<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
March 12, 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 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>
On January 16, 1997, Equity Residential Properties Trust ("EQR") entered
into an Agreement and Plan of Merger regarding the planned acquisition of the
multifamily property business of Wellsford Residential Property Trust
("Wellsford"), a Maryland real estate investment trust, by EQR through the tax
free merger of EQR and Wellsford (the "Merger"). The transaction is valued at
approximately $1 billion and includes 75 multifamily properties containing
19,004 units. In the Merger, each outstanding common share of beneficial
interest of Wellsford will be converted into .625 of a common share of the
surviving Maryland real estate investment trust in the Merger (the "Surviving
Trust").
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired
-------------------------------------------
Wellsford is subject to the informational requirements of the
Securities Act of 1934, as amended ("Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"), including
Wellsford's Annual Report on Form 10-K for the year ended December 31,
1995. Reports, proxy statements and other information filed by
Wellsford can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at its regional offices at Suite 1400, 500
West Madison Street, Chicago, Illinois 60661; and Seven World Trade
Center, Suite 1300, New York, New York 10048. Copies of such material
can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission. The address of the
Commission's web site is: http://www.sec.gov. The common and preferred
shares of beneficial interest of Wellsford are currently listed on the
New York Stock Exchange ("NYSE") and such reports, proxy statements and
other information concerning Wellsford can be inspected at the offices
of the NYSE, 20 Broad Street, New York, New York 10005.
3
<PAGE>
(b) Pro Forma Financial Information
-------------------------------
EQR is hereby filing the unaudited pro forma financial information related
to the Surviving Trust.
SURVIVING TRUST
BASIS OF PRESENTATION TO UNAUDITED PRO FORMA
COMBINED FINANCIAL STATEMENTS
The Unaudited Pro Forma Combined Balance Sheet gives effect to the proposed
Merger of EQR and Wellsford as if the Merger had occurred on September 30, 1996.
The Unaudited Pro Forma Combined Balance Sheet gives effect to the Merger under
the purchase method of accounting in accordance with Accounting Principles Board
Opinion No. 16. In addition to the Merger, the EQR Pro Forma Balance Sheet gives
effect to certain material events which occurred between October 1, 1996 and
January 20, 1997, as if they had occurred on September 30, 1996. See Note (A) to
the Unaudited Pro Forma Combined Balance Sheet. In the opinion of management,
all significant adjustments necessary to reflect the effects of the Merger have
been made.
The Unaudited Pro Forma Combined Balance Sheet is presented for comparative
purposes only and is not necessarily indicative of what the actual combined
financial position of EQR and Wellsford would have been at September 30, 1996,
nor does it purport to represent the future combined financial position of EQR
and Wellsford.
The Unaudited Pro Forma Combined Statements of Operations for the year
ended December 31, 1995 and the nine months ended September 30, 1996 are
presented as if the Merger had occurred at the beginning of each period
presented. The Unaudited Pro Forma Combined Statements of Operations give effect
to the Merger under the purchase method of accounting in accordance with
Accounting Principles Board Opinion No. 16, and the combined entity qualifying
as a real estate investment trust, distributing at least 95% of its taxable
income, and therefore, incurring no federal income tax liability for the periods
presented. In addition to the Merger, the EQR Pro Forma Statement of Operations
for the nine months ended September 30, 1996 gives effect to the acquisition of
41 multifamily residential properties between January 1, 1996 and November 15,
1996 and the EQR Pro Forma Statement of Operations for the year ended December
31, 1995 gives effect to the acquisition of 58 multifamily residential
properties and the investment in partnership interests and subordinate mortgages
collateralized by 21 multifamily residential properties between January 1, 1995
and November 15, 1996. In the opinion of management, all significant adjustments
necessary to reflect the effects of these transactions have been made.
The Unaudited Pro Forma Combined Statements of Operations are presented for
comparative purposes only and are not necessarily indicative of what the actual
combined results of EQR and Wellsford would have been for the year ended
December 31, 1995 and the nine months ended September 30, 1996, nor does it
purport to be indicative of the results of operations in future periods.
