<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 31, 1997
G & L REALTY CORP.
(Exact name of Registrant as specified in its charter)
MARYLAND 1-12566 95-4449388
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
439 N. BEDFORD DRIVE
BEVERLY HILLS, CALIFORNIA 90210
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 273-9930
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 31, 1997 G&L Realty Partnership, L. P., a Delaware limited
partnership (the "Operating Partnership"), as Seller, agreed to sell and GLN
Capital Co., LLC, a Delaware limited liability company ("GLN"), as Buyer, agreed
to purchase certain Massachusetts Industrial Finance Authority Health Care
Revenue Bonds (Hampden Nursing Homes, Inc. Project) Series 1989A and Series
1989B (collectively, the "Bonds") owned by the Operating Partnership. The
Bonds, which at the time of sale had an aggregate principal amount of
$27,665,000, including accrued and unpaid interest, were sold by the Operating
Partnership to GLN for $7,665,000 and an assumption of $14,000,000 in
indebtedness owed to GMAC Commercial Mortgage Corporation ("GMAC-CM"). The
$7,665,000 amount consisted of a cash payment of $4,500,000 and $3,165,000 which
was deemed a capital contribution to GLN. The Operating Partnership acquired
the Bonds in October 1995 for a total cost of $19,898,000.
G&L Realty Corp. (the "Company") is the sole general partner of, and owns
an 89.1 % interest in, the Operating Partnership. All of the Company's assets
are held by, and operations are conducted through, the Operating Partnership or
other entities created for financing purposes. On November 25, 1996, GLN was
organized as a limited liability company by the Operating Partnership and
Property Acquisition Trust I ("PAT"), a Delaware business trust and affiliate of
Nomura Asset Capital Corporation ("Nomura"), a Delaware corporation. The
Operating Partnership, designated as the managing member, and PAT own a 49.9%
and 50.1% interest in GLN, respectively. The purpose of GLN is to fund loans to
the senior care industry, allowing the Company to expand its senior care loan
program.
The Operating Partnership originally acquired the Bonds with an aggregate
face value of $25,970,000 on October 4, 1995. The Bonds, which were issued by
the Massachusetts Industrial Finance Agency, are backed by mortgages on three
nursing homes owned by Hampden Nursing Homes, Inc., a Massachusetts nonprofit
corporation. Principal and interest payments due on these unrated bonds are
paid by the bond trustee out of the debt service payments received from the
underlying mortgages. The State of Massachusetts has not guaranteed the Bonds,
and the underlying mortgages are not insured in the event of default. Interest
on the Bonds is payable semiannually on April 1 and October 1 each year at the
rate of 9.75% and 9.5% for the Series A and B Bonds, respectively.
As of December 31, 1996, the Company's cumulative investment, through the
Operating Partnership, was $20,191,000 for the Series A Bonds, including
$503,000 of accrued interest, and $643,000 for the Series B Bonds, including
$543,000 of accrued interest. The Series A Bonds are not callable, and the
Series B Bonds are subordinated to the payment of interest and principal on the
Series A Bonds with no right of foreclosure.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(B) PRO FORMA FINANCIAL INFORMATION
Pro Forma Financial Information is presented on pages 3 through 11 of this
report.
Page 2
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G&L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The pro forma financial information is based on the historical financial
statements of the Company and should be read in conjunction with all of the
financial statements previously filed by the Company with the Securities and
Exchange Commission ("SEC") including those filed with the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 and the Company's Form
10-Q for the quarter ended March 31, 1997.
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet
as of December 31, 1996 is presented as if the Bonds were sold on December 31,
1996. The accompanying unaudited Pro Forma Condensed Consolidated Statements of
Operations for the year ended December 31, 1996 and the three-month period ended
March 31, 1997 are presented as if the Bonds were sold prior to January 1,
1996.
The accompanying unaudited pro forma financial statements give effect to
(i) the realized and unrealized gains from the sale of the Bonds to GLN, (ii)
the adjustments to assets available for sale, notes and bonds receivable, cash
and cash equivalents, accounts receivable and other assets included in the
records of the Operating Partnership, (iii) elimination of interest income from
the Bonds and interest expense related to the indebtedness incurred to acquire
the Bonds, and (iv) the effect of the Company's $3,165,000 increased investment
in GLN and the anticipated increase in the Company's equity interest in the
earnings of GLN.
