<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 Exchange Act of 1934
Date of Report (Date of earliest event reported) May 27, 1998
------------------------
United Investors Realty Trust
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Texas 001-13915 76-0265701
- ------------------------------- ------------ -------------------
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File Number) Identification No.)
5847 San Felipe, Suite 850
Houston, TX 77057
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (713) 781-2860
<PAGE> 2
Item 2. Acquisition of Assets
On May 27, 1998, United Investors Realty Trust (the "Registrant") acquired
the Big Curve Shopping Center located in Yuma, Arizona (the "Property"). The
Property was purchased pursuant to a Contract of Sale dated March 23, 1998
through a wholly owned subsidiary controlled by the Trust. The Property, an
approximately 126,400 square foot community shopping center, located in Yuma,
Arizona, was purchased from Dermot Big Curve, LLC for $8,850,000. The asset was
acquired with available cash of $2,884,870.66 and by taking title subject to an
existing loan having a principal balance outstanding on the date of closing of
$5,965,129.34. Interest on this loan is payable at the rate of 9.19% per
annum. This loan matures on October 1, 2006 and may be prepaid on or after
October 1, 2000 with a yield maintenance based penalty with a minimum of one
percent of the then outstanding principal balance. The Registrant intends to
continue to operate the Property as a shopping center.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements.
The index to the financial information for the Big Curve Shopping
Center is included on page F-1 of this report.
(b) Pro Forma Financial Information.
The index to the pro forma financial information is included on
page F-1 of this report.
(c) Exhibits.
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on August 11, 1998.
UNITED INVESTORS REALTY TRUST
BY: /s/ R. STEVEN HAMNER
---------------------------
R. Steven Hamner
Chief Financial Officer
<PAGE> 3
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
INDEX TO FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PRO FORMA FINANCIAL INFORMATION PAGE
----
<S> <C>
Unaudited Condensed Consolidated Balance Sheet ........................ F-3
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the six months ended June 30, 1998 .............................. F-4
Unaudited Pro Forma Condensed Consolidated Statement of Operations
for the year ended December 31, 1997 ................................ F-5
Notes to Unaudited Pro Forma Condensed Consolidated Statements
of Operations ....................................................... F-6
HISTORICAL FINANCIAL INFORMATION
Big Curve Shopping Center
Report of Independent Auditors - Ernst & Young LLP..................... F-10
Statement of Revenues and Certain Expenses for the three months
ended March 31, 1998 (unaudited) and for the year ended
December 31, 1997 ................................................... F-11
Notes to the Statement of Revenue and Certain Expenses ................ F-12
</TABLE>
F-1
<PAGE> 4
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AND
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
INTRODUCTION
The unaudited pro forma condensed consolidated statements of operations for the
year ended December 31, 1997 and the six months ended June 30, 1998 are
presented as if the IPO Acquisitions, the Offering, the Big Curve Acquisition,
and the application of the net proceeds of the Offering all had occurred on
January 1, 1997.
The unaudited condensed consolidated balance sheet of United Investors Realty
Trust and Subsidiaries as of June 30, 1998 already reflects the effects of the
IPO Acquisitions, the Offering, and the Big Curve Acquisition as each of these
transactions occurred prior to June 30, 1998. Consequently, there are no pro
forma adjustments required to the June 30, 1998 unaudited condensed consolidated
balance sheet presented herein.
The unaudited pro forma condensed consolidated statements of operations should
be read in conjunction with the consolidated financial statements of United
Investors Realty Trust ("UIRT"), including the notes thereto, included in UIRT's
Registration Statement on Form S-11 dated March 5, 1998 and UIRT's Quarterly
report on Form 10-Q for the quarter ended June 30, 1998. The pro forma condensed
consolidated statements of operations do not purport to project the Company's
results of operations as of any future date or for any future period.
