SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K/A
Amendment No. 1
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, 1997
--------------------------------------------------------------------
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)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Acquisitions
- ------------
Between July 31, 1997 and December 22, 1997, Walden Residential
Properties, Inc. (the "Company"), acquired the following properties
(the "Acquisition Properties"):
<TABLE>
<CAPTION>
Acquisition Acquisition
Property Location Units Price Date Seller
- -------- -------- ----- ----------- ----------- ------
<S> <C> <C> <C> <C> <C>
Windsor Park Hendersonville, TN 232 $ 9,500,000 07/31/97 Windsor Park Apartments, Inc.
Clover Hill Arlington, TX 216 6,600,000 10/03/97 1990 Clover Hill Limited Partnership
Oak Ramble Tampa, FL 256 10,000,000 11/03/97 MIG-Oak Ramble Associates Limited Partnership
Parkway Station Marietta, GA 344 18,400,000 12/16/97 Windsor at Parkway Station Limited Partnership
Ashton Park Tampa, FL 192 7,000,000 12/19/97 Windsor at Ashton Park Limited Partnership
Woods of Bedford Bedford, TX 328 9,900,000 12/22/97 Pacific Life Insurance Company
----- -----------
1,568 $61,400,000
===== ===========
</TABLE>
The above acquisitions were financed as follows:
Source Date Funds
- ------ ---- -----
Bonds Assumed on Windsor Park 07/31/97 $ 6,900,000
Property Sale 10/02/97 4,400,000
Mortgage Assumed on Ashton Park 12/16/97 3,900,000
Credit Facility Various 43,400,000
Cash Various $ 2,800,000
-----------
$61,400,000
===========
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 Acquisition 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.
Disposition
- -----------
On October 2, 1997, the Company sold Towne Center, a 392-unit
apartment property located in Dallas, Texas for approximately $9.1
million to Towne Center Kiwi, Inc. The Purchaser is not affiliated
with the Company, any director or officer of the Company or any
associate of any such director or officer. The property was
secured by a $4.6 million mortgage loan, which was repaid at
closing. The sales price, which was negotiated with the Purchaser,
was determined through internal analysis by the Company of
historical cash flows and fair market value of the disposed
property.
ITEM 5. OTHER EVENTS
The Company is revising its financial statements for the
fiscal years ended December 31, 1995 and December 31, 1996 and for
the fiscal quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997, by reclassifying the convertible equity
securities formerly reported as a component of stockholders'
equity in its consolidated balance sheets to minority interest and
by restating its statements of income to reflect distributions or
income on such convertible equity securities as income allocated
to minority interest which is deducted in arriving at net income.
This change results in net income decreasing by $922,000 in 1995,
$1,705,000 in 1996 and $405,000, $395,000, and $397,000 for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997,
respectively. The Company believes these changes are necessary to
conform the Company's financial statements to generally accepted
accounting principles. These changes will have no impact on the
financial condition, business or assets of the Company and do not
change the Company's net income available to common stockholders
net income per share, or funds from operations.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
a. Financial Statements:
The undersigned Registrant hereby submits the Financial
Statements for the Acquisition Properties referred to in
Item 2., except for Clover Hill Apartments, which was not
audited.
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Walden Residential Properties, Inc.
We have audited the accompanying statement of revenues and
certain expenses (defined as being operating revenues less direct
operating expenses) of Windsor Park 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
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 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 statement of revenues and
certain expenses, that would not be comparable to those resulting
from the proposed future operations of the Windsor Park 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 statement of revenues and certain
expenses presents fairly, in all material respects, the revenues
and certain expenses, as defined above, of the Windsor Park
Apartments for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
July 31, 1997
WINDSOR PARK APARTMENTS
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
Revenues
Rental income. . . . . . . . . . . . . . . . $1,015 $1,329
Other property income, net . . . . . . . . . 74 105
------ ------
Total revenues. . . . . . . . . . . . . . 1,089 1,434
------ ------
Certain Expenses
Property operating and maintenance . . . . . 355 487
Real estate taxes. . . . . . . . . . . . . . 67 80
Management fees. . . . . . . . . . . . . . . 43 43
------ ------
Total expenses. . . . . . . . . . . . . . 465 610
------ ------
Revenues in excess of certain expenses . . . . $ 624 $ 824
====== ======
</TABLE>
See Notes to Statement of Revenues and Certain Expenses
WINDSOR PARK APARTMENTS
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The operating revenues and direct
operating expenses of the Windsor Park Apartments described in Note
2 is 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. (the "Company"), in the
proposed future operations of the Windsor Park 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 Windsor Park Apartments.
