<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
MAY 20, 1997
(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 (I.R.S. Employer
of Incorporation) Identification No.)
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
ACQUISITIONS
Equity Residential Properties Trust and its subsidiaries (the "Company") has
acquired 18 multifamily properties during the period from January 2, 1997
through May 20, 1997. The cash portion of these transactions was financed
primarily through the December 1996 Common Share Offerings and the March 1997
Common Share Offerings. Descriptions of the acquired properties are as follows.
The Company has also made commitments to acquire an additional seven properties
which are discussed in Item 5 (the "1997 Probable Properties").
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, 1996, as amended by Form
10-K/A, and the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1997.
TOWN CENTER APARTMENTS, KINGSWOOD, TEXAS
On January 2, 1997, the Company acquired a multifamily property located in
Kingwood, Texas ("Town Center"). Town Center was approximately 95% occupied as
of May 1, 1997. The property consists of 258 units in 14 residential buildings
and one leasing office/clubhouse on approximately 10 acres. Amenities include a
clubhouse, swimming pool, picnic area with barbecue grills, covered parking, 50
garages, full-size washers and dryers in all units, microwaves and frost-free
refrigerators in all units and fireplaces in select units. The property was
constructed in 1994. Property management services are being provided by the
Company.
Terms of Purchase
Town Center was purchased from an unaffiliated third party for approximately
$12.8 million.
HARBORVIEW APARTMENTS, SAN PEDRO, CALIFORNIA
On January 21, 1997, the Company acquired a multifamily property located in San
Pedro, California ("Harborview"). Harborview was approximately 100% occupied as
of May 1, 1997. The property consists of 160 units in 23 residential buildings
on approximately seven acres. Amenities include a community center, swimming
pool, access gates, covered parking, washer/dryer in each unit and fireplaces in
each unit. The property was constructed in 1985. Property management services
are being provided by the Company since the date of acquisition.
Terms of Purchase
Harborview was purchased from an unaffiliated third party for approximately $19
million, which included the assumption of mortgage indebtedness of approximately
$12.7 million.
2
<PAGE>
THE CARDINAL APARTMENTS, GREENSBORO, NORTH CAROLINA
On January 31, 1997, the Company acquired a multifamily property located in
Greensboro, North Carolina ("The Cardinal"). The Cardinal was approximately 93%
occupied as of May 1, 1997. The property consists of 256 units in 11 three story
residential buildings on approximately 17 acres. Amenities include a clubhouse,
swimming pool, fitness room, tennis courts, washer/dryer hookups, microwaves,
ceiling fans and mini-blinds. The property was constructed in 1994. Property
management services are being provided by the Company since the date of
acquisition.
Terms of Purchase
The Cardinal was purchased from an unaffiliated third party for approximately
$12.8 million, which included the assumption of mortgage indebtedness of
approximately $7.5 million.
TRAILS AT DOMINION APARTMENTS, HOUSTON, TEXAS
On February 12, 1997, the Company acquired a multifamily property located in
Houston, Texas ("Trails at Dominion"). Trails at Dominion was approximately 91%
occupied as of May 1, 1997. The property consists of 843 units in 44 two and
three story residential buildings and three one-story office/clubhouses on
approximately 55 acres. Amenities include three clubhouses, a fitness center,
five swimming pools, three spas, four tennis courts, a sand volleyball court,
fireplaces in select units, washer/dryer connections in every unit,
washer/dryers in select units and microwaves in every unit. The property was
constructed in phases between 1992 and 1995. Property management services are
being provided by the Company since the date of acquisition.
Terms of Purchase
Trails at Dominion was purchased from an unaffiliated third party for
approximately $38.3 million, which included the assumption of mortgage
indebtedness of approximately $26.2 million.
DARTMOUTH WOODS APARTMENTS, LAKEWOOD, COLORADO
On February 25, 1997, the Company acquired a multifamily property located in
Lakewood, Colorado ("Dartmouth Woods"). Dartmouth Woods was approximately 96%
occupied as of May 1, 1997. The property consists of 201 units in six two, three
and four story residential buildings on approximately 13 acres. Amenities
include a clubhouse with fitness center, swimming pool, jacuzzi, garages and
covered parking, microwaves in every unit, washer/dryer hookups in every unit
and gas fireplaces in some units. The property was constructed in 1990. Property
management services are being provided by the Company since the date of
acquisition.
Terms of Purchase
Dartmouth Woods was purchased from an unaffiliated third party for approximately
$12.4 million, which included the assumption of mortgage indebtedness of
approximately $4.4 million.
3
<PAGE>
RINCON APARTMENTS, HOUSTON, TEXAS
On February 28, 1997, the Company acquired a multifamily property located in
Houston, Texas ("Rincon"). Rincon was approximately 100% occupied as of May 1,
1997. The property consists of 288 units in nine three story residential
buildings, one two story clubhouse and a four-level parking structure on
approximately five acres. Amenities include a clubhouse with business center,
fitness center, spa, swimming pool, barbecue grills, washer/dryers in all units,
crown molding, microwaves and lockable storage closets. The property was
constructed in 1996. Property management services are being provided by the
Company since the date of acquisition.
Terms of Purchase
Rincon was purchased from an unaffiliated third party for approximately $20.9
million.
WATERFORD AT THE LAKES APARTMENTS, KENT, WASHINGTON
On February 28, 1997, the Company acquired a multifamily property located in
Kent, Washington ("Waterford at the Lakes"). Waterford at the Lakes was
approximately 97% occupied as of May 1, 1997. The property consists of 344 units
in 35 two and three story residential buildings on approximately 18 acres.
Amenities include a clubhouse, two swimming pools, indoor/outdoor spa, tanning
salon, daycare center, playground, fitness room and washer/dryers in each unit.
The property was constructed in 1990. Property management services are being
provided by the Company since the date of acquisition.
Terms of Purchase
Waterford at the Lakes was purchased from an unaffiliated third party for
approximately $18.9 million.
JUNIPERS OF YARMOUTH APARTMENTS, YARMOUTH, MAINE
On March 17, 1997, the Company acquired a multifamily property located in
Yarmouth, Maine ("Junipers of Yarmouth"). Junipers of Yarmouth was approximately
99% occupied as of May 1, 1997. The property consists of 225 units in 13 two,
three and four story residential buildings and one office/clubhouse on
approximately nine acres. Amenities include a clubhouse, leasing office,
swimming pool and fitness center. The property was constructed in 1970. Property
management services are being provided by the Company since the date of
acquisition.
Terms of Purchase
Junipers of Yarmouth was purchased from an unaffiliated third party for
approximately $9.2 million.
4
<PAGE>
LINCOLN HARBOUR APARTMENTS, FT. LAUDERDALE, FLORIDA
On March 20, 1997, the Company acquired a multifamily property located in Ft.
Lauderdale, Florida ("Lincoln Harbour"). Lincoln Harbour was approximately 95%
occupied as of May 1, 1997. The property consists of 324 units in 15 three story
residential buildings on approximately 14 acres. Amenities include a clubhouse,
swimming pool, fitness center, basketball court, two indoor racquetball courts
and boat dockage. The property was constructed in 1989. Property management
services are being provided by the Company since the date of acquisition.
