SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1 to
Current Report
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Original Report: June 26, 1996
CORNERSTONE REALTY INCOME TRUST, INC.
(Exact name of registrant as specified in its charter)
VIRGINIA 0-23954 54-1589139
(State of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
306 East Main Street
Richmond, Virginia 23219
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code:
(804) 643-1761
<PAGE>
CORNERSTONE REALTY INCOME TRUST, INC.
FORM 8-K/A
Index
Page No.
Item 7. Financial Statements, Pro Forma Financial
Information and Exhibits
a. Independent Auditor's Report
(Lexington Towers Apartments)
Historical Statement of Income
and Direct Operating Expenses
(Lexington Towers Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Lexington Towers
Apartments)
b. Independent Auditor's Report
(Oak Park Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Oak Park Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Oak Park Apartments)
e. Independent Auditors' Report
(Hampton Glen Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Hampton Glen Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Hampton Glen Apartments)
f. Pro Forma Statement of Operations for
the Six Months ended June 30, 1996
(unaudited)
Pro Forma Balance Sheet as of
June 30, 1996 (unaudited)
Pro Forma Statement of Operations
for the Year ended December 31, 1995
(unaudited)
g. Exhibits
23.1 Consent of Independent Auditors
23.2 Consent of Independent Auditors
23.5 Consent of Independent Auditors
-2-
<PAGE>
The Company hereby amends and restates Item 7.a., 7.b., 7.e. and 7.f.
of its Current Report on Form 8-K dated June 26, 1996 as follows:
-3-
<PAGE>
Item 7.a.
-4-
<PAGE>
[L.P. MARTIN & COMPANY LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We have audited the accompanying statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Lexington Tower Apartments located in Richmond,
Virginia for the year ended December 31, 1995. This statement is the
responsibility of the management of Lexington Tower Apartments. 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 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 presentation of the statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in a filing by Cornerstone Realty Income Trust, Inc.) and excludes
material expenses, described in Note 1 to the statement, that would not be
comparable to those resulting from the proposed future operations of the
property.
In our opinion, the statement referred to above presents fairly, in all
material respects, the income and direct operating expenses of Lexington Tower
Apartments (as defined above) for the year ended December 31, 1995, in
conformity with generally accepted accounting principles.
/s/ L.P. MARTIN & CO., P.C.
Richmond, Virginia
June 21, 1996
<PAGE>
LEXINGTON TOWER APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
YEAR ENDED DECEMBER 31, 1995
INCOME
Rental and Other Income $ 690,473
-----------
DIRECT OPERATING EXPENSES
Administrative and Other 82,341
Insurance 20,244
Repairs and Maintenance 195,638
Taxes, Property 61,928
Utilities 124,494
---------
TOTAL DIRECT OPERATING EXPENSES 484,645
----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 205,828
==========
See accompanying note to the financial statement.
<PAGE>
LEXINGTON TOWER APARTMENTS
NOTE TO THE STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES
EXCLUSIVE OF ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
YEAR ENDED DECEMBER 31, 1995
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Lexington Tower Apartments is a 197 unit high rise apartment complex with
attached parking located in Richmond, Virginia. Living space totals 107,322
square feet.
The assets comprising the property are owned by Lexington Tower Associates
during the financial statement period. Cornerstone Realty Income Trust, Inc. has
a contract to purchase the property and is scheduled to close in June, 1996.
In accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission, the statement of income and direct operating expenses excludes
interest and non rent related income and expenses not considered comparable to
those resulting from the proposed future operations of the property. Excluded
expenses are mortgage interest, property depreciation, legal fees, accounting
fees and management fees.
<PAGE>
ITEM 7.b.
-5-
<PAGE>
[L.P. Martin & Company Letterhead]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We have audited the accompanying statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Oak Park Apartments located in Augusta, Georgia for
the twelve month period ended June 30, 1996. This statement is the
responsibility of the management of Oak Park Apartments. 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 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 presentation of the statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in a filing by Cornerstone Realty Income Trust, Inc.) and excludes
material expenses, described in Note 1 to the statement, that would not be
comparable to those resulting from the proposed future operations of the
property.
