<PAGE>
UNITED STATES
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
NOVEMBER 15, 1996
(Date of Report)
EQUITY RESIDENTIAL PROPERTIES TRUST
(Exact Name of Registrant as Specified in its Charter)
1-12252
(Commission File No.)
Maryland 36-3877868
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation)
Two North Riverside Plaza, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 474-1300
(Registrant's Telephone Number, Including Area Code)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Capitalized terms not defined herein are used as defined in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, as amended by Form 10-
K/A, and the Company's Quarterly Report on Form 10-Q for the three months ended
September 30, 1996.
ACQUISITIONS
Equity Residential Properties Trust and its subsidiaries (the "Company") has
acquired 31 multifamily residential properties during the period from May 31,
1996 through November 15, 1996. The cash portion of these transactions was
financed primarily through the Company's line of credit and net proceeds
received from the Third Public Debt Offering, the Series C Preferred Share
Offering and the September 1996 Common Share Offering. Descriptions of the
acquired properties are as follows except for 16 properties which were included
in the Current Report on Form 8-K dated May 23, 1996.
CHANDLER COURT APARTMENTS, CHANDLER, ARIZONA
On June 25, 1996, the Company acquired a multifamily residential property
located in Chandler, Arizona ("Chandler Court"). Chandler Court was
approximately 86% occupied as of November 1, 1996. The property consists of 311
units in 35 townhouses and single-story flats on approximately 20 acres.
Amenities include a clubhouse, washer/dryer hookups in each unit, two spas,
barbecues, playground, fireplaces, billiard table, two swimming pools and an
aerobics room. The property was constructed in 1987. Property management
services are being provided by the Company since the date of acquisition.
TERMS OF PURCHASE
Chandler Court was purchased from an unaffiliated third party for approximately
$13.5 million.
PINE MEADOW APARTMENTS, GREENSBORO, NORTH CAROLINA
On July 16, 1996, the Company acquired a multifamily residential property
located in Greensboro, North Carolina ("Pine Meadow"). Pine Meadow was
approximately 98% occupied as of November 1, 1996. The property consists of 204
units in 29 three story residential buildings and one maintenance shop/leasing
office on approximately 14 acres. Amenities include a swimming pool, tennis
courts, washer/dryer connections and playground. The property was constructed in
1974. Property management services are being provided by the Company since the
date of acquisition.
TERMS OF PURCHASE
Pine Meadow was purchased from an unaffiliated third party for approximately
$7.19 million, which included the assumption of mortgage indebtedness of
approximately $4.9 million.
PUEBLO VILLAS APARTMENTS, ALBUQUERQUE, NEW MEXICO
On August 1, 1996, the Company acquired a multifamily residential property
located in Albuquerque, New Mexico ("Pueblo Villas"). Pueblo Villas was
approximately 94% occupied as
2
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of November 1, 1996. The property consists of 232 units in 17 residential
buildings on approximately 12 acres. Amenities include two lighted tennis
courts, heated jacuzzi, sauna, clubhouse, covered parking and on-site coin
operated laundry facilities. The property was constructed in 1975. Property
management services are being provided by the Company since the date of
acquisition.
TERMS OF PURCHASE
Pueblo Villas was purchased from an unaffiliated third party for approximately
$8.5 million.
BRIXWORTH APARTMENTS, NASHVILLE, TENNESSEE
On August 28, 1996, the Company acquired a multifamily residential property
located in Nashville, Tennessee ("Brixworth"). Brixworth was approximately 92%
occupied as of November 1, 1996. The property consists of 216 units in 19 three-
story residential buildings on approximately six acres. Amenities include a
clubhouse with swimming pool, covered parking, washer/dryers in select units and
woodburning fireplaces in select units. The property was constructed in 1985.
Property management services are being provided by the Company since the date of
acquisition.
TERMS OF PURCHASE
Brixworth was purchased from an unaffiliated third party for approximately $11.7
million.
WOODSCAPE APARTMENTS, RALEIGH, NORTH CAROLINA
On August 30, 1996, the Company acquired a multifamily residential property
located in Raleigh, North Carolina ("Woodscape"). Woodscape was approximately
97% occupied as of November 1, 1996. The property consists of 240 units in 21
two story residential buildings on approximately 25 acres. Amenities include
two lighted tennis courts, swimming pool, volleyball court and weight room. The
property was constructed in 1979. Property management services are being
provided by the Company since the date of acquisition.
TERMS OF PURCHASE
Woodscape was purchased from an unaffiliated third party for approximately $9.55
million.
CANTERCHASE APARTMENTS, NASHVILLE, TENNESSEE
On September 19, 1996, the Company acquired a multifamily residential property
located in Nashville, Tennessee ("Canterchase"). Canterchase was approximately
91% occupied as of November 1, 1996. The property consists of 235 units in 12
two and three-story garden style residential buildings and 1 one-story
office/clubhouse on approximately 22 acres. Amenities include a clubhouse,
jacuzzi, lighted tennis courts, basketball court, laundry facilities, swimming
pool, fitness center, sand volleyball court and playground. The property was
constructed in 1985. Property management services are being provided by the
Company since the date of acquisition.