4
<PAGE>
SURVIVING TRUST
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
EQR EQR Pro Forma EQR WRP Merger
Historical Adjustments (A) Pro Forma Historical (B) Adjustments (C)
<S> <C> <C> <C> <C> <C>
ASSETS
Rental property, net $ 2,473,686 $ 233,065 $ 2,706,751 $ 651,926 $ 338,937 (D)
Real Estate held for disposition 11,260 (11,260) - - -
Construction in progress - - - 44,153 (43,153)(E)
Investment in mortgage notes, net 86,486 - 86,486 17,800 (17,800)(F)
Cash and cash equivalents 152,545 (37,279) 115,266 7,979 (75,037)(G)
Rents receivables 2,126 - 2,126 - -
Deposits-restricted 5,501 - 5,501 9,813 (6,355)(H)
Escrows deposits-mortgage 14,953 - 14,953 - -
Deferred financing costs, net 13,062 - 13,062 5,092 (5,092)(I)
Other assets 25,247 - 25,247 3,060 6,296 (J)
----------- ----------- ----------- ----------- ----------
Total assets $ 2,784,866 $ 184,526 $ 2,969,392 $ 739,823 $ 197,796
=========== =========== =========== =========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 738,862 $ 7,154 $ 746,016 $ 83,299 $ (5,223)(K)
Line of credit - - - 26,000 (26,000)(L)
Notes, net 498,761 - 498,761 223,447 -
Accounts payable and accrued expenses 36,063 - 36,063 10,812 -
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 3,131 -
Distributions payable 39,233 - 39,233 11,431 -
----------- ----------- ------------ ----------- ----------
Total liabilities 1,358,137 7,154 1,365,291 358,120 (31,223)
----------- ----------- ------------ ----------- ----------
Commitments and contingencies
Minority Interests 154,839 (5,194) 149,645 - 38,424
----------- ----------- ------------ ----------- ----------
Shareholders' equity:
Common shares 458 43 501 171 (64)(O)
Preferred shares 393,000 - 393,000 63 (63)(P)
Series D Convertible Preferred Shares 99,995 (P)
Series E Preferred Shares 57,500 (P)
Employee notes (5,274) - (5,274) (7,284) 7,284 (Q)
Paid in capital 962,647 182,523 1,145,170 461,298 (46,602)(R)
Distributions in excess of accumulated earnings (78,941) - (78,941) (72,545) 72,545 (S)
----------- ----------- ------------ ----------- ----------
Total Shareholders' Equity 1,271,890 182,566 1,454,456 381,703 190,595
----------- ----------- ------------ ----------- ----------
Total liabilities and shareholders' equity $ 2,784,866 184,526 2,969,392 739,823 197,796
----------- ----------- ------------ ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
Surviving Trust
Pro Forma
Combined
<S> <C>
ASSETS $ 3,697,614
Rental property, net -
Real Estate held for disposition 1,000
Construction in progress 86,486
Investment in mortgage notes, net 48,208
Cash and cash equivalents 2,126
Rents receivables 8,959
Deposits-restricted 14,953
Escrows deposits-mortgage 13,062
Deferred financing costs, net 34,603
Other assets ------------
Total assets $ 3,907,011
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 824,092
Line of credit -
Notes, net 722,208
Accounts payable and accrued expenses 46,875
Accrued interest payable 14,682
Due to affiliates 778
Rents received in advance and other liabilities 16,813
Security deposits 16,076
Distributions payable 50,664
------------
Total liabilities 1,692,188
------------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Commitments and contingencies (M)
Minority Interests 188,069 (N)
------------
Shareholders' equity:
Common shares 608
Preferred shares 393,000
Series D Convertible Preferred Shares 99,995
Series E Preferred Shares 57,500
Employee notes (5,274)
Paid in capital 1,559,866
Distributions in excess of accumulated earnings (78,941)
------------
Total Shareholders' Equity 2,026,754
------------
Total liabilities and shareholders' equity-- 3,907,011
============
</TABLE>
6
<PAGE>
SURVIVING TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
A) The EQR Pro Forma Adjustments column includes the acquisition of
twelve multifamily residential properties, for an aggregate purchase
price of $231,700, including the assumption of $42,300 of mortgage
indebtedness, the disposition of three multifamily residential
properties which had a net book value of $9,900 and $12,200 of
mortgage indebtedness as of September 30, 1996 and the repayment of
mortgage indebtedness for three properties which had balances of
$23,000 as of September 30, 1996. In addition, this column includes
the issuance of 4,440 Common Shares which resulted in net proceeds of
$177,400 to EQR. All of these events occurred between October 1, 1996
and January 20, 1997.
