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: March 27, 1997
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 Auditors' Report
(Paces Arbor Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Paces Arbor Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Paces Arbor Apartments)
b. Independent Auditors' Report
(Paces Forest Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Paces Forest Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Paces Forest Apartments)
c. Independent Auditors' Report
(Carlyle Club Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Carlyle Club Apartments)
Note to Historical Statement of
Income and Direct Operating
Expenses (Carlyle Club Apartments)
d. Independent Auditors' Report
(Ashley Run Apartments)
Historical Statement of Income and
Direct Operating Expenses
(Ashley Run Apartments)
Note to Historical Statement of
-2-
<PAGE>
Income and Direct Operating
Expenses (Ashley Run Apartments)
e. Pro Forma Statement of Operations for
the Three Months ended March 31, 1997
(unaudited)
Pro Forma Balance Sheet as of
March 31, 1997 (unaudited)
Pro Forma Statement of Operations
for the Year ended December 31, 1996
(unaudited)
f. Exhibits
23.1 Consent of Independent Auditors
23.2 Consent of Independent Auditors
23.3 Consent of Independent Auditors
23.4 Consent of Independent Auditors
-3-
<PAGE>
The Company hereby amends Item 7.a., 7.b., 7.c., 7.d., 7.e., and 7.f.
of its Current Report on Form 8-K dated March 27, 1997 as follows:
-4-
<PAGE>
ITEM 7.a.
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
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 Paces Arbor Apartments located in Raleigh, North
Carolina for the twelve month period ended February 28, 1997. This statement is
the responsibility of the management of Paces Arbor 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 Paces Arbor
Apartments (as defined above) for the twelve month period ended February 28,
1997, in conformity with generally accepted accounting principles.
Richmond, Virginia L.P. Martin & Co., P.C.
May 7, 1997
<PAGE>
PACES ARBOR 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 FEBRUARY 28, 1997
INCOME
- ---------
Rental and Other Income $ 773,960
-----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 75,685
Insurance 6,717
Repairs and Maintenance 116,391
Taxes, Property 41,846
Utilities 23,325
-------
TOTAL DIRECT OPERATING EXPENSES
263,964
-------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 509,996
========
See accompanying note to the financial statement.
<PAGE>
PACES ARBOR 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 FEBRUARY 28, 1997
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Paces Arbor Apartments is a 101 unit garden style apartment complex located on
10.28 acres in Raleigh, North Carolina.
The assets comprising the property were owned by Paces Arbor Apartments Limited
Partnership, an entity unaffiliated with Cornerstone Realty Income Trust, Inc.,
during the financial statement period. Cornerstone Realty Income Trust, Inc.
purchased the property in March 1997.
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 and
professional fees and management fees.
<PAGE>
ITEM 7.b.
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
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 Paces Forest Apartments located in Raleigh, North
Carolina for the twelve month period ended February 28, 1997. This statement is
the responsibility of the management of Paces Forest 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 Paces Forest
Apartments (as defined above) for the twelve month period ended February 28,
1997, in conformity with generally accepted accounting principles.
Richmond, Virginia
May 7, 1997 L.P. Martin & Co., P.C.
<PAGE>
PACES FOREST 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 FEBRUARY 28, 1997
INCOME
- ------
Rental and Other Income $ 928,214
-----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 79,152
Insurance 7,688
Repairs and Maintenance 114,620
Taxes, Property 46,961
Utilities 28,891
-----------
TOTAL DIRECT OPERATING EXPENSES 277,312
-----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $ 650,902
=========
See accompanying note to the financial statement.
<PAGE>
PACES FOREST 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 FEBRUARY 28, 1997
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
Paces Forest Apartments is a 117 unit garden style apartment complex located on
19.54 acres in Raleigh, North Carolina.
The assets comprising the property were owned by Paces Forest Apartments Limited
Partnership, an entity unaffiliated with Cornerstone Realty Income Trust, Inc.,
during the financial statement period. Cornerstone Realty Income Trust, Inc.
purchased the property in March 1997.
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 and
professional fees and management fees.
<PAGE>
ITEM 7.c.
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
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 Carlyle Club Apartments located in Lawrenceville, Georgia for the
twelve month period ended March 31, 1997. This statement is the responsibility
of the management of Carlyle Club 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 2 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 Carlyle Club
Apartments (as defined above) for the twelve month period ended March 31, 1997,
in conformity with generally accepted accounting principles.
