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): February 27, 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 February 27, 1998, Asset Investors Corporation (the "Company") acquired two
adult manufactured home communities. Salem Farm is located in Bensalem,
Pennsylvania (near Philadelphia), consists of 28 developed homesites and was
acquired from Salem Farm Mobile Home Park, Inc. Mullica Woods is located in Egg
Harbor City, New Jersey (near Atlantic City), consists of 90 developed homesites
and was acquired from Roth Associates of New Jersey. Both manufactured home
communities are fully occupied. Since May 1997, the Company has managed Salem
Farm and Mullica Woods for the prior owners.
The consideration for the communities was determined through arms-length
negotiations with the sellers. Total consideration for Salem Farm was $1,397,000
consisting of $59,000 of cash, the assumption of $550,000 of existing debt, and
the issuance of 45,000 limited partnership units of Asset Investors Operating
Partnership, L.P. ("OP Units") valued at $788,000. Total consideration for
Mullica Woods was $3,684,000 consisting of $83,000 of cash, the assumption of
$2,244,000 of existing debt, and the issuance of 78,000 OP Units valued at
$1,357,000. The existing debt was prepaid by the Company upon acquisition of the
manufactured home communities.
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 the effect of acquisitions, the
Company's future financial performance and the effect of government regulations.
Actual results may differ materially from those described in the forward looking
statements and will be affected by a variety of risks and factors including,
without limitation, national and local economic conditions, the general level of
interest rates, terms of governmental regulations that affect the Company and
interpretations of those regulations, the competitive environment in which the
Company operates, financing risks, including the risk that the Company's cash
flow from operations may be insufficient to meet required payments of principal
and interest, real estate risks, including variations of real estate values and
the general economic climate in local markets and competition for tenants in
such markets, acquisition and development risks, including failure of such
acquisitions to perform in accordance with projections, and possible
environmental liabilities, including costs which may be incurred due to
necessary remediation of continued qualification as a real estate investment
trust involves the application of highly technical and complex provisions of the
Internal Revenue Code. 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
Salem Farm Manufactured Home Community for the year ended December 31,
1997.
Statement of Excess of Revenues Over Specific Operating Expenses of the
Mullica Woods Adult Community for the year ended December 31, 1997.
(b) Pro Forma Financial Information
Pro Forma Condensed Consolidated Balance Sheet of Asset Investors
Corporation and Subsidiaries as of December 31, 1997.
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
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: May 12, 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 Salem Farms Manufactured Home Community
Year ended December 31, 1997
<PAGE>
The Salem Farms 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>
1
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 Salem Farms Manufactured Home Community (Note 1) for
the year ended December 31, 1997. This statement is the responsibility of the
management of The Salem Farms 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 Salem Farms Manufactured Home Community for
the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
April 16, 1998
1
<PAGE>
The Salem Farms Manufactured Home Community
Statement of Excess of Revenues
Over Specific Operating Expenses
Year Ended December 31, 1997
Revenues
Rental $ 129,384
Other 10,555
----------------
139,939
Specific operating expenses
Property operations and maintenance 64,901
Real estate taxes 3,201
----------------
68,102
----------------
Excess of revenues over specific operating expenses $ 71,837
================
2
See accompanying notes.
<PAGE>
The Salem Farms Manufactured Home Community
Notes to Statement of Excess of Revenues
Over Specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
The Salem Farms Manufactured Home Community is a manufactured home community
located in Bensalem, Pennsylvania which contains 28 lots. In February 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>
Statement of Excess of Revenues Over Specific Operating Expenses
The Mullica Woods Adult Community
Year ended December 31, 1997
<PAGE>
The Mullica Woods Adult 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 Mullica Woods Adult Community (Note 1) for the year
ended December 31, 1997. This statement is the responsibility of the management
of The Mullica Woods Adult 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 Mullica Woods Adult Community for the year
ended December 31, 1997 in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
April 16, 1998
1
<PAGE>
The Mullica Woods Adult Community
Statement of Excess of Revenues
Over Specific Operating Expenses
Year ended December 31, 1997
Revenues
Rental $ 440,043
Other 2,108
----------------
442,151
Specific operating expenses
Property operations and maintenance 110,583
Real estate taxes 49,657
----------------
160,240
----------------
Excess of revenues over specific operating expenses $ 281,911
================
2
See accompanying notes.
<PAGE>
The Mullica Woods Adult Community
Notes to Statement of Excess of Revenues
Over Specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Property
The Mullica Woods Adult Community (the Property) is a manufactured home
community located in Egg Harbor City, New Jersey which contains 90 lots. In
February 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).
