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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): June 15, 1998
WINDSOR REAL ESTATE INVESTMENT TRUST 8
(Exact Name of Registrant as Specified in Its Declaration of Trust)
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CALIFORNIA 0-21470 33-610944499
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation or organization) File Number) Identification Number)
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6430 SO. QUEBEC STREET, ENGLEWOOD, COLORADO 80111
(Address of Principal Executive Offices) (Zip Code)
(303) 741-3707
(Registrant's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OF ASSETS
Windsor Real Estate Investment Trust 8, a California business trust
(the "Trust") is an externally advised real estate investment trust. The
information contained herein supplements the information contained in the Form
10-KSB of the Trust filed by the Trust on March 30, 1998, relating to the
Trust's acquisition on March 31, 1998 of a 627 site manufactured home community
in Montgomery, Alabama (the "Acquired Property") for a purchase price of $5.7
million.
In acquiring the Acquired Property, the Trust purchased all of the
seller's right title and interest in the manufactured home community including
the real property, all improvements thereon owned by the seller along with all
licenses, permits, fixtures, furnishings and equipment relating to the Acquired
Property.
Neither the Trust nor any of its shareholders, trustees or officers,
nor their respective affiliates owned any interest in the seller or the
Acquired Property prior to the acquisition. The purchase price of the Acquired
Property was determined through arms-length negotiations, was paid in cash, and
there was no assumed indebtedness. The funds for the acquisition were provided
through a loan of $5.7 million (the "Loan") from Chateau Communities, Inc., a
publicly- held real estate investment trust ("Chateau"). The Loan was made
pursuant to an Investment Agreement dated March 30, 1998 by and between the
Trust and Chateau which provided among other things for: (i) the immediate
investment by Chateau in the Trust of $5.7 million in cash, and (ii) the future
issuance to Chateau by the Trust of a combination of common shares of the Trust
(the "Common Shares") and promissory notes, having an aggregate value of $5.7
million. Pursuant to the Investment Agreement, on May 11, 1998, the Trust
issued to Chateau (i) 19,139 Common Shares having an aggregate value of
$478,475 and (ii) two promissory notes having an aggregate principal amount of
$5,221,525. Chateau also owns all of the outstanding shares of capital stock
of The Windsor Corporation, the advisor to the Trust.
In determining the price paid for the Acquired Property, the Trust
considered the historical and expected cash flow from the Acquired Property,
the nature of the occupancy trends and terms of the leases in place, current
operating costs and taxes, the physical condition of the Acquired Property, the
potential to increase its cash flow and other factors. The Trust also
considered the capitalization rates of recently sold manufactured home
communities in the same geographic area as the Acquired Property. No
independent appraisals were performed in connection with the acquisition.
The Trust, after reasonable inquiry, is not aware of any material
factors, other than those identified in the preceding paragraph, that would
cause the financial information reported herein not to be necessarily
indicative of future operating results.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
A. Financial Statements Relating to Acquired Property
The Audited Historical Summary of Revenues and Direct Expenses of
Woodland Hills Park, required pursuant to Rule 3-14 of Regulation S-X for
the Fiscal Year ended December 31, 1997 is set forth in pages F-2 through
F-4 hereof.
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B. Pro Forma Financial Information
The combined unaudited pro forma condensed Statement of Income of the
Trust is set forth in pages F-5 through F-7 hereof.
C. Exhibits:
None
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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.
Dated: June 15, 1998 WINDSOR REAL ESTATE INVESTMENT TRUST 8
a California business trust
(Registrant)
By: /s/Gary McDaniel
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Gary McDaniel
Trustee
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FINANCIAL STATEMENT INDEX
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Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2
Audited Historical Summary of Revenues and
Direct Operating Expenses of Woodland Hills Park . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3
Combined unaudited Pro Forma Statement of Income of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-5
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F-1
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Windsor Real Estate Investment Trust 8:
We have audited the accompanying Historical Summary of Revenues and Direct
Operating Expenses (the "Historical Summary") of Woodland Hills Park (the
"Property") for the year ended December 31, 1997. The Historical Summary is the
responsibility of current management of the Property. Our responsibility is to
express an opinion on the Historical Summary 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 Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with rules and regulations of the Securities and Exchange Commission, as
described in Note 1, and is not intended to be a complete presentation of the
Property's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses (described in Note
1) of Woodland Hills Park for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Denver, Colorado
June 15, 1998
F-2
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WOODLAND HILLS PARK
HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1997
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Rental income $ 872,875
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Direct operating expenses:
On-site operating 144,092
Real estate taxes 28,937
Utilities 167,666
Repairs and maintenance 90,068
Other 6,359
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Total direct operating expenses 437,122
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Revenues in excess of direct operating expenses $ 435,753
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The accompanying notes are an integral part of the Historical Summary.