The pro forma financial information is unaudited and is not necessarily
indicative of the consolidated results which actually would have occurred if the
transaction had been consummated on the dates described below, nor does it
purport to represent the Company's financial position and results of operations
for future periods.
Page 3
<PAGE>
G&L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
---------------------------------------------------------------
<S> <C> <C> <C>
ASSETS
- ------
Rental properties:
Land $ 17,096,000 $ 17,096,000
Buildings and improvements, net 76,135,000 76,135,000
------------ ------------
Total rental properties 93,231,000 93,231,000
Cash and cash equivalents 2,232,000 2,232,000
Accounts receivable, net 682,000 $ 536,000 1,218,000
Tenant rent and reimbursements receivable, net 1,048,000 1,048,000
Unbilled rent receivable, net 1,477,000 1,477,000
Investment in unconsolidated affiliate --- 2,609,000 2,609,000
Mortgage loans and bonds receivable 14,358,000 (643,000) 13,715,000
Assets available for sale 20,523,000 (20,191,000) 332,000
Deferred charges and other assets, net 2,445,000 (255,000) 2,190,000
------------ ------------ ------------
TOTAL ASSETS $135,996,000 $(17,944,000) $118,052,000
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Notes payable $109,025,000 $(18,500,000) $ 90,525,000
Accounts payable and other liabilities 1,462,000 1,462,000
Distributions payable 1,642,000 1,642,000
Tenant security deposits 1,034,000 1,034,000
------------ ------------ ------------
Total liabilities 113,163,000 (18,500,000) 94,663,000
Minority interest in consolidated partnership (2,718,000) (2,718,000)
Minority interest in Operating Partnership 3,103,000 59,000 3,162,000
Stockholders' equity:
Common shares - $.01 par value, 50,000,000 shares
authorized, 4,062,500 shares issued and
outstanding as of 3/31/96 41,000 41,000
Preferred shares - $.01 par value, 10,000,000 shares
authorized, no shares issued and outstanding --- ---
Additional paid-in capital 23,710,000 23,710,000
Net income in excess of distributions (1,303,000) 497,000 (806,000)
------------ ------------ ------------
Total stockholders' equity 22,448,000 497,000 22,945,000
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $135,996,000 $(17,944,000) $118,052,000
============ ============ ============
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Financial
Statements.
Page 4
<PAGE>
G&L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
-------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Rental $15,796,000 $15,796,000
Tenant reimbursements 728,000 728,000
Parking 1,251,000 1,251,000
Interest, loan fees and related income 6,712,000 $(2,499,000) 4,213,000
Other 549,000 549,000
----------- ----------- -----------
Total revenues 25,036,000 (2,499,000) 22,537,000
----------- ----------- -----------
EXPENSES:
Property operations 5,696,000 5,696,000
Depreciation and amortization 3,276,000 (140,000) 3,136,000
Interest 8,819,000 (1,435,000) 7,384,000
General and administrative 1,787,000 1,787,000
Loss on disposition of real estate 4,874,000 4,874,000
----------- ----------- -----------
Total expenses 24,452,000 (1,575,000) 22,877,000
----------- ----------- -----------
Income (loss) from operations 584,000 (924,000) (340,000)
Equity in earnings of unconsolidated affiliates --- 352,000 352,000
Minority interest in consolidated partnership (129,000) 5,000 (124,000)
Minority interest in Operating Partnership (65,000) (65,000)
----------- ----------- -----------
Income before extraordinary item 390,000 (567,000) (177,000)
Extraordinary item (net of minority interest) 9,311,000 9,311,000
----------- ----------- -----------
Net income $ 9,701,000 $ (937,000) $ 9,134,000
=========== =========== ===========
Per share data:
Before extraordinary item $0.10 $(0.04)
Extraordinary item 2.23 2.23
----------- -----------
Net income $2.33 $ 2.19
=========== ===========
Weighted average number of outstanding shares 4,172,000 4,172,000
</TABLE>
See accompanying notes to Pro Forma Condensed Consolidated Financial
Statements.
