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
Date of Report (Date of earliest event Commission File Number: 1-12358
reported): January 1, 1997
COLONIAL PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Alabama 59-7007599
(State of organization) (IRS Employer
Identification Number)
2101 Sixth Avenue North 35203
Suite 750 (Zip Code)
Birmingham, Alabama
(Address of principal executive offices)
(205) 250-8700
(Registrant's telephone number, including area code)
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COLONIAL PROPERTIES TRUST
Item 5. Other Events
Colonial Properties Trust (the Company), an Alabama real estate investment trust
whose common shares are listed on the New York Stock Exchange under the symbol
CLP, owns and operates commercial real estate through Colonial Realty Limited
Partnership, a Delaware limited partnership and the "Operating Partnership" of
Colonial Properties Trust. Through the Operating Partnership the Company has
acquired three multifamily apartment communities in Alabama, Florida, and
Georgia, three retail centers in Alabama and Georgia and four office properties
in Alabama (the Acquired Properties) since December 31, 1996. The Company also
currently has two probable acquisitions which include one office and one retail
property in Georgia and one multifamily property in Mississippi (the Probable
Acquisitions). The terms of the acquisitions of the Acquired Properties, which
were determined as a result of arms length negotiations between the sellers of
the properties and the Company, are set forth in real estate sales contracts.
The following is a summary of the material terms of the transactions.
In accordance with Rule 3-14 of Regulation S-X, financial statements with
respect to four of the Acquired Properties and one of the Probable Acquisitions
are being filed because the Company has either (a) already acquired the
properties and the book value of the properties in the aggregate are
significant, or (b) deemed the acquisition to be probable and the book value of
the properties in the aggregate are significant.
Terms of Acquisition
The 10 Acquired Properties total 764 apartment units, 1.1 million square feet of
retail space, and 745,000 square feet of office space and were purchased at a
combined purchase price of $148.1 million. The two Probable Acquisitions total
328 apartment units, and 515,000 square feet of office space and 46,000 square
feet of retail space, and would be purchased at a combined purchase price of
$94.3 million. The combined completed and probable acquisitions would increase
the Company's multifamily portfolio to 14,957 apartment units, increase the
Company's retail portfolio to 7.1 million square feet, and increase the
Company's office portfolio to 2.0 million square feet. In association with three
of the Acquired Properties, the Company assumed existing mortgages totaling
$22.6 million. The remainder of the purchase price of the Acquired Properties
was financed through the issuance of limited partnership units in the Operating
Partnership and advances on the Company's unsecured line of credit. In
association with one of the Probable Acquisitions, the Company will assume
existing mortgages. The remainder of the purchase prices of the Probable
Acquisitions would be financed through the issuance of limited partnership units
in the Operating Partnership and advances on the Company's unsecured line of
credit.
Description of Property
Acquired Properties
Riverchase Center--Birmingham, Alabama
In two transactions on January 1 and January 8, 1997, the Company acquired a
100.00% interest in Riverchase Center 2100, and a 73.05% interest in Riverchase
Center 2200/2300 totaling 306,000 square feet of leasable area. Riverchase
Center is an office park comprised of eight one-level buildings in Birmingham,
Alabama. The purchase price of $20.8 million was funded by the assumption of
$8.7 million in mortgage debt which bears interest at 7.88%, the issuance of
25,163 limited partnership units valued at
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$0.7 million, and an advance on the Company's unsecured line of credit. The
buildings were built between 1984 and 1988 and were 93% leased at the date of
acquisition.
Beechwood Shopping Center--Athens, Georgia
On March 24, 1997, the Company acquired Beechwood Shopping Center, a 336,000
square foot community shopping center in Athens, Georgia. The $22.2 million
purchase price of the center was financed through the assumption of debt
totaling $11.9 million which bears interest at an effective rate of 7.0% (stated
rate of 10.375%), and an advance on the Company's unsecured line of credit.
Anchor tenants include Harris-Teeter, Rhodes Furniture, Revco Drugs, and the
U.S. Post Office. The center, which was built in 1963 and renovated in 1992, was
97% leased at the date of acquisition.
Heatherbrooke Center--Birmingham, Alabama
Also on March 24, 1997, the Company acquired Heatherbrooke Center, a 28,000
square foot community shopping center in Birmingham, Alabama. The $3.0 million
purchase price of the center was financed through the issuance of 16,303 limited
partnership units in Colonial Realty Limited Partnership valued at $0.5 million
and an advance on the Company's unsecured line of credit. AMI-Brookwood Medical
Center occupies 18,000 square feet in the center. The center, which was built in
1984, was 92% leased at the date of acquisition.
