<PAGE>
FORM 8-KA/NO. 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): NOVEMBER 30, 1994
PROPERTY TRUST OF AMERICA
(Exact name of registrant as specified in its charter)
MARYLAND 1-10272 74-6056896
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
7777 MARKET CENTER AVENUE, EL PASO, TEXAS 79912
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (915) 877-3900
NOT APPLICABLE
(Former name or former address, if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
ACQUISITIONS:
- -------------
The following acquisitions of multifamily properties were made by Property
Trust of America (PTR) from unrelated parties since the filing of Form 8-K dated
April 29, 1994. PTR acquired these properties because PTR and its REIT manager,
Security Capital (Southwest) Incorporated believe that multifamily property
investments in the southwestern United States present excellent long term
opportunities for consistent rental increases, high occupancies and value
appreciation.
PTR acquired Tierrasanta Ridge apartments on June 14, 1994 from a limited
partnership. Tierrasanta is a 340 unit, middle income complex located in San
Diego, California. PTR acquired this property for approximately $19.1 million.
At date of purchase, the property's occupancy rate was 85%.
PTR acquired Cimarron Trails apartments on June 28, 1994 from a limited
partnership. Cimarron Trails is a 228 unit, middle income complex located 17
miles south of downtown Oklahoma City in Norman, Oklahoma. PTR acquired this
property for approximately $6.6 million. At date of purchase, the property's
occupancy rate was 97%.
PTR acquired Apple Creek apartments on June 30, 1994 from a corporation.
Apple Creek is a 384 unit middle income complex located in Omaha, Nebraska. PTR
acquired this property for approximately $12.9 million including the assumption
of tax-exempt bonds aggregating $11.1 million. At date of purchase, the
property's occupancy rate was 94%.
PTR acquired Plaza Del Oro apartments on June 30, 1994 from a limited
partnership. Plaza Del Oro is a 348 unit middle income complex located in
Houston, Texas. PTR acquired this property for approximately $11.4 million. At
date of purchase, the property's occupancy rate was 91%.
PTR acquired Brompton Court apartments on July 28, 1994 from a limited
partnership. Brompton Court is a 794 unit middle income complex located in the
Texas Medical Center area of Houston, Texas. PTR acquired this property for
approximately $27.4 million including the assumption of an approximately $14.8
million mortgage. At date of purchase, the property's occupancy rate was 92%.
PTR acquired Dymaxion apartments on November 22, 1994 from a limited
partnership. Dymaxion is a 190 unit middle income complex located on Potranco
Road in west San Antonio, Texas. PTR acquired this property for approximately
$5 million. At date of purchase, the property's occupancy rate was 97%.
PTR acquired Timber Ridge apartments on December 1, 1994 from an
individual. Timber Ridge is a 160 unit middle income complex located in a
suburb northwest of Dallas, Texas. PTR acquired this property for approximately
$6.6 million. At date of purchase, the property's occupancy rate was 99%.
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBIT
(a) Financial Statements:
Statement of Revenues and Certain Expenses for Brompton Court
Apartments with Independent Auditors' Report thereon.
Combined Statements of Revenues and Certain Expenses for
Certain Multifamily Properties with Independent Auditors'
Report thereon.
(b) Pro Forma Financial Information:
Pro Forma Balance Sheet as of September 1994 (unaudited)
Pro Forma Statement of Earnings for the year ended December
31, 1993 (unaudited)
Pro Forma Statement of Earnings for the nine months ended
September 30, 1994 (unaudited)
Estimated Twelve-month Pro Forma Statement of Taxable
Operating Income and Funds Available (unaudited)
(c) Exhibit:
Exhibit 23.1 - Independent Auditors' Consent
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.
Property Trust of America
Date: February 1, 1995 By: /s/ William Kell
-------------------------- ---------------------
William Kell
Vice-President
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Trustees and Shareholders
Property Trust of America:
We have audited the accompanying statement of revenues and certain expenses of
Brompton Court Apartments for the nine months ended May 31, 1994. This
financial statement is the responsibility of management. Our responsibility is
to express an opinion on this statement of revenues and certain expenses 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 revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
certain expenses. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall presentation of the statement of revenues and certain expenses. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses of Brompton Court
Apartments was prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission for inclusion in the Form
8-K/A No. 1 of Property Trust of America and excludes material amounts,
described in note 2 to the statement of revenues and certain expenses, that
would not be comparable to those resulting from the proposed future operations
of the property.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the amount of revenues and certain
expenses of Brompton Court Apartments for the nine months ended May 31, 1994, in
conformity with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
El Paso, Texas
June 15, 1994
<PAGE>
BROMPTON COURT APARTMENTS
Statements of Revenues and Certain Expenses (note 2)
For the Nine Months ended May 31, 1994
Rental income $3,743,493
Other real estate income 129,039
----------
3,872,532
----------
Certain expenses:
Interest expense on debt assumed 938,399
Salaries and benefits 670,195
Utilities 269,357
Repairs and maintenance 223,024
Management fees 135,901
Real estate taxes 435,025
Advertising and leasing commissions 85,626
Insurance 94,705
Other 63,123
----------
2,915,355
----------
Revenues in excess of certain
expenses (note 2) $ 957,177
==========
See accompanying notes to statements of revenues and certain expenses.
