<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
October 16, 1997
-------------------------------------------------------------
Date of Report (Date of Earliest Event Reported)
AMERICAN REALTY TRUST, INC.
-------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Georgia 1-9948 54-0697989
- --------------------------------------------------------------------------------
(State of Incorporation) (Commission (IRS Employer
File No.) Identification No.)
10670 North Central Expressway, Suite 300, Dallas, TX 75231
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (214) 692-4700
Not Applicable
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On September 16, 1997, American Realty Trust, Inc. (the "Company") purchased the
Collection, a retail and commercial center consisting of four buildings in
Denver, Colorado for $19.5 million (8.3% of the Company's assets at December 31,
1996). The sellers of the property were DDC One Properties, Ltd., a Colorado
limited partnership, Interplaza Retail Limited Liability Company, a Colorado
limited liability company and HTDC, Inc., a Colorado corporation. The property
was constructed in 1987 and contains approximately 267,812 square feet.
On October 16, 1997, the Company purchased in a single transaction four hotels,
the Piccadilly Inn Shaw with 194 rooms, constructed in 1973, Piccadilly Inn
University with 190 rooms, constructed in 1984, Piccadilly Inn Airport with 185
rooms, constructed in 1970 and the Chateau Inn with 78 rooms, constructed in
1989 (collectively the "Piccadilly Inns"). The Piccadilly Inns are all in
Fresno, California. The Company paid $33.0 million (14.0% of the Company's
assets at December 31, 1996) consisting of $19.8 million in new mortgage debt
and 1.6 million shares of Series F Preferred Stock. The Company received net
cash proceeds of $2.1 million from the new mortgage debt. The seller of the
property was the Fansler Foundation, a California non-for-profit corporation.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Pro forma financial information:
Pro forma statements of operations are presented for the year ended December 31,
1996 and the nine months ended September 30, 1997. A pro forma balance sheet as
of September 30, 1997 is also presented.
A summary of the pro forma transaction follows:
On September 16, 1997, the Company purchased the Collection a retail and
commercial center totaling 267,812 square feet in Denver, Colorado for $19.5
million. The Company acquired the property through two wholly owned subsidiaries
ART Collection, Inc. ("ART Collection"), a Georgia corporation and ART Blessin,
Inc. ("ART Blessin"), a Georgia corporation. The Company paid $791,000 in cash
and assumed existing mortgages totaling $14.7 million and issued 400,000 shares
of the Company's Series F Cumulative Convertible Preferred Stock with a
liquidation value of $10.00 per share. The holders are entitled to dividends at
a rate of $10.00 per year or $2.50 per quarter on the 15th day of each March,
June, September and December when and as declared by the Board of Directors of
the Company accruing cumulatively from August 16, 1998 and commencing on October
15, 1998. The Series F Preferred Stock may be converted into Common Stock of the
Company at 90% of the market value of the Company's Common Stock after August
15, 2003. The first lien mortgage in the amount of $14.2 million bears interest
at 8.64% per annum, requires monthly principal and interest payments of $116,000
and matures May 31, 2017. The second lien mortgage in the amount of $580,000
bears interest at 7% per annum from April 1996 to April 2001, 7.5% per annum
from May 2001 to May 2010, requires monthly principal and interest payments of
$3,000 and matures May 31, 2010.
2
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
On October 16, 1997, the Company purchased the Piccadilly Inns, four hotels in
Fresno, California, for $33.0 million. The Company acquired the Piccadilly Inns
through four wholly-owned subsidiaries: ART Piccadilly Shaw Corporation, a
Nevada corporation; ART Piccadilly University Corporation, a Nevada corporation;
ART Piccadilly Airport Corporation, a Nevada corporation; and ART Piccadilly
Chateau Corporation, a Nevada corporation. The Company issued 1.6 million shares
of Series F Cumulative Convertible Preferred Stock having a liquidation value of
$10.00 per share or a total of $16.0 million and obtained mortgage financing of
$19.8 million. The holders are entitled to dividends at a rate of $10.00 per
year or $2.50 per quarter on the 15th day of each March, June, September and
December when and as declared by the Board of Directors of the Company accruing
cumulatively from August 16, 1998 and commencing on October 15, 1998. The Series
F Preferred Stock may be converted into Common Stock of the Company at 90% of
the market value of the Company's Common Stock after August 15, 2003. The
Company received net financing proceeds of $2.2 million after the payment of
various closing costs associated with the financing. The mortgage bears interest
at 8.40% per annum, requires monthly principal and interest payments of $158,000
and matures October 2013.
The pro forma statements of operations present the Company's operations as if
the transaction described above had occurred at the beginning of each of the
periods presented.