In our opinion, the statement referred to above presents fairly, in all
material respects, the income and direct operating expenses of Oak Park
Apartments (as defined above) for the twelve month period ended June 30, 1996,
in conformity with generally accepted accounting principles.
/s/ L.P. Martin & Co., P.C.
-------------------------------
L.P. Martin & Co., P.C.
Richmond, Virginia
October 23, 1996
<PAGE>
OAK PARK APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTH PERIOD ENDED JUNE 30, 1996
INCOME
- ------
Rental and Other Income $2,076,569
-----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 191,935
Insurance 23,433
Repairs and Maintenance 443,226
Taxes, Property 74,950
Utilities 204,822
----------
TOTAL DIRECT OPERATING EXPENSES 938,366
---------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $1,138,203
===========
See accompanying note to the financial statement.
<PAGE>
OAK PARK APARTMENTS
NOTE TO THE STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES
EXCLUSIVE OF ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTH PERIOD ENDED JUNE 30, 1996
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
- -----------------------------------------------
Oak Park Apartments is a 456 unit garden style apartment complex located on 9.57
acres in Augusta, Georgia. Living space totals 397,619 square feet.
The assets comprising the property were owned by Palms Associates, Inc. during
the financial statement period. Cornerstone Realty Income Trust, Inc. purchased
the property in July, 1996.
In accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission, the statement of income and direct operating expenses excludes
interest and non rent related income and expenses not considered comparable to
those resulting from the proposed future operations of the property. Excluded
expenses are mortgage interest, property depreciation, amortization, legal fees,
accounting fees and management fees.
<PAGE>
ITEM 7.e.
[L.P. Martin & Company Letterhead]
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We have audited the accompanying statement of income and direct
operating expenses exclusive of items not comparable to the proposed future
operations of the property Hampton Glen Apartments located in Glen Allen,
Virginia for the twelve month period ended July 31, 1996. This statement is the
responsibility of the management of Hampton Glen Apartments. 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 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 presentation of the statement. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in a filing by Cornerstone Realty Income Trust, Inc.) and excludes
material expenses, described in Note 1 to the statement, that would not be
comparable to those resulting from the proposed future operations of the
property.
In our opinion, the statement referred to above presents fairly, in all
material respects, the income and direct operating expenses of Hampton Glen
Apartments (as defined above) for the twelve month period ended July 31, 1996,
in conformity with generally accepted accounting principles.
/s/ L.P. Martin & Co., P.C.
------------------------------
L.P. Martin & Co., P.C.
Richmond, Virginia
October 17, 1996
<PAGE>
HAMPTON GLEN APARTMENTS
STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES EXCLUSIVE OF
ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED JULY 31, 1996
INCOME
- ------
Rental and Other Income $1,663,279
-----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 171,413
Insurance 17,729
Repairs and Maintenance 223,594
Taxes, Property 89,304
Utilities 97,514
----------
TOTAL DIRECT OPERATING EXPENSES 599,554
---------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $1,063,725
===========
<PAGE>
HAMPTON GLEN APARTMENTS
NOTE TO THE STATEMENT OF INCOME AND DIRECT OPERATING EXPENSES
EXCLUSIVE OF ITEMS NOT COMPARABLE TO THE PROPOSED FUTURE
OPERATIONS OF THE PROPERTY
TWELVE MONTHS ENDED JULY 31, 1996
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
- -----------------------------------------------
Hampton Glen Apartments is a 232 unit residential garden style complex located
on 16.018 acres in Glen Allen, Virginia. Living space totals 182,824 square
feet.
The assets comprising the property were owned by Pacific Mutual Life Insurance
Company during the financial statement period. Cornerstone Realty Income Trust,
Inc. purchased the property in September, 1996.
In accordance with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission, the statement of income and direct operating expenses excludes
interest and non rent related income and expenses not considered comparable to
those resulting from the proposed future operations of the property. Excluded
expenses are property depreciation, management fees, legal fees and interest
expense.
<PAGE>
ITEM 7.f.
