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): March 17, 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.
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Item 2. Acquisition or Disposition of Assets................... 2
Item 7. Financial Statements and Exhibits ..................... 2
Signatures ....................................... 3
Appendix A ............................................ F-1 - F-7
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Value Property Trust (the "Trust") received net cash proceeds of
$28.2 million from the sale of four real estate properties to unaffiliated third
parties, which 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 evalutation of the
property's potential for future appreciation and the current return to the
Trust. The Trust continues to operate 26 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"). The Trust
used $4.3 million and $6.8 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, respectively, 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 December 31, 1996 and the Pro Forma
Statement of Operations for the Three Months Ended December 31, 1996 and the
Year Ended September 30, 1996, which are attached as Appendix A, hereto, have
been prepared to reflect the sale of four 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 statemtents and the
notes thereto filed as part of the Trust's quarterly report on Form 10-Q for the
quarter ended December 31, 1996 and the Trust's annual report on Form 10-K for
the fiscal year ended September 30, 1996. The Pro Forma Balance Sheet was
prepared as if the property sales and loan repayment had occurred on December
31, 1996. The Pro Forma Statements of Operations were prepared as if the
property sales and loan repayment 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 property sales and loan repayment been
consummated at the beginning of fiscal 1997 or 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: April 1, 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
Unaudited Financial Statements as of December 31, 1996 and September 30, 1996.
<PAGE>
VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
FORM 8-K -- Item 2 and 7 (b)
INDEX OF UNAUDITED PRO FORMA FINANCIAL STATEMENTS
Page No.
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Pro Forma Balance Sheet as of December 31, 1996...................... F-2 - F-3
Pro Forma Statement of Operations for the Three
Months Ended December 31, 1996 ................................ F-4
Pro Forma Statement of Operations for the Year
Ended September 30, 1996 ...................................... F-5
Notes and Management's Assumptions to Unaudited
Pro Forma Financial Statements................................. F-6 - F-7
F-1
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<TABLE>
<CAPTION>
VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
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PRO FORMA CONSOLIDATED BALANCE SHEETS (Unaudited)
(In Thousands)
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Historical Pro Forma
December 31, Pro Forma Amount
1996 Adjustments (As Adjusted)
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ASSETS
<S> <C> <C> <C>
Assets Held for Sale:
Investment in partnerships.............................. $ 10,417 $ (4,706) A $ 5,711
Real estate owned....................................... 36,181 (14,222) A 21,959
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Total Assets Held for Sale........................ 46,598 (18,928) 27,670
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Assets Held for Investment:
Mortgage loans.......................................... 651 651
Investment in partnerships.............................. 13,510 (3,438) A 10,072
Real estate owned....................................... 63,325 63,325
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Total Assets Held for Investment.................. 77,486 (3,438) 74,048
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Total Invested Assets............................. 124,084 (22,366) 101,718
Cash and cash equivalents.................................. 34,978 17,007 A 51,985
Restricted cash............................................ 3,440 3,440
Interest receivable and other assets....................... 5,356 (338) A 5,018
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Total Assets...................................... $ 167,858 $ (5,697) $ 162,161
============ ============ ============
LIABILITIES
Senior secured notes (due 1999)............................ $ 54,832 $ (11,162) A $ 43,670
Accounts payable and accrued expenses...................... 1,697 1,697
Interest payable........................................... 308 308
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Total Liabilities................................. 56,837 (11,162) 45,675
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F-2
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<TABLE>
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
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PRO FORMA CONSOLIDATED BALANCE SHEETS (Unaudited)(continued)
(In Thousands)
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Historical Pro Forma
December 31, Pro Forma Amount
1996 Adjustments (As Adjusted)
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SHAREHOLDERS' EQUITY
<S> <C> <C> <C>
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....................................... 10,947 5,465 A 16,412
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Total Shareholders' Equity........................ 111,021 5,465 116,486
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Total Liabilities and
Shareholders' Equity............................ $ 167,858 $ (5,697) $ 162,161
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See accompanying notes to the consolidated financial statements.