Terms of Purchase
Lincoln Harbour was purchased from an unaffiliated third party for approximately
$22 million, which included the assumption of mortgage indebtedness of $10
million.
SEDONA RIDGE APARTMENTS, PHOENIX, ARIZONA
On March 24, 1997, the Company acquired a multifamily property located in
Phoenix, Arizona ("Sedona Ridge"). Sedona Ridge was approximately 94% occupied
as of May 1, 1997. The property consists of 250 units in 16 two story
residential buildings on approximately 17 acres. Amenities include two swimming
pools, two whirlpools, indoor racquetball/walleyball court, car service center,
tennis court, basketball court and sand volleyball court. The property was
constructed in 1988. Property management services are being provided by the
Company.
Terms of Purchase
Sedona Ridge was purchased from an affiliate of the Company, Zell/Merrill Lynch
Real Estate Opportunity Partners Limited Partnership ("Zell/Merrill I"), for
approximately $15.2 million.
KNIGHT'S CASTLE APARTMENTS, WILSONVILLE, OREGON
On March 28, 1997, the Company acquired a multifamily property located in
Wilsonville, Oregon ("Knight's Castle"). Knight's Castle was approximately 93%
occupied as of May 1, 1997. The property consists of 296 units in 21 two and
three story residential buildings on approximately 22 acres. Amenities include a
clubhouse, fitness center, outdoor pool, whirlpool spa, built-in closet
organizer, patio/balconies, microwaves, dishwashers, free basic cable,
washer/dryers and reserved covered parking. The property was constructed in
1991. Property management services are being provided by the Company since the
date of acquisition.
Terms of Purchase
Knight's Castle was purchased from an unaffiliated third party for $15 million.
5
<PAGE>
CLUB AT THE GREEN APARTMENTS, BEAVERTON, OREGON
On March 28, 1997, the Company acquired a multifamily property located in
Beaverton, Oregon ("Club at the Green"). Club at the Green was approximately 93%
occupied as of May 1, 1997. The property consists of 254 units in 14 two and
three story residential buildings on approximately 15 acres. Amenities include a
clubhouse, indoor swimming pool, sauna, jacuzzi, weight room, playground,
washer/dryers in all units and wood burning fireplaces. The property was
constructed in 1991. Property management services are being provided by the
Company since the date of acquisition.
Terms of Purchase
Club at the Green was purchased from an unaffiliated third party for
approximately $14.7 million.
COUNTRY GABLES APARTMENTS, BEAVERTON, OREGON
On April 4, 1997, the Company acquired a multifamily property located in
Beaverton, Oregon ("Country Gables"). Country Gables was approximately 95%
occupied as of May 1, 1997. The property consists of 288 units in 26 residential
buildings on approximately 15 acres. Amenities include a clubhouse, indoor and
outdoor swimming pools, spa, sauna, racquetball court, fitness facility,
washer/dryers, vaulted ceilings in select units and wood burning fireplaces. The
property was constructed in 1991. Property management services are being
provided by the Company.
Terms of Purchase
Country Gables was purchased from an affiliate of the Company, Zell/Merrill
Lynch Real Estate Opportunity Partners Limited Partnership II ("Zell/Merrill
II") for $17.0 million, which included the assumption of mortgage indebtedness
of approximately $8.6 million.
INDIGO SPRINGS APARTMENTS, KENT, WASHINGTON
On April 4, 1997, the Company acquired a multifamily property located in Kent,
Washington ("Indigo Springs"). Indigo Springs was approximately 99% occupied as
of May 1, 1997. The property consists of 278 units in 25 two and three story
residential buildings and one clubhouse on approximately 24 acres. Amenities
include a swimming pool, fitness room, computer room, clubhouse, washer/dryers
and fireplaces. The property was constructed in 1991. Property management
services are being provided by the Company.
Terms of Purchase
Indigo Springs was purchased from Zell/Merrill II for $12.7 million, which
included the assumption of mortgage indebtedness of approximately $8.2 million.
6
<PAGE>
WATERMARK SQUARE APARTMENTS, PORTLAND, OREGON
On April 4, 1997, the Company acquired a multifamily property located in
Portland, Oregon ("Watermark Square"). Watermark Square was approximately 95%
occupied as of May 1, 1997. The property consists of 390 units in 21 garden-
style residential buildings and two recreational buildings on approximately 12
acres. Amenities include two fitness centers, two indoor pools, spa, sauna,
wood-burning fireplaces, private decks or patios and full-size washer/dryers in
each unit. The property was constructed in 1990. Property management services
are being provided by the Company.
Terms of Purchase
Watermark Square was purchased from Zell/Merrill II for $15.8 million, which
included the assumption of mortgage indebtedness of approximately $8.7 million.
SUMMIT CHASE APARTMENTS, CORAL SPRINGS, FLORIDA
On April 29, 1997, the Company acquired a multifamily property located in Coral
Springs, Florida ("Summit Chase"). Summit Chase was approximately 94% occupied
as of May 20, 1997. The property consists of 140 units in 10 two story garden
style residential buildings on approximately nine acres. Amenities include a
leasing/management office, swimming pool, jacuzzi and tennis court. The property
was constructed in 1985. Property management services are being provided by the
Company since the date of acquisition.
Terms of Purchase
Summit Chase was purchased from an unaffiliated third party for approximately
$5.5 million.
WILLOW BROOK APARTMENTS, DURHAM, NORTH CAROLINA
On May 13, 1997, the Company acquired a multifamily property located in Durham,
North Carolina ("Willow Brook"). Willow Brook was approximately 96% occupied as
of May 20, 1997. The property consists of 176 units in 13 two story and two
three story residential buildings on approximately 21 acres. Amenities include a
clubhouse, swimming pool, tennis courts, basketball courts, sand volleyball
courts, fireplaces and in-unit washer/dryers. The property was constructed in
1986. Property management services are being provided by the Company since the
date of acquisition.
Terms of Purchase
Willow Brook was purchased from an unaffiliated third party for approximately
$8.5 million.
7
<PAGE>
THE WILLOWS APARTMENTS, KNOXVILLE, TENNESSEE
On May 15, 1997, the Company acquired a multifamily property located in
Knoxville, Tennessee ("The Willows"). The Willows was approximately 96% occupied
as of May 1, 1997. The property consists of 250 units in 12 two and three story
residential buildings and one clubhouse on approximately 19 acres. Amenities
include a swimming pool, whirlpool, tennis court, car wash, sport court, fitness
room, clubhouse and laundry facilities. The property was constructed between
1987 and 1988. Property management services are being provided by the Company.
Terms of Purchase
The Willows was purchased from Zell/Merrill I for $11 million, which included
the assumption of mortgage indebtedness of approximately $8.1 million.
DISPOSITION
On March 28, 1997, the Company sold the Plantation Apartments, a 200-unit
multifamily property located in Monroe, Louisiana, for a sales price of $4.8
million to an unaffiliated third party. For financial statement purposes, the
Company recorded a gain of approximately $3.6 million.