Richmond, Virginia
July 11, 1997
<PAGE>
CARLYLE CLUB 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 MARCH 31, 1997
INCOME
- ------
Rental and Other Income $1,913,527
----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 148,114
Insurance 20,117
Repairs and Maintenance 277,214
Taxes, Property 120,792
Utilities 191,838
----------
TOTAL DIRECT OPERATING EXPENSES 758,075
-------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $1,155,452
==========
See accompanying notes to the financial statement.
<PAGE>
CARLYLE CLUB APARTMENTS
NOTES 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 MARCH 31, 1997
NOTE 1 - ORGANIZATION
Carlyle Club Apartments is a 243 unit garden and townhouse style apartment
complex located on 19.77 acres in Lawrenceville, Georgia. The assets comprising
the property were owned by Gwinnett I Limited Partnership an entity unaffiliated
with Cornerstone Realty Income Trust, Inc., during the financial statement
period. Cornerstone Realty Income Trust, Inc. subsequently purchased the
property.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue and Expense Recognition - The accompanying statement of rental
operations has been prepared using the accrual method of accounting. 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, management fees and entity expenses.
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.
Repairs and Maintenance - Repairs and maintenance costs are expensed as
incurred, while significant improvements, renovations and replacements are
capitalized.
Advertising - Advertising costs are expensed in the period incurred.
<PAGE>
ITEM 7.d.
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
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 Ashley Run Apartments located in Norcross, Georgia for the twelve
month period ended March 31, 1997. This statement is the responsibility of the
management of Ashley Run 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 2 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 Ashley Run
Apartments (as defined above) for the twelve month period ended March 31, 1997,
in conformity with generally accepted accounting principles.
Richmond, Virginia
July 11, 1997
<PAGE>
ASHLEY RUN 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 MARCH 31, 1997
INCOME
- ------
Rental and Other Income $2,750,461
----------
DIRECT OPERATING EXPENSES
- -------------------------
Administrative and Other 208,473
Insurance 32,103
Repairs and Maintenance 357,004
Taxes, Property 175,617
Utilities 174,135
----------
TOTAL DIRECT OPERATING EXPENSES 947,332
----------
Operating income exclusive of items not
comparable to the proposed future operations
of the property $1,803,129
==========
See accompanying notes to the financial statement.
<PAGE>
ASHLEY RUN APARTMENTS
NOTES 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 MARCH 31, 1997
NOTE 1 - ORGANIZATION
Ashley Run Apartments is a 348 unit garden and townhouse style apartment complex
located on 44.97 acres in Norcross, Georgia. The assets comprising the property
were owned and managed by entities unaffiliated with Cornerstone Realty Income
Trust, Inc. during the financial statement period. Cornerstone Realty Income
Trust, Inc. subsequently purchased the property.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue and Expense Recognition - The accompanying statement of rental
operations has been prepared using the accrual method of accounting. 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 and
professional fees and management fees.
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.
Repairs and Maintenance - Repairs and maintenance costs are expensed as
incurred, while significant improvements, renovations and replacements are
capitalized.
Advertising - Advertising costs are expensed in the period incurred.
<PAGE>
ITEM 7.e.
<PAGE>
PRO FORMA STATMEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1997 (UNAUDITED)
The accompanying unaudited Pro Forma Statement of Operations for the three
months ended March 31, 1997 is presented as if (a) the Company had qualified as
a REIT, distributed all of its taxable income and, therefore, incurred no
federal income tax expense during the period. Properties acquired after the
completion of the offering were assumed to be acquired using the Company's line
of credit. The pro forma information does not purport to represent what the
Company's results of operations would have been if such transactions, in fact,
had occurred on January 1, 1997, nor does it purport to represent the results of
operations for future periods.