[THIS SPACE INTENTIONALLY LEFT BLANK.]
3
<PAGE> 4
AMERICAN REALTY TRUST, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Piccadilly
Actual(1) Inns Pro forma
-------- ---------- ---------
(dollars in thousands)
Assets
<S> <C> <C> <C>
Notes and interest receivable
Performing .......................... $ 4,182 $ -- $ 4,182
Nonperforming, nonaccruing .......... 18,954 -- 18,954
-------- -------- --------
23,136 -- 23,136
Less - allowance for estimated losses ... (2,398) -- (2,398)
-------- -------- --------
20,738 -- 20,738
Real estate held for sale, net of
accumulated depreciation ............ 149,127 -- 149,127
Real estate held for investment, net of
accumulated depreciation ............ 84,898 33,000 117,898
Plant and equipment, net of accumulated
depreciation ........................ 5,809 -- 5,809
Investments in marketable equity
securities, at market ............... 7,425 -- 7,425
Investments in equity investees ......... 46,266 -- 46,266
Intangibles, net of accumulated
amortization ........................ 15,309 -- 15,309
Cash and cash equivalents ............... 2,031 2,200 4,231
Other assets ............................ 23,015 600 23,615
-------- -------- --------
$354,618 $ 35,800 $390,418
======== ======== ========
</TABLE>
- ----------------
(1) Includes the Collection acquired September 16, 1997.
4
<PAGE> 5
AMERICAN REALTY TRUST, INC.
PRO FORMA
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Piccadilly
Actual(1) Inns Pro forma
--------- ---------- ---------
(dollars in thousands)
<S> <C> <C> <C>
Liabilities and Shareholders' Equity
Liabilities
Notes and interest payable .............. $213,293 $ 19,800 $233,093
Margin borrowings ....................... 52,071 -- 52,071
Other liabilities ....................... 31,456 -- 31,456
-------- -------- --------
296,820 19,800 316,620
Minority interest ....................... 10,742 -- 10,742
Commitments and contingencies
Shareholders' equity
Preferred Stock, $2.00 par value
authorized 20,000,000 shares
4,000 shares Series B, 10%
cumulative, $2.00 par value .... 8 -- 8
16,681 shares Series C, 10%
cumulative, $2.00 par value ... 33 -- 33
2,000,000 shares Series F 10%
Cumulative, $2.00 par value ... 800 3,200 4,000
Common Stock, $.01 par value; authorized
16,667,000 shares, 13,497,348 shares
in 1997 and 1996 issued ............. 120 -- 120
Paid-in capital ......................... 72,147 12,800 84,947
Accumulated distributions in excess of
accumulated earnings ................ (26,037) -- (26,037)
Treasury stock at cost, 1,503,427 ....... (15) -- (15)
-------- -------- --------
47,056 16,000 63,056
-------- -------- --------
$354,618 $ 35,800 $390,418
======== ======== ========
</TABLE>
- -----------
(1) Includes the Collection acquired September 16, 1997.
5
<PAGE> 6
AMERICAN REALTY TRUST, INC.
PRO FORMA
STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997
<TABLE>
<CAPTION>
Piccadilly
Actual Collection(1) Inns(1) Proforma
--------- ------------- ------------ --------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Income
Sales ............................... $ 10,828 $ -- $ -- $ 10,828
Rents ............................... 18,725 1,879 10,769 31,373
Interest ............................ 2,769 -- -- 2,769
Other ............................... (117) -- -- (117)
------------ -------- ------------ ------------
32,205 1,879 10,769 44,853
Expenses
Cost of sales ....................... 8,672 -- -- 8,672
Property operations ................. 13,501 308 6,493 20,302
Interest ............................ 20,425 947 1,247 22,619
Depreciation and amortization ....... 1,902 -- -- 1,902
Advisory fee to affiliate ........... 1,639 -- -- 1,639
Incentive compensation .............. 299 -- -- 299
General and administrative .......... 4,654 -- -- 4,654
Minority interest ................... 959 -- -- 959
------------ -------- ------------ ------------
52,051 1,255 7,740 61,046
------------ -------- ------------ ------------
Income (loss) from operations ........... (19,846) 624 3,029 (16,193)
Equity in income (losses) of investees .. 5,106 -- -- 5,106
Gain on sale of real estate ............. 11,354 -- -- 11,354
------------ -------- ------------ ------------
Income (loss) before extraordinary gain . (3,386) 624 3,029 (267)
Extraordinary gain ...................... -- -- -- --
------------ -------- ------------ ------------
Net income (loss) ....................... (3,386) 624 3,029 (267)
Preferred dividend requirement .......... (151) (60) (240) (451)
------------ -------- ------------ ------------
Net income (loss) applicable to Common
shares .............................. $ (3,537) $ 564 $ 2,789 $ (184)
============ ======== ============ ============
Earnings per share
Income before extraordinary gain .... $ (.29) $ (.02)
Extraordinary gain .................. -- --
------------ ------------
Net (loss) .......................... $ (.29) $ (.02)
============ ============
Weighted average shares of Common Stock
used in computing earnings per share 12,041,252 12,041,252
============ ============
</TABLE>
- ----------------
(1) Assumes acquisition by the Company on January 1, 1997.