8
<PAGE>
ITEM 5. OTHER EVENTS
On April 28, 1997, the Company made an $88 million investment in six mortgage
loans which are collateralized by five multifamily properties.
The Company has entered into a letter of intent to purchase an additional seven
multifamily properties from Zell Merrill I (the "1997 Probable Properties") for
an aggregate purchase price of $90.7 million, which includes $17.1 million in
cash and the assumption of mortgage indebtedness of $73.6 million. The Company
plans to fund the purchase of these properties primarily from the Company's
working capital. The descriptions of the 1997 Probable Properties are discussed
below.
HIGHLINE OAKS APARTMENTS, DENVER, COLORADO
Highline Oaks Apartments ("Highline Oaks") is a multifamily property located in
Denver, Colorado. The property consists of 220 units in 11 residential buildings
and one community building on approximately 10 acres. Amenities include a
swimming pool, fitness room, jacuzzi, sport courts, clubhouse, monitored alarm
system, washer/dryers and fireplaces in each unit. The property was constructed
in 1986. The Company currently provides property management services for this
property.
MOUNTAIN BROOK APARTMENTS, CHATTANOOGA, TENNESSEE
Mountain Brook Apartments ("Mountain Brook") is a multifamily property located
in Chattanooga, Tennessee. The property consists of 280 units in 19 two and
three story garden style residential buildings on approximately 43 acres.
Amenities include a clubhouse, outdoor pool and Jacuzzi, sport court, car wash,
picnic areas with grills, laundry facilities, individual alarm systems,
washer/dryer hook-ups, mountain views and wood-burning fireplaces in select
units. The property was constructed in 1987. The Company currently provides
property management services for this property.
RIDGEMONT APARTMENTS, CHATTANOOGA, TENNESSEE
Ridgemont Apartments ("Ridgemont") is a multifamily property located in
Chattanooga, Tennessee. The property consists of 226 units in 12 two and three
story garden style residential buildings and one clubhouse on approximately 21
acres. Amenities include a swimming pool, whirlpool, fitness room, sauna,
clubhouse, tennis court, laundry facilities, washer/dryer hook-ups and wood
burning fireplaces. The property was constructed in 1988. The Company currently
provides property management services for this property.
PRESTON BEND APARTMENTS, DALLAS, TEXAS
Preston Bend Apartments ("Preston Bend") is a multifamily property located in
Dallas, Texas. The property consists of 255 units in 10 garden style residential
buildings and one community building on approximately nine acres. Amenities
include a swimming pool, spa, car wash area, clubhouse, fitness room, tennis
court, playground, sport court, in-unit washer/dryers and fireplaces in select
units. The property was constructed in 1986. The Company currently provides
property management services for this property.
9
<PAGE>
SPINNAKER COVE APARTMENTS, NASHVILLE, TENNESSEE
Spinnaker Cove Apartments ("Spinnaker Cove") is a multifamily property located
in Nashville, Tennessee. The property consists of 278 units in 16 two and three
story garden style residential buildings and one clubhouse on approximately 21
acres. Amenities include a clubhouse, fitness center, steam room, two
whirlpools, a two-level swimming pool with a fountain, two lighted tennis
courts, car wash, sand volleyball court, picnic area with grills and tables,
courtesy business center and fenced boat storage area. The property was
constructed in 1986. The Company currently provides property management services
for this property.
WINDEMERE APARTMENTS, MESA, ARIZONA
Windemere Apartments ("Windemere") is a multifamily property located in Mesa,
Arizona. The property consists of 224 units in 18 two story residential
buildings and one clubhouse on approximately 13 acres. Amenities include a spa,
dry sauna, fitness facility, volleyball court, basketball court, playground,
clubhouse, car wash center, gas barbecue grills, two pools and two tennis
courts. The property was constructed in 1986. The Company currently provides
property management services for this property.
WYNDRIDGE II & III APARTMENTS, MEMPHIS, TENNESSEE
Wyndridge II & III Apartments ("Wyndridge II & III") is a multifamily property
located in Memphis, Tennessee. The property consists of 568 units in 27 two and
three story residential buildings and two clubhouses on approximately 59 acres.
Amenities include three swimming pools, three whirlpools, two lighted tennis
courts, a fitness center, playground, jogging path, barbecue areas, indoor
racquetball court, sand volleyball court, car wash area and laundry facilities.
The property was constructed in 1988. The Company currently provides property
management services for this property.
10
<PAGE>
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.
11
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
Required under Item 7(b) of Form 8-K
12
<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, 1996, as amended by Form
10-K/A, and the Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1997.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1997 and Statements of Operations for the three months ended March 31,
1997 and for the year ended December 31, 1996 have been presented as if the
March 1997 Common Share Offerings, the acquisition of 18 multifamily properties,
the probable acquisition of seven properties and the disposition of one
multifamily property had occurred on January 1, 1997 or January 1, 1996 (or
March 31, 1997 for balance sheet purposes). Twelve of the acquired properties
are included in the Company's Historical Balance Sheet as of March 31, 1997 and
six of the properties, which were acquired subsequent to March 31, 1997, are
included on a Pro Forma basis as described in Note A of the Pro Forma Condensed
Consolidated Balance Sheet as of March 31, 1997.
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, 1996 or January 1, 1997.
The Pro Forma Condensed Consolidated Financial Statements should be read in
conjunction with the accompanying Notes to the Pro Forma Condensed Consolidated
Financial Statements, the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, as amended by Form 10-K/A, and the Company's Quarterly
Report on Form 10-Q for the three months ended March 31, 1997 and Statements of
Revenue and Certain Expenses for certain of the acquired properties and the 1997
Probable Properties (included elsewhere herein).