(B) Certain reclassifications have been made to Wellsford's historical
balance sheet to conform to EQR's balance sheet presentation.
(C) Represents adjustments to record the Merger in accordance with the
purchase method of accounting, based upon the assumed purchase
price of $998,248 assuming a market value of $42.25 per share of
EQR's common shares, as follows:
Issuance of 10,732 common shares of beneficial interest of EQR, based
on the .625 exchange rate, in exchange for 17,171 common shares of
Wellsford, which includes 67 common shares of Wellsford issued
<TABLE>
<S> <C>
immediately prior to the merger. . . . . . . . . . . . . . . . . . $ 453,427
Issuance of Series D Preferred Shares of Beneficial Interest . . . . . . . . 99,995
Issuance of Series E Preferred Shares of Beneficial Interest . . . . . . . . 57,500
Assumption of Wellsford's liabilities, net of spin-off to a subsidiary of
Wellsford, Wellsford Real Properties, Inc. ("WRP NewCo") of $3,953. . . . . . . . 354,167
Adjustment to increase the assumed Wellsford debt to it's fair value (see Note K) . 9,532
Merger costs (see calculation below). . . . . . . . . . . . . . . . 23,627
------------
$ 998,248
============
<CAPTION>
The following is a calculation of the estimated fees and other expenses
related to the Merger:
<S> <C>
Employee termination costs. . . . . . . . . . . . . . . . . . . $ 10,063
Buyout of stock options. . . . . . . . . . . . . . . . . . . . 4,227
Advisory fees . . . . . . . . . . . . . . . . . . . . . . . 2,350
Legal and accounting fees . . . . . . . . . . . . . . . . . . . 2,225
Consulting contracts. . . . . . . . . . . . . . . . . . . . . 2,000
Other, including printing, filing, transfer and spin-off costs . . . . . . 2,762
------------
TOTAL $ 23,627
============
</TABLE>
7
<PAGE>
SURVIVING TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
D) Represents the estimated increase in Wellsford's rental property, net
based upon EQR's purchase price and the adjustment to eliminate the
basis of Wellsford's net assets acquired:
<TABLE>
<S> <C>
Purchase Price (see Note C) $ 998,248
Less: Historical basis of Wellsford's net assets acquired
Rental property, net 651,926
Construction in progress, net of spin-off to WRP NewCo of $17,028 27,125
Restricted deposits, net of spin-off to WRP NewCo of $6,355 3,458
Other assets, net of spin-off to WRP NewCo of $134 2,927
------------------
Step-up to record fair value of Wellsford Rental property 312,812
------------------
Plus: reclassification from construction in progress (see note E) 26,125
------------------
$ 338,937
==================
</TABLE>
E) Reflects the spin-off of $17,028 of costs related to the Palomino Park
project to WRP NewCo and the reclassification of $26,125 related to
three development properties completed subsequent to September 30,
1996, to rental property, net (see Note D).
F) Decrease results from the spin-off of the Sonterra mortgage notes
receivable to WRP NewCo.
G) Decrease of $75,037 reflects the spin-off of $21,710 in cash to WRP
NewCo, including an investment of $2,930 for EQR's 20% interest in the
Palomino Park project (see Note J), the expected payment of $23,827
for Merger (see Note C) and registration (see Note R) costs, the
repayment of $26,000 on Wellsford's line of credit (see Note L) and
EQR's purchase of $3,500 in WRP NewCo common stock (see Note J).
H) Decrease results from the spin-off of restricted cash to WRP NewCo for
the Palomino Park project.
I) Decrease due to elimination of Wellsford deferred loan costs in
connection with the Merger.
J) Increase of $6,296 results from the purchase of $3,500 in WRP NewCo
common stock and EQR's 20% investment in the Palomino Park project of
$2,930 offset by the spin-off to WRP NewCo of $134 in interest
receivable related to the Sonterra Mortgage notes receivable.
