SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 13, 1996 (April 29, 1996)
-----------------------------
Boddie-Noell Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-9496 56-1574675
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3710 One First Union Center, Charlotte, North Carolina 28202-6032
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 704/333-1367
Total number of pages: 9
1
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 29, 1996, Boddie-Noell Properties, Inc. (the "Company") acquired Paces
Village Apartments from The Northwestern Mutual Life Insurance Company for a
contract purchase price of $10,625,000. Transaction costs related to the
acquisition, including costs associated with financing the purchase, are
estimated at $170,000.
Paces Village Apartments is located near the intersection of North Elm Street
and Cone Boulevard in Greensboro, North Carolina. Paces Village was constructed
in 1988 on 15.45 acres. The property consists of 10 two and three story masonry
and wood frame buildings containing a total of 198 apartments, a clubhouse,
pool, tennis court, whirlpool spa, exercise facility, car wash and picnic areas.
The community offers four different one and two bedroom floor plans with an
average apartment size of 848 heated square feet.
For the year ended December 31, 1995, Paces Village average economic occupancy
was 94 percent and average monthly revenue per occupied apartment was $660. For
the period January 1 through March 31, 1996, average economic occupancy was 93
percent and average monthly revenue per occupied apartment was $674. At April
29, 1996, the property was 95 percent occupied.
The Company financed the purchase through first and second deed of trust loans
totaling $10 million from SouthTrust Bank of Alabama (the "Bank"), along with a
draw of $650,000 from the Company's existing credit facility with the Bank. The
first deed of trust loan in the amount of $8.6 million bears interest at a
variable rate equal to the 30-day LIBOR rate plus 1.75 percent, payable in
monthly installments of $6,511 principal plus interest, with all unpaid
principal due in seven years. The second deed of trust loan in the amount of
$1.4 million bears interest at a variable rate equal to the 30-day LIBOR rate
plus 2.25 percent, interest payable in monthly installments, with the principal
amount due in three years. The loans are secured by a deed of trust on the
property acquired. In addition, the second deed of trust loan is secured by
second deeds of trust on Paces Commons Apartments and Oakbrook Apartments. In
conjunction with execution of the second deeds of trust, the Paces Commons and
Oakbrook loans were also modified to extend their terms from 25 to 30 years and
to increase interest rate lock periods by two years for each loan.
Management expects that the acquisition of Paces Village will increase the
Company's funds from operations ("FFO"). Based on pro forma results of 1995
operations included in Item 7(b) of this report (which are based on available
information and upon certain assumptions as set forth in the notes thereto),
Paces Village operations would have generated FFO of approximately $130,000 (a 3
percent increase over the Company's 1995 FFO). FFO is generally defined as net
income (loss) plus certain non-cash items, primarily depreciation. The Company
considers FFO in evaluating property acquisitions and its operating performance
and believes that FFO should be considered along with, but not as an alternative
to, net income and cash flows as a measure of the Company's operating
performance and liquidity. FFO does not represent cash generated from operating
activities in accordance with generally accepted accounting principles and is
not necessarily indicative of cash available to fund cash needs.
The Company is a self-managed, self-advised real estate investment trust. With
the acquisition of Paces Village, the Company now owns 47 net-lease restaurant
properties and five apartment properties containing 1,328 apartments. Through
its management subsidiary, the Company manages an additional nine apartment
properties containing 1,713 apartments and two shopping centers. All of the
Company's operations are in the states of North Carolina and Virginia.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Pages 5 - 7 Paces Village Apartments statement of revenues and certain
expenses (as defined) for the year ended December 31, 1995,
and report of independent public accountants.
2
<PAGE>
The Company is not aware of any material factors that would cause the
reported financial information not to be indicative of future operating
results.
(b) Pro Forma Financial Information.
Page 8 Boddie-Noell Properties, Inc. unaudited pro forma
consolidating balance sheet as of December 31, 1995.
Page 9 Boddie-Noell Properties, Inc. unaudited pro forma
consolidating statement of operations for the year ended
December 31, 1995.