The Meadows at Trussville--Birmingham, Alabama
On April 1, 1997, the Company acquired The Meadows at Trussville, a 376-unit
complex comprising 20 two- and three-story buildings on approximately 28 acres
of land in a suburb of Birmingham, Alabama. The property was developed during
1996 and 1997 and is currently in lease-up. The Meadows at Trussville was
acquired for a purchase price of $20.5 million which was financed through the
issuance of 57,072 limited partnership units of Colonial Realty Limited
Partnership valued at $1.6 million and an advance on the Company's unsecured
line of credit. Amenities include a clubhouse, two swimming pools and a wading
pool, a car care center, a fitness center, tennis courts, a playground, and
leasable garages. The average unit size is 1,091 square feet with average unit
market rent of $645 per month.
International Park 1900 and 2100--Birmingham, Alabama
On May 1, 1997, the Company acquired the remaining 62.5% outside interests in
International Park Buildings 1900 and 2100, two multistory office buildings in
Birmingham, Alabama. The purchase of these outside interests increased the
Company's ownership from a 37.5% interest to full ownership in the two buildings
which total 93,000 square feet. At the same time, the Company sold its 25.0%
interest in a 129,000 square foot building in the same office complex to an
unaffiliated party. As a part of the acquisition of these outside interests, the
Company assumed a mortgage with a balance of $2.0 million which bears interest
at 8.65%. The Company received $57,000 net cash as a result of the transactions.
The buildings, which were built between 1987 and 1989, were 100% leased at the
date of acquisition.
Brookwood Mall--Birmingham, Alabama
On May 13, 1997, the Company acquired Brookwood Mall, a 693,000 square foot
enclosed mall (including 232,000 square feet of tenant-owned space) in
Birmingham, Alabama, for a purchase price of $32.5 million. The mall includes a
232,000 square foot Rich's department store, a 106,000 square foot McRae's
department store, and 375,000 square feet specialty shop space. The Company
funded the acquisition through the exchange of two multifamily properties in
Florida with a carrying value of $14.0 million and an advance on the Company's
unsecured line
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of credit. The mall, which was built in 1973 and renovated in 1991, was 92%
leased at the date of acquisition.
Lakeside Office Park--Huntsville, Alabama
On May 22, 1997, the Company acquired Lakeside Office Park, an office park
comprised of two three-story brick and glass multi-tenant buildings in
Huntsville, Alabama, totaling 121,000 square feet of leasable area. The purchase
price of $8.8 million was funded by an advance on the Company's unsecured line
of credit. Lakeside Office Park was built during 1989 and 1990 and was 93%
leased at the date of acquisition.
Progress Center--Huntsville, Alabama
On June 26, 1997, the Company acquired Progress Center, an office park comprised
of five multi-tenant buildings in Huntsville, Alabama, totaling 225,000 square
feet of leasable area. The purchase price of $15.0 million was funded through
the exchange of an existing office property in Alabama valued at $1.8 million
and an advance on the Company's unsecured line of credit. Progress Center was
built between 1983 and 1991 and was 87% leased at the date of acquisition.
Timothy Woods--Athens, Georgia
On July 11, 1997, the Company acquired Timothy Woods, a 212-unit complex
comprising 88 one-bedroom, 76 two-bedroom, and 48 three-bedroom units in Athens,
Georgia. The property was developed during 1996 and was 99% leased at the date
of acquisition. Timothy Woods was acquired for a purchase price of $12.8 million
which was financed through the issuance of 27,275 limited partnership units of
Colonial Realty Limited Partnership valued at $.8 million and an advance on the
Company's unsecured line of credit. Amenities include a clubhouse, a swimming
pool, a car wash, a fitness center, two tennis courts, limited access entry, and
leasable garages. The average unit size is 1,008 square feet with average unit
market rent of $746 per month.
Oakleigh Apartments--Pensacola, Florida
On July 14, 1997, the Company acquired Oakleigh Apartments, a 176-unit complex
comprising 48 one-bedroom, 104 two-bedroom/two-bath, and 24
three-bedroom/two-bath units on approximately 11 acres of land in Pensacola,
Florida. The property was developed during 1997 and was 100% leased as of the
date of acquisition. Oakleigh Apartments was acquired for a purchase price of
$10.5 million which was financed through the issuance of 35,522 limited
partnership units of Colonial Realty Limited Partnership valued at $1.0 million
and an advance on the Company's unsecured line of credit. Amenities include a
swimming pool, a car wash, and exercise room, a small business center, screened
porches, security gates, garages and covered parking, and alarm systems. Units
range from 815 square feet to 1,223 square feet with average unit market rents
ranging from $590 to $805 per month.
Probable Acquisitions
As described further below, the Company has entered into an agreement to acquire
one of the Probable Acquisitions, and has entered into a letter of intent to
merge the second. The completion of each of the Probable Acquisitions is subject
to due diligence, definitive documentation of various agreements, and other
material conditions. If these conditions are satisfied, the Company expects to
complete these acquisitions during the third quarter of 1997. There can be no
assurance that the conditions will be satisfied, that the Company will
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in fact complete any or all of the Probable Acquisitions, or that any Probable
Acquisition that is completed will occur on schedule.
