SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 24, 1997
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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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VALUE PROPERTY TRUST AND SUBSIDIARIES
INDEX
Page No.
Item 2. Acquisition or Disposition of Assets................. 2
Item 7. Financial Statements and Exhibits ................... 2-3
Signatures ..................................... 4
Appendix A .......................................... F-1 - F-8
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 24, 1997, Value Property Trust (the "Trust") received net
proceeds of $40.1 million from the sale of three real estate properties to an
unaffiliated third party. The carrying value of these real estate properties was
approximately $28.6 million. The properties were located in California and were
divested based on a number of factors including the price offered, the Trust's
evaluation of the property's potential for future appreciation and the current
return to the Trust. The Trust continues to operate 23 properties in eight
states.
Two of the sold properties were encumbered under the terms of the
indenture relating to the Floating Rate Notes (the "New Indenture"). On July 1,
1997, the Trust used $22.1 million of the net proceeds from the sale of the
encumbered properties to prepay a portion of the Floating Rate Notes, as
required under the terms of the New Indenture.
During the second quarter of fiscal 1997, as previously reported on
Form 8-K filed with the Securities and Exchange Commission on April 1, 1997, the
Trust received net proceeds of $28.2 million from the sale of four real estate
properties to unaffiliated third parties. These sales occurred between February
21, 1997 and March 17, 1997. The carrying value of these real estate properties
was approximately $22.4 million. Three of the properties, located in Maine,
Oregon and Washington, are outside of the geographic regions in which the Trust
is focusing its ongoing operating activities. The fourth property, located in
Pennsylvania, was divested based on a number of factors including the price
offered, the Trust's evaluation of the property's potential for future
appreciation and the then current return to the Trust.
Two of the properties sold during the second quarter of fiscal 1997
were encumbered under the terms of the indenture relating to the Floating Rate
Notes (the "New Indenture"). The Trust used $11.1 million of the net proceeds
from the sale of the encumbered properties to prepay a portion of the Floating
Rate Notes on March 3, 1997 and April 1, 1997, as required under the terms of
the New Indenture.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The Pro Forma Balance Sheet as of March 31, 1997, the Pro Forma
Statement of Operations for the Six Months Ended March 31, 1997 and for the Year
Ended September 30, 1996, which are attached as Appendix A, hereto, have been
prepared to reflect the sale of seven real estate properties and the repayment
of related debt. 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 March 31, 1997 and the Trust's annual report on Form 10-K for the
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fiscal year ended September 30, 1996. The Pro Forma Balance Sheet as of March
31, 1997 was prepared as if the third quarter property sales and the related
loan repayment had occurred on March 31, 1997. In addition, the Pro Forma
Balance Sheet as of March 31, 1997 reflects the loan repayment from a second
quarter property sale which was required on April 1, 1997 under the terms of the
New Indenture. The Pro Forma Statement of Operations for the six months ended
March 31, 1997 and for the year ended September 30, 1996 were prepared as if the
property sales which occurred during the second and third quarters of fiscal
1997 and the related loan repayments had occurred on October 1, 1995. The pro
forma financial information is unaudited and not necessarily indicative of the
results that would have actually occurred had the seven property sales and
related loan repayments been consummated at the beginning of fiscal 1996 nor
does it purport to represent the financial position and results of operations
for future periods.
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
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
/s/Robert T. English
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Robert T. English
Secretary, Treasurer and Chief Financial Officer
(Principal Financial and Accounting Officer)
DATE: July 9, 1997
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
APPENDIX A TO
CURRENT REPORT ON FORM 8-K
ITEMS 2 AND 7
Pro Forma Unaudited Financial Statements as of March 31, 1997 and audited
Financial Statements as of September 30, 1996.
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
FORM 8-K -- Item 2 and 7 (b)
INDEX OF PRO FORMA FINANCIAL STATEMENTS
Page No.