3
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TERMS OF PURCHASE
Canterchase was purchased from an unaffiliated third party for approximately
$8.55 million, which included the assumption of mortgage indebtedness of
approximately $5.8 million.
EAGLE CANYON APARTMENTS, CHINO HILLS, CALIFORNIA
On September 19, 1996, the Company acquired a multifamily residential property
located in Chino Hills, California ("Eagle Canyon"). Eagle Canyon was
approximately 96% occupied as of November 1, 1996. The property consists of 252
units in 34 two-story residential buildings on approximately 32 acres.
Amenities include two swimming pools, tennis court, washer/dryer connections and
garages. The property was constructed in 1985. Property management services
are being provided by the Company since the date of acquisition.
TERMS OF PURCHASE
Eagle Canyon was purchased from an unaffiliated third party for approximately
$17.3 million.
SUMMERSET VILLAGE APARTMENTS, CHATSWORTH, CALIFORNIA
On September 19, 1996, the Company acquired a multifamily residential property
located in Chatsworth, California ("Summerset Village"). Summerset Village was
approximately 97% occupied as of November 1, 1996. The property consists of 280
units in 29 two-story residential buildings on approximately 29 acres.
Amenities include two swimming pools, tennis courts, washer/dryer connections,
fireplaces and garages. The property was constructed in 1985. Property
management services are being provided by the Company since the date of
acquisition.
TERMS OF PURCHASE
Summerset Village was purchased from an unaffiliated third party for
approximately $25.5 million.
SONGBIRD APARTMENTS, SAN ANTONIO, TEXAS
On September 20, 1996, the Company acquired a multifamily residential property
located in San Antonio, Texas ("Songbird"). Songbird was approximately 85%
occupied as of November 1, 1996. The property consists of 262 units in 29 two
and three story residential buildings and 1 one story office/laundry on
approximately 15 acres. Amenities include a clubhouse, two swimming pools,
fireplaces in select units and washer/dryer connections in select units. The
property was constructed in 1981. Property management services are being
provided by the Company since the date of acquisition.
TERMS OF PURCHASE
Songbird was purchased from an unaffiliated third party for approximately $10.7
million, which included the assumption of mortgage indebtedness of approximately
$7 million.
4
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WILLOWGLEN APARTMENTS, AURORA, COLORADO
On September 20, 1996, the Company acquired a multifamily residential property
located in Aurora, Colorado ("Willowglen"). Willowglen was approximately 87%
occupied as of November 1, 1996. The property consists of 384 units in 24
residential buildings and two clubhouses on approximately 17 acres. Amenities
include washer/dryer hook-ups, clubhouse, fitness center, swimming pool and spa,
fireplaces, tennis court, volleyball and basketball courts and lighted covered
parking. The property was constructed in 1983. Property management services
are being provided by the Company since the date of acquisition.
TERMS OF PURCHASE
Willowglen was purchased from an unaffiliated third party for approximately
$17.1 million.
MERRIMAC WOODS APARTMENTS, COSTA MESA, CALIFORNIA
On September 26, 1996, the Company acquired a multifamily residential property
located in Costa Mesa, California ("Merrimac Woods"). Merrimac Woods was
approximately 97% occupied as of November 1, 1996. The property consists of 123
units in six three-story residential elevator buildings and one clubhouse on
approximately three acres. Amenities include a clubhouse, swimming pool, spa,
billiards, recreation room, fitness center, barbecues, streams and ponds and
enclosed garages. The property was constructed in 1970. Property management
services are being provided by the Company since the date of acquisition.
TERMS OF PURCHASE
Merrimac Woods was purchased from an unaffiliated third party for approximately
$6.73 million.
CASA CAPRICORN APARTMENTS, SAN DIEGO, CALIFORNIA
On September 27, 1996, the Company acquired a multifamily residential property
located in San Diego, California ("Casa Capricorn"). Casa Capricorn was
approximately 98% occupied as of November 1, 1996. The property consists of 192
units in 24 residential buildings on approximately eight acres. Amenities
include swimming pools, spas and covered and open parking. The property was
constructed in 1981. Property management services are being provided by the
Company since the date of acquisition.
TERMS OF PURCHASE
Casa Capricorn was purchased from an unaffiliated third party for approximately
$12.47 million.
HUNTER'S GLEN APARTMENTS, CHESTERFIELD, MISSOURI
On September 30, 1996, the Company acquired a multifamily residential property
located in Chesterfield, Missouri ("Hunter's Glen"). Hunter's Glen was
approximately 95% occupied as of November 1, 1996. The property consists of 192
units in 8 two and three-story residential buildings and one office/clubhouse on
approximately 10 acres. Amenities include ceiling fans, fireplaces in some
units, indoor/outdoor pool with spa, tennis courts, covered parking, volleyball
court, laundry facilities, full size washer/dryer connections and fitness room.
The property was
5
<PAGE>
constructed in 1985. Property management services are being provided by the
Company since the date of acquisition.
TERMS OF PURCHASE
Hunter's Glen was purchased from an unaffiliated third party for approximately
$9.1 million.