Proposed Office and Retail Merger--Atlanta, Georgia
The Company has entered into a letter of intent to merge the real estate assets
of an Atlanta-area developer into Colonial. The transaction includes a Class-A,
multi-tenant office park comprising 515,000 square feet and 46,000 square feet
of retail shopping space. One of the office buildings in the park is currently
under construction and is due to be completed during the third quarter of 1997.
The transaction is estimated to be valued at approximately $76.3 million and is
expected to be funded through the issuance of limited partnership units in
Colonial Realty Limited Partnership, the assumption of debt, and an advance on
the Company's unsecured line of credit. An additional amount could be earned by
the developer if the building under construction exceeds certain lease-up
parameters. As a part of the transaction, the developer is expected to be
elected to Colonial's Board of Trustees. The merger is subject to customary
closing conditions, including the satisfactory completion of due diligence
procedures, the execution of definitive merger agreements, and compliance with
applicable laws. Assuming satisfaction of these conditions, the merger is
expected to close in phases during the second half of 1997 and the first half of
1998.
Mark Trace--Jackson, Mississippi
The Company has entered into an agreement to acquire Mark Trace, a 328-unit
complex on approximately 26 acres of land in Jackson, Mississippi. The community
was developed between 1995 and 1997, and is currently 95% leased. Mark Trace
would be acquired for a purchase price of $18.0 million which would be financed
through the issuance of limited partnership units in Colonial Realty Limited
Partnership valued at $6.7 million and an advance on the Company's unsecured
line of credit. The average unit size is 988 square feet with average unit
market rent of $616 per month.
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COLONIAL PROPERTIES TRUST
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired or to be Acquired
Page
Historical Summary of Revenues and Direct
Operating Expenses of Riverchase Center Building 2100..........7
Historical Summary of Revenues and Direct
Operating Expenses of Beechwood Shopping Center................10
Historical Summary of Revenues and Direct
Operating Expenses of The Meadows at Trussville................13
Historical Summary of Revenues and Direct
Operating Expenses of Brookwood Mall...........................16
Historical Summary of Revenues and Direct
Operating Expenses of Proposed Office and Retail Merger
in Atlanta, Georgia........................................19
(b) Pro Forma Financial Information................................22
(c) Exhibits
23.1 Letter re: Consent of Independent Accountants...........31
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees
Colonial Properties Trust
We have audited the Historical Summary of Revenues and Direct Operating Expenses
of the Acquired Property--Riverchase Center Building 2100 as defined in Note 1
for the year ended December 31, 1996. This Historical Summary is the
responsibility of the Acquired Property's management. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe our
audit provides a reasonable basis for our opinion.
The accompanying Historical Summary of Revenues and Direct Operating 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 Colonial
Properties Trust, and is not intended to be a complete presentation of the
revenues and expenses of the Acquired Property--Riverchase Center Building 2100.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses of the Acquired
Property--Riverchase Center Building 2100 for the year ended December 31, 1996
in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
February 7, 1997
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ACQUIRED PROPERTY--RIVERCHASE CENTER BUILDING 2100
HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
---------------------
For the
Year Ended
December 31, 1996
----------------
Revenues $ 1,341,234
------------
Direct operating expenses:
General operating expenses 29,801
Salaries and benefits 12,844
Repairs and maintenance 72,639
Taxes, licenses, and insurance 84,348
------------
199,632
------------
Excess of revenues over direct
operating expenses $ 1,141,602
============
See Note to Historical Summary of Revenues and Direct Operating Expenses.
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ACQUIRED PROPERTY--RIVERCHASE CENTER BUILDING 2100
NOTE TO HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
1. Accounting Policies
Description--The accompanying Historical Summary consists of the revenues
and direct operating expenses of Riverchase Center Building 2100, an
office property (the Acquired Property) located in Birmingham, Alabama.
Colonial Properties Trust, through Colonial Realty Limited Partnership,
purchased the Acquired Property for a total of approximately $11.6
million.
Basis of Presentation--The Historical Summary of Revenues and Direct
Operating Expenses includes gross operating revenues, exclusive of
interest income, and direct operating expenses, exclusive of mortgage and
other interest expense, depreciation, amortization, management fees,
non-recurring administrative expenses, and federal, state, and local
income taxes, if any.
Income Recognition--Revenue from rental property is recognized on a
straight-line basis over the terms of the leases.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees
Colonial Properties Trust
We have audited the Historical Summary of Revenues and Direct Operating Expenses
of the Acquired Property--Beechwood Shopping Center as defined in Note 1 for the
year ended December 31, 1996. This Historical Summary is the responsibility of
the Acquired Property's management. Our responsibility is to express an opinion
on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe our
audit provides a reasonable basis for our opinion.