F-2
<PAGE> 5
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30,
1998
-------------
<S> <C>
ASSETS
Investment real estate:
Land $ 32,149,317
Buildings and improvements 88,854,914
-------------
121,004,231
Less accumulated depreciation (6,004,299)
-------------
Investment real estate, net 114,999,932
Cash and cash equivalents 11,610,321
Accounts receivable, net 1,754,539
Prepaid expenses and other assets 2,626,762
-------------
Total assets $ 130,991,554
=============
LIABILITIES, MINORITY INTEREST,
AND COMMON SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 40,870,225
Short-term notes and lines of credit 3,000
Accounts payable -- trade 928,015
Accrued property taxes 1,469,185
Security deposits 407,304
-------------
Total liabilities 43,677,729
-------------
Minority interest in real estate joint ventures 2,429,080
Common shareholders' equity:
Common shares of beneficial interest, no par value,
500,000,000 shares authorized, 9,514,889
issued and outstanding at June 30, 1998 85,652,642
Accumulated deficit (767,897)
-------------
Total common shareholders' equity 84,884,745
Total liabilities, minority interest,
and common shareholders' equity $ 130,991,554
=============
</TABLE>
F-3
<PAGE> 6
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the six months ended June 30, 1998
<TABLE>
<CAPTION>
UNITED INVESTORS IPO
REALTY TRUST PRO FORMA BIG CURVE TOTAL
HISTORICAL(1) ADJUSTMENTS(2) ACQUISITION PRO FORMA
--------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Base rents $ 5,426,224 $ 1,453,160(A) $ 390,392(F) $ 7,269,776
Percentage rents - 26,434(A) -(F) 26,434
Expense reimbursements 1,491,896 401,849(A) 89,317(F) 1,983,062
Interest and other income 291,646 22,029(A) 722(F) 314,397
----------- ----------- --------- -----------
Total revenues 7,209,766 1,903,472 480,431 9,593,669
Expenses:
Operating and maintenance 856,170 240,925 (A) 66,316(F) 1,163,411
Real estate taxes 955,214 265,031 (A) 95,562(F) 1,315,897
General and administrative 370,752 10,911 (A) 9,275(F) 390,938
Advisory and trustee fees 321,986 94,289 (C) 19,719(G) 435,994
Stock grant to Advisor and officers - - -
Other - - -
Interest 3,990,961 286,952 (B) 223,846(F) 4,501,759
Depreciation, amortization and ground lease 1,188,586 302,226 (A) 86,470(F) 1,577,282
----------- ----------- --------- -----------
Total expenses 7,683,669 1,200,334 501,277 9,385,281
----------- ----------- --------- -----------
Income (loss) before minority interest, extraordinary item
and preferred share distribution requirements (473,903) 703,138 20,846 208,389
Minority interest in net income of real estate ventures (61,462) 56,402 (D) (5,060)
----------- ----------- --------- -----------
Income (loss) before extraordinary item and preferred
share distribution requirements (535,365) 759,540 (20,846) 203,329
Extraordinary item-prepayment penalties incurred on early
extinguishment of debt (232,532) 232,532 (H) - -
----------- ----------- --------- -----------
Income before preferred share distribution requirements (767,897) 992,072 (20,846) 203,329
Preferred share distribution requirements (20,670) 20,670 (E) - -
----------- ----------- --------- -----------
Net income (loss) available for common shareholders $ (788,567) $ 1,012,742 $ (20,846) $ 203,329
=========== =========== ========= ===========
Net income (loss) per common share (basic and diluted) $ (0.13) $ 0.02
=========== ===========
Weighted average shares outstanding (basic and diluted) 5,904,889 9,514,889
=========== ===========
</TABLE>
(1) Includes the results of operations of all properties (including Big Curve)
from the date of their acquisition forward.
(2) Includes the effects of the Offering, and the results of operations of the
IPO Acquisitions for the period prior to the date of acquisition.
