<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): OCTOBER 28, 1997
G & L REALTY CORP.
(Exact name of Registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
MARYLAND 1-12566 95-4449388
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification No.)
</TABLE>
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 October 15, 1997, G & L Realty Corp. (the "Company") and G&L Realty
Partnership, L.P. (the "Operating Partnership") created two new entities for the
purpose of acquiring three nursing homes in Massachusetts (the "Hampden
Properties.") The Company has formed G&L Hampden, Inc., a Delaware corporation
and wholly owned subsidiary of the Company. The Operating Partnership and G&L
Hampden, Inc. have entered into an operating agreement and have formed G&L
Hampden, LLC ("G&L Hampden"), a Delaware limited liability company which is 99%
owned by the Operating Partnership and 1% owned by G&L Hampden, Inc. its sole
managing member. On October 28, 1997, G&L Hampden acquired the Hampden
Properties from Hampden Nursing Homes, Inc. ("Hampden Nursing") for a total
aggregate consideration of approximately $20.0 million. Of this amount, G&L
Hampden borrowed $6.0 million from Nomura Asset Capital Corp. ("Nomura") at
an interest rate of 8.62% per annum. The Hampden Properties were pledged as
security for the repayment of this loan. Under this loan, the Company may, at
any time during the next two years, make up to two additional draws of not less
than $2.0 million each, up to an aggregate loan amount of 14.0 million
(including the initial draw under the loan). In the event the Company makes an
additional loan draw, the interest rate on such draw will be 2.5% per annum
above the prevailing market rate on U.S. Treasury Securities of equivalent
maturity. The loan agreement with Nomura provides for a term of 12 years and
requires monthly interest and principal payments based upon a 27-year
amortization schedule. At the end of 12 years, all unpaid principal and interest
will be due in full. The Company has the option to prepay this loan at any time
upon the payment of a premium that, when added to the remaining principal amount
of the note, will be sufficient to purchase non-callable obligations of the U.S.
Government sufficient to provide for the scheduled payments remaining under the
note. As a condition of the loan, Nomura has required G&L Hampden to place
$400,000 into a reserve account which may be used to fund unspecified
maintenance capital reserves.
In conjunction with the acquisition of the Hampden Properties, the Company
entered into a 15-year net operating lease with Iatros Health Network, Inc.
("Iatros"). Although Iatros is the current operator of the Hampden Properties,
the licenses necessary to operate the Hampden Properties are currently held by
Hampden Nursing. Iatros has applied for state authorization to operate the
Hampden Properties without the participation of Hampden Nursing. Although this
transfer will be handled in the normal course of business, the parties
anticipate that it will take approximately 90 days to transfer the licenses from
the close of the transaction. Until the licenses are transferred, the Company
has leased the facilities to Hampden Nursing which has engaged Iatros to manage
the facilities until the licenses are transferred. The lease between the Company
and Hampden Nursing requires monthly lease payments of $225,000 and expires upon
transfer of the operating licenses from Hampden Nursing to Iatros. The Company's
lease with Iatros for the Hampden Properties provides for the monthly lease
payments of $225,000 and fixed annual increases of 2.0% per year during the
first seven years. Thereafter, the annual increase will be based upon the
greater of 2.0% of the previous year's rent or 2.5% of the increase in gross
receipts derived from the operation of the Hampden Properties in excess of
$17,750,000. Although management believes that Iatros will receive approval for
the transfer of the operating license from Hampden Nursing in a timely manner,
there can be no assurance that the license will be transferred or, if it is,
that the transfer will occur within the expected 90-day time period from the
close of the transaction.
The Hampden Properties consist of Riverdale Gardens Nursing Home, located
in West Springfield, Massachusetts, Chestnut Hill Nursing Home, located in East
Longmeadow, Massachusetts and Mary Lyon Nursing Home, located in Hampden,
Massachusetts.
Riverdale Gardens Nursing Home is a 168-bed nursing facility currently
licensed for 84 skilled care and 84 intermediate care beds with 16 private and
76 double occupancy rooms. Constructed in various stages between 1957 and 1975,
the property consists of a single story, 54,451 square foot building on
approximately 3.85 acres as well as a 3,366 square foot family residence on an
adjacent 30,000 square foot lot.
Chestnut Hill Nursing Home is a 123-bed nursing home consisting of 82
skilled nursing and 41 intermediate care beds with 15 private and 54 double
occupancy rooms. The facility is a 49,198 square foot, single story building
constructed in 1984 on approximately 11.9 acres of land.
