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
Date of Report: November 24, 1997
(Date of Earliest Event Reported)
Commission File No. 1-12590
GABLES RESIDENTIAL TRUST
A MARYLAND CORPORATION
I.R.S. EMPLOYER IDENTIFICATION NO. 58-2077868
2859 PACES FERRY ROAD
ATLANTA, GEORGIA 30339
TELEPHONE: (770) 436-4600
<PAGE>
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ITEM 5. OTHER EVENTS
Apartment Community Acquisitions:
- ---------------------------------
Gables Residential Trust (the "Company") is a self-administered and self-managed
real estate investment trust ("REIT"). Substantially all of the Company's
business is conducted through, and all of the Company's interests in property
are held by or through, Gables Realty Limited Partnership (the "Operating
Partnership"), of which the Company is currently an 83.3% economic owner
(excluding the Company's direct or indirect ownership of 100% of the Operating
Partnership's Series A Preferred Units) and which the Company controls through
Gables GP, Inc., a wholly-owned subsidiary of the Company and the sole general
partner of the Operating Partnership. The term "Company" as used herein means
Gables Residential Trust and its subsidiaries on a consolidated basis (including
the Operating Partnership and its subsidiaries).
On May 28, 1997, the Company acquired Wood Mill Apartments, a multifamily
apartment community located in Atlanta, Georgia, comprised of 438 apartment
homes, from The Prudential Insurance Company of America for an aggregate
purchase price of $29.1 million. On September 4, 1997, the Company acquired
Jefferson Forest Apartments, a multifamily apartment community located in
Houston, Texas, comprised of 404 apartment homes, from Jefferson Forest, L.P.
for an aggregate purchase price of $22.6 million. On September 26, 1997, the
Company acquired Jefferson at Vinings Apartments, a multifamily apartment
community located in Atlanta, Georgia, comprised of 310 apartment homes, from
Jefferson at Vinings Apartments, L.P. for an aggregate purchase price of $27.5
million. On September 30, 1997, the Company acquired The Crescent Apartments, a
multifamily apartment community located in Houston, Texas, comprised of 324
apartment homes, from Crescent Apartments Limited Partnership for an aggregate
purchase price of $22.6 million. The acquisition costs of Wood Mill Apartments,
Jefferson Forest Apartments, Jefferson at Vinings Apartments, and The Crescent
Apartments (collectively, the "Properties") were financed through borrowings
under the Company's $175 million unsecured revolving credit facility with
Wachovia Bank of Georgia, N.A., as agent bank, and four other participant banks.
The contracts related to the acquisition of the Properties were negotiated at
arms length between the Company and representatives of the respective sellers.
In assessing the Properties acquired, the Company's management considered the
existing leases, which are the primary source of revenue, the occupancy rates,
the competitive nature of the markets and comparative rental rates. Furthermore,
current and anticipated operating expenses, maintenance and repair costs, real
estate taxes and capital improvement requirements were evaluated. Management is
not aware of any material factors that would cause the reported financial
information in Item 7. to be misleading.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS:
(a) Financial Statements of the Properties Acquired Pursuant to Rule 3-14 of
Regulation S-X
The financial statements relating to the acquisition of Wood Mill
Apartments are attached hereto as Exhibit 99.1 and incorporated herein by
this reference. The financial statements of Jefferson Forest Apartments are
attached hereto as Exhibit 99.2 and incorporated herein by this reference.
The financial statements of Jefferson at Vinings Apartments are attached
hereto as Exhibit 99.3 and incorporated herein by this reference. The
financial statements of The Crescent Apartments are attached hereto as
Exhibit 99.4 and incorporated herein by this reference.
(b) Pro Forma Financial Information
The unaudited pro forma financial information relating to the acquisition
of the Properties is attached hereto as Exhibit 99.5 and incorporated
herein by this reference.
<PAGE>
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(c) Exhibits
Exhibit
No Description
- ------ ----------------------------------------------------------------------
99.1 Statements of Excess of Revenues Over Specific Operating Expenses of Wood
Mill Apartments.
99.2 Statements of Excess of Revenues Over Specific Operating Expenses of
Jefferson Forest Apartments.
99.3 Statements of Excess of Revenues Over Specific Operating Expenses of
Jefferson at Vinings Apartments.
99.4 Statements of Excess of Revenues Over Specific Operating Expenses of The
Crescent Apartments.
99.5 Pro Forma Financial Information Related to the Acquisition of the
Properties.
