UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
(Amendment No. 2)
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): September 12, 1997
(August 28, 1997)
The Price REIT, Inc.
(Exact name of registrant as specified in charter)
Maryland 1-13432 52-1746059
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
7979 Ivanhoe Avenue, Suite 524, La Jolla, California 92037
(Address of Principal Executive Offices) (Zip Code)
(619) 551-2320
(Registrant's Telephone Number, Including Area Code)
None
(Former name or former address, if changed since last report.)
On November 7, 1997 The Price REIT, Inc. filed Amendment No. 1 on Form 8-K/A
("Amendment No.1") to amend Item 7 of its Current Report on Form 8-K (originally
filed with the Securities and Exchange Commission on September 12, 1997) to file
the (i) audited statement of revenue over specific operating expenses for the
Renaissance Centre, (ii) unaudited pro forma condensed financial information and
(iii) consent of independent auditors.
The Report of Independent Auditors filed as part of Amendment No. 1 omitted
the conformed signature of Ernst & Young LLP by mistake. This Amendment No. 2 on
Form 8-K/A is being filed only to add the conformed signature of Ernst & Young
LLP to such report.
Item 7. Financial Statements and Exhibits
(a) Financial Statement of Property Acquired
Renaissance Centre
Report of Independent Auditors
Statement of Revenue Over Specific Operating Expenses
Notes to Statement of Revenue Over Specific Operating Expenses
(b) Pro Forma Financial Information
The Price REIT, Inc.
Pro Forma Condensed Balance Sheet as of
June 30, 1997
The Price REIT, Inc.
Pro Forma Condensed Statement of Income for
the year ended December 31, 1996
The Price REIT, Inc.
Pro Forma Condensed Statement of Income for
the six months ended June 30, 1997
(c) Exhibits
The following exhibit is filed with this report on Form 8-K/A.
Exhibit No.
23.1 Consent of Independent Auditors
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 2 to Form 8-K filed on Form 8-K/A
to be signed on its behalf by the undersigned hereunto duly authorized.
The Price REIT, Inc.
(Registrant)
Date: May 5, 1998 By: /George M. Jezek/
--------------------------------
George M. Jezek
Executive Vice President,
Chief Financial Officer and Secretary
Report of Independent Auditors
The Board of Directors and Stockholders
The Price REIT, Inc.
We have audited the accompanying statement of revenue over specific operating
expenses of the Renaissance Centre (the "Center") for the year ended December
31, 1996. The statement is the responsibility of the Center'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 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 basis of
accounting 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 of revenue over specific operating expenses was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in the Form 8-K of The Price
REIT, Inc. as described in Note 2, and is not intended to be a complete
presentation of the Center's revenue and expenses.
In our opinion, the statement of revenue over specific operating expenses
referred to above presents fairly, in all material respects, the revenue over
specific operating expenses of the Center, as described in Note 2, for the year
ended December 31, 1996, in conformity with generally accepted accounting
principles.
/s/ Ernst & Young LLP
San Diego, California
October 24, 1997
Renaissance Centre
Statement of Revenue Over Specific Operating Expenses
(In Thousands)
Six Months Ended
Year Ended June 30,
December 31, ----------------------
1996 1997 1996
------------------------------------
(Unaudited)
Revenue
Rental income $ 4,881 $ 2,409 $ 2,460
Specific Operating Expenses (Note 2)
Rental operations, maintenance and 778 354 376
management
Real estate taxes 534 264 264
------------------------------------
1,312 618 640
------------------------------------
Excess of Revenue over Specific
Operating Expenses $ 3,569 $ 1,791 $ 1,820
====================================
See accompanying notes.
Renaissance Centre
Notes To Statement of Revenue Over
Specific Operating Expenses
Year ended December 31, 1996
1. Acquisition and Significant Accounting Policies
Organization
The Price REIT, Inc. (the "Company") acquired the Renaissance Centre (the
"Center") on August 29, 1997 from Altamonte Joint Venture ("Altamonte"). The
Center is a 271,000 rentable square-foot shopping center built in 1990 located
in Altamonte Springs (Orlando), Florida.
Rental Income
Rental income is recorded on a straight-line basis over the lives of the tenant
leases.
Use of Estimates
The preparation of the Center's statement of revenue over specific operating
expenses requires management to make estimates and assumptions that affect the
reported amounts of revenue and specific expenses during the reporting period.
Due to uncertainties inherent in the estimation process, it is possible that
actual results could differ from these estimates.
2. Basis of Presentation
The statement of revenue over specific operating expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of The Price REIT, Inc. and is
not intended to be a complete presentation of the Center's revenue and expenses.
