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 (Date of earliest event reported):
April 5, 1999
Gables Residential Trust
(Exact name of Registrant as specified in its charter)
Maryland 1-12590 58-2077868
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
2859 Paces Ferry Road, Suite 1450
Atlanta, Georgia 30339
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code:
770-436-4600
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IMEM 5. OTHER EVENTS
This Form 8-K is filed in connection with Gables Residential Trust's and
Gables Realty Limited Partnership's Registration Statement on Form S-3
(Registration No. 333-68359) filed with the Securities and Exchange Commission
on December 3, 1998, as amended, and supplements unaudited pro forma
consolidated financial information filed under cover of Form 8-K dated April 1,
1998, as amended, in connection with the April 1, 1998 acquisition of the
properties and operations of Trammell Crow Residential South Florida Group
("TCR/SF") by Gables Residential Trust (the "Company").
The unaudited pro forma consolidated statement of operations of the Company
for the year ended Deceember 31, 1998 giving effect to the TCR/SF acquisition
set forth in Item 7(b) of this Form 8-K expands on, but is otherwise consistant
with, the supplementary pro forma results of operations giving effect to the
TCR/SF acquisition for the year ended December 31, 1998 which the Company
previously disclosed in its Annual Report on Form 10-K for the year ended
December 31, 1998.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired:
Not applicable.
(b) Pro Forma Financial Information:
Pro forma financial information for the Registrant is filed with this report as
Attachment A.
(c) Exhibits:
Not applicable.
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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 hereunto duly authorized.
Date: April 5, 1999 GABLES RESIDENTIAL TRUST
/s/ Marvin R. Banks, Jr.
---------------------------
By: Marvin R. Banks, Jr.
Chief Financial Officer
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Attachment A
GABLES RESIDENTIAL TRUST
PREFACE TO UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL INFORMATION
BASIS OF PRESENTATION
- ---------------------
The following unaudited pro forma consolidated statement of operations is
presented as if the Company acquired the properties and operations of Trammell
Crow Residential South Florida Group (TCR/SF) on January 1, 1998 and includes
the historical operating results of the properties and residential construction
and development and third-party management activities acquired. The unaudited
pro forma consolidated statement of operations further assumes that the Company
distributed at least 95% of its taxable income and met all other requirements to
qualify as a REIT and, therefore, incurred no income tax expense. The
acquisition has been accounted for under the purchase method of accounting in
accordance with Accounting Principles Board Opinion No. 16. Accordingly, assets
acquired and liabilities assumed have been reflected herein at their estimated
fair values. In management's opinion, all material adjustments necessary to
present fairly the effects of the acquisition have been made.
The unaudited pro forma consolidated statement of operations should be read in
conjunction with the consolidated financial statements and accompanying notes
thereto of the Company included in its Annual Report on Form 10-K for the year
ended December 31, 1998.
The unaudited pro forma consolidated statement of operations is not necessarily
indicative of what the actual results of operations of the Company would have
been assuming the Company had consummated the acquisition as of the beginning of
the period presented, nor does it purport to represent the results of operations
for future periods.
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GABLES RESIDENTIAL TRUST
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(Amounts in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Pro Forma
Company TCR/SF Acquisition Company
Historical(A) Historical(B) Adjustments Pro Forma
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Rental revenues .................................................... $ 199,292 $ 8,845 $ -- $ 208,137
Other property revenues ............................................ 9,988 489 -- 10,477
-------- ------- ----- --------
Total property revenues ....................................... 209,280 9,334 -- 218,614
-------- ------- ----- --------
Property management revenues ....................................... 4,533 669 -- 5,202
Other .............................................................. 2,811 25 -- 2,836
-------- ------- ----- --------
Total other revenues .......................................... 7,344 694 -- 8,038
-------- ------- ----- --------
Total revenues ................................................ 216,624 10,028 -- 226,652
-------- ------- ----- --------
Property operating and maintenance (exclusive of items shown
separately below) ............................................. 70,502 3,879 -- 74,381
Depreciation and amortization ...................................... 40,650 1,865 277 (C) 42,792
Amortization of deferred financing costs ........................... 984 238 (206)(D) 1,016
Property management - owned ........................................ 4,758 176 -- 4,934
Property management - third party .................................. 3,219 440 -- 3,659
General and administrative ......................................... 6,242 -- -- 6,242
Interest ........................................................... 38,519 2,806 763 (E) 42,088
Credit enhancement fees ............................................ 1,455 303 37 (F) 1,795
------- ------- ------ --------
Total expenses ................................................ 166,329 9,707 871 176,907
------- ------- ------ --------
Equity in income of joint ventures ................................. 359 -- -- 359
Interest income .................................................... 417 58 (58)(G) 417
Loss on treasury locks ............................................. (5,637) -- -- (5,637)
------- ------- ------ --------
Income before minority interest ........................... ........ 45,434 379 (929) 44,884
Minority interest of common unitholders in Operating Partnership ... (7,142) -- (542)(H) (7,684)
Minority interest of preferred unitholders in Operating Partnership. ( 587) -- -- (587)
------- ------- ------ -------
Net income ......................................................... 37,705 379 (1,471) 36,613
Dividends to preferred shareholders ................................ (9,665) -- -- (9,665)
------- ------- ------ --------
Net income available to common shareholders ........................ $ 28,040 $ 379 ($ 1,471) $ 26,948
======= ======= ====== ========
Weighted average number of common shares outstanding - basic ....... 24,118 -- -- 24,118
Weighted average number of common shares outstanding - diluted ..... 30,340 -- 587 (I) 30,927
Per Common Share Information:
Net income - basic ................................................. $ 1.16 $ 1.12
Net income - diluted ............................................... $ 1.16 $ 1.12
<FN>
The accompanying notes are an integral part of this statement.
