<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 24, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 23, 1998
---------------------
EQUITY RESIDENTIAL PROPERTIES TRUST
(Exact Name of Registrant as Specified in Charter)
<TABLE>
<S> <C> <C>
MARYLAND 1-12252 13-3675988
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation or File Number) Identification No.)
organization)
</TABLE>
<TABLE>
<S> <C>
TWO NORTH RIVERSIDE PLAZA, SUITE 400
CHICAGO, ILLINOIS 60606
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (312) 474-1300
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
ITEM 5 -- OTHER EVENTS
On July 8, 1998, Equity Residential Properties Trust, a Maryland real
estate investment trust ("EQR"), and Merry Land & Investment Company, Inc.
("Merry Land"), a Georgia corporation, entered into an Agreement and Plan of
Merger dated as of July 8, 1998 pursuant to which Merry Land will merge with and
into EQR (the "Merger"). Pursuant to the Merger, the shares of common stock of
Merry Land issued and outstanding immediately prior to the Merger will be
converted into 0.53 of a common share of beneficial interest of EQR, Merry
Land's preferred stock will be converted into preferred shares of beneficial
interest of EQR with the same terms and preferences, subject to certain
adjustments to the conversion prices of Merry Land's convertible preferred stock
in accordance with its terms. Immediately prior to the consummation of the
Merger, Merry Land will distribute to its common shareholders all of the common
stock of Merry Land Properties, Inc., a newly formed Georgia corporation ("MYRP
Newco"), which will own and operate certain of Merry Land's assets following the
Merger (the "Spin-Off"). Consummation of the Merger and Spin-Off is subject to
the approval of the Merger by the shareholders of EQR and Merry Land and to
specified closing conditions.
In connection with the Merger, EQR hereby amends its Current Report on Form
8-K dated July 23, 1998 by filing pro forma financial information relating to
EQR giving effect to, among other things, the completion of the Merger.
Capitalized terms used but not defined herein shall have the meanings ascribed
to them in EQR's Annual Report on Form 10-K, as amended by Form 10-K/A, for the
year ended December 31, 1997.
2
<PAGE> 3
ITEM 7 -- FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(b) Pro Forma Financial Information.
EQUITY RESIDENTIAL PROPERTIES TRUST
BASIS OF PRESENTATION TO UNAUDITED PRO FORMA
COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
The Unaudited Pro Forma Combined Balance Sheet gives effect to (i) the
proposed Merger of Equity Residential Properties Trust ("EQR") and Merry Land &
Investment Company, Inc. ("Merry Land") and (ii) the acquisition in July, 1998
and probable acquisition of 42 properties for a total purchase price of $645.7
million, which included the assumption of $180.5 million of mortgage
indebtedness, the issuance of 2.3 million OP Units with a value of $111 million
and the expected borrowings of $90 million on EQR's line of credit. All of these
events have been presented as if they had occurred on June 30, 1998. 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 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 Merry Land would have been at June 30, 1998, nor
does it purport to represent the future combined financial position of EQR and
Merry Land. This Unaudited Pro Forma Combined Balance Sheet should be read in
conjunction with, and is qualified in its entirety by, the respective historical
financial statements and notes thereto of EQR and Merry Land included in each
company's respective Annual Report on Form 10-K for the year ended December 31,
1997, as amended by Form 10-K/A, each company's respective Quarterly Report on
Form 10-Q for the six months ended June 30, 1998 and the financial statements
and notes thereto in EQR's Form 8-K dated June 25, 1998.
3
<PAGE> 4
EQUITY RESIDENTIAL PROPERTIES TRUST
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1998 MOST
RECENT
ACQUIRED AND EQR PRO FORMA EQR
EQR PROBABLE PRE-MERGER MERRY LAND MERGER PRO FORMA
HISTORICAL PROPERTIES(A) PRO FORMA HISTORICAL(B) ADJUSTMENTS(C) COMBINED
---------- ------------- ---------- ------------- -------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Rental property, net.......... $7,352,780 $645,684 $7,998,464 $1,601,069 $ 543,575(D) $10,143,108
Construction in progress...... 41,982 41,982 52,736 94,718
Investment in mortgage notes,
net......................... 87,916 87,916 38,317(E) 126,233
Cash and cash equivalents..... 265,915 (264,275) 1,640 2,474 792(F) 4,906
Rent receivables.............. 5,127 5,127 5,127
Deposits -- restricted........ 48,692 48,692 48,692
Escrow deposits -- mortgage... 57,655 57,655 57,655
Deferred financing costs,
net......................... 23,299 23,299 4,567 (4,567)(G) 23,299
Other assets.................. 116,673 116,673 8,521 (31,527)(H) 93,667
---------- -------- ---------- ---------- --------- -----------
Total assets............ $8,000,039 $381,409 $8,381,448 $1,669,367 $ 546,590 $10,597,405
========== ======== ========== ========== ========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable........ $1,775,556 $180,450 $1,956,006 $ 183,340 $ 9,948(I) $ 2,149,294
Line of credit................ 175,000 90,000 265,000 12,100 95,000(F) 372,100
Notes, net.................... 1,428,304 1,428,304 460,000 1,888,304
Accounts payable, accrued
expenses.................... 78,362 78,362 17,173 (716)(I) 94,819
Accrued interest payable...... 34,952 34,952 7,169 42,121
Rents received in advance and
other liabilities........... 41,822 41,822 6,316 48,138
Security deposits............. 33,800 33,800 2,081 35,881
