SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 14, 1996
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VALUE PROPERTY TRUST
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(Exact name of registrant as specified in its charter)
Maryland 1-6613 23-1862664
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
120 Albany Street, 8th Floor
New Brunswick, New Jersey 08901-2163
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 296-3080
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<PAGE>
TABLE OF CONTENTS
Page No.
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Item 2. Acquisition or Disposition of Assets 2
Item 5. Other Events 2
Item 7. Financial Statements and Exhibits 3
Signatures 4
Appendix A F1-F8
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
On March 14, 1996, Value Property Trust ( the "Trust") received net cash
proceeds of $44.0 million from the sale of twenty-one commercial mortgage loans
to an unaffiliated third party. The price received for the mortgage loans was
determined through a bid process. Victor Capital Group was retained by the Trust
to act as financial advisor for this transaction. The carrying value of the
loans was $41.7 million.
In the period January 1, 1996 to March 1, 1996, Value Property Trust received
aggregate net cash proceeds of $11.0 million attributable to the repayment of
four commercial loans. These four loans had a carrying value of $8.8 million.
The Trust's remaining mortgage loan holdings are currently less than $1.0
million.
While the Trust's Amended and Restated Indenture dated as of September 29, 1995
(the "Indenture") relating to the Trust's outstanding 11.125 percent Senior
Secured Notes due 2002 (the "Senior Secured Notes") requires the Trust to use
the proceeds from asset sales to make a purchase offer to redeem Senior Secured
Notes, the Trust has determined to redeem 100 percent of its outstanding Senior
Secured Notes. See Item 5 below.
In connection with its emergence from Chapter 11 proceedings in September 1995,
the Trust implemented Fresh Start Reporting as provided in Statement of Position
90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy
Code." As a result, gains and losses arising from asset sales from the
held-for-sale category over the twelve months following emergence from
bankruptcy will not be immediately recognized but will adjust the basis of the
remaining assets held for investment.
Item 5. Other Events
On March 28, 1996, Value Property Trust entered into a financing agreement with
BlackRock Capital Finance L.P. The agreement provides for the issuance of $67.4
million aggregate principal amount of new Floating Rate Senior Secured Notes to
BlackRock Capital. The new Floating Rate Notes will bear interest at 30 day
LIBOR plus 1.375 percent, payable monthly, and will have a stated maturity date
of April 1, 1999. The new Notes are redeemable in whole or in part prior to
maturity without a penalty. The financing is anticipated to be completed within
45 days.
In conjunction with the financing and in accordance with the terms of the
Trust's Indenture, the Trust has notified the Indenture Trustee that it is
exercising the optional redemption provision in the Indenture. The Trust will
utilize approximately $60.7 million of available cash; which includes $55.0
million of cash proceeds from the transactions discussed in Item 2 above, and
$67.4 million of proceeds from the BlackRock financing to redeem all of the
$110.0 million Senior Secured Notes presently outstanding, pay approximately
$4.1 million of accrued interest, and to prepay an existing $14.0 million
mortgage loan.
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<PAGE>
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The Pro Forma Balance Sheet as of December 31, 1995, and the Pro Forma Statement
of Operations for the Three Months Ended December 31, 1995 and the Year Ended
September 30, 1995, which are attached as Appendix A, hereto, have been prepared
to reflect the sale and repayment of the mortgage loan portfolio, the new
financing agreement with BlackRock Capital and the adjustments described in the
accompanying notes. Additionally, the Pro Forma Statement of Operations for the
Year Ended September 30, 1995 is presented as if the Prepackaged Plan of
Reorganization and Fresh Start Reporting which was implemented on September 30,
1995, had occurred as of October 1, 1994. The pro-forma financial information is
based on and should be read in conjunction with the historical financial
statements and the notes thereto filed as part of the Trust's quarterly report
on Form 10-Q for the quarter ended December 31, 1995 and the Trust's annual
report on Form 10-K for the fiscal year ended September 30 , 1995. The Pro Forma
Balance Sheet was prepared as if the mortgage loan sale, mortgage loan
repayments and new financing had occurred on December 31, 1995. The Pro Forma
Statements of Operations were prepared as if the mortgage loan sale, mortgage
loan repayments, new financing, the Prepackaged Plan of Reorganization and Fresh
Start Reporting had occurred on October 1, 1994. The pro forma financial
information is unaudited and not necessarily indicative of the results that
would have actually occurred had the mortgage loan sale, repayments and new
financing been consummated at the beginning of fiscal 1995 or 1994 nor does it
purport to represent the financial position and results of operations for future
periods.