The accompanying Historical Summary of Revenues and Direct Operating 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 Colonial
Properties Trust, and is not intended to be a complete presentation of the
revenues and expenses of the Acquired Property--Beechwood Shopping Center.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses of the Acquired
Property--Beechwood Shopping Center for the year ended December 31, 1996 in
conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
April 24, 1997
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ACQUIRED PROPERTY--BEECHWOOD SHOPPING CENTER
HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
---------------------
For the
Year Ended
December 31, 1996
------------------
Revenues $ 2,299,197
-------------------
Direct operating expenses:
General operating expenses 67,241
Salaries and benefits 46,388
Repairs and maintenance 176,629
Taxes, licenses, and insurance 212,551
-------------------
502,809
-------------------
Excess of revenues over direct
operating expenses $ 1,796,388
===================
See Note to Historical Summary of Revenues and Direct Operating Expenses.
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ACQUIRED PROPERTY--BEECHWOOD SHOPPING CENTER
NOTE TO HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
1. Accounting Policies
Description--The accompanying Historical Summary consists of the revenues
and direct operating expenses of Beechwood Shopping Center, a retail
property (the Acquired Property) located in Athens, Georgia. Colonial
Properties Trust, through Colonial Realty Limited Partnership, purchased
the Acquired Property for a total of approximately $22.2 million.
Basis of Presentation--The Historical Summary of Revenues and Direct
Operating Expenses includes gross operating revenues, exclusive of
interest income, and direct operating expenses, exclusive of mortgage and
other interest expense, depreciation, amortization, management fees,
non-recurring administrative expenses, and federal, state, and local
income taxes, if any.
Income Recognition--Revenue from rental property is recognized on a
straight-line basis over the terms of the leases.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees
Colonial Properties Trust
We have audited the Historical Summary of Revenues and Direct Operating Expenses
of the Acquired Property--The Meadows at Trussville as defined in Note 1 for the
period from inception (January 23, 1996) through December 31, 1996. This
Historical Summary is the responsibility of the Acquired Property's management.
Our responsibility is to express an opinion on the Historical Summary based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe our
audit provides a reasonable basis for our opinion.
The accompanying Historical Summary of Revenues and Direct Operating 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 Colonial
Properties Trust, and is not intended to be a complete presentation of the
revenues and expenses of the Acquired Property--The Meadows at Trussville.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses of the Acquired
Property--The Meadows at Trussville for the period from inception (January 23,
1996) through December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
June 16, 1997
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ACQUIRED PROPERTY--THE MEADOWS AT TRUSSVILLE
HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
---------------------
For the Period
from Inception
(January 23, 1996)
through
December 31, 1996
-----------------------
Revenues $ 390,215
----------------------
Direct operating expenses:
General operating expenses 75,476
Salaries and benefits 80,117
Repairs and maintenance 61,090
Taxes, licenses, and insurance 13,005
----------------------
229,688
----------------------
Excess of revenues over direct
operating expenses $ 160,527
======================
See Note to Historical Summary of Revenues and Direct Operating Expenses.
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ACQUIRED PROPERTY--THE MEADOWS AT TRUSSVILLE
NOTE TO HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
1. Accounting Policies
Description--The accompanying Historical Summary consists of the revenues
and direct operating expenses of The Meadows at Trussville, a multifamily
property (the Acquired Property) located in Birmingham, Alabama. The
Acquired Property was under construction during 1996. The first units were
completed in January 1996 and lease-up began in February 1996.
Construction was completed in December 1996. Colonial Properties Trust,
through Colonial Realty Limited Partnership, purchased the Acquired
Property for a total of approximately $20.5 million.
Basis of Presentation--The Historical Summary of Revenues and Direct
Operating Expenses includes gross operating revenues, exclusive of
interest income, and direct operating expenses, exclusive of mortgage and
other interest expense, depreciation, amortization, management fees,
non-recurring administrative expenses, and federal, state, and local
income taxes, if any.
Income Recognition--Revenue from rental property is recognized when due
from tenants.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees
Colonial Properties Trust
We have audited the Historical Summary of Revenues and Direct Operating Expenses
of the Acquired Property--Brookwood Mall as defined in Note 1 for the year ended
December 31, 1996. This Historical Summary is the responsibility of the Acquired
Property's management. Our responsibility is to express an opinion on the
Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe our
audit provides a reasonable basis for our opinion.
The accompanying Historical Summary of Revenues and Direct Operating 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 Colonial
Properties Trust, and is not intended to be a complete presentation of the
revenues and expenses of the Acquired Property--Brookwood Mall.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses of the Acquired
Property--Brookwood Mall for the year ended December 31, 1996 in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
June 18, 1997
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ACQUIRED PROPERTY--BROOKWOOD MALL
STATEMENT OF HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
---------------------
For the
Year Ended
December 31, 1996
-------------------
Revenues $ 6,118,192
-------------------
Direct operating expenses (Note 2):
General operating expenses 1,091,296
Salaries and benefits 326,868
Repairs and maintenance 559,078
Taxes, licenses, and insurance 449,084
-------------------
2,426,326
-------------------
Excess of revenues over direct
operating expenses $ 3,691,866
===================
The accompanying notes are an integral part of the financial statement.