Distributions payable......... 90,471 90,471 90,471
---------- -------- ---------- ---------- --------- -----------
Total liabilities....... 3,658,267 270,450 3,928,717 688,179 104,232 4,721,128
---------- -------- ---------- ---------- --------- -----------
Commitments and
contingencies............... (J)
---------- -------- ---------- ---------- --------- -----------
Minority interests............ 290,770 70,857 361,627 18,769 (14,272)(K) 366,124
---------- -------- ---------- ---------- --------- -----------
Shareholders' equity:
Common shares................. 979 979 42,969 (42,750)(L) 1,198
Preferred shares:
Series A...................... 153,000 153,000 4,665 (4,665)(M) 153,000
Series B...................... 125,000 125,000 100,000 (100,000)(M) 125,000
Series C...................... 115,000 115,000 114,985 (114,985)(M) 115,000
Series D...................... 175,000 175,000 50,000 (50,000)(M) 175,000
Series E convertible.......... 99,950 99,950 100,000 (100,000)(M) 99,950
Series F...................... 57,500 57,500 57,500
Series G convertible.......... 316,250 316,250 316,250
Series H...................... 4,665(M) 4,665
Series I...................... 100,000(M) 100,000
Series J...................... 114,985(M) 114,985
Series K...................... 50,000(M) 50,000
Series L...................... 100,000(M) 100,000
Employee notes................ (4,949) (4,949) (29,446) 29,446(N) (4,949)
Paid in capital............... 3,194,261 40,102 3,234,363 611,068 438,112(O) 4,283,543
Distributions in excess of
accumulated earnings........ (180,989) (180,989) (31,822) 31,822(P) (180,989)
---------- -------- ---------- ---------- --------- -----------
Total shareholders'
equity............... 4,051,002 40,102 4,091,104 962,419 456,630 5,510,153
---------- -------- ---------- ---------- --------- -----------
Total liabilities and
shareholders'
equity............... $8,000,039 $381,409 $8,381,448 $1,669,367 $ 546,590 $10,597,405
========== ======== ========== ========== ========= ===========
</TABLE>
4
<PAGE> 5
EQUITY RESIDENTIAL PROPERTIES TRUST
BASIS OF PRESENTATION TO UNAUDITED PRO FORMA
COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
The Unaudited Pro Forma Combined Statement of Operations for the six months
ended June 30, 1998 gives effect to (i) the proposed merger of EQR and Merry
Land, (ii) the acquisition from January to June, 1998 of 41 properties and the
acquisition in July, 1998 and probable acquisition of 42 properties for a total
purchase price of $1.4 billion, which included the assumption of $412.6 million
of mortgage indebtedness, the issuance of 2.5 million OP Units with a value of
$127.3 million and the borrowings of $265 million on EQR's line of credit, which
includes $90 million on a pro forma basis, (iii) the January 1998 Common Share
Offering, the February 1998 Common Share Offerings, the March 1998 Common Share
Offering and the April 1998 Common Share Offering and (iv) the issuance of the
2015 Notes. All of these events have been presented as if they occurred on
January 1, 1998. The Unaudited Pro Forma Combined Statement of Operations gives
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 REIT, distributing at least 95% of its taxable income, and therefore,
incurring no federal income tax liability for the period presented. In the
opinion of management, all significant adjustments necessary to reflect the
effects of these transactions have been made.
The Unaudited Pro Forma Combined Statement of Operations is presented for
comparative purposes only and is not necessarily indicative of what the actual
combined results of EQR and Merry Land would have been for the six months ended
June 30, 1998, nor does it purport to be indicative of the results of operations
in future periods. The Unaudited Pro Forma Combined Statement of Operations
should be read in conjunction with, and is qualified in its entirety by, the
respective historical financial statements and notes thereto of EQR and Merry
Land included in each company's respective Annual Report on Form 10-K for the
year ended December 31, 1997, as amended by Form 10-K/A, each company's
respective Quarterly Report on Form 10-Q for the six months ended June 30, 1998
and the financial statements included in EQR's Form 8-K dated June 25, 1998.
5
<PAGE> 6
EQUITY RESIDENTIAL PROPERTIES TRUST
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1998
ACQUIRED EQR PRO FORMA EQR
EQR AND PROBABLE PRE-MERGER MERRY LAND MERGER PRO FORMA
HISTORICAL PROPERTIES(Q) PRO FORMA HISTORICAL(AA) ADJUSTMENTS COMBINED
---------- ------------- ---------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income............................. $571,370 $70,920(R) $642,290 $126,430 $(4,867)(BB) $763,853
Fee and asset management.................. 2,790 2,790 2,790
Interest income -- investment in mortgage
notes.................................... 10,221 (1,873)(S) 8,348 56 1,491(CC) 9,895
Interest and other income................. 9,010 (5,210)(T) 3,800 2,270 6,070
-------- ------- -------- -------- ------- --------
Total revenues......................... 593,391 63,837 657,228 128,756 (3,376) 782,608
-------- ------- -------- -------- ------- --------
EXPENSES
Property and maintenance.................. 137,910 16,252(U) 154,162 29,796 (1,182)(DD) 182,776
Real estate taxes and insurance........... 56,484 7,320(V) 63,804 14,867 (397)(EE) 78,274
Property management....................... 25,110 1,487(W) 26,597 2,375 (835)(FF) 28,137
Fee and asset management.................. 2,240 2,240 2,240
Depreciation.............................. 131,910 17,150(X) 149,060 26,543 4,989(GG) 180,592
Interest:.................................