<TABLE>
<CAPTION>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1997
(In thousands)
(Unaudited)
As Previously Pro Forma Pro Forma
Reported Adjustments Results
-------- ----------- -------
ASSETS
<S> <C> <C> <C>
Real estate, net $ 40,726 $ 5,081 (a) $ 45,807
Investments in and notes receivable from
real estate joint ventures 25,415 -- 25,415
Cash and cash equivalents 21,802 (2,936) (a) 18,866
Investment in CAX 20,866 -- 20,866
Other assets, net 10,352 -- 10,352
---------- -------- ----------
Total Assets $ 119,161 $ 2,145 $ 121,306
========== ======== ==========
LIABILITIES
Secured notes payable $ 10,677 $ -- $ 10,677
Accounts payable and accrued liabilities 2,607 -- 2,607
---------- -------- ----------
13,284 -- 13,284
---------- -------- ----------
MINORITY INTEREST IN OPERATING PARTNERSHIP 22,362 2,145 (a) 24,507
STOCKHOLDERS' EQUITY
Common Stock 51 -- 51
Additional paid-in capital 231,221 -- 231,221
Dividends in excess of accumulated earnings (147,757) -- (147,757)
---------- -------- ----------
83,515 -- 83,515
---------- -------- ----------
Total Liabilities and Stockholders' Equity $ 119,161 $ 2,145 $ 121,306
========== ======== ==========
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
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)
As Previously Pro Forma Pro Forma
RENTAL PROPERTY OPERATIONS Reported Adjustments Results
-------------------------------------------------------
<S> <C> <C> <C>
Rental and other property revenues $ 3,104 $ 582 (b) $ 3,686
Equity in earnings of real estate joint ventures 466 -- 466
Property operating expenses (1,311) (203) (b) (1,514)
Owned property management expenses (87) (13) (b) (100)
--------- --------- ---------
Income from property operations before depreciation 2,172 366 2,538
Depreciation (693) (189) (e) (882)
--------- --------- ---------
Income from rental property operations 1,479 177 1,656
--------- --------- ---------
SERVICE OPERATIONS
Property management fees and other income 128 (18) (c) 110
Property management costs and other expenses (59) 9 (c) (50)
Amortization of management contracts (744) (137) (c) (881)
--------- --------- ---------
Loss from service operations (675) (146) (821)
--------- --------- ---------
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 (147) (d) 1,661
Interest expense (368) -- (368)
Costs incurred to acquire management contract (6,553) -- (6,553)
--------- --------- ---------
INCOME BEFORE GAIN ON RESTRUCTURING OF BONDS AND MINORITY
INTEREST 708 (116) 592
Gain on restructuring of bonds 6,484 -- 6,484
--------- --------- ---------
INCOME BEFORE MINORITY INTEREST 7,192 (116) 7,076
Minority interest in Operating Partnership 62 (110) (f) (48)
--------- --------- ---------
NET INCOME $ 7,254 $ (226) $ 7,028
========= ========= =========
BASIC EARNINGS PER SHARE $ 1.44 $ (0.04) $ 1.40
========= ========= =========
DILUTED EARNINGS PER SHARE $ 1.43 $ (0.04) $ 1.39
========= ========= ====-====
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
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
December 31, 1997, is presented as if the February 27, 1998, acquisition of two
manufactured home communities had occurred on December 31, 1997. The Pro Forma
condensed consolidated statement of income is presented assuming the acquisition
of the manufactured home communities had been completed at the beginning of
1997. In management's opinion, all adjustments necessary to reflect these
transactions 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 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
$5,081,000 consisting of: $2,936,000 of cash (including the assumption of
$2,794,000 of existing debt, which was prepaid by the Company) and 123,000
OP Units at $17.38 each.
(b) Reflects adjustment for the rental income and property expenses of acquired
communities.
(c) Eliminates income from and expenses related to management of Salem Farm and
Mullica Woods for the prior owners and amortizes the cost of acquired
management contracts.
(d) Eliminates the short-term investment income at 5% per annum on the cash
used to acquire the interests in manufactured housing communities and
management operations.
(e) 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.
(f) Adjusts minority interest in net income allocated to holders of OP Units
based upon OP Units issued and adjusted income before minority interest.
</TABLE>
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 April 16,
1998, with respect to the Statements of Excess of Revenues over Specific
Operating Expenses of a) The Mullica Woods Adult Community for the year ended
December 31, 1997 and b) The Salem Farms Manufactured Home Community for the
year ended December 31, 1997, both of which are included in the Current Report
(Form 8-K/A) dated May 12, 1998.
ERNST & YOUNG LLP
Denver, Colorado
May 12, 1998
