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
JUNE 12, 1998
Date of Report (Date of earliest event reported)
MID-AMERICA APARTMENT COMMUNITIES, INC.
(Exact name of registrant as specified in its charter)
TENNESSEE 1-12762 62-1543819
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6584 POPLAR AVENUE, SUITE 340, MEMPHIS, TENNESSEE 38138
(Address of principal executive offices) (Zip Code)
(901) 682-6600
Registrant's telephone number, including area code
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
Item 5. Other events.
The registrant hereby files this Current Report on Form 8-K with the
Securities Exchange Commission to provide the Unaudited Pro Forma Condensed
Combined Statement of Operations for the Year Ended December 31, 1997 and Notes
thereto, as set forth on the pages attached hereto.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
BASIS OF PRESENTATION
The accompanying pro forma statement of operations provides pro forma
information for the year ended December 31, 1997. The unaudited pro forma
condensed combined balance sheet at December 31, 1997 is not presented as the
transactions described below on this Form 8-K were consummated on or before
December 31, 1997 and are therefore included in the Company's consolidated
balance sheet at December 31, 1997. The unaudited pro forma condensed combined
statement of operations for the year ended December 31, 1997 is presented as if
each of the transactions described below had been consummated on January 1,
1997; (i) the FDC Merger and Reorganization consummated on November 25, 1997
pursuant to which MAAC and MAALP acquired all the properties and assets
comprising the Flournoy Properties Group, including FDC, in exchange for
1,552,355 shares of Common Stock, 412,110 Class A Common Units of MAALP, and
approximately $29.6 million cash; in addition, MAAC prepaid certain FPG
indebtedness totalling approximately $213.1 million and assumed certain FPG
indebtedness totalling approximately $93.5 million. In connection with the
Reorganization, FDC disposed of its interest in the Section 42 partnerships
prior to the date of the Reorganization; (ii) the acquisition in 1997 of ten
Communities containing an aggregate of 2,938 apartment units for an aggregate
cash purchase price of $121.5 million (the "1997 Completed Acquisitions"); (iii)
the issuance and sale in November 1997 of 1,983,800 shares of MAAC's 8.875%
Series B Cumulative Preferred Stock (Liquidation Preference $25 per share) for
an aggregate net cash price of $46.7 million (the "Preferred Stock Offering"),
and the related use of such proceeds; (iv) the issuance and sale in October 1997
of 3,499,300 shares of MAAC Common Stock for an aggregate net cash price of
$98.2 million (the "Common Stock Offering"), and the related use of such
proceeds; (v) the issuance and sale in March 1997 of 2,300,000 shares of MAAC
Common Stock for an aggregate net cash price of $62.6 million, and the related
use of such proceeds; (vi) the establishment of a $142 million aggregate
principal amount of Bonds bearing interest at 6.95% per annum (the "New Credit
Facilities") that was used to partially finance the Reorganization.
The unaudited pro forma condensed combined statement of operations does not
give effect to the following property acquisitions: 1) Sterling Ridge
Apartments, a 192 unit community acquired on November 12, 1997, for $7.7 million
including a bond assumption of $4.8 million; 2) Colony at South Park, a 184 unit
community acquired on November 25, 1997, for $7.5 million; 3) Walden Run
Apartments, a 240 unit community acquired on February 5, 1998, for $13.4
million; 4) Van Mark Apartments, a 154 unit community acquired on February 26,
1998, for $5.1 million; 5) Eagle Ridge Apartments, a 200 unit community acquired
on May 6, 1998, for $8.4 million including a loan assumption of $6.5 million and
6) Georgetown Grove Apartments, a 220 unit community acquired on May 29, 1998,
for $12.8 million including a loan assumption of $10.5 million. These property
acquisitions are not included in the pro forma condensed combined statement of
operations because the effect of such acquisitions are not significant.
The 1997 Completed Acquisitions consist of the following properties:
Properties Purchase Price
---------- --------------
Howell Commons 13,000,000
Balcones Woods 15,800,000
Westside Creek I 6,100,000
Villages at Hartland 10,300,000
Woodhollow 16,700,000
The Woods 10,000,000
Oaks at Deerwood 15,200,000
Austin Chase 14,000,000
Westside Creek II 6,500,000
Woodwinds 5,000,000
Hermitage at Beechtree 8,936,200
-----------
121,536,200
<PAGE>
The unaudited pro forma condensed combined statement of operations for the
year ended December 31, 1997 also assumes that MAAC had qualified as a REIT and
distributed all of its taxable income for the period presented and, therefore,
incurred no income tax expense.
For purposes of this pro forma condensed combined statement of operations,
the Reorganization has been accounted for as a purchase in accordance with
Accounting Principles Board Opinion No. 16. In the opinion of MAAC's management,
all significant adjustments necessary to reflect the effects of the foregoing
transactions have been made.