2
<PAGE>
BROMPTON COURT APARTMENTS
Notes to Statements of Revenues and Certain Expenses
For the Nine Months ended May 31, 1994
(1) OPERATING PROPERTY
Brompton Court Apartments (the Apartments) is a multifamily property
located in Houston, Texas. The Apartments were acquired by Property Trust
of America on July 28, 1994 for approximately $27,400,000.
(2) BASIS OF PRESENTATION
The statements of revenues and certain expenses have been prepared on the
accrual basis of accounting.
Rental income attributable to residential leases is recorded when due from
residents. Leases are for periods up to one year with rental payments due
monthly.
The statements of revenues and certain expenses of the Apartments exclude
certain amounts which would not be comparable to the proposed future
operations of the Apartments:
(a) depreciation of the building and improvements;
(b) interest income;
(c) income taxes; and
(d) other income and expense items unique to the prior owners.
(3) DEBT ASSUMPTION
The following is information related to the mortgage loan assumed in
connection with the property acquisition:
<TABLE>
<CAPTION>
May 31, Interest expense
1994 for the Nine
Mortgage Original Debt Principal Months Ended
Origination Maturity Amount Balance Interest May 31, 1994
Lender Date Date (in thousands) (in thousands) Rate (in thousands)
------ ----------- -------- -------------- ------------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Collateral
Mortgage, LTD 8/31/93 9/1/00 $15,000 $14,863 8.375% $938
</TABLE>
The note is secured by the property and is subject to a scheduled balloon
payment of $13,340,000 in September 2000. The note is subject to a
prepayment penalty as defined in the loan agreement.
3
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------
Board of Trustees and Shareholders
Property Trust of America:
We have audited the accompanying combined statement of revenues and certain
expenses for certain multifamily properties as described in notes 1 and 2 for
the year ended December 31, 1993. This combined financial statement is the
responsibility of management. Our responsibility is to express an opinion on
this combined statement of revenues and certain expenses for certain multifamily
properties 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 combined statement of revenues and certain expenses
for certain multifamily properties is free of material misstatement. An audit
included examining, on a test basis, evidence supporting the amounts and
disclosures in the combined statement of revenues and certain expenses for
certain multifamily properties. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the combined statement of revenues and
certain expenses for certain multifamily properties. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying combined statement of revenues and certain expenses for certain
multifamily properties was prepared for the purpose of complying with the rules
and regulations of the Securities and Exchange Commission for inclusion in the
Form 8-K/A No. 1 of Property Trust of America and excludes material amounts,
described in note 2 to the combined statement of revenues and certain expenses
for certain multifamily properties, that would not be comparable to those
resulting from the proposed future operations of the properties.
In our opinion, the combined statement of revenues and certain expenses for
certain multifamily properties referred to above presents fairly, in all
material respects, the amount of combined revenues and certain expenses of the
properties for the year ended December 31, 1993, in conformity with generally
accepted accounting principles.
KPMG PEAT MARWICK LLP
El Paso, Texas
September 8, 1994
<PAGE>
PROPERTY TRUST OF AMERICA
Combined Statement of Revenues and Certain Expenses for Certain Multifamily
Properties
Year ended December 31, 1993 and Period from
January 1, 1994 to the earlier of September 30, 1994 or Date of Acquisition
(in thousands)
<TABLE>
<CAPTION>
1994
1993 (Unaudited)
-------- -----------
<S> <C> <C>
Rental income $15,132 4,712
Other real estate income 523 152
------- -----
15,655 4,864
------- -----
Certain expenses:
Salaries and benefits 1,317 387
Utilities 1,093 333
Repairs and maintenance 1,370 430
Management fees 699 233
Real estate taxes 1,286 473
Advertising and promotion 311 71
Insurance 303 91
Interest expense on debt assumed 1,262 396
Other 261 107
------- -----
7,902 2,521
------- -----
Revenues in excess of certain
expenses $ 7,753 2,343
======= =====
</TABLE>
See accompanying notes to combined statement of revenues and certain expenses
for certain multifamily properties.