The statement of revenue over specific operating expenses excludes depreciation,
amortization and certain other expenses of the Center which are not comparable
with the future operations of the Center.
In the opinion of management, the unaudited financial information contains all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the statements of revenue over specific operating expenses
of the Center.
Property taxes have not been adjusted to reflect the estimated reassessed value
of the Center after acquisition by the Company.
The statement contains no provision for income taxes because the Company intends
to continue to qualify as a real estate investment trust ("REIT") under both
Federal and state statutes. A REIT is not taxed on income distributed to its
stockholders, and the Company plans to distribute substantially all of its
taxable income to its stockholders.
3. Rental Income
The Center is generally leased to tenants under noncancellable operating leases
with remaining terms ranging from one to 14 years. Certain leases contain
renewal options and provisions for percentage rental income based on a
percentage of gross sales of the tenant in excess of a specified amount. During
1996, $15,000 of percentage rents are included in rental income. The leases
generally contain provisions for predetermined fixed increases in rent and
require the tenants to reimburse the owner for substantially all operating
expenses of the property.
Future minimum rental income due under the terms of the operating leases is as
follows (in thousands):
1997 $ 3,791
1998 3,784
1999 3,624
2000 3,011
2001 2,315
Thereafter 10,376
The following tenant accounts for greater than 10% of total revenues in 1996 (in
thou-sands):
Revenue
---------
General Cinema $ 776
4. Related Party Transaction
Rental operations, maintenance and management includes $144,000 of management
fees paid to an affiliate of Altamonte during the year ended December 31, 1996.
The Price REIT, Inc.
Pro Forma Condensed Balance Sheet
June 30, 1997
(Unaudited)
The following unaudited pro forma condensed balance sheet has been presented as
if the purchases of Renaissance Centre and West Farms Shopping Center
(collectively, the "Centers") occurred on June 30, 1997. The unaudited pro forma
condensed balance sheet should be read in conjunction with the condensed
consolidated financial statements included in the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997, Current Report on Form
8-K dated April 16, 1997 (and Amendment No. 1 thereto), and Current Report on
Form 8-K dated May 28, 1997 (and Amendment No. 1 thereto). In management's
opinion, all adjustments necessary to reflect the purchase of the Centers and
related significant transactions have been made. The unaudited pro forma
condensed balance sheet is not necessarily indicative of what the actual
financial position would have been at June 30, 1997, nor does it purport to
present the future financial position of the Company.
The Price REIT, Inc.
Pro Forma Condensed Balance Sheet
June 30, 1997
(Unaudited)
The The
Company Pro Forma Company
Historical Adjustments Pro Forma
---------- ------------- -----------
(In Thousands)
Assets
Rental property, net $ 493,303 $ 53,500 (a) $ 546,803
Other assets 42,158 (25,800)(a) 16,358
---------- ------------- -----------
$ 535,461 $ 27,700 $ 563,161
========== ============= ===========
Liabilities and Stockholders' Equity
Liabilities $ 245,498 $ 27,700 (a) $ 273,198
Stockholders' Equity 289,963 - 289,963
---------- ------------- -----------
$ 535,461 $ 27,700 $ 563,161
========== ============= ===========
See accompanying pro forma adjustments.
The Price REIT, Inc.
Pro Forma Adjustments to Condensed Balance Sheet
June 30, 1997
(Unaudited)
(a) Record the acquisitions of Renaissance Centre and West Farms Shopping
Center from operating cash, draws from the Company's unsecured line of credit,
and assumption of a secured loan as follows:
Paid from
--------------------------
Line of Loan
Acquisition Date Property Name Cost Cash Credit Assumed
- ---------------- ------------- ------------------------------------
(In Thousands)
August 29, 1997 Renaissance Centre $33,500 $20,500 $13,000 $ -
August 28, 1997 West Farms Shopping 20,000 5,300 - 14,700
Center
------------------------------------
$53,500 $25,800 $13,000 $14,700
====================================
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1996
(Unaudited)
The following unaudited pro forma condensed statement of income for the year
ended December 31, 1996 has been presented as if the Renaissance Centre, West
Farms Shopping Center and the 1997 Acquired Properties were acquired on January
1, 1996. The 1997 Acquired Properties include Westgate Market, Broadmoor
Village, Richardson Plaza, Cityplace Market, Wendover Ridge Center, Arboretum
Crossing Center, and Smoketown Stations Center that were previously presented in
the Company's Current Reports on Amendment No. 1 to Form 8-K dated April 16,
1997 and Amendment No. 1 to Form 8-K dated May 28, 1997 filed with the
Securities and Exchange Commission. The unaudited pro forma condensed statement
of income should be read in conjunction with the Company's Annual Report on Form
10-K for the year ended December 31, 1996, Current Report on Form 8-K dated
April 16, 1997 (and Amendment No. 1 thereto), and Current Report on Form 8-K
dated May 28, 1997 (and Amendment No. 1 thereto). In manage-ment's opinion, all
adjustments necessary to reflect the above acquisitions and related significant
transactions have been made. The unaudited pro forma condensed statement of
income is not necessarily indicative of what actual results of operations would
have been had the acquisitions and related transactions actually occurred as of
January 1, 1996, nor does it purport to represent the results of operations of
the Company for future periods.