Pro Forma Balance Sheet as of March 31, 1997......................... F-2 - F-3
Pro Forma Statement of Operations for the Six
Months Ended March 31, 1997 ................................... F-4 - F-5
Pro Forma Statement of Operations for the Year
Ended September 30, 1996 ...................................... F-6
Notes and Management's Assumptions to Unaudited
Pro Forma Financial Statements................................. F-7 - F-8
F-1
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
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<CAPTION>
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PRO FORMA CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
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Historical Pro Forma
March 31, Pro Forma Amount
1997 Adjustments (As Adjusted)
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ASSETS
<S> <C> <C> <C>
Assets Held for Sale:
Investment in partnerships.............................. $ 15,906 $ (4,590) A $ 11,316
Real estate owned....................................... 47,076 (23,811) A 23,265
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Total Assets Held for Sale........................ 62,982 (28,401) 34,581
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Assets Held for Investment:
Mortgage loans.......................................... 605 605
Real estate owned....................................... 37,801 37,801
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Total Assets Held for Investment.................. 38,406 38,406
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Total Invested Assets............................. 101,388 (28,401) 72,987
Cash and cash equivalents.................................. 53,526 18,040 A 71,566
Restricted cash............................................ 11,943 (6,847) A 5,096
Interest receivable and other assets....................... 3,908 3,908
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Total Assets...................................... $ 170,765 $ (17,208) $ 153,557
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LIABILITIES
Senior secured notes (due 1999)............................ $ 49,729 $ (28,936) A $ 20,793
Accounts payable and accrued expenses...................... 1,540 1,540
Interest payable........................................... 252 252
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Total Liabilities................................. 51,521 (28,936) 22,585
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F-2
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
<TABLE>
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PRO FORMA CONSOLIDATED BALANCE SHEETS (Unaudited)(continued0
(In Thousands)
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Historical Pro Forma
March 31, Pro Forma Amount
1997 Adjustments (As Adjusted)
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<S> <C> <C> <C>
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 shares
issued and outstanding................................ 11,226 11,226
Additional paid-in capital................................. 88,848 88,848
Accumulated earnings....................................... 19,170 11,728 A 30,898
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Total Shareholders' Equity........................ 119,244 11,728 130,972
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Total Liabilities and
Shareholders' Equity............................ $ 170,765 $ (17,208) $ 153,557
============ ============ ============
See accompanying notes to the consolidated financial statements.
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F-3
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
<TABLE>
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In Thousands Except Per Share Data)
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Six Months
Ended Pro Forma
March 31, Pro Forma Pro Forma Amount
1997 Adjustments * Adjustments ** (As Adjusted)
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<S> <C> <C> <C> <C>
Revenue:
Rental properties:
Rental income.................................$ 11,649 $ (1,918) B $ (2,026) E $ 7,705
Operating expense reimbursements.............. 1,675 (41) B (627) E 1,007
Interest and fee income on mortgage loans......... 42 42
Interest on short-term investments................ 1,114 1,114
Other............................................. 8 8
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Total Revenue................................. 14,488 (1,959) (2,653) 9,876
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Expenses:
Interest.......................................... 2,773 (433) C (903) F 1,437
Rental properties:
Operating..................................... 4,931 (658) B (786) E 3,487
Depreciation and amortization................. 944 (4) B (253) E 687
Other operating expenses.......................... 1,515 1,515
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Total Expenses................................ 10,163 (1,095) (1,942) 7,126
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Income before gain on sale of real estate............ 4,325 (864) (711) 2,750
Gain on sale of real estate.......................... 7,872 (6,077) D 1,795
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Net income...........................................$ 12,197 $ (6,941) $ (711) $ 4,545
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F-4
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
<TABLE>
<CAPTION>
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)(continued)
(In Thousands Except Per Share Data)
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Six Months
Ended Pro Forma
March 31, Pro Forma Pro Forma Amount
1997 Adjustments * Adjustments ** (As Adjusted)
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<S> <C> <C> <C> <C>
Per share:
Income before gain on sale of real estate............$ .39 $ .24
Gain on sale of real estate.......................... .70 .16
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Net income ..........................................$ 1.09 $ .40
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Weighted average number of common
shares outstanding................................ 11,226 11,226
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* Pro Forma adjustments for real estate properties sold during the second
quarter of fiscal 1997.
** Pro Forma adjustments for real estate properties sold during the third
quarter of fiscal 1997.
See accompanying notes to the consolidated financial statements.
</TABLE>
F-5
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
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<CAPTION>
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(In Thousands Except Per Share Data)
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For the
Year Ended Pro Forma
September 30, Pro Forma Pro Forma Amount
1996 Adjustments * Adjustments ** (As Adjusted)
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(Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenue:
Rental properties:
Rental income............................ $ 26,925 $ (4,312) G $ (3,908) J $ 18,705
Operating expense reimbursements......... 3,557 (140) G (1,113) J 2,304
Interest and fee income on mortgage loans.... 2,853 2,853
Interest on short-term investments........... 1,713 1,713
Other........................................ 18 18
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Total Revenue............................ 35,066 (4,452) (5,021) 25,593
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Expenses:
Interest..................................... 10,489 (386) H (765) K 9,338
Rental properties:
Operating................................ 12,084 (1,525) G (1,633) J 8,926
Depreciation and amortization............ 2,347 (67) G (763) J 1,517
Other operating expenses..................... 3,173 3,173
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Total Expenses........................... 28,093 (1,978) (3,161) 22,954
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Net income...................................... $ 6,973 $ (2,474) I $ (1,860) L $ 2,639
============= ============= ============== =============
Net income per share............................ $ .62 $ .24
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Weighted average number of common
shares outstanding........................... 11,226 11,226
============= =============
* Pro Forma adjustments for real estate properties sold during the second
quarter of fiscal 1997.