2
<PAGE>
PROPERTY TRUST OF AMERICA
Notes to Combined Statement of Revenues and Certain
Expenses for Certain Multifamily Properties
Year ended December 31, 1993 and Period from January 1, 1994
to the earlier of September 30, 1994 or Date of Acquisition
(1) OPERATING PROPERTIES
The combined statement reflects the revenues and certain expenses of certain
multifamily properties which Property Trust of America (PTR) has acquired
during 1994. Following is a summary of the acquisitions:
<TABLE>
<CAPTION>
Period from January 1, 1994 to the
earlier of September 30, 1994 or
Year ended December 31, 1993 Date of Acquisition (unaudited)
(in thousands) (in thousands)
------------------------------ ----------------------------------
Actual or Revenues Revenues
Estimated Purchase in Excess in Excess
Acquisition Price Certain of Certain Certain of Certain
Multifamily Property Location Date (in thousands) Revenues Expenses Expenses Revenues Expenses Expenses
- -------------------- ------------- ----------- -------------- -------- -------- ---------- -------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sandpebble/Sundance Phoenix,
Arizona 1/24/94 $23,400 3,375 1,390 1,985 222 92 130
Scripps Landing San Diego,
California 1/26/94 9,100 1,363 664 699 110 55 55
Entrada Pointe Albuquerque,
New Mexico 1/31/94 6,700 1,099 463 636 99 53 46
Chasewood Crossing Houston,
Texas 5/11/94 13,300 1,990 1,762 228 708 581 127
Plaza del Oro Houston,
Texas 6/30/94 11,400 2,017 941 1,076 986 472 514
Cimarron Trails Norman,
Oklahoma 6/28/94 6,600 1,085 557 528 559 244 315
Tierrasanta Ridge San Diego,
California 6/14/94 19,100 2,767 1,127 1,640 1,157 525 632
Apple Creek Omaha,
Nebraska 6/30/94 12,900 1,959 998 961 1,023 499 524
-------- ------ ----- ----- ----- ----- -----
$102,500 15,655 7,902 7,753 4,864 2,521 2,343
======== ====== ===== ===== ===== ===== =====
</TABLE>
In addition to the properties listed above, PTR has acquired certain other
multifamily properties, which, due to their relative significance to PTR, are
reported in separately-issued financial statements.
(Continued)
3
<PAGE>
PROPERTY TRUST OF AMERICA
Notes to Combined Statement of Revenues and
Certain Expenses for Certain Multifamily Properties, Continued
(2) BASIS OF PRESENTATION
The combined statement of revenues and certain expenses for certain
multifamily properties has been prepared on the accrual basis of
accounting. In the opinion of management, the combined unaudited financial
information contains all adjustments, consisting of normal recurring
accruals, necessary for a fair presentation of the combined statement of
revenues and certain expenses for certain multifamily properties for the
interim period. The results for the interim period are not necessarily
indicative of the results to be expected for the full year.
Rental income attributable to residential leases is recorded when due from
residents. Leases are for periods up to one year with rental payments due
monthly.
The combined statement of revenues and certain expenses for certain
multifamily properties excludes certain amounts which would not be
comparable to the proposed future operations of the properties as follows:
(a) depreciation and write-downs of the building and improvements;
(b) interest expense related to debt not assumed;
(c) interest income;
(d) income taxes; and
(e) other income and expense items unique to the prior owners.
(3) RELATED PARTY TRANSACTIONS
Approximately $151,000 and $32,000 (unaudited) was paid in management fees
and approximately $19,000 was paid in insurance premiums to affiliates of
prior owners in 1993 and 1994, respectively.
4
<PAGE>
PROPERTY TRUST OF AMERICA
Notes to Combined Statement of Revenues and Certain Expenses for Certain
Multifamily Properties
Year ended December 31, 1993 and Period from January 1, 1994 to the earlier of
September 30, 1994 or Date of Acquisition
(4) DEBT ASSUMPTION
The following is information related to mortgage loans assumed in connection
with the respective property acquisitions:
<TABLE>
<CAPTION>
(Unaudited)
Interest
Expense for the
Period from
January 1,
1994 to
Interest Expense the earlier of
for the September
December 31, Year ended 30, 1994
Mortgage Original debt 1993 Principal December or Date of
Multifamily Origination Maturity amount Balance Interest 31, 1993 Acquisition
Property Lender Date Date (in thousands) (in thousands) Rate (in thousands) (in thousands)
----------- ------ ----------- -------- -------------- -------------- --------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Chasewood Nationwide 5/04/92 6/01/97 $ 9,830 9,739 9.5% $928 $238
Crossing Life
Insurance
Company
Apple Creek Nebraska
Investing 9/01/85 9/01/07 11,100 11,100 Floating 334 158
Finance rate
Authority
</TABLE>
The Chasewood Crossing note is subject to a prepayment premium calculated in
accordance with the loan agreement. Effective January 1994, the interest
rate on the Chasewood Crossing note was reduced to 6.75% per annum in
accordance with the terms of the loan agreement.
