Diluted earnings per common share 0.50
=================
Dividends declared per common share 1.01
=================
Weighted average number of common
shares-basic 481 (30) 95,485
Weighted average number of common shares
- -diluted 1,635 (30) 98,363
</TABLE>
See accompanying notes
<TABLE>
<CAPTION>
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1998
(In thousands, except per share data)
UNITED
DOMINION
UNITED ASR PRO FORMA PRO FORMA
DOMINION HISTORICAL MERGER COMBINED
HISTORICAL (1) (13) ADJUSTMENTS WITH (ASR)
--------------- ------------- ------------- -------------
<S> <C>
INCOME
Rental income $ 222,275 $ 11,730 $ $ 234,005
Interest and non-property income 2,159 252 2,411
--------------- ------------- ------------- -------------
224,434 11,982 236,416
EXPENSES
Rental expenses:
Utilities 11,945 744 12,689
Repairs and maintenance 28,035 1,043 29,078
Real estate taxes 19,341 1,177 20,518
Property management 7,920 368 (114) (16) 8,174
Other rental expenses 23,031 1,890 24,921
Depreciation of real estate owned 46,476 2,613 (253) (17) 48,836
Interest 48,561 3,452 (474) (18) 51,539
General and administrative 4,618 1,273 (993) (19) 4,898
Other depreciation and amortization 1,541 189 (18) (20) 1,712
--------------- ------------- ------------- -------------
191,468 12,749 (1,852) 202,365
--------------- ------------- ------------- -------------
Income before gains on sales of investments
and minority interest of unitholders in
operating partnership 32,966 (767) 1,852 34,051
Gains on sales of investments 20,461 20,461
Minority interest of unitholders in operating
partnership (1,122) (363) (1,485)
Extraordinary items (116) (7,053) 7,053(21) (116)
--------------- ------------- ------------- -------------
Net income 52,189 (8,183) 8,905 52,911
Dividends to preferred shareholders (11,303) (11,303)
--------------- ------------- ------------- -------------
Net income available to common shareholders $ 40,886 $ (8,183) $ 8,905 $ 41,608
=============== ============= ============= =============
Basic earnings per common share $ 0.42
===============
Diluted earnings per common share $ 0.42
===============
Distributions declared per common share $ 0.0525
===============
Weighted average number of common shares
outstanding-basic 96,244 3,679(22)
Weighted average number of common shares
outstanding-diluted 98,666 4,406(22)
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION OF
TENNESSEE PORTFOLIO,
DOGWOOD CREEK
ACQUISITION OF APARTMENTS,
DOGWOOD CREEK ACQUISITION OF SAN ANTONIO PORTFOLIO,
APARTMENTS & SAN RANCHO MIRAGE & RANCHO MIRAGE
ANTONIO PORTFOLIO APARTMENTS APARTMENTS
(23) (24) ADJUSTMENTS (25)
------------------ --------------- -------------------------
<S> <C>
INCOME
Rental income $ 3,150 $ 1,768 $ 1,095
Interest and non-property income
------------------ --------------- -------------------------
3,150 1,768 1,095
EXPENSES
Rental expenses:
Utilities 161 93 52
Repairs and maintenance 368 301 144
Real estate taxes 371 62 86
Property management 126 70 46
Other rental expenses 504 167 138
Depreciation of real estate owned
Interest
General and administrative
Other depreciation and amortization
------------------ --------------- -------------------------
1,530 693 466
------------------ --------------- -------------------------
Income before gains on sales of investments
and minority interest of unitholders in
operating partnership 1,620 1,075 629
Gains on sales of investments
Minority interest of unitholders in operating
partnership
Extraordinary items
------------------ --------------- -------------------------
Net income 1,620 1,075 629
Dividends to preferred shareholders
------------------ --------------- -------------------------
Net income available to common shareholders $ 1,620 $ 1,075 $ 629
================== =============== =========================
Basic earnings per common share
Diluted earnings per common share
Distributions declared per common share
Weighted average number of common shares
outstanding-basic
Weighted average number of common shares
outstanding-diluted
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION OF
TENNESSEE PORTFOLIO,
DOGWOOD CREEK
APARTMENTS
& SAN ANTONIO
PORTFOLIO
PRO FORMA UNITED DOMINION
ADJUSTMENTS PRO FORMA
---------------------- ------------------
<S> <C>
INCOME
Rental income $ $ 240,018
Interest and non-property income 2,411
---------------------- ------------------
242,429
EXPENSES
Rental expenses:
Utilities 12,995
Repairs and maintenance 29,891
Real estate taxes 21,037
Property management (32)(26) 8,384
Other rental expenses 25,730
Depreciation of real estate owned 1,023 (27) 49,859
Interest 2,322 (28) 53,861
General and administrative 4,898
Other depreciation and amortization 1,712
---------------------- ------------------
3,313 208,367
---------------------- ------------------
Income before gains on sales of investments
and minority interest of unitholders in
operating partnership (3,313) 34,062
Gains on sales of investments 20,461
Minority interest of unitholders in operating
partnership (405)(29) (1,890)
Extraordinary items (116)
---------------------- ------------------
Net income (3,718) 52,517
Dividends to preferred shareholders (11,303)
---------------------- ------------------
Net income available to common shareholders $ (3,718) $ 41,214
====================== ==================
Basic earnings per common share $ 0.41
==================
Diluted earnings per common share $ 0.40
==================
Distributions declared per common share $ 0.5250
==================
Weighted average number of common shares
outstanding-basic 282 (30) 100,205
Weighted average number of common shares
outstanding-diluted 907 (30) 103,979
</TABLE>
SEE ACCOMPANYING NOTES.
