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): January 31, 2000
ASSET INVESTORS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-9360 84-1500244
(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 January 31, 2000, Asset Investors Corporation (the "Company") entered into a
series of agreements dated effective as of January 1, 2000 and acquired four
manufactured home communities and undeveloped homesites at three manufactured
home communities from Community Acquisition and Development Corporation ("CADC")
and affiliates of CADC (collectively, the "Seller"). Joseph W. Gaynor is the
President of CADC and owns 31% of the Seller. Mr. Gaynor was appointed the
Company's Vice President of Development in January 2000. These communities
consist of 535 developed homesites and 2,183 undeveloped homesites. The
developed homesites are 95% occupied.
The consideration for the communities was determined through arms-length
negotiations with the Seller. Total consideration for the communities was
$36,816,000 and was paid as follows:
o Cancellation of $24,851,000 of participating mortgages and other loans
previously made by the Company to Seller;
o Assumption of $10,704,000 of third-party debt;
o Issuance of 44,572 units of limited partnership interests ("OP Units") in
the Company's subsidiary, Asset Investors Operating Partnership, L.P., at
an assigned value of $496,000; and
o $765,000 cash, the source of which is the Company's cash on hand and its
line of credit with U.S. Bank National Association.
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.
Some of the statements in this report, as well as oral statements made by the
Company's officials to analysts and stockholders in the course of presentations
about the Company and conference calls following quarterly earnings releases,
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements may include
projections of the Company's adjusted funds from operations, 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; and 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.
Item 7. Financial Statements and Exhibits
(a) Financial Statements
Statement of Excess of Revenues Over Specific Operating Expenses of the
Community Acquisition and Development Corporation Manufactured Home
Communities for the Year Ended December 31, 1998 (audited) and the Nine
Months Ended September 30, 1999 (unaudited).
(b) Pro Forma Financial Information
<PAGE>
Pro Forma Condensed Consolidated Balance Sheet of Asset Investors
Corporation and Subsidiaries as of September 30, 1999.
Pro Forma Condensed Consolidated Statement of Earnings of Asset
Investors Corporation and Subsidiaries for the Nine Months Ended
September 30, 1999.
Pro Forma Condensed Consolidated Statement of Earnings of Asset
Investors Corporation and Subsidiaries for the Year Ended December 31,
1998.
(c) Exhibits
Exhibit No. Description
----------- -----------
2.8 Contribution Agreement dated effective as of January
1, 2000, by and among Asset Investors Operating
Partnership, L.P., CADC Holding L.L.C. and Community
Acquisition and Development Corporation (incorporated
herein by reference to Exhibit 2.8 to the
Registrant's Current Report on Form 8-K dated January
31, 2000, Commission File No. 1-9360, filed on
February 15, 2000).
2.8(a) Purchase and Sale Agreement dated effective as of
January 1, 2000, by and between Asset Investors
Operating Partnership, L.P. and Community Acquisition
and Development Corporation (incorporated herein by
reference to Exhibit 2.8(a) to the Registrant's
Current Report on Form 8-K dated January 31, 2000,
Commission File No. 1-9360, filed on February 15,
2000).
2.8(b) Purchase and Sale Agreement dated effective as of
January 1, 2000, by and between Prime Forest Partners
and Community Acquisition and Development Corporation
(incorporated herein by reference to Exhibit 2.8(b)
to the Registrant's Current Report on Form 8-K dated
January 31, 2000, Commission File No. 1-9360, filed
on February 15, 2000).
2.8(c) Purchase and Sale Agreement dated effective as of
January 1, 2000, by and between Asset Investors
Operating Partnership, L.P. and Community Acquisition
and Development Corporation (incorporated herein by
reference to Exhibit 2.8(c) to the Registrant's
Current Report on Form 8-K dated January 31, 2000,
Commission File No. 1-9360, filed on February 15,
2000).