5
<PAGE>
PROPERTY TRUST OF AMERICA
PRO FORMA FINANCIAL STATEMENTS
(UNAUDITED)
The following unaudited pro forma financial statements for Property Trust
of America (PTR) reflect the acquisition by PTR of the properties disclosed in
Item 5 and properties acquired during 1993 as reported in Form 8-K/A No.2 dated
August 11, 1993 and Forms 8-K dated November 4 and December 17, 1993 and
operating properties acquired during 1994 as reported in Form 8-K dated April
29, 1994. The pro forma financial statements have been prepared based upon
certain pro forma adjustments to the historical financial statements of PTR.
The accompanying pro forma balance sheet as of September 30, 1994 has been
prepared as if the operating properties acquired subsequent to September 30,
1994 had been acquired as of the balance sheet date.
The accompanying pro forma statements of earnings for the year ended
December 31, 1993 and for the nine months ended September 30, 1994 have been
prepared as if (i) the operating property acquisitions, reported in this Form 8-
K/A No. 1 Item 5 and (ii) the operating property acquisitions reported in Forms
8-K mentioned above had occurred as of January 1, 1993. Line of credit and long
term debt borrowings and common and preferred share issuances that occurred in
1993 and 1994 were adjusted to reflect the proforma funds that would have been
required for these pro forma acquisitions. The accompanying pro forma financial
statements do not give retroactive effect to development expenditures or the
portion of the proceeds from borrowings and share issuances used to fund such
expenditures.
The pro forma financial statements do not purport to be indicative of the
results which would actually have been obtained had the transactions described
above been completed on the dates indicated or which may be obtained in the
future. PTR is not aware of any material factors relating to the properties
that would cause the reported financial information not to be necessarily
indicative of future operating results.
<PAGE>
PROPERTY TRUST OF AMERICA
PRO FORMA BALANCE SHEET
September 30 1994
(In thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- ----------
<S> <C> <C> <C>
Assets
Real estate $ 1,233,021 $ 11,550 (a) $1,244,571
Less accumulated depreciation 39,071 - 39,071
----------- ---------- ----------
1,193,950 11,550 1,205,500
Mortgage notes receivable 22,553 - 22,553
----------- ---------- ----------
Total investments 1,216,503 11,550 1,228,053
Cash and cash equivalents 12,475 (9,475)(b) 3,000
Accounts receivable 2,209 - 2,209
Other assets 13,350 - 13,350
----------- ---------- ----------
Total assets $ 1,244,537 $ 2,075 $1,246,612
=========== ========== ==========
Liabilities and Shareholders' Equity
Liabilities:
Line of credit $ 53,500 $ 2,075 (b) $ 55,575
Long term debt 200,000 - 200,000
Mortgages payable 96,200 - 96,200
Accounts payable 12,494 - 12,494
Accrued expenses and other liabilities 24,719 - 24,719
----------- ---------- ----------
Total liabilities 386,913 2,075 388,988
----------- ---------- ----------
Shareholders' Equity:
Series A Preferred shares (9,200,000
convertible shares authorized and issued;
stated liquidation preference of
$25 per share) 230,000 - 230,000
Common shares (50,561,666 shares issued) 50,562 - 50,562
Additional paid-in capital 621,787 - 621,787
Deficit (excess) of distributions to
net earnings (42,796) - (42,796)
Treasury shares (164,478 shares) (1,929) - (1,929)
----------- ---------- ----------
Total shareholders' equity 857,624 - 857,624
----------- ---------- ----------
Total liabilities and shareholders' equity $ 1,244,537 $ 2,075 $1,246,612
=========== ========== ==========
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
PROPERTY TRUST OF AMERICA
PRO FORMA STATEMENT OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Year ended December 31, 1993
------------------------------------------------------------------------
Historical
---------------------------------------
Acquisitions
---------------------------
Prior Current Pro Forma PTR
PTR Reports (c) Report (d) Adjustments Pro Forma
------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $76,186 $76,014 $15,013 $ - $167,213
Interest income 2,232 - - (261)(e) 1,971
------- ----------- ---------- ----------- ----------
78,418 76,014 15,013 (261) 169,184
------- ----------- ---------- ----------- ----------
Expenses:
Rental expenses 30,484 36,862 6,962 107 (f) 74,415