UNITED DOMINION REALTY TRUST, INC.
UNAUDITED NOTES TO CONSOLIDATED PRO FORMA CONDENSED
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND
THE TWELVE MONTHS ENDED DECEMBER 31, 1997
Basis of Presentation
The unaudited Consolidated Pro Forma Condensed Statements of Operations on this
Form 8-K reflect the historical results of United Dominion adjusted to reflect
the operations of: (i) 39 apartment communities with 7,550 apartment homes owned
by ASR that were merged with and into a wholly-owned subsidiary of United
Dominion, in a statutory merger on March 27, 1998, (as previously reported on
Form 8-K dated March 27, 1998 and subsequently amended on Form 8-K/A No.1 dated
March 27, 1998 which was filed with the Securities and Exchange Commission on
June 12, 1998), (ii) a portfolio of three apartment communities (collectively
the "Tennessee Portfolio") acquired on January 9, 1998 which consists of The
Trails at Kirby Parkway Apartments and The Trails at Mount Moriah Apartments
(which run as one community under the name The Trails), and Cinnamon Trails
Apartments (as previously reported on Form 8-K dated June 9, 1998 which was
filed with the Securities and Exchange Commission on June 24, 1998), (iii)
Dogwood Creek Apartments acquired on February 6, 1998 (as previously reported on
Form 8-K dated June 9, 1998 which was filed with the Securities and Exchange
Commission on June 24, 1998), (iv) a portfolio of eight apartment communities
(collectively the San Antonio Portfolio) acquired on April 16, 1998 which
consists of Audubon Apartments, Carmel Apartments, Cimarron Apartments, Grand
Cypress Apartments, Kenton Place Apartments, Peppermill Apartments, The Crest
Apartments and Villages of Thousand Oaks Apartments (as previously reported on
Form 8-K dated June 9, 1998 which was filed with the Securities and Exchange
Commission on June 24, 1998), (v) Rancho Mirage Apartments acquired on May 28,
1998, (vi) Crosswinds Apartments (formerly Tradewinds Apartments), Stoney Pointe
Apartments (formerly Stoneybrooke Apartments) and Dominion Trinity Place
Apartments, (formerly Trinity Place Apartments) acquired on February 28, 1997,
(collectively the "Option Properties") (as previously reported on Form 8-K dated
July 1, 1997 and subsequently amended on Form 8-K/A No. 1 dated July 1, 1997
which was filed with the Securities and Exchange Commission on September 15,
1997), (vii) Anderson Mill Oaks Apartments acquired on March 25, 1997, Oak Ridge
Apartments (formerly Post Oak Ridge Apartments) acquired on March 27, 1997,
Green Oaks Apartments (formerly Pineloch Apartments) and Skyhawk Apartments
(formerly Seahawk Apartments) acquired on May 8, 1997, (collectively the "Texas
Properties") (as previously reported on Form 8-K dated July 1, 1997 and
subsequently amended on Form 8-K/A No. 1 dated July 1, 1997 which was filed with
the Securities and Exchange Commission on September 15, 1997), (viii) a
portfolio of five apartment communities containing 934 apartment homes acquired
on July 1, 1997 (the "Florida Portfolio") which consist of Lakeside Apartments,
Mallards of Brandywine Apartments, Lotus Landing Apartments , Orange Oaks
Apartments and Forest Creek Apartments, (as previously reported on Form 8-K
dated July 1, 1997 and subsequently amended on Form 8-K/A No. 1 dated July 1,
1997 which was filed with the Securities and Exchange Commission on September
15, 1997), (ix) a portfolio of four apartment communities (collectively the
"Houston Portfolio") which consist of Greenhouse Patio Apartments (formerly
Pecan Grove Apartments) and Braesridge Apartments acquired on September 26,
1997, Bammelwood Apartments acquired on October 30, 1997 and Camino Village
Apartments acquired on November 20, 1997, (as previously reported on Form 8-K
dated October 21, 1997 and subsequently amended on Form 8-K/A No. 1 dated
October 21, 1997 which was filed with the Securities and Exchange Commission on
December 31, 1997) and (x) Waterside at Ironbridge Apartments acquired on
September 29, 1997, (as previously reported on Form 8-K dated October 21, 1997
and subsequently amended on Form 8-K/A No. 1 dated October 21, 1997 which was
filed with the Securities and Exchange Commission on December 31, 1997). The
above referenced acquisitions are shown as if they had occurred on January 1,
1997.
