UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
AMENDMENT NO. 1
TO
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): May 29, 1998
ASSET INVESTORS CORPORATION
(Exact name of registrant as specified in its charter)
Maryland 1-9360 84-1038736
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
3410 South Galena Street, Suite 210 80231
Denver, Colorado (Zip Code)
(Address of principal executive offices)
(303) 614-9400
(Registrant's telephone number, including area code)
N/A
(Former name or former address,
if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On May 29, 1998, Asset Investors Corporation (the "Company") acquired an adult
manufactured home community located in Fort Myers, Florida from Serendipity
Properties, Inc. This community consists of 338 developed homesites and is 97%
occupied. In addition, on June 2, 1998, the Company acquired an adult
manufactured home community located in Mesa, Arizona from Brentwood West
Partners, LLP. This community consists of 350 developed homesites and is 100%
occupied.
The consideration for the communities was determined through arms-length
negotiations with the sellers. Total consideration for Serendipity Mobile Home
Park was $8,672,000 of cash, and for Brentwood West Mobile Home Park was
$6,948,000 of cash and $7,000,000 advanced under a short-term note from Holliday
Fenoglio Fowler, L.P. The Company intends to replace the short-term note with
permanent financing in the third quarter of 1998.
The Company generally intends to continue to utilize the assets acquired in the
transaction as rental properties which is the same manner as they were employed
prior to the acquisition. Due to the Company's intent to acquire additional
manufactured home communities, the Company's future dividends and the taxable
portion thereof cannot be estimated at this time.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. Certain information
included in this Report, the Company's Annual Report to Stockholders and other
Company filings (collectively "SEC Filings") under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended (as well as
information communicated orally or in writing between the dates of such SEC
Filings) contains or may contain information that is forward looking, including,
without limitation, statements regarding projections of the Company's future
financial performance, cash flow, dividends and anticipated returns on real
estate investments. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that may cause the actual results,
performance or achievements of the Company to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. Such factors include: general economic and business
conditions; interest rate changes; financing and refinancing risks; risks
inherent in owning real estate or debt secured by real estate; future
development rate of homesites; competition; the availability of real estate
assets at prices which meet the Company's investment criteria; the Company's
ability to reduce expense levels, implement rent increases, use leverage and
other risks set forth in the Company's Securities and Exchange Commission
filings. Readers should carefully review the Company's financial statements and
the notes thereto, as well as the risk factors described in the SEC Filings.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Statement of Excess of Revenues Over Specific Operating Expenses of the
Brentwood West Manufactured Home Community for the Year Ended December
31, 1997 (audited) and the Period from January 1, 1998 to March 31,
1998 (unaudited).
Statement of Excess of Revenues Over Specific Operating Expenses of the
Serendipity Manufactured Home Community for the Year Ended December 31,
1997 (audited) and the Period from January 1, 1998 to March 31, 1998
(unaudited).
(b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet of Asset Investors
Corporation and Subsidiaries as of March 31, 1998.
Pro Forma Condensed Consolidated Statement of Income of Asset Investors
Corporation and Subsidiaries for the Three Months Ended March 31, 1998.
Pro Forma Condensed Consolidated Statement of Income of Asset Investors
Corporation and Subsidiaries for the Year Ended December 31, 1997.
(c) Exhibits
Exhibit No. Description
2.5 Agreement of Sale dated as of April 13, 1998, between
Community Acquisition Joint Venture and Serendipity
Properties, Inc., (incorporated herein by reference
to Exhibit 2.5 to the Registrant's Current Report on
Form 8-K dated May 29, 1998, Commission File No.
1-22262, filed on June 12, 1998).
2.5(a) Assignment of Agreement of Sale dated as of May 20,
1998, between Community Acquisition Joint Venture and
Asset Investors Operating Partnership, L.P.
(incorporated herein by reference to Exhibit 2.5(a)
to the Registrant's Current Report on Form 8-K dated
May 29, 1998, Commission File No. 1-22262, filed on
June 12, 1998).