23.1 Consent of Independent Public Accountants.
<PAGE>
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SIGNATURE
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 hereunto duly authorized.
GABLES RESIDENTIAL TRUST
Date: November 24, 1997 By: /s/ Marvin R. Banks, Jr.
------------------------------
Marvin R. Banks, Jr.
Senior Vice President and Chief
Financial Officer
<PAGE>
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Index to Exhibits
Exhibit
No. Description
- ------ ---------------------------------------------------------------------
99.1 Statements of Excess of Revenues Over Specific Operating Expenses of Wood
Mill Apartments.
99.2 Statements of Excess of Revenues Over Specific Operating Expenses of
Jefferson Forest Apartments.
99.3 Statements of Excess of Revenues Over Specific Operating Expenses of
Jefferson at Vinings Apartments.
99.4 Statements of Excess of Revenues Over Specific Operating Expenses of The
Crescent Apartments.
99.5 Pro Forma Financial Information Related to the Acquisition of the
Properties.
23.1 Consent of Independent Public Accountants.
<PAGE>
Page-6
Exhibit 99.1
STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
OF WOOD MILL APARTMENTS
FOR THE PERIOD FROM JANUARY 1, 1997 TO MAY 27, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
<PAGE>
Page-7
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of Gables Residential Trust:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of Wood Mill Apartments (the "Property") for the year ended
December 31, 1996. This financial statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
financial 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 excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the 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.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Property
after acquisition by the Company. The accompanying financial statement was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and is not intended to be a complete
presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of expenses described in Note 2) of Wood Mill Apartments for the year
ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 5, 1997
<PAGE>
Page-8
WOOD MILL APARTMENTS
STATEMENTS OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO MAY 27, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
Year Ended
January 1, 1997 December 31,
to May 27, 1997 1996
----------------- ------------
(Unaudited)
REVENUES:
Rental revenues (Note 1) ............................. $1,439 $3,711
Other property revenues ............................. 74 126
------- -------
Total property revenues ............................ 1,513 3,837
SPECIFIC OPERATING EXPENSES:
Property operating and maintenance ................... 541 1,158
------- -------
EXCESS OF REVENUES OVER SPECIFIC OPERATING
EXPENSES ........................................... $ 972 $2,679
======= =======
The accompanying notes are an integral part of these statements.
<PAGE>
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WOOD MILL APARTMENTS
NOTES TO STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Period From January 1, 1997 to May 27, 1997 (Unaudited)
and the Year Ended December 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Property Acquired
--------------------------------
On May 28, 1997, Gables Residential Trust (collectively with its
subsidiaries, the "Company") through Gables Realty Limited Partnership (the
"Operating Partnership", of which the Company owns the sole general partner
and, as of September 30, 1997, held an approximate 84.8% economic
interest), acquired Wood Mill Apartments, a multifamily apartment community
located in Atlanta, Georgia, comprised of 438 apartment homes (the
"Property").
The aggregate purchase price of $29.1 million was financed through
borrowings under the Operating Partnership's $175 million
unsecured revolving credit facility.
Rental Revenue Recognition
--------------------------
The Property is leased under operating leases with terms generally equal to
one year or less. Rental revenue is recognized when earned which materially
approximates revenue recognition on a straight-line basis.
2. BASIS OF ACCOUNTING
The accompanying statements of excess of revenues over specific operating
expenses are presented on the accrual basis. These statements have been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statements exclude certain historical expenses not
comparable to the operations of the Property after acquisition, such as
depreciation, interest and management fees.
<PAGE>
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Exhibit 99.2
STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
OF JEFFERSON FOREST APARTMENTS
FOR THE PERIOD FROM JANUARY 1, 1997 TO SEPTEMBER 3, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
<PAGE>
Page-11
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of Gables Residential Trust:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of Jefferson Forest Apartments (the "Property") for the year
ended December 31, 1996. This financial statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
financial 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 excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the 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.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Property
after acquisition by the Company. The accompanying financial statement was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and is not intended to be a complete
presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of expenses described in Note 2) of Jefferson Forest Apartments for
the year ended December 31, 1996 in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 5, 1997
<PAGE>
Page-12
JEFFERSON FOREST APARTMENTS
STATEMENTS OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD FROM JANUARY 1, 1997 TO SEPTEMBER 3, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
January 1, 1997 Year Ended
to September December 31,
3, 1997 1996
------------- --------
(Unaudited)
REVENUES:
Rental revenues (Note 1) ............................. $2,155 $2,560
Other property revenues ... .......................... 127 152
------- -------
Total property revenues ............................ 2,282 2,712
SPECIFIC OPERATING EXPENSES:
Property operating and maintenance ................... 968 1,394
------- -------
EXCESS OF REVENUES OVER SPECIFIC OPERATING
EXPENSES ........................................... $1,314 $1,318
======= =======
The accompanying notes are an integral part of these statements.