** Pro Forma adjustments for real estate properties sold during the third
quarter of fiscal 1997.
See accompanying notes to the consolidated financial statements.
</TABLE>
F-6
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
NOTES AND MANAGEMENT'S ASSUMPTIONS TO THE
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1997 AND SEPTEMBER 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying Pro Forma Balance Sheet as of March 31, 1997 is
presented as if the real estate property sales which occurred on June 24, 1997
and the related loan repayment had occurred on March 31, 1997. In addition, the
Pro Forma Balance Sheet as of March 31, 1997 reflects the loan repayment from a
second quarter property sale which was required on April 1, 1997 under the terms
of the New Indenture.
The accompanying Pro Forma Statement of Operations for the six months
ended March 31, 1997 and for the year ended September 30, 1996 are presented as
if the real estate property sales which occurred during the second and third
quarters of fiscal 1997 and the related loan repayments had occurred on October
1, 1995. The Pro Forma Statements of Operations do not assume an increase in
investment income for the periods presented.
These pro forma financial statements should be read in conjunction with
the historical financial statements and notes hereto as of March 31, 1997 and
September 30, 1996 filed as part of the Trust's quarterly report on Form 10-Q
for the quarter ended March 31, 1997 and the Trust's annual report on Form 10-K
for the fiscal year ended September 30, 1996, respectively. In management's
opinion, all adjustments necessary to reflect the effects of these real estate
property sales by the Trust have been made.
The unaudited pro forma financial statements are not necessarily
indicative of the actual financial position as of March 31, 1997 or what the
actual results of operations would have been assuming the real estate property
sales had been consummated on October 1, 1995, 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 the net proceeds of $40.1 million received from the sale of three
real estate properties with a carrying value of approximately $28.4 million as
of March 31, 1997. Reflects the use of $22.1 million of the net proceeds from
the sale of two encumbered properties during the third quarter of fiscal 1997 to
prepay a portion of the Floating Rate Notes, as required under the terms of the
New Indenture. Reflects the use of $6.8 million of the net proceeds from the
sale of an encumbered property during the second quarter of fiscal 1997 to
prepay a portion of the Floating Rate Notes, which was required on April 1,
1997, under the terms of the New Indenture.
B) Reflects the reversal of revenue and expense associated with the operations
of the four properties sold during the second quarter of fiscal 1997.
C) Reflects the reduction in interest expense related to the two encumbered
properties sold during the second quarter of fiscal 1997.
F-7
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
D) Reflects the reversal of the gain on sales of real estate, assuming the
property sales were consummated on October 1, 1995. In conjunction with the
adoption of Fresh Start Reporting on September 30, 1995, all gains and losses
for a period of one year after such adoption are applied against the carrying
value of long lived assets held for investment. Therefore, as a result of the
adoption of Fresh Start Reporting, the pro forma statement of operations does
not report the gain on sale of $6.1 million in net income, from the four real
estate sales during the second quarter of fiscal 1997, but rather applies the
$6.1 million as a reduction of the carrying value of the remaining assets held
for investment.
E) Reflects the reversal of revenue and expense associated with the operations
of the three properties sold during the third quarter of fiscal 1997.
F) Reflects the reduction in interest expense related to the two encumbered
properties sold during the third quarter of fiscal 1997.
G) Reflects the reversal of revenue and expense associated with the operations
of the four sold properties during the second quarter of fiscal 1997.
H) Reflects the reduction in interest expense related to the two encumbered
properties sold during the second quarter of fiscal 1997.
I) Does not reflect the gain on sales of real estate, assuming the property
sales were consummated on October 1, 1995. In conjunction with the adoption of
Fresh Start Reporting on September 30, 1995, all gains and losses for a period
of one year after such adoption are applied against the carrying value of long
lived assets held for investment. Therefore, as a result of the adoption of
Fresh Start Reporting, the pro forma statement of operations does not report the
gain on sale of $6.1 million in net income, from the four real estate sales
during the second quarter of fiscal 1997, but rather applies the $6.1 million as
a reduction of the carrying value of the remaining assets held for investment.
J) Reflects the reversal of revenue and expense associated with the operations
of the four sold properties during the third quarter of fiscal 1997.
K) Reflects the reduction in interest expense related to the two sold encumbered
properties during the third quarter of fiscal 1997.
L) Does not reflect the gain on sales of real estate, assuming the property
sales were consummated on October 1, 1995. In conjunction with the adoption of
Fresh Start Reporting on September 30, 1995, all gains and losses for a period
of one year after such adoption are applied against the carrying value of long
lived assets held for investment. Therefore, as a result of the adoption of
Fresh Start Reporting, the pro forma statement of operations does not report the
gain on sale of $11.7 million in net income, from the three real estate sales
during the third quarter of fiscal 1997, but rather applies the $11.7 million as
a reduction of the carrying value of the remaining assets held for investment.
F-8