K) Decrease of $5,223 in mortgage notes payable reflects the spin-off of
$14,755 in bonds on the Palomino Park project to WRP NewCo offset by
recording a premium of $9,532 required to adjust Wellsford's debt to
its estimated fair value.
L) Reflects the repayment of Wellsford's line of credit from EQR's cash
balances. It is assumed that additional Wellsford borrowings of
$10,802 that would be incurred in connection with the spin-off of WRP
NewCo are repaid from EQR's cash balances.
8
<PAGE>
SURVIVING TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
M) ERP Operating Partnership has committed to acquire up of 1,000 shares
of WRP NewCo Series A 8% Convertible Redeemable Preferred Stock; has
provided stand-by obligations with respect to a $36,800 agreement with
respect to the construction financing of Phase I of Palomino Park and
$30,000 pursuant to an agreement expected to be entered into with
respect to the construction financing for Phase II of Palomino Park;
and a $14,800 credit enhancement with respect to bonds issued to
finance certain public improvements at Palomino Park.
N) The pro forma allocation to the minority interests is based upon the
percentage owned by such minority interests as follows:
<TABLE>
<S> <C>
Total Shareholders' Equity and Minority Interests $ 2,214,823
Less: Preferred Shares, Series D Convertible and Series E Preferred shares (550,495)
------------------
1,664,328
Minority Interests percentage ownership in ERP Operating
Partnership (see Note R) 11.3%
------------------
Minority Interests $ 188,069
==================
</TABLE>
O) Decrease results from elimination of Wellsford common shares at $.01
par value ($171) net of the issuance of EQR common shares at $.01 par
value ($107) (see Note C).
P) Elimination of $63 of Wellsford Preferred Shares and the issuance of
$99,995 of EQR Series D Convertible Preferred Shares and of $57,500 of
EQR Series E Preferred Shares (see Note C).
Q) Reflects the elimination of restricted stock and the forgiveness of
all of Wellsford's employee notes, as a result of the Merger and the
subsequent repayment and forfeiture of $668 by a former employee.
R) Decrease to paid in capital to reflect the following:
<TABLE>
<S> <C>
Issuance of 10,732 EQR common shares at $42.25 per share $ 453,427
Par value of common shares issued (107)
Registration costs incurred in connection with the Merger (200)
Wellsford's historical shareholders' equity (461,298)
Adjustment for an 11.3% minority interest ownership in ERP Operating (38,424)
Partnership
==================
$ (46,602)
==================
</TABLE>
<TABLE>
<CAPTION>
The 11.3% minority interest ownership in EQR, is calculated as follows:
Shares Units
------ -----
<S> <C> <C>
Wellsford's historical Shares outstanding. . . . 17,171 -
==============
EQR's Shares to be issued based on the .625 Merger exchange ratio. . . . 10,732 10,732
EQR's historical Shares/Units outstanding. . . . 51,155 59,013
-------------- -------------
EQR's proforma Shares/Units outstanding. . . 61,887 69,745
============== =============
EQR ownership percentage of ERP Operating Partnership 88.7%
==============
Minority interest ownership percentage of ERP Operating Partnership 11.3%
==============
</TABLE>
S) Reflects the elimination of Wellsford's distribution in excess of
accumulated earnings to paid in capital, as a result of the Merger.
