<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
DATE OF REPORT (Date of earliest event reported): September 8, 1999
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
(Exact name of registrant as specified in its charter)
Commission File Number: 1934 Act File Number: 0-25968
Delaware 54-1681657
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2345 Crystal Drive 22202
Crystal City, VA (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number including area code: (703) 920-8500
<PAGE>
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
The following pro forma financial information is included as a second amendment
to the Form 8-K/A dated September 8, 1999 and filed on September 22, 1999 for
Charles E. Smith Residential Realty L.P.
(A) Pro forma financial information beginning at page F-2
(B) Historical financial information beginning at page F-7
(C) Exhibits
99.2 Consent of Independent Public Accountants dated January 18, 2000
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized, on this 18th day of
January 2000.
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
By: Charles E. Smith Residential Realty, Inc.,
its General Partner
By: /s/ W.D. Minami
------------------------------------------
W.D. Minami
Senior Vice President and Chief Financial
Officer of Charles E. Smith Residential
Realty, Inc. (on behalf of the Registrant and
as Principal Financial Officer)
/s/ Steven E. Gulley
------------------------------------------
Steven E. Gulley
Chief Accounting Officer of Charles E. Smith
Residential Realty, Inc.
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
Pro Forma (Unaudited) Consolidated Balance Sheet
as of September 30, 1999 F-3
Pro Forma (Unaudited) Consolidated Statement of
Operations for the nine months ended September 30, 1999 F-4
Pro Forma (Unaudited) Consolidated Statement of
Operations for the year ended December 31, 1998 F-5
Notes and Management's Assumptions to Unaudited Pro Forma
Consolidated Financial Information F-6
ACQUISITION PROPERTY
Report of Independent Public Accountants - Forte Towers F-7
Statements of Revenues and Certain Expenses of
Forte Towers for the nine months ended September 30, 1999
(Unaudited) and for the year ended December 31, 1998. F-8
Notes to Statements of Revenues and Certain Expenses
of Forte Towers for the nine months ended
September 30, 1999 (Unaudited) and for the year
ended December 31, 1998. F-9
</TABLE>
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1999, and
unaudited Pro Forma Consolidated Statements of Operations for the nine months
ended September 30, 1999, and the year ended December 31, 1998, are based on the
historical financial statements of the Operating Partnership.
The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1999, is
presented as if the Forte Towers acquisition had occurred by September 30, 1999.
The unaudited Pro Forma Consolidated Statements of Operations for the nine
months ended September 30, 1999, and the year ended December 31, 1998, are
presented as if the acquisition had occurred at the beginning of each of those
periods. The unaudited pro forma information should be read in conjunction with
the historical financial statements and notes related thereto appearing in the
Operating Partnership's Forms 10-Q and 10-K.
Preparation of the unaudited pro forma financial information was based on
assumptions considered appropriate by the Operating Partnership's management.
The pro forma financial information is unaudited and is not necessarily
indicative of the results which would have occurred if the acquisitions had been
consummated at the beginning of the periods presented, nor does it purport to
represent the future financial position and results of operations for future
periods. In management's opinion, all adjustments necessary to reflect the
effects of the transaction have been made.