Pro Forma Statement of Operations for the six months ended June 30, 1996
(unaudited)
The accompanying unaudited Pro Forma Statement of Operations for the
six months ended June 30, 1996 is presented as if (a) the Company had owned the
acquired properties shown below on January 1, 1996, (b) the Company had
qualified as a REIT, distributed all of its taxable income and, therefore,
incurred no federal income tax expense during the year, and (c) the Company had
used proceeds from its offering to acquire the properties. The unadjusted Pro
Forma Statement of Operations does not purport to represent what the Company's
results of operations would actually have been if such transactions, in fact,
had occurred on January 1, 1996, nor does it purport to represent the results of
operations for future periods.
<TABLE>
<CAPTION>
Historical Meadows West Eagle Ashley Park Arbor Trace Longmeadow
Statement of Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Operations Adjustments Adjustments Adjustments Adjustments Adjustments
-----------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions - 1/31/96 3/1/96 3/1/96 3/1/96 4/1/96
Revenues from rental properties $15,219,575 $90,006 $127,302 $284,403 $138,795 186,114
Rental expenses:
Utilities 1,371,187 7,903 7,327 16,769 14,849 9,440
Repairs and maintenance 1,697,353 14,553 22,819 39,027 19,702 25,542
Taxes and insurance 1,391,073 5,273 9,776 27,496 10,819 14,262
Property management 801,236 - - - - -
Advertising 389,585 1,484 3,066 3,213 3,215 5,455
General and administrative 476,357 - - - - -
Amortization 15,282 - - - - -
Depreciation of rental property 2,704,072 - - - - -
Other 1,300,231 4,452 9,198 18,542 9,645 16,367
----------------------------------------------------------------------------------
10,146,376 33,665 52,186 105,047 58,230 71,066
Income before interest income (expense) 5,073,199 56,341 75,116 179,356 80,565 115,048
Interest income 191,213 - - - - -
Interest expense (343,089) - - - - -
---------------------------------------------------------------------------------
Net Income $4,921,323 $56,341 $75,116 $179,356 $80,565 $115,048
Net income per share $0.32
-----
Wgt. avg. number of shares outstanding 15,435,615
----------
</TABLE>
<TABLE>
<CAPTION>
Trophy Chase Beacon Hill Summerwalk Willow Creek Meadowcreek Lexington
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments
----------------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 4/1/96 5/1/96 5/1/96 5/1/96 5/31/96 6/26/96
Revenues from rental properties 217,183 684,622 297,115 418,247 671,043 345,237
Rental expenses:
Utilities 21,899 48,373 23,038 30,473 32,330 62,247
Repairs and maintenance 39,180 68,173 59,973 68,918 90,083 97,819
Taxes and insurance 13,830 58,443 15,663 38,620 50,931 41,086
Property management - - - - - -
Advertising 5,819 12,974 7,559 10,041 12,198 10,293
General and administrative - - - - - -
Amortization - - - - - -
Depreciation of rental property - - - - - -
Other 17,458 38,922 22,676 30,122 36,593 30,878
----------------------------------------------------------------------------------------
98,186 226,885 128,909 178,174 222,135 242,323
Income before interest income (expense) 118,997 457,737 168,206 240,073 448,908 102,914
Interest income - - - - - -
Interest expense - - - - - -
----------------------------------------------------------------------------------------
Net Income $118,997 $457,737 $168,206 $240,073 $448,908 $102,914
Net income per share
Wgt. avg. number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
Oak Park Paces Glen Doctors Park Hampton Glen 1996
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Total
Adjustments Adjustments Adjustments Adjustments Adjustments Pro Forma
---------------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 7/1/96 7/19/96 8/1/96 8/1/96 - -
Revenues from rental properties $ 1,038,285 580,282 436,897 831,640 - 21,566,746
Rental expenses:
Utilities 102,411 36,056 22,244 48,757 - 1,855,303
Repairs and maintenance 221,613 85,006 105,425 111,797 - 2,766,983
Taxes and insurance 49,192 43,232 40,425 53,517 - 1,863,638
Property management - - - - 351,646 1,152,882
Advertising 23,992 13,687 8,143 21,427 - 532,151
General and administrative - - - - 93,532 569,889
Amortization - - - - - 15,282
Depreciation of rental property - - - - 1,231,020 3,935,092
Other 71,976 41,060 24,429 64,280 - 1,736,829
--------------------------------------------------------------------------------------
469,184 219,041 200,666 299,778 1,676,198 14,428,049
Income before interest income (expense) 569,101 361,241 236,231 531,862 (1,676,198) 7,138,697
Interest income - - - - - 191,213
Interest expense - - - - (179,028) (522,117)
---------------------------------------------------------------------------------------
Net Income $569,101 $361,241 $236,231 $531,862 $(1,855,226) 6,807,793
Net income per share $0.29
----
Wgt. avg. number of shares outstanding 23,078,666
----------
</TABLE>
The pro forma adjustments give effect to the actual rental income and expenses
for the properties for the period in 1996 prior to their acquisition by the
Company. Notes to the Pro Forma Statement of Operations are as follows: (1)
property management expense has been adjusted based on the Company's contractual
arrangement, and (2) depreciation has been adjusted based on the Company's
depreciable basis of the acquired properties of $97,473,448, a 27.5 year life a
the respective periods prior to their acquisition. The pro forma rental income
and expenses of each property are based on the annual financial results of each
respective property as obtained in an audit by an independent auditor.