9
<PAGE>
SURVIVING TRUST
UNAUDITED PRO FORMA COMDINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Surviving Trust
EQR Wellsford Merger Pro Forma
Pro Forma (T) Historical (U) Adjustments Combined
<S> <C> <C> <C> <C>
REVENUES
Rental Income $ 375,717 $ 91,927 $ - $ 467,644
Fee and asset management 4,982 - - 4,982
Interest income-investment in mortgage notes 9,084 356 (356)(V) 9,084
Interest and other income 1,064 4,869 - 5,933
--------- ------------ ----------- ----------
Total revenues 390,847 97,152 (356) 487,643
--------- ------------ ----------- ----------
EXPENSES
Property and maintenance 105,322 30,476 - 135,798
Real estate taxes and insurance 37,302 7,072 - 44,374
Property management 14,036 3,451 (523)(W) 16,964
Fee and asset management 3,037 - - 3,037
Depreciation 75,592 19,630 2,077 (X) 97,299
Interest:
Expense incurred 69,310 16,415 (1,302)(Y) 84,423
Amortization of deferred financing costs 2,794 494 (494)(Z) 2,794
General and administrative 6,690 2,593 (2,221)(AA) 7,062
--------- ------------ ------------ -----------
Total expenses 314,083 80,131 (2,463) 391,751
--------- ------------ ------------ -----------
Income before loss on joint venture communities 76,764 17,021 2,107 95,892
(Loss) on joint venture communities - (53) - (53)
--------- ------------ ------------ -----------
Income before allocation to Minority Interests 76,764 16,969 2,107 95,839
(Income) allocated to Minority Interests (7,938) - (2,862)(AB) (10,800)
--------- ------------ ------------ -----------
Net income 68,826 16,969 (755) 85,039
Preferred distributions 27,183 9,411 - 36,594
--------- ------------ ------------ -----------
Net income available to common shares $ 41,643 $ 7,557 $ (755) $ 48,445
========= ============ ============ ===========
Net income per weighted average Common
Share outstanding $ 0.91 $ 0.44 $ (0.49) $ 0.86
========= ============ ============ ===========
Weighted average Common Shares outstanding 45,775 17,041 (6,390)(AC) 56,426
========= ============ ============ ===========
</TABLE>
10
<PAGE>
SURVIVING TRUST
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Surviving Trust
EQR Wellsford Merger Pro Forma
Pro Forma (T) Historical (U) Adjustments Combined
<S> <C> <C> <C> <C>
REVENUES
Rental Income $ 479,116 $ 123,566 $ - $ 602,682
Fee and asset management 7,030 - - 7,030
Interest income-investment in mortgage notes 10,266 380 - 10,646
Interest and other income 2,955 7,286 - 10,241
-------------- -------------- ------------- -----------------
Total revenues 499,367 131,232 - 630,599
-------------- -------------- ------------- -----------------
EXPENSES
Property and maintenance 140,739 40,920 - 181,659
Real estate taxes and insurance 48,960 9,596 - 58,556
Property management 17,471 4,951 (1,106) (W) 21,316
Fee and asset management 3,887 - - 3,887
Depreciation 93,866 26,912 2,030 (X) 122,808
Interest:
Expense incurred 92,840 24,439 (1,736) (Y) 115,543
Amortization of deferred financing costs 3,425 2,534 (2,534) (Z) 3,425
General and administrative 8,129 4,360 (3,864) (AA) 8,625
-------------- -------------- ------------ ----------------
Total expenses 409,317 113,712 (7,210) 515,819
-------------- -------------- ------------ ----------------
Income before loss on sale of investment 90,050 17,520 7,210 114,780
communities and loss on joint venture
communities
(Loss) on sale of investment communities - (819) - (819)
(Loss) on joint venture communities - (280) - (280)
-------------- -------------- ------------- ----------------
Income before extraordinary item 90,050 16,421 7,210 113,681
Extraordinary item:
(Loss) on early extinguishment of debt - (5,553) - (5,553)
-------------- -------------- ------------- ----------------
Income before allocation to Minority Interests 90,050 10,868 7,210 108,128
(Income) allocated to Minority Interests (8,614) - (3,576) (AB) (12,190)
-------------- -------------- ------------- ----------------
Net income 81,436 10,868 3,634 95,938
Preferred distributions 36,244 8,973 - 45,217
-------------- -------------- -------------- ----------------
Net income available to common shares 45,192 $ 1,895 $ 3,634 $ 50,721
============== ============== ============= ================
Net income per weighted average Common $ 1.03 $ 0.11 $ (0.21) $ 0.93
Share outstanding ============== ============== ============= ================
Weighted average Common Shares outstanding 43,774 16,938 (6,352) (AC) 54,360
============== ============== ============= ===============
</TABLE>
11
<PAGE>
SURVIVING TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(T) The EQR Pro Forma Statements of Operations reflect the historical
results of EQR adjusted to reflect the following transactions as if they
had occurred at the beginning of each period presented: (i) the January
1996 Common Share Offering, (ii) the February 1996 Common Share
Offering, (iii) the May 1996 Common Share Offering, (iv) the Second
Public Debt Offering, (v) the Third Public Debt Offering, (vi) the
Series A Preferred Share Offering, (vii) the Series B Preferred Share
Offering, (viii) the September 1996 Common Share Offering, (ix) the
acquisition of 17 properties during 1995 and 41 properties during 1996,
(x) the refinancing of certain tax-exempt bonds in 1996, (xi) the
disposition of six properties in 1995 and two properties in 1996, (xii)
the repayment of mortgage indebtedness for six properties in 1995 and
six properties in 1996, and (xiii) the investment in partnership
interests and subordinate mortgages collateralized by 21 multifamily
properties in 1995. These transactions were reflected in the Pro Forma
Consolidated Financial Statements included in EQR's Form 8-K dated
November 15, 1996. Defined terms used herein are used as defined in
EQR's Annual Report on Form 10-K for the year ended December 31, 1995,
as amended, and EQR's Quarterly Report on Form 10-Q for the three months
ended September 30, 1996.