Costs incurred for carpet are capitalized which is consistent with
the Company's current capitalization policy.
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.
Interim Financial Data. In the opinion of management, all
adjustments and eliminations, consisting only of normal recurring
adjustments, necessary to present fairly the statement of revenues
and certain expenses of the Windsor Park Apartments for the nine
months ended September 30, 1997 have been included. The results of
operations for the nine months ended September 30, 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.
Management Fees. The Windsor Park Apartments had a management
agreement with an affiliated management company to maintain and
manage the operations of the apartment complex. Management fees
are based on 3% of total revenue collected. Upon acquisition of
the Windsor Park Apartments by the Company, such management
contract was canceled, at which time the Company began to manage
the Windsor Park Apartments.
NOTE 2 - DESCRIPTION OF THE AUDITED ACQUISITION PROPERTIES
The following property is included in the statement of
revenues and certain expenses:
Property Location Number of Units
- -------- -------- ---------------
Windsor Park Hendersonville, Tennessee 232
===
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Walden Residential Properties, Inc.
We have audited the accompanying statement of revenues and
certain expenses (defined as being operating revenues less direct
operating expenses) of Oak Ramble 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
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 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 statement of revenues and
certain expenses, that would not be comparable to those resulting
from the proposed future operations of the Oak Ramble 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 statement of revenues and certain
expenses presents fairly, in all material respects, the revenues
and certain expenses, as defined above, of the Oak Ramble
Apartments for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
October 29, 1997
OAK RAMBLE APARTMENTS
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
Revenues
Rental income. . . . . . . . . . . . . . . . $1,308 $1,624
Other property income, net . . . . . . . . . 62 76
------ ------
Total revenues. . . . . . . . . . . . . . 1,370 1,700
------ ------
Certain Expenses
Property operating and maintenance 533 670
Real estate taxes. . . . . . . . . . . . . . 122 167
Management fees. . . . . . . . . . . . . . . 55 67
------ ------
Total expenses. . . . . . . . . . . . . . 710 904
------ ------
Revenues in excess of certain expenses. . . . $ 660 $ 796
====== ======
</TABLE>
See Notes to Statement of Revenues and Certain Expenses
OAK RAMBLE APARTMENTS
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The operating revenues and direct
operating expenses of the Oak Ramble Apartments described in Note
2 is 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. (the "Company"), in the
proposed future operations of the Oak Ramble 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 Oak Ramble Apartments.
Costs incurred for carpet are capitalized which is consistent with
the Company's current capitalization policy.
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.
Interim Financial Data. In the opinion of management, all
adjustments and eliminations, consisting only of normal recurring
adjustments, necessary to present fairly the statement of revenues
and certain expenses of the Oak Ramble Apartments for the nine
months ended September 30, 1997 have been included. The results of
operations for the nine months ended September 30, 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.
Management Fees. The Oak Ramble Apartments had a management
agreement with an affiliated management company to maintain and
manage the operations of the apartment complex. Management fees
are based on 4% of total revenue collected. Upon acquisition of
the Oak Ramble Apartments by the Company, such management contract
was canceled, at which time the Company began to manage the Oak
Ramble Apartments.