Management believes these results are representative of the actual results of
operations for the periods in which the Company did not own the properties. The
Company financed part of the purchase price of certain acquisitions with short
term borrowings, which were subsequently retired with proceeds of the Company's
on-going best efforts offering within approximately 60 days of acquisition. The
Company executed a $5,500,000 unsecured note in conjunction with the purchase of
Lexington Towers. The payment terms were more favorable than the line of credit.
The principal balance is due on January 1, 1999 and is prepayable at any time.
The pro forma weighted average number of shares includes the number of shares
necessary to provide proceeds adequate to finance the purchase price.
<PAGE>
Pro Forma Balance Sheet as of June 30, 1996 (unaudited)
The accompanying unaudited Pro Forma Balance Sheet as of June 30, 1996 is
presented as if the Company had owned the following properties held on December
31, 1995. The unaudited Pro Forma Balance Sheet does not purport to represent
what the Company's financial position would actually have been if the
transactions, in fact, had occurred on December 31, 1995. The Pro Forma column
assumes the Company used the proceeds from its offerings to acquire certain
properties.
<TABLE>
<CAPTION>
As of June 30, 1996
------------------------------------------------------------------------------
Historical Oak Park Paces Glen Doctors Park Hampton Glen
Balance Pro Forma Pro Forma Pro Forma Pro Forma Total
Sheet Adjustments Adjustments Adjustments Adjustments Pro Forma
-----------------------------------------------------------------------------
<S> <C>
ASSETS
Investment in Rental Property
Land $26,444,788 588,240 2,153,250 491,665 1,391,992 $31,069,935
Building 188,770,894 9,215,760 5,271,750 4,971,283 10,207,939 218,437,626
Furniture 2,839,132 - - - - 2,839,132
------------------------------------------------------------------------------
218,054,814 9,804,000 7,425,000 5,462,948 11,599,931 252,346,693
Less accumulated depreciation (6,959,046) - - - - (6,959,046)
------------------------------------------------------------------------------
211,095,768 9,804,000 7,425,000 5,462,948 11,599,931 245,387,647
Cash and cash equivalents 7,961,752 - - - - 7,961,752
Prepaid expenses 561,066 - - - - 561,066
Other assets 877,668 - - - - 877,668
-----------------------------------------------------------------------------
9,400,486 - - - - 9,400,486
-------------------------------------------------------------------------------
$220,496,254 $9,804,000 $7,425,000 $5,462,948 $11,599,931 $254,788,133
===============================================================================
LIABILITIES and SHAREHOLDERS' EQUITY
Liabilities
Notes payable $19,205,000 - - - - $19,205,000
Accounts payable 504,506 - - - - 504,506
Accrued expenses 4,110,553 - - - - 4,110,553
Rents received in advance 77,513 - - - - 77,513
Tenant security deposits 1,105,511 - - - - 1,105,511
----------------------------------------------------------------------------
25,003,083 - - - - 25,003,083
Shareholders' equity
Common stock 198,300,145 9,804,000 7,425,000 5,462,948 11,599,931 232,592,024
Deferred compensation (66,000) - - - - (66,000)
Distributions in excess of net income (2,740,974) - - - - (2,740,974)
------------------------------------------------------------------------------
195,493,171 9,804,000 7,425,000 5,462,948 11,599,931 229,785,050
------------------------------------------------------------------------------
$220,496,254 $9,804,000 $7,425,000 $5,462,948 $11,599,931 $254,788,133
===============================================================================
</TABLE>
Pro Forma Statement of Operations for the year ended December 31, 1995
(unaudited)
The accompanying unaudited Pro Forma Statement of Operations for the
year ended December 31, 1995 is presented as if (a) the Company had owned the
acquired properties shown below on January 1, 1995, (b) the Company had
qualified as a REIT, distributed all of its taxable income and, therefore,
incurred no federal income tax expense during the year, and (c) the Company had
used proceeds from its offering to acquire the properties. The unadjusted Pro
Forma Statement of Operations does not purport to represent what the Company's
results of operations would actually have been if such transactions, in fact,
had occurred on January 1, 1995, nor does it purport to represent the results of
operations for future periods.
