<Cover Page>
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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): April 21, 1997
--------------------------------------------
WALDEN RESIDENTIAL PROPERTIES, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND
(State or 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)
==================================================================
<Page 1>
WALDEN RESIDENTIAL PROPERTIES, INC.
Item 2. Acquisition or Disposition of Assets . . . . . . . . . . . . .2
Item 7. Financial Statements and Exhibits
a. Financial Statements of Audited Acquisition
Properties
Independent Auditors' Report. . . . . . . . . . . . . . .4
Statements of Revenues and Certain Expenses for the
Three Months Ended March 31, 1997 (Unaudited) and for
the Year Ended December 31, 1996. . . . . . . . . . . . .5
Notes to Statements of Revenues and Certain Expenses. . .6
b. Pro Forma Financial Information of Walden
Residential Properties, Inc.
Pro Forma Condensed Consolidated Balance Sheet
as of March 31, 1997 (Unaudited). . . . . . . . . . . . .8
Pro Forma Condensed Consolidated Statement of Income
for the Three Months Ended March 31, 1997
(Unaudited) . . . . . . . . . . . . . . . . . . . . . . .9
Pro Forma Condensed Consolidated Statement of Income
for the Year Ended December 31, 1996 (Unaudited). . . . .11
<Page 2>
Item 2. Acquisition or Disposition of Assets
Acquisitions
------------
On April 21, 1997, Walden Residential Properties, Inc. (the
"Company") acquired the following properties (the "Arbors
Apartments"):
<TABLE>
<CAPTION>
Occupancy
Property Location Units Seller at Acquisition
- -------- -------- ----- ------ --------------
<S> <C> <C> <C> <C>
Arbor Park Dallas, Texas 276 Arbor Park Limited 94%
Arbors of Bedford Bedford, Texas 204 Arbors of Bedford Limited 90%
Arbors of Carrollton Carrollton, Texas 131 Arbor Mill Limited 94%
Arbors of Euless Euless, Texas 272 Euless II Limited 94%
Arbors of Forest Lane Dallas, Texas 154 The Arbors of Forest Lane, Ltd. 93%
Arbors of Austin Austin, Texas 226 The Arbors of Austin, Ltd. 94%
-----
1,263
=====
</TABLE>
The combined purchase price was approximately $39.8 million.
The purchase was financed approximately as follows:
Credit Facility $18,500,000
Cash 20,248,000
Convertible equity securities 1,050,000
-----------
$39,798,000
===========
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 Arbors Apartments were previously operated by the
Sellers as multifamily apartment properties, and it is the intent
of the Company to continue to operate the Arbors Apartments as
multifamily apartment properties.
The purchase price that was negotiated with the Sellers was
determined through internal analysis by the Company of historical
cash flows and fair market values of the Arbors Apartments with
adjustments for the Company's estimates of the cost of operation.
<Page 3>
Item 7. Financial Statements and Exhibits
The undersigned Registrant hereby submits the Financial
Statements for the Arbors Apartments referred to in Item 2.
a. Financial Statements
Statements of Revenues and Certain Expenses of the Arbors
Apartments for the three months ended March 31, 1997
(unaudited) and for the year ended December 31, 1996,
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, 1996, are presented on pages 4 through 6.
<Page 4>
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 Arbor Park, Arbors of Bedford,
Arbors of Carrollton, Arbors of Euless, Arbors of Forest Lane and
Arbors of Austin ("Arbors Apartments") for the year ended December
31, 1996. 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 Arbors
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 Arbors
Apartments for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
DELOITTE & TOUCHE LLP
- ---------------------
Dallas, Texas
April 18, 1997
<Page 5>
ARBORS APARTMENTS
COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
<S> <C> <C>
Revenues
Rental income. . . . . . . . . . . . . . . $1,856 $7,317
Other property income, net . . . . . . . . 58 227
------ ------
Total revenues. . . . . . . . . . . . . 1,914 7,544
------ ------
Certain Expenses
Property operating and maintenance . . . . 552 2,394
Real estate taxes. . . . . . . . . . . . . 223 895
Management fees. . . . . . . . . . . . . . 77 298
------ ------
Total expenses. . . . . . . . . . . . . 852 3,587
------ ------
Revenues in excess of certain expenses . . . $1,062 $3,957
====== ======
</TABLE>
See Notes to Combined Statements of Revenues and Certain Expenses.
<Page 6>
ARBORS 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 Arbor Park, Arbors of Bedford, Arbors
of Carrollton, Arbors of Euless, Arbors of Forest Lane and Arbors
of Austin ("Arbors 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 Arbors
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
Arbors 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 Arbors Apartments have management
agreements with affiliated management companies to maintain and
manage the operations of the apartment complexes. Management fees
are based on 4% of total revenue collected.
Interim Financial Data. In the opinion of management, all
adjustments and eliminations, consisting only of normal recurring
adjustments, necessary to present fairly the combined statement of
revenues and certain expenses of Arbors Apartments for the three
months ended March 31, 1997 have been included. The combined
results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results for the full year.