Depreciation 10,509 - - 11,371 (g) 21,880
Interest expense 3,923 4,134 1,588 13,215 (h) 22,860
General and administrative and REIT management fee 7,733 - - 3,921 (i) 11,654
Provision for possible loss on investments 2,270 - - - 2,270
Other 308 - - - 308
------- ----------- ---------- ----------- ----------
55,227 40,996 8,550 28,614 133,387
------- ----------- ---------- ----------- ----------
Earnings from operations 23,191 35,018 6,463 (28,875) 35,797
Gains on sale of investments, net 2,302 - - - 2,302
------- ----------- ---------- ----------- ----------
Net earnings 25,493 35,018 6,463 (28,875) 38,099
Less Series A Preferred share dividends 1,341 - - 9,182 (h) 10,523
------- ----------- ---------- ----------- ----------
Net earnings attributable to common shareholders $24,152 $35,018 $ 6,463 $(38,057) $ 27,576
======= =========== ========== =========== ==========
Weighted average common shares outstanding 36,549 9,151 (h) 45,700
======= =========== ==========
Net earnings per share attributable to common
shareholders (k) $ 0.66 $ 0.60
======= ==========
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
PROPERTY TRUST OF AMERICA
PRO FORMA STATEMENT OF EARNINGS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30, 1994
-----------------------------------------------------------
Historical
----------------------------------
Acquisitions
-----------------------
Prior Current Pro Forma PTR
PTR Reports(j) Report(d) Adjustments Pro Forma
-------- ---------- ---------- ----------- ---------
<S> <C> <C> <C>
Revenues:
Rental income $131,103 $5,341 $8,266 $ - $144,710
Interest income 2,093 - - (195)(e) 1,898
-------- ------ ------ ------- ---------
133,196 5,341 8,266 (195) 146,608
-------- ------ ------ ------- ---------
Expenses:
Rental expenses 56,662 2,067 3,907 (39)(f) 62,597
Depreciation 17,411 - - 1,762 (g) 19,173
Interest expense 14,021 577 876 673 (h) 16,147
General and administrative
and REIT management fee 9,965 - - 737 (i) 10,703
Provision for possible loss
on investments 1,600 - - - 1,600
Other 533 - - - 533
-------- ------ ------ ------- ---------
100,192 2,644 4,783 3,133 110,753
-------- ------ ------ ------- ---------
Earnings from operations 33,004 2,697 3,483 (3,328) 35,855
Gains on sale of investments, net - - - - -
-------- ------ ------ ------- ---------
Net earnings 33,004 2,697 3,483 (3,328) 35,855
Less Series A Preferred share dividends 12,075 - - - 12,075
-------- ------ ------ ------- ---------
Net earnings attributable to
common shareholders $ 20,929 $2,697 $3,483 $(3,328) $ 23,780
======== ====== ====== ======= =========
Weighted average common shares outstanding 45,490 3,339 (h) 48,829
======== ======= =========
Net earnings per share attributable
to common shareholders (k) $ 0.46 $ 0.49
======== =========
</TABLE>
See accompanying notes to pro forma financial statements.
<PAGE>
Property Trust of America
Notes to Pro Forma Financial Statements
September 30, 1994
(unaudited)
(a) Represents PTR's acquisition of multifamily properties as follows:
Acquisition Amount
Property Date (in thousands)
------------ ----------- --------------
Dymaxion 11/22/94 $ 5,000
Timber Ridge 12/1/94 6,550
-------
Total $11,550
=======
(b) Reflects the application of cash on hand of $9,475,000 and line of credit
borrowings of $2,075,000 utilized to fund the pro forma acquisitions.
(c) Reflects historical revenues and certain expenses, including mortgage
interest, if applicable, of properties acquired by PTR during 1993 and 1994
for the period from January 1, 1993 to the earlier of the respective dates
of acquisition or December 31, 1993 as previously reported by PTR on Form
8-K dated April 29, 1994. Historical revenues and certain expenses exclude
amounts which would not be comparable to the proposed future operations of
the properties such as certain interest expense, interest income, income
taxes and depreciation.
(d) Reflects historical revenues and certain expenses, including mortgage
interest if applicable, on properties acquired in 1994 as described in this
Form 8-K/A No. 1 Item 5, for the year ended December 31, 1993 or for the
period from January 1, 1994 to the earlier of the respective dates of
acquisition or September 30, 1994. Historical revenues and certain expenses
exclude amounts which would not be comparable to the proposed future
operations of the properties such as certain interest expense, interest
income, income taxes and depreciation.