<PAGE>
<TABLE>
<CAPTION>
Historical 1995 Meadows West Eagle Ashley Park Arbor Trace
Statement of 1995 Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Operations Acquisitions Adjustments Adjustments Adjustments Adjustments Adjustments
-------------------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions - - - 1/31/96 3/1/96 3/1/96 3/1/96
Revenues from rental properties $16,300,821 $7,778,024 - $1,080,070 $763,810 $1,706,415 $832,771
Rental expenses:
Utilities 1,676,938 577,495 - 94,834 43,960 100,612 89,092
Repairs and maintenance 2,042,819 1,442,619 - 174,632 136,915 234,163 118,212
Taxes and insurance 1,342,427 677,381 - 63,281 58,657 164,974 64,914
Property management 896,521 - $451,856 - - - -
Advertising 378,089 180,896 - 17,808 18,397 19,275 19,290
General and administrative 609,969 - 112,858 - - - -
Amortization 30,564 - - - - - -
Depreciation of rental property 2,788,818 - 1,316,783 - - - -
Other 1,283,396 542,686 - 53,425 55,189 111,254 57,869
-----------------------------------------------------------------------------------------
11,049,541 3,421,077 1,881,497 403,980 313,118 630,278 349,377
Income before interest income (expense) 5,251,280 4,356,947 (1,881,497) 676,090 450,692 1,076,137 483,394
Interest income 226,555 - - - - - -
Interest expense (248,120) - - - - - -
-----------------------------------------------------------------------------------------
Net Income $5,229,715 $4,356,947 ($1,881,497) $676,090 $450,692 $1,076,137 $483,394
Net income per share $0.64
-----
Wgt. avg. number of shares outstanding 8,176,803
---------
</TABLE>
<TABLE>
<CAPTION>
Longmeadow Trophy Chase Beacon Hill Summerwalk Willow Creek Meadowcreek Lexington
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments
--------------------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 4/1/96 4/1/96 5/1/96 5/1/96 5/1/96 5/31/96 6/26/96
Revenues from rental properties 744,456 868,732 2,053,866 891,345 1,254,741 1,610,504 690,473
Rental expenses:
Utilities 37,759 87,594 145,120 69,113 91,419 77,592 124,494
Repairs and maintenance 102,168 156,719 204,519 179,920 206,755 216,198 195,638
Taxes and insurance 57,047 55,321 175,329 46,988 115,859 122,234 82,172
Property management - - - - - - -
Advertising 21,822 23,277 38,923 22,676 30,122 29,275 20,585
General and administrative - - - - - - -
Amortization - - - - - - -
Depreciation of rental property - - - - - - -
Other 65,465 69,831 116,767 68,029 90,365 87,824 61,756
---------------------------------------------------------------------------------------------
284,261 392,742 680,658 386,726 534,520 533,123 484,645
Income before interest income (expense) 460,195 475,990 1,373,208 504,619 720,221 1,077,381 205,828
Interest income - - - - - - -
Interest expense - - - - - -
---------------------------------------------------------------------------------------------
Net Income $460,195 $475,990 $1,373,208 $504,619 $720,221 $1,077,381 $205,828
Net income per share
Wgt. avg. number of shares outstanding
</TABLE>
<TABLE>
<CAPTION>
Oak Park Paces Glen Doctors Park Hampton Glen 1996
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Total