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1996
(Unaudited)
Pro Forma Adjustments
------------------------------------
The 1997 West Farms The
Company Acquired Renaissance Shopping Company
Historical Properties Centre Center Pro Forma
-------------------------------------------------------------
(In thousands, except per share amounts)
Revenue
Rental income $ 51,292 $ 10,337(a) $ 4,881(a) $ 2,821(a) $ 69,331
Other income 3,033 - - - 3,033
--------------------------------------------------------------
54,325 10,337 4,881 2,821 72,364
Expenses
Rental operations 9,909 2,322(b) 1,168(b) 542(b) 13,941
General and
administrative 3,550 - - - 3,550
Depreciation 11,876 2,612(c) 975(c) 582(c) 16,045
Interest 12,071 3,730(d) 987(d) 1,305(d)(e) 18,093
--------------------------------------------------------------
37,406 8,664 3,130 2,429 51,629
--------------------------------------------------------------
Net income $ 16,919 $ 1,673 $ 1,751 $ 392 $ 20,735
==============================================================
Per Share Data
- ---------------
Net income per $ 1.98 $ 1.86
share
Weighted average 8,560 11,160(f)
number of shares
outstanding
Other Data
- ----------
Number of 24 33
properties at end
of period
See accompanying pro forma adjustments.
The Price REIT, Inc.
Pro Forma Adjustments to Condensed Statement of Income
For the Year Ended December 31, 1996
(Unaudited)
(In Thousands)
(a) Record the rental income of the 1997 Acquired Properties, Renaissance
Centre, and West Farms Shopping Center (the "Properties").
(b) Record the rental operating expenses of the Properties less property
management fees (as the Company self-manages its properties) as follows:
1997 West Farms
Acquired Renaissance Shopping
Properties Centre Center
----------------------------------------
Rental operations $ 2,541 $ 1,312 $ 669
Less: management fees (219) (144) (127)
----------------------------------------
$ 2,322 $ 1,168 $ 542
========================================
(c) Record the additional depreciation expense to be recognized for the
acquisition of the Properties under the straight-line method as follows:
1997 Acquired Renaissance West Farms
Properties Centre Shopping Center
--------------------------------------------------------
Cost Depre- Cost Depre- Cost Depre-
Years ciation ciation ciation
---------------------------------------------------------------
Land - $ 33,518 $ - $ 10,596 $ - $ 6,326 $ -
Land
improvements 15 6,971 390 2,188 146 1,306 87
Buildings 25 66,164 2,222 20,716 829 12,368 495
--------------------------------------------------------
$106,653 $ 2,612 $ 33,500 $ 975 $ 20,000 $ 582
========================================================
(d) Record the additional interest expense resulting from the acquisitions of
the Properties with the proceeds from the unsecured line of credit, using
the Company's weighted average interest rate on its unsecured line of
credit for the year ended December 31, 1996 of 7.595%.
(e) Record the additional interest expense resulting from the assumption of the
$14.7 million secured loan on the West Farms Shopping Center. The interest
rate on the loan is 8.875%.
(f) Includes the issuance of 1.6 million shares of common stock sold on January
22, 1997 and the issuance of 1.0 million shares of common stock sold on
August 5,1997.
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 1997
(Unaudited)
The following unaudited pro forma condensed statement of income for the six
months ended June 30, 1997 has been presented as if the Renaissance Centre, West
Farms Shopping Center and the 1997 Acquired Properties were acquired on January
1, 1997. The 1997 Acquired Properties include Westgate Market, Broadmoor
Village, Richardson Plaza, Cityplace Market, Wendover Ridge Center, Arboretum
Crossing Center and Smoketown Stations Center that were previously presented in
the Company's Current Reports on Amendment No. 1 to Form 8-K dated April 16,
1997 and Amendment No. 1 to Form 8-K dated May 28, 1997 filed with the
Securities and Exchange Commission. The unaudited pro forma condensed statement
of income should be read in conjunction with the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1997, Current Report on Form
8-K dated April 16, 1997 (and Amendment No. 1 thereto), and Current Report on
Form 8-K dated May 28, 1997 (and Amendment No. 1 thereto). In management's
opinion, all adjustments necessary to reflect the above acquisitions and related
significant transactions have been made. The unaudited pro forma condensed
statement of income is not necessarily indicative of what actual results of
operations would have been had the acquisitions and related transactions
actually occurred as of January 1, 1997, nor does it purport to represent the
results of operations of the Company for future periods.