The unaudited Consolidated Pro Forma Condensed Statements of Operations
assume the Merger with ASR occurred on January 1, 1997. The Merger was
accounted for as a purchase in accordance with Accounting Principles Board
No. 16. Assets and liabilities acquired were recorded at their fair values
at March 27, 1998 and the results of operations are included from the date of
acquisition. In connection with the Merger, United Dominion issued 7,742,839
million shares of United Dominion's common stock at $14 per share for all of
the outstanding common stock of ASR for an aggregate equity value of $108.4
million plus the issuance of 1,529,990 Units in the ASR Operating Partnership
valued at $21.4 million. United Dominion acquired real estate assets of
$313.7 million plus other operating assets of $8.8 million, respectively. In
addition, United Dominion assumed mortgage debt totaling $179.4 million, at
fair value and other liabilities of $13.6 million.
The unaudited Consolidated Pro Forma Condensed Statements of Operations on
this Form 8-K assume the 1998 acquisition of 13 communities containing 4,318
apartment homes for an aggregate purchase price of approximately $182.6
million, including closing costs as referenced in sections (ii) through (v)
of the above paragraphs. These acquisitions are assumed to have been
purchased with bank line borrowings aggregating $47.6 million with a weighted
average interest rate of 6.22%, the assumption of eleven mortgage notes
payable aggregating $81.6 million with a weighted average interest rate of
8.12%, the issuance of 1,154,148 Operating Partnership Units and 481,251
shares of common stock at $14.75 per unit/share for an aggregate value of
$24.2 million and the use of $29.2 million of cash proceeds from the sale of
properties held in escrow. These acquisitions are shown as if the
acquisitions occurred on January 1, 1997.
In addition, the unaudited Consolidated Pro Forma Condensed Statements of
Operations on this Form 8-K assume the 1997 acquisition of 17 communities
containing 5,394 apartment homes for an aggregate purchase price of
approximately $218.5 million, including closing costs as referenced in
sections (vi) through (x) of the above paragraphs. These acquisitions are
assumed to have been purchased with bank line borrowings aggregating $145.9
million with a weighted average interest rate of 6.24%, the assumption of
seven mortgage notes payable aggregating $60.1 million with a weighted
average interest rate of 8.43% and the issuance of 849,498 Operating
Partnership Units at $14.75 per Unit for an aggregate value of $12.5 million.
These acquisitions are shown as if the acquisitions occurred on January 1,
1997.
The unaudited Consolidated Pro Forma Condensed Statements of Operations are
not necessarily indicative of what United Dominion's results would have been
for the twelve months ended December 31, 1997 and the six months ended June
30, 1998 if the acquisitions had been consummated at the beginning of each
period presented, nor do they purport to be indicative of the results of
operations or financial position of United Dominion in future periods.
(1) Represents United Dominion's Historical Statements of Operations
contained in its Quarterly Report on Form 10-Q for the six months ended
June 30, 1998 as filed with the Securities and Exchange Commission on
August 14, 1998 and its Annual Report on Form 10-K for the twelve
months ended December 31, 1997 as filed with the Securities and
Exchange Commission on March 31, 1998.
(2) Represents the actual results of operations of the Option Properties,
the Texas Properties and the Florida Portfolio as previously reported
in the unaudited combined results of operations as appearing on Form
8-K/A No. 1 dated July 1, 1997 filed with the Securities and Exchange
Commission on September 15, 1997.