</FN>
</TABLE>
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GABLES RESIDENTIAL TRUST
NOTES AND ASSUMPTIONS TO UNAUDITED PRO FORMA
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited and Amounts in Thousands)
(A) Represents the historical audited consolidated statement of operations of
the Company contained in its Annual Report on Form 10-K for the year ended
December 31, 1998. Such results include the operating results of TCR/SF
since April 1, 1998, the closing date of the acquisition.
(B) Represents the historical unaudited combined statement of operations of
TCR/SF for the three months ended March 31, 1998.
(C) Represents the net increase in depreciation of real estate owned as a
result of recording the TCR/SF real estate assets at fair value versus
historical cost. The acquisition price of the real estate assets was
allocated to land, buildings, furniture, fixtures and equipment, and
construction in progress and the related depreciation is calculated
utilizing an estimated useful life of 40 years for the buildings and 5
years for furniture, fixtures and equipment. Depreciation expense is
provided to the extent the real estate was operational during the period.
The components of the pro forma adjustment pertaining to the three months
ended March 31, 1998 are as follows:
Pro forma depreciation expense for acquired assets at
fair value $2,142
Less TCR/SF historical depreciation expense (1,865)
------
Pro forma adjustment $ 277
======
(D) Represents the net adjustment to amortization of deferred financing costs
for the three months ended March 31, 1998 as follows:
To record the amortization of deferred financing
costs related to the credit enhancement facility
put into effect on April 1, 1998 to enhance the
bond indebtedness assumed by the Company (the
"Bond Enhancement Facility") $ 32
To eliminate the amortization of TCR/SF's deferred
financing costs which have a zero fair value at
April 1, 1998 (238)
------
Pro forma adjustment $ (206)
======
(E) Represents the net adjustment to interest expense for the three months
ended March 31, 1998 as follows:
To record interest expense on the cash portion of the TCR/SF
purchase price financed with borrowings under the
Company's unsecured credit facilities $ 2,504
To record the amortization of the discount required to
record the $12,500 portion of the purchase price
that was deferred until January 1, 2000 at fair
value 193
To record the interest expense on bond indebtedness
that was assumed by the Company 1,598
To record capitalized interest for qualifying
construction expenditures at fair value (726)
------
Pro forma interest expense for acquisition 3,569
Less TCR/SF historical interest expense (2,806)
------
Pro forma adjustment $ 763
======
The Company's borrowings under its current unsecured credit facilities
currently bear interest at LIBOR plus 0.80%. If interest rates under the
credit facilities fluctuated 0.125%, interest costs on the pro forma credit
facility indebtedness would increase or decrease by approximately
$194 on an annualized basis.
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(F) Represents the net adjustment to credit enhancement fees for the three
months ended March 31, 1998 as follows:
To record the credit enhancement fees under the
Bond Enhancement Facility $ 340
To eliminate the credit enhancement fees incurred
by TCR/SF related to enhancements that do not remain
in place at April 1, 1998 (303)
------
Pro forma adjustment $ 37
======
(G) Represents the adjustment to eliminate interest income included in the
TCR/SF historical amounts as the interest-bearing cash balances were not
acquired by the Company.
(H) Reflects (i) the portion of all of the preceding pro forma adjustments
attributable to the minority interest unitholders in the Operating
Partnership and (ii) an adjustment to minority interest associated with the
issuance of minority units of limited partnership interest in the Operating
Partnership ("Units") in connection with the acquisition. The calculation
of the pro forma adjustment is as follows:
Pro forma income before minority interest $ 44,884
Dividends to preferred shareholders and unitholders (10,252)
-------
Pro forma income to common shareholders and unitholders 34,632
Pro forma common minority interest ownership percentage 22.188%
-------
Pro forma minority interest of common unitholders in
Operating Partnership 7,684
Less historical minority interest of common unitholders in
Operating Partnership (7,142)
-------
Pro forma adjustment $ 542
=======
(I) Reflects the issuance of Units in connection with the acquisition that are
not antidilutive.