Page 5
<PAGE>
G&L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
----------------------------------------------------------
<S> <C> <C> <C>
REVENUES:
Rental $4,246,000 $4,246,000
Tenant reimbursements 249,000 249,000
Parking 360,000 360,000
Interest, loan fees and related income 1,575,000 $(1,179,000) 396,000
Other 109,000 109,000
---------- ----------- ----------
Total revenues 6,539,000 (1,179,000) 5,360,000
---------- ----------- ----------
EXPENSES:
Property operations 1,666,000 1,666,000
Depreciation and amortization 916,000 (60,000) 856,000
Interest 2,339,000 (420,000) 1,919,000
General and administrative 478,000 478,000
---------- ----------- ----------
Total expenses 5,399,000 (480,000) 4,919,000
---------- ----------- ----------
Income (loss) from operations 1,140,000 (699,000) 441,000
Equity in earnings of unconsolidated affiliates 132,000 87,000 219,000
Minority interest in consolidated partnership (30,000) (30,000)
Minority interest in Operating Partnership (136,000) 67,000 (69,000)
---------- ----------- ----------
Net income $1,106,000 $ (545,000) $ 561,000
========== =========== ==========
Net income per share $0.26 $0.13
Weighted average number of outstanding shares 4,175,000 4,175,000
</TABLE>
See accompanying Notes to Pro Forma Condensed Consolidated Financial
Statements.
Page 6
<PAGE>
G&L REALTY CORP.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. GENERAL
G&L Realty Corp. (the "Company") was formed as a Maryland corporation on
September 15, 1993 to continue the ownership, management, acquisition and
development operations of medical office buildings conducted previously by G&L
Development, the Company's predecessor. All of the Company's assets are held
by, and all of its operations are conducted through, the following
entities:
G&L Realty Partnership, L.P., a Delaware limited partnership
(the "Operating Partnership")
G&L Realty Financing Partnership II, L.P., a Delaware limited
partnership
(the "Realty Financing Partnership")
G&L Medical Partnership, L.P., a Delaware limited partnership
(the "Medical Partnership")
435 North Roxbury Drive, Ltd., a California limited partnership
(the "Roxbury Partnership")
The Company, as the sole general partner and as owner of an approximately
89.1% ownership interest, controls the Operating Partnership. The Company also
controls the Realty Financing Partnership through its wholly owned subsidiary
G&L Realty Financing II, Inc., a Delaware corporation, which is the sole general
partner and 1% owner of the Realty Financing Partnership. The sole limited
partner and 99% owner of the Realty Financing Partnership is the Operating
Partnership. The sole limited partner and 99% owner of the Medical Partnership
is the Operating Partnership. The Company controls the Medical Partnership
through its wholly owned subsidiary, G&L Medical, Inc., a Delaware corporation,
which is the sole general partner and 1% owner of the Medical Partnership.
References in these consolidated financial statements to the Company, its
operations, assets and liabilities include the operations, assets and
liabilities of its consolidated subsidiaries, the Operating Partnership, the
Realty Financing Partnership, the Medical Partnership and the Roxbury
Partnership, in which the Operating Partnership owns a 61.75% partnership
interest and is the sole general partner.
The Company also owns interests in two unconsolidated affiliates: (i) GLN
Capital Co., LLC ("GLN"), a Delaware limited liability company formed in 1996,
and (ii) GL/PHP, LLC ("GL/PHP"), a Delaware limited liability company formed in
1997. GLN is owned 49.9% by the Operating Partnership and 50.1% by PAT, an
affiliate of Nomura Asset Capital Corp. ("Nomura"). The purpose of GLN is to
fund loans to the senior care industry.
The Operating Partnership and PHP Healthcare Corporation, a Delaware
corporation ("PHP") own 80.5% and 19.5% interests, respectively, in GL/PHP,
which purchased six New Jersey medical office properties in February 1997 for
$22.4 million. The properties total 80,415 square feet and have been leased to
PHP for 25 years.
