SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
[X] Current Report Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
February 5, 1997
(Date of Report)
Commission file number: 0-28354
Great Lakes REIT, Inc.
(Exact name of Registrant as specified in its Charter)
Maryland 36-3844714
(State or other jurisdiction (I.R.S. Employer identification no.)
of incorporation organization)
823 Commerce Drive, Suite 300, Oak Brook, IL 60521
(Address of principal executive offices) (Zip Code)
(630) 368 - 2900
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITIONS
As previously reported in a Current Report on Form 8-K filed December 6, 1996,
on November 22, 1996 Great Lakes REIT, Inc. through Great Lakes REIT L.P.
(collectively the "Company") acquired a three-story, class A office building
located at 1301 Long Lake Road, Troy, Michigan ("Long Lake Crossing").
Constructed in 1988, the property consists of 169,959 rentable square feet and
was approximately 93% occupied at acquisition. The property includes a two-story
main lobby, an underground garage with 47 parking spaces, exterior parking with
1,067 spaces and a deli.
TERMS OF PURCHASE
Long Lake Crossing was purchased from an unaffiliated third party for
approximately $16.1 million. Funds for the purchase came from Company cash
reserves.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The required financial statement for Long Lake Crossing is attached as Exhibit
A. The required proforma financial statement is attached as Exhibit B.
No information is required under Items 1,3,4, and 6, and these items have
therefore been omitted.
By: /s/ Richard L. Rasley
Richard L. Rasley, Secretary
<PAGE>
EXHBIT A
Statements of Revenue and
Certain Expenses
Long Lake Crossing
The period from January 1, 1996 to November 22, 1996 and the year ended December
31, 1995 with Report of Independent Auditors
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Great Lakes REIT, Inc.
We have audited the accompanying Statements of Revenue and Certain Expenses of
Long Lake Crossing (the Property) for the period from January 1, 1996 to
November 22, 1996 and the year ended December 31, 1995. The Statements of
Revenue and Certain Expenses are the responsibility of the Property's
management. Our responsibility is to express an opinion on the Statements of
Revenue and Certain Expenses based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Statements of Revenue and Certain
Expenses are free from material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures made in the
Statements 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 Statements of Revenue and Certain
Expenses. We believe that our audits provide a reasonable basis for our opinion.
The accompanying Statements of Revenue and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission as described in Note 2 and are not intended to be a complete
presentation of the Property's revenue and expenses.
In our opinion, the Statements of Revenue and Certain Expenses referred to above
present fairly, in all material respects, the revenue and certain expenses of
the Property described in Note 2 for the period from January 1, 1996 to November
22, 1996 and the year ended December 31, 1995, in conformity with generally
accepted accounting principles.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
Chicago, Illinois
December 27, 1996
<PAGE>
<TABLE>
LONG LAKE CROSSING
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<CAPTION>
January 1, 1996 to Year Ended
November 22, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Revenue
Base rents $2,269,745 $2,519,925
Tenant reimbursements 167,721 152,633
Other income 65,876 42,392
------ ------
Total revenue 2,503,342 2,714,950
--------- ---------
Expenses
Real estate taxes 303,440 340,696
Contract Services 178,172 164,876
Utilities 277,635 300,855
Repairs and maintenance 92,496 106,083
Management fee 48,684 51,582
Insurance 23,689 25,788
Other 18,008 12,562
------ ------
Total expenses 942,124 1,002,442
------- ---------
Revenue in excess of certain expenses $1,561,218 $1,712,508
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
LONG LAKE CROSSING
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
Note 1 Business
The accompanying Statements of Revenue and Certain Expenses relate to the
operations of Long Lake Crossing (the Property). The Property was acquired on
November 22, 1996, by Great Lakes REIT, L.P. (Great Lakes).
As of November 22, 1996 and December 31, 1995, the Property had twenty-eight
tenants and was 92% and 93% leased, respectively. Two tenants (Walsh College of
Business and St. Paul Fire & Marine Insurance) accounted for approximately 33%
of base rents at November 22, 1996 and December 31, 1995.