Expense incurred......................... 105,651 24,769(Y) 130,420 18,049 1,900(HH) 150,369
Amortization of deferred financing
costs.................................. 1,275 1,275 728 (728)(II) 1,275
General and administrative................ 10,271 10,271 2,394 (1,644)(JJ) 11,021
-------- ------- -------- -------- ------- --------
Total expenses......................... 470,851 66,978 537,829 94,752 2,103 634,684
-------- ------- -------- -------- ------- --------
Income before gain on disposition of
properties and allocation to Minority
Interest................................. 122,540 (3,141) 119,399 34,004 (5,479) 147,924
Gain on disposition of properties........ 11,092 11,092 (400) 10,692
-------- ------- -------- -------- ------- --------
Income before allocation to Minority
Interests................................ 133,632 (3,141) 130,491 33,604 (5,479) 158,616
(Income) allocated to Minority
Interests.............................. (8,310) (1,314) (9,624) (328) 1,765(KK) (8,187)
-------- ------- -------- -------- ------- --------
Net income................................ 125,322 (4,455) 120,867 33,276 (3,714) 150,429
Preferred distributions................... (43,384) (43,384) (14,471) (919)(LL) (58,774)
-------- ------- -------- -------- ------- --------
Net income available to common shares..... $ 81,938 $(4,455) $ 77,483 18,805 (4,633) $ 91,655
======== ======= ======== ======== ======= ========
Net income per weighted average Common
Shares outstanding....................... $ 0.86 $ 0.80 $ 0.77
======== ======== ========
Net income per weighted average Common
Shares outstanding -- assuming
dilution................................. $ 0.85 $ 0.79 $ 0.75
======== ======== ========
Weighted average Common Shares
outstanding.............................. 95,394 97,350(Z) 21,872(MM) 119,222
======== ======== ======= ========
Weighted average Common Shares outstanding
-- assuming dilution..................... 106,195 110,351(Z) 22,738(MM) 133,089
======== ======== ======= ========
</TABLE>
6
<PAGE> 7
EQUITY RESIDENTIAL PROPERTIES TRUST
BASIS OF PRESENTATION TO UNAUDITED PRO FORMA
COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
The Unaudited Pro Forma Combined Statement of Operations for the year ended
December 31, 1997 gives effect to (i) the proposed merger of EQR and Merry Land,
(ii) the acquisition from the mergers between EQR and Wellsford and EQR and
Evans and other acquisitions during 1997 of 124 properties for a total purchase
price of $4.1 billion, (iii) the acquisition from January to June, 1998 of 41
properties and the acquisition in July, 1998 of 42 properties for a total
purchase price of $1.4 billion, which included the assumption of $412.6 million
of mortgage indebtedness, the issuance of 2.5 million OP Units with a value of
$127.3 million and the borrowings of $265 million on EQR's line of credit, which
includes $90 million on a pro forma basis, (iv) the March 1997 Common Share
Offerings, the June 1997 Common Share Offerings, the September 1997 Common Share
Offering, the October 1997 Common Share Offering, the December 1997 Common Share
Offerings, the January 1998 Common Share Offering, the February 1998 Common
Share Offerings, the March 1998 Common Share Offering and the April 1998 Common
Share Offering, and (v) the Fourth Public Debt Offering and the issuance of the
2015 Notes. All of these events have been presented as if they occurred on
January 1, 1997. The Unaudited Pro Forma Combined Statement of Operations gives
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 REIT, distributing at least 95% of its taxable income, and therefore,
incurring no federal income tax liability for the period presented. In the
opinion, of management, all significant adjustments necessary to reflect the
effects of these transactions have been made.
The Unaudited Pro Forma Combined Statement of Operations is presented for
comparative purposes only and is not necessarily indicative of what the actual
combined results of EQR and Merry Land would have been for the year ended
December 31, 1997, nor does it purport to be indicative of the results of
operations in future periods. The Unaudited Pro Forma Combined Statement of
Operations should be read in conjunction with, and is qualified in its entirety
by, the respective historical financial statements and notes thereto of EQR and
Merry Land included in each company's respective Annual Report on Form 10-K for
the year ended December 31, 1997, as amended by Form 10-K/A, each company's
respective Quarterly Report on Form 10-Q for the six months ended June 30, 1998
and the financial statements included in EQR's Form 8-K dated June 25, 1998.
7
<PAGE> 8
EQUITY RESIDENTIAL PROPERTIES TRUST
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
1998 ACQUIRED EQR PRO FORMA
EQR 1997 ACQUIRED AND PROBABLE PRE-MERGER MERRY LAND MERGER
HISTORICAL PROPERTIES(NN) PROPERTIES(YY) PRO FORMA HISTORICAL(AA) ADJUSTMENTS
---------- -------------- -------------- ---------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income................ $707,733 $369,160(OO) $172,852(ZZ) $1,249,745 $208,871 $ (9,185)(III)
Fee and asset management..... 5,697 5,697
Interest income -- investment
in mortgage notes........... 20,366 (4,907)(AAA) 15,459 84 3,011(JJJ)
Interest and other income.... 13,525 (6,665)(PP) (6,666)(BBB) 194 9,006
-------- -------- -------- ---------- -------- ---------
Total revenues.............. 747,321 362,495 161,279 1,271,095 217,961 (6,174)
-------- -------- -------- ---------- -------- ---------
EXPENSES
Property and maintenance..... 176,075 98,733(QQ) 44,991(CCC) 319,799 52,847 (2,350)(KKK)
Real estate taxes and
insurance................... 69,520 27,091(RR) 18,652(DDD) 115,263 23,712 (793)(LLL)
Property management.......... 26,793 13,320(SS) 4,321(EEE) 44,434 3,176 (1,669)(MMM)
Fee and asset management..... 3,364 3,364
Depreciation................. 156,644 84,624(TT) 42,598(FFF) 283,866 42,876 20,188(NNN)
Interest:....................