The unaudited condensed combined pro forma statement of operations has been
prepared by MAAC based on the historical financial statements of FPG and MAAC,
which have been previously filed with the Securities and Exchange Commission and
are incorporated herein by reference. This unaudited pro forma condensed
combined statement of operations should be read in conjunction with the
foregoing historical financial statements, including the notes thereto. This
pro forma condensed combined statement of operations is presented for
comparative purposes only and is not indicative of what the actual results of
operations of MAAC would have been had the foregoing transactions occurred on
the dates indicated.
<PAGE>
MID-AMERICA APARTMENT COMMUNITIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MAAC FPG COMBINED
PRO FORMA(A) HISTORICAL(B) ADJUSTMENTS(C) PRO FORMA
------------ ------------- -------------- ----------
<S> <C> <C> <C>
REVENUES:
Property
Rental.......................... $142,862 $43,743 -- $186,605
Other........................... 3,446 2,521 -- 5,967
Property management.................. 164 1,245 -- 1,409
Development.......................... -- 738 -- 738
Construction, net.................... -- 1,523 (765)(D) 758
Miscellaneous........................ -- 696 (425)(E) 271
------------ ------------- ------------ ----------
TOTAL REVENUES............. 146,472 50,466 (1,190) 195,748
EXPENSES:
Personnel............................ 15,311 5,038 -- 20,349
Building repairs / maintenance,
utilities, landscaping, and other
operating.......................... 24,685 7,301 -- 31,986
Real estate taxes and insurance...... 15,346 4,530 -- 19,876
Depreciation and amortization ....... 29,223 11,259 (156)(F) 40,326
Property management.................. -- 692 -- 692
General and administrative........... 6,823 4,483 -- 11,306
Interest............................. 31,462 18,593 (6,618)(G) 43,437
Amortization of deferred financing
costs.............................. 932 460 1,055 (H) 2,447
Offering expenses.................... -- 2,252 -- 2,252
Other, net........................... -- (875) -- (875)
------------ ------------- ------------ ----------
TOTAL EXPENSES............. 123,782 53,733 (5,719) 171,796
------------ ------------- ------------ ----------
Income before gains on sale of
assets............................. 22,690 (3,267) 4,529 23,952
------------ ------------- ------------ ----------
Gains on sale of assets.............. -- 132 -- 132
------------ ------------- ------------ ----------
Income before minority interest in
operating partnership income....... 22,690 (3,135) 4,529 24,084
------------ ------------- ------------ ----------
Minority interest in operating
partnership income................. 2,769 -- 217 (I) 2,986
------------ ------------- ------------ ----------
Net income........................... 19,921 (3,135) 4,312 21,098
------------ ------------- ------------ ----------
Dividend on preferred shares......... 5,252 -- 3,800 (J) 9,052
------------ ------------- ------------ ----------
Net income available for common
shareholders....................... $ 14,669 $(3,135) $ 512 $ 12,046
============ ============= ============ ==========
Net income per common share.......... $ 0.65 (K)
==========
</TABLE>
<PAGE>
PRO FORMA ADJUSTMENTS:
(A) See MAAC Pro Forma below.
(B) Reflects the unaudited historical combined statement of operations of
FPG for the period from January 1, 1997 to November 25, 1997, the date
MAAC consummated the FDC merger and reorganization. Certain
reclassifications have been made to FPG's historical statement of
operations to conform to MAAC's presentation. The unaudited pro forma
financial information does not include the effect of eliminating
certain nonrecurring income and expenses or the elimination of certain
general and administration expenses that were related to FPG which the
combined entity does not expect to incur in the future. Included in
the pro forma information are gains from sales of assets ($132),
dividend income on trading securities ($20), other income ($38),
accounting, legal and other costs incurred in connection with a
proposed public offering of FDC common stock which was abandoned
during 1997 ($2,252) and general and administrative expenses which are
expected to be eliminated as a result of cost savings resulting from
the Reorganization ($587). Subsequent to the Reorganization, MAAC
incurred prepayment penalties of approximately $7,851, net of minority
interest on notes payable of FPG which were prepaid. These
nonrecurring costs were charged to operations as an extraordinary item
when incurred. Such amounts have not been included in the Pro Forma
Condensed Combined Statement of Operations.
(C) MAAC may issue additional shares of Common Stock having a value of up
to $7,500 if certain agreed upon conditions are satisfied during
calendar years 1998, 1999 and 2000. When and if issued, the Contingent
Value Shares will be recorded as additional purchase consideration
based upon the fair value of the Common Stock at the date of issuance.
The amount of the amortization charge related to the Contingent Value
Shares potentially issuable by MAAC has not been included in the Pro
Forma Condensed Combined Statement of Operations.
(D) Represents the elimination of income recognized on a construction
contract between MAAC and FPG.
(E) Represents the elimination of distributions from the Section 42
interests which were disposed of prior to the Reorganization.
(F) Represents change in depreciation for the application of the purchase
method of accounting related to FPG properties ($1,276) net of
amortization of cost in excess of fair value of net assets acquired
in connection with the Reorganization (Goodwill) of $1,120. The
depreciation adjustment is based upon the purchase price of the
properties and utilizing the straight line method assuming an
estimated life of 30 years for building and 5 years for furniture and
equipment. The amortization of goodwill is based upon the straight
line method and an estimated life of 8 years for the identifiable
intangible assets and 15 years for the unindentifiable intangible
assets.