(3) Represents the operations of Oak Ridge Apartments (for the 26 day
period from March 1, 1997 to March 26, 1997) and Anderson Mill Oaks
Apartments (for the 24 day period from March 1, 1997 to March 24,
1997), which represents the period the properties were not owned by
United Dominion during 1997 (based on the operating statements of the
properties for the stub period January 1, 1997 to February 28, 1997).
Represents operations of Pineloch Apartments and Seahawk Apartments,
(for the 7 day period from May 1, 1997 to May 7, 1997), which
represents the period the properties were not owned by United Dominion
during 1997 (based on the operating statements of the properties for
the stub period January 1, 1997 to April 30, 1997).
(4) Reflects the net reduction in property management fees for the Option
Properties, Texas Properties and Florida Portfolio. United Dominion
internally managed its apartment portfolio at an assumed cost of
approximately 3.4% of rental income (based on 1997 actual information)
at the time of the filing of the Form 8-K/A dated July 1, 1997 filed
with the Securities and Exchange Commission on September 15, 1997.
United Dominion used 96% of the amount reported as rental income in
calculating the property management fee, as approximately 4% (based on
1997 actual information) of the amount reported as rental income is
assumed to be other income which is not subject to management fee.
(5) Reflects the net adjustments to record depreciation expense for the
Option Properties, Texas Properties and Florida Portfolio as if the
transactions had occurred on January 1, 1997. Depreciation is computed
on a straight-line basis over the useful lives of the related assets
based upon the actual purchase price allocations of the properties.
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.
United Dominion's policy is to record a full month of depreciation in
the month of acquisition. The weighted average life of other
improvements is approximately 7.67 years based upon the initial cost of
the properties of $151.1 million. The allocation and useful lives are
as follows (in thousands of dollars):
Twelve Month
Useful Life Depreciation
Purchase Price In Years Expense Adjustments *
-------------- ------------- ------------------
Buildings $ 118,714 35 $ 814
Other Improvements 7,822 7.67 245
Land 24,612 n/a --
----------- -------
Total $ 151,148 $ 1,059
=========== =======
* Includes a pro forma adjustment for 2.88 months (1 month for the
Option Properties, 2 months for Anderson Mill Oaks and Oak Ridge
Apartments, 4 months for Pineloch Apartments and Seahawk
Apartments, and 6 months for the Florida Portfolio) out of 12
months.
(6) Reflects the additional interest expense associated with the
acquisition of the Option Properties, Texas Properties and Florida
Portfolio which consists of the following: (i) variable-rate bank debt
aggregating approximately $129.1 million used to fund the acquisitions
at assumed interest rates equal to market rates in effect at the time
of each acquisition with a weighted average interest rate of 6.26% and
(ii) the assumption of approximately $22.0 million of fixed-rate
mortgage debt with a weighted average interest rate of 8.39% as
outlined below (in thousands of dollars):
<TABLE>
<CAPTION>
Twelve Month
Weighted Average Interest Expense
Acquisition Type of Debt Amount Interest Rate Adjustment
------------- ----------- ------- --------------- --------------
<S> <C>
Option Properties Bank Lines $ 36,774 6.058% $ 360 **
Option Properties Secured Debt 22,063 8.389% 299 **
Texas Properties Bank Lines 56,311 6.291% 998 ***
Florida Portfolio Bank Lines 36,000 6.410% 1,144 ****
---------- ------------
$ 151,148 $ 2,801
=========== ============
</TABLE>
** Includes a pro forma adjustment for 59 out of 365 days.
*** Includes a pro forma adjustment for 103 out of 365 days.
**** Includes a pro forma adjustment for 181 out of 365 days.
(7) Represents the actual results of operations of the Houston
Portfolio and Waterside at Ironbridge Apartments as previously reported
in the unaudited combined results of operations as appearing on Form
8-K/A No. 1 dated October 21, 1997 filed with the Securities and
Exchange Commission on December 31, 1997.
(8) Represents the operations of Greenhouse Patio Apartments and
Braesridge Apartments (for the 26 day period from September 1,
1997 to September 26, 1997) and Waterside at Ironbridge Apartments (for
the 29 day period from September 1, 1997 to September 29, 1997), which
represents the period the properties were not owned by United Dominion
during 1997 (based on the operating statements of the properties for
the stub period January 1, 1997 to August 31, 1997 which consists of
243 days). In addition, this represents the operations of Bammelwood
Apartments (for the 30 day period from October 1, 1997 to October 30,
1997) and Camino Village Apartments (for the 50 day period from October
1, 1997 to November 20, 1997 ) which represents the period the
properties were not owned by United Dominion during 1997. The
unaudited combined statements of rental operations for these properties
was for the stub period from January 1, 1997 to September 30, 1997.