<TABLE>
<CAPTION>
Historical Westchase Paces Arbor Paces Forest
Statement of Pro Forma Pro Forma Pro Forma
Operations Adjustments Adjustments Adjustments
--------------------------------------------------------------------------
<S> <C>
Date of Acquisitions -- 1/15/97 3/1/97 3/1/97
Revenues from rental properties $15,023,222 $166,656 $128,993 $154,702
Rental expenses:
Utilities 1,316,722 12,070 3,890 4,814
Repairs and maintenance 1,475,859 25,811 19,399 19,103
Taxes and insurance 1,396.859 16,024 8,094 9,108
Property management fee -- -- -- --
Property management 264,810 --
Advertising 440,422 4,139 3,154 3,298
General and administrative 412,835 -- -- --
Amortization and other depreciation 7,641 -- -- --
Depreciation of rental property 3,184,003 -- -- --
Other operating Expenses 1,093,652 -- -- --
Other 81,648 12,416 9,461 9,894
Management contract termination 135,999 -- -- --
--------------------------------------------------------------------------
9,810,450 70,460 43,998 46,217
Income before interest income (expense) 5,212,772 96,196 84,995 108,485
Interest income 383,170 -- -- --
Interest expense (1,316,464) -- -- --
Other Expense (277,738) -- -- --
--------------------------------------------------------------------------
Net Income $4,001,740 $96,196 $84,995 $108,485
Net income per share $0.14
=====
Wgt. avg. number of share outstanding 28,424,683
==========
</TABLE>
<TABLE>
<CAPTION>
Ashley Run Carlyle 1997
Pro Forma Pro Forma Pro Forma Total
Adjustments Adjustments Adjustments Pro Forma
--------------------------------------------------------------------------
<S> <C>
Date of Acquisitions 4/30/97 4/30/97 --
Revenues from rental properties $687,615 $478,382 -- $16,639,570
Rental expenses:
Utilities 43,534 47,960 -- 1,428,990
Repairs and maintenance 89,251 69,305 -- 1,698,728
Taxes and insurance 51,930 35,227 -- 1,517,242
Property management fee -- -- $ 87,220 87,220
Property management 264,810
Advertising 13,030 9,257 -- 473,300
General and administrative -- -- -- 412,835
Amortization and other depreciation -- -- -- 7,641
Depreciation of rental property -- -- 286,994 3,470,997
Other operating Expenses -- -- -- 1,093,652
Other 39,089 27,771 -- 180,279
Management contract termination -- -- -- 135,999
---------------------------------------------------------
236,834 189,520 374,214 10,771,693
Income before interest income (expense) 450,781 288,862 (374,214) 5,867,877
Interest income -- -- -- 383,170
Interest expense -- -- (750,101) (2,066,565)
Other Expense -- -- -- (277,738)
---------------------------------------------------------
$450,781 $288,862 ($1,124,315) $ 3,906,744
Net Income
Net income per share $.14
====
Wgt. avg. number of share outstanding 28,424,683
==========
</TABLE>
The pro forma information reflects adjustments for the actual rental income and
rental expenses of the 1997 acquisitions for the respective periods in 1997
prior to acquisition by the Company. Net income has been adjusted as follows:
(1) property management and advisory expenses have been adjusted based on the
Company's contractual arrangements in effect until the contracts were
terminated; (2) interest expense has been reflected based on market rates at the
time of acquisition available to the Company for applicable properties; (3)
depreciation has been adjusted based on the Company's basis in the properties.
<PAGE>
PRO FORMA BALANCE SHEET AS OF MARCH 31, 1997 (UNAUDITED)
The accompanying unaudited Pro Forma Balance Sheet as of March 31, 1997 is
presented as if the Company had owned the following properties held on March 31,
1997. 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 March 31, 1997. The Pro Forma column assumes the
Company used the proceeds from its offerings to acquire certain properties.