Expense incurred............ 121,324 91,190(UU) 63,824(GGG) 276,338 25,900 3,061(OOO)
Amortization of deferred
financing costs........... 2,523 66(VV) 2,589 737 (737)(PPP)
General and administrative... 15,064 3,319(WW) 18,383 4,666 (3,287)(QQQ)
-------- -------- -------- ---------- -------- ---------
Total expenses............ 571,307 318,343 174,386 1,064,036 153,914 14,413
-------- -------- -------- ---------- -------- ---------
Income before gain on
disposition of properties
and allocation to Minority
Interests................... 176,014 44,152 (13,107) 207,059 64,047 (20,587)
Gain on disposition of
properties................ 13,838 13,838 1,456
-------- -------- -------- ---------- -------- ---------
Income before allocation to
Minority Interests.......... 189,852 44,152 (13,107) 220,897 65,503 (20,587)
(Income) allocated to
Minority Interests........ (13,260) 524 (12,736) 587(RRR)
-------- -------- -------- ---------- -------- ---------
Net income................... 176,592 44,152 (12,583) 208,161 65,503 (20,000)
Preferred distributions...... (59,012) (27,756)(XX) (86,768) (23,257) (7,625)(SSS)
-------- -------- -------- ---------- -------- ---------
Net income available to
common shares............... $117,580 $ 16,396 $(12,583) $ 121,393 $ 42,246 $ (27,625)
======== ======== ======== ========== ======== =========
Net income per weighted
average Common Shares
outstanding................. $ 1.79 $ 1.26
======== ==========
Net income per weighted
average Common Shares
outstanding -- assuming
dilution.................... $ 1.76 $ 1.25
======== ==========
Weighted average Common
Shares outstanding.......... 65,729 96,356 (HHH) 21,872(TTT)
======== ========== =========
Weighted average Common
Shares outstanding --
assuming dilution........... 74,281 107,408 (HHH) 22,738(TTT)
======== ========== =========
<CAPTION>
EQR
PRO FORMA
COMBINED
---------
<S> <C>
REVENUES
Rental income................ $1,449,431
Fee and asset management..... 5,697
Interest income -- investment
in mortgage notes........... 18,554
Interest and other income.... 9,200
----------
Total revenues.............. 1,482,882
----------
EXPENSES
Property and maintenance..... 370,296
Real estate taxes and
insurance................... 138,182
Property management.......... 45,941
Fee and asset management..... 3,364
Depreciation................. 346,930
Interest:....................
Expense incurred............ 305,299
Amortization of deferred
financing costs........... 2,589
General and administrative... 19,762
----------
Total expenses............ 1,232,363
----------
Income before gain on
disposition of properties
and allocation to Minority
Interests................... 250,519
Gain on disposition of
properties................ 15,294
----------
Income before allocation to
Minority Interests.......... 265,813
(Income) allocated to
Minority Interests........ (12,149)
----------
Net income................... 253,664
Preferred distributions...... (117,650)
----------
Net income available to
common shares............... $ 136,014
==========
Net income per weighted
average Common Shares
outstanding................. $ 1.15
==========
Net income per weighted
average Common Shares
outstanding -- assuming
dilution.................... $ 1.14
==========
Weighted average Common
Shares outstanding.......... 118,228
==========
Weighted average Common
Shares outstanding --
assuming dilution........... 130,146
==========
</TABLE>
8
<PAGE> 9
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(A) Includes the most recent multifamily properties acquired in July 1998 and
probable properties anticipated to be acquired in 1998, as reported on Form
8-K dated June 25, 1998.
Lakes at Vinings, Martins Landing, Lexington Village, Alderwood Park,
Bellevue Meadows, Bramblewood, Briarwood, Cedar Pointe, Chelsea Square,
Creekside, Grandview I&II, Greenhaven, Lincoln Green I&II, Lincoln Village
I&II, Mountain Shadows, North Creek, Olde Redmond Place, Parkside, Skylark,
Southwood, Summerwood, Surrey Downs, Timberwood, Turf Club, Willowick,
Woodlake, Woodleaf, Woodridge I, II, III, Broadway, Cedar Ridge, Fielder
Crossing, Lakeshore at Preston, Lakewood Greens, Pleasant Ridge, River Park,
Sandstone, Villas at Josey Ranch, Wimbledon Oaks, Overlook Manor I, Overlook
Manor II, Tilman Place and Willows, (collectively the "1998 Most Recent
Acquired and Probable Properties").
In connection with these transactions the amounts presented include the
initial purchase price of $645.7 million, the assumption of $180.5 million
of mortgage indebtedness, a draw on EQR's line of credit in the amount of
$90 million and the issuance of approximately 2.3 million OP Units with a
value of approximately $111 million.
