SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
PURSUANT TO SECTION 12, 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 16, 1996
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND
(State of other
jurisdiction
of incorporation or
organization)
1-12592
(Commission file
number)
75-2506197
(I.R.S. Employer
Identification
Number)
One Lincoln Centre
5400 LBJ Freeway, Suite 400
Dallas, Texas 75240
(Address of principal executive offices)
Registrant's telephone number,
including area code: (972) 788-0510
Not Applicable
(Former name or former address, if changed since last report)
WALDEN RESIDENTIAL PROPERTIES, INC.
Item 2. Acquisition or Disposition of Assets . . . . . . . . .3
Item 7. Financial Statements and Exhibits
a. Financial Statements of Audited Acquisition
Properties
Independent Auditors' Report. . . . . . . . . . .5
Statements of Revenues and Certain Expenses for
the Nine Months Ended September 30, 1996
(Unaudited) and for the Year Ended
December 31, 1995 . . . . . . . . . . . . . . . .6
Notes to Statements of Revenues and Certain
Expenses. . . . . . . . . . . . . . . . . . . . .7
b. Pro Forma Financial Information of Walden
Residential Properties, Inc.
Pro Forma Condensed Consolidated Balance Sheet
as of September 30, 1996 (Unaudited). . . . . . .9
Pro Forma Condensed Consolidated Statement of
Income for the Nine Months Ended September 30,
1996 (Unaudited). . . . . . . . . . . . . . . . 10
Pro Forma Condensed Consolidated Statement of
Income for the Year Ended December 31, 1995
(Unaudited) . . . . . . . . . . . . . . . . . . 12
Item 2. Acquisition or Disposition of Assets
Acquisitions
- ------------
Between October 2, 1996 and December 16, 1996, Walden Residential
Properties, Inc. (the "Company"), acquired the following
properties (the "Acquisition Properties"):
<TABLE>
Occupancy
Acquisition Acquisition at
Property Location Units Price Date Acquisition
- -------- -------- ----- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Oak Forest Bedford, TX 170 $ 4,765,000 10/02/96 93.5%
Meadow Glen Glendale, AZ 290 12,500,000 11/15/96 99.0%
Nashboro Nashville, TN 994 49,000,000 12/16/96 90.0%
----- -----------
1,454 $66,265,000
===== ===========
</TABLE>
The acquisition of Nashboro includes 994 apartment units, a
tennis facility and 82 acres of land held for development.
Nashboro Apartments consists of 5 apartment communities
(Deerfield, Doubletree, Village Green, Village Hills, Center
Court) and an Information Center.
<TABLE>
Property Seller
- -------- ------
<S> <C>
Oak Forest Asset Preservation, Inc.
Meadow Glen Meadow Glen Limited Partnership
Nashboro Nashboro Village Apartments, L.P.
</TABLE>
The above acquisitions were financed as follows:
<TABLE>
Source Date Funds
- ------ ---- -----
<S> <C> <C>
Bonds Assumed on
Meadow Glen Acquisition 11/16/96 $ 7,130,000
Credit Facility Various 58,484,000
-----------
$65,614,000
===========
</TABLE>
The Sellers are not affiliated with the Company, any director or
officer of the Company or any associate of any such director or
officer. The Properties were previously operated by the Sellers
as multifamily apartment properties, and it is the intent of the
Company to continue to operate the Acquisition Properties as
multifamily apartment properties.
The purchase prices, which were negotiated with the Sellers, were
determined through internal analysis by the Company of historical
cash flows and fair market values of the Acquisition Properties
with adjustments for the Company's estimates of the cost of
operation.
Item 7. Financial Statements and Exhibits
The undersigned Registrant hereby submits the Financial
Statements for the Nashboro Apartments referred to in Item 2.
a. Financial Statements
Statements of Revenues and Certain Expenses of the Nashboro
Apartments for the nine months ended September 30, 1996
(unaudited) and for the year ended December 31, 1995, notes
to the financial statements and the report of Deloitte &
Touche LLP with respect to the Statement of Revenues and
Certain Expenses for the year ended December 31, 1995, are
presented on pages 5 through 7.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Walden Residential Properties, Inc.
We have audited the accompanying combined statement of
revenues and certain expenses (defined as being operating
revenues less direct operating expenses) of Deerfield,
Doubletree, Village Green, Village Hills, Center Court,
Information Center and Tennis Center ("Nashboro Apartments") for
the year ended December 31, 1995. This financial statement is
the responsibility of the management of Walden Residential
Properties, Inc. Our responsibility is to express an opinion on
this statement 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 combined statement of revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the
financial statement. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying combined statement of revenues and certain
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 Walden Residential Properties, Inc.