(9) Reflects the net reduction in property management fees for the Houston
Properties and Waterside at Ironbridge Apartments. United
Dominion internally managed its apartment portfolio at an assumed cost
of approximately 3.2% of rental income (based on 1997 actual
information). United Dominion used 96% of the amount reported as rental
income in calculating the property management fee, as approximately 4%
(based on 1997 actual information) of the amount reported as rental
income is assumed to be other income which is not subject to management
fee.
(9) Reflects the net adjustments to record depreciation expense for the
Houston Properties and Waterside at Ironbridge Apartments, as if
the transactions had occurred on January 1, 1997. Depreciation is
computed on a straight-line basis over the useful lives of the related
assets based upon the actual purchase price allocations of the
properties. 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. United Dominion's policy is to record a full month of
depreciation in the month of acquisition. The weighted average life of
other improvements is approximately 7.72 years based upon the initial
cost of the properties of $67.4 million. The allocation and useful
lives are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Twelve Month
Useful Life Depreciation
Purchase Price In Years Expense Adjustments *
-------------- ------------ ----------------------
<S> <C> <C> <C>
Buildings $ 50,828 35 $ 1,027
Other Improvements 4,415 7.72 410
Land 12,120 n/a --
------------ --------
Total $ 67,363 $ 1,437
============ ========
</TABLE>
* Includes a pro forma adjustment for approximately 8.48 months (8 months
for Greenhouse Patio Apartments, Braesridge Apartments and Waterside at
Ironbridge Apartments and 10 months for Camino Village Apartments and 9
months for Bammelwood Apartments) out of 12 months.
(11) Reflects the additional interest expense associated with the
acquisition of the Houston Properties and Waterside at
Ironbridge Apartments which consists of the following: (i)
variable-rate bank debt aggregating approximately $16.8 million used to
fund the acquisitions at assumed interest rates equal to market rates
in effect at the time of each acquisition with a weighted average
interest rate of 6.1% and (ii) the assumption of approximately $38.0
million of fixed-rate mortgage debt with a weighted average interest
rate of 8.43% as outlined below (in thousands of dollars):
<TABLE>
<CAPTION>
Twelve Month
Weighted Average Interest Expense
Acquisition Type of Debt Amount Interest Rate Adjustment
------------ ------------ ---------------- --------------- ----------------
<S> <C>
Houston Properties Bank Lines $ 6,877 6.089% $ 340 **
Houston Properties Secured Debt 32,874 8.685% 2,245 **
Waterside Bank Lines 9,949 6.087% 451 ***
Waterside Secured Debt 5,133 7.000% 268 ***
---------------- -------
$ 54,833 $3,304
================ =======
</TABLE>
** Includes a pro forma adjustment for approximately 297 out of 365 days.
*** Includes a pro forma adjustment for approximately 272 out of 365 days
(12) Reflects the additional minority interest expense associated with the
acquisition of the Houston Properties. In connection with the
acquisition of the Houston Properties, United Dominion issued 849,498
Operating Partnership Units at $14.75 per Unit for an aggregate value
of $12.5 million. Assuming the acquisition of the Houston Properties
on January 1, 1997 the minority interest ownership would have been
10.6339% for the twelve months ended December 31, 1997.
(13) Represents ASR's Historical Consolidated Statement of Operations for
the twelve months ended December 31, 1997 as appearing in Form 8-K/A
No. 1 dated March 27, 1998 filed with the Securities and Exchange
Commission on June 12, 1998 and the actual results of operations of ASR
for the period January 1,1998 through March 27, 1998. Certain
reclassifications have been made to ASR's historical
consolidated statements of operations to conform to United
Dominion's presentation.
(14) Represents the cumulative pro forma adjustments reported by ASR on Form
8-K/A No. 1 dated October 27, 1997 filed with the Securities and
Exchange Commission on January 6, 1998 to reflect the actual results of
operations and the pro forma adjustments for ASR's 1997 acquisitions
which included 22 communities with 4,208 apartment homes at a total
cost of approximately $176.1 million.