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<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VALUE PROPERTY TRUST
By: /s/ Robert T. English
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Robert T. English
Chief Financial Officer
(Principal Financial Officer)
DATE: May 28, 1996
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<PAGE>
APPENDIX A TO
CURRENT REPORT ON FORM 8-K
ITEMS 2, 5 AND 7
UNAUDITED PROFORMA FINANCIAL STATEMENTS AS OF
DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
VALUE PROPERTY TRUST
<PAGE>
Form 8-K -- Item 2, 5 and 7 (b)
VALUE PROPERTY TRUST
INDEX OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Page No.
--------
Pro Forma Balance Sheet as of December 31, 1995........................ F-2
Pro Forma Statement of Operations for the Three
Months Ended December 31, 1995 .................................. F-4
Pro Forma Statement of Operations for the Year
Ended September 30, 1995 ........................................ F-5
Notes and Managements's Assumptions to Unaudited
Pro Forma Financial Statements................................... F-7
<PAGE>
<TABLE>
<CAPTION>
VALUE PROPERTY TRUST
Pro Forma Balance Sheet
As of December 31, 1995
(Unaudited)
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Pro Forma
Historical Mortgage Pro Forma
December 31, Sale and New Amount
(in thousands) 1995 Repayment Financing (As Adjusted)
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Assets Held for Sale:
Mortgage loans........................................ $ 47,303 $(47,303) A $ $ --
Investments in partnerships .......................... 5,231 5,231
Real estate owned..................................... 42,667 42,667
Notes Receivable...................................... 333 (333) A --
-------- -------- ------- --------
95,534 (47,636) -- 47,898
-------- -------- ------- --------
Assets Held for Investment:
Mortgage loans........................................ 3,023 (2,131) A 892
Investments in partnerships .......................... 20,565 20,565
Real estate owned..................................... 86,606 (4,949) A 81,657
-------- -------- ------- --------
110,194 (7,080) -- 103,114
-------- -------- ------- --------
Total Invested Assets...................................... 205,728 (54,716) 151,012
Cash and cash equivalents ................................. 17,782 (3,916) B 13,866
Restricted cash............................................ 2,362 2,362
Interest receivable and other assets....................... 6,654 (995) A 2,400 B 8,059
-------- -------- ------- --------
$232,526 $(55,711) $(1,516) $175,299
======== ======== ======= ========
(Continued)
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<PAGE>
<CAPTION>
VALUE PROPERTY TRUST
Pro Forma Balance Sheet
As of December 31, 1995
(Unaudited)
(Continued)
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Pro Forma
Historical Mortgage Pro Forma
December 31, Sale and New Amount
(in thousands) 1995 Repayment Financing (As Adjusted)
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<S> <C> <C> <C> <C>
LIABILITIES
Senior secured notes (due 2002)............................ $109,975 $(55,033) A $(54,942) B $ --
Mortgage payable .......................................... 13,953 (13,953) B --
New floating rate notes.................................... -- 67,379 B 67,379
Accounts payable and accrued expenses ..................... 3,960 (678) A 3,282
Interest payable .......................................... 3,127 3,127
-------- -------- ------- --------
131,015 (55,711) (1,516) 73,788
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SHAREHOLDERS' EQUITY
Preferred shares, $1 par value:
3,500,000 shares authorized, none issued.............. -- --
Common shares, $1 par value:
20,000,000 shares authorized,
11,226,310 and 11,226,215 shares
issued and outstanding ............................... 11,226 11,226
Additional paid-in capital ................................ 88,848 88,848
Retained earnings ......................................... 1,437 1,437
-------- -------- ------- --------
Total shareholders' equity............................ 101,511 -- -- 101,511
-------- -------- ------- --------
Total liabilities and shareholders' equity............ $232,526 $(55,711) $ (1,516) $175,299
======== ======== ======== ========
</TABLE>
See accompanying notes.