13
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1997
(UNAUDITED)
(Amounts in thousands)
<TABLE>
<CAPTION>
1997
Most Recent 1997
Acquired Probable
Historical Properties (A) Properties (B)
---------- -------------- --------------
<S> <C> <C> <C>
ASSETS
Rental property, net $ 2,873,260 $ 70,914 $ 90,705
Investment in mortgage notes, net 86,895 -- --
Cash and cash equivalents 84,829 (37,262) (17,142)
Rents receivable 1,351 -- --
Deposits-restricted 9,007 -- --
Escrows deposits-mortgage 17,582 -- --
Deferred financing costs, net 14,425 -- --
Other assets 25,886 -- --
----------- -------------- --------------
Total assets $ 3,113,235 $ 33,652 $ 73,563
=========== ============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 795,723 $ 33,652 $ 73,563
Line of credit -- -- --
Notes, net 498,918 -- --
Accounts payable and accrued expenses 31,243 -- --
Accrued interest payable 15,447 -- --
Due to affiliates 656 -- --
Rents received in advance and other liabilities 18,904 -- --
Security deposits 15,123 -- --
Distributions payable 47,220 -- --
----------- -------------- --------------
Total liabilities 1,423,234 33,652 73,563
----------- -------------- --------------
Commitments and contingencies
Minority Interests 144,264 -- --
----------- -------------- --------------
Shareholders' equity:
Common shares 537 -- --
Preferred shares 393,000 -- --
Employee notes (5,229) -- --
Paid in capital 1,243,736 -- --
Distributions in excess of accumulated earnings (86,307) -- --
----------- -------------- --------------
Total shareholders' equity 1,545,737 -- --
----------- -------------- --------------
Total liabilities and shareholders' equity $ 3,113,235 $ 33,652 $ 73,563
=========== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
Pro
Forma
-----
<S> <C>
ASSETS
Rental property, net $ 3,034,879
Investment in mortgage notes, net 86,895
Cash and cash equivalents 30,425
Rents receivable 1,351
Deposits-restricted 9,007
Escrows deposits-mortgage 17,582
Deferred financing costs, net 14,425
Other assets 25,886
-----------
Total assets $ 3,220,450
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 902,938
Line of credit --
Notes, net 498,918
Accounts payable and accrued expenses 31,243
Accrued interest payable 15,447
Due to affiliates 656
Rents received in advance and other liabilities 18,904
Security deposits 15,123
Distributions payable 47,220
-----------
Total liabilities 1,530,449
-----------
Commitments and contingencies
Minority Interests 144,264
-----------
Shareholders' equity:
Common shares 537
Preferred shares 393,000
Employee notes (5,229)
Paid in capital 1,243,736
Distributions in excess of accumulated earnings (86,307)
-----------
Total shareholders' equity 1,545,737
-----------
Total liabilities and shareholders' equity $ 3,220,450
===========
</TABLE>
(A) Reflects the most recent multifamily property acquisitions, which include
Country Gables, Indigo Springs, Watermark Square, The Willows, Summit Chase
and Willow Brook (acquired in April and May 1997) (collectively the "1997
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 $33.7 million of mortgage
indebtedness secured by four of the 1997 Most Recent Acquired Properties.
(B) Reflects the probable acquisitions of Highline Oaks, Mountain Brook,
Ridgemont, Preston Bend, Spinnaker Cove, Windemere, Wyndridge II and III
(collectively the "1997 Probable Properties"). In connection with the 1997
Probable Properties the amounts presented include the initial purchase
price and the assumption of $73.6 million of mortgage indebtedness secured
by the 1997 Probable Properties.
14
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 1997
(UNAUDITED)
(Amounts in thousands except for share data)
<TABLE>
<CAPTION>
1997 1997
Previously Most Recent 1997
Acquired Acquired Probable
Historical Properties (A) Properties (B) Properties (C)
---------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES
Rental income $134,235 $4,645 $2,890 $3,696
Fee and asset management 1,578 -- -- --
Interest income - investment in mortgage notes 3,683 -- -- --
Interest and other income 1,891 -- -- --
-------- ------ ------ ------
Total revenues 141,387 4,645 2,890 3,696
-------- ------ ------ ------
EXPENSES
Property and maintenance 32,334 1,225 935 1,186
Real estate taxes and insurance 13,911 517 292 265
Property management 5,671 -- -- --
Fee and asset management 967 -- -- --
Depreciation 28,877 -- -- --
Interest:
Expense incurred 23,293 -- -- --
Amortization of deferred financing costs 603 -- -- --
General and administrative 2,975 -- -- --
-------- ------ ------ ------
Total expenses 108,631 1,742 1,227 1,451
-------- ------ ------ ------
Income before gain on disposition of properties
and allocation to Minority Interests 32,756 $2,903 $1,663 $2,245
====== ====== ======
Gain on disposition of properties 3,632
--------
Income before allocation to Minority Interests 36,388
(Income) allocated to Minority Interests (F) (3,426)
--------
Net income 32,962
Preferred distributions 9,061
-------
Net income available to Common Shares $ 23,901
========
Net income per weighted average Common
Share outstanding $ 0.46
========
Weighted average Common Shares outstanding 51,791
========
</TABLE>
<TABLE>
<CAPTION>
1997
Disposed Pro
Property (D) Adjustments (E) Forma
------------ --------------- --------
<S> <C> <C> <C>
REVENUES
Rental income $(222) $ -- $145,244
Fee and asset management -- -- 1,578
Interest income - investment in mortgage notes -- -- 3,683
Interest and other income -- (1,094) 797
----- ------- --------
Total revenues (222) (1,094) 151,302
----- ------- --------
EXPENSES
Property and maintenance (93) (594) 34,993
Real estate taxes and insurance (14) -- 14,971
Property management (12) 248 5,907
Fee and asset management -- -- 967
Depreciation (38) 2,756 31,595
Interest:
Expense incurred -- 2,232 25,525
Amortization of deferred financing costs -- 603
General and administrative -- -- 2,975
----- ------- --------
Total expenses (157) 4,642 117,536
----- ------- --------
Income before gain on disposition of properties
and allocation to Minority Interests (65) (5,736) 33,766
===== ======= --
-------
Gain on disposition of properties
Income before allocation to Minority Interests 33,766
(Income) allocated to Minority Interests (F) (2,972)
--------
Net income 30,794
Preferred distributions 9,061
--------
Net income available to Common Shares $ 21,733
========
Net income per weighted average Common
Share outstanding $ 0.40
========
Weighted average Common Shares outstanding (G) 53,713
========
</TABLE>
(A) Reflects the results of operations for Town Center, Harborview, The
Cardinal, Trails at Dominion, Dartmouth Woods, Rincon, Waterford at the
Lakes, Junipers at Yarmouth, Lincoln Harbor, Sedona Ridge, Club at the Green
and Knight's Castle (acquired from January through March 1997) (collectively
the "1997 Previously Acquired Properties"). The amounts presented represent
the historical amounts for certain revenues and expenses for the periods
from January 1, 1997 through the respective acquisition dates for each
property.
(B) Reflects the results of operations for the 1997 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 1997 Most Recent Acquired Properties for the
three months ended March 31, 1997.
(C) Reflects the results of operations for the 1997 Probable 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 1997 Probable Properties for the three months ended March 31, 1997.
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(D) Reflects the elimination of the results of operations for the Plantation
Apartments (the "1997 Disposed Property") for the period from January 1,
1997 through the disposition date for the property.