Material amounts, described in Note 1 to the combined statement
of revenues and certain expenses, that would not be comparable to
those resulting from the proposed future operations of the
Nashboro Apartments are excluded and the statement is not
intended to be a complete presentation of the revenues and
expenses of these apartments.
In our opinion, such combined statement of revenues and
certain expenses presents fairly, in all material respects, the
revenues and certain expenses, as defined above, of the Nashboro
Apartments for the year ended December 31, 1995, in conformity
with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- --------------------------
Dallas, Texas
December 16, 1996
<TABLE>
<CAPTION>
NASHBORO APARTMENTS
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
(In thousands)
Nine Months Ended Year Ended
September 30, 1996 December 31, 1995
------------------ -----------------
(unaudited)
<S> <C> <C>
Revenues
Rental income. . . . . . . . . . . . . . . . . . $5,026 $6,637
Other property income, net . . . . . . . . . . . 98 278
------ ------
Total revenues. . . . . . . . . . . . . . . . 5,124 6,915
------ ------
Certain Expenses
Property operating and maintenance . . . . . . . 1,600 2,510
Real estate taxes. . . . . . . . . . . . . . . . 352 413
Management fees. . . . . . . . . . . . . . . . . 210 346
------ ------
Total expenses. . . . . . . . . . . . . . . . 2,162 3,269
------ ------
Revenues in Excess of Certain Expenses . . . . . . $2,962 $3,646
====== ======
</TABLE>
See Notes to Combined Statements of Revenues and Certain Expenses
NASHBORO APARTMENTS
NOTES TO COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
Note 1 - Basis of Presentation and Summary of Significant
Accounting Policies
Basis of Presentation. The combined operating revenues and
direct operating expenses of the Deerfield, Doubletree, Village
Green, Village Hills, Center Court, Information Center and Tennis
Center ("Nashboro Apartments") described in Note 2 are presented
on the accrual basis of accounting. The accompanying financial
statements are not representative of the actual operations for
the periods presented as certain expenses, which may not be
comparable to the expenses expected to be incurred by Walden
Residential Properties, Inc., in the proposed future operations
of the Nashboro Apartments, have been excluded. Expenses
excluded consist of interest, depreciation and amortization,
professional fees, and other costs not directly related to the
future operations of the Nashboro Apartments.
Income Recognition. Rental income is recorded when it is
earned and due from tenants. Apartment units are rented under
lease agreements with terms of one year or less.
Management Fees. The Nashboro Apartments have various
management agreements with affiliated and unaffiliated management
companies to maintain and manage the operations of the apartment
complexes. Management fees are based on a range of 4% to 5% of
total revenue collected.
Note 2 - Description of the Audited Acquisition Properties
<TABLE>
Number
Property Location of Units
- -------- -------- --------
<S> <C> <C>
Nashboro Nashville, Tennessee 994
===
</TABLE>
Other property income includes a net loss on the operation of
a tennis facility included in the Nashboro Apartments purchase.
The net loss was $58,000 for the year ended December 31, 1995 and
$22,000 for the nine months ended September 30, 1996.
Item 7. Financial Statements and Exhibits
b. Pro Forma Financial Information
The following September 30, 1996, unaudited Pro Forma
Condensed Balance Sheet of Walden Residential Properties,
Inc., (the "Company") reflects the September 30, 1996
Balance Sheet adjusted for (1) the acquisition of the three
properties acquired between October 2, 1996 and December 16,
1996, (see Item 2.), and (2) the estimated Credit Facility
borrowings necessary to finance the acquisitions.
The following unaudited Pro Forma Condensed Consolidated
Statements of Income for the nine months ended September 30,
1996, and the twelve months ended December 31, 1995, were
prepared from the financial statements of the Company by
adjusting for properties acquired or disposed of through
December 16, 1996, including the related debt or stock
offerings used to finance the acquisitions, debt that was
repaid from the proceeds of dispositions, or estimated
Credit Facility borrowings as if all of these transactions
had occurred on January 1, 1996, and 1995, respectively.
This is not necessarily indicative of what the performance
would have been had the Company owned these properties for
the entire period, nor does it purport to represent future
results of operations of the Company.