Adjustments Adjustments Adjustments Adjustments Adjustments Pro Forma
--------------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 7/1/96 7/19/96 8/1/96 8/1/96 - -
Revenues from rental properties 2,076,569 1,160,564 873,794 1,663,279 - $42,350,234
Rental expenses:
Utilities 204,822 72,111 44,488 97,514 - 3,634,957
Repairs and maintenance 443,226 170,012 210,849 223,594 - 6,458,958
Taxes and insurance 98,383 86,463 80,849 107,033 - 3,399,312
Property management - - - - $1,011,159 2,359,536
Advertising 47,984 27,373 16,286 42,853 - 954,931
General and administrative - - - - 273,709 996,536
Amortization - - - - - 30,564
Depreciation of rental property - - - - 3,544,524 7,650,125
Other 143,951 82,119 48,856 128,560 - 3,067,342
---------------------------------------------------------------------------------------
938,366 438,078 401,328 599,554 4,829,392 28,552,261
Income before interest income (expense) 1,138,203 722,486 472,466 1,063,725 (4,829,392) 13,797,973
Interest income - - - - - 226,555
Interest expense - - - - (358,044) (606,164)
----------------------------------------------------------------------------------------
Net Income $1,138,203 $722,486 $472,466 $1,063,725 $(5,187,436) $ 13,418,364
Net income per share $0.56
-----
Wgt. avg. number of shares outstanding 23,924,097
----------
</TABLE>
The pro forma adjustments give effect to the actual rental income and expenses
for the properties for the period in 1996 prior to their acquisition by the
Company. Notes to the Pro Forma Statement of Operations are as follows: (1)
property management expense has been adjusted based on the Company's contractual
arrangement, and (2) depreciation has been adjusted based on the Company's
depreciable basis of the acquired properties of $120,988,061, a 27.5 year life
and the respective periods prior to their acquisition. The pro forma rental
income and expenses of each property are based on the annual financial results
of each respective property as obtained in an audit by an independent auditor.
Management believes these results are representative of the actual results of
operations for the periods in which the Company did not own the properties. The
Company financed part of the purchase price of certain acquisitions with short
term borrowings, which were subsequently retired with proceeds of the Company's
on-going best efforts offering within approximately 60 days of acquisition. The
Company executed a $5,500,000 unsecured note in conjunction with the purchase of
Lexington Towers. The payment terms were more favorable than the line of credit.
The principal balance is due on January 1, 1999 and is prepayable at any time.
The pro forma weighted average number of shares includes the number of shares
necessary to provide proceeds adequate to finance the purchase price. (3) See
attached for detail of 1995 acquisitions.
<PAGE>
Pro Forma Statement of Operations for the year ended December 31, 1995
(unaudited)
The following schedule provides detail of 1995 acquisitions by property included
in the Pro Forma Statement of Operations for the year ended December 31, 1995.
