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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 18, 1994
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B. F. SAUL REAL ESTATE INVESTMENT TRUST
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(Exact Name of Registrant as Specified in Charter)
Maryland 1-7184 52-6053341
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
8401 Connecticut Avenue
Chevy Chase, Maryland 20815
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (301) 986-6000
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N/A
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(Former Name or Former Address, if Changed Since Last Report.)
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Item 4. Changes in Registrant's Certifying Accountant.
(a) (1) On May 18, 1994, B.F. Saul Real Estate Investment Trust (the
"Registrant") engaged the accounting firm of Arthur Andersen & Co. ("Arthur
Andersen") as independent accountants for the Registrant for its fiscal year
ending September 30, 1994. The engagement of Arthur Andersen was authorized
by the Registrant's Board of Trustees on May 18, 1994, upon the recommendation
of the Audit Committee of the Registrant's Board of Trustees. The Board of
Trustees determined that the selection of Arthur Andersen would facilitate
coordination of financial reporting matters with the Registrant's 80%-owned
subsidiary, Chevy Chase Bank, F.S.B. ("Chevy Chase"), and would more fully
serve the accounting and auditing requirements of the Registrant. Arthur
Andersen serves as independent accountants for Chevy Chase, whose financial
statements are consolidated with those of the Registrant.
On May 18, 1994, the Registrant informed its previous independent
accountants, Stoy, Malone & Company, P.C. ("Stoy, Malone"), of the
determination by the Board of Trustees to replace Stoy, Malone with Arthur
Andersen as the Registrant's independent accountants. The reports of Stoy,
Malone on the financial statements of the Registrant for its past two years
did not contain an adverse opinion or disclaimer of opinion, and were not
qualified or modified as to uncertainty, audit scope or accounting
principles.
During the Registrant's two most recent fiscal years and the subsequent
interim period prior to the engagement of Arthur Andersen (the "Accounting
period"), there were no disagreements between the Registrant and Stoy,
Malone on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which, if not resolved
to the satisfaction of Stoy, Malone, would have caused Stoy, Malone to make
a reference to the subject matter of the disagreement in connection with its
report ("Accounting Matters").
During the Accounting Period, there did not occur any of the kinds
of "reportable events" listed in paragraphs (A) through (D) of Item
304(a) (1) (v) or Regulation S-K.
(a) (2) The engagement of Arthur Andersen as independent accountants
for the Registrant for the fiscal year ending September 30, 1994 was
effective May 18, 1994. During the Accounting Period, in connection with
the issuance on March 30, 1994 of $175,000,000 aggregate principal amount
of its 11-5/8% Senior Secured Notes due 2002 (the "Senior Notes") and on the
advice of the Initial Purchasers (as defined in the Offering Memorandum for
the Senior Notes), the Registrant engaged Arthur Andersen on January 20,
1994 to perform an audit of the Registrant's financial statements for its
fiscal quarter ended December 31, 1993. Arthur Andersen's report on the
first quarter financial statements was unqualified and included in the
Offering Memorandum for the Senior Notes. In connection with the audit,
the Registrant consulted with Arthur Andersen regarding the application
of certain accounting principles. There were no disagreements between
Arthur Andersen and the Registrant with respect to such consultations.
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The following summarizes the significant aspects of those consultations:
1. The application of accounting principles with respect to long
lived assets.
2. The initial application and effect of implementation of SFAS 109
Accounting for Income Taxes, which was adopted by the Registrant
effective October 1, 1993.
3. The short and long term liquidity needs of the Registrant and the
Registrant's plans to meet its future liquidity requirements.
Further, during the Accounting Period, neither the Registrant nor anyone
acting on its behalf consulted Arthur Andersen regarding (i) the application
of accounting principles to any specified transaction (except as discussed
above), (ii) the type of audit opinion that might be rendered on the
Registrant's financial statements, or (iii) any matter that was either the
subject of a disagreement on an Accounting Matter or a "reportable event"
as listed in paragraphs (A) through (D) of Item 304(a) (1) (v) of Regulation
S-K.
(a) (3) In compliance with Item 304(a) (3) of Regulation S-K, attached
hereto as Exhibit 16 is the letter of Stoy, Malone confirming the statements
made by the Registrant in this report.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
Exhibit 16 Letter form Stoy, Malone & Company, P.C. stating
its agreement with the statements in this Current
Report on Form 8-K.
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Exhibit 16
May 23, 1994
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Ladies and Gentlemen:
We were previously principal accountants for B.F. Saul Real Estate
Investment Trust (the "Trust) and, under the date of November 4, 1993,
we reported on the consolidated Financial Statements of the Trust as
of September 30, 1993 and 1992, and for each of years in the three year
period ended September 30, 1993. Effective May 18, 1994, our appointment
as principal accountants was terminated.
We have read Item 4 of Form 8-K dated May 23, 1994 of the Trust and are
in agreement with the statements contained in the second, third and
fourth paragraphs of Item 4 of Form 8-K. We have no basis to agree or
disagree with other statements of the Trust contained therein.
Very truly yours,
/s/Robert Holder
STOY, MALONE & COMPANY, P.C.
cc: Stephen R. Halpin
Vice President and Chief Financial Officer
B.F. Saul Real Estate Investment Trust
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
B.F. SAUL REAL ESTATE INVESTMENT TRUST
By: Stephen R. Halpin, Jr.
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Vice President and
Chief Financial Officer
By: Ross E. Heasley
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Principal Accounting Officer
Date: May 23, 1994
