UNITES 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 reported): Commission File Number:
December 9, 1998 1-12358
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. Through the Operating Partnership the Company has
acquired a regional shopping mall and entered into two joint ventures since the
filing of the Company's Form 10-Q on November 13, 1998. 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 Acquired Property are being filed to appropriately update the
Company's shelf registration statement.
Description of Property
Acquired Property
Bel Air Mall---Mobile, Alabama
On December 29, 1998, the Company acquired Bel Air Mall, a 1.4 million square
foot regional shopping mall located in Mobile, Alabama. Bel Air is the second
largest mall in the state of Alabama and was 92% leased at the time of
acquisition. Bel Air is anchored by Parisian, Dillard's, Sears, JC Penney, and
Target; major in-line tenants include The Gap, Limited, Eddie Bauer and
Gymboree. Dillard's and JC Penney have recently completed major renovations to
their stores and Sears completed a 90,000 square foot expansion and renovation
of its store in 1997. The purchase price of $89.1 million was funded through the
proceeds received in connection with the formation of the Orlando Fashion Square
joint venture and an advance on the Company's unsecured line of credit.
Joint Ventures
Parkway City Mall Joint Venture-Huntsville, Alabama
On December 9, 1998, the Company and CBL & Associates Properties formed a joint
venture to acquire Parkway City Mall, a 414,000 square foot mall located in
Huntsville, Alabama, for $11.4 million. In addition to the purchase of the
property, the joint venture will redevelop the mall, with all related costs
being shared equally by both venture partners. Parkway City Mall is anchored by
Parisian and McRae's and was 86% leased at the time of the acquisition.
Orlando Fashion Square Joint Venture-Orlando, Florida
On December 29, 1998, the Company and Prudential Real Estate Investors
(Prudential) entered into a joint venture to own Orlando Fashion Square. Orlando
Fashion Square is a super-regional mall with 1.1 million square feet located in
the affluent Winter Park area of Orlando, Florida. The mall is anchored by
Burdine's, Sears, Dillard's, and JC Penney. In connection with the formation of
the joint venture, Prudential acquired a 50% interest in Orlando Fashion Square
from the Company for $52 million. Subsequent to formation, the joint venture
leveraged the property with a $65 million note and the proceeds from the
issuance of the note were distributed equally to the joint venture partners.
Colonial used the proceeds from the formation of the joint venture to fund the
acquisition of Bel Air Mall.
<PAGE>
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 Bel Air Mall................................5
(b) Pro Forma Financial Information...................................8
(c) Exhibits
23.1 Letter re: Consent of Independent Accountants.............17
<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 Bel Air Mall (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 Forms 8-K of Colonial
Properties Trust and Colonial Realty Limited Partnership, 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 Bel Air Mall
for the year ended December 31, 1997 in conformity with generally accepted
accounting principles.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Birmingham, Alabama
February 4, 1999
<PAGE>
BEL AIR MALL
HISTORICAL SUMMARY OF
REVENUES AND DIRECT OPERATING EXPENSES
_____________________
For the
Year Ended
December 31, 1997
------------------------
Revenues
Base and percentage rents $ 7,596,863
CAM reimbursements 2,392,717
Other 515,434
------------------------
$ 10,505,014
------------------------
Direct operating expenses:
General operating expenses 1,199,863
Salaries and benefits 879,003
Repairs and maintenance 285,032
Taxes, licenses, and insurance 723,658
------------------------
3,087,556
------------------------
Excess of revenues over direct
operating expenses $ 7,417,458
========================
See Notes to Historical Summary of Revenues and Direct Operating Expenses.
<PAGE>
BEL AIR MALL
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 Bel Air Mall (the property), a retail
mall located in Mobile, Alabama. Colonial Properties Trust, through
Colonial Realty Limited partnership, purchases the Property on December 30,
1998 for a total of approximately $89.1 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-Rental income is recognized as earned pursuant to the
terms of tenant leases. Anticipated losses, if any, are recognized when
such amounts become known.
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:
1998 $ 6,908,694
1999 6,550,595
2000 5,897,069
2001 5,348,344
2002 5,176,951
Thereafter 20,549,985
------------------
$ 50,431,638
==================
<PAGE>
COLONIAL PROPERTIES TRUST
PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
September 30, 1998
(Unaudited)
The following unaudited pro forma consolidated condensed balance sheet reflects
significant transactions effected by the Company after September 30, 1998,
including the purchase of the Acquired Property and two joint venture
transactions mentioned elsewhere herein.