F-4
<PAGE> 7
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1997
<TABLE>
<CAPTION>
UNITED INVESTORS IPO
REALTY TRUST PRO FORMA BIG CURVE TOTAL
HISTORICAL(1) ADJUSTMENTS(2) ACQUISITION PRO FORMA
---------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Base rents $ 4,954,820 $ 8,419,326(I) $ 1,008,578(O) $ 14,382,724
Percentage rents 26,400 266,930(I) - 293,330
Expense reimbursements 1,167,355 2,669,388(I) 260,060(O) 4,096,803
Interest and other income 27,278 21,809(I) 1,214(O) 50,301
----------- ----------- ----------- ------------
Total revenues 6,175,853 11,377,453 1,269,852 18,823,158
----------- ----------- ----------- ------------
Expenses:
Operating and maintenance 754,703 1,488,112(I) 171,362(O) 2,414,177
Real estate taxes 793,359 1,565,940(I) 190,937(O) 2,550,236
General and administrative 179,933 153,844(I) 7,086(O) 340,863
Advisory and trustee fees 345,000 457,822(J) 61,232(P) 864,054
Stock grant to Advisor and officers 787,500 -- 787,500
Other 204,829 -- 204,829
Interest 2,435,538 681,940(N) 553,775(O) 3,671,253
Depreciation, amortization and ground lease 1,309,180 2,045,367(I) 206,665(O) 3,561,212
----------- ----------- ----------- ------------
Total expenses 6,810,042 6,393,025 1,191,057 14,394,124
Income (loss) before minority interest and preferred share
distribution requirements (634,189) 4,984,428 78,795 4,429,034
Minority interest in net income of real estate ventures (40,894) 40,894 (K) (107,544)
(107,544)(L)
----------- ----------- ----------- ------------
Income (loss) before preferred share distribution
requirements (675,083) 4,917,778 78,795 4,321,490
Preferred share distribution requirements (96,633) 96,633(M) --
----------- ----------- ----------- ------------
Net income (loss) available for common shareholders $ (771,716) $ 5,014,411 $ 78,795 $ 4,321,490
=========== =========== =========== ============
Net income (loss) per common share (basic and diluted) $ (0.85) $ 0.45
=========== ============
Weighted average shares outstanding (basic and diluted) 912,493 9,512,493
=========== ============
</TABLE>
(1) Does not include the historical results of operations of the IPO
Acquisitions or Big Curve Acquisition as these transactions were closed in
1998.
(2) Includes the effects of the Offering, and results of operations of the IPO
Acquisitions.
F-5
<PAGE> 8
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
NOTE 1 - THE TRANSACTIONS
The pro forma adjustments described subsequently give effect to the following
transactions as if they were all completed on January 1, 1997 for the
accompanying unaudited condensed consolidated statements of operations for the
year ended December 31, 1997 and the six months ended June 30, 1998.
The Offering
On March 16, the Company completed its initial public offering of 7,600,000
common shares of beneficial interest. The shares were sold at $10 per share, and
offering costs aggregated approximately $6,663,354. On April 6, 1998, the
underwriters exercised their over allotment option for the purchase of 1,000,000
common shares of beneficial interest. These shares were sold at the option price
of $10 per share, with related offering cost totaling approximately $700,000
(collectively, the "Offering"). Proceeds from the Offering were used to retire
debt of $16,392,755, acquire properties (see IPO Acquisitions and Big Curve
Acquisition below), redeem preferred shares for $1,068,226, redeem convertible
subordinated notes for $212,400, acquire minority interests in real estate
joint ventures for $1,457,239 and for general corporate purposes.
The IPO Acquisitions
In conjunction with the Offering, the Company planned and completed the
acquisition of eight neighborhood shopping centers (the IPO Acquisitions), four
of which are in Houston, Texas, and one each in Dallas, Texas, Tampa, Florida,
Fort Lauderdale, Florida, and Phoenix, Arizona. Four of the IPO acquisitions
were acquired in February 1998, two were acquired in March 1998, and two were
acquired in May 1998.
The eight properties were purchased for a combined total of $72,189,429. The
Company paid cash of $43,251,946, assumed debt of $26,551,543 (with fixed
interest rates ranging from 8.25% to 10.75%), and issued partnership units with
a value of $2,385,940. With the purchase of Town 'n Country, a single purpose
partnership was formed and the Company issued partnership units to the seller
of the property. The Company has a 99% interest in the partnership, which is
consolidated for financial reporting purposes.
The Big Curve Acquisition
The Company acquired the Big Curve Shopping Center (the Big Curve Acquisition)
on May 27, 1998. Big Curve is a 126,400 square foot shopping center in Yuma,
Arizona, and was acquired for approximately $8,850,000, including $5,965,129 of
assumed debt.