<TABLE>
<CAPTION>
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 1996
(Unaudited)
(In thousands)
Historical Acquisitions Pro Forma
---------- ------------ ---------
<S> <C> <C> <C>
ASSETS
Real estate assets -- net. . . . . . . . . . $575,879 $ 66,265 (a) $642,144
Receivable from and investment
in WDN Management . . . . . . . . . . . . 1,105 1,105
Other assets . . . . . . . . . . . . . . . . 11,220 282 (b) 11,502
Cash and cash equivalents. . . . . . . . . . 4,870 4,870
Restricted cash. . . . . . . . . . . . . . . 8,045 8,045
-------- -------- --------
Total assets. . . . . . . . . . . . . . $601,119 $ 66,547 $667,666
======== ======== ========
LIABILITIES
Mortgage notes payable . . . . . . . . . . $251,477 $ 7,130 (c) $258,607
Credit facility. . . . . . . . . . . . . . 35,800 58,484 (d) 94,284
Other liabilities. . . . . . . . . . . . . 18,802 933 (e) 19,735
-------- -------- --------
Total liabilities . . . . . . . . . . . 306,079 66,547 372,626
-------- -------- --------
STOCKHOLDERS' EQUITY
Convertible equity securities. . . . . . . 14,886 14,886
Common stock . . . . . . . . . . . . . . . 157 157
Preferred stock. . . . . . . . . . . . . . 18 18
Additional paid in capital . . . . . . . . 312,140 312,140
Notes receivable from Company
Officers. . . . . . . . . . . . . . . . (5,263) (5,263)
Distributions in excess of net
income. . . . . . . . . . . . . . . . . (26,898) (26,898)
-------- -------- --------
Total stockholders' equity. . . . . . . 295,040 -- 295,040
-------- -------- --------
Total liabilities and
stockholders' equity . . . . . . . . $601,119 $ 66,547 $667,666
======== ======== ========
</TABLE>
(a) Represents cost of properties acquired between October 2,
1996 and December 16, 1996.
(b) Represents security deposit escrows and real estate tax
escrows required on acquisition properties.
(c) Represents mortgage assumed by the Company on November
15, 1996 property purchase.
(d) Represents estimated draws on Credit Facility to finance
acquisitions between October 2, 1996 and December 16,
1996.
(e) Represents Real Estate Tax Liabilities and Security
Deposit Liabilities that would be assumed had the
properties acquired between October 2, 1996 and December
16, 1996 been owned on September 30, 1996.
<TABLE>
<CAPTION>
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1996
(Unaudited)
(In thousands, except per share information)
1996 (a) Sales Acquisition Pro Forma
Historical Acquisitions (b) Properties (c) Adjustments Pro Forma
---------- ------------ ----- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income. . . . . . . . . . . . . . $76,032 $11,703 $(2,466) $ 7,073 $ $92,342
Other property income. . . . . . . . . . 2,810 473 (88) 154 3,349
Interest income. . . . . . . . . . . . . 1,048 (349) (d) 699
Income from WDN Management . . . . . . . 246 246
------- ------- ------- ------- ------- -------
Total revenues. . . . . . . . . . . . 80,136 12,176 (2,554) 7,227 (349) 96,636
------- ------- ------- ------- ------- -------
EXPENSES
Property operating and
maintenance . . . . . . . . . . . . . 27,319 4,551 (924) 2,365 33,311
Real estate taxes. . . . . . . . . . . . 7,249 1,221 (189) 529 8,810
General and administrative . . . . . . . 3,702 3,702
Interest . . . . . . . . . . . . . . . . 14,810 4,579 (e) 19,389
Financing costs and
amortization. . . . . . . . . . . . . 666 (14) (f) 652
Depreciation . . . . . . . . . . . . . . 14,262 3,309 (g) 17,571
------- ------- ------- ------- ------- -------
Total expenses. . . . . . . . . . . . 68,008 5,772 (1,113) 2,894 7,874 83,435
------- ------- ------- ------- ------- -------
Net income before preferred
distribution. . . . . . . . . . . . . . $12,128 $ 6,404 $(1,441) $ 4,333 $(8,223) 13,201
======= ======= ======= ======= ======= =======
Preferred distributions. . . . . . . . . . (4,402)
-------
Net income . . . . . . . . . . . . . . . . $ 8,799
=======
Net income per share . . . . . . . . . . . $ 0.56
=======
Weighted average shares of
common stock. . . . . . . . . . . . . . 15,815
=======
</TABLE>
(a) Represents historical revenues and certain expenses for
properties acquired in 1996 from January 1, 1996, through
the earlier of September 30, 1996, or date of acquisition
for which a Form 8-K was filed on November 8, 1996,
excluding third party management fees.