F-2
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(UNAUDITED) (IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS Historical Forte Towers (A) Pro-forma
------------- ---------------- ------------
<S> <C> <C> <C>
Rental property, net $1,217,012 $ 86,871 $1,303,883
Rental property under construction 148,264 148,264
Security deposits 2,169 2,169
Escrow funds 9,575 9,575
Investment in and advances to Property Service Businesses 46,903 46,903
Investment in joint ventures 19,555 19,555
Deferred charges, net 18,333 18,333
Other assets 27,372 27,372
---------- -------- ----------
Total $1,489,183 $ 86,871 $1,576,054
========== ======== ==========
LIABILITIES AND EQUITY
Liabilities
Mortgage loans $ 784,081 $ 34,321 (C) $ 818,402
Line of credit and note payable 38,488 1,932 40,420
Construction loans 73,095 73,095
Accounts payable and accrued expenses 46,175 46,175
Security deposits 2,169 1,993 4,162
---------- -------- ----------
Total Liabilities 944,008 38,246 982,254
Other Limited Partners' Interest
Preferred units - Series H Cumulative Convertible
Redeemable Preferred Units 45,000 45,000
Common units at redemption value 471,931 471,931
---------- ----------
516,931 516,931
Partner's Equity:
General Partner's General and Limited Partnership Interest
Preferred Units
Series A Cumulative Convertible Redeemable Preferred Units 71,500 71,500
Series C Cumulative Redeemable Preferred Units 50,000 50,000
Series E Cumulative Convertible Redeemable Preferred Units 25,000 25,000
Series H Cumulative Convertible Redeemable Preferred Units 55,000 55,000
Series G Cumulative Convertible Redeemable Preferred Units - 25,000 (B) 25,000
Common Units (173,256) 23,625 (149,631)
---------- -------- ----------
Total partner's equity 28,244 48,625 76,869
---------- -------- ----------
Total Liabilities and Partners' Equity $1,489,183 $ 86,871 $1,576,054
========== ======== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
F-3
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED) (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
Forte Other
Historical Towers Adjustments Pro-forma
---------- --------- ----------- ----------
<S> <C> <C> <C> <C>
Rental Properties:
Revenues $ 218,749 $ 9,171 $227,920
Expenses
Operating Costs (70,189) (3,540) 135 (A) (73,594)
Real estate taxes (16,678) (952) (17,630)
Depreciation and amortization (24,304) (1,303) (B) (25,607)
--------- -------- ------- --------
Total expenses (111,171) (4,492) (1,168) (116,831)
--------- -------- ------- --------
Equity in income of joint ventures 408 408
Equity in income of Property Service Businesses 3,255 3,255
Corporate general and administrative expenses (6,785) (6,785)
Interest income 605 605
Interest expense (42,040) (2,320) (C) (44,360)
--------- -------- ------- --------
Income before gain on sales
and extraordinary item 63,021 4,679 (3,488) 64,212
Gain on sales 7,065 7,065
--------- -------- ------- --------
Income before extraordinary item 70,086 4,679 (3,488) 71,277
Extraordinary item - loss on extinguishment of debt (359) (359)
--------- -------- ------- --------
Net Income 69,727 4,679 (3,488) 70,918
Less: Income attributable to preferred units (8,028) (1,454) (D) (9,482)
--------- -------- ------- --------
Net Income attributable to common units $ 61,699 $ 3,225 $(3,488) $ 61,436
========= ======== ======= ========
Net income per common unit - basic $ 1.89 $ 1.85
========= ========
Net income per common unit - diluted $ 1.85 $ 1.81
========= ========
Weighted average units outstanding - basic 32,569 33,264
========= ========
Weighted average units outstanding - diluted 35,755 36,450
========= ========
</TABLE>
The accompanying notes are an integral part of this statement.