6
<PAGE> 7
AMERICAN REALTY TRUST, INC.
PRO FORMA
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
Piccadilly
Actual Collection(1) Inns(1) Proforma
------ ------------- ---------- --------
(dollars in thousands, except per share)
<S> <C> <C> <C> <C>
Income
Rents ................. $ 20,658 $ 1,886 $ 12,930 $ 35,474
Interest .............. 4,724 -- 3 4,727
Other ................. 1,597 356 -- 1,953
------------ ------------ ------------ ------------
26,979 2,242 12,933 42,154
Expenses
Property operations ... 15,874 381 9,719 25,974
Interest .............. 16,450 124 16,574
Depreciation and
amortization ....... 2,002 -- 549 2,551
Advisory fee to
affiliate .......... 1,539 -- -- 1,539
General and
administrative ..... 2,712 3,168 5,880
------------ ------------ ------------ ------------
38,577 381 13,560 52,518
------------ ------------ ------------ ------------
Income (loss) from
operations ............ (11,598) 1,861 (627) (10,364)
Equity in income of
investees .......... 2,004 -- -- 2,004
Gain on sale of real
estate ............. 3,659 -- -- 3,659
------------ ------------ ------------ ------------
Income (loss) before
extraordinary gain .... (5,935) 1,861 (627) (4,701)
Extraordinary gain ........ 381 -- -- 381
------------ ------------ ------------ ------------
Net income (loss) ......... (5,554) 1,861 (627) (4,320)
Preferred dividend
requirement ........... (113) (80) (320) (513)
------------ ------------ ------------ ------------
Net income (loss)
applicable to
Common Shares $ 5,667 $ 1,781 $ (947) $ 4,833
============ ============ ============ ============
Earnings per share
Income (loss) before
extraordinary gain . $ (.46) $ (.41)
Extraordinary gain .... .03 .03
------------ ------------
Net (loss) ............ $ (.43) $ (.38)
============ ============
Weighted average shares
of Common Stock used in
computing earnings per
share ................. 12,765,082 12,765,082
============ ============
</TABLE>
- ----------------
(1) Assumes acquisition by the Company on January 1, 1996.
7
<PAGE> 8
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (Continued)
(b) Financial statements of properties acquired:
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ---------------------------------------------------------------------
<S> <C>
99.0 The Collection Audited Statement of Revenues and Direct Operating
Expenses for the year ended December 31, 1996.
99.1 The Piccadilly Inns Audited Statement of Revenues and Direct Operating
Expenses for the year ended June 30, 1997.
</TABLE>
----------------------------------
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 hereto duly authorized.
AMERICAN REALTY TRUST, INC.
Date: December 16, 1997 By: /s/ Thomas A. Holland
-------------------------- -------------------------------
Thomas A. Holland
Executive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
8
<PAGE> 9
AMERICAN REALTY TRUST, INC.
EXHIBIT TO ITS
CURRENT REPORT ON FORM 8-K
Dated October 16, 1997
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- ---------------------------------------------------------
<S> <C>
99.0 The Collection Audited Statement of Revenues
and Direct Operating Expenses for the year
ended December 31, 1996.
99.1 The Piccadilly Inns Audited Statement of
Revenues and Direct Operating Expenses for
the year ended June 30, 1997.
</TABLE>
9
<PAGE> 1
EXHIBIT 99.0
THE COLLECTION RETAIL CENTER
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1996
<PAGE> 2
Independent Auditors' Report
To the Board of Trustees
American Realty Trust
We have audited the accompanying statement of revenues and direct operating
expenses of The Collection Retail Center for the year ended December 31, 1996.
This statement of revenues and direct operating expenses is the responsibility
of the Property's management. Our responsibility is to express an opinion on
this statement of revenues and direct operating 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 direct operating 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
direct operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of revenues and direct operating expenses
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of American Realty Trust) and, as described in Note 1, is
not intended to be a complete presentation of the results of operations.