<PAGE>
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JEFFERSON FOREST APARTMENTS
NOTES TO STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Period From January 1, 1997 to September 3, 1997 (Unaudited)
and the Year Ended December 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Property Acquired
--------------------------------
On September 4, 1997, Gables Residential Trust (collectively with its
subsidiaries, the "Company") through Gables Realty Limited Partnership (the
"Operating Partnership", of which the Company owns the sole general partner
and, as of September 30, 1997, held an approximate 84.8% economic
interest), acquired Jefferson Forest Apartments, a multifamily apartment
community located in Houston, Texas, comprised of 404 apartment homes (the
"Property").
The aggregate purchase price of $22.6 million was financed through
borrowings under the Operating Partnership's $175 million
unsecured revolving credit facility.
In September, 1995, the construction of the Property was completed and in
September, 1996, the Property reached a stabilized
occupancy level of 91%.
Rental Revenue Recognition
--------------------------
The Property is leased under operating leases with terms generally equal to
one year or less. Rental revenue is recognized when earned which materially
approximates revenue recognition on a straight-line basis.
2. BASIS OF ACCOUNTING
The accompanying statements of excess of revenues over specific operating
expenses are presented on the accrual basis. These statements have been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statements exclude certain historical expenses not
comparable to the operations of the Property after acquisition, such as
depreciation, interest and management fees.
<PAGE>
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Exhibit 99.3
STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
OF JEFFERSON AT VININGS APARTMENTS
FOR THE PERIOD FROM JANUARY 1, 1997 TO SEPTEMBER 25, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
<PAGE>
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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of Gables Residential Trust:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of Jefferson at Vinings Apartments (the "Property") for the
year ended December 31, 1996. This financial statement is the responsibility of
the Property's management. Our responsibility is to express an opinion on this
financial 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 excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the 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.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Property
after acquisition by the Company. The accompanying financial statement was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and is not intended to be a complete
presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of expenses described in Note 2) of Jefferson at Vinings Apartments
for the year ended December 31, 1996 in conformity with generally accepted
accounting principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
September 5, 1997
<PAGE>
Page-16
JEFFERSON AT VININGS APARTMENTS
STATEMENTS OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD JANUARY 1, 1997 TO SEPTEMBER 25, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
January 1, 1997 Year Ended
to September December 31,
25, 1997 1996
--------------- -----------
(Unaudited)
REVENUES:
Rental revenues (Note 1) ............................. $2,233 $ 588
Other property revenues .. .......................... 74 22
------ ------
Total property revenues ............................ 2,307 610
SPECIFIC OPERATING EXPENSES:
Property operating and maintenance ................... 723 324
------ ------
EXCESS OF REVENUES OVER SPECIFIC OPERATING
EXPENSES ........................................... $1,584 $ 286
====== ======
The accompanying notes are an integral part of these statements.
<PAGE>
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JEFFERSON AT VININGS APARTMENTS
NOTES TO STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Period From January 1, 1997 to September 25, 1997 (Unaudited)
and the Year Ended December 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Property Acquired
--------------------------------
On September 26, 1997, Gables Residential Trust (collectively with its
subsidiaries, the "Company") through Gables Realty Limited Partnership (the
"Operating Partnership", of which the Company owns the sole general partner
and, as of September 30, 1997, held an approximate 84.8% economic
interest), acquired Jefferson at Vinings Apartments, a multifamily
apartment community located in Atlanta, Georgia, comprised of 310 apartment
homes (the "Property").
The aggregate purchase price of $27.5 million was financed through
borrowings under the Operating Partnership's $175 million unsecured
revolving credit facility.
In January, 1997, the construction of the Property was completed and in
July, 1997, the Property reached a stabilized occupancy level of 93%.
Rental Revenue Recognition
--------------------------
The Property is leased under operating leases with terms generally equal to
one year or less. Rental revenue is recognized when earned which materially
approximates revenue recognition on a straight-line basis.
2. BASIS OF ACCOUNTING
The accompanying statements of excess of revenues over specific operating
expenses are presented on the accrual basis. These statements have been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statements exclude certain historical expenses not
comparable to the operations of the Property after acquisition, such as
depreciation, interest and management fees.