The pro forma financial information has been prepared giving effect to
the acquisition of Paces Village Apartments. The pro forma consolidating
balance sheet as of December 31, 1995, has been prepared as if the
acquisition of Paces Village Apartments had been consummated on that
date. The pro forma consolidating statement of operations for the year
ended December 31, 1995, has been prepared as if the acquisition of Paces
Village Apartments had been consummated on January 1, 1995.
The unaudited pro forma consolidating balance sheet is not necessarily
indicative of what the actual financial position of the Company would
have been at December 31, 1995. The unaudited pro forma consolidating
statement of operations does not purport to be indicative of the results
that actually would have occurred if the acquisition had occurred at the
beginning of 1995 or to project the Company's results of operations for
any future date or period. The pro forma statement of operations is based
on available information and upon certain assumptions, as set forth in
the notes to the pro forma statements of operations, that management of
the Company believes are reasonable in the circumstances. In management's
opinion, all adjustments necessary to reflect the terms of the
acquisition have been made.
The pro forma financial statements should be read in conjunction with the
Company's 1995 Annual Report on Form 10-K.
(c) Exhibits.
None
3
<PAGE>
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 hereunto duly authorized.
BODDIE-NOELL PROPERTIES, INC.
(Registrant)
Date: May 13, 1996 by: /s/ Pamela B. Novak
----------------------
Pamela B. Novak
Vice President - Controller
4
<PAGE>
Report of Independent Public Accountants
To Boddie-Noell Properties, Inc.:
We have audited the accompanying statement of revenue and certain expenses
(defined as rental revenue less direct operating expenses, exclusive of
depreciation, management fees and mortgage interest expense) of Paces Village
Apartments (the Property) for the year ended December 31, 1995. The statement of
revenue and certain expenses (as defined) is the responsibility of the
Property's management. 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 revenue and certain expenses (as
defined) 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 financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
The accompanying statement of revenue and certain expenses (as defined) was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission. As described in Note 2, certain costs or
expenses which may not be comparable to those expected to be incurred in the
proposed future operation of the Property are excluded and the accompanying
statement is not intended to be a complete presentation of the revenue and
expenses of the Property.
In our opinion, the statement of revenue and certain expenses (as defined)
referred to above presents fairly, in all material respects, the revenue and
certain expenses of Paces Village Apartments for the year ended December 31,
1995, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Charlotte, North Carolina,
March 20, 1996.
5
<PAGE>
Paces Village Apartments
Statement of Revenue and Certain Expenses (as defined)
For the Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Rental revenue $1,466,867
Certain expenses (as defined):
Rental operations 335,488
Property tax 125,303
Property insurance 11,290
472,081
Revenue in excess of certain expenses (as defined) =============
$ 994,786
</TABLE>
The accompanying notes are an
integral part of this statement.
6
<PAGE>
Paces Village Apartments
Notes to Statement of Revenue and Certain Expenses
December 31, 1995
(as defined)
1. Description of Rental Property:
Paces Village Apartments (the Property) is located in Greensboro, North
Carolina, and consists of 198 one, two and three bedroom units. Construction of
the Property was completed in 1988. The Property was acquired by Boddie-Noell
Properties, Inc. (the Company) on April 29, 1996.
2. Basis of Presentation and Summary of Significant Accounting Policies:
Basis of Presentation
The accompanying statement of revenue and certain expenses (as defined) are
presented on the accrual basis of accounting and comply with the reporting
requirements of the Securities and Exchange Commission for real estate
operations to be acquired. The Company is not aware of any material factors
relating to the Property, other than those factors discussed herein, that would
cause the statement of revenue and certain expenses (as defined) not to be
indicative of future operating results.
Rental Revenue
The apartments are leased for terms of one year or less. Fixed rental amounts
are recorded as they accrue under the terms of each lease.
Certain Expenses (as defined)
Certain expenses (as defined) include direct operating expenses of the Property,
excluding expenses (primarily depreciation, management fees and mortgage
interest expense) which may not be comparable to the expenses expected to be
incurred in the proposed future operations of the Property. Therefore, the
accompanying statement is not representative of the actual operations of the
Property for the period presented.