<TABLE>
<CAPTION>
Historical Westchase Paces Arbor Paces Forest Ashley Run Carlyle
Balance Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Total
Sheet Adjustments Adjustments Adjustments Adjustments Adjustments Pro Forma
---------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
Investment in Rental Property
Land $ 52,926,166 $ 1,980,000 $1,173,526 $1,359,431 $ 3,780,000 $3,589,800 $ 64,808,923
Building 279,951,281 9,020,000 4,414,693 5,114,050 14,220,000 7,990,200 320,710,224
Property Improvements 30,901,524 -- -- -- -- -- 30,901,524
Furniture 7,048,084 -- -- -- -- -- 7,048,084
---------------------------------------------------------------------------------------------------
370,827,055 11,000,000 5,588,219 6,473,481 18,000,000 11,580,000 423,468,755
Less accumulated
depreciation (15,523,819) -- -- -- -- -- (15,523,819)
---------------------------------------------------------------------------------------------------
355,303,236 11,000,000 5,588,219 6,473,481 18,000,000 11,580,000 407,944,936
Cash and cash
equivalents 4,005,142 -- -- -- -- -- 4,005,142
Prepaid expenses 385,529 -- -- -- -- -- 385,529
Other assets 3,591,208 -- -- -- -- -- 3,591,208
---------------------------------------------------------------------------------------------------
7,981,879 -- -- -- -- -- 7,981,879
---------------------------------------------------------------------------------------------------
$363,285,115 $11,000,000 $5,588,219 $6,473,481 $18,000,000 $11,580,000 $415,926,815
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities
Notes payable $ 93,395,949 $11,000,000 $5,588,219 $6,473,481 $18,000,000 $11,580,000 $146,037,649
Accounts payable-related
party 7,433,092 -- -- -- -- -- 7,433,092
Accounts payable 712,192 -- -- -- -- -- 712,192
Accrued expenses 2,558,234 -- -- -- -- -- 2,558,234
Rents received in advance 193,312 -- -- -- -- -- 193,312
Tenant security deposits 1,737,330 -- -- -- -- -- 1,737,330
---------------------------------------------------------------------------------------------------
106,030,109 11,000,000 5,588,219 6,473,481 18,000,000 11,580,000 158,671,809
Shareholders' equity
Common stock 281,961,091 -- -- -- -- -- 281,961,091
Deferred Compensation (49,501) -- -- -- -- -- (49,501)
Distributions in excess
of net income (24,656,584) -- -- -- -- -- (24,656,584)
---------------------------------------------------------------------------------------------------
257,255,006 0 0 0 0 0 257,255,006
---------------------------------------------------------------------------------------------------
$363,285,115 $11,000,000 $5,588,219 $6,473,481 $18,000,000 $11,580,000 $415,926,815
===================================================================================================
</TABLE>
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
The accompanying unaudited Pro Forma Statement of Operations for the twelve
months ended December 31, 1996 is presented as if (a) the Company had qualified
as a REIT, distributed all of its taxable income and, therefore, incurred no
federal income tax expense during the period; and (b) the Company had used
proceeds from its best efforts offering to acquire the properties, for
properties acquired before the completion of the offering. Properties acquired
after the completion of the offering were assumed to be acquired using the
Company's line of credit. The pro forma information does not purport to
represent what the Company's results of operations would 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 1996 Westchase Paces Arbor Paces Forest Ashley Run
Statement of 1996 Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma
Operations Acquisitions Adjustments Adjustments Adjustments Adjustments Adjustments
---------------------------------------------------------------------------------------------
<S> <C>
Date of Acquisitions -- -- -- 1/15/97 3/1/97 3/1/97 4/30/97
Revenues from rental properties $40,352,955 $11,707,374 -- $1,999,870 $773,960 $928,214 $2,750,461
Rental expenses:
Utilities 3,870,541 816,694 -- 144,841 23,325 28,891 174,135
Repairs and maintenance 4,203,180 1,883,845 -- 309,732 116,391 114,620 357,004
Taxes and insurance 3,275,422 947,968 -- 192,289 48,563 54,649 207,720
Property management fee 1,243,215 -- $645,502 -- -- -- --
Property management 741,257 -- -- -- -- -- --
Advertising 1,126,295 306,249 -- 49,665 18,921 19,788 52,118
General and administrative 1,495,528 -- 175,770 -- -- -- --
Amortization and other depreciation 47,133 -- -- -- -- -- --
Depreciation of rental property 8,068,063 -- 2,513,278 -- -- -- --
Other operating expenses 2,638,183 -- -- -- -- -- --
Other 151,537 927,643 -- 148,994 56,764 59,364 156,355
Management contract termination 16,526,012 -- -- -- -- -- --