Page 7
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2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business- The Company is a self-administered and self-managed Real Estate
Investment Trust ("REIT") that finances, acquires, develops, manages and leases
health care properties. The Company's business currently consists primarily of
investments, either directly or through joint ventures, in health care
properties (primarily through its Medical Office Building Division) and in debt
obligations secured by health care properties (primarily through its Senior Care
Division).
Basis of Presentation - The accompanying condensed consolidated financial
statements include the accounts of the Company. The interests in the Roxbury
Partnership not owned by the Company have been reflected in minority interests.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
The information for the three months ended March 31, 1997 has not been
audited by independent accountants, but includes all adjustments (consisting of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the results for such periods. The results of
operations for the three months ended March 31, 1997 are not necessarily
indicative of results that might be expected for the full fiscal year.
Certain information and footnote disclosures normally included in annual
financial statements have been omitted. The Company believes that the
disclosures included in these financial statements are adequate for a fair
presentation and conform to reporting requirements established by the SEC. The
condensed consolidated financial statements as presented herein should be read
in conjunction with the audited consolidated financial statements and notes
thereto included in the Company's annual report on Form 10-K as filed with the
SEC.
The Condensed Consolidated Balance Sheets reflect the combined assets and
liabilities of the Company. The Condensed Consolidated Statements of Operations
and Cash Flows have been prepared to reflect the operations of the Company for
the three months ended March 31, 1997.
Per Share Data - Earnings per share are computed based upon the weighted
average number of common shares outstanding during the period. The treasury
stock method is used to determine the number of incremental common equivalent
shares resulting from options granted under the Company's 1993 Amended and
Restated Stock Incentive Plan. At a weighted average exercise price of $11.95
and a market price $17.00, the 367,000 outstanding stock options increase the
number of shares outstanding by 109,000 at December 31, 1996. As of March 31,
1997, there were approximately 362,000 stock options outstanding with a weighted
average exercise price of $11.95. Using the closing market price of $17.50 on
March 31, 1997, the number of shares to be issued is 112,000.
Page 8
<PAGE>
3. DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets changed as follows:
<TABLE>
<CAPTION>
As of December 31, 1996
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
------------------------------------------
<S> <C> <C> <C>
Loan fees $2,061,000 $(265,000) $1,796,000
Pre-acquisition costs 17,000 17,000
Leasing commissions 462,000 462,000
Prepaid expense and other assets 272,000 272,000
---------- --------- ----------
2,812,000 (265,000) 2,547,000
Less accumulated amortization (367,000) 10,000 (357,000)
---------- --------- ----------
Total $2,445,000 $(255,000) $2,190,000
========== ========= ==========
</TABLE>
During 1996, the Company advanced $195,000 in the form of a refundable
loan processing fee to obtain a new loan to replace the $14,000,000 GMAC-CM loan
which would have been due June 6, 1997. In December 1996, the Company paid
$70,000 to extend the note payable to GMAC-CM for six months from December 6,
1996 to June 6, 1997.
4. ASSETS AVAILABLE FOR SALE
Assets available for sale as of December 31, 1996 consist of the
following:
<TABLE>
<CAPTION>
As of December 31, 1996
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
-----------------------------------------------------------
<S> <C> <C> <C>
Unrated Series A Industrial Revenue Bonds
due October 1, 2017 collateralized by
deed of trust, interest payable semiannually
at 9.75% per annum (including accrued
interest of $503,466) $20,191,000 $(20,191,000) $ ---
Land 280,000 280,000
Unsecured subordinated notes receivable
due February 1, 2006, interest payable
semiannually at 12.0% per annum
(including accrued interest of $2,050) 27,000 27,000
Miscellaneous supplies and equipment 25,000 25,000
----------- ------------ ----------
Total assets available for sale $20,523,000 $(20,191,000) $ 332,000
=========== ============ ==========
</TABLE>
The Company received cash for all the accrued interest on the Series A
bonds at the time of the sale. Outstanding accrued interest on the Series B
bonds were transferred to the buyer.