<PAGE>
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Exhibit 99.4
STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
OF THE CRESCENT APARTMENTS
FOR THE PERIOD FROM JANUARY 1, 1997 TO SEPTEMBER 29, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
<PAGE>
Page-19
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of Gables Residential Trust:
We have audited the accompanying statement of excess of revenues over specific
operating expenses of The Crescent Apartments (the "Property") for the year
ended December 31, 1996. This financial statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on this
financial 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 excess of revenues over specific
operating expenses is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the 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.
As described in Note 2, this financial statement excludes certain expenses that
would not be comparable with those resulting from the operations of the Property
after acquisition by the Company. The accompanying financial statement was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission and is not intended to be a complete
presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the excess of revenues over specific operating expenses
(exclusive of expenses described in Note 2) of The Crescent Apartments for the
year ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ Arthur Andersen LLP
Atlanta, Georgia
November 14, 1997
<PAGE>
Page-20
THE CRESCENT APARTMENTS
STATEMENTS OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
FOR THE PERIOD JANUARY 1, 1997 TO SEPTEMBER 29, 1997 (UNAUDITED)
AND FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)
January 1, 1997 Year Ended
to September December 31,
29, 1997 1996
------------- ----------
(Unaudited)
REVENUES:
Rental revenues (Note 1) ............................. $2,328 $2,272
Other property revenues ............................. 55 76
------ ------
Total property revenues ............................ 2,383 2,348
SPECIFIC OPERATING EXPENSES:
Property operating and maintenance ................... 985 1,277
------ ------
EXCESS OF REVENUES OVER SPECIFIC OPERATING
EXPENSES ........................................... $1,398 $1,071
====== ======
The accompanying notes are an integral part of these statements.
<PAGE>
Page-21
THE CRESCENT APARTMENTS
NOTES TO STATEMENTS OF EXCESS OF REVENUES
OVER SPECIFIC OPERATING EXPENSES
For the Period From January 1, 1997 to September 29, 1997 (Unaudited)
and the Year Ended December 31, 1996
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Description of Property Acquired
--------------------------------
On September 30, 1997, Gables Residential Trust (collectively with its
subsidiaries, the "Company") through Gables Realty Limited Partnership (the
"Operating Partnership", of which the Company owns the sole general partner
and, as of September 30, 1997, held an approximate 84.8% economic
interest), acquired The Crescent Apartments, a multifamily apartment
community located in Houston, Texas, comprised of 324 apartment homes (the
"Property").
The aggregate purchase price of $22.6 million was financed through
borrowings under the Operating Partnership's $175 million unsecured
revolving credit facility.
In February, 1996, the construction of the Property was completed and in
April, 1997, the Property reached a stabilized occupancy level of 93%.
Rental Revenue Recognition
--------------------------
The Property is leased under operating leases with terms generally equal to
one year or less. Rental revenue is recognized when earned which materially
approximates revenue recognition on a straight-line basis.
2. BASIS OF ACCOUNTING
The accompanying statements of excess of revenues over specific operating
expenses are presented on the accrual basis. These statements have been
prepared in accordance with the applicable rules and regulations of the
Securities and Exchange Commission for real estate properties acquired.
Accordingly, the statements exclude certain historical expenses not
comparable to the operations of the Property after acquisition, such as
depreciation, interest and management fees.
<PAGE>
Page-22
Exhibit 99.5
Gables Residential Trust
Pro Forma Consolidated Statements of Operations
(Unaudited and amounts in thousands, except per share amounts)
The unaudited consolidated statements of operations are presented as if the
Company acquired Wood Mill Apartments, Jefferson Forest Apartments, Jefferson at
Vinings Apartments, and The Crescent Apartments as of the beginning of each
period presented. In management's opinion, all adjustments necessary to present
fairly the effects of the property acquisitions have been made.
The unaudited pro forma consolidated statements of operations are not
necessarily indicative of what the actual results of operations of the Company
would have been assuming the Company had acquired the properties as of the
beginning of each period presented, nor do they purport to represent the results
of operations for future periods.
