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: March 15, 2000
REII INCORPORATED
(Formerly Bap Acquisition Corp.)
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Exact name of registrant as specified in its charter
Delaware 21-16563-B 51-0373976
___________________________ ____________ _________________
(State or other Jurisdiction (Commission (IRS Employee
of Incorporation) File number) Identification No.)
1051 Fifth Avenue North, Naples, FL 34102
________________________________________________
(Address of Principal Executive Office) (Zip Code)
(941) 261-3396
____________________________
(registrant's Telephone Number
Including area code)
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ITEM 1. N/A
Item 2. Acquisition of Assets
On March 15, 2000, REII Incorporated (the "Company") acquired 100% of the
issued and outstanding common shares of Ricketts Enterprises of Naples, Inc.
("RENI"). RENI was formed on December 7, 1999 under the laws of the state
of Florida by two of REII's stockholders, Garfield Ricketts, a 62%
stockholder and Una Ricketts, a 15% stockholder, for the purpose of
acquiring seven (7) rental real estate properties formerly owned by Garfield
Ricketts. The net assets of RENI were contributed by Garfield Ricketts and
recorded at their fair market value, based on independent appraisals and
current mortgage values as follows:
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Six (6) Residential Rental Properties $ 905,500
One (1) Commercial Rental Property 70,000
Bank Mortgages (588,000)
Notes Payable due to Garfield Ricketts (322,000)
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Net Assets $ 65,500
The business activity relating to the properties will be carried on through
the Company's wholly owned subsidiary, RENI. A description of the
properties and related financing arrangements follow.
Property Mortgage Note
Value Value
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Property Description and Financing Arrangement
1) 5384 24th Avenue SW, Naples, Florida-
Three residential rental units $175,000
Mortgage with Washington Mutual Bank
in the amount of $105,000, payable in
monthly payments of $523 including
principal and interest at the bank's
index plus 2.85% (effective rate of
7.818% at March 15, 2000), due February 2030.
Mortgage will be recasted annually on
March 1st to reflect the new interest rate. $105,000
Mortgage with Garfield Ricketts, a 62%
stockholder, in the amount of $45,000,
payable in monthly payments of $315
including principal and interest at 7.5%,
due February 2030. 45,000
2) 1743 54th Street SW, Naples, Florida -
One residential rental unit 90,000
Mortgage with Washington Mutual Bank
in the amount of $59,500, payable in
monthly payments of $291 including
principal and interest at the bank's
index plus 2.85% (effective rate of
7.818% at March 15, 2000), due February 2030.
Mortgage will be recasted annually on
March 1st to reflect the new interest rate. 59,500
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Property Description and financing Arrangement-continued-
Mortgage Note
Property Value Value
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Mortgage with Garfield Ricketts, a 62%
stockholder, in the amount of $25,500,
payable in monthly payments of $178
including principal and interest at 7.5%,
due February 2030. 25,500
3) 2600 Santa Barbara Blvd., Naples, Florida-
Four residential rental units 193,000
Mortgage with Washington Mutual Bank
in the amount of $135,100, payable in
monthly payments of $673 including
principal and interest at the bank's
index plus 2.85% (effective rate of
7.818% at March 15, 2000), due February 2030.