2.6 Purchase Agreement with Escrow Instructions, as
amended, dated as of April 14, 1998 between Brentwood
West Partners, LLP and Parkbridge Capital Group, Inc.
(incorporated herein by reference to Exhibit 2.6 to
the Registrant's Current Report on Form 8-K dated May
29, 1998, Commission File No. 1-22262, filed on June
12, 1998).
2.6(a) Conditional Assignment of Contract dated as of April
17, 1998, between Parkbridge Capital Group, Inc. and
Community Acquisition Development Corporation.
(incorporated herein by reference to Exhibit 2.6(a)
to the Registrant's Current Report on Form 8-K dated
May 29, 1998, Commission File No. 1-22262, filed on
June 12, 1998).
<PAGE>
2.6(b) Assignment of Agreement of Sale dated as of June 1,
1998, between Community Acquisition Joint Venture and
Asset Investors Operating Partnership, L.P.
(incorporated herein by reference to Exhibit 2.6(b)
to the Registrant's Current Report on Form 8-K dated
May 29, 1998, Commission File No. 1-22262, filed on
June 12, 1998).
23 Consent of Independent Auditors - Ernst & Young LLP
SIGNATURE
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 hereunto duly authorized.
ASSET INVESTORS CORPORATION
Date: July 28, 1998
By: /s/David M. Becker
-----------------------------
David M. Becker
Chief Financial Officer
<PAGE>
Item 7(a).
Statement of Excess of Revenues Over Specific Operating Expenses
The Brentwood West Manufactured Home Community
Year ended December 31, 1997
<PAGE>
The Brentwood West Manufactured Home Community
Statement of Excess of Revenues
Over Specific Operating Expenses
Year ended December 31, 1997
Contents
Report of Independent Auditors.................................................1
Statement of Excess of Revenues Over Specific Operating Expenses...............2
Notes to Statement of Excess of Revenues Over Specific Operating Expenses......3
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Asset Investors Corporation
We have audited the accompanying statement of excess of revenues over specific
operating expenses of The Brentwood West Manufactured Home Community (Note 1)
for the year ended December 31, 1997. This statement is the responsibility of
the management of The Brentwood West Manufactured Home Community. 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As described in Note 1, the statement of excess of revenues over specific
operating expenses excludes certain expenses that would not be comparable to the
operations of the community after acquisition by Asset Investors Corporation.
The accompanying statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the community's revenues and expenses.
In our opinion, the statement referred to above presents fairly, in all material
respects, the excess of revenues over specific operating expenses (exclusive of
expenses described in Note 1) of The Brentwood West Manufactured Home Community
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
June 9, 1998
1
<PAGE>
The Brentwood West Manufactured Home Community
Statement of Excess of Revenues
Over Specific Operating Expenses
<TABLE>
<CAPTION>
Period from
January 1,
Year ended 1998 to
December 31, March 31,
1997 1998
----------------------------------------
(Unaudited)
Revenues
<S> <C> <C>
Rental $ 1,086,881 $ 288,933
Other 13,964 2,327
----------------------------------------
1,100,845 291,260
Specific operating expenses
Property operations and maintenance 211,998 55,191
Real estate taxes 42,955 10,723
----------------------------------------
254,953 65,914
----------------------------------------
Excess of revenues over specific operating expenses $ 845,892 $ 225,346
========================================
</TABLE>
See accompanying notes. 2
<PAGE>
The Brentwood West Manufactured Home Community
Notes to Statement of Excess of Revenues
Over specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
The Brentwood West Manufactured Home Community (the Property) is a manufactured
home community located in Mesa, Arizona which contains 350 lots. In June 1998,
the Property was sold to Asset Investors Operating Partnership L.P.
Basis of Accounting
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties. Accordingly, the statement
excludes certain historical expenses not comparable to the operations of the
property after acquisition, such as professional fees, management fees,
depreciation, amortization and interest.