(15) Represents the elimination of the income from the gains on sales or
redemptions of mortgage assets reported by ASR during the period ended
December 31, 1997. Beginning in 1996, ASR implemented a strategic plan
to divest its mortgage assets 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 the gains on sales of mortgage assets is eliminated since
these assets will not have a continuing impact on the results of
operations for the combined entity.
(16) Reflects the net estimated reduction of property management costs of
$486 and $114 for the twelve months ended December 31, 1997 and the six
months ended June 30, 1998, respectively, based upon the
identified historical costs of certain items which are anticipated to
be eliminated or reduced as a result of the Merger with ASR, as follows
(in thousands of dollars):
<TABLE>
<CAPTION>
Twelve Months Six Months
Ended Ended
December 31, 1997 June 30, 1998
----------------- -------------
<S> <C>
Net reduction in salary, benefits and other
compensation due to the termination of ASR
employees prior to the Merger in
accordance with the Merger Agreement $ 377 $ 75
Net reduction in travel and entertainment 25 6
Net reduction in professional services 34 15
Net reduction in other expenses 50 18
------ -----
Pro forma adjustment $ 486 $ 114
====== =====
</TABLE>
(17) Represents the net decrease in depreciation of real estate owned as a
result of recording the ASR real estate 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 27.5 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.
Calculation of the fair value of depreciable real estate assets at
March 27, 1998 (in thousands of dollars):
<TABLE>
<S> <C>
Purchase price $ 323,155
Less: Purchase price allocated to cash and cash equivalents (5,934)
Purchase price allocated to other assets (3,521)
Purchase price allocated to land (47,782)
Purchase price allocated to real estate under development (925)
Purchase price allocated to real estate held for
disposition (5,000)
------------
Pro forma basis of ASR's depreciable real estate held for
investment at fair value $ 259,993
============
</TABLE>
Calculation of depreciation of real estate owned for the twelve months
ended December 31,1997 and the three months ended March 31, 1998 (in
thousands of dollars):
<TABLE>
<CAPTION>
Twelve Months Six Months
Ended Ended
December 31, 1997 June 30, 1998
----------------- -------------
<S> <C>
Depreciation expense based upon an estimated weighted
average useful life of approximately 27.5 years $ 9,440 $ 2,360
Less: ASR's pro forma depreciation of real estate owned (9,634)** (2,613)
--------- ---------
Pro forma adjustment $ (194) $ (253)
========= =========
</TABLE>
** Represents ASR's historical depreciation expense for the
twelve months ended December 31, 1997 plus the cumulative pro
forma adjustments to depreciation expense reported by ASR on
Form 8-K/A No. 1 dated October 27, 1997 filed with the
Securities and Exchange Commission on January 6, 1998 to
reflect the actual results of operations and the pro forma
adjustments for ASR's 1997 acquisitions.
(18) Represents the net adjustment to interest expense for the twelve months
ended December 31, 1997 and the six months ended June 30, 1998
associated with the Merger with ASR, as follows (in thousands
of dollars):
<TABLE>
<CAPTION>
Twelve Months Six Months
Ended Ended
December 31, 1997 June 30, 1998
----------------- -------------
<S> <C>
To adjust amortization of ASR's deferred financing
costs which were eliminated in the Merger $ (412) $ (171)
To reflect amortization of the premium required to
record ASR's mortgage notes payable at fair value (1,261) (315)
To reflect additional borrowings of $792 under United
Dominion's bank line borrowings at current
market interest rates available to United Dominion
of 6.14% 49 12
---------- ---------
Pro forma adjustment $ (1,624) $ (474)
========== =========
</TABLE>
(19) Reflects the net estimated reduction of general and administrative
expenses of $2,432 and $993 for the twelve months ended December
31, 1997 and the six months ended June 30, 1998, respectively,
based upon the identified historical costs of certain
items which are anticipated to be eliminated or reduced as a
result of the Merger with ASR, as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Twelve Months Six Months
Ended Ended
December 31, 1997 June 30, 1998
----------------- -------------
<S> <C>
Net reduction in salary, benefits and other
compensation due to the termination of ASR
employees prior to the ASR Merger in
accordance with the ASR Merger Agreement $ 1,909 $ 219
Net reduction in duplicative public company expenses 333 497
Net reduction in professional services 35 7
Net reduction in other expenses 155 270
----------- --------
Pro forma adjustment $ 2,432 $ 993
=========== ========
</TABLE>
(20) Represents the elimination of the amortization of goodwill included in the
ASR historical and pro forma financial statements which were eliminated
in connection with the Merger.