2.8(d) Asset Purchase Agreement dated effective as of
January 1, 2000, by and between AIC Homesales Corp.
and Community Acquisition and Development Corporation
(incorporated herein by reference to Exhibit 2.8(d)
to the Registrant's Current Report on Form 8-K dated
January 31, 2000, Commission File No. 1-9360, filed
on February 15, 2000).
23 Consent of Independent Auditors - Ernst & Young LLP
<PAGE>
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: February 24, 2000
By: /s/David M. Becker
----------------------------
David M. Becker
Chief Financial Officer
<PAGE>
Report of Independent Auditors
Board of Directors and Stockholders
Asset Investors Corporation
We have audited the accompanying combined statement of excess of revenues over
specific operating expenses of the Community Acquisition and Development
Corporation Manufactured Home Communities (Note 1) for the year ended December
31, 1998. This combined statement is the responsibility of the management of the
Community Acquisition and Development Corporation Manufactured Home Communities.
Our responsibility is to express an opinion on this combined statement based on
our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the combined 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 combined statement of excess of revenues over
specific operating expenses excludes certain expenses that would not be
comparable to the operations of the communities after acquisition by Asset
Investors Corporation. The accompanying combined 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
communities' revenues and expenses.
In our opinion, the combined 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 Community Acquisition and
Development Corporation Manufactured Home Communities for the year ended
December 31, 1998 in conformity with accounting principles generally accepted in
the United States.
Denver, Colorado /s/ERNST & YOUNG LLP
December 24, 1999
1
<PAGE>
Community Acquisition Development Corporation
Manufactured Home Communities
Combined Statement of Excess of Revenues
Over Specific Operating Expenses
<TABLE>
<CAPTION>
Nine Months
Year ended December Ended
31, 1998 September 30, 1999
-------------------------------------------------------
(Unaudited)
Revenues
<S> <C> <C>
Rental $1,248,850 $1,026,807
Other 25,114 15,937
-------------------------------------------------------
1,273,964 1,042,744
Specific operating expenses
Property operations and maintenance 525,293 491,863
Selling and marketing 394,639 686,523
Real estate taxes 132,688 96,370
-------------------------------------------------------
1,052,620 1,274,756
-------------------------------------------------------
Excess of revenues over specific operating expenses $221,344 $(232,012)
=======================================================
</TABLE>
See accompanying notes.
2
<PAGE>
Community Acquisition and Development Corporation
Manufactured Home Communities
Notes to Combined Statement of Excess of Revenues
Over Specific Operating Expenses
1. Organization and Significant Accounting Policies
Description of Properties
The Community Acquisition and Development Corporation Manufactured Home
Communities (the "Communities") include four separate manufactured home
communities and sites for manufactured homes located in three additional
manufactured home communities, all located in Florida. The Communities, which
are under common management and control, have been summarized as follows:
<TABLE>
<CAPTION>
Property Name Location Developed Homesites Undeveloped homesites
------------- -------- ------------------- ---------------------
<S> <C> <C> <C>
Blue Heron Pines Punta Gorda, FL 133 311
Brentwood Hudson, FL 75 148
Forest View Homosassa, FL 11 120
Park Royale Pinellas Park, FL - 51
Savanna Club Port St. Lucie, FL 65 1,281
Stonebrook Homosassa, FL 6 94
Sun Lake Grand Island, FL 245 178
</TABLE>
In January 2000, Asset Investors Corporation acquired the communities from
Community Acquisition and Development Corporation.
Basis of Accounting
The accompanying combined statement of excess of revenues over specific
operating expenses is presented on the accrual basis. This combined statement
has been prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties. Accordingly, the
combined statement excludes certain historical expenses not comparable to the
operations of the properties 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 combined 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>
Interim Unaudited Financial Information
The accompanying interim unaudited combined statement of excess of revenue over
specific operating expenses has been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission and was prepared on the
same basis as the combined statement of excess of revenues over specific
operating expenses for the year ended December 31, 1998. In the opinion of
management of the Communities, all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation of the information for
this interim period have been made. The combined excess of revenues over
specific operating expenses for such interim period is not necessarily
indicative of the combined excess of revenue over specific operating expenses
for the full year.