(b) Represents historical revenues and expenses on properties
sold in 1996, from January 1, 1996, through the earlier
of September 30, 1996, or date of sale for which a Form
8-K was filed on November 8, 1996.
(c) Represents historical revenues and certain expenses for
the Acquisition Properties. Excludes third party
management fees.
(d) Represents pro forma adjustment for interest earned on
escrowed funds which were used for 1996 acquisitions.
(e) Represents pro forma adjustment required to present
interest expense as if the debt reflected on the pro
forma condensed consolidated balance sheet at September
30, 1996, had been outstanding for the entire period at
the then applicable rates.
(f) Represents pro forma adjustment required to present
financing costs and amortization expense as if the
amortizable assets on the pro forma condensed
consolidated balance sheet at September 30, 1996, had
been in place for the entire period.
(g) Represents pro forma adjustment required to present
depreciation expense as if the depreciable assets on the
pro forma condensed consolidated balance sheet at
September 30, 1996, had been in place for the entire
period.
<TABLE>
<CAPTION>
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1995
(Unaudited)
(In thousands, except per share information)
1995 (a) 1996 (b) Sales Acquisition Pro Forma
Historical Acquisitions Acquisitions (c) Properties (d) Adjustments Pro Forma
---------- ------------ ------------ ----- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income. . . . . . $78,469 $16,072 $19,490 $(5,613) $ 9,324 $ $117,742
Other property income. . 3,090 621 819 (198) 372 4,704
Interest income. . . . . 856 856
Income from
WDN Management. . . . 409 409
------- ------- ------- ------- ------- ------- --------
Total revenues. . . . 82,824 16,693 20,309 (5,811) 9,696 -- 123,711
------- ------- ------- ------- ------- ------- --------
EXPENSES
Property operating and
maintenance . . . . . 28,748 5,870 7,814 (1,928) 3,439 43,943
Real estate taxes. . . . 7,337 1,806 1,958 (455) 642 11,288
General and
administrative. . . . 3,811 56 (e) 3,867
Interest . . . . . . . . 17,111 9,410 (f) 26,521
Financing costs and
amortization. . . . . 900 (52) (g) 848
Depreciation . . . . . . 15,734 7,694 (h) 23,428
------- ------- ------- ------- ------- -------- --------
Total expenses. . . . 73,641 7,676 9,772 (2,383) 4,081 17,108 109,895
------- ------- ------- ------- ------- -------- --------
Net income before preferred
distribution. . . . . . $ 9,183 $ 9,017 $10,537 $(3,428) $ 5,615 $(17,108) 13,816
======= ======= ======= ======= ======= ========
Preferred distributions. . (6,006)
--------
Net income . . . . . . . . 7,810
========
Net income per share . . . $ 0.50
========
Weighted average shares
of common stock . . . . 15,606
========
</TABLE>
(a) Represents historical revenues and certain expenses for
properties acquired in 1995, from January 1, 1995,
through the earlier of December 31, 1995, or date of
acquisition, excluding third party management fees.
(b) Represents historical revenues and certain expenses for
the year ended December 31, 1995, of properties acquired
in 1996, for which a Form 8-K was filed on November 8,
1996. Excludes third party management fees.
(c) Represents historical revenues and expenses on properties
sold in 1995 and 1996 from the later of January 1, 1995,
or date of purchase through the earlier of December 31,
1995, or date of sale.
(d) Represents historical revenues and certain expenses for
the Acquisition Properties for the year ended December
31, 1995, excluding third party management fees.
(e) Represents pro forma adjustment for administrative fees
on properties purchased in 1995.
(f) Represents pro forma adjustment required to present
interest expense as if the debt reflected on the pro
forma condensed consolidated balance sheet at September
30, 1996, had been outstanding for the entire period at
the then applicable rates.
(g) Represents pro forma adjustment required to present
financing costs and amortization expense as if the
amortizable assets on the pro forma condensed
consolidated balance sheet at September 30, 1996, had
been in place for the entire period.
(h) Represents pro forma adjustment required to present
depreciation expense as if the depreciable assets on the
pro forma condensed consolidated balance sheet at
September 30, 1996, had been in place for the entire
period.
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.
WALDEN RESIDENTIAL PROPERTIES, INC.
/s/ Mark S. Dillinger December 16, 1996
- --------------------- -----------------
Mark S. Dillinger Date
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