</TABLE>
F-3
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<TABLE>
<CAPTION>
VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
(In Thousands Except Per Share Data)
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Three Months
Ended Pro Forma
December 31, Pro Forma Amount
1996 Adjustments (As Adjusted)
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<S> <C> <C> <C>
Revenue:
Rental properties:
Rental income....................................... $ 5,924 $ (1,089) B $ 4,835
Operating expense reimbursements.................... 845 (49) B 796
Interest and fee income on mortgage loans............... 21 21
Interest on short-term investments...................... 519 214 C 733
Other................................................... -- --
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Total Revenue....................................... 7,309 (924) 6,385
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Expenses:
Interest................................................ 1,381 (229) D 1,152
Rental properties:
Operating........................................... 2,484 (348) B 2,136
Depreciation and amortization....................... 529 (3) B 526
Other operating expenses................................ 736 736
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Total Expenses...................................... 5,130 (580) 4,550
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Income before gain on sale of real estate.................. 2,179 (344) 1,835
Gain on sale of real estate................................ 1,795 1,795
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Net income................................................. $ 3,974 $ (344) $ 3,630
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Per share:
Income before gain on sale of real estate.................. $ .19 $ (.03) $ .16
Gain on sale of real estate................................ .16 .16
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Net income ................................................ $ .35 $ (.03) $ .32
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Weighted average number of common
shares outstanding...................................... 11,226 11,226 11,226
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See accompanying notes to the consolidated financial statements.
</TABLE>
F-4
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<TABLE>
<CAPTION>
VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
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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 Amount
1996 Adjustments (As Adjusted)
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(Unaudited) (Unaudited)
<S> <C> <C> <C>
Revenue:
Rental properties:
Rental income....................................... $ 26,925 $ (4,312) E $ 22,613
Operating expense reimbursements.................... 3,557 (140) E 3,417
Interest and fee income on mortgage loans............... 2,853 2,853
Interest on short-term investments...................... 1,713 850 F 2,563
Other................................................... 18 18
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Total Revenue....................................... 35,066 (3,602) 31,464
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Expenses:
Interest................................................ 10,489 (386) G 10,103
Rental properties:
Operating........................................... 12,084 (1,525) E 10,559
Depreciation and amortization....................... 2,347 (67) E 2,280
Other operating expenses................................ 3,173 3,173
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Total Expenses...................................... 28,093 (1,978) 26,115
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Net income................................................. $ 6,973 $ (1,624) H $ 5,349
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Net income per share....................................... $ .62 $ (.14) $ .48
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Weighted average number of common
shares outstanding...................................... 11,226 11,226 11,226
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See accompanying notes to the consolidated financial statements.
</TABLE>
F-5
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VALUE PROPERTY TRUST AND SUBSIDIARIES FORM 8-K
NOTES AND MANAGEMENT'S ASSUMPTIONS TO THE
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND SEPTEMBER 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying Pro Forma Balance Sheet as of December 31, 1996 is
presented as if the real estate property sales occurred on December 31, 1996.
The accompanying Pro Forma Statements of Operations are presented as if
the real estate property sales occurred on October 1, 1995.
These pro forma financial statements should be read in conjunction with
the historical financial statements and notes hereto as of December 31, 1996 and
September 30, 1996 filed as part of the Trust's quarterly report on Form 10-Q
for the quarter ended December 31, 1996 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 December 31, 1996 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 cash proceeds of $28.2 million received from the sale of
four real estate properties with a carring value of $22.4 million. Reflects the
use of $11.2 million of the net proceeds from the sale of two encumbered
properties to prepay a portion of the Floating Rate Notes, as required under the
terms of the New Indenture.
B) Reflects the reversal of revenue and expense associated with the operations
of the four sold properties for the three months ended December 31, 1996.
C) Reflects the adjustment of investment income to reflect the increase in the
average cash position of approximately $17.0 million at an average investment
rate of 5.0% for the three months ended December 31, 1996.
D) Reflects the reduction in interest expense related to the two sold encumbered
properties.
E) Reflects the reversal of revenue and expense associated with the operations
of the four sold properties for the year ended September 30, 1996.
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
DECEMBER 31, 1996 AND SEPTEMBER 30, 1996
NOTE 2 - ADJUSTMENTS TO THE PRO FORMA FINANCIAL STATEMENTS (continued)
F) Reflects the adjustment of investment income to reflect the increase in the
average cash position of approximately $17.0 million at an average investment
rate of 5.0% for the year ended September 30, 1996.
G) Reflects the reduction in interest expense related to the two sold encumbered
properties.
H) 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 $5.5 million in net
income but rather applies the $5.5 million as a reduction of the carrying value
of the remaining assets held for investment.
F-7