(E) Reflects the following adjustments to the 1997 Previously Acquired
Properties and the 1997 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 $(1,094)
======
Property and maintenance:
The elimination of third-party management fees where the Company is
providing onsite property management services $ (594)
======
Property management:
Incremental cost associated with self management of the 1997 Most Recent
Acquired Properties and the 1997 Probable Properties for the three
months ended March 31, 1997 and the 1997 Previously Acquired Properties
for the period from January 1, 1997 through the respective acquisition
dates for each property. $ 248
======
Depreciation:
Reflects depreciation based on the expected total investment of $161.6
million for the 1997 Most Recent Acquired Properties and the 1997
Probable Properties and the expected total investment of $214.4 million
for the 1997 Previously Acquired Properties less 10% allocated to land
and depreciated over a 30-year life for real property. Depreciation for
the 1997 Previously Acquired Properties reflect amounts from January 1,
1997 through the respective acquisition dates for each property. $ 2,756
======
Interest:
Expense incurred:
Interest on mortgage indebtedness for certain of the 1997 Previously
Acquired Properties, the 1997 Most Recent Acquired Properties and the
1997 Probable Properties (H) $ 2,232
======
</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) Pro Forma weighted average Common Shares outstanding for the three months
ended March 31, 1997 was 53.7 million, which includes 53.7 million Common
Shares outstanding as of March 31, 1997. 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 1997
Previously Acquired Properties, the 1997 Most Recent Acquired Properties and
and the 1997 Probable Properties:
<TABLE>
<CAPTION>
Mortgage Interest Interest
Property Indebtedness Rate Expense
------------------------------- ------------ -------- --------
<S> <C> <C> <C>
Harborview (1) $ 12,688 8.85% $ 62
The Cardinal (1) 7,532 8.63% 52
Trails at Dominion (1) 9,100 8.78% 90
Trails at Dominion (1) 10,391 9.00% 101
Trails at Dominion (1) 6,698 7.70% 57
Dartmouth Woods (1) 4,442 8.25% 55
Lincoln Harbor (1) 10,000 6.68% 111
Highline Oaks 7,100 6.75% 120
Preston Bend 8,664 6.50% 141
Spinnaker Cove 14,205 4.45% 158
Wyndridge II & III 24,990 4.25% 265
Mountain Brook 6,553 6.25% 102
Ridgemont 5,582 6.25% 87
The Willows 8,110 9.75% 198
Country Gables 8,648 7.71% 167
Indigo Springs 8,186 8.00% 164
Watermark Square 8,708 8.68% 189
Windemere 6,469 7.00% 113
-------- ------
Totals $168,066 $2,232
======== ======
</TABLE>
(1) The amounts presented for these properties represent the historical amounts
for the periods from January 1, 1997 through the respective acquisition
dates for each property.
16
<PAGE>
EQUITY RESIDENTIAL PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1996
(UNAUDITED)
(Amounts in thousands except for share data)
<TABLE>
<CAPTION>
1997 1997 1997
Acquired Probable Disposed Pro
Historical Properties (A) Properties (B) Property (C) Adjustments (D) Forma
---------- -------------- -------------- ------------ --------------- -------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $454,412 $40,638 $14,021 $(915) $ -- $508,156
Fee and asset management 6,749 -- -- -- -- 6,749
Interest income - investment in
mortgage notes 12,819 -- -- -- -- 12,819
Interest and other income 4,405 -- -- -- (2,942) 1,463
-------- ------- ------- ----- -------- --------
Total Revenues 478,385 40,638 14,021 (915) (2,942) 529,187
-------- ------- ------- ----- -------- --------
EXPENSES
Property and maintenance 127,172 10,723 6,014 (343) (2,427) 141,139
Real estate taxes and insurance 44,128 4,841 1,112 (58) -- 50,023
Property management 17,512 -- -- (47) 1,367 18,832
Fee and asset management 3,837 -- -- -- -- 3,837
Depreciation 93,253 -- -- (156) 10,569 103,666
Interest:
Expense incurred 81,351 -- -- -- 11,873 93,224
Amortization of deferred
financing costs 4,242 -- -- -- -- 4,242
General and administrative 9,857 -- -- -- -- 9,857
-------- ------- ------- ----- - -------- --------
Total expenses 381,352 15,564 7,126 (604) 21,382 424,820
-------- ------- ------- ----- -------- --------
Income before gain on disposition
of properties 97,033 $25,074 $ 6,895 $(311) $(24,324) 104,367
Gain on disposition of properties 22,402 ======= ======= ===== ======== --
-------- --------
Income before extraordinary item 119,435 104,367
Extraordinary item:
Write-off of unamortized costs on
refinanced debt (3,512) --
-------- --------
Income before allocation to
Minority Interests 115,923 104,367
(Income) allocated to Minority
Interests(E) (14,299) (12,343)
-------- --------
Net income 101,624 92,024
Preferred distributions 29,015 29,015
-------- --------
Net income available to Common Shares $ 72,609 $ 63,009
======== ========
Net income per weighted average
Common Share outstanding $ 1.70 $ 1.42
======== ========
Weighted average Common Shares
outstanding 42,586 (F)44,507
======== ========
</TABLE>
(A) Reflects the results of operations of the 1997 Previously Acquired
Properties and the 1997 Most Recent Acquired Properties (collectively the
"1997 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 1997 Acquired Properties for the
year ended December 31, 1996.
(B) Reflects the results of operations of the 1997 Probable 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 1997 Probable Properties for the year ended December 31, 1996.
(C) Reflects the elimination of the results of operations for the 1997 Disposed
Property for the year ended December 31, 1996.
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(D) Reflects the following adjustments:
Interest and other income:
Reduction of interest income due to the use of working capital for
property acquisitions $(2,942)
======
Property and maintenance:
The elimination of third-party management fees where the Company is
providing onsite property management services $(2,427)
======
Property management:
Incremental cost associated with self management of the 1997 Acquired
Properties and the 1997 Probable Properties for the year ended December 31,
1996 $ 1,367
======
Depreciation:
Reflects depreciation based on the expected total investment of $376
million for the 1997 Acquired Properties and the 1997 Probable Properties
less amounts allocated to land, generally 10%, and depreciated over a 30-year
life for real property. $10,569
======
Interest:
Expense incurred:
Interest on mortgage indebtedness for certain of the 1997 Acquired
Properties and the 1997 Probable Properties (G) $11,873
======
</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) Pro Forma weighted average Common Shares outstanding for the year ended
December 31, 1996 was 44.5 million, which includes 42.6 million weighted
average Common Shares outstanding as of December 31, 1996 plus the issuance
of 1.9 million Common Shares in connection with the March 1997 Common Share
Offerings. 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.
(G) Detail of interest expense on mortgage indebtedness for certain of the 1997
Acquired Properties and the 1997 Probable Properties:
<TABLE>
<CAPTION>
Mortgage Interest Interest
Property Indebtedness Rate Expense
----------------------- ------------ -------- --------
<S> <C> <C> <C>
Harborview $ 12,688 8.85% $ 1,123
The Cardinal 7,532 8.63% 649
Trails at Dominion 9,100 8.78% 799
Trails at Dominion 10,391 9.00% 935
Trails at Dominion 6,698 7.70% 516
Dartmouth Woods 4,442 8.25% 366
Lincoln Harbor 10,000 6.68% 668
Highline Oaks 7,100 6.75% 479
Preston Bend 8,664 6.50% 563
Spinnaker Cove 14,205 4.45% 632
Wyndridge II & III 24,990 4.25% 1,062
Mountain Brook 6,553 6.25% 410
Ridgemont 5,582 6.25% 349
The Willows 8,110 9.75% 791
Country Gables 8,648 7.71% 667
Indigo Springs 8,186 8.00% 655
Watermark Square 8,708 8.68% 756
Windemere 6,469 7.00% 453
-------- -------
Totals $168,066 $11,873
======== =======
</TABLE>
18
<PAGE>
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
Required under Item 7(a) of Form 8-K
19
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying combined Statements of Revenue and Certain
Expenses of the Zell/Merrill Properties (the Properties) described in Note 2 for
each of the three years in the period ended December 31, 1996. These combined
Statements of Revenue and Certain Expenses are the responsibility of the
Properties' management. Our responsibility is to express an opinion on the
combined 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 audits to obtain
reasonable assurance about whether the Statements of Revenue and Certain
Expenses are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the Statements of
Revenue and Certain Expenses. 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 Statements of Revenue and Certain
Expenses. We believe that our audits provide a reasonable basis for our
opinion.