MARBRISA APARTMENTS, TAMPA, FLORIDA
On October 11, 1996, the Company acquired a multifamily residential property
located in Tampa, Florida ("Marbrisa"). Marbrisa was approximately 95% occupied
as of November 1, 1996. The property consists of 224 units in 16 two-story
residential buildings on approximately 37 acres. Amenities include a swimming
pool with cabana, two lighted tennis courts, one laundry building, car wash
area, washer/dryer connections in all two bedroom units and fireplaces in 32 of
the two bedroom units. The property was constructed in 1984. Property
management services are being provided by the Company since the date of
acquisition.
TERMS OF PURCHASE
Marbrisa was purchased from an unaffiliated third party for approximately $7.8
million.
CEDAR CREST APARTMENTS, OVERLAND PARK, KANSAS
On November 1, 1996, the Company acquired a multifamily residential property
located in Overland Park, Kansas ("Cedar Crest"). Cedar Crest was approximately
97% occupied as of November 1, 1996. The property consists of 466 units in 73
two and three story garden style residential buildings on approximately 37
acres. Amenities include a fully equipped clubhouse, game tables, two saunas,
whirlpools, exercise room, lighted tennis courts, heated swimming pools, tanning
beds, woodburning fireplaces, washer/dryer hookups and attached garages. The
property was constructed in 1986. Property management services are being
provided by the Company since the date of acquisition.
TERMS OF PURCHASE
Cedar Crest was purchased from an unaffiliated third party for approximately
$21.55 million.
DISPOSITION
On June 25, 1996, the Company sold Deer Run, a 152 unit multifamily residential
property located in Charleston, South Carolina, for a sales price of $3.95
million to an unaffiliated third party. For financial statement purposes, the
Company recorded a gain of approximately $1 million.
6
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
C. EXHIBITS
--------
24.1 Consent of Ernst & Young LLP
No information is required under Items 1, 3, 4, and 6, and these items
have therefore been omitted.
7
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EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
Required under Item 7(b) of Form 8-K
8
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Capitalized terms not defined herein are used as defined in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, as amended by Form 10-
K/A, and the Company's Quarterly Report on Form 10-Q for the three months ended
September 30, 1996.
The following unaudited Pro Forma Condensed Balance Sheet as of September 30,
1996 and Statement of Operations for the nine months ended September 30, 1996
have been presented as if the January 1996 Common Share Offering, the February
1996 Common Share Offering, the May 1996 Common Share Offerings, the Third
Public Debt Offering, the Series C Preferred Share Offering, the September 1996
Common Share Offering, the refinancing of certain tax-exempt bonds, the
acquisition of 41 multifamily residential properties (10 from January 1, 1996
through May 30, 1996 and 31 from May 31, 1996 through the date of this Form 8-
K), the disposition of two multifamily residential properties and the repayment
of mortgage indebtedness for six properties had occurred on January 1, 1996 (or
September 30, 1996 for balance sheet purposes). Thirty-eight of the acquired
properties are included in the Historical Balance Sheet as of September 30, 1996
and three of the properties which were acquired subsequent to September 30, 1996
are included on a Pro Forma basis as described in Note A of the Pro Forma
Condensed Consolidated Balance Sheet as of September 30, 1996.
The following unaudited Pro Forma Statement of Operations for the year ended
December 31, 1995 has been presented as if the January 1996 Common Share
Offering, the February 1996 Common Share Offering, the May 1996 Common Share
Offerings, the Second Public Debt Offering, the Series A Preferred Share
Offering, the Series B Preferred Share Offering, the Third Public Debt Offering,
the Series C Preferred Share Offering, the September 1996 Common Share Offering,
the refinancing of certain tax-exempt bonds, the acquisition of 58 multifamily
residential properties, the disposition of eight multifamily residential
properties, the repayment of mortgage indebtedness for 12 properties and the
investment in partnership interests and subordinated mortgages collateralized by
21 multifamily residential properties had occurred on January 1, 1995.
The unaudited Pro Forma Condensed Consolidated Financial Statements are not
necessarily indicative of the results of future operations, nor the results of
historical operations, had all the transactions occurred as described above on
either January 1, 1995 or January 1, 1996.
The Pro Forma Condensed Consolidated Financial Statements should be read in
conjunction with the accompanying Notes to Pro Forma Condensed Consolidated
Financial Statements, Quarterly Report on Form 10-Q for the three months ended
September 30, 1996 and Combined Statements of Revenue and Certain Expenses
(included elsewhere herein).