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ACQUIRED PROPERTY--BROOKWOOD MALL
NOTES TO STATEMENT OF HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
1. Organization and Significant Accounting Policies
Description of Property--Brookwood (the "Property") is a retail
development located in Birmingham, Alabama consisting of a covered mall, a
covered garage, and a detached strip shopping center and encompassing
approximately 461,000 square feet.
Rental Revenues--Commercial leases require the payment of base rent
monthly in advance. Rental revenues are recorded on the accrual basis.
Commercial leases generally contain provisions for additional rent based
on a percentage of tenant sales and other provisions which are recorded as
income when received. Minimum rental revenue from long-term commercial
leases is recognized on a straight-line basis over the life of the related
lease.
Risks and Uncertainties--The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. Basis of Accounting
The Historical Summary of Revenues and Direct Operating Expenses includes
gross operating revenues, exclusive of interest income, and direct
operating expenses, exclusive of mortgage and other interest expense,
depreciation, amortization, management fees, non-recurring administrative
expenses, and federal, state, and local income taxes, if any.
3. Description of Leasing Arrangements
The commercial space is leased to tenants under leases with terms that
vary in length. Certain of the leases contain real estate tax
reimbursement clauses, operating expense reimbursement clauses and renewal
options. Minimum lease payments to be received during the next five years
for noncancelable operating leases in effect at December 31, 1996 are
approximately as follows:
Year Ending December 31,
1997 $3,978,000
1998 3,604,100
1999 3,230,800
2000 2,603,400
2001 2,193,600
Thereafter 11,002,800
Contingent rental revenue, based on a percentage of tenant sales and other
provisions contained in tenant leases totaled $421,665 for the year ended
December 31, 1996.
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REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees
Colonial Properties Trust
We have audited the Historical Summary of Revenues and Direct Operating Expenses
of the Proposed Office and Retail Merger in Atlanta, Georgia (the Properties) as
defined in Note 1 for the year ended December 31, 1996. This Historical Summary
is the responsibility of the Properties' management. Our responsibility is to
express an opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe our
audit provides a reasonable basis for our opinion.
The accompanying Historical Summary of Revenues and Direct Operating 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 Colonial
Properties Trust, and is not intended to be a complete presentation of the
revenues and expenses of the Properties.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses of the Properties
for the year ended December 31, 1996 in conformity with generally accepted
accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
June 23, 1997
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PROPOSED OFFICE AND RETAIL MERGER IN ATLANTA, GEORGIA
HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
---------------------
For the
Year Ended
December 31, 1996
----------------------
Revenues $ 3,814,772
-------------------
Direct operating expenses:
General operating expenses 239,141
Salaries and benefits 1,567
Repairs and maintenance 318,463
Taxes, licenses, and insurance 228,951
-------------------
788,122
-------------------
Excess of revenues over direct
operating expenses $ 3,026,650
===================
See Notes to Historical Summary of Revenues and Direct Operating Expenses.
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PROPOSED OFFICE AND RETAIL MERGER IN ATLANTA, GEORGIA
NOTES TO HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
1. Accounting Policies
Description--The accompanying Historical Summary consists of the
revenues and direct operating expenses of the Proposed Office and
Retail Merger in Atlanta, Georgia, (the Properties). Colonial
Properties Trust, through Colonial Realty Limited Partnership,
has signed a letter of intent to merge the Properties into the
Company's holdings. The names of the Properties, which are
presently owned by various partnerships, have not been disclosed
due to the confidential nature of this ongoing transaction. The
Company's estimated investment in the Properties is approximately
$52.0 million.
Basis of Presentation--The Historical Summary of Revenues and Direct
Operating Expenses includes gross operating revenues, exclusive of
interest income, and direct operating expenses, exclusive of mortgage and
other interest expense, depreciation, amortization, management fees,
non-recurring administrative expenses, and federal, state, and local
income taxes, if any.
Income Recognition--Revenue from rental property is recognized on a
straight-line basis over the terms of the leases.
Use of Estimates--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
2. Description of the Property
The Properties are comprised of six existing office buildings and a
retail center. At December 31, 1996, the Properties have
approximately 378,000 square feet of leasable office and retail
space. One of the office buildings contains approximately 163,000
square feet and was completed in July 1996. This building was in
lease-up during the second half of 1996 and, therefore, only a
partial year of revenues and direct operating expenses is
included in the Historical Summary.
Page - 21
<PAGE>
COLONIAL PROPERTIES TRUST
PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
March 31, 1997
(Unaudited)
The following unaudited pro forma consolidated condensed balance sheet reflects
significant transactions effected by the Company after March 31, 1997 including
the purchase of seven of the 10 Acquired Properties, and the two Probable
Acquisitions mentioned elsewhere herein (three of the 10 Acquired Properties
were purchased prior to March 31, 1997 and are already reflected in the
Company's historical balance sheet at March 31, 1997.)