The Price REIT, Inc.
Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 1997
(Unaudited)
Pro Forma Adjustments
------------------------------------
The 1997 West Farms The
Company Acquired Renaissance Shopping Company
Historical Properties Centre Center Pro Forma
-------------------------------------------------------------
(In thousands, except per share amounts)
Revenue
Rental income $ 30,697 $ 3,586(a) $ 2,409(a) $ 1,367(a) $ 38,059
Other income 1,882 - - - 1,882
-------------------------------------------------------------
32,579 3,586 2,409 1,367 39,941
Expenses
Rental operations 5,939 588(b) 553(b) 236(b) 7,316
General and
administrative 1,907 - - - 1,907
Depreciation 6,948 1,318(c) 487(c) 291(c) 9,044
Interest 6,665 2,070(d) 449(d) 652(d)(e) 9,836
------------------------------------------------------------
21,459 3,976 1,489 1,179 28,103
------------------------------------------------------------
Net income(loss) $ 11,120 $ (390) $ 920 $ 188 $ 11,838
============================================================
Per Share Data
- --------------
Net income per $ 1.06 $ 1.01
share
Weighted average 10,488 11,674(f)
number of shares
outstanding
Other Data
- ----------
Number of 32 34
properties at
end of period
See accompanying pro forma adjustments.
The Price REIT, Inc.
Pro Forma Adjustments to Condensed Statement of Income
For the Six Months Ended June 30, 1997
(Unaudited)
(In Thousands)
(a) Record the rental income less amount included in the Company historical of
the 1997 Acquired Properties, Renaissance Centre, and West Farms Shopping
Center (the "Properties").
(b) Record the rental operating expenses of the Properties less property
management fees (as the Company self-manages its properties) net of amount
included in the Company historical as follows:
1997 Acquired Renaissance West Farms
Properties Center Shopping Center
----------------------------------------------
Rental operations $ 662 $ 618 $ 303
Less: management fees (74) (65) (67)
----------------------------------------------
$ 588 $ 553 $ 236
==============================================
(c) Record the additional depreciation expense to be recognized for the
acquisition of the Properties under the straight-line method as follows:
1997 Acquired Renaissance West Farms
Properties Centre Shopping Center
----------------------------------------------------
Depre- Depre- Depre-
Years Cost ciation Cost ciation Cost ciation
--------------------------------------------------------------
Land - $ 33,518 $ - $10,596 $ - $ 6,326 $ -
Land
improvements 15 6,971 232 2,188 73 1,306 44
Buildings 25 66,164 1,323 20,716 414 12,368 247
------------------------------------------------------
$106,653 1,555 $33,500 $ 487 $ 20,000 $ 291
======== ===================================
Less amount included in
the Company historical (237)
-------
$1,318
=======
(d)Record the additional interest expense resulting from the acquisitions of the
Properties with the proceeds from the unsecured line of credit, using the
Company's weighted average interest rate on its unsecured line of credit for
the six months ended June 30, 1997 of 6.9%.
(e)Record the additional interest expense resulting from the assumption of
the $14.7 million secured loan on the West Farms Shopping Center. The
interest rate on the loan is 8.875%.
(f) Includes the issuance of 1.6 million shares of common stock
sold on January 22, 1997 and the issuance of 1.0 million
shares of common stock sold on August 5, 1997.
EXHIBIT 23.1
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statements
(Form S-3 No. 33-75547; Form S-8 No. 33-87812; Form S-3 No. 333-35185 and
related Prospectus) of The Price REIT, Inc. for the registration of 500,000
shares of its common stock; 600,000 shares of its common stock; and an aggregate
maximum total of $400,000,000 of debt securities, preferred stock, common stock,
and warrants for the purchase of its preferred stock or common stock,
respectively, of our report dated October 24, 1997 with respect to the statement
of revenue over specific operating expenses of the Renaissance Centre of The
Price REIT, Inc. included in its Current Report on Amendment No. 2 to Form 8-K
dated September 12, 1997, filed with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
San Diego, California
May 5, 1998