9
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
1996
Most Recent 1996
Acquired Mortgage Note Pro
Historical Properties (A) Repayments (B) Forma
---------- -------------- -------------- ----------
<S> <C> <C> <C> <C>
ASSETS
Rental property, net $2,473,686 $ 58,065 $ -- $2,531,751
Real Estate held for disposition 11,260 -- -- 11,260
Investment in mortgage notes, net 86,486 -- -- 86,486
Cash and cash equivalents 152,545 (37,269) (11,816) 103,460
Rents receivable 2,126 -- -- 2,126
Deposits-restricted 5,501 -- -- 5,501
Escrows deposits-mortgage 14,953 -- -- 14,953
Deferred financing costs, net 13,062 -- -- 13,062
Other assets 25,247 -- -- 25,247
---------- -------- -------- ----------
Total assets $2,784,866 $ 20,796 $(11,816) $2,793,846
========== ======== ======== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 738,862 $ 20,796 $(11,816) $ 747,842
Line of credit -- -- -- --
Notes, net 498,761 -- -- 498,761
Accounts payable and accrued expenses 36,063 -- -- 36,063
Accrued interest payable 14,682 -- -- 14,682
Due to affiliates 778 -- -- 778
Rents received in advance and other liabilities 16,813 -- -- 16,813
Security deposits 12,945 -- -- 12,945
Distributions payable 39,233 -- -- 39,233
---------- -------- -------- ----------
Total liabilities 1,358,137 20,796 (11,816) 1,367,117
---------- -------- -------- ----------
Commitments and Contingencies
Minority Interests 154,839 -- -- 154,839
---------- -------- -------- ----------
Shareholders' equity:
Common shares 458 -- -- 458
Preferred shares 393,000 -- -- 393,000
Employee notes (5,274) -- -- (5,274)
Paid in capital 962,647 -- -- 962,647
Distributions in excess of accumulated earnings (78,941) -- -- (78,941)
---------- -------- -------- ----------
Total shareholders' equity 1,271,890 -- -- 1,271,890
---------- -------- -------- ----------
Total liabilities and shareholders' equity $2,784,866 $ 20,796 $(11,816) $2,793,846
========== ======== ======== ==========
</TABLE>
- --------------
(A) Reflects the most recent multifamily residential property acquisitions,
which include Marbrisa, Cedar Crest and Lakeville Resort (acquired October
and November, 1996) (collectively the "1996 Most Recent Acquired
Properties"). In connection with such acquisitions the amounts presented
include the initial purchase price as well as subsequent closing costs
incurred and capital improvements required as identified in the acquisition
process and the assumption of $20.8 million of mortgage indebtedness
secured by one of the 1996 Most Recent Acquired Properties.
(B) Reflects the repayment of mortgage indebtedness of $11.8 million secured by
two properties.
10
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EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the nine months ended September 30, 1996
(UNAUDITED)
(Amounts in thousands except for share data)
<TABLE>
<CAPTION>
1996 1996
Previously Most Recent 1996 1996
Acquired Acquired Mortgage Note Disposed Pro
Historical Properties(A) Properties(B) Repayments(C) Properties(D) Adjustments(E) Forma
---------- ------------- ------------- ------------- ------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 327,749 $ 41,949 $ 6,524 $ -- $ (505) $ -- $375,717
Fee and asset management 4,982 -- -- -- -- -- 4,982
Interest income - investment
in mortgage notes 9,084 -- -- -- -- -- 9,084
Interest and other income 2,232 -- -- -- -- (1,168) 1,064
--------- -------- --------- ------- ------- -------- --------
Total revenues 344,047 41,949 6,524 -- (505) (1,168) 390,847
--------- -------- --------- ------- ------- -------- --------
EXPENSES
Property and maintenance 93,128 11,024 1,720 -- (226) (324) 105,322
Real estate taxes and insurance 32,301 4,421 623 -- (43) -- 37,302
Property management 13,136 -- -- -- (22) 922 14,306
Fee & asset management 3,037 -- -- -- -- -- 3,037
Depreciation 66,759 -- -- -- (82) 8,915 75,592
Interest:
Expense incurred 58,632 -- -- (2,284) (1) 12,963 69,310
Amortization of deferred
financing costs 2,860 -- -- (152) -- 86 2,794
General and administrative 6,690 -- -- -- -- -- 6,690
--------- -------- --------- -------- ------- -------- --------
Total expenses 276,543 15,445 2,343 (2,436) (374) 22,562 314,083
--------- -------- --------- -------- ------- -------- --------
Income before gain on disposition
of properties, extraordinary items
and allocation to Minor Interests 67,504 $ 26,504 $ 4,181 $ 2,436 $ (131) $(23,730) 76,764
======== ========= ======== ======= ========
Gain on disposition of properties 2,346 --
--------- --------
Income before extraordinary items and
allocation to Minority Interests 69,850 76,764
Write-off of unamortized costs on
refinanced debt (3,134) --
--------- --------
Income before allocation to Minority
Interests 66,716 76,764
(Income) allocated to Minority
Interests (F) (8,426) (7,938)
--------- --------
Net income 58,290 68,826
Preferred distributions 19,953 (G) 27,183
--------- --------
Net income available to Common Shares $ 38,337 $ 41,643
========= ========
Net income per weighted average Common
Share outstanding $ 0.94 $ 0.91
========= ========
Weighted average Common Shares
outstanding 40,934 (H) 45,775
========= ========
</TABLE>
(A) Reflects the results of operations for Desert Park, 7979 Westheimer, Sabal
Pointe (fka: Vinings at Coral Springs), Woodbridge (fka: The Plantations),
Heron Landing (fka: Oxford & Sussex), The Pines of Cloverlane, Regency
Palms, Port Royale II, 2900 on First, Woodland Hills, Ivy Place (fka: Post
Place), Ridgetree, Country Ridge, Rosehill Pointe, Forest Ridge, Canyon
Sands Village, Desert Sands Village, Chandler Court, Lands End, Mallard
Cove, Sunny Oak Village, Pine Meadow, Summer Ridge, Promenade Terrace,
South Creek, Pueblo Villas, Brixworth, Brierwood, Woodscape, Park Place,
Canterchase, Eagle Canyon, Summerset Village, Songbird, Willowglen,
Merrimac Woods, Casa Capricorn and Hunter's Glen (acquired from February
through September, 1996) (collectively the "1996 Previously Acquired
Properties"). The amounts presented represent the historical amounts for
certain revenues and expenses for the periods from January 1, 1996 through
the respective acquisition dates for each property.