(21) Represents the elimination of extraordinary items included in the ASR
historical statement of operations for the period ended March 27, 1998
which relates to costs directly attributable to the Merger and are
therefore non-recurring.
(22) Represents the adjustment to the weighted average shares outstanding
to reflect the Merger with ASR for the twelve months ended December
31, 1997 and the six months ended June 30, 1998. The ASR pro forma
weighted average common shares outstanding were exchanged into 1.575
shares of United Dominion common stock in accordance with the Merger
Agreement.
(23) Represents the actual results of operations of the Tennessee Portfolio,
Dogwood Creek Apartments and the San Antonio Portfolio as previously
reported in the unaudited combined results of operations as appearing on
Form 8-K/A No. 1 dated June 9, 1998 filed with the Securities and Exchange
Commission on August 13, 1998.
(24) Represents the actual results of operations of Rancho Mirage Apartments
as reported elsewhere herein.
(25) Represents the operations of the following 1998 acquisitions: (i) the
operation of the Tennessee Portfolio (for the 8 day period from January
1, 1998 to January 8, 1998) which represents the period the properties
were not owned by United Dominion during 1998 (based on the operating
statements of the properties for the year ended December 31, 1997),
(ii) the operations of Dogwood Creek Apartments (for the 5 day period
from February 1, 1998 to February 5, 1998), which represents the
period the property was not owned by United Dominion during 1998
(based on the operating statements of the properties for the stub
period January 1, 1998 to January 31, 1998), (iii) the operations of
the San Antonio Portfolio (for the 15 day period from April 1, 1998
to April 15, 1998), which represents period the property was not owned
by. United Dominion during 1998) based on the operating statements of
the properties for the stub period January 1, 1998 to March 31 1998)
and (iv) the operations of Rancho Mirage Apartments (for the 27 day
period from May 1 1998, to May 27, 1998), which represents the period
the property was not owned by United Dominion during 1998 (based on the
operating statements of the properties for the stub period January 1,
1998 to April 30, 1998).
(26) Reflects the net reduction in property management fees for the
Tennessee Portfolio, Dogwood Creek Apartments, the San Antonio
Portfolio and Rancho Mirage Apartments. United Dominion internally
managed its apartment portfolio at an assumed cost of approximately
3.6% of rental income for the six months ended June 30, 1998 and 3.4%
for the twelve months ended December 31, 1997 (based on actual
information during 1997 and 1998). United Dominion used 96% of the
amount reported as rental income in calculating the property management
fee, as approximately 4% (based on 1998 actual information) of the
amount reported as rental income is assumed to be other income which is
not subject to management fee.
(27) Reflects the net adjustments to record depreciation expense for the
Tennessee Portfolio, Dogwood Creek Apartments, the San Antonio
Portfolio and Rancho Mirage Apartments as if the transactions occurred
on January 1, 1997. Depreciation is computed on a straight-line basis
over the useful lives of the related assets based upon the actual
purchase price allocations of the properties. 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. United Dominion's
policy is to record a full month of depreciation in the month of
acquisition. The weighted average life of other improvements is
approximately 7.20 years based upon the initial cost of the properties
of $182.6 million. The allocation and useful lives are as follows (in
thousands of dollars):
<TABLE>
<CAPTION>
Twelve Month Six Month
Useful Life Depreciation Depreciation
Purchase Price In Years Expense Adjustment** Expense Adjustment*
-------------- ------------- ------------------- -------------------
<S> <C>
Buildings $ 144,709 35 $ 3,922 $ 756
Other Improvements 10,190 7.20 1,349 267
Land 27,671 n/a -- --
------------ ---------- -----------
Total $ 182,570 $ 5,271 $ 1,023
============ ========== ===========
</TABLE>
* The six months ended June 30, 1998 includes a pro forma adjustment for 2.2
months (1 month for Dogwood Creek Apartments, 3 months for the San
Antonio Portfolio and 4 months for Rancho Mirage Apartments) out of 12
months.
** The twelve months ended December 31, 1997 includes a pro forma
adjustment for the full year for the Tennessee Properties, the San
Antonio Portfolio and Rancho Mirage Apartments and a pro forma
adjustment for 6 months for Dogwood Creek Apartments as the community
was not in full lease-up for all of 1997.