This unaudited pro forma consolidated condensed balance sheet is not necessarily
indicative of the actual financial position of the Company had the transactions
been completed as of March 31, 1997, nor does it purport to represent the future
financial position of the Company. The unaudited pro forma consolidated
condensed balance sheet and related notes should be read in conjunction with the
information appearing in the Company's 1996 Annual Report as filed with the
Securities and Exchange Commission on Form 10-K and with the financial
statements included therein and the notes thereto and with the Company's March
31, 1997 Quarterly Report as filed with the Securities and Exchange Commission
on Form 10-Q and with the financial statements included therein and the notes
thereto. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made.
Page - 22
<PAGE>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Balance Sheet
March 31, 1997
(In Thousands)
(Unaudited)
<CAPTION>
Colonial Colonial
Properties Pro Properties
Trust Forma Trust
Historical Adjustments Pro Forma
---------------- --------------- -----------------
(A) (B)
<S> <C> <C> <C>
ASSETS
Land, buildings, & equipment, net $ 866,068 $ 155,302 $ 1,021,370
Undeveloped land and construction in progress 125,263 125,263
Cash and equivalents 2,284 2,284
Restricted cash 2,568 2,568
Accounts receivable, net 4,839 4,839
Prepaid expenses 2,860 2,860
Deferred debt and lease costs 6,576 6,576
Investment in subsidiaries 5,584 5,584
Other assets 5,590 5,590
================ =============== =================
$ 1,021,632 $ 155,302 $ 1,176,934
================ =============== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable $ 534,927 $ 139,993 $ 674,920
Accounts payable 16,144 16,144
Accrued expenses 9,654 9,654
Tenant deposits 3,156 3,156
Unearned rent 929 929
---------------- --------------- -----------------
Total liabilities 564,810 139,993 704,803
---------------- --------------- -----------------
Minority interest 144,415 8,429 152,844
---------------- --------------- -----------------
Common shares of beneficial interest, $.01 par value 192 192
Additional paid-in capital 338,531 6,880 345,411
Cumulative earnings 57,580 57,580
Cumulative distributions (83,354) (83,354)
Deferred compensation on restricted shares (542) (542)
---------------- --------------- -----------------
Total shareholders' equity 312,407 13,169 319,287
---------------- --------------- -----------------
$ 1,021,632 $ 155,302 $ 1,176,934
================ =============== =================
</TABLE>
Page - 23
<PAGE>
COLONIAL PROPERTIES TRUST
NOTES TO PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
(Unaudited)
(A) Reflects the historical financial position of the Company as of March 31,
1997 as presented in the Company's Form 10-Q as filed with the Securities
and Exchange Commission on May 9, 1997.
(B) Includes the acquisition of seven of the 10 Acquired Properties;
The Meadows at Trussville for a purchase price of $20.5 million,
International Park 1900 and 2100 (exchange of partnership interests),
Brookwood Mall for a purchase price of $32.5 million, Lakeside Office
Park for $8.8 million, Progress Center for a purchase price of $15.0
million, Timothy Woods for a purchase price of $12.8 million, and Oakleigh
Apartments for a purchase price of $10.5 million. These property
acquisitions were financed through the issuance of limited partnership
units in Colonial Realty Limited Partnership, the exchange of two
multifamily properties and one office property, advances on the Company's
unsecured line of credit and the assumption of indebtedness on one of the
properties. Also includes the acquisition of the two Probable Acquisitions;
the Proposed Office and Retail Merger in Atlanta, Georgia for a purchase
price of $52.0 million and Mark Trace for a purchase price of $18.0
million. These property acquisitions would be financed through the
issuance of limited partnership units in Colonial Realty Limited
Partnership, advances on the Company's unsecured line of credit and the
assumption of indebtedness.
Page - 24
<PAGE>
COLONIAL PROPERTIES TRUST
PRO FORMA CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1996 and
the Three Months Ended March 31, 1997
(Unaudited)
The following unaudited pro forma consolidated condensed statements of
operations reflect significant transactions effected by the Company during 1997
which includes the purchase of the 10 Acquired Properties and the two Probable
Acquisitions mentioned elsewhere herein. In addition to the Acquired Properties,
the following significant transactions are reflected in the unaudited pro forma
consolidated condensed statements of operations: (i) the Company's equity
offerings completed in January 1996 and January 1997, and (ii) the Operating
Partnership's debt offerings completed in July 1996, December 1996, and January
1997. The pro forma effects of all such transactions are included in the
unaudited pro forma consolidated condensed statements of operations assuming the
transactions had occurred as of January 1, 1996 and assuming the Company used
the proceeds of the equity and debt offerings to repay outstanding indebtedness
(See notes to unaudited pro forma consolidated condensed statements of
operations).