Use of Estimates. The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect reported
amounts of certain revenues and expenses as of and for the
reporting periods. Actual results may differ from such estimates.
Note 2 - Description of the Audited Acquisition Properties
Number
Property Location of Units
Arbor Park Dallas, Texas 276
Arbors of Bedford Bedford, Texas 204
Arbors of Carrollton Carrollton, Texas 131
Arbors of Euless Euless, Texas 272
Arbors of Forest Lane Dallas, Texas 154
Arbors of Austin Austin, Texas 226
-----
1,263
=====
<Page 7>
Item 7. Financial Statements and Exhibits
b. Pro Forma Financial Information
The following March 31, 1997, unaudited Pro Forma
Condensed Balance Sheet of Walden Residential Properties,
Inc. (the "Company") reflects the March 31, 1997
Consolidated Balance Sheet adjusted for (1) the
acquisition of the properties acquired on April 21, 1997,
and (2) the estimated Credit Facility borrowings, cash
disbursements and stock issuances necessary to finance
the acquisition.
The following unaudited Pro Forma Condensed Consolidated
Statement of Income for the three months ended March 31,
1997, and the twelve months ended December 31, 1996, were
prepared from the consolidated financial statements of
the Company by adjusting for properties acquired or
disposed of during the periods presented and properties
acquired on April 21, 1997, 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, 1997 and 1996,
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.
<Page 8>
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1997
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Historical Acquisitions Pro Forma
---------- ------------ ---------
<S> <C> <C> <C>
ASSETS
Real estate assets -- net. . . . . . . . . . $649,665 $ 39,798 (a) $689,463
Other assets . . . . . . . . . . . . . . . . 10,039 432 (b) 10,471
Cash and cash equivalents. . . . . . . . . . 22,493 (20,248) (c) 2,245
Restricted cash. . . . . . . . . . . . . . . 7,896 -- 7,896
-------- --------- --------
Total assets. . . . . . . . . . . . . . . $690,093 $ 19,982 $710,075
======== ========= ========
LIABILITIES
Mortgage notes payable . . . . . . . . . . . $258,085 $ -- $258,085
Credit facility. . . . . . . . . . . . . . . -- 18,500 (d) 18,500
Other liabilities. . . . . . . . . . . . . . 16,014 432 (e) 16,446
-------- --------- --------
Total liabilities . . . . . . . . . . . . 274,099 18,932 293,031
-------- --------- --------
STOCKHOLDERS' EQUITY
Convertible equity securities. . . . . . . . 14,886 1,050 (f) 15,936
Preferred stock. . . . . . . . . . . . . . . 58 -- 58
Common stock . . . . . . . . . . . . . . . . 174 -- 174
Additional paid in capital . . . . . . . . . 444,947 -- 444,947
Notes receivable from Company officers . . . (5,263) -- (5,263)
Deferred compensation on
Restricted Stock . . . . . . . . . . . . . (2,800) -- (2,800)
Distributions in excess of net income. . . . (36,008) -- (36,008)
-------- --------- --------
Total stockholders' equity. . . . . . . . 415,994 1,050 417,044
Total liabilities and stockholders' -------- --------- --------
equity. . . . . . . . . . . . . . . . . $690,093 $ 19,982 $710,075
======== ========= ========
</TABLE>
(a) Represents cost of properties acquired on April 21, 1997.
(b) Represents security deposit escrows and real estate tax
escrows required on acquisition properties.
(c) Represents estimated cash used to purchase the properties
acquired on April 21, 1997.
(d) Represents estimated draws on Credit Facility to finance
acquisitions on April 21, 1997.
(e) Represents real estate tax liabilities and security
deposit liabilities that would be assumed had the properties
acquired on April 21, 1997 been owned on March 31, 1997.
(f) Represents convertible equity securities issued to finance
acquisitions on April 21, 1997.
<Page 9>
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Three Months Ended March 31, 1997
(Unaudited)
(In thousands, except per share information)
<TABLE>
<CAPTION>
Arbors Pro Forma
Historical Apartments (a) Adjustments Pro Forma
---------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Rental income. . . . . . . . . . . . . . . . . . . . . . $31,516 $ 1,856 $ -- $33,372
Other property income. . . . . . . . . . . . . . . . . . 1,272 58 -- 1,330
Interest income. . . . . . . . . . . . . . . . . . . . . 503 -- (257) (b) 246
------- -------- -------- -------
Total revenues. . . . . . . . . . . . . . . . . . . . 33,291 1,914 (257) 34,948
------- -------- -------- -------
EXPENSES
Property operating and maintenance . . . . . . . . . . . 10,569 552 -- 11,121
Real estate taxes. . . . . . . . . . . . . . . . . . . . 3,149 223 -- 3,372
General and administrative . . . . . . . . . . . . . . . 1,422 -- -- 1,422
Interest . . . . . . . . . . . . . . . . . . . . . . . . 4,877 -- 308 (c) 5,185
Financing costs and amortization . . . . . . . . . . . . 211 -- -- 211
Depreciation . . . . . . . . . . . . . . . . . . . . . . 6,328 -- 267 (d) 6,595
------- -------- -------- -------
Total expenses. . . . . . . . . . . . . . . . . . . . 26,556 775 575 27,906
------- -------- -------- -------
Net income before preferred distributions. . . . . . . . . 6,735 1,139 (832) 7,042
Preferred distributions. . . . . . . . . . . . . . . . . . (3,717) -- -- (3,717)
------- -------- -------- -------
Net income available to common stockholders. . . . . . . . $ 3,018 $ 1,139 $ (832) $ 3,325
======= ======== ======== =======
Net income available to common stockholders per share. . . $ 0.18 $ 0.19
======= =======
Weighted average shares of common stock. . . . . . . . . . 17,153 80 (e) 17,233
======= ======== =======
</TABLE>
<Page 10>
(a) Represents historical revenues and certain expenses for the
Arbors Apartments. Excludes third party management fees.