The accompanying combined Statements of Revenue and Certain Expenses were
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 are
not intended to be a complete presentation of the Properties' revenue and
expenses.
In our opinion, the combined Statements of Revenue and Certain Expenses referred
to above present fairly, in all material respects, the revenue and certain
expenses described in Note 1 for each of the three years in the period ended
December 31, 1996 in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
March 25, 1997
20
<PAGE>
ZELL/MERRILL PROPERTIES
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the
Three Months Ended For the For the For the
March 31, 1997 Year Ended Year Ended Year Ended
(Unaudited) December 31, 1996 December 31, 1995 December 31, 1994
------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
REVENUE
Rental Income $ 6,191 $ 25,212 $ 24,038 $ 23,198
------------------ ----------------- ----------------- -----------------
CERTAIN EXPENSES
Property operating and maintenance 1,744 6,899 7,018 6,782
Real estate taxes and insurance 516 2,100 2,008 2,242
Management fees 310 1,269 1,235 1,119
------------------ ----------------- ----------------- -----------------
2,570 10,268 10,261 10,143
------------------ ----------------- ----------------- -----------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 3,621 $ 14,944 $ 13,777 $ 13,055
================== ================= ================= =================
</TABLE>
See accompanying notes.
21
<PAGE>
ZELL/MERRILL 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 three years ended December 31, 1996 and the three months ended March
31, 1997 (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
Zell/Merrill Properties for the periods presented as certain expenses,
which may not be comparable to the expenses to be incurred by Equity
Residential Properties Trust and its subsidiaries (the "Company") in the
proposed future operations of the Zell/Merrill 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 Zell/Merrill 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. Expenses are recognized in the
period in which they are incurred.
Note 2 - Description of Properties
The following properties are included in the combined statements of revenue
and certain expenses:
<TABLE>
<CAPTION>
Date
Property Name Location Seller (A) Acquired
------------- -------- ---------- --------
<S> <C> <C> <C>
Sedona Ridge Phoenix, AZ Zell/Merrill I 3/24/97
Country Gables Beaverton, OR Zell/Merrill II 4/4/97
Indigo Springs Kent, WA Zell/Merrill II 4/4/97
Watermark Square Portland, OR Zell/Merrill II 4/4/97
The Willows Knoxville, TN Zell/Merrill I 5/15/97
Highline Oaks Denver, CO Zell/Merrill I (C)
Mountain Brook Chattanooga, TN Zell/Merrill I (C)
Ridgemont Chattanooga, TN Zell/Merrill I (C)
Preston Bend Dallas, TX Zell/Merrill I (C)
Spinnaker Cove Nashville, TN Zell/Merrill I (C)
Windemere Mesa, AZ Zell/Merrill I (C)
Wyndridge II & III Memphis, TN Zell/Merrill I (C)
</TABLE>
<TABLE>
<CAPTION>
Number Total
Property Name of Units Investment (B)
------------- -------- --------------
<S> <C> <C>
Sedona Ridge 250 $ 15,200,000
Country Gables 288 17,000,000
Indigo Springs 278 12,700,000
Watermark Square 390 15,800,000
The Willows 250 11,000,000
Highline Oaks 220 10,700,000
Mountain Brook 280 7,600,000
Ridgemont 226 7,600,000
Preston Bend 255 11,000,000
Spinnaker Cove 278 14,205,000
Windemere 224 9,600,000
Wyndridge II & III 568 30,000,000
-------- --------------
3,507 $ 162,405,000
======== ==============
</TABLE>
Notes:
(A) The Zell/Merrill Properties have been presented on a combined basis because
all of the properties are commonly managed by the Company and because the
selling entities, Zell/Merrill Lynch Real Estate Opportunity Partners
Limited Partnership ("Zell/Merrill I") and Zell/Merrill Lynch Real Estate
Opportunity Partners Limited Partnership II ("Zell/Merrill II"), are all
ultimately controlled by Mr. Samuel Zell, Chairman of the Board of the
Company.
(B) Includes initial purchase price.
(C) The Company has a commitment to acquire this property or has reached an
agreement in principle and is in the final stages of documenting the
acquisition of this property.
22
<PAGE>
Note 3 - Related Party Transactions
During the years ended December 31, 1996 and 1995 and during the unaudited
interim period from January 1, 1997 to March 31, 1997, the Zell/Merrill
Properties were managed by the Company. During the year ended December 31,
1994, all of the Zell/Merrill Properties, except for Country Gables, Indigo
Springs and Watermark Square, were managed by the Company. Of the
management fees paid during 1994, approximately $827,000 were paid to the
Company. The management agreements provided for a fee based on a percentage
of gross receipts, as defined by each of the Zell/Merrill Properties'
individual management agreements.
Insurance premiums of approximately $359,000, $249,000 and $268,000 for the
years ended December 31, 1994, 1995 and 1996, respectively, were incurred
from and coverage was provided by an affiliate of the Seller.
The general partner of the entities that own the Zell/Merrill Properties
are ultimately controlled by Mr. Samuel Zell, who is also Chairman of the
Board of the Company.
23
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Harborview (the Property) for the year ended December 31, 1996. The Statement of
Revenue and Certain Expenses is the responsibility of the Property's management.
Our responsibility is to express an opinion on the 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 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 made in the Statement of Revenue and
Certain Expenses. 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 of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying 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 Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 16, 1997
24
<PAGE>
HARBORVIEW
STATEMENT OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the
Year Ended
December 31, 1996
-----------------
<S> <C>
REVENUE
Rental Income $ 2,325
-----------------
CERTAIN EXPENSES
Property operating and maintenance 440
Real estate taxes and insurance 199
Management fees 74
-----------------
713
-----------------
REVENUE IN EXCESS OF CERTAIN EXPENSES $ 1,612
=================
</TABLE>
See accompanying notes.
25
<PAGE>
HARBORVIEW
NOTES TO STATEMENT OF
REVENUE AND CERTAIN EXPENSES
Note 1 - Summary of Significant Accounting Policies
The accompanying statement of revenue and certain expenses for the year
ended December 31, 1996 was prepared for purposes of complying with the
rules and regulations of the Securities and Exchange Commission. The
accompanying financial statement is not representative of the actual
operations of Harborview for the period presented as certain expenses,
which may not be comparable to the expenses to be incurred by Equity
Residential Properties Trust and its subsidiaries (the "Company") in the
proposed future operations of Harborview, have been excluded. Expenses
excluded consist of interest, depreciation and amortization, professional
fees and other costs not directly related to the future operations of
Harborview.
In preparation of the Company's 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.