(B) Certain reclassifications have been made to Merry Land'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 $2,206,994
assuming a market value of $46.36 per share for EQR's common shares, as
follows:
<TABLE>
<S> <C>
Issuance of 21,872 common shares of beneficial interest of
EQR, based on the .53 exchange rate, in exchange for
41,268 common shares of Merry Land........................ $1,013,991
Cost of 1,701 common shares of Merry Land acquired by EQR
prior to Merger........................................... 35,146
Issuance of EQR Series H Preferred Shares of Beneficial
Interest.................................................. 4,665
Issuance of EQR Series I Preferred Shares of Beneficial
Interest.................................................. 100,000
Issuance of EQR Series J Preferred Shares of Beneficial
Interest.................................................. 114,985
Issuance of EQR Series K Preferred Shares of Beneficial
Interest.................................................. 50,000
Issuance of EQR Series L Preferred Shares of Beneficial
Interest.................................................. 100,000
Assumption of Merry Land's minority interests, adjusted to
fair value................................................ 40,155
Assumption of Merry Land's liabilities, net of amount
assumed by MYRP Newco of $716............................. 687,463
Adjustment to increase the assumed Merry Land debt to its
fair value (see Note I)................................... 9,948
Merger costs (see calculation below)........................ 50,641
----------
$2,206,994
==========
</TABLE>
9
<PAGE> 10
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET -- (CONTINUED)
AS OF JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
The following is a calculation of the estimated fees and other expenses
related to the Merger:
<TABLE>
<S> <C>
Employee termination costs.................................. $27,250
Buyout of stock options..................................... 5,408
Advisory fees............................................... 5,700
Legal and accounting fees................................... 2,700
Other, including printing, filing, transfer and spin-off
costs..................................................... 9,583
-------
Total....................................................... $50,641
=======
</TABLE>
(D) Represents the estimated increase in Merry Land's rental property, net based
upon EQR's purchase price and the adjustments to eliminate the basis of
Merry Land's net assets acquired:
<TABLE>
<S> <C>
Purchase price (see note C)................................. $2,206,994
Less: Historical basis of Merry Land's net assets acquired
Rental property, net of spin-off to MYRP Newco of
$42,495............................................... 1,558,574
Construction in progress.............................. 52,736
Other assets, net of spin-off of notes receivable to
MYRP Newco of $1,381.................................. 9,614
----------
Step-up to record fair value of Merry Land rental
property.................................................. 586,070
Spin-off of rental properties, net to MYRP Newco............ (42,495)
----------
$ 543,575
==========
</TABLE>
(E) Increase in Investment in mortgage notes reflects the issuance of a
one-year term loan with an initial balance of $18.3 million and a $20
million fifteen year senior subordinated term loan to MYRP Newco.
(F) Increase to Cash and Cash Equivalents reflects the following:
<TABLE>
<S> <C>
EQR's expected issuance of a fifteen year senior
subordinated term loan to MYRP Newco (see Note E)......... $(20,000)
EQR's expected purchase of MYRP Newco Preferred Stock (see
Note H)................................................... (5,000)
EQR's expected issuance of a one-year term loan at LIBOR
plus 2.5% to MYRP Newco (see Note E)...................... (18,317)
The expected payment for Merger (see Note C) and
registration (see Note O) costs........................... (50,891)
EQR's expected draw on its line of credit................... 95,000
--------
$ 792
========
</TABLE>
(G) Decrease due to the elimination of Merry Land's deferred loan costs in
connection with the Merger.
(H) Decrease in Other Assets reflects the following:
<TABLE>
<S> <C>
EQR's purchase of MYRP Newco Preferred Stock................ $ 5,000
Reclassification of EQR's historical cost basis in common
shares of Merry Land to real estate....................... (35,146)
----------
(30,146)
Spin-off of Merry Land notes to MYRP Newco.................. (1,381)
----------
$ (31,527)
==========
</TABLE>
10
<PAGE> 11
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET -- (CONTINUED)
AS OF JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
(I) Increase in mortgage notes payable reflects a premium of $9,948 required to
adjust Merry Land debt to its estimated fair value.
Decrease in accounts payable, accrued expenses reflects the spinoff of
Merry Land liabilities to MYRP Newco of $716.
(J) MYRP Newco has agreed to manage the completion of several development
properties for EQR in exchange for an aggregate fee of $2.4 million payable
monthly on a prorata basis until each development is complete. EQR's total
commitment under the one-year term loan is $25,000.
(K) The pro forma allocation to the Minority Interests is based upon the
percentages owned by such Minority Interests as follows:
<TABLE>
<S> <C>
Total Shareholders' Equity and Minority Interests........... $ 5,876,277
Less: Preferred Shares...................................... (1,411,350)
-----------
4,464,927
Minority Interests percentage ownership in ERP Operating
Partnership............................................... 8.2%
-----------
Pro Forma Combined Minority Interests ownership in ERP
Operating Partnership..................................... 366,124
EQR pre-Merger historical Minority Interest ownership in ERP
Operating Partnership..................................... (361,627)
Merry Land historical Minority Interest..................... (18,769)
-----------
Adjustment to Minority Interests ownership in ERP Operating
Partnership............................................... $ (14,272)
===========
</TABLE>
(L) Decrease results from elimination of Merry Land common shares at $1.00 par
value ($42,969) net of the issuance of EQR common shares at $.01 par value
$219.
(M) Elimination of $369,650 Merry Land Preferred Shares and the issuance of
$369,650 EQR Preferred Shares.
(N) Reflects the forgiveness of all Merry Land's employee notes as a result of
the Merger.
(O) Increase in paid in capital to reflect the following:
<TABLE>
<S> <C>
Issuance of 21,872 EQR common shares at $46.36 per share.... $1,013,991
Adjustment of Merry Land's Minority Interests to fair
value..................................................... 21,386
Par value of common shares issued........................... (219)
Registration costs incurred in connection with the Merger... (250)
Merry Land historical shareholders' equity.................. (611,068)
Adjustment to Minority Interests ownership in ERP Operating
Partnership (see Note K).................................. 14,272
----------
$ 438,112
==========
</TABLE>
(P) Reflects the elimination of Merry Land's distribution in excess of
accumulated earnings to paid in capital, as a result of the Merger.
11
<PAGE> 12
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Q) Reflects the historical results of operations for the 1998 Most Recent
Acquired and Probable Properties (see note A) and for the following
properties acquired from January through June, 1998 (collectively, the
"1998 Acquired and Probable Properties").