---------------------------------------------------------------------------------------------
43,386,366 4,882,399 3,334,550 845,521 263,964 277,312 947,332
Income before interest income (expense) (3,033,411) 6,824,975 (3,334,550) 1,154,349 509,996 650,902 1,803,129
Interest income 287,344 -- -- -- -- -- --
Interest expense (1,423,782) -- (568,258) -- -- -- --
---------------------------------------------------------------------------------------------
Net Income ($4,169,849) $6,824,975 ($3,902,808) $1,154,349 $509,996 $650,902 $1,803,129
Net income per share ($0.21)
======
Wgt. avg. number of shares outstanding 20,210,432
==========
</TABLE>
<TABLE>
<CAPTION>
Carlyle 1996
Pro Forma Pro Forma Total
Adjustments Adjustments Pro Forma
--------------------------------------------
<S> <C>
Date of Acquisitions 4/30/97 -- --
Revenues from rental properties $1,913,527 -- $60,426,361
Rental expenses:
Utilities 191,838 -- 5,250,265
Repairs and maintenance 277,214 -- 7,261,986
Taxes and insurance 140,909 -- 4,867,520
Property management fee -- $ 453,132 2,341,849
Property management -- -- 741,257
Advertising 37,029 -- 1,610,065
General and administrative -- -- 1,671,298
Amortization and other depreciation -- -- 47,133
Depreciation of rental property -- 1,482,141 12,063,482
Other operating expenses -- -- 2,638,183
Other 111,086 -- 1,611,743
Management contract termination -- -- 16,526,012
--------------------------------------------
758,076 1,935,273 56,630,793
Income before interest income (expense) 1,155,451 (1,935,273) 3,795,568
Interest income -- -- 287,344
Interest expense -- (3,813,286) (5,805,326)
--------------------------------------------
Net Income $1,155,451 ($5,748,559) ($1,722,414)
Net income per share ($.06)
=====
Wgt. avg. number of shares outstanding
28,464,120
==========
</TABLE>
The pro forma information reflects adjustments for the actual rental income and
rental expenses of 19 of the 1996 acquisitions (see detail on attached) and the
1997 acquisitions for the respective periods in 1996 prior to acquisition by the
Company. Net income has been adjusted as follows: (1) property management and
advisory expenses have been adjusted based on the Company's contractual
arrangements in effect until the contracts were terminated; (2) interest expense
has been reflected based on market rates at the time of acquisition available to
the Company for applicable properties; (3) depreciation has been adjusted based
on the Company's basis in the properties.
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
The following schedule provides detail of 1996 acquisitions by property included
in the Pro Forma Statement of Operations for the year ended December 31, 1996.
<TABLE>
<CAPTION>
Meadows West Eagle Ashley Park Arbor Trace Longmeadow Trophy Chase Beacon Hill
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 Acquisition 1/31/96 3/31/96 3/1/96 3/1/96 4/1/96 4/1/96 5/1/96
Property operations
Revenues from rental properties $90,006 $127,302 $284,403 $138,795 $186,114 $217,183 $684,622
Rental expenses:
Utilities 7,903 7,327 16,769 14,849 9,440 21,899 48,373
Repairs and maintenance 14,553 22,819 39,027 19,702 25,542 39,180 68,173
Taxes and insurance 5,273 9,776 27,496 10,819 14,262 13,830 58,443
Property management -- -- -- -- -- -- --
Advertising 1,484 3,066 3,213 3,215 5,455 5,819 12,974
General and administrative -- -- -- -- -- -- --
Amortization -- -- -- -- -- -- --
Depreciation of rental property -- -- -- -- -- -- --
Other 4,452 9,198 18,542 9,645 16,367 17,458 38,922
----------- ----------- ----------- ----------- ----------- ----------- -----------
33,665 52,186 105,047 58,230 71,066 98,186 226,885
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before interest income (expense) 56,341 75,116 179,356 80,565 115,048 118,997 457,737
Interest income -- -- -- -- -- -- --
Interest expense -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Income $56,341 $75,116 $179,356 $80,565 $115,048 $118,997 $457,737
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Summerwalk The Landing Meadowcreek Trolley East Savannah Paces Glen Signature
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 Acquisition 5/1/96 5/1/96 5/31/96 6/26/96 7/1/96 7/19/96 8/1/96
Property operations
Revenues from rental properties $297,115 $418,247 $671,043 $345,237 $1,038,285 $628,639 $509,713
Rental expenses:
Utilities 23,038 30,473 32,330 62,247 102,411 39,060 25,951
Repairs and maintenance 59,973 68,918 90,083 97,819 221,613 92,090 122,995
Taxes and insurance 15,663 38,620 50,931 41,086 49,192 46,834 47,162
Property management -- -- -- -- -- -- --
Advertising 7,559 10,041 12,198 10,293 23,992 14,827 9,500
General and administrative -- -- -- -- -- -- --
Amortization -- -- -- -- -- -- --
Depreciation of rental property -- -- -- -- -- -- --
