<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported)
September 26, 1997
American Real Estate Investment Corporation
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(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Maryland 1-12514 84-1246585
---------------------------- ----------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
1670 Broadway, Suite 3350, Denver, Colorado 80202
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(Address of principal executive offices)
Registrant's telephone number, including area code: 303-869-4700
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- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
------------------------------------
On September 26, 1997, pursuant to the mutual release and settlement
agreement (the "Settlement Agreement") dated April 30, 1997, American Real
Estate Investment Corporation (the "Company"), through a limited partnership of
which a wholly owned subsidiary is the general partner and the Company's
operating partnership is the sole limited partner, sold to Emerald Vista
Associates, L.P. and certain affiliated entities, on exercise of an option
granted in the Settlement Agreement, the Company's 50% general partner interest
in Emerald Vista Associates, L.P., the owner of a 456 unit apartment complex
known as the Emerald Pointe apartments, which is located at 333 North Emerald
Drive, Vista, California in north San Diego county. The gross selling price for
the general partner interest was $2,000,000.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statement of businesses acquired.
Not applicable
(b) Pro forma financial information.
Pro Forma Balance Sheet as of June 30, 1997 (unaudited)
Pro Forma Statement of Operations for the six months ended June
30, 1997 (unaudited) and for the year ended December 31, 1996
(unaudited)
(c) Exhibits.
Not applicable
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.
American Real Estate
Investment Corporation
By: /s/Rick A. Burger
-----------------------------
Rick A. Burger, Treasurer
Dated: October 2, 1997
Enclosures
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AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA BALANCE SHEET
AS OF JUNE 30, 1997
(In Thousands)
(Unaudited)
The pro forma balance sheet is presented as if the disposition of Sedona
apartments ("Sedona") and the general partner interest in Emerald Vista
Associates, L.P. ("Emerald") had occurred on June 30, 1997. The sale of
International Apartments was reflected in the Company's historical consolidated
balance sheet as of December 31, 1996 and the sale of Timberleaf apartments was
reflected in the Company's historical consolidated balance sheet as of June 30,
1997. The pro forma balance sheet should be read in conjunction with the
financial statements filed by the Company with the Securities and Exchange
Commission, including the Company's Form 10-QSB for the six months ended June
30, 1997.
This unaudited pro forma balance sheet is not necessarily indicative of what the
actual financial position would have been at June 30, 1997, nor does it purport
to represent the future financial position of the Company.
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<CAPTION>
American
Real Estate Pro Forma Adjustments
Investment ------------------------
Corporation Sedona Emerald Pro Forma
----------- ------ ------- ---------
(A)
<S> <C> <C> <C> <C>
ASSETS
- ------
Real estate, net ...................................... $ 35,159 $ (5,132)(B) $ (1,088)(D) $ 28,939
Other assets .......................................... 5,371 2,573 (B) (C) 1,822 (D) (E) 9,766
-------- -------- -------- --------
Total assets ...................................... $ 40,530 $ (2,559) $ 734 $ 38,705
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Mortgage notes payable .............................. $ 32,189 $ (5,678)(B) $ 0 (D) $ 26,511
Other liabilities ................................... 858 (165)(B) 0 (D) 693
-------- -------- -------- --------
Total liabilities ............................. 33,047 (5,843) 0 27,204
-------- -------- -------- --------
Minority interest ..................................... 2,758 2,997 (C) 316 (E) 6,071
Shareholders' equity:
Preferred stock ................................... 0 0 0 0
Common stock ...................................... 1 0 0 1
Additional paid-in capital ........................ 5,439 0 0 5,439
Cumulative net income ............................... 2,393 287 (C) 418 (E) 3,098
Cumulative dividends ................................ (3,108) 0 0 (3,108)
-------- -------- -------- --------
Total shareholders' equity .................... 4,725 287 418 5,430
-------- -------- -------- --------
Total liabilities and shareholders' equity..... $ 40,530 $ (2,559) $ 734 $ 38,705
======== ======== ======== ========
</TABLE>
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(A) Reflects the historical consolidated balance sheet of American
Real Estate Investment Corporation as of June 30, 1997.