<PAGE>
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<TABLE>
GABLES RESIDENTIAL TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30,1997
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Jefferson Jefferson The Additional
Company Wood Mill Forest at Vinings Crescent Pro Forma Company
Historical Apartments Apartments Apartments Apartments Adjustments Pro Forma
---------- ---------- ---------- ---------- ---------- ----------- ---------
(A) (A) (A) (A)
<S> <C> <C> <C> <C> <C> <C> <C>
Rental revenues ................................... $94,293 $1,439 $2,155 $2,233 $2,328 $ -- $102,448
Other property revenues .......................... 4,612 74 127 74 55 4,942
------- ------- ------- ------- ------- ------- --------
Total property revenues ...................... 98,905 1,513 2,282 2,307 2,383 107,390
------- ------- ------- ------- ------- ------- --------
Property management revenues ...................... 2,299 (72)(B) 2,227
Other ............................................. 1,662 1,662
------- ------- ------- ------- ------- ------- --------
Total other revenues ......................... 3,961 (72) 3,889
------- ------- ------- ------- ------- ------- --------
Total revenues ............................... 102,866 1,513 2,282 2,307 2,383 (72) 111,279
------- ------- ------- ------- ------- ------- --------
Property operating and maintenance (exclusive
of items shown separately below) ............. 34,707 541 968 723 985 37,924
Depreciation and amortization ..................... 17,285 1,786(C) 19,071
Amortization of deferred financing costs .......... 722 722
Property management - owned ....................... 2,469 2,469
Property management - third party ................. 1,733 1,733
General and administrative ........................ 2,495 2,495
Interest .......................................... 18,120 4,143(D) 22,263
Credit enhancement fees ... ....................... 385 385
------- ------- ------- ------- ------- ------- -------
Total expenses ............................... 77,916 541 968 723 985 5,929 87,062
------- ------- ------- ------- ------- ------- -------
Income before equity in income of joint
ventures and interest income ................ 24,950 972 1,314 1,584 1,398 (6,001) 24,217
Equity in income of joint ventures ................ 251 251
Interest income .................................. 279 279
------- ------- ------- ------- ------- ------- -------
Income before gain on sale of real
estate assets ............................... 25,480 972 1,314 1,584 1,398 (6,001) 24,747
Gain on sale of real estate assets ................ 5,349 5,349
------- ------- ------- ------- ------- ------- -------
Income before minority interest and extraordinary
loss ......................................... 30,829 972 1,314 1,584 1,398 (6,001) 30,096
Minority interest of unitholders in Operating
Partnership................................... (4,478) 113(E) (4,365)
------- ------- ------- ------- ------- ------- -------
Income before extraordinary loss, net ............. 26,351 972 1,314 1,584 1,398 (5,888) 25,731
Extraordinary loss, net of minority interest ...... (602) (602)
------- ------- ------- ------- ------- ------- -------
Net income ........................................ 25,749 972 1,314 1,584 1,398 (5,888) 25,129
Dividends to preferred shareholders ............... (1,775) (1,775)
------- ------- ------- ------- ------- ------- -------
Net income available to common shareholders ....... $23,974 $972 $1,314 $1,584 $1,398 ($5,888) $23,354
======= ======= ======= ======= ======= ======= =======
Weighted average number of common shares
outstanding .................................. 19,438 19,438
======= =======
Per Common Share Information:
Income before extraordinary loss, net ............. $1.26 $1.23
======= =======
Net income ........................................ $1.23 $1.20
======= =======
<FN>
The accompanying notes are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
Page-24
<TABLE>
GABLES RESIDENTIAL TRUST
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED AND AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
Jefferson Jefferson The Additional
Company Wood Mill Forest at Vinings Crescent Pro Forma Company
Historical Apartments Apartments Apartments Apartments Adjustments Pro Forma
---------- ---------- ---------- ---------- ---------- ----------- ---------
(A) (A) (A) (A)
<S> <C> <C> <C> <C> <C> <C> <C>
Rental revenues ................................... $104,543 $3,711 $2,560 $588 $2,272 $ -- $113,674
Other property revenues ........................... 4,928 126 152 22 76 5,304
-------- ------- ------ ------- ------ ------- --------
Total property revenues ....................... 109,471 3,837 2,712 610 2,348 118,978
-------- ------- ------ ------- ------ ------- --------
Property management revenues ....................... 3,871 (153)(B) 3,718
Non-recurring Olympic revenues, net ................ 900 900
Other .............................................. 1,939 1,939
-------- ------- ------ ------- ------ ------- --------
Total other revenues .......................... 6,710 (153) 6,557