(28) Reflects the additional interest expense associated with the acquisition
of the Tennessee Portfolio, Dogwood Creek Apartments, the San Antonio
Portfolio and Rancho Mirage Apartments which consists of the following:
(i) variable-rate bank debt aggregating approximately $47.6 million used
to fund the acquisitions at assumed interest rates equal to market rates
in effect at the time of each acquisition with a weighted average interest
rate of 6.22% and (ii) the assumption of approximately $81.6 million of
fixed-rate mortgage debt with a weighted average interest rate of 8.12%
as outlined below (in thousands of dollars):
<TABLE>
<CAPTION>
Twelve Month Six Month
Weighted Average Interest Expense Interest Expense
Acquisition Type of Debt Amount Interest Rate Adjustment * Adjustment
- ------------ ------------ -------- ----------------- ------------------ -----------------
<S> <C>
Tennessee Portfolio Bank Lines $ 26,266 6.289% $ 1,652 $ 36 **
Tennessee Portfolio Secured Debt 28,047 7.649% 2,145 47 **
Dogwood Creek Bank Lines 6,522 6.164% 101 40 ***
Dogwood Creek Secured Debt 10,000 8.000% 500 79 ***
San Antonio Portfolio Bank Lines 5,472 6.107% 333 97 ****
San Antonio Portfolio Secured Debt 43,603 8.444% 3,683 1,069 ****
Rancho Mirage Bank Lines 38,538 6.107% 2,354 954*****
--------- -------- -------
$ 158,448 $ 10,768 $ 2,322
========= ========= ========
</TABLE>
* The twelve months ended December 31, 1997 includes a pro forma
adjustment for the full year for the Tennessee Portfolio, the San
Antonio Portfolio and Rancho Mirage Apartments and a pro forma
adjustment for 6 months for Dogwood Creek Apartments as the community
was not in full lease-up for all of 1997.
** Includes a pro forma adjustment for 8 out of 365 days.
*** Includes a pro forma adjustment for 36 out of 365 days.
**** Includes a pro forma adjustment for 106 out of 365 days.
***** Includes a pro forma adjustment for 148 out of 365 days.
(29) Reflects the additional minority interest expense associated with the
acquisition of Dogwood Creek Apartments and the San Antonio Portfolio. In
connection with the Dogwood Creek acquisition, United Dominion issued
130,416 Operating Partnership Units and in connection with the San
Antonio Portfolio acquisition issued 1,023,732 Operating Partnership
Units. Assuming the acquisition of Dogwood Creek Apartments and the San
Antonio Portfolio on January 1, 1997, the weighted average Operating
Partnership Units outstanding (as a percentage of all common stock and
Operating Partnership Units) was 3.53% and 3.71% for the six months ended
June 30,1998 and the twelve months ended December 31, 1997, respectively.
(30) Represents the adjustment to record the pro forma weighted average shares
of common stock and Operating Partnership Units outstanding as a result
of the acquisition of Dogwood Creek Apartments and the San Antonio
Portfolio. In connection with the Dogwood Creek acquisition, United
Dominion issued 130,416 Operating Partnership Units and in connection
with the San Antonio Portfolio acquisition issued 1,023,732 Operating
Partnership Units and 481,251 shares of common stock. The common stock
and Operating Partnership Units are assumed to have been outstanding
since the beginning of each period presented.
Signatures
Pursuant to the requirements of the Securities and 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: September 19, 1998 /s/ James Dolphin
---------------------------------------
James Dolphin, Senior Vice President
Chief Financial Officer
[L.P. MARTIN & COMPANY LETTERHEAD]
CONSENT OF L.P. MARTIN & COMPANY, P.C., 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. 333-27221, Registration Statement Form S-3 No. 33-64275, Registration
Statement Form S-3 No. 333-11207, Registration Statement Form S-3 No. 333-15133,
Registration Statement Form S-8 No. 33-47296, Registration Statement Form S-8
No. 33-48000, Registration Statement Form S-8 No. 33-58201, Registration
Statement Form S-8 No. 333-32829, Registration Statement Form S-8 No. 333-42691,
Registration Statement Form S-3 No. 333-44463, Registration Statement Form S-3
No. 333-48557, and Registration Statement Form S-3 No. 333-53401, of United
Dominion Realty Trust, Inc. of our report dated July 9, 1998, with respect to
the statement of rental operations of Rancho Mirage Apartments for the year
ended December 31, 1997, included in this Form 8-K dated May 28, 1998.
/s/ L.P. Martin & Company, P.C.
L.P. Martin & Company, P.C.
Certified Public Accountants
Richmond, Virginia
October 15, 1998