These unaudited pro forma consolidated condensed statements of operations are
not necessarily indicative of the actual results of operations had the
transactions been completed as of January 1, 1996, nor do they purport to
represent the future results of the operations of the Company. The Company is
not aware of any material factors relating to the Acquired Properties and
Probable Acquisitions, other than as disclosed in the footnotes to the unaudited
pro forma consolidated condensed statements of operations, which would cause the
combined historical summaries of revenues and direct operating expenses not to
be necessarily indicative of future operating results.
The unaudited pro forma consolidated condensed statements of operations and
related notes should be read in conjunction with the information appearing in
the Company's 1996 Annual Report as filed with the Securities and Exchange
Commission on Form 10-K and with the financial statements included therein and
the notes thereto and with the Company's March 31, 1997 Quarterly Report as
filed with the Securities and Exchange Commission on Form 10-Q and with the
financial statements included therein and the notes thereto. In management's
opinion, all adjustments necessary to reflect the effects of these transactions
have been made.
Page - 25
<PAGE>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Statements of Operations
For the year ended December 31, 1996
(In Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the year ended December 31, 1996
--------------------------------------------------------------
Colonial Colonial
Properties Pro Properties
Trust Forma Trust
Historical Adjustments Pro Forma
------------------ --------------- -----------------
(A) (B)
<S> <C> <C> <C>
Revenues:
Rent $ 130,370 $ 20,946 $ 151,316
Other 4,511 45 4,556
------------------ --------------- -----------------
Total revenue 134,881 20,991 155,872
------------------ --------------- -----------------
Property operating expenses:
General operating expenses 9,530 2,761 12,291
Salaries and benefits 8,606 484 9,090
Repairs and maintenance 13,073 1,182 14,255
Taxes, licenses and insurance 11,538 1,410 12,948
General and administrative 4,071 358 4,429
Depreciation 22,025 3,960 25,985
Amortization 1,509 58 1,567
------------------ --------------- -----------------
Total operating expenses 70,352 10,213 80,565
------------------ --------------- -----------------
Income from operations 64,529 10,778 75,307
------------------ --------------- -----------------
Other income (expense):
Interest expense (24,584) (6,264) (30,848)
Income from partnerships 835 (36) 799
Gains from sale of property 468 -0- 468
Minority interest in consolidated
operating property -0- 15 15
------------------ --------------- -----------------
Total other expense (23,281) (6,285) (29,566)
------------------ --------------- -----------------
Income before extraordinary items and
minority interest in CRLP 41,248 4,493 45,741
Extraordinary loss from debt extinguishment (511) -0- (511)
------------------ --------------- -----------------
Income before minority interest in CRLP 40,737 4,493 45,230
Minority interest in CRLP 13,231 1,410 14,641
------------------ --------------- -----------------
Net income (loss) $ 27,506 $ 3,083 $ 30,589
================== =============== =================
Net income per share $ 1.58 $ 1.59
================== =================
Common shares outstanding 17,378 19,183
================== =================
</TABLE>
Page - 26
<PAGE>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Statements of Operations
For the three months ended March 31, 1997
(In Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the three months ended March 31, 1997
-----------------------------------------------------------------
Colonial Colonial
Properties Pro Properties
Trust Forma Trust
Historical Adjustments Pro Forma
----------------- ----------------- -------------------
(A) (B)
<S> <C> <C> <C>
Revenues:
Rent $ 37,402 $ 5,711 $ 43,113
Other 1,768 47 1,815
----------------- ---------------- ---------------
Total revenue 39,170 5,758 44,928
----------------- ---------------- ---------------
Property operating expenses:
General operating expenses 2,668 844 3,512
Salaries and benefits 2,274 179 2,453
Repairs and maintenance 3,580 382 3,962
Taxes, licenses and insurance 3,618 394 4,012
General and administrative 1,213 102 1,315
Depreciation 6,669 1,174 7,843
Amortization 354 13 367
----------------- ---------------- ---------------
Total operating expenses 20,376 3,088 23,464
----------------- ---------------- ---------------
Income from operations 18,794 2,670 21,464
----------------- ---------------- ---------------
Other income (expense):
Interest expense (8,488) (2,211) (10,699)
Income from partnerships 40 (10) 30
Gains (losses) from sale of property (1) -0- (1)
Minority interest in consolidated
operating property (56) -0- (56)
----------------- ---------------- ---------------
Total other expense (8,505) (2,221) (10,726)
----------------- ---------------- ---------------
Income before extraordinary items and
minority interest in CRLP 10,289 449 10,738
Extraordinary loss from debt extinguishment (384) -0- (384)
----------------- ---------------- ---------------
Income before minority interest in CRLP 9,905 449 10,354
Minority interest in CRLP 3,092 260 3,352
----------------- ---------------- ---------------
Net income (loss) $ 6,813 $ 189 $ 7,002
================= ================ ===============
Net income per share $ 0.37 $ 0.37
================= ================
Common shares outstanding 18,657 19,183
================= ================
</TABLE>
Page - 27
<PAGE>
COLONIAL PROPERTIES TRUST
NOTES TO PRO FORMA CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(A) Reflects the Company's historical results of operations for the year ended
December 31, 1996, as presented in the Company's 1996 Annual Report as
filed with the Securities and Exchange Commission on Form 10-K and the
Company's historical results of operations for the three months ended March
31, 1997 as presented in the Company's March 31, 1997 Quarterly Report as
filed with the Securities and Exchange Commission on Form 10-Q.