(B) Represents adjustments for the assets and liabilities of Sedona.
(C) Reflects the gain on sale and net cash proceeds from the sale of
Sedona.
(D) Represents adjustments for the assets and liabilities relating to
Emerald.
(E) Reflects the gain on sale and net cash proceeds from the sale of
Emerald.
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AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
These pro forma Statements of Operations are presented as if the disposition of
Sedona apartments ("Sedona") and Timberleaf apartments ("Timberleaf") and the
interest in Emerald Pointe apartments ("Emerald") had occurred on January 1,
1997 and the Company qualified as a REIT, distributed all of its taxable income
and, therefore, incurred no tax expense during the period. These statements
should be read in conjunction with the financial statements filed by the Company
with the Securities and Exchange Commission, including the Company's Form 10-QSB
for the six months ended June 30, 1997.
These unaudited pro forma Statements of Operations are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the aforementioned events had been completed as of January 1,
1997, nor does it purport to represent the results of operations for future
periods.
<TABLE>
<CAPTION>
American
Real Estate Pro Forma Adjustments
Investment -------------------------------------
Corporation Timberleaf Sedona Emerald Pro Forma
----------- ------------ ---------- --------- -----------
(A)
<S> <C> <C> <C> <C> <C>
Revenues from rental properties ...................... $4,093 $ (363)(B) $ (790)(B) $ 0 $ 2,940
Rental property expenses:
Repairs and maintenance ............................ 240 (29)(B) (43)(B) 0 168
Property taxes ..................................... 178 (9)(B) (30)(B) 0 139
Property management fees ........................... 139 (12)(B) (26)(B) 0 101
Utilities .......................................... 402 (90)(B) (144)(B) 0 168
Payroll ............................................ 313 (33)(B) (84)(B) 0 196
Other property operations .......................... 365 (63)(B) (101)(B) 0 201
General & administrative ........................... 411 0 0 0 411
Depreciation and amortization ...................... 535 (45)(B) (118)(B) 33 (E) 405
------ ------ ------ ----- ------
Total operating expenses ......................... 2,583 (281) (546) 33 1,789
------ ------ ------ ----- ------
Financing expenses ................................... 1,658 (91)(C) (263)(C) (298)(E) 1,006
Minority interest .................................... 0 0 0 0 0
Equity in earnings from investment
in partnership ..................................... 264 0 0 (264)(E) 0
------ ------ ------ ------ ------
Income before gain on sale of property ............... 116 9 19 1 145
Gain on sale of property ............................. 403 (403) 0 0 0
------ ------ ------ ------ ------
Net income (loss) .................................... $ 519 $ (394) $ 19 $ 1 $ 145
====== ====== ====== ====== ======
Primary earnings (loss) per share (D) ................ $ 0.46 $(0.35) $ 0.02 $ 0.00 $ 0.13
====== ====== ====== ====== ======
Fully diluted earnings (loss) per share (D) .......... $ 0.28 $(0.21) $ 0.01 $ 0.00 $ 0.08
====== ====== ====== ====== ======
</TABLE>
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AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS)
(UNAUDITED)
- -----------------------------
(A) Represents historical consolidated operating statement amounts for the
six months ended June 30, 1997 for American Real Estate Investment
Corporation.
(B) Represents revenues and operating expenses, including depreciation and
amortization, for the six months ended June 30, 1997 relating to
Timberleaf and Sedona.
(C) Represents interest expense for the six months ended June 30, 1997
relating to the first mortgage indebtedness for Timberleaf, along with
the bank loan and first mortgage indebtedness secured by Sedona.
(D) Pro forma amount represents the earnings per share obtained by
incorporating the net income effect of all pro forma adjustments for
Timberleaf, Sedona and Emerald.
(E) Represents interest expense and equity income in investment
partnership, including depreciation and amortization, for the six
months ended June 30, 1997 relating to Emerald.