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<PAGE>
<TABLE>
<CAPTION>
VALUE PROPERTY TRUST
Pro Forma Statement of Operations
For the Three Months Ended December 31, 1995
(Unaudited)
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Three Months Pro Forma Adjustments
Ended Mortgage Sale, Pro Forma
December 31, Repayments and Amount
(in thousands) 1995 New Financing (As Adjusted)
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<S> <C> <C> <C>
Income:
Income on rental properties:
Rental income..................................... $ 6,650 $ $ 6,650
Operating expense reimbursements.................. 754 754
Interest and fee income on mortgage loans ........ 1,679 (1,551) C 128
Interest on short-term investments................ 304 (179) D 125
Other............................................. 8 8
------- ------- -------
9,395 (1,730) 7,665
Expenses:
Interest.............................................. 3,565 (2,185) E 1,380
Expenses of rental properties:
Depreciation and amortization .................... 564 564
Operating ........................................ 3,076 3,076
Administrative ....................................... 753 753
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7,958 (2,185) 5,773
------- ------- -------
Net income................................................. $ 1,437 $ 455 $ 1,892
======= ======= =======
Per share:
Net income................................................. $ .13 $ .04 $ .17
======= ======= =======
Weighted average number of common
shares outstanding.................................... 11,226 11,226 11,226
======= ======= =======
</TABLE>
See accompanying notes.
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<PAGE>
<TABLE>
<CAPTION>
VALUE PROPERTY TRUST
Pro Forma Statement of Operations
For the Year Ended September 30, 1995
(Unaudited)
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The Year Pro Forma Adjustments
Ended Reorganization Mortgage Sale, Pro Forma
September 30, and Fresh Start Repayment and Amount
(in thousands) 1995 Reporting New Financing (As Adjusted)
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income:
Income on rental properties:
Rental income..................................... $ 24,608 $ $ $ 24,608
Operating expense reimbursements.................. 2,286 2,286
Interest and fee income on mortgage loans 9,353 (8,778) L 575
Interest on short-term investments................ 3,086 (2,586) F 500
Other............................................. 131 131
-------- -------- -------- --------
39,464 (2,586) (8,778) 28,100
Expenses:
Interest.............................................. 35,900 (21,780) G (8,602) M 5,518
Expenses of rental properties:
Depreciation and amortization .................... 7,306 (2,390) I 4,916
Operating ........................................ 11,702 11,702
Administrative ....................................... 4,518 4,518
Provision for losses on mortgage loans and
related investments .............................. 3,000 (3,000) H --
-------- -------- -------- --------
62,426 (27,170) (8,602) 26,654
-------- -------- -------- --------
Income (loss) from operations before reorganization
items, and extraordinary item........................ (22,962) 24,584 (176) 1,446
Reorganization items:
Professional fees and other........................... 6,219 (6,219) J --
Interest income....................................... (441) 441 J --
Write down of invested assets to
reorganization value............................. 66,597 (66,597) J --
-------- -------- -------- --------
72,375 (72,375) -- --
-------- -------- -------- --------
(Continued)
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<PAGE>
<CAPTION>
VALUE PROPERTY TRUST
Pro Forma Statement of Operations
For the Year Ended September 30, 1995
(Unaudited)
(Continued)
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The Year Pro Forma Adjustments
Ended Reorganization Mortgage Sale, Pro Forma
September 30, and Fresh Start Repayment and Amount
(in thousands) 1995 Reporting New Financing (As Adjusted)
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income (loss) before extraordinary item................ (95,337) 96,959 (176) 1,446
-------- -------- -------- --------
Extraordinary item-Gain on extinguishment
of debt............................................... 75,304 (75,304) K --
-------- -------- -------- --------
Net income (loss).......................................... $(20,033) $ 21,655 $ (176) $ 1,446
======== ======== ======== ========
Per share:
Net income (loss).......................................... $ * $ 0.13
======== ========
Weighted average number of common
shares outstanding 11,226 11,226
======== ========
</TABLE>
* Per share amounts are not meaningful due to Fresh Start reporting.