Mary Lyon Nursing Home occupies a 28,940 square foot building situated on
3.7 acres and was originally constructed in 1959 and renovated in 1986. The
facility is licensed for 100 beds of which 40 are skilled nursing and 60 are
intermediate care beds with ten private rooms, 39 double occupancy and three
quadruple occupancy rooms.
Page 2
<PAGE>
The following table sets forth certain information regarding the Hampden
Properties as of October 28, 1997.
<TABLE>
<CAPTION>
Year Constructed
or Total Average Annual
Rehabilitated Number of Purchase Annualized Rent Per Bed
Property Beds Price Rent
- ----------------------------------------- ----------------- ---------- --------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Riverdale Gardens Nursing Home........... 1957-1975 168 $ 5,650,000 $ 762,420 $ 4,538
Chestnut Hill Nursing Home............... 1984 123 10,616,000 1,432,800 11,649
Mary Lyon Nursing Home................... 1986 100 3,741,000 504,780 5,048
----------- ----------
Total $20,007,000 $2,700,000
</TABLE>
The total annualized rent expected to be derived from the Hampden
Properties is approximately $2.7 million, or approximately 11.5% of the
Company's total annualized rental income based on current rental rates. This
rental income will be derived from Hampden Nursing until the transfer of the
licenses to Iatros, at which time Iatros will be responsible for the rent on the
Hampden Properties. Iatros has recently experienced problems in operating
certain senior care facilities and had reported financial difficulties which
could materially and adversely affect the Company's results of operations and
its ability to make expected distributions to stockholders. In light of such
difficulties, Iatros has recently hired a new management team to improve its
senior care facility operating capabilities. Although the Company believes that
this new management team will be able to operate senior care facilities
profitably, there can be no assurance that Iatros' facility operations will
improve under its new management team.
Page 3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(A) Financial Statements of Businesses Acquired
Financial Statements of Iatros for the period specified in Rule 3-14 of
Regulation S-X are included as part of Iatros' Quarterly Report on Form 10-
Q for the quarter ended September 30, 1997 (File No.: 0-20345) and are
incorporated herein by reference.
(B) Pro forma Financial Information
G & L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(UNAUDITED)
This Pro Forma Condensed Consolidated Balance Sheet reflects the September
30, 1997: (i) unaudited assets, liabilities and stockholders' equity of G&L
Realty Corp. (the "Company") as previously reported in the Company's Form 10-Q,
(ii) unaudited pro forma adjustments, and (iii) an unaudited pro forma statement
which presents the September 30, 1997 balance sheet as if the acquisition of the
Hampden Properties and the execution of the related 15-year net operating lease
between the Company and Iatros had been completed as of September 30, 1997.
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
---------------------------------------------------------
ASSETS
- ------
<S> <C> <C> <C>
Rental properties:
Land $ 23,521,000 $ 3,078,000 $ 26,599,000
Buildings and improvements, net 95,117,000 16,929,000 112,046,000
------------ ------------ ------------
Total rental properties 118,638,000 20,007,000 138,645,000
Cash and cash equivalents 570,000 2,163,000 2,733,000
Restricted Cash 2,566,000 400,000 2,966,000
Accounts receivable, net 1,013,000 47,000 1,060,000
Tenant rent and reimbursements receivable, net 1,581,000 1,581,000
Unbilled rent receivable, net 1,722,000 1,722,000
Investments in unconsolidated affiliates 5,391,000 (2,653,000) 2,738,000
Mortgage loans and bonds receivable 30,224,000 (14,000,000) 16,224,000
Assets available for sale 287,000 287,000
Deferred charges and other assets, net 2,354,000 36,000 2,390,000
------------ ------------ ------------
TOTAL ASSETS $164,346,000 $ 6,000,000 $170,346,000
============ ============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS EQUITY
- -----------------------------------
<S> <C> <C> <C>
Liabilities:
Notes payable $103,939,000 $6,000,000 109,939,000
Accounts payable and other liabilities 1,617,000 1,617,000
Distributions payable 1,601,000 1,601,000
Tenant security deposits 1,044,000 1,044,000
------------ ------------ ------------
Total liabilities 108,201,000 6,000,000 114,201,000
Commitments and contingencies --- ---
Minority interest in consolidated partnership (2,645,000) (2,645,000)
Minority interest in Operating Partnership 2,966,000 2,966,000
Stockholders' equity:
Preferred shares - $.01 par value, 10,000,000 shares
authorized, 1,495,000 shares of 10.25% Series A
Cumulative issued and outstanding as of 6/30/97 15,000 15,000
Common shares - $.01 par value, 50,000,000 shares
authorized, 4,005,700 shares issued and outstanding as
of 6/30/97 40,000 40,000
Additional paid-in capital 58,186,000 58,186,000
Distributions in excess of net income (2,417,000) (2,417,000)
------------ ------------ ------------
Total stockholders' equity 55,824,000 55,824,000
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $164,346,000 $6,000,000 170,346,000
============ ============ ============
</TABLE>
Page 4
<PAGE>
G & L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
This Pro Forma Condensed Consolidated Statement of Operations for the year
ended December 31, 1996 reflects: (i) the audited revenues, expenses and net
income of the Company as previously reported in the Company's Form 10-K, (ii)
unaudited pro forma adjustments, and (iii) an unaudited pro forma statement of
revenues, expenses and operating income of the as if the acquisition of the
Hampden Properties and the execution of the related 15-year net operating lease
between the Company and Iatros had been completed as of January 1, 1996, the
start of the Company's fiscal year.