NOTE 2 - DESCRIPTION OF THE AUDITED ACQUISITION PROPERTIES
The following property is included in the statement of
revenues and certain expenses:
Property Location Number of Units
- -------- -------- ---------------
Oak Ramble Tampa, Florida 256
===
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 Parkway Station and Ashton Park
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
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 Parkway
Station and Ashton Park 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 Parkway
Station and Ashton Park Apartments for the year ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- ------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
December 11, 1997
PARKWAY STATION AND ASHTON PARK APARTMENTS
COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
Revenues
Rental income. . . . . . . . . . . . . . . . $2,831 $3,740
Other property income, net . . . . . . . . . 158 172
------ ------
Total revenues. . . . . . . . . . . . . . 2,989 3,912
------ ------
Certain Expenses
Property operating and maintenance . . . . . 938 1,371
Real estate taxes. . . . . . . . . . . . . . 219 277
Management fees. . . . . . . . . . . . . . . 118 154
------ ------
Total expenses. . . . . . . . . . . . . . 1,275 1,802
------ ------
Revenues in excess of certain expenses . . . . $1,714 $2,110
====== ======
</TABLE>
See Notes to Combined Statements of Revenues and Certain Expenses
PARKWAY STATION AND ASHTON PARK APARTMENTS
NOTES TO COMBINED STATEMENT 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 Parkway Station and Ashton Park
Apartments described in Note 2 is 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. (the
"Company"), in the proposed future operations of the Parkway
Station and Ashton Park 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 Parkway Station and Ashton Park
Apartments. Costs incurred for carpet are capitalized which is
consistent with the Company's current capitalization policy.
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.
Interim Financial Data. In the opinion of management, all
adjustments and eliminations, consisting only of normal recurring
adjustments, necessary to present fairly the statement of revenues
and certain expenses of the Parkway Station and Ashton Park
Apartments for the nine months ended September 30, 1997 have been
included. The combined results of operations for the nine months
ended September 30, 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.
Management Fees. The Parkway Station and Ashton Park
Apartments had a management agreement with an affiliated management
company to maintain and manage the operations of the apartment
complexes. Management fees are based on 4% of total revenue
collected. Upon acquisition of the Parkway Station and Ashton Park
Apartments by the Company, such management contract was canceled,
at which time the Company began to manage the Parkway Station and
Ashton Park Apartments.
NOTE 2 - DESCRIPTION OF THE AUDITED ACQUISITION PROPERTIES
The following properties are included in the combined
statement of revenues and certain expenses:
Property Location Number of Units
- -------- -------- ---------------
Parkway Station Marietta, Georgia 344
Ashton Park Tampa, Florida 192
---
536
===
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
of Walden Residential Properties, Inc.
We have audited the accompanying statement of revenues and
certain expenses (defined as being operating revenues less direct
operating expenses) of Woods of Bedford 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
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 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 statement of revenues and
certain expenses, that would not be comparable to those resulting
from the proposed future operations of the Woods of Bedford
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 statement of revenues and certain
expenses presents fairly, in all material respects, the revenues
and certain expenses, as defined above, of the Woods of Bedford
Apartments for the year ended December 31, 1996, in conformity with
generally accepted accounting principles.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Dallas, Texas
December 12, 1997
WOODS OF BEDFORD APARTMENTS
STATEMENT OF REVENUES AND CERTAIN EXPENSES
(In thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 1997 December 31, 1996
------------------ -----------------
(Unaudited)
<S> <C> <C>
Revenues
Rental income. . . . . . . . . . . . . . . . $1,278 $1,714
Other property income, net . . . . . . . . . 97 70
------ ------
Total revenues. . . . . . . . . . . . . . 1,375 1,784
------ ------
Certain Expenses
Property operating and maintenance . . . . . 548 758
Real estate taxes. . . . . . . . . . . . . . 152 204
Management fees. . . . . . . . . . . . . . . 55 71
------ ------
Total expenses. . . . . . . . . . . . . . 755 1,033
------ -------
Revenues in excess of certain expenses. . . . $ 620 $ 751
====== ======
</TABLE>
See Notes to Statement of Revenues and Certain Expenses
WOODS OF BEDFORD APARTMENTS
NOTES TO STATEMENT OF REVENUES AND CERTAIN EXPENSES
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The operating revenues and direct
operating expenses of the Woods of Bedford Apartments described in
Note 2 is 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. (the "Company"), in the
proposed future operations of the Woods of Bedford 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 Woods of Bedford Park
Apartments. Costs incurred for carpet are capitalized which is
consistent with the Company's current capitalization policy.