F-4
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED) (IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
<TABLE>
<CAPTION>
Forte Other
Historical Towers Adjustments Pro-forma
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Rental Properties:
Revenues $ 250,211 $ 11,441 $ 261,652
Expenses
Operating costs (84,381) (4,448) 150 (A) (88,679)
Real estate taxes (17,254) (1,269) (18,523)
Depreciation and amortization (28,958) (1,737) (B) (30,695)
--------- -------- -------- ---------
Total expenses (130,593) (5,717) (1,587) (137,897)
--------- -------- -------- ---------
Equity in income of Property Service Businesses 8,433 8,433
Corporate general and administrative expenses (8,947) (8,947)
Interest income 1,257 1,257
Interest expense (47,334) (3,093) (C) (50,427)
--------- -------- -------- ---------
Income before gain on sale, loss on unused treasury
lock, and extraordinary item 73,027 5,724 (4,680) 74,071
Gain on sale of property 18,150 18,150
Loss on unused treasury lock (4,923) (4,923)
--------- -------- -------- ---------
Income before extraordinary item 86,254 5,724 (4,680) 87,298
Extraordinary item - loss on extinguishment of debt (16,384) (16,384)
--------- -------- -------- ---------
Net Income 69,870 5,724 (4,680) 70,914
Less: Income attributable to preferred units (10,722) (1,938) (D) (12,660)
--------- -------- -------- ---------
Net Income attributable to common units $ 59,148 $ 3,786 $ (4,680) $ 58,254
========= ======== ======== =========
Net income per common unit - basic $ 1.96 $ 1.89
========= =========
Net income per common unit - diluted $ 1.95 $ 1.88
========= =========
Weighted average units outstanding - basic 30,184 30,879
========= =========
Weighted average units outstanding - diluted 30,349 31,044
========= =========
</TABLE>
The accompanying notes are an integral part of this statement.
F-5
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY L.P.
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
(DOLLAR AMOUNTS IN THOUSANDS)
1. Basis of Presentation
On November 5, 1999, the Operating Partnership closed the acquisition of
Forte Towers, a five-building high-rise apartment property located in the
South Beach section of Miami Beach, Florida. The capitalized cost of
$86,871 consisted of 694,586 common units valued at $23,625, assumed
mortgage debt of $34,321, and cash funded primarily through the sale of
641,026 units of Series G Preferred Units valued at $25,000. The Operating
Partnership plans to reposition the property by making substantial
renovations, in the range of $15 to $25 million.
The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1999
and unaudited Pro Forma Consolidated Statements of Operations for the nine
months ended September 30, 1999 and the year ended December 31, 1998 are
based on the historical financial statements of the Operating Partnership.
The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1999
is presented as if the Forte Towers acquisition had occurred by September
30, 1999. The unaudited Pro Forma Consolidated Statements of Operations for
the nine months ended September 30, 1999 and the year ended December 31,
1998 are presented as if the acquisition had occurred at the beginning of
each of those periods. The unaudited pro forma information should be read
in conjunction with the historical financial statements and notes related
thereto appearing in the Operating Partnership's Forms 10-Q and 10-K.
2. Adjustments to Pro Forma Consolidated Balance Sheet
(A) Acquisition of Forte Towers
Forte Towers
------------
Purchase price of rental property $85,800
Acquisition costs 1,071
-------
Cost basis of rental property $86,871
=======
Security deposit liability $ 1,993
Proceeds from line of credit 1,932
Assumption of mortgage loan 34,321
Sale of Preferred Units 25,000
Sale of Common Units 23,625
-------
$86,871
=======
(B) The Operating Partnership sold 641,026 Series G Preferred Units,
$0.01 par value, at $39.00 per unit for a value of $25,000. The
proceeds from this sale were used for the acquisition of Forte
Towers. The dividend yield to be paid on these preferred units
will be 7.75% in year one, 8.25% in year two and 8.5% in year
three, with a minimum equivalent to the dividend rate paid on the
Operating Partnership's common units.
(C) The company assumed debt of $34,321. This debt matures in 2001
and has an effective interest rate of 8.65%.
3. Adjustments to Pro Forma Consolidated Statements of Operations
(A) Operating expenses have been adjusted to eliminate management
fees since the Operating Partnership's affiliate manages owned
properties.
(B) Depreciation and amortization has been adjusted based on the
allocated purchase price of the assets acquired and an estimated
useful life of 40 years, as if the purchase occurred on January
1, 1999 for the nine months ended September 30, 1999 and January
1, 1998 for the year ended December 31, 1998.
(C) Represents interest expense for draws on the line of credit
(assuming a weighted average interest rate of 6.48% for both the
nine months ended September 30, 1999 and the year ended December
31, 1998, respectively) and interest expense for the assumed
mortgage loan related to the acquisition.
(D) Represents Series G Preferred Unit dividends attributable to the
Series G unitholders.