(B) Reflects the operating results of the 10 properties acquired during 1997
and the two Probable Acquisitions expected to be acquired during the third
quarter of 1997, less the operations of the three properties exchanged in
connection with two of the acquisitions, as mentioned elsewhere herein. The
results included as pro forma adjustments for these properties include
those operating results of the properties for the respective periods during
which the Company did not own the properties. This column also reflects the
net effect of the application of the equity and debt offering proceeds to
repay the revolving debt incurred in the acquisition of properties and
mortgage debt. The interest saved from this repayment of debt is shown net
of interest expense arising from debt incurred from the debt offerings.
Included elsewhere herein are Historical Summaries of Revenues and Direct
Operating Expenses for four of the Acquired Properties and one of the
Probable Acquisitions. The pro forma statements of operations include
certain adjustments made to these historical summaries as presented in the
following table.
For the
Year Ended
December 31, 1996
(in thousands)
--------------
Excess of revenues over direct
operating expenses (1)
Riverchase Center Building $ 1,142
2100
Beechwood Shopping Center 1,796
The Meadows at Trussville 161
Brookwood Mall 3,692
Proposed Office and Retail Merger
in Atlanta, Georgia 3,027
Other properties 4,977
--------------
14,795
Less:
Depreciation and
amortization of property (2) 4,017
Interest on acquisition
financing, net of
savings from debt
and equity offerings (3) 5,871
Other adjustments 33
--------------
Pro forma income before
minority interest $ 4,874
==============
(1) The excess of revenues over direct operating expenses is based upon
historical operations for the properties acquired or to be acquired
during 1997 for the year ended December 31, 1996, as contained in the
Historical Summaries of Revenues and Direct Operating Expenses included
elsewhere herein for the properties whose December 31, 1996 financial
results have been audited.
Page - 28
<PAGE>
(2) The asset basis used in the computation of depreciation includes a
preliminary allocation of the purchase price to land, land
improvements, building, and personal property, plus acquisition costs
to date. Such allocation may be adjusted pending receipt of additional
information. Depreciation has been computed using the straight line
method with cost recovery periods of 7 to 40 years.
(3) Includes interest expense incurred from sources of funds used to
finance the acquisition of the Acquired Properties and Probable
Acquisitions including advances on the Company's unsecured line of
credit, net of the effect of the application of the equity and debt
offering proceeds to repay the revolving debt incurred in the
acquisition of properties and mortgage debt. The interest saved from
this repayment of debt is shown net of interest expense arising from
debt incurred from the debt offerings.
Page - 29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
COLONIAL PROPERTIES TRUST
Date: July 21, 1997 /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
Date: July 21, 1997 /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Page - 30
<PAGE>
Exhibit 23.1
Consent of Independent Accountants
We consent to the incorporation by reference in the registration statements of
Colonial Properties Trust on Form S-8 related to certain restricted shares and
stock options filed on September 29, 1994; Form S-8 related to the Non-Employee
Trustee Share Plan filed on May 15, 1997; Form S-8 related to the Employee Share
Purchase Plan filed on May 15, 1997; Form S-8 related to the Employee Share
Option and Restricted Share Plan and the Non-Employee Trustee Share Option Plan
filed on May 15, 1997; Form S-3 related to the Shelf Registration filed on
January 8, 1997; Form S-3 related to the Dividend Reinvestment Plan filed on
April 11, 1995, as amended; and Form S-8 related to the registration of common
stock issuable under the Colonial Properties Trust 401(K)/Profit-Sharing Plan
filed on October 15, 1996, of our report dated February 7, 1997 on our audit of
the Historical Summary of Revenues and Direct Operating Expenses of Acquired
Property--Riverchase Center Building 2100; our report dated April 24, 1997 on
our audit of the Historical Summary of Revenues and Direct Operating Expenses of
Acquired Property--Beechwood Shopping Center; our report dated June 16, 1997 on
our audit of the Historical Summary of Revenues and Direct Operating Expenses of
Acquired Property--The Meadows at Trussville; our report dated June 18, 1997 on
our audit of the Historical Summary of Revenues and Direct Operating Expenses of
Acquired Property--Brookwood Mall; and our report dated June 23, 1997 on our
audit of the Historical Summary of Revenues and Direct Operating Expenses of the
Proposed Office and Retail Merger in Atlanta, Georgia, which reports are
included in this Form 8-K.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
July 18, 1997
Page - 31