Other 22,676 30,122 36,593 30,878 71,976 44,481 28,499
----------- ----------- ----------- ----------- ----------- ----------- -----------
128,909 178,174 222,135 242,323 469,184 237,292 234,107
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before interest income (expense) 168,206 240,073 448,908 102,914 569,101 391,347 275,606
Interest income -- -- -- -- -- -- --
Interest expense -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Income $168,206 $240,073 $448,908 $102,914 $569,101 $391,347 $275,606
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
Hampton Glen Sterling Parkside Greenbrier Deerfield Franklin 1996
Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Pro Forma Acquisition
Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments Adjustments
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C>
Date of Acquisition 8/1/96 9/1/96 9/30/96 10/1/96 11/20/96 12/1/96
Property operations
Revenues from rental properties $970,246 $1,077,164 $653,152 $1,250,682 $1,489,997 $629,429 $11,707,374
Rental expenses:
Utilities 56,883 45,391 34,669 70,957 62,040 104,684 816,694
Repairs and maintenance 130,430 155,415 94,280 205,550 190,567 125,116 1,883,845
Taxes and insurance 62,436 81,204 66,873 98,321 155,082 54,665 947,968
Property management -- -- -- -- -- -- --
Advertising 24,998 21,877 64,687 24,988 25,476 20,587 306,249
General and administrative -- -- -- -- -- -- --
Amortization -- -- -- -- -- -- --
Depreciation of rental property -- -- -- -- -- -- --
Other 74,993 65,629 194,059 74,964 76,430 61,759 927,643
----------- ----------- ----------- ----------- ----------- ----------- -----------
349,740 369,516 454,568 474,780 509,595 366,811 4,882,399
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before interest income (expense) 620,506 707,648 198,584 775,902 980,402 262,618 6,824,975
Interest income -- -- -- -- -- -- --
Interest expense -- -- -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Income $620,506 $707,648 $198,584 $775,902 $980,402 $262,618 $6,824,975
----------- ----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<PAGE>
ITEM 7.f.
<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: July __, 1997 By:/s/ Stanley J. Olander, Jr.
---------------------------
Stanley J. Olander, Jr.
Chief Financial Officer of
Cornerstone Realty Income
Trust, Inc.
<PAGE>
EXHIBIT INDEX
Cornerstone Realty Income Trust, Inc.
Form 8-K/A for Form 8-K dated March 27, 1997
Exhibit Number Exhibit Page Number
______________ _______ ___________
23.1 Consent of Independent Auditors
23.2 Consent of Independent Auditors
23.3 Consent of Independent Auditors
23.4 Consent of Independent Auditors
Exhibit 23.1
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Consent of Independent Auditors'
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated May 7, 1997 with respect to
the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Paces Arbor
Apartments for the twelve month period ended February 28, 1997, for inclusion in
a form 8K filing with the Securities and Exchange Commission by Cornerstone
Realty Income Trust, Inc.
Richmond, Virginia
July 10, 1997
Exhibit 23.2
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Consent of Independent Auditors'
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated May 7, 1997 with respect to
the statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Paces Forest
Apartments for the twelve month period ended February 28, 1997, for inclusion in
a form 8K filing with the Securities and Exchange Commission by Cornerstone
Realty Income Trust, Inc.
Richmond, Virginia
July 10, 1997
Exhibit 23.3
<PAGE>
Consent of Independent Auditors'
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated July 11, 1997 with respect to the
statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Carlyle Club
Apartments for the twelve month period ended March 31, 1997 for inclusion in a
form 8K filing with the Securities and Exchange Commission by Cornerstone Realty
Income Trust, Inc.
Richmond, Virginia
July 11, 1997
Exhibit 23.4
<PAGE>
[LETTERHEAD]
L.P. MARTIN & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS
4132 INNSLAKE DRIVE
GLEN ALLEN, VIRGINIA 23060
PHONE: (804) 346-2626
FAX: (804) 346-9311
Consent of Independent Auditors'
The Board of Directors
Cornerstone Realty Income Trust, Inc.
Richmond, Virginia
We consent to the use of our report dated July 11, 1997 with respect to the
statement of income and direct operating expenses exclusive of items not
comparable to the proposed future operations of the property Ashley Run
Apartments for the twelve month period ended March 31, 1997, for inclusion in a
form 8K filing with the Securities and Exchange Commission by Cornerstone Realty
Income Trust, Inc.
Richmond, Virginia
July 14, 1997