Harborview had a management agreement with a management company
unaffiliated with the Company through the acquisition date to maintain and
manage the operations of the apartment complex. Management fees were based
on 4% of gross receipts. In 1996, all of the management fees were paid to
an affiliate of the seller. Upon acquisition of Harborview by the Company,
such management contract was cancelled at which time the Company began to
manage Harborview.
Note 2 - Description of Property
The following property is included in the statement of revenue and
certain expenses:
<TABLE>
<CAPTION>
Date Number Total
Property Name Location Acquired of Units Investment (A)
------------- -------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Harborview San Pedro, CA 1/21/97 160 $19,115,000
</TABLE>
Notes:
(A) Includes initial purchase price, closing costs, start up costs and
amounts specified at date of purchase for future capital improvements.
26
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Trails at Dominion (the Property) for the year ended December 31, 1996. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
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 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 Statement of Revenue and Certain
Expenses. 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 of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying 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 Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 6, 1997
27
<PAGE>
TRAILS AT DOMINION
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the Period
January 1, 1997 - For the
February 12, 1997 Year Ended
(Unaudited) December 31, 1996
------------------- -----------------
<S> <C> <C>
REVENUE
Rental Income $988 $6,537
---- ------
CERTAIN EXPENSES
Property operating and maintenance 225 1,587
Real estate taxes and insurance 147 1,273
Management fees 37 326
---- ------
409 3,186
---- ------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $579 $3,351
==== ======
</TABLE>
See accompanying notes.
28
<PAGE>
TRAILS AT DOMINION
NOTES TO STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
Note 1 - Summary of Significant Accounting Policies
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1996 and the three months ended March 31, 1997
(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
Trails at Dominion for the periods presented as certain expenses, which may
not be comparable to the expenses to be incurred by Equity Residential
Properties Trust and its subsidiaries (the "Company") in the proposed
future operations of Trails at Dominion, have been excluded. Expenses
excluded consist of interest, depreciation and amortization, professional
fees and other costs not directly related to the future operations of
Trails at Dominion.
In preparation of the Company's 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.
Trails at Dominion had a management agreement with a management company
unaffiliated with the Company through the acquisition date to maintain and
manage the operations of the apartment complex. Management fees were based
on 5% of gross receipts. In 1996, all of the management fees were paid to
an affiliate of the seller. Upon acquisition of Trails at Dominion by the
Company, such management contract was cancelled at which time the Company
began to manage Trails at Dominion.
Note 2 - Description of Property
The following property is included in the statements of revenue and certain
expenses:
<TABLE>
<CAPTION>
Date Number Total
Property Name Location Acquired of Units Investment (A)
------------------ ----------- -------- -------- --------------
<S> <C> <C> <C> <C>
Trails at Dominion Houston, TX 2/12/97 843 $38,750,000
</TABLE>
Notes:
(A) Includes initial purchase price, closing costs, start up costs and
amounts specified at date of purchase for future capital improvements.
29
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Rincon (the Property) for the year ended December 31, 1996. The Statement of
Revenue and Certain Expenses is the responsibility of the Property's management.
Our responsibility is to express an opinion on the 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 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 Statement of Revenue and Certain
Expenses. 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 of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying 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 Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 7, 1997
30
<PAGE>
RINCON
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the Period
January 1, 1997- For the
February 28, 1997 Year Ended
(Unaudited) December 31, 1996
-------------------- ---------------------
<S> <C> <C>
REVENUE
Rental Income $ 403 $ 1,183
-------------------- ---------------------
CERTAIN EXPENSES
Property operating and maintenance 112 425
Real estate taxes and insurance 44 123
Management fees 25 57
-------------------- ---------------------
181 605
-------------------- ---------------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 222 $ 578
==================== =====================
See accompanying notes.
</TABLE>
31
<PAGE>
RINCON
NOTES TO STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
Note 1 - Summary of Significant Accounting Policies
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1996 and the three months ended March 31, 1997
(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
Rincon for the period presented as certain expenses, which may not be
comparable to the expenses to be incurred by Equity Residential Properties
Trust and its subsidiaries (the "Company") in the proposed future
operations of Rincon, have been excluded. Expenses excluded consist of
interest, depreciation and amortization, professional fees and other costs
not directly related to the future operations of Rincon.
In preparation of the Company's 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.
Rincon had a management agreement with a management company unaffiliated
with the Company through the acquisition date to maintain and manage the
operations of the apartment complex. Management fees were based on 5% of
gross receipts. In 1996, all of the management fees were paid
to an affiliate of the seller. Upon acquisition of Rincon by the
Company, such management contract was cancelled at which time the Company
began to manage Rincon.
Note 2 - Description of Property
The following property is included in the statements of revenue and certain
expenses:
<TABLE>
<CAPTION>
Date Number Total
Property Name Location Acquired of Units Investment (A)
------------- -------- -------- -------- --------------
<S> <C> <C> <C> <C>
Rincon Houston, TX 2/28/97 288 $ 21,175,000
</TABLE>
Notes:
(A) Includes initial purchase price, closing costs, start up costs and amounts
specified at date of purchase for future capital improvements.
Rincon consists of 8 buildings which were all under development during a
portion of 1996. As a result, the accompanying statement only reflects the
certain expenses of each building subsequent to the date each building was
placed in service in September 1996.
32
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Waterford at the Lakes (the Property) for the year ended December 31, 1996. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
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 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 Statement of Revenue and Certain
Expenses. 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 of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying 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 Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 12, 1997
33
<PAGE>
WATERFORD AT THE LAKES
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the Period
January 1, 1997- For the
February 28, 1997 Year Ended
(Unaudited) December 31, 1996
------------------ -----------------
<S> <C> <C>
REVENUE
Rental Income $ 447 $ 2,661
------------------ -----------------
CERTAIN EXPENSES
Property operating and maintenance 173 641
Real estate taxes and insurance 53 268
Management fees 22 132
------------------ ------------------
248 1,041
------------------ ------------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 199 $ 1,620
================== ==================
</TABLE>
See accompanying notes.
34
<PAGE>
WATERFORD AT THE LAKES
NOTES TO STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
Note 1 - Summary of Significant Accounting Policies
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1996 and the three months ended March 31, 1997
(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
Waterford at the Lakes for the periods presented as certain expenses, which
may not be comparable to the expenses to be incurred by Equity Residential
Properties Trust and its subsidiaries (the "Company") in the proposed
future operations of Waterford at the Lakes, have been excluded. Expenses
excluded consist of interest, depreciation and amortization, professional
fees and other costs not directly related to the future operations of
Waterford at the Lakes.
In preparation of the Company's 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.
Waterford at the Lakes had a management agreement with a management company
unaffiliated with the Company through the acquisition date to maintain and
manage the operations of the apartment complex. Management fee were based
on 5% of gross receipts. In 1996, all of the management fees were paid to
an affiliate of the seller. Upon acquisition of Waterford at the Lakes by
the Company, such management contract was cancelled at which time the
Company began to manage Waterford at the Lakes.