(B) Reflects the results of operations for the 1996 Most Recent Acquired
Properties. The amounts presented for rental revenues, property and
maintenance and real estate taxes and insurance are based on the revenues
and certain expenses of the 1996 Most Recent Acquired Properties for the
nine months ended September 30, 1996 as contained in the Combined Statement
of Revenues and Certain Expenses included elsewhere herein.
(C) Reflects the elimination of interest expense and amortization of deferred
financing costs related to the repayment of mortgage indebtedness for six
properties.
11
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<TABLE>
<CAPTION>
<S> <C>
(D) Reflects the elimination of the results of operations for Sanddollar and
Deer Run (the "1996 Disposed Properties") for the period from January 1,
1996 through the respective disposition dates for each property.
(E) Reflects the following adjustments to the 1996 Previously Acquired
Properties and the 1996 Most Recent Acquired Properties results of
operations as follows:
Interest and other income:
Reduction of interest income due to the use of working capital for
property acquisitions $(1,168)
=======
Property and maintenance:
The elimination of third-party management fees where the Company is
providing onsite property management services $ (324)
=======
Property management:
Incremental cost associated with self management of the 1996 Most Recent
Acquired Properties for the nine months ended September 30, 1996 and
the 1996 Previously Acquired Properties for the period from January 1,
1996 through the respective acquisition dates for each property. $ 922
=======
Depreciation:
Reflects depreciation based on the expected total investment of $58.1
million for the 1996 Most Recent Acquired Properties and the expected
total investment of $570.9 million for the 1996 Previously Acquired
Properties less 10% allocated to land and depreciated over a 30-year life
for real property. Depreciation for the 1996 Previously Acquired
Properties reflect amounts from January 1, 1996 through the respective
acquisition dates for each property. $ 8,915
=======
Interest:
Expense incurred:
Interest on mortgage indebtedness for certain of the 1996 Previously
Acquired Properties and the 1996 Most Recent Acquired Properties (1) $ 5,352
Interest on refinancing $138.4 million of tax-exempt bonds at an average
interest cost of 4.4% for the nine months ended September 30, 1996 4,567
Interest on refinancing $77.1 million of tax-exempt bonds at a blended
average interest cost of 6.88% for the nine months ended September 30, 1996 3,977
Non-usage fee on the Company's unused portion of its line of credit equal to 20
basis points on $250 million 375
Interest on the Third Public Debt Offering in the amount $150 million at
7.57% for the nine months ended September 30, 1996 8,516
Amortization of a swap settlement amount associated with the Third Public
Debt Offering for the nine months ended September 30, 1996 (43)
Reduction of interest associated with refinancing $138.4 million of tax-
exempt bonds to the extent amounts are already included in the Company's
historical financial results (4,164)
Reduction of interest associated with refinancing $77.1 million of tax-
exempt bonds to the extent amounts are already included in the Company's
historical financial results (1,332)
Reduction of interest associated with amounts borrowed on
the Company's line of credit and the Third Public Debt Offering to the
extent amounts are already included in the Company's historical financial
results (4,285)
-------
$12,963
=======
Amortization of financing costs:
Amortization of financing costs on the Third Public Debt Offering of
$1,275,000 over 10 years for the nine months ended September 30, 1996 96
Reduction of amortization associated with the Third Public Debt Offering
to the extent amounts are already included in the Company's historical
financial results (10)
-------
$ 86
=======
</TABLE>
(F) A portion of income was allocated to Minority Interests representing
interests in the Operating Partnership not owned by the Company. The pro
forma allocation to Minority Interests (represented by OP Units) is based
upon the percentage owned by such Minority Interests as a result of the pro
forma transactions.
(G) Preferred distributions represents amounts payable on the Series A Preferred
Shares, Series B Preferred Shares and Series C Preferred Shares at the rates
of 9.375%, 9.125% and 9.125%, respectively, of the liquidation preference
thereof per annum.
(H) Pro Forma weighted average Common Shares outstanding for the nine months
ended September 30, 1996 was 45.8 million, which includes 45.8 million
Common Shares outstanding as of September 30, 1996. The Common Shares
outstanding does not include any shares issued in a private or public
offering that have not been used or are not intended to be used for
acquisitions or repayment of debt directly incurred in an acquisition.