<TABLE>
<CAPTION>
Sterling Pointe Breckinridge Magnolia Bay Watch Hanover Mill Creek
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments
--------------- ------------ ----------- ----------- ------------ -----------
Date of Acquisition 4/1/95 6/21/95 6/1/95 7/18/95 8/22/95 9/22/95
<S><C>
Property operations
Revenues from rental properties $374,940 $487,168 $429,620 $563,622 $636,160 $906,560
Rental expenses:
Utilities 17,682 35,962 30,289 83,187 44,983 34,986
Repairs and maintenance 56,047 112,044 97,415 99,880 118,199 131,318
Taxes and insurance 38,868 45,426 46,920 32,555 47,354 92,438
Property management - - - - - -
Advertising 11,857 13,508 8,733 18,415 14,269 18,112
General and administrative - - - - - -
Amortization - - - - - -
Depreciation of rental property - - - - - -
Other 35,570 40,526 26,198 55,244 42,808 54,335
------ ------ ------ ------ ------ ------
160,024 247,466 209,555 289,281 267,613 331,189
------- ------- ------- ------- ------- -------
Income before interest income (expense) 214,916 239,702 220,065 274,341 368,547 575,371
Interest income - - - - - -
Interest expense - - - - - -
------ ------ ------ ------- ------- -------
Net income $214,916 $239,702 $220,065 $274,341 $368,547 $575,371
-------- -------- -------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
Glen Eagles Sailboat Tradewinds Osprey 1995
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Adjustments Adjustments Adjustments Adjustments Adjustments
--------------- ------------ ----------- ----------- ------------
Date of Acquisition 10/26/95 11/1/95 11/9/95 11/16/95
<S> <C>
Property operations
Revenues from rental properties $804,873 $1,486,737 $1,350,803 $737,541 $7,778,024
Rental expenses:
Utilities 31,564 116,080 102,607 80,155 577,495
Repairs and maintenance 137,482 322,516 189,926 177,792 1,442,619
Taxes and insurance 75,170 119,629 119,817 59,204 677,381
Property management - - - - -
Advertising 16,163 36,868 32,962 10,009 180,896
General and administrative - - - - -
Amortization - - - - -
Depreciation of rental property - - - - -
Other 48,490 110,604 98,888 30,023 542,686
-------- -------- ------- ------- ---------
308,869 705,697 544,200 357,183 3,421,077
------ ------- ------ ------ -------
Income before interest income (expense) 496,004 781,040 806,603 380,358 4,356,947
Interest income - - - - -
Interest expense - - - - -
------- ------- ------- ------- ---------
Net income $496,004 $781,040 $806,603 $380,358 $4,356,947
------- ------- ------- ------- ---------
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report on Form 8-K/A to be signed on its behalf
by the undersigned hereunto duly authorized.
Cornerstone Realty Income Trust, Inc.
Date: November 15, 1996 By: /s/ S.J. Olander
----------------------------------
Stanley J. Olander, Jr.
Chief Financial Officer of
Cornerstone Realty Income
Trust, Inc.
-16-
<PAGE>
EXHIBIT INDEX
Cornerstone Realty Income Trust, Inc.
Form 8K/A for Form 8-K dated June 26, 1996
Exhibit Number Exhibit Page Number
23.1 Consent of Independent Auditors
23.2 Consent of Independent Auditors
23.5 Consent of Independent Auditors
-17-
<PAGE>
EXHIBIT 23.1
<PAGE>
Consent of Independent Auditors'
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our reports dated June 21, 1996 with respect to
the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Lexington Tower
Apartments for the year ended December 31, 1995 for inclusion in a form 8K
filing with the Securities and Exchange Commission by Cornerstone Realty Income
Trust, Inc., and to the reference to our firm under the heading "Expert"
therein.
/s/ L.P. Martin & Co., P.C.
Richmond, Virginia
November 15, 1996
Exhibit 23.2
[L.P. Martin & Company Letterhead]
Consent of Independent Auditors'
-------------------------------
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated October 23, 1996 with respect
to the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Oak Park Apartments
for the twelve month period ended June 30, 1996, for inclusion in a form 8K
filing with the Securities and Exchange Commission by Cornerstone Realty Income
Trust, Inc., and to the reference to our firm under the heading "Expert"
therein.
/s/ L.P. Martin & Co., P.C.
---------------------------
L.P. Martin & Co., P.C.
Richmond, Virginia
November 15, 1996
Exhibit 23.5
[L.P. Martin & Company Letterhead]
Consent of Independent Auditors'
--------------------------------
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated October 17, 1996 with respect
to the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Hampton Glen
Apartments for the twelve month period ended July 31, 1996, for inclusion in a
form 8K filing with the Securities and Exchange Commission by Cornerstone Realty
Income Trust, inc., and to the reference to our firm under the heading "Expert"
therein.
/s/ L.P. Martin & Co., P.C.
---------------------------
L.P. Martin & Co., P.C.
Richmond, Virginia
November 15, 1996
<PAGE>