Note 2 - Description of Property
The following property is included in the statements of revenue and certain
expenses:
<TABLE>
<CAPTION>
Date Number Total
Property Name Location Acquired of Units Investment (A)
------------- -------- -------- -------- --------------
<S> <C> <C> <C> <C>
Waterford at the Lakes Kent, WA 2/28/97 344 $ 19,152,000
</TABLE>
Notes:
(A) Includes initial purchase price, closing costs, start up costs and amounts
specified at date of purchase for future capital improvements.
35
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Trustees of
Equity Residential Properties Trust
We have audited the accompanying Statement of Revenue and Certain Expenses of
Lincoln Harbour (the Property) for the year ended December 31, 1996. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
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 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 Statement of Revenue and Certain
Expenses. 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 of Revenue and Certain Expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying 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 Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to above
presents fairly, in all material respects, the revenue and certain expenses
described in Note 1 for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 16, 1997
36
<PAGE>
LINCOLN HARBOUR
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the Period
January 1, 1997- For the
March 20, 1997 Year Ended
(Unaudited) December 31, 1996
------------------ -----------------
<S> <C> <C>
REVENUE
Rental Income $ 817 $ 3,062
------------------ -----------------
CERTAIN EXPENSES
Property operating and maintenance 183 871
Real estate taxes and insurance 120 447
Management fees 27 114
------------------ -----------------
330 1,432
------------------ -----------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 487 $ 1,630
================== =================
</TABLE>
See accompanying notes.
37
<PAGE>
LINCOLN HARBOUR
NOTES TO STATEMENTS OF
REVENUE AND CERTAIN EXPENSES
Note 1 - Summary of Significant Accounting Policies
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1996 and the three months ended March 31, 1997
(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
Lincoln Harbor for the periods presented as certain expenses, which may not
be comparable to the expenses to be incurred by Equity Residential
Properties Trust and its subsidiaries (the "Company") in the proposed
future operations of Lincoln Harbor, have been excluded. Expenses excluded
consist of interest, depreciation and amortization, professional fees and
other costs not directly related to the future operations of Lincoln
Harbor.
In preparation of the Company's 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.
Lincoln Harbor had a management agreement with a management company
unaffiliated with the Company through the acquisition date to maintain and
manage the operations of the apartment complex. Management fees were based
on 3.75% of gross receipts. In 1996, all of the management fees were paid
to an affiliate of the seller. Upon acquisition of Lincoln Harbor by the
Company, such management contract was cancelled at which time the Company
began to manage Lincoln Harbor.
Note 2 - Description of Property
The following property is included in the statements of revenue and certain
expenses:
<TABLE>
<CAPTION>
Date Number Total
Property Name Location Acquired of Units Investment (A)
----------------- ------------------ -------- -------- --------------
<S> <C> <C> <C> <C>
Lincoln Harbour Ft. Lauderdale, FL 3/20/97 324 $22,285,000
</TABLE>
Notes:
(A) Includes initial purchase price, closing costs, start up costs and amounts
specified at date of purchase for future capital improvements.
38
<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 of Club at the Green and Knights Castle (the Properties) for the year
ended December 31, 1996. The combined Statement of Revenue and Certain Expenses
is the responsibility of the Properties' management. 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 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 made in the Statement of Revenue and
Certain Expenses. 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 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 Properties' revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1996, in conformity
with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 9, 1997
39
<PAGE>
CLUB AT THE GREEN AND KNIGHT'S CASTLE
COMBINED STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
(amounts in thousands)
<TABLE>
<CAPTION>
For the
Three Months Ended For the
March 31, 1997 Year Ended
(Unaudited) December 31, 1996
------------------ -----------------
<S> <C> <C>
REVENUE
Rental Income $ 1,033 $ 4,090
------------------ -----------------
CERTAIN EXPENSES
Property operating and maintenance 251 960
Real estate taxes and insurance 111 397
Management fees 36 142
------------------ -----------------
398 1,499
------------------ -----------------
REVENUE IN EXCESS OF CERTAIN
EXPENSES $ 635 $ 2,591
================== =================
</TABLE>
See accompanying notes.
40
<PAGE>
CLUB AT THE GREEN AND KNIGHT'S CASTLE
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, 1996 and the three months ended March 31, 1997
(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
Club at the Green and Knight's Castle for the period presented as certain
expenses, which may not be comparable to the expenses to be incurred by
Equity Residential Properties Trust and its subsidiaries (the "Company") in
the proposed future operations of Club at the Green and Knight's Castle,
have been excluded. Expenses excluded consist of interest, depreciation and
amortization, professional fees and other costs not directly related to the
future operations of Club at the Green and Knight's Castle.
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.
Club at the Green and Knight's Castle had a management agreement with a
management company unaffiliated with the Company through the acquisition
dates to maintain and manage the operations of the apartment complexes.
Management fees were based on 3.5% of gross receipts. In 1996, all of the
management fees were paid to an affiliate of the seller. Upon acquisition
of Club at the Green and Knight's Castle by the Company, such management
contract was cancelled at which time the Company began to manage Club at
the Green and Knight's Castle.
Note 2 - Description of Properties
The following properties are included in the combined statements of
revenue and certain expenses:
<TABLE>
<CAPTION>
Date Number Total
Property Name Location Acquired of Units Investment (A)
----------------- --------------- -------- -------- --------------
<S> <C> <C> <C> <C>
Club at the Green Beaverton, OR 3/28/97 254 $ 14,925,000
Knight's Castle Wilsonville, OR 3/28/97 296 16,027,000
-------- --------------
550 $ 30,952,000
======== ==============
</TABLE>
Notes:
(A) Includes initial purchase price, closing costs, start up costs and amounts
specified at date of purchase for future capital improvements.
41
<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
May 29, 1997 By: /s/ Michael J. McHugh
- ------------ ---------------------------------------
(Date) Michael J. McHugh
Senior Vice President, Chief Accounting
Officer and Treasurer
42
<PAGE>
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-12211) of Equity Residential Properties Trust and in the related
Prospectus of our reports indicated below with respect to the financial
statements indicated below included in this Current Report of Equity Residential
Properties Trust on Form 8-K.
<TABLE>
<CAPTION>
Financial Statements Date of Auditors Report
- ---------------------------------------- -----------------------
<S> <C>
Statement of Revenue and Certain
Expenses of Harborview for the year
ended December 31, 1996 May 16, 1997
Statement of Revenue and Certain
Expenses of Trails at Dominion for the
year ended December 31, 1996 May 6, 1997
Statement of Revenue and Certain
Expenses of Rincon for the year ended
December 31, 1996 May 7, 1997
Statement of Revenue and Certain
Expenses of Waterford at the Lakes for
the year ended December 31, 1996 May 12, 1997
Statement of Revenue and Certain
Expenses of Lincoln Harbour for the
year ended December 31, 1996 May 16, 1997
Combined Statement of Revenue and
Certain Expenses of Knights Castle and
Club at the Green for the year ended
December 31, 1996 May 9, 1997
Combined Statement of Revenue and
Certain Expenses of the Zell/Merrill
Properties for the three years in the
period ended December 31, 1996 March 25, 1997
</TABLE>
Ernst & Young LLP
Chicago, Illinois
May 27, 1997