Revenue Recognition
Rental income attributable to manufactured home lots is recorded when due from
residents.
Use of Estimates
The preparation of the statement of excess of revenues over specific operating
expenses in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in
the statement and accompanying notes. Actual results could differ from those
estimates.
3
<PAGE>
Statement of Excess of Revenues Over Specific Operating Expenses
The Serendipity Manufactured Home Community
Year ended December 31, 1997
<PAGE>
The Serendipity Manufactured Home Community
Statement of Excess of Revenues
Over Specific Operating Expenses
Year ended December 31, 1997 (audited) and
the period from January 1, 1998 to March 31, 1998
(unaudited)
Contents
Report of Independent Auditors.................................................1
Statement of Excess of Revenues Over Specific Operating Expenses...............2
Notes to Statement of Excess of Revenues Over Specific Operating Expenses......3
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Asset Investors Corporation
We have audited the accompanying statement of excess of revenues over specific
operating expenses of The Serendipity Manufactured Home Community (Note 1) for
the year ended December 31, 1997. This statement is the responsibility of the
management of The Serendipity Manufactured Home Community. 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 statement of excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the statement. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
As described in Note 1, the statement of excess of revenues over specific
operating expenses excludes certain expenses that would not be comparable to the
operations of the community after acquisition by Asset Investors Corporation.
The accompanying statement was prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission and is not
intended to be a complete presentation of the community's revenues and expenses.
In our opinion, the statement referred to above presents fairly, in all material
respects, the excess of revenues over specific operating expenses (exclusive of
expenses described in Note 1) of The Serendipity Manufactured Home Community for
the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
June 9, 1998
1
<PAGE>
The Serendipity Manufactured Home Community
Statement of Excess of Revenues
Over Specific Operating Expenses
<TABLE>
<CAPTION>
Period from
January 1,
Year Ended 1998
December 31, to March 31,
1997 1998
-------------------------------------------
(Unaudited)
Revenues
<S> <C> <C>
Rental $ 1,001,491 $ 262,186
Other 37,957 21,479
-------------------------------------------
1,039,448 283,665
Specific operating expenses
Property operations and maintenance 287,712 79,095
Real estate taxes 92,803 26,911
-------------------------------------------
380,515 106,006
-------------------------------------------
Excess of revenues over specific operating expenses $ 658,933 $ 177,659
===========================================
</TABLE>
See accompanying notes. 2
<PAGE>
The Serendipity Manufactured Home Community
Notes to Statement of Excess of Revenues
Over specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
The Serendipity Manufactured Home Community (the Property) is a manufactured
home community located in North Fort Myers, Florida which contains 338 lots. In
May 1998, the Property was sold to Asset Investors Operating Partnership L.P.
Basis of Accounting
The accompanying statement of excess of revenues over specific operating
expenses is presented on the accrual basis. This statement has been prepared in
accordance with the applicable rules and regulations of the Securities and
Exchange Commission for real estate properties. Accordingly, the statement
excludes certain historical expenses not comparable to the operations of the
property after acquisition, such as professional fees, depreciation,
amortization and interest.
Revenue Recognition
Rental income attributable to manufactured home lots is recorded when due from
residents.
Use of Estimates
The preparation of the statement of excess of revenues over specific operating
expenses in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts reported in
the statement and accompanying notes. Actual results could differ from those
estimates.
3
<PAGE>
Item 7(b).