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.
Interim Financial Data. In the opinion of management, all
adjustments and eliminations, consisting only of normal recurring
adjustments, necessary to present fairly the statement of revenues
and certain expenses of the Woods of Bedford Apartments for the
nine months ended September 30, 1997 have been included. The
results of operations for the nine months ended September 30, 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.
Management Fees. The Woods of Bedford Apartments had a
management agreement with an affiliated management company to
maintain and manage the operations of the apartment complex.
Management fees are based on 4% of total revenue collected. Upon
acquisition of the Woods of Bedford Apartments by the Company, such
management contract was canceled, at which time the Company began
to manage the Woods of Bedford Apartments.
NOTE 2 - DESCRIPTION OF THE AUDITED ACQUISITION PROPERTIES
The following property is included in the statement of
revenues and certain expenses:
Property Location Number of Units
- -------- -------- ---------------
Woods of Bedford Bedford, Texas 328
===
ITEM 7 (b). PRO FORMA FINANCIAL INFORMATION
The following Unaudited Pro Forma Condensed Combined Financial
Statements include (i) the historical results of the Company, which
should be read in conjunction with the consolidated financial
statements of the Company and its "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, as amended by Form 10-K/A2, and the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1997, (ii) the Combined Financial Statements of DPI,
which consist of Drever Partners, Inc., four majority owned
subsidiaries (including Drever McIntosh, Inc.), two affiliated
corporations (AOF and AOF II), one affiliated entity and the 18
Partnerships, which should be read in conjunction with the combined
financial statements of DPI included in the Company's Form 8-K
filed October 16, 1997 (the "DPI Acquisition"), (iii) the six
Acquisition Properties acquired between July 31, 1997 and December
22, 1997, (iv) the sale of one property sold on October 2, 1997,
and (v) credit facility and term loan borrowings necessary to
complete the acquisitions. The acquisition of DPI is recorded in
accordance with the purchase method of accounting pursuant to
Accounting Standards Board Opinion No. 16. It is assumed the
combined entity, consisting of the Company, DPI, and the
Acquisition Properties, qualifies as a REIT with a taxable
management company subsidiary. It is also assumed that the
combined entities will have no Federal income tax liability for the
periods presented. The Unaudited Pro Forma Condensed Combined
Financial Statements are not necessarily indicative of what the
Company's financial position or results of operations would have
been had the acquisitions occurred on the pro forma dates. Such
financial statements also do not purport to represent the future
financial position or results of operations of the Company.
The Unaudited Pro Forma Condensed Combined Statement of Income
of the Company for the year ended December 31, 1996 is based upon
the audited statements of income of the Company and DPI for the
year ended December 31, 1996, adjusted to reflect as of January 1,
1996: (i) the purchase by the Company of 29 properties acquired
from January 1, 1996 to December 31, 1997 for $284.3
million, including the value of 44,379 limited partnership
interests, (ii) the sale by the Company of four properties, (iii)
the issuance by the Company of 1.8 million shares of Series A and
Series B Convertible Redeemable Preferred Stock having net proceeds
of $43.5 million, (iv) the issuance by the Company of 2,917,650
shares of Common Stock having net proceeds of $61.1 million, (v)
the issuance by the Company of 4.0 million shares of 9.20% Senior
Preferred Stock, including the Series A Warrants having net
proceeds of $95.3 million, (vi) the additional borrowings by the
Company required to complete the purchase of 29 properties, (vii)
the effects of accounting for the purchase of DPI, and (viii) the
subsequent borrowing on the term loan and credit facility to pay
off certain DPI mortgages.