(e) Reflects the elimination of interest income applicable to cash and cash
equivalents of $9,475,000 which was assumed to have been utilized for pro
forma property acquisitions. The assumed bank pro forma average interest
rate was 2.75%.
(f) Reflects the difference between historical property management fee expense
and PTR's management fee expense and estimated real estate property taxes
and other costs on land held for future development as follows:
Twelve Nine
Months Months
Ended Ended
12/31/93 9/30/94
--------- --------
Decrease in property
management fee expense $ (2,000) $(39,000)
Estimated real estate
property taxes and other
costs on land held 109,000 -
--------- --------
Net pro forma adjustment $ 107,000 $(39,000)
========= ========
<PAGE>
Property Trust of America
Notes to Pro Forma Financial Statements
September 30, 1994
(unaudited)
(g) Reflects proforma depreciation expense of acquired properties based on
the depreciable basis of PTR's purchase cost assuming asset lives ranging
from 10 to 40 years as if the properties had been acquired on January 1,
1993. The amounts by property are as follows (amounts in thousands):
<TABLE>
<CAPTION>
Acquisition
-------------------
Property Date Price 12/31/93 9/30/94
- ---------------------- ------- --------- --------- --------
<S> <C> <C> <C> <C>
Previously Reported Acquisitions:
Camino Real 2/3/93 $ 5,500 $ 9 $ -
Sundown 2/25/93 8,100 37 -
Double Tree 3/18/93 5,600 33 -
The Ridge 4/23/93 8,300 66 -
Windsail 4/27/93 9,300 63 -
Vista del sol 5/7/93 5,500 39 -
Parkside 5/13/93 11,300 104 -
Reflections 5/19/93 7,900 60 -
The Cedars 5/21/93 15,600 157 -
Cielo Vista 6/30/93 5,400 55 -
Indian Trails 7/2/93 3,600 36 -
Castle Hills 7/2/93 5,000 50 -
Shadowood 7/29/93 6,000 70 -
Wellington 8/11/93 9,300 130 -
Fox Creek 9/10/93 5,800 82 -
Pheasant Run 9/15/93 8,000 114 -
Pelican Bay 9/28/93 13,900 209 -
Cannon Place 10/27/93 6,000 100 -
Portfolio I 10/29/93 38,100 635 -
Warrington 11/4/93 5,700 95 -
Southern Slope 11/12/93 5,200 91 -
Corrales Pointe 11/30/93 6,300 115 -
Haystack 12/1/93 6,500 119 -
Portfolio III 12/15/93 115,300 2,210 -
Portfolio II 12/16/93 106,300 2,014 158
Rock Creek 12/17/93 8,800 169 -
The Ridge - Phoenix 12/27/93 12,400 247 -
Sundance 1/24/94 23,400 466 39
Scripps Landing 1/26/94 9,100 177 15
Entrada Pointe 1/31/94 6,700 136 11
Rio Cancion 4/14/94 19,200 384 111
North Mountain Village 4/14/94 18,400 364 105
Foxfire 5/2/94 6,600 131 45
Peaks at Papago Park 5/2/94 27,700 553 188
Chasewood 5/11/94 13,300 280 101
Acquisitions reported in this Form 8-K:
Tierrasanta 6/14/94 $ 19,100 380 190
Cimarron Trails 6/28/94 6,600 132 66
Apple Creek 6/30/94 12,900 259 129
Plaza del Oro 6/30/94 11,400 228 114
Brompton Court 7/28/94 27,400 541 315
Dymaxion 11/22/94 5,000 100 76
Timber Ridge 12/1/94 6,600 131 99
------- ------
Total $11,371 $1,762
======= ======
</TABLE>
<PAGE>
PROPERTY TRUST OF AMERICA
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(unaudited)
(h) Represents the utilization of line of credit and long term borrowings and
common and preferred share issuances that would have been required if the
property acquisitions had occurred at January 1, 1993.