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Reported Adjustments Results
-------- ----------- -------
ASSETS
<S> <C> <C> <C>
Real estate, net $ 45,434 $ 22,620 (a) $ 68,054
Investments in participating mortgages 15,930 -- 15,930
Real estate joint ventures 9,690 -- 9,690
Cash and cash equivalents 19,417 (15,620) (a) 3,797
Investment in CAX 21,133 -- 21,133
Other assets, net 9,751 -- 9,751
---------- -------- ----------
Total Assets $ 121,355 $ 7,000 $ 128,355
========== ======== ==========
LIABILITIES
Secured notes payable $ 10,567 $ -- $ 10,567
Short-term financing -- 7,000 (a) 7,000
Accounts payable and accrued liabilities 2,051 -- 2,051
---------- -------- ----------
12,618 7,000 19,618
---------- -------- ----------
MINORITY INTEREST IN OPERATING PARTNERSHIP 24,724 -- 24,724
STOCKHOLDERS' EQUITY
Common Stock 51 -- 51
Additional paid-in capital 231,237 -- 231,237
Dividends in excess of accumulated earnings (147,275) -- (147,275)
---------- -------- ----------
84,013 -- 84,013
---------- -------- ----------
Total Liabilities and Stockholders' Equity $ 121,355 $ 7,000 $ 128,355
========== ======== ==========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
RENTAL PROPERTY OPERATIONS Reported Adjustments Results
-------------------------------------------------------
<S> <C> <C> <C>
Rental and other property revenues $ 1,744 $ 672 (b) $ 2,416
Interest on participating mortgages 393 -- 393
Equity in earnings of real estate joint ventures 311 -- 311
Property operating expenses (759) (210) (b) (969)
Owned property management expenses (34) (2) (b) (36)
--------- --------- ---------
Income from property operations before depreciation 1,655 460 2,115
Depreciation (393) (238) (f) (631)
--------- --------- ---------
Income from rental property operations 1,262 222 1,484
--------- --------- ---------
SERVICE OPERATIONS
Property management fees and other income 77 (11) (c) 66
Property management costs and other expenses (24) 2 (c) (22)
Amortization of management contracts (827) -- (827)
--------- --------- ---------
Loss from service operations (774) (9) (783)
--------- --------- ---------
OTHER ACTIVITIES
Non-agency MBS bonds revenues 50 -- 50
Equity in earnings of CAX 268 -- 268
--------- --------- ---------
Income from other activities 318 -- 318
--------- --------- ---------
General and administrative expenses (322) -- (322)
Interest and other income 333 (219) (e) 114
Interest expense (208) (123) (g) (331)
--------- --------- ---------
INCOME BEFORE MINORITY INTEREST 609 (129) 480
Minority interest in Operating Partnership (127) 20 (h) (107)
--------- --------- ---------
NET INCOME $ 482 $ (109) $ 373
========= ========= =========
BASIC EARNINGS PER SHARE $ 0.09 $ (0.02) $ 0.07
========= ======== ========
DILUTED EARNINGS PER SHARE $ 0.09 $ (0.02) $ 0.07
========= ======== ========
Weighted-Average Common Shares Outstanding 5,109 5,109 5,109
Weighted-Average Common Shares And Common Share
Equivalents Outstanding 5,143 5,143 5,143
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
RENTAL PROPERTY OPERATIONS Reported Adjustments Results
-------- ----------- -------
<S> <C> <C> <C>
Rental and other property revenues $ 3,104 $ 2,722 (b) $ 5,826
Equity in earnings of real estate joint ventures 466 -- 466
Property operating expenses (1,311) (852) (b) (2,163)
Owned property management expenses (87) (13) (b) (100)
--------- --------- ---------
Income from property operations before depreciation 2,172 1,857 4,029
Depreciation (693) (1,011) (f) (1,704)
--------- --------- ---------
Income from rental property operations 1,479 846 2,325
--------- --------- ---------
SERVICE OPERATIONS
Property management fees and other income 128 (48) (c) 80
Property management costs and other expenses (59) 9 (c) (50)
Amortization of management contracts (744) (137) (d) (881)
--------- --------- ---------
Loss from service operations (675) (176) (851)
--------- --------- ---------
OTHER ACTIVITIES
Non-agency MBS bonds revenues 2,966 -- 2,966
Equity in earnings of CAX 3,663 -- 3,663
Management fees to former manager (570) -- (570)