The Unaudited Pro Forma Condensed Combined Statement of Income
of the Company for the nine months ended September 30, 1997 is
based upon the unaudited statements of operations of the Company
and DPI for the nine months ended September 30, 1997, adjusted to
reflect as of January 1, 1997: (i) the purchase by the Company of
thirteen properties acquired from January 1, 1997 to December 31, 1997
for $105.3 million, including the value of 44,379 limited
partnership interests, (ii) the sale by the Company
of one property, (iii) the additional borrowings by the Company
required to complete the purchase of thirteen properties, (iv) the
effects of accounting for the purchase of DPI, and (v) the
subsequent borrowing on the term loan and credit facility to pay
off certain DPI mortgages.
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
September 30, 1997
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Combined
The Company DPI Most Recent Entity
Historical Pro forma Acquisitions Sales (l) Pro Forma
----------- --------- ------------ --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate assets -- net. . . . . . . . . . . . $708,817 $683,908 (a) $ 51,920 (e) $ (6,637) $1,438,008
Other assets . . . . . . . . . . . . . . . . . . 18,376 (3,615) (296) (f) (50) 21,498
Cash and cash equivalents. . . . . . . . . . . . 4,760 13,622 (6,313) (g) 4,426 15,679
Restricted cash. . . . . . . . . . . . . . . . . 9,039 2,579 92 (h) (890) 10,728
-------- -------- -------- -------- ----------
Total assets. . . . . . . . . . . . . . . . . $740,992 $696,494 $ 45,403 $ (3,151) $1,479,738
======== ======== ======== ======== ==========
LIABILITIES
Mortgage notes payable . . . . . . . . . . . . . $263,297 $167,026 (b) $ 3,946 (i) $ (4,648) $ 429,621
Term loan. . . . . . . . . . . . . . . . . . . . -- 200,000 (c) -- -- 200,000
Credit facility. . . . . . . . . . . . . . . . . 40,000 8,114 (c) 40,732 (j) -- 88,846
Other liabilities. . . . . . . . . . . . . . . . 23,075 17,866 725 (k) (198) 41,468
-------- -------- -------- -------- ----------
Total liabilities . . . . . . . . . . . . . . 326,372 393,006 45,403 (4,846) 759,935
-------- -------- -------- -------- ----------
MINORITY INTERESTS . . . . . . . . . . . . . . . . 15,936 303,488 (d) -- -- 319,424
-------- -------- -------- -------- ----------
STOCKHOLDERS' EQUITY
Common stock . . . . . . . . . . . . . . . . . . 57 -- -- -- 57
Preferred stock. . . . . . . . . . . . . . . . . 179 -- -- -- 179
Additional paid in capital . . . . . . . . . . . 454,565 -- -- -- 454,565
Notes receivable from Company officers . . . . . (5,263) -- -- -- (5,263)
Deferred compensation on restricted stock. . . . (2,391) -- -- -- (2,391)
Distributions in excess of net income. . . . . . (48,463) -- -- 1,695 (46,768)
-------- -------- -------- -------- ----------
Total stockholders' equity. . . . . . . . . . 398,684 -- -- 1,695 400,379
-------- -------- -------- -------- ----------
Total liabilities and stockholders' equity. . $740,992 $696,494 $ 45,403 $ (3,151) $1,479,738
======== ======== ======== ======== ==========
</TABLE>
See accompanying notes.