12
<PAGE>
(I) Detail of interest expense on mortgage indebtedness for certain of the 1996
Previously Acquired Properties and the 1996 Most Recent Acquired Properties:
<TABLE>
<CAPTION>
Mortgage Interest Interest
Property Indebtedness Rate Expense
------------------------------------ ------------ -------- --------
<S> <C> <C> <C>
Woodbridge (fka: The Plantations)(1) $ 4,862 8.25% $ 68
Desert Sands Village (1) 8,957 6.50% 262
Canyon Sands Village (1) 8,952 6.50% 260
Pine Meadow (1) 4,948 8.33% 223
Promenade Terrace (1) 16,588 7.70% 703
South Creek (1) 16,651 8.00% 733
Park Place I (1) 8,996 8.50% 515
Park Place II (1) 8,996 8.70% 528
Canterchase (1) 5,838 7.66% 320
Songbird (1) 7,015 7.63% 383
Lakeville Resort 20,796 8.70% 1,357
-------- ------
Totals $112,599 $5,352
======== ======
</TABLE>
(1) The amounts presented for these properties represent the historical amounts
for the periods from January 1, 1996 through the respective acquisition
dates for each property.
13
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EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1995
(UNAUDITED)
(Amounts in thousands except for share data)
<TABLE>
<CAPTION>
1995 1996 1995 & 1996
Acquired Acquired Disposed Pro
Historical Properties (A) Properties (B) Properties (C) Adjustments (D) Forma
---------- -------------- -------------- -------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $372,447 $23,598 $95,679 $(12,608) $ -- $479,116
Fee and asset management 7,030 -- -- -- -- 7,030
Interest income - investment in mortgage notes 4,862 5,404 -- -- -- 10,266
Interest and other income 4,573 (28) -- (347) (1,243) 2,955
-------- -------- ------- --------- ---------- --------
Total revenues 388,912 28,974 95,679 (12,955) (1,243) 499,367
-------- ------- ------- --------- ---------- --------
EXPENSES
Property and maintenance 110,714 5,595 33,058 (4,324) (4,304) 140,739
Real estate taxes and insurance 37,002 2,386 10,629 (1,057) -- 48,960
Property management 15,213 -- -- (602) 2,860 17,471
Fee & asset management 3,887 -- -- -- -- 3,887
Depreciation 72,410 -- -- (1,923) 23,379 93,866
Interest:
Expense incurred 78,375 -- -- (823) 15,288 92,840
Amortization of deferred financing costs 3,444 -- -- -- (19) 3,425
General and administrative 8,129 -- -- -- -- 8,129
-------- ------- ------- --------- --------- --------
Total expenses 329,174 7,981 43,687 (8,729) 37,204 409,317
-------- ------- ------- --------- --------- --------
Income before gain on disposition of properties 59,738 $20,993 $51,992 $ (4,226) $ (38,447) 90,050
======= ======= ========= ==========
Gain on disposition of properties 21,617 --
-------- --------
Income before extraordinary items 81,355 90,050
Extraordinary item:
Gain on early extinguishment of debt 2,000 --
-------- --------
Income before allocation to Minority Interests 83,355 90,050
(Income) allocated to Minority Interests (E) (15,636) (8,614)
-------- --------
Net income 67,719 81,436
Preferred distributions 10,109 (F) 36,244
-------- --------
Net income available to Common Shares $ 57,610 $ 45,192
======== ========
Net income per weighted average Common
Share outstanding $ 1.68 $ 1.03
======== ========
Weighted average Common Shares outstanding 34,358 (G) 43,774
========= ========
</TABLE>
(A) Reflects the results of operations for the 1995 Acquired Properties. The
amounts presented represent the historical amounts for certain revenues and
expenses for the periods from January 1, 1995 through the respective
acquisition dates for each property.
(B) Reflects the results of operations of the 1996 Previously Acquired
Properties and the 1996 Most Recent Acquired Properties (collectively the
"1996 Acquired Properties"). The amounts presented for rental revenues,
property and maintenance and real estate taxes and insurance are based on
the revenues and certain expenses of the 1996 Acquired Properties for the
year ended December 31, 1995 as contained in the Combined Statement of
Revenue and Certain Expenses included elsewhere herein.
(C) Reflects the elimination of the results of operations for the 1995 Disposed
Properties and the 1996 Disposed Properties for the year ended December 31,
1995.