(G) Represents the reduction in interest and credit enhancement costs
associated with the repayment of FPG mortgage and notes payable as a
part of the transaction and the MAAC Credit Line ($14,757) net of
interest on additional borrowings under the New Credit Facilities of
$8,139. The adjustment is based upon $142,000 of incremental
borrowings under the Credit Facilties, reduction of MAAC Credit Line
of $29,450 and debt FPG repayment of $213,067 and assuming that the
transactions occurred at the beginning of the period presented. The
interest rates utilized for debt repayment ranged from 8% to 11% per
annum based on the rates for the related borrowings.
(H) Represents amortization of historical deferred financing costs of FPG
which were eliminated in connection with applying the purchase method
of accounting ($460) net of the amortization of deferred financing
costs on new debt which is expected to be incurred of $1,515.
(I) Represents the change in minority interest in MAALP income as a result
of the Reorganization and the Common Stock Offering.
(J) Represents dividends on the 1,938,830 shares of preferred stock issued
in the Preferred Stock Offering.
(K) Pro Forma net income available per common share based on 18,479,000
shares outstanding during the period and Pro Forma net income
available for common shareholders. Extraordinary expenses related to
the debt financings have been excluded from the calculation of Pro
Forma net income available for common shareholders.
<PAGE>
MID-AMERICA APARTMENT COMMUNITIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(IN THOUSANDS EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ADJUSTMENTS
---------------------------
MAAC COMPLETED MAAC
HISTORICAL(L) ACQUISITIONS(M) OTHER PRO FORMA
------------- --------------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Property
Rental.......................... $135,673 $ 7,189 -- $ 142,862
Other........................... 3,279 167 -- 3,446
Management and development,
net........................... 164 -- -- 164
------------- --------------- --------- ---------
TOTAL REVENUES............. 139,116 7,356 -- 146,472
EXPENSES:
Personnel....................... 14,623 688 -- 15,311
Building repairs/maintenance,
utilities, landscaping, and
other operating............... 23,316 1,369 -- 24,685
Real estate taxes and
insurance..................... 14,465 881 -- 15,346
Depreciation and
amortization -- .............. 27,737 -- 1,486 (N) 29,223
General and administrative...... 6,602 -- 221 (O) 6,823
Interest........................ 28,943 -- 2,519 (P) 31,462
Amortization of deferred
financing costs............... 888 -- 44 (Q) 932
------------- --------------- --------- ---------
TOTAL EXPENSES............. 116,574 2,938 4,270 123,782
------------- --------------- --------- ---------
Income before minority interest in
operating partnership income....... 22,542 4,418 (4,270) 22,690
Minority interest in operating
partnership income................. 2,693 -- 76 (R) 2,769
------------- --------------- --------- ---------
Net income........................... 19,849 4,418 (4,346) 19,921
Dividends on preferred shares........ 5,252 -- -- 5,252
------------- --------------- --------- ---------
Net income available for common
shareholders....................... $14,597 $ 4,418 $ (4,346) $ 14,669
============= =============== ========= =========
Net income per share................. $ 1.05
=============
</TABLE>
<PAGE>
MAAC PRO FORMA ADJUSTMENTS:
(L) Reflects the unaudited historical consolidated statement of operations
of MAAC for the year ended December 31, 1997.
(M) Represents historical operating revenues and expenses from January 1,
1997 to the earlier of the acquisition date or December 31, 1997 for
the 1997 Completed Acquisitions.
(N) Represents additional depreciation and amortization resulting from the
Completed Acquisitions. The adjustment is based upon the purchase
price of the properties and utilizing the straight line method
assuming an estimated life of 30 years for building and 5 years for
furniture and equipment.
(O) Represents anticipated additional costs to operate MAAC resulting from
property acquisitions based upon MAAC's estimate that additional
administrative costs will be approximately 3% of incremental revenues.
(P) Represents additional interest costs related to mortgage debt incurred
or assumed in connection with the Completed Acquisitions. The
adjustment is based upon new borrowings, net of proceeds of offerings,
of $60,422 to fund the Completed Acquisitions and weighted average
interest rates ranging from 7.5% to 8.9% based upon the rates for the
related borrowings. The period utilized to calculate the adjustments
equals the period from the beginning of the period presented to
consummation date of the Completed Acquisitions.
(Q) Represents additional amortization resulting from deferred financing
costs incurred in connection with the Completed Acquisitions.
(R) Represents the change in the minority interest in the income of MAALP
during the period.
<PAGE>
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 thereunto duly authorized.
MID-AMERICA APARTMENT COMMUNITIES, INC.
Date: June 12, 1998 /s/ SIMON R.C. WADSWORTH
Simon R.C. Wadsworth
Executive Vice President
(Principal Financial and
Accounting Officer)