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
BALANCE SHEET
September 30, 1997
(In thousands, except property and per share information)
(a) Represents the purchase price of DPI in accordance with
purchase accounting, assuming a market value of $23.75 per Common
Unit, which is exchangeable for one share of Common Stock, and a
market value of $29.17 per Preferred Unit exchangeable for one
share of Redeemable Preferred Stock and 3 1/3 Warrants, each of
which is exercisable for one-third of one share of Common Stock
at $26.875 per share as follows:
Issuance of 10,322 Common Units. . . . . . . . . . . . . . . . $245,157
Issuance of 2,000 Preferred Units. . . . . . . . . . . . . . . 58,331
Cash consideration to DPI. . . . . . . . . . . . . . . . . . . 85,007
Assumption of the Partnerships' mortgage indebtedness. . . . . 286,062
Transaction costs. . . . . . . . . . . . . . . . . . . . . . . 9,351
--------
Purchase price -- real estate assets . . . . . . . . . . . . . $683,908
========
(b) Represents DPI mortgage loans remaining subsequent to the
acquisition of DPI as follows:
Historical DPI mortgage loans. . . . . . . . . . . . . $286,062
DPI mortgage loans paid off subsequent to acquisition. (119,036)
--------
DPI mortgage loans remaining . . . . . . . . . . . . . $167,026
========
(c) Represents the term loan issued and credit facility
reduction related to the DPI Acquisition. The $200,000 unsecured
one-year term loan borrowings were used to pay down the credit
facility, and the 90-day bridge loan. The Company utilized the
credit facility and the bridge loan to pay off certain DPI
mortgages, the cash consideration and transaction costs related to
the acquisition.
(d) To reflect the issuance of 10,322 Common Units at a
price of $23.75 per security and 2,000 Preferred Units at a price
of $29.17 per security (see note (a)).
(e) Represents the recent property acquisitions which include
Clover Hill, Oak Ramble, Parkway Station, Ashton Park and Woods of
Bedford (collectively the "Most Recent Acquisitions"), acquired in
October through December 1997. In connection with such
acquisitions, the amounts presented include the initial purchase
price and closing costs as identified in the acquisition process.
(f) Represents purchase deposits used and security deposit
escrows on the Most Recent Acquisitions.
(g) Represents estimated cash used to purchase the Most
Recent Acquisitions.
(h) Represents real estate tax escrows required on the Most
Recent Acquisitions.
(i) Represents mortgage note assumed with the purchase of
Ashton Park.
(j) Represents draws on the credit facility to finance the
Most Recent Acquisitions.
(k) Represents real estate tax liabilities and security
deposit liabilities that were assumed on the Most Recent
Acquisitions.
(l) Represents the sale of Towne Center on October 2, 1997
and related cash proceeds received and mortgage note pay off.
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Nine Months Ended September 30, 1997
(Unaudited)
(In thousands, except per share information)
<TABLE>
<CAPTION>
Previously Reported
------------------------------ Combined
Acquisition DPI Pro Forma Entity
Historical Adjustments (a) Pro Forma (b) Acquisitions (d) Sales (e) Adjustments Pro Forma
---------- --------------- ------------- ---------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income. . . . . . . . $ 99,288 $ 3,035 $ 82,566 $ 7,114 $ (1,308) $ -- $190,695
Other property income. . . . 3,979 109 2,785 405 (67) -- 7,211
Interest income. . . . . . . 1,273 (332) 493 -- -- -- 1,434
Other income (expense) . . . -- -- 653 -- -- -- 653
-------- -------- -------- -------- -------- -------- --------
Total revenues. . . . . . 104,540 2,812 86,497 7,519 (1,375) -- 199,993
-------- -------- -------- -------- -------- -------- --------
EXPENSES (i)
Property operating and
maintenance. . . . . . . . 34,187 1,016 31,917 2,683 (563) -- 69,240
Real estate taxes. . . . . . 10,077 345 8,670 645 (147) -- 19,590
General and administrative . 5,117 -- 8,069 -- -- -- 13,186
Interest . . . . . . . . . . 15,764 613 21,121 -- -- 2,504 (f) 40,002
Financing costs and
amortization . . . . . . . 612 -- -- -- -- (7) (g) 605