Cityscape, 740 River Drive, Prospect Towers, Park Place, Park Westend,
Emerald Bay at Winter Park, Farnham Park, Plantation, Balcones Club, Coach
Lantern, Foxcroft, Yarmouth Woods, Rolido Parque, The Trails of Valley
Ranch, Fairfield, Harbor Pointe, Sonterra at Foothill Ranch, Vista Pointe
at the Valley, Emerson Place at Charles River Park, Sierra Canyon,
Northridge, The Arboretum, Townhomes of Meadowbrook, Woodridge Apartments,
Brookside, Greystone, Coconut Palm Club, Portside Towers, Defoor Village,
Plantation Ridge, Wynbrook, The Gates at Carlson Center, Glengarry Club,
Plum Tree I, II, and III, Ravinia, Woodlands, and Cross Creek.
(R) Reflects rental income for the 1998 Acquired and Probable Properties for
the periods indicated as follows:
<TABLE>
<S> <C>
Properties acquired during the first quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from January 1, 1998 through the respective acquisition
date for each property.................................... $ 4,051
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the three
months ended March 31, 1998............................... 17,825
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended March 31, 1998................. 20,852
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from April 1, 1998 through the respective acquisition date
for each property......................................... 7,340
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended June 30, 1998.................. 20,852
-------
$70,920
=======
</TABLE>
(S) Reflects the reduction of interest income on investment in mortgage loans
collateralized by five of the 1998 Previously Acquired Properties to the
extent amounts are already included in EQR's historical financial results.
(T) Reflects the reduction of interest income due to the use of working
capital for the acquisition of the 1998 Most Recent Acquired and Probable
Properties for the periods indicated as follows:
<TABLE>
<S> <C>
For the three months ended March 31, 1998 as reported on
Form 8-K dated June 25, 1998.............................. $ 791
For the three months ended June 30, 1998 as reported on Form
8-K dated June 25, 1998................................... 4,419
------
$5,210
======
</TABLE>
12
<PAGE> 13
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(U) Reflects property and maintenance expense, which includes the elimination
of third party management fees where EQR is providing onsite property
management services, for the 1998 Acquired and Probable Properties for the
periods indicated as follows:
<TABLE>
<S> <C>
Properties acquired during the first quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from January 1, 1998 through the respective acquisition
date for each property.................................... $ 656
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the three
months ended March 31, 1998............................... 3,963
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended March 31, 1998................. 4,981
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from April 1, 1998 through the respective acquisition date
for each property......................................... 1,671
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended June 30, 1998.................. 4,981
-------
$16,252
=======
</TABLE>
(V) Reflects real estate taxes and insurance expense for the 1998 Acquired and
Probable Properties for the periods indicated as follows:
<TABLE>
<S> <C>
Properties acquired during the first quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from January 1, 1998 through the respective acquisition
date for each property.................................... $ 350
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the three
months ended March 31, 1998............................... 2,299
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended March 31, 1998................. 1,834
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from April 1, 1998 through the respective acquisition date
for each property......................................... 1,003
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended June 30, 1998.................. 1,834
------
$7,320
======
</TABLE>
13
<PAGE> 14
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(W) Reflects incremental cost associated with self management of the 1998
Acquired and Probable Properties for the periods indicated as follows:
<TABLE>
<S> <C>
Properties acquired during the first quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from January 1, 1998 through the respective acquisition
date for each property.................................... $ 47
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the three
months ended March 31, 1998............................... 446
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended March 31, 1998................. 521
Properties acquired during the second quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from April 1, 1998 through the respective acquisition date
for each property......................................... (24)
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended June 30, 1998.................. 497
------
$1,487
======
</TABLE>
(X) Reflects depreciation based on total investment of $1.4 billion for the
1998 Acquired and Probable Properties less amounts allocated to land,
generally 10%, and depreciated over a 30-year life for real property for
the periods indicated as follows:
<TABLE>
<S> <C>
Properties acquired during the first quarter of 1998 as
reported on Form 8-K dated June 25, 1998 for the period
from January 1, 1998 through the respective acquisition
date for each property.................................... $ 773
Properties acquired and notes issued during the second
quarter of 1998 as reported on Form 8-K dated June 25,
1998 for the three months ended March 31, 1998............ 4,150
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended March 31, 1998................. 4,860
Properties acquired and notes issued during the second
quarter of 1998 as reported on Form 8-K dated June 25,
1998 for the period from April 1, 1998 through the
respective acquisition date for each property............. 2,507
Properties acquired or expected to be acquired subsequent to
June 30, 1998 as reported on Form 8-K dated June 25, 1998
for the three months ended June 30, 1998.................. 4,860
-------
$17,150
=======
</TABLE>
(Y) Reflects Interest Expense on the following:
<TABLE>
<S> <C>
Mortgage indebtedness totaling $412.6 million assumed in
connection with the acquisition of the 1998 Acquired and
Probable Properties....................................... $10,737
$300 million associated with the issuance of the 2015
Notes..................................................... 5,558
$265 million draw on the line of credit, which includes $90
million on a pro forma basis, at a LIBOR rate of 5.71875%
plus 45 basis points plus $300,000 in fees................ 8,474
-------
$24,769
=======
</TABLE>
14
<PAGE> 15
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(Z) Reflects the increase in pro forma Common Shares outstanding resulting
from the January 1998 Common Share Offering, February 1998 Common Share
Offerings, March 1998 Common Share Offering and April 1998 Common Share
Offering as if they had occurred on January 1, 1998.
(AA) Certain reclassifications have been made to Merry Land Historical Statement
of Operations to conform to EQR's Statement of Operations presentation.
(BB) Decrease results from the loss of rental income related to the spin-off of
$42,495 of rental property to MYRP Newco.
