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 9, 1998
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)
<PAGE>
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. Since December 31, 1997, the Company
has acquired through the Operating Partnership two office properties in Alabama,
one multifamily apartment community in South Carolina, and a retail property in
Florida (the Acquired Properties). 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 the retail property in Florida are being filed to keep the Company's
shelf registration statement current.
Terms of Acquisition
The four Acquired Properties during 1998 contain a total of 200 apartment units,
1.1 million square feet of retail space, and 339,000 square feet of office space
and were purchased at a combined purchase price of $144.7 million. The
acquisitions increase the Company's multifamily portfolio to 14,003 apartment
units, increase the Company's retail portfolio to 11.6 million square feet, and
increase the Company's office portfolio to 2.2 million square feet. In
connection with the acquisition of one of the Acquired Properties, the Company
assumed an existing mortgage totaling $5.7 million. The remainder of the
purchase price of the Acquired Properties was financed through advances on the
Company's unsecured line of credit.
Description of
Acquired Properties
Perimeter Corporate Park--Huntsville, Alabama
On January 9, 1998, the Company acquired Perimeter Corporate Park, an office
park comprised of two multi-tenant buildings in Huntsville, Alabama totaling
233,000 square feet of leasable area. Major tenants include Mevatec, Schafer
Corporation, Computer Systems Technology, EER Systems Corporation, and Silicon
Graphics. The purchase price of $19.5 million was funded through the assumption
of $5.7 million of debt and an advance on the Company's unsecured line of
credit.
Page 2
<PAGE>
Independence Plaza--Birmingham, Alabama
On January 15, 1998, the Company acquired Independence Plaza, a 106,000 square
foot office building in Birmingham, Alabama, for a purchase price of $7.5
million. Major tenants include AmSouth Bank, Cooney, Rikard & Curtain (an
insurance firm) and Wall Street Deli (executive offices). The entire purchase
price was funded through an advance on the Company's unsecured line of credit.
Ashley Plantation--Bluffton, South Carolina
On May 1, 1998, the Company acquired Ashley Plantation, a 200-unit apartment
complex developed in 1997 on approximately 21 acres of land in Bluffton, South
Carolina. The average unit size is 1,026 square feet, and the average unit
market rent is $768 per month. The purchase price of $13.7 million was financed
through an advance on the Company's unsecured line of credit.
Orlando Fashion Square--Orlando, Florida
On May 29, 1998, the Company acquired Orlando Fashion Square, a 1.1 million
square foot regional mall (including 361,000 square feet of tenant-owned space)
in Orlando, Florida, for a total purchase price of $104 million. The mall
anchors include Burdine's, Sears, Gayfers, JC Penney and General Cinemas. The
entire purchase price was funded through an advance on the Company's unsecured
line of credit.
Page 3
<PAGE>
COLONIAL PROPERTIES TRUST
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired
Page
Historical Summary of Revenues and Direct
Operating Expenses of Orlando Fashion Square...................5
(b) Pro Forma Financial Information................................9
(c) Exhibits
23.1 Letter re: Consent of Independent Accountants...........18
Page 4
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
Colonial Properties Trust:
We have audited the Historical Summary of Revenues and Direct Operating Expenses
of the Orlando Fashion Square (the Property) as defined in Note 1 for the year
ended December 31, 1997. This Historical Summary is the responsibility of the
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 Property.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the revenues and direct operating expenses of the Orlando
Fashion Square for the year ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
May 14, 1998
Page 5
<PAGE>
<TABLE>
THE ORLANDO FASHION SQUARE
HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
_____________________
<CAPTION>
For the
Year Ended
December 31, 1997
-----------
Revenues:
<S> <C>
Base and percentage rents ........................... $10,066,974
CAM reimbursements .................................. 4,154,930
Other ............................................... 159,643
-----------
14,381,547
-----------
Direct operating expenses:
General operating expenses .......................... 1,844,340
Salaries and benefits ............................... 1,052,769
Repairs and maintenance ............................. 534,102
Taxes, licenses, and insurance ...................... 1,851,015
-----------
5,282,226
-----------
Excess of revenues over direct operating expenses ......... $ 9,099,321
===========
<FN>
See Notes to Historical Summary of Revenues and Direct Operating Expenses.