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
------------------ ----------------- ------------------
(Audited) (Unaudited) (Unaudited)
<S> <C> <C> <C>
REVENUES:
Rental ......................................... $ 15,796,000 $ 2,700,000 $ 18,496,000
Tenant reimbursements .......................... 728,000 728,000
Parking ........................................ 1,251,000 1,251,000
Interest, loan fees and other .................. 6,712,000 (2,631,000) 4,081,000
Other .......................................... 549,000 549,000
------------- ------------ ------------
Total revenues .............................. 25,036,000 69,000 25,105,000
------------- ------------ ------------
EXPENSES:
Property operations ............................ 5,696,000 5,696,000
Depreciation and amortization .................. 3,276,000 440,000 3,716,000
Interest ....................................... 8,819,000 (855,000) 7,964,000
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 (415,000) 24,037,000
------------- ------------ ------------
Income from operations before minority interests and
extraordinary gains (losses) ................... 584,000 484,000 1,068,000
Minority interest in consolidated partnership ...... (129,000) (129,000)
Minority interest in Operating Partnership ......... (65,000) (53,000) (118,000)
------------- ------------ ------------
Income before extraordinary gains (losses) ......... 390,000 431,000 821,000
Extraordinary gain, net of minority interest ... 9,311,000 9,311,000
------------- ------------ ------------
Net income ......................................... $ 9,701,000 431,000 $ 10,132,000
============= ============ ============
Per share data:
Income before extraordinary gains (losses) ..... $ 0.10 $ 0.10 $ 0.20
Extraordinary gains (losses) ................... 2.23 2.23
------------- ------------ ------------
Net income ..................................... $ 2.33 $ 0.10 $ 2.43
============= ============ ============
Weighted average number of outstanding shares ...... 4,172,000 4,172,000
</TABLE>
Page 5
<PAGE>
G & L REALTY CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
This Pro Forma Condensed Consolidated Statement of Operations for the nine
months ended September 30, 1997 reflects: (i) the unaudited revenues, expenses
and net income of the Company as previously reported in the Company's Form 10-Q,
(ii) unaudited pro forma adjustments, and (iii) an unaudited pro forma statement
of revenues, expenses and operating income of the Company as if the acquisition
of the Hampden Properties and the execution of the related 15-year net operating
lease between the Company and Iatros had been completed as of January 1, 1997,
the start of the Company's current fiscal year.