(U) Certain reclassifications have been made to Wellsford's Historical
Statement of Operations to conform to EQR's Statement of Operations
presentation.
(V) Decrease results from the loss of interest income related to the
spin-off of the $17,800 Sonterra mortgage notes receivable to WRP NewCo.
(W) Decrease results from operating efficiencies expected to occur as a
result of the Merger.
(X) Represents the net increase in depreciation of real estate owned as a
result of recording the Wellsford real estate assets at fair value
versus historical cost. Depreciation is computed on a straight-line
basis over the estimated useful lives of the related assets which have a
useful life of approximately 30 years.
The calculation of the fair value of depreciable real estate assets at
September 30, 1996 is as follows:
<TABLE>
<CAPTION>
<S> <C>
Historical basis of Wellsford's rental property $ 651,926
Plus: Step up to Wellsford's rental property, net (see Note D) 312,812
-------------------
Pro forma basis of Wellsford's rental property at fair value 964,738
Less: Fair value allocated to land (96,474)
-------------------
Pro forma basis of Wellsford's depreciable rental property at fair value $ 868,264
===================
</TABLE>
Calculations of depreciation of rental property for the year ended
December 31,1995 and the nine months ended September 30, 1996 are as
follows:
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended
December 31, 1995 September 30, 1996
----------------- ------------------
<S> <C> <C>
Depreciation expense based upon an estimated useful life $ 28,942 $ 21,707
of approximately 30 years. . . . .
Less: historic Wellsford depreciation of rental property. . 26,912 19,630
----------------- ------------------
Pro forma adjustment. . . . . $ 2,030 $ 2,077
================= ==================
</TABLE>
12
<PAGE>
SURVIVING TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND
THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Y) Decrease results from the amortization of the premium required to record
Wellsford's debt at it's estimated fair value.
(Z) Decrease results from the elimination of amortization of Wellsford's
deferred financing costs, which costs would be eliminated in connection
with the Merger.
(AA) Decrease results from identified historic costs of certain items which
are anticipated to be eliminated or reduced as a result of the Merger as
follows:
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended
December 31, 1995 September 30, 1996
----------------- ------------------
<S> <C> <C>
Duplication of public company expenses...................... $ 429 $ 410
Net reduction in salary, benefits and occupancy............. 2,521 1,281
Other....................................................... 914 530
--------------------------- ----------------------------
Total.................................................. $ 3,864 $ 2,221
=========================== ============================
</TABLE>
(AB) A portion of income was allocated to minority interests representing
interests in ERP Operating Partnership not owned by EQR. The pro forma
allocation to minority interests (represented by OP Units) is based upon
the percentage estimated to be owned by such minority interests as a
result of the pro forma transactions.
(AC) Decrease of Weighted Average Common Shares Outstanding based on the
conversion of Wellsford common shares to EQR common shares at a
conversion ratio of .625 Wellsford shares per EQR share and a par value
of $.01.
13
<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
March 12, 1997 By: /s/ Michael J. McHugh
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(Date) Michael J. McHugh
Senior Vice President, Chief Accounting
Officer and Treasurer