(b) Represents pro forma adjustment for interest earned on
escrowed funds which were used for acquiring the Arbors
Apartments.
(c) Represents pro forma adjustment required to present interest
expenses as if the debt reflected on the pro forma condensed
consolidated balance sheet at March 31, 1997 had been
outstanding for the entire period at the then applicable
rates.
(d) Represents pro forma adjustment required to present
depreciation expense as if the depreciable assets on the pro
forma condensed consolidated balance sheet at March 31, 1997
had been in place for the entire period.
(e) Represents pro forma adjustment for weighted average shares
outstanding as if the issuance of common shares and
convertible equity securities were outstanding since January
1, 1997.
<Page 11>
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
For the Year Ended December 31, 1996
(Unaudited)
(In thousands, except per share information)
<TABLE>
<CAPTION>
Arbors Pro Forma
Historical Acquisitions (a) Sales (b) Apartments (c) Adjustments Pro Forma
---------- ---------------- --------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income. . . . . . . . . . . $105,602 $ 21,608 $ (2,466) $ 7,317 $ -- $132,061
Other property income. . . . . . . 3,873 674 (88) 227 -- 4,686
Interest income. . . . . . . . . . 1,433 -- -- -- (349)(d) 1,084
Income from WDN Management . . . . 263 -- -- -- -- 263
-------- -------- -------- -------- -------- --------
Total revenues. . . . . . . . . 111,171 22,282 (2,554) 7,544 (349) 138,094
-------- -------- -------- -------- -------- --------
EXPENSES
Property operating and
maintenance. . . . . . . . . . . 37,521 7,901 (924) 2,394 -- 46,892
Real estate taxes. . . . . . . . . 10,039 1,943 (189) 895 -- 12,688
General and administrative . . . . 5,124 -- -- -- -- 5,124
Interest . . . . . . . . . . . . . 20,573 -- -- -- 249 (e) 20,822
Financing costs and amortization . 916 -- -- -- (72)(f) 844
Depreciation . . . . . . . . . . . 19,810 -- -- -- 6,568 (g) 26,378
-------- -------- -------- -------- -------- --------
Total expenses. . . . . . . . . 93,983 9,844 (1,113) 3,289 6,745 112,748
-------- -------- -------- -------- -------- --------
Net income before preferred
distribution . . . . . . . . . . . 17,188 12,438 (1,441) 4,255 (7,094) 25,346
Preferred distributions. . . . . . . (4,092) -- -- -- (10,909)(h) (15,001)
-------- -------- -------- -------- -------- --------
Net income available to common
stockholders . . . . . . . . . . . $ 13,096 $ 12,438 $ (1,441) $ 4,255 $(18,003) $ 10,345
======== ======== ======== ======== ======== ========
Net income available to common
stockholders per share . . . . . . $ 0.89 $ 0.61
======== ========
Weighted average shares of common
stock. . . . . . . . . . . . . . . 14,720 2,365 (h) 17,085
======== ======== ========
</TABLE>
<Page 12>
(a) Represents historical revenues and certain expenses for
properties acquired in 1996, and from January 1, 1996, through
the earlier of December 31, 1996, or date of acquisition.
Amounts exclude third party management fees.
(b) Represents historical revenues and expenses on properties sold
in 1996 from January 1, 1996 through the date of sale.
(c) Represents historical revenues and certain expenses for the
Arbors Apartments for the year ended December 31, 1996,
excluding third party management fees.
(d) Represents pro forma adjustment for interest earned on
escrowed funds which were used for acquiring Arbors Apartments
and properties acquired in 1996 through March 31, 1997.
(e) Represents pro forma adjustment required to present interest
expense as if the debt reflected on the pro forma condensed
consolidated balance sheet at March 31, 1997 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 March
31, 1997 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 March 31, 1997
had been in place for the entire period.
(h) Represents pro forma adjustment for preferred distributions
and weighted average shares outstanding as if the issuance of
preferred and common shares and convertible equity securities
were outstanding since January 1, 1996.
<Page 13>
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 August 7, 1997
- --------------------- --------------
Mark S. Dillinger Date
Executive Vice President,
Chief Financial Officer and Director
(Principal Financing and Accounting Officer)