In our opinion, the statement of revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of The Collection Retail Center for the year ended December
31, 1996, in conformity with generally accepted accounting principles.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
December 9, 1997
<PAGE> 3
THE COLLECTION RETAIL CENTER
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
Year Ended December 31, 1996
<TABLE>
<S> <C>
REVENUES
Net rental revenues $ 1,886,095
Other revenues 356,383
--------------
Total revenues 2,242,478
DIRECT OPERATING EXPENSES
Property taxes 149,965
Repairs and maintenance 108,991
Utilities 46,556
Insurance 45,194
Salaries and benefits 30,643
--------------
Total direct operating expenses 381,349
--------------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 1,861,129
==============
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 4
THE COLLECTION RETAIL CENTER
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
December 31, 1996
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
The Collection Retail Center (the Center) is a 267,812 square
foot wholesale and retail complex consisting of four
buildings, located in Denver, Colorado. During 1996, the
property was owned by DDC One Properties, Ltd., Interplaza
Retail Limited Liability Company and HTDC, Inc.
The accompanying financial statement does not include a
provision for depreciation and amortization, bad debt expense,
interest expense or income taxes. Accordingly, this statement
is not intended to be a complete presentation of the results
of operations.
NOTE 2: ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3: OTHER REVENUES
Other revenues consist of the following:
<TABLE>
<S> <C>
Common area maintenance charges $346,255
Miscellaneous 10,128
--------
$356,383
========
</TABLE>
NOTE 4: SUBSEQUENT EVENT
The Center was sold to American Realty Trust, a Georgia
corporation, on September 16, 1997.
<PAGE> 1
EXHIBIT 99.1
THE PICCADILLY HOTELS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED JUNE 30, 1997
<PAGE> 2
Independent Auditors' Report
To the Board of Trustees
American Realty Trust
We have audited the accompanying statement of revenues and direct operating
expenses of The Piccadilly Hotels for the year ended June 30, 1997. This
statement of revenues and direct operating expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement of revenues and direct operating 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 direct operating 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
direct operating expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall statement of revenues and direct operating expenses
presentation. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying financial statement is prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in Form 8-K of American Realty Trust) and, as described in Note 1, is
not intended to be a complete presentation of the results of operations.
In our opinion, the statement of revenues and direct operating expenses referred
to above presents fairly, in all material respects, the revenues and direct
operating expenses of The Piccadilly Hotels for the year ended June 30, 1997, in
conformity with generally accepted accounting principles.
Farmer, Fuqua, Hunt & Munselle, P.C.
Dallas, Texas
December 8, 1997
<PAGE> 3
THE PICCADILLY HOTELS
STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
YEAR ENDED JUNE 30, 1997
<TABLE>
<S> <C>
REVENUES
Room revenues $10,872,023
Food and liquor sales 3,329,040
Other revenues 158,660
-----------
Total revenues 14,359,723
OPERATING EXPENSES
Salaries and benefits 4,158,393
Utilities 845,539
Food costs 897,417
Repairs and maintenance 674,063
Direct expenses 612,961
Linens and supplies 526,087
Property taxes 284,953
House laundry 216,726
Insurance 215,730
Liquor costs 182,573
Music 43,227
-----------
Total direct operating expenses 8,637,669
-----------
REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES $ 5,702,054
===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE> 4
THE PICCADILLY HOTELS
NOTES TO STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
JUNE 30, 1997
NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION
The Piccadilly Hotels ("the Hotels") consists of four hotels,
two with restaurants, located in Fresno, California. The
Hotels are as follows, The Piccadilly Inn - Shaw, a 194-room
hotel, which includes Oliver's Restaurant, The Piccadilly Inn
- Airport, a 185-room hotel, which includes The Steak & Anchor
Restaurant, The Piccadilly Inn - University, a 190-room
hotel, which includes its catering and restaurant operation,
and The Chateau Inn, a 78-room hotel. During 1997, the Hotels
were owned by The Fansler Foundation, a nonprofit public
benefit corporation.
The accompanying financial statement does not include a
provision for depreciation and amortization, bad debt expense,
interest expense or income taxes. Accordingly, this statement
is not intended to be a complete presentation of the results
of operations.
NOTE 2: ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
NOTE 3: OTHER REVENUES
Other revenues consist of the following:
<TABLE>
<S> <C>
Miscellaneous hotel revenues $ 78,674
Telephone revenues (net) 74,630
Gift shop income 5,356
------------
Total $ 158,660
============
</TABLE>
NOTE 4: SUBSEQUENT EVENT
The Hotels were sold to American Realty Trust, a Georgia
corporation, on October 16, 1997.