F-6
<PAGE> 9
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
NOTE 2 - PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma adjustments to the Pro Forma Condensed Consolidated Statement
of Operations for the six months ended June 30, 1998, are as follows:
<TABLE>
<S> <C>
(A) Purchase of IPO Acquisitions:
Base rents............................................................ $ 1,453,160
Percentage rents..................................................... 26,434
Expense reimbursements................................................ 401,849
Other income.......................................................... 22,029
Operating and maintenance............................................. 240,925
Real estate taxes..................................................... 265,031
General and administrative............................................ 10,911
Depreciation ......................................................... 302,226
Depreciation above reflects the increased basis of the properties, depreciated over an estimated
30 year useful life on a straight-line basis.
(B) Decrease in interest expense related to repayment of
mortgage debt and lines of credit with proceeds from the Offering........ $ (255,739)
Interest on mortgage loans assumed in IPO Acquisition..................... 542,691
-----------
$ 286,952
===========
(C) Increase in Advisory Fees related to revenue from IPO
Acquisitions............................................................... $ 94,289
===========
(D) Decrease in minority interest in earnings of consolidated
partnerships .............................................................. $ 61,462
Increase in minority interest in earnings of consolidated partnership
(Town 'N Country) ......................................................... (5,060)
-----------
$ 56,402
===========
(E) Decrease in preferred share distributions related to redemption of
preferred shares with proceeds from the Offering........................... $ 20,670
===========
(F) Purchase of Big Curve Acquisition:
Base rents........................................................... $ 390,392
Expense reimbursements............................................... 89,317
Other income......................................................... 722
Operating and maintenance............................................ 66,316
Real estate taxes.................................................... 95,652
General and administrative........................................... 9,275
Depreciation......................................................... 86,470
Interest on debt assumed............................................. 223,846
Depreciation above reflects the increased basis of the property, depreciated over an estimated
30 year useful life on a straight-line basis.
(G) Increase in Advisory Fees related to revenue from Big Curve
Acquisition................................................................ $ 19,719
===========
(H) Represents elimination of the extraordinary loss from the early
extinguishment of debt Because the intent of the pro forma financial
information is to reflect the expected continuing impact of certain
transactions on United Interests Realty Trust and Subsidiaries,
this non-recurring expense has been excluded from the pro forma
condensed consolidated statement of operations.
</TABLE>
F-7
The pro forma adjustments to the Pro Forma Condensed Consolidated Statement
of Operations for the year ended December 31, 1997, are as follows:
<PAGE> 10
<TABLE>
<S> <C>
(I) Purchase of IPO Acquisitions:
Base rents........................................................... 8,419,326
Percentage rents.................................................... 266,930
Expense reimbursements............................................... 2,669,388
Other income......................................................... 21,809
Operating and maintenance............................................ 1,488,112
Real estate taxes.................................................... 1,565,940
General and administrative........................................... 153,844
Depreciation......................................................... 2,045,367
Depreciation above reflects the increased basis of the properties, depreciated over an estimated
30 year useful life on a straight-line basis.
(J) Increase in Advisory Fees related to revenue from IPO Acquisitions
and amendment of advisory agreement................................... 457,822
===========
(K) Decrease in minority interest in earnings of consolidated
partnerships.......................................................... $ 40,894
===========
(L) Increase in minority interest in earnings of consolidated
partnership (Town `N Country)......................................... $ (107,544)
===========
(M) Decrease in preferred dividends related to redemption of
preferred shares with proceeds from the Offering..................... $ 96,633
===========
(N) Interest expense; net pro forma adjustment to interest expense is
comprised of the following:
Decrease in interest related to mortgage and other loans
repaid with IPO proceeds............................................ $(1,644,257)
Interest on mortgage loans assumed in IPO Acquisitions.............. 2,326,197
-----------
Total pro forma adjustment.......................................... $ 681,940
===========
</TABLE>
F-8
<PAGE> 11
UNITED INVESTORS REALTY TRUST AND SUBSIDIARIES
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C>
(O) Purchase of Big Curve Acquisition:
Base rents........................................................... 1,008,578
Percentage rents..................................................... --
Expense reimbursements............................................... 260,060
Other income......................................................... 1,214
Operating and maintenance............................................ 171,362
Real estate taxes.................................................... 190,937
General and administrative........................................... 7,086
Depreciation and amortization........................................ 206,665
Interest............................................................. 553,775
Depreciation above reflects the increased basis of the properties,
depreciated over an estimated 30 year useful life on a
straight-line basis.