14
<PAGE>
(D) Reflects the following adjustments:
<TABLE>
<CAPTION>
<S> <C>
Interest and other income:
Reduction of interest income due to the use of working capital for property acquisitions $ (1,313)
Interest income earned on loans made to the Company's Chief Executive Officer and other officers 70
---------
$ (1,243)
=========
Property and maintenance:
The elimination of third-party management fees where the Company is providing onsite
property management services $ (4,304)
=========
Property management:
Incremental cost associated with self management of the 1996 Acquired Properties for the year ended
December 31, 1995 and the 1995 Acquired Properties for the period from January 1, 1995 through the
respective acquisition dates for each property. $ 2,860
=========
Depreciation:
Reflects depreciation based on the expected total investment of $629 million for the 1996 Acquired
Properties and the expected total investment of $265.7 million for the 1995 Acquired Properties less
10% allocated to land and depreciated over a 30-year life for real property. Depreciation for the 1995
Acquired Properties reflect amounts from January 1, 1995 through the respective acquisition dates for
each property. $ 23,379
=========
Interest:
Expense incurred:
Interest on mortgage indebtedness for certain of the 1995 and 1996 Acquired Properties (H) $ 10,174
Interest on refinancing $138.4 million of tax-exempt bonds at an average interest cost of 4.4% 6,090
Interest on refinancing $77.1 million of tax-exempt bonds at a blended average interest cost of 6.88% 5,302
Reduction of interest associated with refinancing $138.4 million of tax-exempt bonds to the extent amounts are
already included in the Company's historical financial results (6,171)
Reduction of interest associated with refinancing $77.1 million of tax-exempt bonds to the extent amounts are
already included in the Company's historical financial results (167)
Reduction of interest on mortgage indebtedness on twelve properties for which the loans were repaid during 1995
and 1996 to the extent the amounts are already included in the Company's historical financial results (4,774)
Interest associated with the Second Public Debt Offering in the amount of $125 million at an interest rate of
7.95% per annum 9,937
Interest associated with the Public Debt Offering in the amount of $100 million at an interest rate of 7.075%
per annum 7,075
Interest associated with the Third Public Debt Offering in the amount of $150 million at an interest rate of
7.57% per annum 11,355
Reflects amortization of discounts associated with the Second Public Debt Offering and the treasury rate lock
costs associated with the Second Public Debt Offering 253
Reflects amortization of a swap settlement amount associated with the Third Public Debt Offering (58)
Reduction of interest and amortization associated with the Public Debt Offering and the Second Public Debt
Offering to the extent the amounts are already included in the Company's historical financial results (14,350)
Non-usage fee on the Company's unused portion of its line of credit equal to 20 basis points on $250 million 500
Reduction of interest associated with amounts borrowed on the Company's line of credit to the extent amounts are
already included in the Company's historical financial results (9,878)
---------
$ 15,288
=========
Amortization of deferred financing costs:
Reduction of amortization of deferred financing costs on twelve properties for which the loans were repaid
during 1995 and 1996 to the extent the amounts are already included in the Company's historical financial
results $ (349)
Reflects amortization of deferred financing costs associated with the Public Debt Offering and the investment
in mortgage notes 405
Reflects amortization of deferred financing costs associated with the Third Public Debt Offering 127
Reduction of amortization of deferred financing costs associated with the Public Debt Offering and the
investment in mortgage notes to the extent amounts are already included in the Company's historical financial
results (202)
---------
$ (19)
=========
</TABLE>
(E) A portion of income/loss was allocated to Minority Interests representing
interests in the Operating Partnership not owned by the Company. The pro
forma allocation to Minority Interests (represented by OP Units) is based
upon the percentage owned by such Minority Interests as a result of the pro
forma transactions.
(F) Preferred distributions represents amounts payable on the Series A Preferred
Shares, Series B Preferred Shares and Series C Preferred Shares at the rates
of 9.375%, 9.125% and 9.125%, respectively, of the liquidation preference
thereof per annum.
15
<PAGE>
(G) Pro Forma weighted average Common Shares outstanding for the year ended
December 31, 1995 was 43.8 million, which includes 34 million Common Shares
outstanding as of December 31, 1994 and reflects the following transactions
as if they had been completed on January 1, 1995: the issuance of 4,025,000
Common Shares related to the January and February 1996 Common Share
Offerings, the issuance of 3,476,390 Common Shares in connection with the
May 1996 Common Share Offerings and the issuance of 2,272,728 Common Shares
in connection with September 1996 Common Share Offering. The Common Shares
outstanding does not include any shares issued in a private or public
offering that have not been used or are not intended to be used for
acquisitions or repayment of debt directly incurred in an acquisition.
(H) Detail of interest expense on mortgage indebtedness for certain of the
1995 Acquired Properties and the 1996 Acquired Properties:
<TABLE>
<CAPTION>
Mortgage Interest Interest
Property Indebtedness Rate Expense
------------------------------ ------------------- ----------------- ---------------------
<S> <C> <C> <C>
Camellero (1) $ 12,086 8.96% $ 642
Keystone (1) 3,023 8.00% 152
Wellington (1) 8,453 8.33% 455
Woodbridge (fka: The Plantations) 4,862 8.25% 401
Desert Sands Village 8,957 6.50% 582
Canyon Sands Village 8,952 6.50% 582
Pine Meadow 4,948 8.33% 412
Promenade Terrace 16,588 7.70% 1,277
South Creek 16,651 8.00% 1,332
Park Place I 8,996 8.50% 765
Park Place II 8,996 8.70% 783
Canterchase 5,838 7.66% 447
Songbird 7,015 7.63% 535
Lakeville Resort 20,796 8.70% 1,809
------------------- ---------------------
Totals $ 136,161 $ 10,174
=================== =====================
</TABLE>
(1) The amounts presented for these properties represent the historical
amounts for the periods from January 1, 1995 through the respective
acquisition dates for each property.