7
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
PRO FORMA CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
Acquisition of Pro forma
Historical Paces Village Consolidated
---------------- ---------------- ----------------
(A)
<S> <C> <C> <C>
Assets
Real estate investments at cost:
Restaurant properties $ 43,205,075 $ - $ 43,205,075
Apartment properties 55,315,686 10,660,000 65,975,686
---------------- ---------------- ----------------
98,520,761 10,660,000 109,180,761
Less accumulated depreciation (9,020,948) - (9,020,948)
---------------- ---------------- ----------------
89,499,813 10,660,000 100,159,813
Cash and cash equivalents 700,863 (55,589) 645,274
Other assets 3,425,387 42,060 3,467,447
Deferred financing costs, net of amortization 725,713 134,863 860,576
================ ================ ================
Total assets $ 94,351,776 $ 10,781,334 $ 105,133,110
================ ================ ================
Liabilities and Shareholders' Equity
Mortgage and other notes payable 67,161,785 10,650,000 77,811,785
Other liabilities 990,053 131,334 1,121,387
---------------- ---------------- ----------------
Total liabilities 68,151,838 10,781,334 78,933,172
---------------- ---------------- ----------------
Shareholders' equity:
Common stock, $.01 par value, 10,000,000
shares authorized, 3,106,740 shares
issued and outstanding 30,167 - 30,167
Additional paid-in capital 33,785,335 - 33,785,335
Dividends distributed in excess of net income (7,615,564) - (7,615,564)
---------------- ---------------- ----------------
Total shareholders' equity 26,199,938 - 26,199,938
================ ================ ================
Total liabilities and shareholders' equity $ 94,351,776 $ 10,781,334 $ 105,133,110
================ ================ ================
</TABLE>
Notes:
(A) Reflects the acquisition of Paces Village Apartments together with
related borrowings, as if consummated on December 31, 1995.
8
<PAGE>
BODDIE-NOELL PROPERTIES, INC.
PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
The Acquisition Pro Forma
Historical Paces Village Consolidated
--------------- --------------- ---------------
<S> <C> <C> <C>
Revenues
Restaurant rental income $ 4,649,250 $ - $ 4,649,250
Apartment rental income 8,476,268 1,466,867 (a) 9,943,135
Management fees 514,872 - 514,872
Other income 85,248 - 85,248
--------------- --------------- ---------------
13,725,638 1,466,867 15,192,505
--------------- --------------- ---------------
Expenses
Depreciation 2,204,199 273,000 (b) 2,477,199
Amortization 405,182 16,000 (c) 421,182
Apartment operations 2,480,920 472,081 (a) 2,953,001
Administrative 1,285,509 10,000 (d) 1,295,509
Interest 5,362,437 835,000 (e) 6,197,437
Write-off of deferred loan costs at refinancing 37,723 - 37,723
Write-off of deferred acquisition costs 321,400 - 321,400
--------------- --------------- ---------------
12,097,370 1,606,081 13,703,451
=============== =============== ===============
Net income $ 1,628,268 $ (139,214) $ 1,489,054
=============== =============== ===============
Net income per share $ 0.54 $ 0.50
=============== ===============
Weighted average number of
shares outstanding 3,005,809 3,005,809
=============== ===============
Notes:
<FN>
(a) Reflects rental revenue and certain operating expenses (as defined)
of Paces Village Apartments for the year ended December 31, 1995.
See Item 7(a).
(b) Reflects estimated annual straight-line depreciation expense based on
allocation of cost and related lives as follows: Land - $1,250,000; Land
improvements - $940,000, 20 years; Buildings - $8,340,000, 40 years;
Equipment and other personal property - $130,000, 5 to 10 years.
(c) Reflects estimated annual straight-line amortization of various direct
costs associated with execution of new and modified loan agreements.
(d) Reflects estimated annual increase in administrative costs resulting from
acquisition of Paces Village Apartments.
(e) Reflects estimated annual interest expense on borrowings used to finance
the acquisition of Paces Village Apartments. Assumes average 30-day LIBOR
rate of approximately 6.01 percent applied to first deed of trust loan of
$8.6 million with interest at 30-day LIBOR plus 1.75 percent and second
deed of trust loan of $1.4 million with interest at 30-day LIBOR plus
2.25 percent, and effective interest rate of 8.11 percent applied to
$650,000 draw on existing credit facility.
</FN>
</TABLE>
9
<PAGE>