F-6
<PAGE>
[ARTHUR ANDERSEN, LLP LETTERHEAD APPEARS HERE]
Report of Independent Public Accountants
To Charles E. Smith Residential Realty L.P.
We have audited the accompanying statement of revenues and certain expenses of
Forte Towers (the "Property") for the year ended December 31, 1998. This
statement is the responsibility of the Property's management. Our responsibility
is to express an opinion on this statement based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenue and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Form 8-K of Charles E. Smith
Residential Realty L.P. Material amounts described in Note 1 to the statement of
revenues and certain expenses that would not be comparable to those resulting
from the proposed future operations of the property are excluded and the
statement is not intended to be a complete presentation of the revenues and
expenses of this property.
In our opinion, the statement referred to above presents fairly, in all material
respects, the revenues and certain expenses of Forte Towers for the year ended
December 31, 1998 in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Vienna, Virginia
December 6, 1999
F-7
<PAGE>
Forte Towers
Statements Of Revenues And Certain Expenses
For The Nine Months Ended September 30, 1999 (Unaudited)
And The Year Ended December 31, 1998
Nine Months Ended
September 30, 1999 Year Ended
(Unaudited) December 31, 1998
------------------- -----------------
Revenues:
Residential rental income $8,434,935 $10,585,620
Parking income 460,819 537,595
Other income 275,678 317,947
---------- -----------
Total Revenues 9,171,432 11,441,162
---------- -----------
Certain Expenses:
Payroll and related costs 1,187,398 1,328,860
Utilities 1,077,243 1,391,516
Real estate taxes 951,608 1,268,810
Repairs and maintenance 703,960 982,156
Administrative 333,258 431,662
Other 238,667 314,480
---------- -----------
Total Certain Expenses 4,492,134 5,717,484
---------- -----------
Revenues in Excess of Certain Expenses $4,679,298 $ 5,723,678
========== ===========
The accompanying notes are an integral part of these statements.
F-8
<PAGE>
Forte Towers
Notes to Statements of Revenues and Certain Expenses
For The Nine Months Ended September 30, 1999 (Unaudited) And For
The Year Ended December 31, 1998
1. Basis of Presentation
---------------------
The accompanying statements of revenues and certain expenses relate to the
operations of Forte Towers (the "Property") which is a 1,339-unit, 5-
building high-rise apartment building located in Miami Beach, Florida. The
Property was acquired by Charles E. Smith Residential Realty L.P. on
November 5, 1999.
The accompanying statements have been prepared for the purpose of complying
with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission
and thus exclude certain expenses, such as interest expense, depreciation
and amortization, certain professional fees, and other costs not related to
the future operations of the Property. Management is not aware of any
material factors relating to the Property which would cause the reported
financial information not to be indicative of future operating results.
2. Significant Accounting Policies
-------------------------------
The accompanying statements were prepared on the accrual basis of
accounting. Rental income attributable to residential leases is recognized
when due from tenants. Rental income from retail tenants is recorded on a
straight-line basis over the term of the related lease.
3. Interim Financial Information
-----------------------------
The interim statements of revenues and certain expenses are unaudited but
reflect all adjustments which are, in the opinion of management, necessary
to a fair presentation of the interim periods presented. The adjustments
consist of normal recurring accruals.
The statements of revenues and certain expenses for interim periods will
not necessarily be indicative of the operating results of the fiscal year.
F-9
<PAGE>
EXHIBIT 99.2
[LETTERHEAD OF ARTHUR ANDERSEN LLP APPEARS HERE]
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation of our report dated December 6, 1999, on
our audit of the statement of revenue and certain expenses of Forte Towers for
the year ended December 31, 1998 which report appears in the Form 8-K/A for
Charles E. Smith Residential Realty L.P. dated January 18, 2000 filed with the
Securities and Exchange Commission.
/s/ ARTHUR ANDERSEN LLP
Vienna, Virginia
January 18, 2000