16
<PAGE>
1996 ACQUIRED PROPERTIES
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
Required under Item 7(a) of Form 8-K
17
<PAGE>
1996 ACQUIRED PROPERTIES
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page(s)
-------
<S> <C>
Report of Independent Auditors 1
Combined Statements of Revenue and Certain Expenses
For the year ended December 31, 1995 and for the nine months
ended September 30, 1996 2
Notes to Combined Statements of Revenue and Certain Expenses 3
</TABLE>
18
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying combined statement of revenue and
certain expenses for certain residential properties (the "1996 Acquired
Properties") described in Note 2 for the year ended December 31, 1995. The
combined statement of revenue and certain expenses is the responsibility of the
managements of the 1996 Acquired Properties. Our responsibility is to express
an opinion on the combined statement of revenue and certain expenses 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 combined 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 combined
statement of revenue and certain expenses. An audit also includes assessing the
basis of accounting principles used and the significant estimates made by
management, as well as evaluating the overall presentation of the combined
statement of revenue and certain expenses. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying combined 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 Equity Residential
Properties Trust's Current Report on Form 8-K as described in Note 1, and is not
intended to be a complete presentation of the 1996 Acquired Properties' revenues
and expenses.
In our opinion, the combined statement of revenue and certain expenses
referred to above presents fairly, in all material respects, the combined
revenue and certain expenses described in Note 1 of the 1996 Acquired Properties
for the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
Chicago, Illinois
November 7, 1996
1
<PAGE>
<TABLE>
<CAPTION>
1996 ACQUIRED PROPERTIES
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
For the
For the Nine Months Ended
Year Ended September 30, 1996
December 31, 1995 (Unaudited)
-------------------- -------------------
<S> <C> <C>
REVENUE
Rental Income $ 25,770 $ 19,522
-------------------- -------------------
CERTAIN EXPENSES
Property operating and maintenance 7,847 5,303
Real estate taxes and insurance 2,711 2,029
Management fees 1,159 842
-------------------- -------------------
11,717 8,174
-------------------- -------------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 14,053 $ 11,348
==================== ===================
</TABLE>
See accompanying notes.
-2-
<PAGE>
1996 ACQUIRED PROPERTIES
NOTES TO COMBINED STATEMENTS
OF REVENUE AND CERTAIN EXPENSES
Note 1 - Summary of Significant Accounting Policies
The accompanying combined statements of revenue and certain expenses for
the year ended December 31, 1995 and the nine months ended September 30,
1996 (unaudited) were prepared for purposes of complying with the rules and
regulations of the Securities and Exchange Commission. The accompanying
financial statements are not representative of the actual operations of the
1996 Acquired Properties for the periods presented as certain expenses,
which may not be comparable to the expenses to be incurred by the Company
in the proposed future operations of the properties, have been excluded.
Expenses excluded consist of interest, depreciation and amortization,
professional fees and other costs not directly related to the future
operations of the properties.
In preparation of the Company's Combined Statements of Revenue and Certain
Expenses in conformity with generally accepted accounting principles,
management makes estimates and assumptions that effect the reported amounts
of revenues and expenses during the reporting period. Actual results could
differ from these estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
The 1996 Acquired Properties had management agreements with various
management companies unaffiliated with the Company through the acquisition
dates to maintain and manage the operations of the apartment complexes.
Management fees were based on a range of 3% to 5% of gross receipts. Of the
management fees paid in 1995, $462,000 were paid to affiliates of the
property owners. Upon acquisition of the properties by the Company, such
management contracts were cancelled at which time the Company began to
manage the properties.
Note 2 - Description of Properties
The following properties are included in the combined statements of revenue
and certain expenses:
Date Number Total
Property Name Location Acquired of Units Investment (A)
-------------- ----------------- --------- -------- ---------------
Chandler Court Chandler, AZ 6/25/96 311 $ 13,958,000
Pine Meadow Greensboro, NC 7/16/96 204 7,416,000
Pueblo Villas Albuquerque, NM 8/1/96 232 8,716,000
Brixworth Nashville, TN 8/28/96 216 11,956,000
Woodscape Raleigh, NC 8/30/96 240 9,758,000
Canterchase Nashville, TN 9/19/96 235 8,801,000
Eagle Canyon Chino Hills, CA 9/19/96 252 18,143,000
Summerset Village Chatsworth, CA 9/19/96 280 26,442,000
Songbird San Antonio, TX 9/20/96 262 11,236,000
Merrimac Woods Costa Mesa, CA 9/26/96 123 6,914,000
Casa Capricorn San Diego, CA 9/27/96 192 12,730,000
Hunter's Glen Chesterfield, MO 9/30/96 192 9,198,000
Marbrisa Tampa, FL 10/11/96 224 8,175,000
Cedar Crest Overland Park, KS 11/1/96 466 22,406,000
-------- ---------------
3,429 $175,849,000
======== ===============
Notes:
(A) Includes initial purchase price, closing costs, start up costs and
amounts specified at date of purchase for future capital improvements.
-3-
<PAGE>
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 thereunto duly authorized.
EQUITY RESIDENTIAL PROPERTIES TRUST
November 18, 1996 By: /s/ Michael J. McHugh
----------------- ----------------------------------------
(Date) Michael J. McHugh
Senior Vice President, Chief Accounting
Officer and Treasurer
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements of
Equity Residential Properties Trust on Form S-3, as amended (File No. 33-96792
and No. 33-97680), and the related Prospectus, of our report dated November 7,
1996 with respect to the Combined Statement of Revenue and Certain Expenses of
the 1996 Acquired Properties for the year ended December 31, 1995, in the
Current Report of Equity Residential Properties Trust on Form 8-K, dated
November 15, 1996.
Ernst & Young LLP
Chicago, Illinois
November 18, 1996