(CC) Increase results from $1,547 in interest income on the $18,317 one-year
term loan at LIBOR plus 2.5% and on the $20,000 fifteen year senior
subordinated term loan initially at 8%, net of the loss of interest income
of $(56) related to the spin-off of the $1,381 mortgage notes receivable to
MYRP Newco.
(DD) Decrease results from the reduction of property and maintenance related to
the spin-off of $42,495 of rental property to MYRP Newco.
(EE) Decrease results from the reduction of property taxes and insurance related
to the spin-off of $42,495 of rental property to MYRP Newco
(FF) Decrease results from salary, benefits and rent costs anticipated to be
eliminated or reduced.
(GG) Represents the net increase in depreciation of real estate owned as a
result of recording the Merry Land 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 June
30, 1998 is as follows:
<TABLE>
<S> <C>
Historical basis of Merry Land's rental property, net of
$42,495 of amount spun off to MYRP Newco.................. $1,558,574
Plus: Step up to Merry Land's rental property, net (see Note
D)........................................................ 543,575
----------
Pro forma basis of Merry Land's rental property at fair
value..................................................... 2,102,149
Less: Fair value allocated to land.......................... (210,215)
----------
Pro forma basis of Merry Land's depreciable rental property
at fair value............................................. $1,891,934
==========
</TABLE>
Calculation of depreciation of rental property for the six months ended
June 30, 1998 is as follows:
<TABLE>
<S> <C>
Depreciation expense based upon an estimated useful life of
approximately 30 years.................................... $31,532
Less: historical Merry Land depreciation of rental
property.................................................. (26,543)
-------
Pro forma adjustment........................................ $ 4,989
=======
</TABLE>
(HH) Increase in interest expense reflects the following:
<TABLE>
<S> <C>
Amortization of the premium required to record Merry Land's
debt at its estimated fair value.......................... $(1,080)
Interest expense on the $95 million draw on the line of
credit at a LIBOR rate of 5.71875% plus 45 basis points
plus $50,000 in fees...................................... 2,980
-------
$ 1,900
=======
</TABLE>
15
<PAGE> 16
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS -- (CONTINUED)
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(II) Decrease results from the elimination of amortization of Merry Land's
deferred financing costs, which costs would be eliminated in connection
with the Merger.
(JJ) Decrease in public company costs anticipated to be eliminated or reduced.
(KK) 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.
(LL) Reflects the allocation of net income based on the distributions payable to
Series L Preferred Shares at the rate of 7.625% for the period from January
1, 1998 through date of issuance.
(MM) Increase of Weighted Average Common Shares Outstanding based on the
conversion of Merry Land common shares to EQR common shares at a conversion
ratio of .53 Merry Land shares per EQR share.
16
<PAGE> 17
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(NN) Reflects the results of operations for the properties acquired in the
mergers between EQR and Wellsford and EQR and EWR and for the properties
acquired during 1997 (collectively, the "1997 Acquired Properties") as
disclosed in EQR's Annual Report on Form 10-K for the year ended
December 31, 1997.
(OO) Reflects rental income for the 1997 Acquired Properties for the period
from January 1, 1997 through the respective acquisition date for each
property.
(PP) Reflects the reduction of interest income due to the use of working
capital for property acquisitions.
(QQ) Reflects property and maintenance expense, which includes the
elimination of third party management fees where EQR is providing onsite
property management services, for the 1997 Acquired Properties for the
period from January 1, 1997 through the respective acquisition date for
each property.
(RR) Reflects real estate tax and insurance expense for the 1997 Acquired
Properties for the period from January 1, 1997 through the respective
acquisition date for each property.
(SS) Reflects incremental cost associated with self management of the 1997
Acquired Properties for the period from January 1, 1997 through the
respective acquisition date for each property.
(TT) Reflects depreciation based on total investment of $4.1 billion for the
1997 Acquired Properties less amounts allocated to land, generally 10%,
and depreciated over a 30-year life for real property for the period
from January 1, 1997 through the respective acquisition date for each
property.
(UU) Reflects interest expense on mortgage indebtedness totaling $931 million
assumed in connection with the 1997 Acquired Properties at various
interest rates, $384 million in unsecured notes assumed in connection
with the Wellsford and EWR mergers at various interest rates, a $120
million draw on the line of credit for acquisitions at a rate of LIBOR
plus 45 basis points and $150 million associated with the Fourth Public
Debt Offering at a rate of 7.125% per annum for the period from January
1, 1997 through the respective date of acquisition or issuance.
(VV) Reflects amortization of financing costs associated with the Fourth
Public Debt Offering in the amount of $1.3 million over 20 years.
(WW) Reflects historical G&A costs for Wellsford and EWR for the period from
January 1, 1997 through the respective merger date.
(XX) Reflects the allocation of net income based on the distributions payable
to Series D Preferred Shares, Series E Preferred Shares, Series F
Preferred Shares and Series G Preferred Shares at the rates of 8.60%,
7.00%, 9.65% and 7.25%, respectively, for the period from January 1,
1997 through their respective date of issuance.
(YY) Reflects the historical results of operations for the 1998 Most Recent
Acquired and Probable Properties (see Note A) and for the following
properties acquired from January through June, 1998 (collectively, the
"1998 Acquired and Probable Properties"):
Cityscape, 740 River Drive, Prospect Towers, Park Place, Park Westend,
Emerald Bay at Winter Park, Farnham Park, Plantation, Balcones Club,
Coach Lantern, Foxcroft, Yarmouth Woods, Rolido Parque, The Trails of
Valley Ranch, Fairfield, Harbor Pointe, Sonterra at Foothill Ranch,
Vista Pointe at the Valley, Emerson Place at Charles River Park, Sierra
Canyon, Northridge, The Arboretum, Townhomes of Meadowbrook, Woodridge
Apartments, Brookside, Greystone, Coconut
17
<PAGE> 18
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS -- (CONTINUED)
Palm Club, Portside Towers, Defoor Village, Plantation Ridge, Wynbrook,
The Gates at Carlson Center, Glengarry Club, Plum Tree I, II, and III,
Ravinia, Woodlands, and Cross Creek.