Page 9
<PAGE>
5. PRO FORMA ESTIMATES AND ASSUMPTIONS
Acquisition loans and the related interest expense associated with the
investment in the Bonds have been eliminated. In conjunction with the March 31,
1997 sale of the Bonds, the Company extinguished $18.5 million in debt. The
following table represents the loans and estimated interest costs associated
with the extinguished debt:
<TABLE>
<CAPTION>
Year Ended Three Months Ended
Loan Amounts December 31, 1996 March 31, 1997
-------------------------------------------------------
<S> <C> <C> <C>
GMAC-CM Term loan - 9.75-10.0% $14,000,000 $1,291,300 $337,000
Credit line - 7.35% 4,500,000 144,000 83,000
----------- ---------- --------
Totals $18,500,000 $1,435,300 $420,000
=========== ========== ========
</TABLE>
6. INVESTMENT IN UNCONSOLIDATED AFFILIATE
GLN acquired the Bonds from the Company for total consideration of
$21,665,000, which was realized in the form of $14,000,000 debt relief,
$4,500,000 in cash and $3,165,000 in deemed capital contributions. At the time
of the sale, the Company's cumulative investment in the Series A and Series B
Bonds was $19,758,000 and $795,000, respectively. The resulting gain on sale
was $1,112,000. The Company recognized gain to the extent of PAT's 50.1%
ownership interest in GLN; however, no gain was recognized to the extent of the
Company's 49.9% ownership interest in GLN. The unrecognized gain of
approximately $556,000 is recorded as an offset to the Company's $3,165,000
deemed contribution to GLN, resulting in a net contribution of $2,609,000. The
Company intends to recognize the remaining $556,000 when GLN subsequently
disposes of the Bonds.
In conjunction with the Bond sale, the Company, Nomura and PAT amended
the GLN operating agreement (see Exhibit 10.39 "First Amendment To Limited
Liability Company Agreement"). Under the terms of the amendment, the interest
on Nomura's $3,000,000 loan to GLN and PAT's preferred return on its $1,500,000
investment in GLN is increased from 9% to 12% for the first year following GLN's
acquisition of the Bonds. Therefore, the pro forma revenues and expenses and
the related allocation of earnings for GLN resulting from the purchase and sale
of the Bonds is as indicated on the following page.
Page 10
<PAGE>
GLN CAPITAL CO., LLC
PRO FORMA REVENUES AND EXPENSES
FROM INVESTMENT IN SERIES A AND B BONDS
<TABLE>
<CAPTION>
Year Ended Three Months
Ended
December 31, 1996 March 31, 1997
-----------------------------------
<S> <C> <C>
Revenues:
Interest - Series A Bonds $2,024,000 $504,000
Interest - Series B Bonds 475,000 119,000
---------- --------
Total Revenues 2,499,000 623,000
Expenses:
GMAC - CM interest expense 1,400,000 350,000
Nomura interest expense 360,000 90,000
Amortization of deferred financing costs 140,000 35,000
---------- --------
Total expenses 1,900,000 475,000
Net income $ 599,000 $148,000
========== ========
Allocation of GLN net income:
PAT $ 247,000 $ 61,000
Operating Partnership 352,000 87,000
---------- --------
Total Allocations $ 599,000 $148,000
========== ========
</TABLE>
Page 11
<PAGE>
(C) EXHIBITS
*10.38 Bond Purchase Agreement dated as of March 31, 1997 by and between
GLN Capital Co., LLC (as Buyer) and G&L Realty Partnership, L.P.
(as Seller).
*10.39 First Amendment To Limited Liability Company Agreement entered
into as of March 31, 1997 by and between G&L Realty Partnership,
L.P., a Delaware limited partnership, and Property Acquisition
Trust I, a Delaware business trust, for the purpose of amending
that certain Limited Liability Company Agreement of GLN Capital
Co., LLC dated as of November 25, 1996.
- --------------------
* Previously filed as an exhibit of like number to the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 and incorporated herein by
reference.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
G & L REALTY CORP.
Dated: May 30, 1997
/s/ Quentin Thompson
---------------------
Quentin Thompson
Chief Accounting Officer, Treasurer and
Secretary
Page 12