The proforma financial statements do not give effect to development
expenditures as such investments have no prior operating history. Total
real estate investment activity during the reported periods was as follows
(amounts in thousands):
<TABLE>
<CAPTION>
Twelve Nine
Months Months Subsequent
Ended Ended To
12/31/93 9/30/94 9/30/94 Total
-------- ------- ---------- -----
<S> <C> <C> <C> <C>
Acquisition of operating
multifamily properties as
previously reported by
PTR in Forms 8-K during
1993 and 1994, net of
mortgages $389,346 $ 175,039 $11,550 $575,935
Development and other
real estate activity not
proformed 147,276 144,229 - 291,505
-------- -------- ------- -------
Total real estate investment
activity, as reported in
Form 10-K or Form 10-Q 536,622 319,268 11,550 867,440
Mortgages assumed upon
acquisition of operating
properties, as reported in
Form 10-K or Form 10-Q 26,952 56,829 - 83,881
-------- -------- ------- -------
Total investment activity $563,574 $376,097 $11,550 $951,221
======== ======== ======= ========
</TABLE>
The above investment activity was funded by PTR through the issuance of
long term debt, line of credit borrowings, mortgage debt assumptions and
preferred and common share issuances as follows (amounts in thousands):
<TABLE>
<CAPTION>
Twelve Nine
Months Months Subsequent
Ended Ended To
12/31/93 9/30/94 9/30/94 Total
--------- ------- ---------- -----
<S> <C> <C> <C> <C>
Long term debt issued
February 1994 $ - $200,000 $ - $200,000
Net proceeds from line of credit
borrowings and other sources 13,369 14,544 11,550 39,463
Mortgages assumed 26,952 56,829 - 83,781
Proceeds from preferred shares
issued November 1993, net
of expenses 219,670 - - 219,670
Proceeds from common shares
issued February 1993,
September 1993 and
August 1994, net of expenses 303,583 104,724 - 408,307
--------- -------- -------- --------
Total funding sources $ 563,574 $376,097 $ 11,550 $951,221
========= ======== ======== ========
</TABLE>
<PAGE>
PROPERTY TRUST OF AMERICA
NOTES TO PRO FORMA FINANCIAL STATEMENTS
SEPTEMBER 30, 1994
(unaudited)
A proportionate amount of the total funding sources were proformed back to
January 1, 1993 in order to reflect the funds that would have been required to
fund the acquisition portion of total investment activity as if the acquisition
of operating properties had occurred on January 1, 1993. The resulting
increases in historical weighted average outstanding balances for each funding
source and the related proforma adjustments were as follows (amounts in
thousands):
<TABLE>
<CAPTION>
Increase in weighted
average outstanding Pro Forma
balances Historical Rates Adjustments
-------------------- ------------------ -----------------
12/31/93 9/30/94 12/31/93 9/30/94 12/31/93 9/30/94
-------- -------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Long term debt issued $136,639 $ 18,978 7.37% 7.37% $ 10,070 $ 1,049
Net proceeds from line of credit
borrowings and other sources $ 39,333 $ (6,916) 6.81% 7.24% $ 2,679 $ (376)
Mortgages given upon acquisition $ 7,767 $ - 6.00% - $ 466 $ -
-------- -------
Total proforma interest expense
adjustment $ 13,215 $ 673
Mortgages assumed:
Prior report amounts $ 48,965 $ 13,025 8.44% 6.87% $ 4,134 $ 577
Current report amounts $ 25,947 $ 18,631 6.12% 6.27% $ 1,588 $ 876
Proceeds from preferred shares issued,
net of expenses $131,178 - 7.00% 7.00% $ 9,182 $ -
Proceeds from common shares issued
(17,617,831 shares in 1993 and 5,752,459
shares in 1994), net of expenses $166,358 $60,911 $18.18 $18.24 9,151 3,339
shares shares
</TABLE>
18
<PAGE>
Property Trust of America
Notes to Pro Forma Financial Statements
September 30, 1994
(unaudited)
(i) Reflects adjustments to PTR's REIT management fee expense related to (i)
the increase in cash flow resulting from acquisition of multifamily
properties and (ii) adjustments discussed in (h) above (amounts in
thousands):
<TABLE>
<CAPTION>
Twelve Nine
Months Months
Ended Ended
12/31/93 9/30/94
-------- -------
<S> <C> <C>
Historical earnings
from operations
from acquisitions -
prior reports $ 35,018 $2,697
Historical earnings
from operations
from acquisitions -
current report 6,463 3,483
Pro Forma adjustments:
Interest income (261) (195)
Rental expenses (107) (39)
Interest expense (13,215) (673)
Adjustment to long term
amortize debt (3,392) (663)
------- ------
24,506 4,610
REIT management fee 16% 16%
------- ------
Pro Forma REIT management fee
expense adjustment $ 3,921 $ 738
======= ======
</TABLE>
(j) Reflects historical revenues and certain expenses, including mortgage
interest, if applicable, of properties acquired by PTR during 1994 for the
period from January 1, 1994 to the earlier of the respective dates of
acquisition or March 31, 1994, as previously reported by PTR on Form 8-K
dated April 29, 1994, as adjusted for historical revenues and certain
expenses for the period from April 1, 1994 to the earlier of the
respective dates of acquisition or September 30, 1994. Historical
revenues and certain expenses exclude amounts which would not be
comparable to the proposed future operations of the properties such as
certain interest expense, interest income, income taxes and depreciation.