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AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(In Thousands)
(Unaudited)
These pro forma Statements of Operations are presented as if the disposition of
Sedona apartments ("Sedona"), Timberleaf apartments ("Timberleaf") and
International apartments ("International") and the interest in Emerald Pointe
apartments ("Emerald") had occurred on January 1, 1996 and the Company qualified
as a REIT, distributed all of its taxable income and, therefore, incurred no tax
expense during the period. These statements should be read in conjunction with
the financial statements filed by the Company with the Securities and Exchange
Commission, including the Company's Form 10-KSB/A for the year ended December
31, 1996.
These unaudited pro forma Statements of Operations are not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the aforementioned events had been completed as of January 1,
1996, nor does it purport to represent the results of operations for future
periods.
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AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
American
American
Real Estate Pro Forma Adjustments
Investment ----------------------------------------------------
Corporation International Timberleaf Sedona Emerald Pro Forma
----------- ------------- ---------- ------ ------- ---------
(A)
<S> <C> <C> <C> <C> <C> <C>
Revenues from rental properties ............. $ 10,240 $ (746)(B) $(2,212)(B) $(1,654)(B) $ 0 $5,628
Rental property expenses:
Repairs and maintenance ..................... 708 (67)(B) (164)(B) (127)(B) 0 350
Property taxes .............................. 417 (27)(B) (57)(B) (57)(B) 0 276
Property management fees .................... 353 (25)(B) (74)(B) (56)(B) 0 198
Utilities ................................... 1,034 (116)(B) (372)(B) (212)(B) 0 334
Payroll ..................................... 893 (99)(B) (235)(B) (168)(B) 0 391
Other property operations ................... 1,005 (121)(B) (307)(B) (214)(B) 0 363
General & administrative .................... 515 0 0 0 0 515
Depreciation and amortization ............... 1,306 (112)(B) (252)(B) (219)(B) 61(F) 784
--------- ------ ------- ------- ------ ------
Total operating expenses ................ 6,231 (567) (1,461) (1,053)(B) 61 3,211
--------- ------ ------- ------- ------ ------
Financing expenses ............................ 3,897 (158)(C) (593)(C) (415)(C) (591)(F) 2,140
Minority interest ............................. 1,364 (1,364)(D) 0
Equity in earnings from investment
in partnership .............................. 570 0 0 0 (570)(F) 0
--------- ------ ------- ------- ------ ------
Income (loss) before gain on sale of property.. (682) 1,343 (158) (186) (40) 277
Gain on sale of property ...................... 1,786 (1,786)(D) 0 0 0 0
--------- ------ ------- ------- ------ ------
Net income (loss) ............................. $ 1,104 $ (443) $ (158) $ (186) $ (40) $ 277
========= ====== ======= ======= ====== ======
Primary earnings (loss) per share (E) ......... $ 1.00 $(0.40) $ (0.14) $ (0.17) $(0.04) $ 0.25
========= ======= ======== ======= ====== ======
Fully diluted earnings (loss) per share (E).... $ 1.00 $(0.46) $ (0.16) $ (0.19) $(0.04) $ 0.15
========= ======= ======== ======= ====== ======
</TABLE>
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AMERICAN REAL ESTATE INVESTMENT CORPORATION
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(In Thousands)
(Unaudited)
___________________________
(A) Represents historical consolidated operating statement amounts for
the year ended December 31, 1996 for American Real Estate Investment
Corporation.
(B) Represents revenues and operating expenses, including depreciation
and amortization, for the year ended December 31, 1996 relating to
Sedona, Timberleaf and International.
(C) Represents interest expense for the year ended December 31, 1996
relating to the first mortgage indebtedness for Timberleaf, along
with Sedona's and International's allocable share of the Company's
line of credit and bank loan secured by Sedona and International.
(D) Represents the adjustments required resulting from eliminating the
gain on sale of property resulting from the sale of International.
The minority interest allocation was adjusted accordingly, in
accordance with the allocation provisions specified in the operating
partnership's partnership agreement.
(E) Pro forma amount represents the earnings per share obtained by
incorporating the net income effect of all pro forma adjustments for
Sedona, Timberleaf, International and Emerald, and the corresponding
adjustment in the number of fully diluted shares outstanding at
December 31, 1996.
(F) Represents interest expense and equity income in investment
partnership, including depreciation and amortization, for the year
ended December 31, 1996 relating to Emerald.