<TABLE>
<CAPTION>
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
------------------ ----------------- ------------------
<S> <C> <C> <C>
REVENUES:
Rental ......................................... $ 14,614,000 $ 2,025,000 16,639,000
Tenant reimbursements .......................... 584,000 584,000
Parking ........................................ 1,048,000 1,048,000
Interest, loan fees and other .................. 3,444,000 (1,637,000) 1,807,000
Other .......................................... 221,000 221,000
------------- ------------ ------------
Total revenues .............................. 19,911,000 388,000 20,299,000
------------- ------------ ------------
EXPENSES:
Property operations ............................ 4,657,000 4,657,000
Depreciation and amortization .................. 2,947,000 397,000 3,344,000
Interest ....................................... 6,749,000 51,000 6,800,000
General and administrative ..................... 1,509,000 1,509,000
------------- ------------ ------------
Total expenses .............................. 15,862,000 448,000 16,310,000
------------- ------------ ------------
Income from operations before minority interests and
equity in earnings of unconsolidated affiliates. 4,049,000 (60,000) 3,989,000
Equity in earnings of unconsolidated affiliate ..... 866,000 (234,000) 632,000
Minority interest in consolidated affiliates ....... (135,000) (135,000)
Minority interest in Operating Partnership ......... (400,000) 32,000 (368,000)
------------- ------------ ------------
Net income ......................................... $ 4,380,000 $ (262,000) $ 4,118,000
============= ============ ============
Net income per share ............................... $ 0.70 $ 0.06 $ 0.64
============= ============ ============
Weighted average number of outstanding shares ...... 4,135,000 4,135,000
</TABLE>
Page 6
<PAGE>
BUILDINGS AND IMPROVEMENTS
Buildings and improvements consist of the following:
<TABLE>
<CAPTION>
As of September 30, 1997
(Unaudited)
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
-------------------------------------------
<S> <C> <C> <C>
Buildings and improvements $102,674,000 $15,885,000 $118,559,000
Tenant improvements 5,123,000 5,123,000
Furniture, fixtures and equipment 372,000 1,044,000 1,416,000
-------------- ----------- ------------
108,169,000 16,929,000 125,098,000
Less accumulated depreciation and
amortization (13,052,000) (13,052,000)
-------------- ----------- ------------
Total $ 95,117,000 $16,929,000 $112,046,000
============== =========== ============
</TABLE>
DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets consist of the following:
<TABLE>
<CAPTION>
As of September 30, 1997
(Unaudited)
As Previously Pro Forma Pro Forma
Stated Adjustments Statement
------------------------------------------------
<S> <C> <C> <C>
Deferred financing costs $1,760,000 $36,000 $1,796,000
Pre-acquisition costs 63,000 63,000
Leasing commissions 576,000 576,000
Prepaid expense and other assets 397,000 397,000
---------- --------- ----------
2,796,000 36,000 2,832,000
Less accumulated amortization (442,000) (442,000)
---------- --------- ----------
Total $2,354,000 $36,000 $2,390,000
========== ========= ==========
</TABLE>
Page 7
<PAGE>
PRO FORMA FUNDS FROM OPERATIONS
Industry analysts generally consider FFO to be an appropriate measure of the
performance of a REIT. The Company presents FFO based upon the guidelines
established by the Board of Governors of the National Association of Real Estate
Investment Trusts ("NAREIT"). FFO is calculated to include the minority
interest's share of income since the Operating Partnership's net income is
allocated proportionately among all owners of Operating Partnership units. The
number of Operating Partnership units held by the Company is identical to the
number of outstanding shares of the Company's common stock, and owners of
Operating Partnership units may, at their discretion and subject to certain
restrictions, exchange their units into shares of common stock on a one-for-one
basis.
Management believes that in order to facilitate a clear understanding of
the operating results of the Company, FFO should be examined in conjunction with
the Company's net income as presented in the Condensed Consolidated Financial
Statements and Notes thereto included in the Company's interim results as
reported on Form 10-Q, the additional data presented below, and the Company's
Consolidated Financial Statements and related Notes included in the Company's
annual report on Form 10-K. FFO is only one of a range of indicators which
should be considered in determining a company's operating performance. The
methods of calculating FFO among different companies are subject to variation,
and FFO therefore may be an invalid measure of comparing companies. Also, the
elimination of depreciation and gains and losses on sales of property may not be
a true indication of an entity's ability to recover its investment in
properties. The table below present an analysis of pro forma FFO for the six
months ended June 30, 1997 and the year ended December 31, 1996.