--------- --------- ---------
Income from other activities 6,059 -- 6,059
--------- --------- ---------
General and administrative expenses (1,042) -- (1,042)
Interest and other income 1,808 (928) (e) 880
Interest expense (368) (490) (g) (858)
Costs incurred to acquire management contract (6,553) -- (6,553)
--------- --------- ---------
INCOME (LOSS) BEFORE GAIN ON RESTRUCTURING OF BONDS AND
MINORITY INTEREST 708 (748) (40)
Gain on restructuring of bonds 6,484 -- 6,484
--------- --------- ---------
INCOME BEFORE MINORITY INTEREST 7,192 (748) 6,444
Minority interest in Operating Partnership 62 (104) (h) (42)
--------- --------- ---------
NET INCOME $ 7,254 $ (852) $ 6,402
========= ========= =========
BASIC EARNINGS PER SHARE $ 1.44 $ (0.17) $ 1.27
========= ======== ========
DILUTED EARNINGS PER SHARE $ 1.43 $ (0.17) $ 1.26
========= ======== ========
Weighted-Average Common Shares Outstanding 5,022 5,022 5,022
Weighted-Average Common Shares And Common Share
Equivalents Outstanding 5,061 5,061 5,061
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The pro forma condensed consolidated balance sheet of the Company as of
March 31, 1998, is presented as if the May 29, 1998 and June 2, 1998,
acquisition of two manufactured home communities had occurred on March 31, 1998.
The pro forma condensed consolidated statements of income are presented assuming
all 1998 acquisitions of manufactured home communities had been completed: (i)
on January 1, 1998 for the statement of income for the three months ended March
31, 1998; and (ii) on January 1, 1997 for the statement of income for the year
ended December 31, 1997. In management's opinion, all adjustments necessary to
reflect the acquisitions have been made. The unaudited pro forma condensed
consolidated financial statements should be read in conjunction with the
Company's Annual Report on Form 10-K for the year ended December 31, 1997, the
Quarterly Report on Form 10-Q for the quarterly period ended March 31, 1998, and
the Current Report on Form 8-K dated February 27, 1998.
The unaudited pro forma condensed consolidated financial statements are
not necessarily indicative of what the actual financial position or results of
operations would have been assuming the transactions had been completed as of
the dates indicated, nor does it purport to represent the future financial
position or results of operations of the Company.
(a) Reflects the purchase of two manufactured housing communities for
$22,620,000 consisting of $15,620,000 of cash and $7,000,000 of short-term
financing.
(b) Reflects adjustment for the rental income and property expenses of
communities acquired during 1998.
(c) Eliminates income from and expenses related to management of Salem Farm and
Mullica Woods for the prior owners and reflects expenses related to the
management of Serendipity and Brentwood West.
(d) Amortizes the remaining cost of Salem Farm and Mullica Woods management
contracts acquired in 1997.
(e) Eliminates the short-term investment income at 5% per annum on the cash
used to acquire the interests in manufactured housing communities.
(f) Reflects depreciation and amortization of acquired assets on the
straight-line basis over the estimated useful lives of the assets. The
estimated useful lives are 25 years for land improvements and buildings.
(g) Reflects interest expense on $7,000,000 of financing at 7%.
(h) Adjusts minority interest in net income allocated to holders of OP Units
based upon OP Units issued and adjusted income before minority interest.
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-42605) of Asset Investors Corporation of our reports dated June 9,
1998, with respect to the Statements of Excess of Revenues over Specific
Operating Expenses of a) The Brentwood West Manufactured Home Community for the
year ended December 31, 1997 and b) Serendipidity Mobile Home Park for the year
ended December 31, 1997, both of which are included in the Current Report (Form
8-K/A) dated July 28, 1998.
ERNST & YOUNG LLP
Denver, Colorado
July 28, 1998