Mortgage will be recasted annually on
March 1st to reflect the new interest rate. 135,100
2600 Santa Barbara Blvd., Naples, Florida
Mortgage with Garfield Ricketts, a 62%
stockholder, in the amount of $57,900,
payable in monthly payments of $406
including principal and interest at 7.5%,
due February 2030. 57,900
4) 2620 Santa Barbara Blvd., Naples, Florida-
Three residential rental units 166,500
Mortgage with Washington Mutual Bank
in the amount of $105,000, payable in
monthly payments of $523 including
principal and interest at the bank's
index plus 2.85% (effective rate of
7.818% at March 15, 2000), due February
2030. Mortgage will be recasted annually
on March 1st to reflect the new interest rate. 105,000
Mortgage with Garfield Ricketts, a 62%
stockholder, in the amount of $45,000,
payable in monthly payments of $315
including principal and interest at 7.5%,
due February 2030. 45,000
5) 2700 Santa Barbara Blvd., Naples, Florida -
Three residential rental units 165,000
Mortgage with Washington Mutual Bank
in the amount of $105,000, payable in
monthly payments of $523 including
principal and interest at the bank's
index plus 2.85% (effective rate of
7.818% at March 15, 2000), due February
2030. Mortgage will be recasted annually
on March 1st to reflect the new interest rate. 105,000
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Property Description and Financing Arrangement continued-
Mortgage Note
Property Value Value
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Mortgage with Garfield Ricketts, a 62%
stockholder, in the amount of $45,000,
payable in monthly payments of $315
including principal and interest at 7.5%,
due February 2030. 45,000
6) 5055 SW 27th Place, Naples, Florida -
Two residential rental units 116,000
Mortgage with Washington Mutual Bank
in the amount of $78,400, payable in
monthly payments of $390 including
principal and interest at the bank's
index plus 2.85% (effective rate of
7.818% at March 15, 2000) due February
2030. Mortgage will be recasted annually
on March 1st to reflect the new interest rate. 78,400
Mortgage with Garfield Ricketts, a 62%
stockholder, in the amount of $33,600,
payable in monthly payments of $235
including principal and interest at 7.5%,
due February 2030. 33,600
7) 1051 5th Avenue North, Naples, Florida -
One office condominium 70,000
Mortgage with Garfield Ricketts, a 62%
stockholder, in the amount of $70,000,
payable in monthly payments of $489
including principal and interest at 7.5%,
due February 2030. 70,000
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Totals $ 975,500 $ 910,000
The proforma effects of the Company's operations if REII had acquired the
wholly owned subsidiary as of January 1,1997 are as follows:
1999 1998 1997
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Rental Income $ 108,661 $ 100,667 $ 104,280
Comparable Expenses 40,386 43,251 34,715
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Subtotal $ 68,275 $ 57,416 $ 69,565
Non-Comparable Expenses 55,947 58,772 55,714
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Net Income (Loss) $ 12,328 $ (1,356) $ 13,851
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Non-comparable expenses include mortgage interest, depreciation,
corporate expenses, and income taxes. Comparable expenses include
advertising, repairs, maintenance, insurance, real estate taxes, utilities,
sales commissions, and other miscellaneous expenses. Management believes that
future estimated taxable operating results of the properties will
approximate the results as shown above.
The Company plans to acquire 14 additional residential rental
properties from Garfield Ricketts, majority stockholder, when permanent
financing can be arranged. Purchase price upon acquisition will be the
properties' market value, based on independent appraisals. Each property will
be subject to an updated independent appraisal at the time of acquisition.
Market value of the 14 properties is currently approximately $ 1,100,000
based on Multiple Listing Service's market analysis, which tracks sales prices
of comparable properties within the area. Financial data of the 14 properties
consisted of the following for the years ended December 31, 1999, 1998, and
1997:
1999 1998 1997
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Rental Income $ 123,870 $ 117,159 $ 117,475
Comparable Expenses 57,970 55,984 54,640
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Subtotal $ 65,900 $ 61,175 $ 62,835
Non-Comparable Expenses 66,461 69,563 68,275
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Net Loss $ (561) $ (8,388) $ (5,440)
Non-comparable expenses include mortgage interest, depreciation,
corporate expenses, and income taxes. Comparable expenses include advertising,
repairs, maintenance, insurance, real estate taxes, utilities, sales
commissions, and other miscellaneous expenses. Management believes that
future estimated taxable operating results of the properties will
approximate the results as shown above. Results could differ based on the
financing structure used to acquire the properties. The Corporation is not
aware of any material factors relating to the properties that could cause
the above financial information not to be indicative of future operating
results. The Corporation does not intend to pay cash distributions from any
positive cash flow that may be generated from the properties.
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, thereunder duly authorized
Dated March 16, 2000
REII INCORPORATED
(FORMERLY BAP ACQUISITION CORP.)
by /s/ Garfield Ricketts by /s/ Una M. Ricketts
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Garfield Ricketts-President Una M. Ricketts-Secretary/Treasurer
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