<TABLE>
<CAPTION>
For the nine months ended For the year ended
September 30, 1997 December 31, 1996
(Unaudited) (Unaudited)
As As
Previously Pro Forma Pro Forma Previously Pro Forma Pro Forma
Stated Adjustments Statement Stated Adjustments Statement
--------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
FUNDS FROM OPERATIONS (1):
- -------------------------
Net Income $ 4,380 $ (262) $ 4,118 $ 9,701 $ 431 $ 10,132
ADD: Minority interest in Operating
Partnership 400 (32) 368 65 53 118
ADD: Real estate related depreciation
and amortization 2,461 298 2,759 2,727 397 3,124
ADD: Loss on disposition of rental --- --- 4,874 4,874
property
LESS: Extraordinary gain --- --- (9,311) (9,311)
LESS: Adjustment for minority interest
in consolidated affiliates (61) (61) (28) (28)
LESS: Dividends on preferred stock (1,150) (1,150) --- ---
------- ------ ------- ------- ----- --------
FUNDS FROM OPERATIONS $ 6,030 $ 4 $ 6,034 $ 8,028 $ 881 $ 8,909
======= ====== ======= ======= ===== ========
Weighted average number of outstanding
shares and units 4,523 4,523 4,542 4,542
</TABLE>
(see footnotes on following page)
Page 8
<PAGE>
_____________
(1) FFO represents net income (computed in accordance with generally accepted
accounting principles, consistently applied ("GAAP")), excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation of
real property, less preferred stock dividends PAID DURING THE PERIOD and
after adjustments for consolidated and unconsolidated entities in which the
Company holds a partial interest. FFO is computed in accordance with the
definition adopted by NAREIT. Dividends on the Company's preferred stocks
are paid monthly in arrears on the fifteenth day of the month to holders of
record on the first day of each month. FFO should not be considered as an
alternative to net income or any other indicator developed in compliance
with GAAP, including measures of liquidity such as cash flows from
operating, investing and financing activities. FFO is helpful in
evaluating the performance of a real estate portfolio considering the fact
that historical cost accounting assumes that the value of real estate
diminishes predictably over time. FFO is only one of a range of indicators
which should be considered in determining a company's operating
performance. The methods of calculating FFO among different companies are
subject to variation; therefore, FFO may be an invalid measure for purposes
of comparing companies. Also, the elimination of depreciation and gains
and losses on sales of property may not be a true indication of an entity's
ability to recover its investment in properties. The Company implemented
the new method of calculating FFO effective as of the NAREIT-suggested
adoption date of January 1, 1996.
(2) Assumes that all outstanding Operating Partnership units have been
converted to common stock.
(c)
10.53* Purchase and Sales Agreement, dated October 1, 1997, by and between
Hampden Nursing Homes, Inc. and G&L Senior Care, LLC.
10.54* Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Holding Group, Inc.
10.55* Loan Commitment, dated October 23, 1997, by and between G&L Realty
Partnership, L.P. and Iatros Health Network, Inc.
10.56* Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Nursing Homes, Inc.
10.57* Guaranty of Lease, dated October 1, 1997, by Iatros Health Network,
Inc.
10.58* Limited Liability Company Agreement of G&L Hampden, LLC.
10.59* Loan Agreement by and between Nomura Asset Capital Corporation and
G&L Hampden, LLC.
10.60* Promissory Note in the amount of $6,000,000 given by G&L Hampden,
LLC in favor of Nomura Asset Capital Corporation.
10.61* Form of Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing for each of the 3 Hampden Properties.
- -----------------
* Filed as an exhibit to the Registant's Current Report on Form 8-K (filed as of
October 28, 1997).
Page 9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
G & L REALTY CORP.
Date: December 24, 1997 /s/ Quentin Thompson
----------------------------
Quentin Thompson
Chief Accounting Officer,
Treasurer and Secretary
Page 10
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<C> <S>
10.53* Purchase and Sales Agreement, dated October 1, 1997, by and
between Hampden Nursing Homes, Inc. and G&L Senior Care, LLC.
10.54* Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Holding Group, Inc.
10.55* Loan Commitment, dated October 23, 1997, by and between G&L
Realty Partnership, L.P. and Iatros Health Network, Inc.
10.56* Lease and Agreement, dated October 1, 1997, by and between G&L
Hampden, LLC and Hampden Nursing Homes, Inc.
10.57* Guaranty of Lease, dated October 1, 1997, by Iatros Health
Network, Inc.
10.58* Limited Liability Company Agreement of G&L Hampden, LLC.
10.59* Loan Agreement by and between Nomura Asset Capital Corporation
and G&L Hampden, LLC.
10.60* Promissory Note in the amount of $6,000,000 given by G&L
Hampden, LLC in favor of Nomura Asset Capital Corporation.
10.61* Form of Mortgage, Assignment of Rents, Security Agreement and
Fixture Filing for each of the 3 Hampden Properties.
</TABLE>
- --------------
* Filed as an exhibit to the Registrant's Current Report on Form 8-K (filed as
of October 28, 1997).
Page 11