F-3
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WOODLAND HILLS PARK
NOTES TO HISTORICAL SUMMARY OF REVENUES AND
DIRECT OPERATING EXPENSES
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1. PROPERTY AND BASIS OF ACCOUNTING:
The accompanying Historical Summary of Revenues and Direct Operating
Expenses has been prepared in accordance with Rule 3-14 of Regulation S-X
of the Securities and Exchange Commission for inclusion in a Form 8-K of
the Windsor Real Estate Investment Trust 8 and relates to the operations of
Woodland Hills Park (the "Property").
The Property is located in Montgomery, Alabama with 627 manufactured home
community sites.
In accordance with Rule 3-14, direct operating expenses are presented
exclusive of depreciation, interest, management fees and income taxes.
Rental income attributable to residential leases is recorded when due from
tenants.
The preparation of financial statements requires management to make
estimates and assumptions. Actual results could differ from estimates.
2. RELATED PARTIES:
Maintenance services were provided to the Property by a related party. For
the year ended December 31, 1997, the Property recorded $17,742 in
maintenance expenses related to these services.
F-4
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REAL ESTATE INVESTMENT TRUST 8
PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
The following unaudited pro forma statement of income has been presented as if
the acquisition of Woodland Hills Park had been completed as of January 1,
1997. The unaudited pro forma statement of income should be read in conjunction
with the Trust's audited financial statements which are included in the Trust's
Annual Report on Form 10-KSB as filed with the Securities and Exchange
Commission (the "Commission"). The unaudited pro forma statement of income is
not necessarily indicative of what actual results of operations of the Trust
would have been nor does it represent the results of operations of the Trust
for future periods.
F-5
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REAL ESTATE INVESTMENT TRUST 8
PRO FORMA STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
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REIT 8 WOODLAND HILLS ADJUSTMENTS PRO FORMA
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(Note 1) (Note 2) (Note 3)
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REVENUES
Rent and utilities $ 956,100 $ 872,875 $ - $ 1,828,975
Equity in earnings (loss) of joint ventures -
and limited partnerships (30,600) (30,600)
Interest 5,000 5,000
Other 11,700 11,700
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942,200 872,875 - 1,815,075
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COSTS AND EXPENSES
Property operating 456,800 437,122 39,500 933,422
Interest 227,700 - 468,000 695,700
Depreciation 163,100 - 181,000 344,100
Advisory fee 54,500 57,000 111,500
General & administrative
Related parties 29,800 43,600 73,400
Other 32,700 32,700
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964,600 437,122 789,100 2,190,822
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NET INCOME (LOSS) $ (22,400) $ 435,753 $ (789,100) $ (375,747)
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Preferred dividends paid (147,100) (147,100)
Net loss attributable to common shares $ (169,500) $ (522,847)
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Basic and dilutive loss per common share $ (4.78)
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Weighted average shares outstanding 90,169 19,139 109,308
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F-6
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REAL ESTATE INVESTMENT TRUST 8
NOTES TO PRO FORMA FINANCIAL STATEMENTS
1. HISTORICAL FINANCIAL STATEMENTS:
The historical financial statements, which are included in its Annual
Report on form 10-KSB as filed with the Commission, include the accounts
of the Trust for the year ended December 31, 1997.
2. ACQUISITIONS-WOODLAND HILLS
This reflects the historical revenues and direct operating expenses for
the Woodland Hills community for the year ended December 31, 1997.
3. PRO FORMA ADJUSTMENTS:
The pro forma adjustments are as follows:
PROPERTY OPERATING
This reflects costs charged to the community by Chateau Communities,
Inc. for overhead reimbursement.
INTEREST
Adjustment for interest expense is calculated on the $5.2 million notes
that are payable to Chateau Communities, Inc. at an average rate of
Prime plus one percent (9%).
DEPRECIATION
Adjustment for depreciation expense is based on the allocation of the
purchase price to Buildings and Improvements which is amortized over the
estimated useful life of twenty years.
ADVISORY FEE
This includes an adjustment for an advisory fee to the Trust's Advisor
pursuant to the REIT 8 advisory contract.
GENERAL AND ADMINISTRATIVE
Adjustment for management fees which is calculated as 5% of revenues
pursuant to the management contract with Chateau Communities, Inc.
F-7