-------- ------- ------ ------- ------ ------- --------
Total revenues ................................ 116,181 3,837 2,712 610 2,348 (153) 125,535
-------- ------- ------ ------- ------ ------- --------
Property operating and maintenance (exclusive
of items shown separately below) ............... 38,693 1,158 1,394 324 1,277 42,846
Depreciation and amortization ....................... 18,892 2,184(C) 21,076
Amortization of deferred financing costs ............ 1,348 1,348
Property management - owned ......................... 2,824 2,824
Property management - third party ................... 2,793 2,793
General and administrative .......................... 3,045 3,045
Interest ............................................ 21,112 5,107(D) 26,219
Credit enhancement fees ... ......................... 576 576
------- ------- ------ ------- ------ ------ -------
Total expenses ................................. 89,283 1,158 1,394 324 1,277 7,291 100,727
------- ------- ------ ------- ------ ------ -------
Income before equity in income of joint ventures
and interest income ............................ 26,898 2,679 1,318 286 1,071 (7,444) 24,808
Equity in income of joint ventures .................. 280 280
Interest income .................................... 363 363
------- ------- ------ ------- ------ ------ -------
Income before minority interest and extraordinary
loss, net....................................... 27,541 2,679 1,318 286 1,071 (7,444) 25,451
Minority interest of unitholders in Operating
Partnership .................................... (4,640) 352 (E) (4,288)
------- ------- ------ ------- ------ ------ -------
Income before extraordinary loss, net ............... 22,901 2,679 1,318 286 1,071 (7,092) 21,163
Extraordinary loss, net of minority interest ........ (520) (520)
------- ------- ------ ------- ------ ------ -------
Net income .......................................... $22,381 $2,679 $1,318 $ 286 $1,071 $(7,092) $20,643
======= ======= ====== ======= ====== ====== =======
Weighted average number of shares outstanding ....... 16,788 16,788
======= =======
Per Share Information:
Income before extraordinary loss, net ............... $1.36 $1.26
======= =======
Net income .......................................... $1.33 $1.23
======= =======
<FN>
The accompanying notes are an integral part of this statement.
</FN>
</TABLE>
<PAGE>
Page-25
Gables Residential Trust
Notes and Assumptions to Unaudited Pro Forma Consolidated Statements of
Operations (Unaudited and Dollars in Thousands)
(A) Reflects rental revenues, other property revenues and property operating
and maintenance expenses (exclusive of depreciation expense) for Wood Mill
Apartments acquired on May 28, 1997, Jefferson Forest Apartments acquired
on September 4, 1997, Jefferson at Vinings Apartments acquired on September
26, 1997 and The Crescent Apartments acquired on September 30, 1997
(collectively, the "Properties"). In September, 1995, the construction of
Jefferson Forest Apartments was completed and in September, 1996, it
reached a stabilized occupancy level of 91%. In January, 1997, the
construction of the Jefferson at Vinings Apartments was completed and in
July, 1997, it reached a stabilized occupancy level of 93%. In February,
1996, the construction of The Crescent Apartments was completed and in
April, 1997, it reached a stabilized occupancy level of 93%.
(B) Reflects management fees earned by the Company for its management of Wood
Mill Apartments for the owner of the property through the May 28, 1997
acquisition date.
(C) Reflects depreciation expense for the Properties during the periods
presented.
(D) Reflects interest expense associated with borrowings under the Company's
$175 million unsecured revolving credit facility which were utilized to
acquire the Properties. The Company's borrowings currently bear interest at
LIBOR plus 0.80%. If interest rates under the credit facility fluctuated
0.125%, interest costs on the pro forma credit facility indebtedness would
increase or decrease by approximately $127 on an annualized basis.
(E) Reflects the portion of all of the preceding pro forma adjustments
attributable to the minority interest unitholders in the Operating
Partnership.
<PAGE>
Page-26
Gables Residential Trust
Pro Forma Consolidated Balance Sheet
As of September 30, 1997
A pro forma consolidated balance sheet is not presented in this report as the
closings of the acquisitions of Wood Mill Apartments, Jefferson Forest
Apartments, Jefferson at Vinings Apartments and The Crescent Apartments all
occurred on or prior to September 30, 1997 and, accordingly, were reflected in
the September 30, 1997 balance sheet included in Gables Residential Trust's
quarterly report on Form 10-Q.
<PAGE>
Page-27
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 8-K, into the Company's previously filed
Registration Statements on Form S-8 (File Nos. 333-00618, 33-83054 and
333-27177) and Form S-3 (File Nos. 33-90032, 33-89000, 333-40, 333-13651 and
333-30093).
/s/ Arthur Andersen LLP
Atlanta, Georgia
November 24, 1997