4
<PAGE>
Item 7(b).
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Reported Adjustments (a) Results
-------- ----------- -------
ASSETS
<S> <C> <C> <C>
Real estate, net $ 109,543 $ 29,618 $ 139,161
Investments in participating mortgages 20,622 (20,622) --
Cash and cash equivalents 1,604 (1,513) 91
Investment in Commercial Assets 19,741 -- 19,741
Other assets, net 8,068 5,529 13,597
---------- -------- ----------
Total Assets $ 159,578 $ 13,012 $ 172,590
========== ======== ==========
LIABILITIES
Secured long-term notes payable $ 54,456 $ 2,607 $ 57,063
Secured long-term notes payable to Commercial Assets -- 2,148 2,148
Secured short-term financing 1,000 5,641 6,641
Accounts payable and accrued liabilities 4,060 2,120 6,180
---------- -------- ----------
59,516 12,516 72,032
---------- -------- ----------
MINORITY INTEREST IN OPERATING PARTNERSHIP 15,386 496 15,882
STOCKHOLDERS' EQUITY
Preferred stock -- -- --
Common stock 56 -- 56
Additional paid-in capital 239,381 -- 239,381
Notes receivable on common stock purchases (588) -- (588)
Dividends in excess of accumulated earnings (153,723) -- (153,723)
Treasury stock (450) -- (450)
---------- -------- ----------
84,676 -- 84,676
---------- -------- ----------
Total Liabilities and Stockholders' Equity $ 159,578 $ 13,012 $ 172,590
========== ======== ==========
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(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 $ 11,075 $ 1,043 (b) $ 12,118
Interest on participating mortgages 2,302 (1,394) (c) 908
Property operating expenses (3,991) (570) (b) (4,561)
Depreciation (2,827) (264) (d) (3,091)
--------- --------- ---------
Income from rental property operations 6,559 (1,185) 5,374
--------- --------- ---------
Service operations
Property management income, net 158 (19) (b) 139
Commercial Assets management fees 418 -- 418
Amortization of management contracts (2,067) -- (2,067)
--------- --------- ---------
Loss from service operations (1,491) (19) (1,510)
--------- --------- ---------
Equity in earnings of Commercial Assets 714 -- 714
General and administrative expenses (1,098) -- (1,098)
Selling and marketing expenses -- (686) (b) (686)
Interest and other income 227 (153) (e) 74
Interest expense (2,853) 610 (f) (2,243)
Income tax benefit 250 -- 250
Loss from early extinguishment of debt (75) -- (75)
Reincorporation expense (70) -- (70)
--------- --------- ---------
Income (loss) before minority interest in Operating Partnership 2,163 (1,433) 730
Minority interest in Operating Partnership (341) 222 (g) (119)
--------- --------- ---------
Net income (loss) $ 1,822 $ (1,211) $ 611
========= ========= =========
Basic and diluted earnings (loss) per share $ 0.33 $ (0.22) $ 0.11
========= ========= =========
Weighted average common shares outstanding 5,527 5,527 5,527
Weighted average common shares and common share
equivalents outstanding 5,534 5,534 5,534
</TABLE>
See Notes to Pro Forma Condensed Consolidated Financial Statements.