(ZZ) Reflects rental income for the 1998 Acquired and Probable Properties as
reported on Form 8-K dated June 25, 1998.
(AAA) Reflects the reduction of interest income on investment in mortgage
loans collateralized by five of the 1998 Previously Acquired Properties
to the extent amounts are already included in EQR's historical financial
results as reported on Form 8-K dated June 25, 1998.
(BBB) Reflects the reduction of interest income due to the use of working
capital for the acquisition of the 1998 Most Recent Acquired and
Probable Properties as reported on Form 8-K dated June 25, 1998.
(CCC) Reflects property and maintenance expense, which includes the
elimination of third party management fees where EQR is providing onsite
property management services, for the 1998 Acquired and Probable
Properties for the year ended December 31, 1997 as reported on Form 8-K
dated June 25, 1998.
(DDD) Reflects real estate tax and insurance expense for the 1998 Acquired and
Probable Properties for the year ended December 31, 1997 as reported on
Form 8-K dated June 25, 1998.
(EEE) Reflects incremental cost associated with self management of the 1998
Acquired and Probable Properties for the year ended December 31, 1997 as
reported on Form 8-K dated June 25, 1998.
(FFF) Reflects depreciation based on total investment of $1.4 billion for the
1998 Acquired and Probable Properties less amounts allocated to land,
generally 10%, and depreciated over a 30-year life for real property
for the year ended December 31, 1997 as reported on Form 8-K dated June
25, 1998.
(GGG) Reflects interest expense on mortgage indebtedness totaling $412.6
million assumed in connection with the acquisition of the 1998 Acquired
and Probable Properties, $300 million associated with the issuance of the
2015 Notes and a $265 million draw on the line of credit, which includes
$90 million on a pro forma basis, at a LIBOR rate of 5.71875% plus 45
basis points plus $250,000 in fees for the year ended December 31, 1997
as reported on Form 8-K dated June 25, 1998.
(HHH) Reflects the increase in pro forma Common Shares outstanding resulting
from the March 1997 Common Share Offerings, June 1997 Common Share
Offerings, September 1997 Common Share Offering, October 1997 Common
Share Offering, December 1997 Common Share Offerings and the Wellsford
and EWR mergers in connection with properties acquired in 1997 as if they
had occurred on January 1, 1997.
(III) Decrease results from the loss of rental income related to the
spin-off of $42,495 of rental property to MYRP Newco.
(JJJ) Increase results from $3,094 in interest income on the $18,317
one-year term loan at LIBOR plus 2.5% and on the $20,000 fifteen year
senior subordinated term loan initially at 8%, net of the loss of
interest income of $(83) related to the spin-off of the $1,381
mortgage notes receivable to MYRP Newco.
(KKK) Decrease results from the reduction of property and maintenance related
to the spin-off of $42,495 of rental property to MYRP Newco.
(LLL) Decrease results from the reduction of property taxes and insurance
related to the spin-off of $42,495 of rental property to MYRP Newco
(MMM) Decrease in salary, benefits and rent costs anticipated to be eliminated
or reduced.
18
<PAGE> 19
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS -- (CONTINUED)
(NNN) Represents the net increase in depreciation of real estate owned as a
result of recording the Merry Land 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
December 31, 1997 is as follows:
<TABLE>
<S> <C>
Historical basis of Merry Land's rental property, net of
$42,495 of amount spun off to MYRP Newco.................. $1,558,574
Plus: Step up to Merry Land's rental property, net (see Note
D)........................................................ 543,575
----------
Pro forma basis of Merry Land's rental property at fair
value..................................................... 2,102,149
Less: Fair value allocated to land.......................... (210,215)
----------
Pro forma basis of Merry Land's depreciable rental property
at fair value............................................. $1,891,934
==========
</TABLE>
Calculation of depreciation of rental property at December 31, 1997 is
as follows:
<TABLE>
<S> <C>
Depreciation expense based upon an estimated useful life of
approximately 30 years.................................... $ 63,064
Less: historical Merry Land depreciation of rental
property.................................................. (42,876)
--------
Pro forma adjustment........................................ $ 20,188
========
</TABLE>
(OOO) Increase in interest expense reflects the following:
<TABLE>
<S> <C>
Amortization of the premium required to record Merry Land's
debt at its estimated fair value.......................... $(2,899)
Interest expense on the $95 million draw on the line of
credit at a LIBOR rate of 5.71875% plus 45 basis points
plus $100,000 in fees..................................... 5,960
-------
$ 3,061
=======
</TABLE>
(PPP) Decrease results from the elimination of amortization of Merry Land's
deferred financing costs, which costs would be eliminated in connection
with the Merger.
(QQQ) Decrease in public company costs anticipated to be eliminated or reduced.
(RRR) 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.
(SSS) Reflects the allocation of net income based on the distributions
payable to Series L Preferred Shares at the rate of 7.625% for the
period from January 1, 1997 through December 31, 1997.
(TTT) Decrease of Weighted Average Common Shares Outstanding based on the
conversion of Merry Land common shares to EQR common shares at a
conversion ratio of .53 Merry Land shares per EQR share and a par value
of $1.
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EQUITY RESIDENTIAL PROPERTIES TRUST
By: /s/ DAVID J. NEITHERCUT
------------------------------------
David J. Neithercut
Executive Vice President and Chief
Financial Officer
Date: August 24, 1998
20