Note 2 Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Statements of Revenue and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission. The statement is not representative of the actual
operations of the Property for the periods presented nor indicative of future
operations as certain expenses, primarily depreciation and amortization, which
may not be comparable to the expenses expected to be incurred by Great Lakes in
future operations of the Property, have been excluded.
Revenue and Expense Recognition
Revenue is recognized in the period in which it is earned. Expenses are
recognized in the period in which they are incurred.
Use of Estimates
The preparation of the Statements 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
expenses during the reporting period. Actual results could differ from these
estimates.
Note 3 Rentals
The Property has entered into tenant leases that provide for tenants to share in
the operating expenses and real estate taxes in relation to their pro rata share
as defined.
Note 4 Management Agreement
During the year ended December 31, 1995 and the period ended November 22, 1996,
the Property was managed by a third-party management company. The management
agreement provided for 2% of gross monthly rent.
<PAGE>
EXHIBIT B
Pro Forma Financial Statements
The unaudited Pro forma statements of income for the nine months ended September
30, 1996, and the year ended December 31, 1995, present the results of
operations as if the property acquisition had occurred at the beginning of 1995.
The unaudited Pro forma balance sheet as of September 30, 1996, gives effect to
the property acquisition subsequent to that date. The unaudited Pro forma
financial staements are not necessarily indicative of what the Company's
financial position or results of operations would have been assuming the above
event would have been consummated as of the dates indicated nor do they purport
to project the Company's financial position or results of operations at any
future date or for any future period.
<TABLE>
Great Lakes REIT, Inc.
Pro Forma Balance Sheet (unaudited)
<CAPTION>
Historical Pro forma
09/30/96 Property 09/30/96
(unaudited) Acquisition (unaudited)
(1) (2) (3)
<S> <C> <C> <C>
Assets
Properties:
Land $21,491,500 $2,500,000 $23,991,500
Buildings, improvements, and equipment 94,623,932 13,600,416 108,224,348
Less accumulated depreciation 4,673,912 4,673,912
----------------------------------------------------------
111,441,520 16,100,416 127,541,936
Cash and cash equivalents 816,207 816,207
Real estate tax escrows 753,197 753,197
Rents receivable 1,434,547 1,434,547
Deferred costs 2,825,225 2,825,225
Other assets 451,702 14,032 465,734
----------------------------------------------------------
Total assets $117,722,398 $16,114,448 $133,836,846
==========================================================
Liabilities and stockholders' equity
Bank loan payable $27,602,368 $16,042,587 $43,644,955
Mortgage loans payable 18,158,065 18,158,065
Bonds payable 5,235,000 5,235,000
Accounts payable and accrued liabilities 911,960 911,960
Accrued real estate taxes 2,905,317 2,905,317
Prepaid rent 690,081 690,081
Security deposits 424,661 71,861 496,522
Distributions/dividends payable 1,638,881
----------------------------------------------------------
Total liabilities 57,566,333 16,114,448 73,680,781
----------------------------------------------------------
Preferred stock ($0.01 par value, 10,000,000
authorized, 73, 548 issued) 735 735
Common stock ($0.01 par value, 20,000,000
authorized; 6,316,683, issued in 1996) 63,167 63,167
Paid-in-capital 65,435,578 65,435,578
Distributions in excess of accumulated
earnings (3,607,528) (3,607,528)
Employee stock loans (1,247,351) (1,247,351)
Deferred compensation (333,125) (333,125)
Treasury stock (155,411) (155,411)
----------------------------------------------------------
Total stockholders' equity 60,156,065 0 60,156,065
----------------------------------------------------------
Total Liabilities and Stockholders' Equity $117,722,398 $16,114,448 $133,836,846
==========================================================
</TABLE>
See accompanying notes to pro forma balance sheet.
Notes to pro forma balance sheet.
(1) Represents the historical financial position of the Company at September 30,
1996.