<PAGE>
ASSET INVESTORS CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 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 $ 10,479 $ 1,274 (b) $ 11,753
Interest on participating mortgages 3,174 (1,671) (c) 1,503
Property operating expenses (4,039) (637) (b) (4,676)
Depreciation (2,685) (352) (d) (3,037)
--------- --------- ---------
Income from rental property operations 6,929 (1,386) 5,543
--------- --------- ---------
Service operations
Property management income, net 156 (21) (b) 135
Commercial Assets management fees 155 -- 155
Amortization of management contracts (2,894) -- (2,894)
--------- --------- ---------
Loss from service operations (2,583) (21) (2,604)
--------- --------- ---------
Equity in earnings of Commercial Assets 975 -- 975
Non-agency MBS bonds revenues 50 -- 50
General and administrative expenses (1,393) -- (1,393)
Selling and marketing expenses -- (395) (b) (395)
Interest and other income 871 (222) (e) 649
Interest expense (2,485) 813 (f) (1,672)
Costs incurred to acquire management contract (2,092) -- (2,092)
--------- --------- ---------
Income (loss) before minority interest in Operating Partnership 272 (1,211) (939)
Minority interest in Operating Partnership (60) 273 (g) 213
--------- --------- ---------
Net income (loss) $ 212 $ (938) $ (726)
========= ========= =========
Basic and diluted earnings (loss) per share $ 0.04 $ (0.18) $ (0.14)
========= ========= =========
Weighted average common shares outstanding 5,094 5,094 5,094
Weighted average common shares and common share
equivalents outstanding 5,113 5,113 5,113
</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
September 30, 1999, is presented as if the January 1, 2000 acquisition of the
Community Acquisition and Development Corporation manufactured home communities
had occurred on September 30, 1999. The pro forma condensed consolidated
statements of earnings for the nine months ended September 30, 1999 and for the
year ended December 31, 1998 are presented assuming the January 1, 2000
acquisition of manufactured home communities had been completed on January 1,
1998. 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, 1998, and the Quarterly
Report on Form 10-Q for the quarterly period ended September 30, 1999.
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 the Community Acquisition and Development
Corporation manufactured home communities as if the purchase had occurred
on September 30, 1999, as follows (in thousands):
<TABLE>
<CAPTION>
Assets Pro Forma
Acquired Consideration Adjustments
----------------- ----------------- ----------------
<S> <C> <C> <C>
Real estate $ 29,618 $ -- $ 29,618
Cancellation of participating mortgages -- 20,622 (20,622)
Cash and cash equivalents 205 1,718 (1,513)
Other assets 6,993 1,464 5,529
Liabilities assumed:
Secured long-term notes payable -- 2,607 2,607
Secured long-term notes payable to Commercial
Assets -- 2,148 2,148
Secured short-term financing -- 5,641 5,641
Other liabilities -- 2,120 2,120
Issuance of 44,572 OP Units at $11.125 -- 496 496
----------------- ----------------- ----------------
$ 36,816 $ 36,816 $ --
================= ================= ================
</TABLE>
<PAGE>
(b) Reflects adjustment for the rental income and property expenses of the
Community Acquisition and Development Corporation manufactured home
communities acquired on January 1, 2000. Specific operating expenses are
allocated as follows (in thousands):
<TABLE>
<CAPTION>
Nine Months
Ended September Year Ended
30, 1999 December 31, 1998
------------------ ------------------
<S> <C> <C>
Property operating expenses $ 570 $ 637
Reduction in property management income, net 19 21
Selling and marketing expenses 686 395
------------------ ------------------
$ 1,275 $ 1,053
================== ==================
</TABLE>
(c) Eliminates interest earned on participating mortgages to the Seller.
(d) 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.
(e) Eliminates the income earned on other loans made to the Seller and
short-term investment income at 5.0% per annum for the nine months ended
September 30, 1999 and 5.35% per annum for the year ended December 31, 1998
on the cash used to acquire the interests in manufactured home communities.
(f) Reflects interest expense on $10,396,000 of assumed debt and line of credit
borrowings at a weighted-average effective interest rate of 8.6%, net of
interest capitalized of $1,283,000 during the nine months ended September
30, 1999 and $1,710,000 during the year ended December 31, 1998.
(g) Adjusts minority interest in net income (loss) allocated to the limited
partners in Asset Investors Operating Partnership, L.P. based upon OP Units
issued and adjusted income (loss) before minority interest in Operating
Partnership.
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 report dated December
24, 1999, with respect to the Combined Statement of Excess of Revenues Over
Specific Operating Expenses of the Community Acquisition and Development
Corporation for the year ended December 31, 1998 which is included in Amendment
No. 1 to the Current Report (Form 8-K) dated January 31, 2000.
/s/ ERNST & YOUNG LLP
Denver, Colorado
February 23, 2000