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 September 30, 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
September 30, 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>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Balance Sheet
September 30, 1998
(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 $ 1,586,099 $ (14,900) $ 1,571,199
Undeveloped land and CIP 89,275 89,275
Cash and equivalents 2,889 2,889
Restricted cash 2,887 2,887
Accounts receivable, net 8,552 8,552
Prepaid expenses 2,825 2,825
Deferred debt and lease costs 6,805 6,805
Other assets 7,072 25,200 32,272
=========== =========== ===========
$ 1,706,404 $ 10,300 $ 1,716,704
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Notes and mortgages payable $ 855,292 $ 10,300 $ 865,592
Accounts payable 7,800 7,800
Accrued interest 10,379 10,379
Accrued expenses 15,883 15,883
Tenant deposits 4,197 4,197
Unearned rent 3,567 3,567
----------- ----------- -----------
Total liabilities 897,118 10,300 907,418
----------- ----------- -----------
Minority interest 198,606 -0- 198,606
----------- ----------- -----------
Preferred shares of beneficial
interest,$.01 par value 50 50
Common shares of beneficial
interest, $.01 par value 260 260
Additional paid-in capital 659,629 659,629
Cumulative earnings 116,148 116,148
Cumulative distributions (165,074) (165,074)
Deferred compensation on
restricted shares (333) (333)
----------- ----------- -----------
Total shareholders' equity 610,680 -0- 610,680
----------- ----------- -----------
$ 1,706,404 $ 10,300 $ 1,716,704
=========== =========== ===========
</TABLE>
<PAGE>
COLONIAL PROPERTIES TRUST
NOTES TO PRO FORMA CONSOLIDATED
CONDENSED BALANCE SHEET
(Unaudited)
(A) Reflects the historical financial position of the Company as of September
30, 1998, as presented in the Company's Form 10-Q as filed with the
Securities and Exchange Commission.
(B) Includes the acquisition of the Bel Air Mall for a purchase price of $89.1
million, and the formation of the Orlando Fashion Square joint venture and
the Parkway City joint venture. The property acquisition and the formation
of the joint ventures were financed through advances on the Company's
unsecured line of credit and proceeds received from the sale of certain
property related to the formation of the Orlando Fashion Square joint
venture.
<PAGE>
COLONIAL PROPERTIES TRUST
PRO FORMA CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1997 and
the Nine Months Ended September 30, 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 Acquired Property and the formation
of the two joint ventures mentioned elsewhere herein. In addition to the
Acquired Property and the two joint ventures, the following significant
transactions are reflected in the unaudited pro forma consolidated condensed
statements of operations: (i) the Company's acquisition activity for the first
three quarters of 1998 which is discussed in the Company's filings on Forms 10-Q
filed on May 6, 1998, August 12, 1998, and November 13, 1998 (ii) the Company's
equity offerings completed in February, March, April and May 1998, and January,
July, November and December 1997 (iii) the Operating Partnership's debt
offerings completed in January, July, August and September 1997 (iv) 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 Property and the two
joint ventures, 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 September 30, 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>
<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)
<S> <C> <C> <C>
Revenues:
Rent $ 178,158 $ 64,838 $ 242,996
Other 5,968 1,749 7,717
--------- --------- ---------
Total revenue 184,126 66,587 250,713
--------- --------- ---------
Property operating expenses:
General operating expenses 12,603 6,282 18,885
Salaries and benefits 10,283 3,464 13,747
Repairs and maintenance 18,669 6,284 24,953
Taxes, licenses and insurance 15,578 4,708 20,286
General and administrative 6,448 1,227 7,675
Depreciation 31,956 12,416 44,372
Amortization 1,322 (2) 1,320
--------- --------- ---------
Total operating expenses 96,859 34,379 131,238
--------- --------- ---------
--------- --------- ---------
Income from operations 87,267 32,208 119,475
--------- --------- ---------
Other income (expense):
Interest expense (40,496) (9,517) (50,013)
Income from equity investments 620 1,686 2,306
Gains from sales of property 2,567 (2,567) -0-
--------- --------- ---------
Total other expense (37,309) (10,398) (47,707)
--------- --------- ---------
--------- --------- ---------
Income before extraordinary items and
minority interest in CRLP 49,958 21,810 71,768
Extraordinary loss from debt
extinguishment (3,650) 3,650 -0-
--------- --------- ---------
Income before minority
interest in CRLP 46,308 25,460 71,768