</FN>
</TABLE>
Page 6
<PAGE>
THE ORLANDO FASHION SQUARE
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 Orlando Fashion Square, a retail mall
(the Property), located in Orlando, Florida. Colonial Properties Trust,
through Colonial Realty Limited Partnership, purchased the Property for a
total of approximately $104 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.
Income Recognition--Rental income attributable to leases 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 report period. Actual results could differ from those
estimates.
2. Leasing Operations
Minimum base rentals to be received in future periods under noncancelable
operating leases extending beyond one year at December 31, 1997, are as
follows:
<TABLE>
<S> <C>
1998 $ 9,436,458
1999 9,170,007
2000 8,748,680
2001 8,173,462
2002 6,320,872
Thereafter 23,344,602
------------
$ 65,194,081
============
</TABLE>
Page 7
<PAGE>
THE ORLANDO FASHION SQUARE
NOTES TO HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
3. Ground Lease Commitment
The Property leases the land on which it is located. The lease expires in
November 2092. The annual ground rent expense consists of fixed minimum
annual rent (MAR) plus additional rent, as defined in the lease and
related amendments. The additional rent consists of 5% of MAR, 10% of the
excess of renewal rents over initial MAR, 10% of the percentage rents paid
by tenants who also pay MAR and 7.5% of the percentage rents paid by
tenants who do not pay MAR. The minimum annual rent payments are equal to
the average minimum base rents due over the immediately preceding 3 years
provided that such payments not decline more than $10,000 from one year to
the next nor decline for three consecutive years. In 1997, ground rent
expense of $539,414 was recorded as a component of general operating
expenses.
Page 8
<PAGE>
COLONIAL PROPERTIES TRUST
PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
March 31, 1998
(Unaudited)
The following unaudited pro forma consolidated condensed balance sheet reflects
significant transactions effected by the Company after March 31, 1998, including
the purchase of two of the four Acquired Properties, and an offering of common
securities to the public.
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, 1998, 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 1997 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, 1998 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 9
<PAGE>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Balance Sheet
March 31, 1998
(In Thousands)
(Unaudited)
<CAPTION>
Colonial Colonial
Properties Pro Properties
Trust Forma Trust
Historical Adjustments Pro Forma
----------- ----------- -----------
(A) (B)
ASSETS
<S> <C> <C> <C>
Land, buildings, & equipment, net ........................... $ 1,337,030 $ 117,700 $ 1,454,730
Undeveloped land and construction in progress ............... 64,117 64,117
Cash and equivalents ........................................ 3,144 3,144
Restricted cash ............................................. 2,678 2,678
Accounts receivable, net .................................... 7,135 7,135
Prepaid expenses ............................................ 2,964 2,964
Deferred debt and lease costs ............................... 6,845 6,845
Investment in subsidiaries .................................. 225 225
Other assets ................................................ 5,257 5,257
----------- ----------- -----------
$ 1,429,395 $ 117,700 $ 1,547,095
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable ................................. $ 695,034 $ 30,839 $ 725,873
Accounts payable ............................................ 4,851 4,851
Accrued interest ............................................ 7,949 7,949
Accrued expenses ............................................ 6,047 6,047
Tenant deposits ............................................. 3,877 3,877
Unearned rent ............................................... 2,822 2,822
----------- ----------- -----------
Total liabilities ...................................... 720,580 30,839 751,419
----------- ----------- -----------
Minority interest ........................................... 180,297 7,492 187,789
----------- ----------- -----------
Preferred shares of beneficial interest, $.01 par value ..... 50 50
Common shares of beneficial interest, $.01 par value ........ 228 30 258
Additional paid-in capital .................................. 567,482 79,339 646,821
Cumulative earnings ......................................... 92,282 92,282
Cumulative distributions .................................... (131,141) (131,141)
Deferred compensation on restricted shares .................. (383) (383)
----------- ----------- -----------
Total shareholders' equity ............................. 528,518 79,369 607,887
----------- ----------- -----------
$ 1,429,395 $ 117,700 $ 1,547,095
=========== =========== ===========
</TABLE>
Page 10
<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,
1998 as presented in the Company's Form 10-Q as filed with the Securities
and Exchange Commission.