Depreciation . . . . . . . . 20,192 541 18,728 -- -- 1,269 (h) 40,730
-------- -------- -------- -------- -------- -------- --------
Total expenses. . . . . . 85,949 2,515 88,505 3,328 (710) 3,766 183,353
-------- -------- -------- -------- -------- -------- --------
Income before minority
interests. . . . . . . . . . 18,591 297 (2,008) 4,191 (665) (3,766) 16,640
Minority interests . . . . . . (1,197) (4) (4,201) (c) -- -- -- (5,402)
-------- -------- -------- -------- -------- -------- --------
Income before preferred
distributions. . . . . . . . 17,394 293 (6,209) 4,191 (665) (3,766) 11,238
Preferred distributions. . . . (9,906) -- -- -- -- -- (9,906)
-------- -------- -------- -------- -------- -------- --------
Net income available to
common stockholders. . . . . $ 7,488 $ 293 $ (6,209) $ 4,191 $ (665) $ (3,766) $ 1,326
======== ======== ======== ======== ======== ======== ========
Net income available to
common stockholders per
share. . . . . . . . . . . . $ 0.43 $ 0.08
======== ========
Distributions per share of
common stock . . . . . . . . $ 1.4475 $ 1.4475
======== ========
Weighted average shares of
common stock outstanding . . 17,468 12 17,480
======== ======== ========
</TABLE>
See accompanying notes.
WALDEN RESIDENTIAL PROPERTIES, INC.
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
For the Year Ended December 31, 1996
(Unaudited)
(In thousands, except per share information)
<TABLE>
<CAPTION>
Previously Reported
------------------------------
Acquisitions Combined
and Sales DPI Pro Forma Entity
Historical Adjustments (a) Pro Forma (b) Acquisitions (d) Sales (e) Adjustments Pro Forma
---------- --------------- ------------- ---------------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income. . . . . . . . $105,602 $ 27,974 $106,846 $ 9,564 $ (1,711) $ -- $248,275
Other property income. . . . 3,873 876 3,243 471 (90) -- 8,373
Construction revenues. . . . -- -- 919 -- -- -- 919
Interest income. . . . . . . 1,433 (349) 620 -- -- -- 1,704
Other income (expense) . . . 263 -- 1,536 -- -- -- 1,799
-------- -------- -------- -------- -------- -------- --------
Total revenues. . . . . . 111,171 28,501 113,164 10,035 (1,801) -- 261,070
-------- -------- -------- -------- -------- -------- --------
EXPENSES (i)
Property operating and
maintenance. . . . . . . . 37,521 10,028 40,372 3,802 (843) -- 90,880
Real estate taxes. . . . . . 10,039 2,794 11,453 852 (142) -- 24,996
Construction cost of sales . -- -- 891 -- -- -- 891
General and administrative . 5,124 -- 9,343 -- -- -- 14,467
Interest . . . . . . . . . . 20,573 857 27,806 -- -- 3,294 (f) 52,530
Financing costs and
amortization . . . . . . . 916 (94) -- -- -- (4) (g) 818
Depreciation . . . . . . . . 19,810 7,488 24,971 -- -- 1,692 (h) 53,961
-------- -------- -------- -------- -------- -------- --------
Total expenses. . . . . . 93,983 21,073 114,836 4,654 (985) 4,982 238,543
-------- -------- -------- -------- -------- -------- --------
Operating income . . . . . . . 17,188 7,428 (1,672) 5,381 (816) (4,982) 22,527
Gain (loss) on disposition of
real property. . . . . . . . 1,934 (1,934) -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income before minority
interests. . . . . . . . . . 19,122 5,494 (1,672) 5,381 (816) (4,982) 22,527
Minority interests . . . . . . (1,705) (5) (5,635) (c) -- -- -- (7,345)
-------- -------- -------- -------- -------- -------- --------
Income before preferred
distributions. . . . . . . . 17,417 5,489 (7,307) 5,381 (816) (4,982) 15,182
Preferred distributions. . . . (2,387) (10,909) -- -- -- -- (13,296)
-------- -------- -------- -------- -------- -------- --------
Net income available to
common stockholders. . . . . $ 15,030 $ (5,420) $ (7,307) $ 5,381 $ (816) $ (4,982) $ 1,886
======== ======== ======== ======== ======== ======== ========
Net income available to
common stockholders per
share. . . . . . . . . . . . $ 1.02 $ 0.11
======== ========
Distributions per share of
common stock . . . . . . . . $ 1.86 $ 1.86
======== ========
Weighted average shares of
common stock outstanding . . 14,720 2,321 17,041
======== ======== ======== ========
</TABLE>
See accompanying notes.