See accompanying notes.
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VALUE PROPERTY TRUST
Notes and Management's Assumptions to
Unaudited Pro Forma Financial Statements
December 31, 1995 and September 30, 1995
NOTE 1 - BASIS OF PRESENTATION
The accompanying Pro Forma Balance Sheet as of December 31, 1995 is presented as
if the mortgage loan sale, mortgage loan repayments and new financing had
occurred on December 31, 1995.
The accompanying Pro Forma Statements of Operations is presented as if the
mortgage loan sale, mortgage loans repayments, new financing, Prepackaged Plan
of Reorganization and Fresh Start Reporting had occurred on October 1, 1994.
These pro forma financial statements should be read in conjunction with the
historical financial statements and notes hereto as of December 31, 1995 and
September 30, 1995 filed as part of the Trust's quarterly report on Form 10-Q
for the quarter ended December 31, 1995 and the Trust's annual report on Form
10-K for the fiscal year ended September 30, 1995, respectively. In management's
opinion, all adjustments necessary to reflect the effects of the aforementioned
transactions have been made.
The unaudited pro forma financial statements are not necessarily indicative of
the actual financial position as of December 31, 1995 or what the actual results
of operations would have been assuming the mortgage loan sale, repayments and
new financing had been consummated on October 1, 1994, nor do they represent the
financial position and results of operations for future periods.
NOTE 2 - ADJUSTMENTS TO THE PRO FORMA FINANCIAL STATEMENTS
A) Reflects net cash proceeds of $55.0 million received from the sale and
repayment of 25 commercial mortgage loans, adjusts the carrying value
of Real Estate - Held For Investment by $4.9 million as a purchase
accounting adjustment in accordance with Fresh Start Reporting and
reflects the use of the cash proceeds to retire existing debt in the
amount of $55.0 million.
B) Reflects the new financing with BlackRock Capital in the amount of
$67.4 million, deferred financing costs of $2.4 million and the
repayment of the outstanding 11.125% Senior Secured Notes and Mortgage
Payable in the amount of $54.9 million and $13.9 million, respectfully.
C) Reflects the reversal of interest income related to the mortgage loans
which were sold or repaid early.
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<PAGE>
D) Reflects the adjustment of investment income to reflect an average cash
position of approximately $10.0 million at an average investment rate
of 5.0% for the three months ended December 31, 1995.
E) Reflects the reversal of interest expense of $3.6 million related to
the 11.125% Senior Secured Notes and Mortgage Payable which were repaid
and the addition of interest expense of $1.4 million related to the New
Floating Rate Notes at an average interest rate, which includes
amortization of $0.2 million of deferred financing costs, of 8.20% for
the three months ended December 31, 1995.
F) Reflects the adjustment of investment income to reflect an average
cash position of approximately $10.0 million at an average investment
rate of 5.0% for fiscal 1995.
G) Reflects the reversal of interest expense related to the previously
Outstanding Notes ($34.0 million) which were cancelled as a result of
the Reorganization and the addition of interest expense for the
11.125% Senior Secured Notes ($12.2 million).
H) Reflects the reversal of the $3.0 million provision for losses which
would be eliminated as a result of the adjustment of invested assets
to reorganization value.
I) Reflects the adjustment to depreciation and amortization resulting
from reduced basis in owned real estate as a result of the adjustment
of invested assets to reorganization value.
J) Reflects the reversal of reorganization expenses based upon the
assumption that the Restructuring was completed and no expenses
related to the Restructuring were incurred.
K) Reflects the reversal of the gain on extinguishment of debt based upon
the assumption that the Restructuring was complete on October 1, 1994.
L) Reflects the reversal of interest income related to the mortgage loans
that were sold or repaid early.
M) Reflects the reversal of interest expense of $14.1 million related to
the 11.125% Senior Secured Notes and Mortgage Payable which were
repaid and the addition of interest expense of $5.5 million related to
the New Floating Rate Notes at an average interest rate, which
includes amortization of $0.8 million of deferred financing costs, of
8.20% for fiscal 1995.
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