(B) Includes the acquisition of two of the four Acquired Properties; Ashley
Plantation for a purchase price of $13.7 million, and the Orlando Fashion
Square for a purchase price of $104.0 million. These property acquisitions
were financed through advances on the Company's unsecured line of credit.
The remaining two Acquired Properties were purchased prior to March 31,
1998, and therefore are already included in the March 31, 1998 historical
results. Also includes the issuance of 3,046,400 common shares of
beneficial interest issued in April and May 1998. The net proceeds of the
equity offerings were used to repay outstanding indebtedness.
Page 11
<PAGE>
COLONIAL PROPERTIES TRUST
PRO FORMA CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997 and
the Three Months Ended March 31, 1998
(Unaudited)
The following unaudited pro forma consolidated condensed statements of
operations reflect significant transactions effected by the Company during 1997
and 1998 which includes the purchase of the four Acquired Properties 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 February, March, April and May 1998, and January, July, November and December
1997 (ii) Colonial Realty Limited Partnership's debt offerings completed in
January, July, August and September 1997 and (iii) the Company's 1997
acquisition and disposition activity, which included the acquisition of 25
properties, the disposition of seven properties, and the purchase of additional
interests in two properties (the 1997 Properties) which are discussed in the
Company's filings on Forms 8-K filed on July 21, 1997, October 30, 1997, and
December 11, 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, 1997 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, 1997, 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, other
than as disclosed in the footnotes to the unaudited pro forma consolidated
condensed statements of operations, which would cause the 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 1997 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, 1998 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 12
<PAGE>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Statements of Operations
For the year ended December 31, 1997
(In Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the year ended December 31, 1997
--------------------------------------
Colonial Colonial
Properties Pro Properties
Trust Forma Trust
Historical Adjustments Pro Forma
--------- --------- ---------
(A) (B)
Revenues:
<S> <C> <C> <C>
Rent .................................... $ 178,158 $ 49,409 $ 227,567
Other ................................... 5,968 354 6,322
--------- --------- ---------
Total revenue ....................... 184,126 49,763 233,889
--------- --------- ---------
Property operating expenses:
General operating expenses .............. 12,603 3,238 15,841
Salaries and benefits ................... 10,283 1,673 11,956
Repairs and maintenance ................. 18,669 4,992 23,661
Taxes, licenses and insurance ........... 15,578 4,008 19,586
General and administrative ................... 6,448 44 6,492
Depreciation ................................. 31,956 9,672 41,628
Amortization ................................. 1,322 91 1,413
--------- --------- ---------
Total operating expenses ............ 96,859 23,718 120,577
--------- --------- ---------
Income from operations .............. 87,267 26,045 113,312
--------- --------- ---------
Other income (expense):
Interest expense ........................ (40,496) (685) (41,181)
Income from equity investments .......... 620 (358) 262
Gains from sales of property ............ 2,567 -0- 2,567
--------- --------- ---------
Total other expense ................. (37,309) (1,043) (38,352)
--------- --------- ---------
Income before extraordinary items and
minority interest in CRLP ........... 49,958 25,002 74,960
Extraordinary loss from debt extinguishment .. (3,650) 3,650 -0-
--------- --------- ---------
Income before minority interest in CRLP . 46,308 28,652 74,960
Minority interest in CRLP .................... 14,360 6,599 20,959
--------- --------- ---------
Net income .............................. $ 31,948 $ 22,053 $ 54,001
Preferred dividends .......................... 1,671 9,267 10,938
--------- --------- ---------
Net income available to common shareholders $ 30,277 $ 12,786 $ 43,063
========= ========= =========
Net income per share - basic and diluted ..... $ 1.53 $ 1.67
========= =========
Common shares outstanding .................... 19,808 25,855
========= =========
</TABLE>
Page 13
<PAGE>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Statements of Operations
For the three months ended March 31, 1998
(In Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the three months ended March 31, 1998