(k) The effect on net earnings per common share assuming conversion of the
Series A Preferred Shares is anti-dilutive for both the historical and pro
forma amounts.
<PAGE>
PROPERTY TRUST OF AMERICA
Estimated Twelve Month Pro Forma Statement of Taxable
Net Operating Income and Funds Available
(In thousands)
(Unaudited)
The following unaudited statement is a pro forma estimate for a twelve
month period of taxable income and funds available from operations of PTR. This
statement does not purport to forecast actual operating results for any period
in the future.
<TABLE>
<CAPTION>
ESTIMATE OF TAXABLE OPERATING RESULTS:
--------------------------------------
HISTORICAL NET EARNINGS EXCLUSIVE OF
DEPRECIATION AND PROVISIONS FOR
POSSIBLE LOSS ON INVESTMENTS OF:
<S> <C>
PTR (Note 1) $ 64,638
Acquisitions (from October 1, 1993
to the earlier of the respective dates
of acquisition or September 30, 1994):
1993 and 1994 acquisitions Previously
Reported on Forms 8-K (Note 2) 7,246
1994 acquisitions as described
in Item 5 (Note 2) 3,826
PRO FORMA EFFECT OF 1994 ACQUISITIONS AND
1993 ACQUISITIONS (NOTE 3):
Line of credit interest expense (1,045)
Long term debt interest expense (3,567)
Interest income (261)
REIT management fee (823)
Property management fee 64
Real estate property taxes (52)
ESTIMATED TAX DEPRECIATION OF:
PTR - historical (21,132)
Acquired properties(Note 4):
1993 and 1994 acquisitions Previously
Reported on Forms 8-K (1,995)
1994 acquisitions as described in Item 5 (1,431)
--------
Estimated pro forma tax depreciation $(24,558)
--------
Pro forma taxable income
before REIT dividend deduction $ 45,468
Estimated REIT dividend deduction 45,468
--------
Pro forma taxable income $ -
========
(continued)
</TABLE>
<PAGE>
PROPERTY TRUST OF AMERICA
Estimated Twelve Month Pro Forma Statement of Taxable
Net Operating Income and Funds Available
(In thousands)
(Unaudited)
Estimate of funds available from operations:
Pro forma taxable income before
REIT dividend deduction $45,468
Add estimated depreciation 24,558
-------
Pro forma funds available
from operations 70,026
Less Series A Preferred pro forma dividend
requirement 14,706
-------
Pro forma funds available
from operations attributable to
common shareholders $55,320
=======
Note 1: The historical net earnings exclusive of depreciation and provisions for
possible losses is for the twelve months ended September 30, 1994 as reflected
in PTR's historical financial statements.
Note 2: Reflects historical revenues and certain expenses, including mortgage
interest, if applicable, of properties acquired during the period from October
1, 1993 to the earlier of the respective dates of acquisition or September 30,
1994. Historical revenues and certain expenses exclude amounts which would not
be comparable to the proposed future operations of the properties such as
certain interest expense, interest income, income taxes and depreciation.
Note 3: Property management fees, the REIT management fee, mortgage interest
expense and real estate property tax amounts represent certain adjustments which
are factually supportable for each of the acquired properties. The adjustments
to long term debt and line of credit interest expense are a result of adjusted
pro forma line of credit and long term debt borrowings and common and preferred
share issuances as more fully described in the notes to the Pro Forma Financial
Statements.
Note 4: Tax depreciation for the acquired properties is based on PTR's purchase
price which was allocated to the buildings and other depreciable assets and
depreciated on the straight-line method assuming asset lives ranging from ten to
forty years.
<PAGE>
INDEPENDENT AUDITORS' CONSENT
-----------------------------
Board of Trustees and Shareholders
Property Trust of America:
We consent to incorporation by reference in the registration statements No.
33-87184 (Form S-4), No. 33-86444 (Form S-3), No. 33-71040 (Form S-3), and No.
33-25317 (Form S-8) of Property Trust of America of (i) our report dated
September 8, 1994 relating to the combined statement of revenues and certain
expenses for certain multifamily properties for the year ended December 31,
1993, and (ii) our report dated June 15, 1994 relating to the statement of
revenues and certain expenses of Brompton Court Apartments for the nine months
ended May 31, 1994, which reports appear in the current report on Form 8-K/A
No. 1 of Property Trust of America dated November 30, 1994.
KPMG PEAT MARWICK LLP
El Paso, Texas
February 1, 1995