WALDEN RESIDENTIAL PROPERTIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
STATEMENT OF INCOME
For the Nine Months Ended September 30, 1997
and the Year Ended December 31, 1996
(In thousands, except per share information)
(a) The pro forma acquisition adjustments for the nine months
ended September 30, 1997, reflect as of January 1, 1997: (i) the
operations of seven apartment properties acquired by the Company in
1997, and (ii) the reduction in interest income and increase in
interest expense related to the acquisitions by the Company.
The pro forma acquisition and sales adjustments for the year
ended December 31, 1996, reflect as of January 1, 1996: (i) the
operations of 23 apartment properties acquired by the Company in
1996 and 1997, (ii) the sale by the Company of three apartment
properties, (iii) the issuance by the Company of 1,800 shares of
Series A and Series B Convertible Redeemable Preferred Stock, (iv)
the issuance by the Company of 2,918 shares of Common Stock, (v)
the issuance by the Company of 4,000 shares of Senior Preferred
Stock, and (vi) the reduction in interest income and increase in
interest expense related to the acquisitions by the Company.
(b) Represents the pro forma condensed combined statement of
operations of DPI with adjustments consistent with the Company's
Form 8-K filed October 16, 1997. Additional adjustments include
interest expense and fees on the $200,000 term loan used to reduce
the credit facility borrowings and repay the $110,000 bridge loan,
which was used to pay off several of the DPI mortgage balances
subsequent to the DPI Acquisition. The credit facility was reduced
$87.8 million from the initial borrowings for the DPI Acquisition
due to the subsequent paydown from the term loan. Interest expense
was reduced to reflect the DPI mortgage balances that were paid off
subsequent to the DPI Acquisition. The weighted average combined
interest rate on the credit facility and term loan were 6.99% and
6.83% for the nine months ended September 30, 1997 and the year
ended December 31, 1996, respectively.
(c) Represents the income allocated to minority interests
and the distributions on the Preferred Units issued in connection
with the DPI Acquisition (see note (a) of the pro forma condensed
combined balance sheet).
(d) Represents pro forma revenues and certain expenses for
the Acquisition Properties and excludes third party management
fees.
(e) Represents revenues and expenses on Towne Center sold in
October 1997.
(f) Represents pro forma adjustment required to present
interest expense as if the Ashton Park debt and the Acquisition
Properties credit facility borrowings reflected on the pro forma
condensed consolidated balance sheet at September 30, 1997 had been
outstanding for the entire period at the then applicable rates and
the removal of the Towne Center mortgage interest.
(g) Represents pro forma adjustment required to present
financing costs and amortization expense as if the Acquisition
Properties amortizable assets on the pro forma condensed
consolidated balance sheet at September 30, 1997 had been in place
for the entire period.
(h) Represents pro forma adjustment required to present
depreciation expense as if the Acquisition Properties' depreciable
assets on the pro forma condensed consolidated balance sheet at
September 30, 1997 had been in place for the entire period.
(i) Although not presented as pro forma adjustments because
they do not meet the criteria for such presentation, management
anticipates that the combination of the Company and DPI will create
property operational savings, as well as significant administrative
cost savings, of approximately $5 million in the first full year of
operations.
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 February 16, 1998
- ---------------------- -----------------
Mark S. Dillinger Date
Executive Vice President,
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