-----------------------------------------
Colonial Colonial
Properties Pro Properties
Trust Forma Trust
Historical Adjustments Pro Forma
-------- -------- --------
(A) (B)
Revenues:
<S> <C> <C> <C>
Rent .................................... $ 56,124 $ 3,774 $ 59,898
Other ................................... 2,186 36 2,222
-------- -------- --------
Total revenue ....................... 58,310 3,810 62,120
-------- -------- --------
Property operating expenses:
General operating expenses .............. 4,310 225 4,535
Salaries and benefits ................... 2,869 157 3,026
Repairs and maintenance ................. 5,746 422 6,168
Taxes, licenses and insurance ........... 4,854 323 5,177
General and administrative ................... 2,554 -0- 2,554
Depreciation ................................. 10,161 952 11,113
Amortization ................................. 337 4 341
-------- -------- --------
Total operating expenses ............ 30,831 2,083 32,914
-------- -------- --------
Income from operations .............. 27,479 1,727 29,206
-------- -------- --------
Other income (expense):
Interest expense ........................ (12,579) 97 (12,482)
Income (loss) from equity investments ... (428) -0- (428)
Gains (losses) from sales of property ... (32) -0- (32)
-------- -------- --------
Total other expense ................. (13,039) 97 (12,942)
-------- -------- --------
Income before extraordinary items and
minority interest in CRLP ........... 14,440 1,824 16,264
Extraordinary loss from debt extinguishment .. (395) 395 -0-
-------- -------- --------
Income before minority interest in CRLP . 14,045 2,219 16,264
Minority interest in CRLP .................... 4,479 69 4,548
-------- -------- --------
Net income .............................. $ 9,566 $ 2,150 $ 11,716
Preferred dividends .......................... 2,734 -0- 2,734
-------- -------- --------
Net income available to common shareholders $ 6,832 $ 2,150 $ 8,982
======== ======== ========
Net income per share - basic and diluted ..... $ 0.32 $ 0.35
======== ========
Common shares outstanding .................... 21,411 25,855
======== ========
</TABLE>
Page 14
<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, 1997, as presented in the Company's 1997 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, 1998 as presented in the Company's March 31, 1998 Quarterly Report as
filed with the Securities and Exchange Commission on Form 10-Q.
(B) Reflects the operating results of the four properties acquired during 1998,
as mentioned elsewhere herein, and the 1997 Properties, as discussed in the
Company's Forms 8-K filed on July 21, 1997, October 30, 1997, and December
11, 1997. 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 is the Historical Summary of Revenues and Direct
Operating Expenses for one of the Acquired Properties. The pro forma
statements of operations include certain adjustments made to this
historical summary as presented in the following table.
<TABLE>
For the
Year Ended
December 31,
1997
(in
thousands)
--------------
<S> <C>
Excess of revenues over direct
operating expenses (1)
Orlando Fashion Square $ 9,099
Other properties 26,709
--------------
35,808
Less (plus):
Depreciation and 9,763
amortization of property (2)
Interest on acquisition
financing, net of 685
savings from debt
and equity offerings (3)
Other adjustments (3,292)
--------------
Pro forma income before $ 28,652
minority interest
==============
</TABLE>
Page 15
<PAGE>
(1) The excess of revenues over direct operating expenses is based upon
historical operations for the properties acquired during 1997 and 1998
for the year ended December 31, 1997, as contained in the Historical
Summary of Revenues and Direct Operating Expenses included elsewhere
herein for the property whose December 31, 1997 financial results have
been audited.
(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 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 16
<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: June 11, 1998 /s/ Howard B. Nelson, Jr.
-------------------------
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
Page 17
<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 changes to First
Amended and Restated 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 November 20, 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 shares issuable under the Colonial
Properties Trust 401(K)/Profit-Sharing Plan filed on October 15, 1996, of our
report dated May 14, 1998 on our audit of the Historical Summary of Revenues and
Direct Operating Expenses of the Orlando Fashion Square, which report is
included in this Form 8-K.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
June 11, 1998
Page 18