(P) Increase in Advisory Fees related to revenue from Big Curve................ $ 61,232
===========
</TABLE>
NOTE 3 - EARNINGS PER SHARE
Pro forma weighted average basic and diluted common shares outstanding
is calculated as follows:
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
WEIGHTED AVERAGE WEIGHTED AVERAGE
SHARES OUTSTANDING SHARES OUTSTANDING
DECEMBER 31, 1997 JUNE 30,1998
----------------- ----------------
<S> <C> <C>
Total shares issued and outstanding at beginning
of period............................................ 837,489 914,889
Offering of 7,600,000 shares assumed
January 1, 1997...................................... 7,600,000 7,600,000
Exercise of underwriters overallotment option
assumed January 1, 1997.............................. 1,000,000 1,000,000
Grant of 75,000 shares on December 30, 1997
(assumed January 1, 1997)............................ 75,000 --
Grant of 2,400 shares on December 30, 1997........... 4 --
--------- ---------
Basic and Diluted Weighted
Average Shares Outstanding .................. 9,512,493 9,514,889
========= =========
</TABLE>
F-9
<PAGE> 12
Report of Independent Auditors
Board of Directors
United Investors Realty Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Big Curve Shopping Center (the Property) for the year ended December 31, 1997.
The Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Statement of Revenue and Certain Expenses is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Statement of Revenue and Certain
Expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the Statement of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of United
Investors Realty Trust as described in Note 1, and is not intended to be a
complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 of the Property for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Houston, Texas
May 1, 1998
F-10
<PAGE> 13
Big Curve Shopping Center
Statement of Revenue and Certain Expenses
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEAR ENDED
MARCH 31, DECEMBER 31,
1998 1997
-----------------------------
(unaudited)
<S> <C> <C>
REVENUE:
Base rents $ 239,083 $ 902,123
Percentage rents 28,224 106,455
Expense reimbursements 67,310 260,060
Other income 3,580 1,214
---------- ----------
Total revenue 338,197 1,269,852
---------- ----------
EXPENSES:
Operating and maintenance 37,319 171,362
Real estate taxes 48,990 190,937
General and administrative 253 7,086
---------- ----------
Total expenses 86,562 369,385
---------- ----------
Revenue in excess of certain expenses $ 251,635 $ 900,467
========== ==========
</TABLE>
See accompanying notes.
F-11
<PAGE> 14
Big Curve Shopping Center
Notes to the Statement of Revenue and Certain Expenses
Year Ended December 31, 1997 and
Three Months Ended March 31, 1998 (unaudited)
1. BASIS OF PRESENTATION
The accompanying Statement of Revenue and Certain Expenses relates to the
operations of Big Curve Shopping Center (the "Property"), a 126,402 square-foot
shopping center located in Yuma, Arizona.
United Investors Realty Trust entered into a contract to acquire this property.
The accompanying Statement of Revenue and Certain Expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K of United
Investors Realty Trust. The accompanying statement excludes certain items not
comparable to the proposed future operations of the Property, including
primarily depreciation, amortization, mortgage interest expense, and certain
owner expenses. Consequently, the statement is not representative of the actual
operations of the Property for the periods presented nor indicative of future
operations.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE AND EXPENSE RECOGNITION
Revenue is recognized in the period in which it is earned. Expenses are
recognized in the period incurred.
Certain leases of the Property provide for tenant occupancy during periods for
which no rent is due or where minimum rent payments increase during the term of
the lease. The Property records rental income for the full term of each lease on
a straight-line basis.
USE OF ESTIMATES
The preparation of the Statement of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenue and
certain expenses during the reporting period. Actual results could differ from
these estimates.
F-12
<PAGE> 15
3. RENTALS
The Property has lease agreements with lease terms ranging from one year to 30
years. The leases generally provide for tenants to share in increases in
operating expenses and real estate taxes in excess of specified base amounts.
The total minimum rentals to be received under such non-cancelable operating
leases as of December 31, 1997, exclusive of tenant reimbursements and
contingent rentals, are as follows:
<TABLE>
<CAPTION>
(in thousands)
--------------
<S> <C>
1998 $ 912,066
1999 810,837
2000 659,393
2001 538,845
2002 435,049
Thereafter 975,238
-----------
$ 4,331,428
===========
</TABLE>
F-13