(2) Represents the purchase price paid for Long Lake Crossing, net of any other
assets acquired or liabilities assumed. It is assumed the purchase price was
funded by borrowings on the Company's line of credit.
(3) The unaudited pro forma balance sheet as of September 30, 1996 gives effect
to the acquisition of Long Lake Crossing as of September 30, 1996 and is not
indicative of the financial position of the Company had this acquisition taken
place on that date nor does it purport to project the Company's financial
position at any future date.
<TABLE>
Great Lakes REIT, Inc.
Pro Forma Statements of Income (unaudited)
<CAPTION>
Historical Pro forma
Nine months Acquisition of Pro Forma Nine months
ended 9/30/96 Property Adjustments ended 9/30/96
(unaudited) (unaudited)
(1) (2) (3) (5)
<S> <C> <C> <C> <C>
Revenues
Rental $17,534,220 2,095,821 19,630,041
Interest 78,366 78,366
-----------------------------------------------------------------------------
Total revenues 17,612,586 2,095,821 0 19,708,407
-----------------------------------------------------------------------------
Expenses
Real estate taxes 2,907,224 254,043 3,161,267
Other property operating 4,691,157 688,081 5,379,238
General and administrative 1,387,097 1,387,097
Interest 2,865,533 902,396 3,767,929
Depreciation and amortization 2,727,414 255,008 2,982,422
Contract termination 1,273,307 1,273,307
-----------------------------------------------------------------------------
Total expenses 15,851,732 942,124 1,157,403 17,951,259
-----------------------------------------------------------------------------
Net income $1,760,854 $1,153,697 ($1,157,403) $1,757,148
=============================================================================
Earnings per common share and common
share equivalent $0.35 $0.35
=================== ===================
Weighted average number of common
shares and common share equivalents
outstanding 5,081,833 5,081,833
=================== ===================
</TABLE>
See accompanying notes to pro forma balance statements of income.
<TABLE>
<CAPTION>
Historical Pro forma
Year Acquisition of Pro forma Year
ended 12/31/95 Property Adjustments ended 12/31/95
(audited) (unaudited)
(1) (4) (3) (5)
<S> <C> <C> <C> <C>
Revenues
Rental $14,765,108 $2,714,950 $17,480,058
Interest 200,818 200,818
-----------------------------------------------------------------------------
Total revenues 14,965,926 2,714,950 0 17,680,876
-----------------------------------------------------------------------------
Expenses
Real estate taxes 2,624,588 340,696 2,965,284
Other property operating 3,967,543 661,746 4,629,289
General and administrative 922,652 922,652
Interest 2,296,457 1,203,194 3,499,651
Depreciation and amortization 1,954,885 340,010 2,294,895
Contract termination 0
-----------------------------------------------------------------------------
Total expenses 11,766,125 1,002,442 1,543,204 14,311,771
-----------------------------------------------------------------------------
Net income $3,199,801 $1,712,508 ($1,543,204) $3,369,105
=============================================================================
Earnings per common share and common
share equivalent $0.88 $0.66
=================== ===================
Weighted average number of common
shares and common share equivalents
outstanding 3,650,133 5,081,833
=================== ===================
</TABLE>
See accompanying notes to pro forma statements of income.
Notes to pro forma statements of income.
(1) Represents the historical operations of the Company for the periods
described.
(2) Represents the unaudited, estimated historical operations of Long Lake
Crossing from January 1, 1996 to September 30, 1996 based upon the audited
results of operations for the period January 1, 1996 to November 22, 1996.
(3) Depreciation is computed on a straight-line basis over 40 years for the
periods described. Interest expense is computed on the amount assumed to be
borrowed to acquire this property at an interest rate of 7.5% per annum for the
periods described.
(4) Represents the historical operations of Long Lake Crossing for the year
ended December 31, 1995.
(5) The unaudited pro forma statements of income for the periods described give
effect to the acquisition of Long Lake Crossing as of January 1, 1995 and are
not indicative of the results of operations of the Company had this acquisition
taken place on that date nor do they purport to project the Company's results of
operations at any future date.