Minority interest in CRLP 14,360 6,330 20,690
--------- --------- ---------
Net income $ 31,948 $ 19,130 $ 51,078
Preferred dividends 1,671 9,267 10,938
--------- --------- ---------
Net income available to
common shareholders $ 30,277 $ 9,863 $ 40,140
========= ========= =========
Net income per share -
basic and diluted $ 1.53 $ 1.54
========= =========
Common shares outstanding 19,808 26,045
========= =========
</TABLE>
<PAGE>
<TABLE>
Colonial Properties Trust
Pro Forma Consolidated Condensed Statements of Operations
For the nine months ended September 30, 1998
(In Thousands, Except Per Share Data)
(Unaudited)
<CAPTION>
For the nine months ended September 30, 1998
Colonial Colonial
Properties Pro Properties
Trust Forma Trust
Historical Adjustments Pro Forma
--------- --------- ---------
(A) (B)
<S> <C> <C> <C>
Revenues:
Rent $ 175,071 $ 9,709 $ 184,780
Other 10,753 858 11,611
--------- --------- ---------
Total revenue 185,824 10,567 196,391
--------- --------- ---------
Property operating expenses:
General operating expenses 14,543 884 15,427
Salaries and benefits 9,065 1,056 10,121
Repairs and maintenance 17,931 370 18,301
Taxes, licenses and insurance 16,035 477 16,512
General and administrative 6,124 -0- 6,124
Depreciation 32,897 2,562 35,459
Amortization 1,208 -0- 1,208
--------- --------- ---------
Total operating expenses 97,803 5,349 103,152
--------- --------- ---------
Income from operations 88,021 5,218 93,239
--------- --------- ---------
Other income (expense):
Interest expense (38,108) (3,056) (41,164)
Income from equity investments (1,371) 1,551 180
Gains from sales of property 17 (17) -0-
--------- --------- ---------
Total other expense (39,496) (1,488) (40,984)
--------- --------- ---------
Income before extraordinary items and
minority interest in CRLP 48,525 3,730 52,255
Extraordinary loss from
debt extinguishment (401) 401 -0-
--------- --------- ---------
Income before minority
interest in CRLP 48,158 4,131 52,255
Minority interest in CRLP 14,726 348 15,074
--------- --------- ---------
$ 33,398 $ 3,738 $ 37,181
Preferred dividends 8,203 -0- 8,203
--------- --------- ---------
Net income available to
common shareholders $ 25,195 $ 3,783 $ 28,978
========= ========= =========
Net income per share -
basic and diluted $ 1.04 $ 1.11
========= =========
Common shares outstanding 24,148 26,045
========= =========
</TABLE>
<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 nine months ended
September 30, 1998 as presented in the Company's September 30, 1998
Quarterly Report as filed with the Securities and Exchange Commission on
Form 10-Q.
(B) Reflects the operating results of the Acquired Property and the two joint
ventures, all properties and additional phases of existing properties
acquired during 1998, as discussed in the Company's filings on Forms 10-Q
filed on May 6, 1998, August 12, 1998, and November 13, 1998, and the
operating results of the 1997 Properties, as discussed in the Company's
filings on 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 incurred in connection
with the debt offerings.
Included elsewhere herein is the Historical Summary of Revenues and Direct
Operating Expenses for the Acquired Property. 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, 1997
(in thousands)
--------------------
Excess of revenues over direct
Operating expenses (1)
Bel Air Mall $ 7,417
Other properties 37,205
--------------------
44,622
Less (Plus):
Depreciation and amortization of 12,414
property (2)
Interest on acquisition financing, net
of 9,517
Savings from debt and equity
offerings (3)
Preferred stock dividends 9,267
Other adjustments (2,769)
--------------------
Pro forma income before minority interest $16,193
====================
(1) The excess of revenues over direct operating expenses is based upon
historical operations for the properties acquired or to be acquired
during 1998 for the year ended December 31, 1997, as contained in the
Historical Summary of Revenues and Direct Operating Expenses included
or incorporated by reference elsewhere herein for the properties 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 Property and other
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 incurred in
connection with the debt offerings.
<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: February 18, 1999 /s/ Howard B. Nelson, Jr.
Howard B. Nelson, Jr.
Chief Financial Officer
(Duly Authorized Officer
and Principal Financial Officer)
<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
February 4, 1999 on our audit of the Historical Summary of Revenues and
Direct Operating Expenses of Bel Air Mall, which report is included in this
Form 8-K.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Birmingham, Alabama
February 18, 1999
