SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1 to
Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): September 2, 1997
American Tax-Exempt Bond Trust
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(Exact Name of Registrant as Specified in Charter)
Delaware (Business Trust)
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(State or other Jurisdiction of Incorporation)
0-28340 13-7033312
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(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 421-5333
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report
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Item 2. Acquisition or Disposition of Assets
High Pointe Apartments
- - ----------------------
General
On September 2, 1997, the Trust purchased Redevelopment Authority of the County
of Dauphin, Multifamily Housing Revenue Bonds (High Pointe Club Apartments
Project) Series 1989 (as hereinafter referred to in this Form 8-K, (the "High
Pointe Bonds") in an aggregate principal amount of $3,250,000. The High Pointe
Bonds are secured by a first Mortgage and mortgage loan on High Pointe
Apartments (the "Project" or "High Pointe") a development consisting of 240
apartment units in Harrisburg, Pennsylvania, pari passu with $8,900,000
Redevelopment Authority of the County of Dauphin, Multifamily Housing Revenue
Bonds (Green Hill Project), Series 1986 (the "1986 Bonds"). The 1986 Bonds are
owned by Summit Tax Exempt Bond Fund, L.P. which is managed by an affiliate of
the Manager of the Trust. High Pointe is owned and operated by RHA INV., INC. an
affiliate of the Manager (the "Borrower"). The Trust has obtained a fairness
opinion in accordance with the Trust's requirements for transactions with
affiliates from The Sturges Company, a long-established nationally recognized
investment banking firm specializing in multifamily tax-exempt underwritings.
In making this acquisition, the Trust utilized $3,693,182 of its gross proceeds
("Gross Proceeds") from its public offering (including fees and expenses). The
High Pointe Bonds were acquired from third party owners not affiliated with the
Manager.
As required by the Trust Agreement, the Trust has received an MAI appraisal
which indicates that the principal amount of the High Pointe Bonds is less than
85% of the appraised value of the Project. It should be recognized that
appraised values are opinions and, as such, may not represent the true worth or
realizable value of the property being appraised.
Payment Terms
The High Pointe Bonds currently meet the Trust's investment criteria and bear a
fixed Current Interest rate of 9.0% per annum, payable monthly in arrears. The
High Pointe Bonds have a current interest payment priority over the 1986 Bonds.
The Trust has been informed that, as of the date hereof, the Borrower is current
with respect to all payments of principal and interest on the High Pointe Bonds.
The High Pointe Bonds mature on June 1, 2006. The principal of the High Pointe
Bonds will be payable upon maturity, sale or refinancing of the Project. The
High Pointe Bonds will receive a $750,000 priority payment of principal prior to
any payment of principal on the 1986 Bonds. Remaining principal on the High
Pointe Bonds and principal and accrued interest on the 1986 Bonds will be paid
pari passu, that is by an equal progression of payments after the payment of
interest, other than interest accrued and upaid on the 1986 Bonds on June 6,
1989, and the $750,000 priority amount.
Management Agent
Related Management Company ("Related") is and is expected to continue to be the
property manager for High Pointe for an annual fee equal to 5% of gross rental
revenues. Related is affiliated with the Manager.
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Description of the Property
High Pointe consists of 240 apartment units contained in 30 garden-style
buildings on approximately 29.5 acres. High Pointe was completed in 1988 and as
of August 17, 1997 is 96.6% occupied.
Each apartment unit in High Pointe contains a walk-in closet, central air,
thermal storm windows with screens, garbage disposals, dishwashers, microwaves
and stacked combination washer/dryers. Some units feature ceiling fans and
skylights. Project amenities include a swimming pool, tennis court, golf driving
station, and car wash. There is also a full clubhouse with exercise room, sauna,
and lockers.
Lease terms on the apartment units of High Pointe are for twelve months. The
average rental income per square foot for the one-year period ending December
31, 1996 was $7.45. The type and number of apartment units together with their
monthly rents are as follows:
Contracted Approximate
Number of Units Type of Unit Monthly Rent Square Feet
- - --------------- ------------ ------------ -----------
28 1 BR/1 BA $ 491 700
28 1 BR/1 BA $ 531 760
86 1 BA/1.5 BA $ 575 900
16 2 BR/2 BA $ 605 850
34 2 BR/1.5 BA $ 619 900
48 2 BR/2.5 BA $ 704 1,100
Location & Market
High Point is located within Susquehanna Township, a suburb of the City of
Harrisburg, with a population of 18,636. The Project's strategic location places
it within convenient distance of ample amenities and within 3.5 miles of the
Harrisburg Central Business District and the State Capital.
Competition
There are five properties, consisting of 4,078 units, that are in direct
competition with the Project. The occupancy rates at the competing properties
range from 95% to 100%.
Real Estate Taxes
Annual real estate taxes for 1996 (payable in 1997) are approximately $116,600.
Fees
In connection with the selection and acquisition of the High Pointe Bonds, the
Manager did not receive any Mortgage Loan Placement Fees from the Borrower.
However, the Manager received from the Trust (i) a Bond Selection Fee equal to
2.00% of the Gross Proceeds attributable to the investment ($73,863.64) and (ii)
an Acquisition Expense Allowance equal to 1.00% of the Gross Proceeds
attributable to the investment ($36,931.82).
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Rent Regulations
At least 20% of the units must be occupied by persons or families earning no
more than 80% of the area's median gross income, adjusted for family size. There
are no rent restrictions.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a). Financial Statements
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The following financial statements are included in compliance with
Staff Accounting Bulletin Number 71/71a.
HIGH POINTE CLUB APARTMENTS
HISTORICAL SUMMARIES OF GROSS INCOME
AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
AND
INDEPENDENT AUDITORS' REPORT
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HIGH POINTE CLUB APARTMENTS
HISTORICAL SUMMARIES OF GROSS INCOME AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
TABLE OF CONTENTS
Independent Auditors' Report 1
Historical Summaries of Gross Income and
Direct Operating Expenses 2
Notes to Historical Summaries of Gross Income and
Direct Operating Expenses 3
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INDEPENDENT AUDITORS' REPORT
TO THE STOCKHOLDERS OF RHA INV., INC.
We have audited the accompanying Historical Summaries of Gross Income
and Direct Operating Expenses of HIGH POINTE CLUB APARTMENTS for each of the
three years in the period ended December 31, 1996. These Historical Summaries
are the responsibility of the Apartments' management. Our responsibility is to
express an opinion on the Historical Summaries based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the Historical Summaries are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Historical Summaries. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the
Historical Summaries. We believe that our audits provide a reasonable basis for
our opinion.
The accompanying Historical Summaries were prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission as described in Note 2 and are not intended to be a complete
presentation of the Apartments' revenues and expenses.
In our opinion, the Historical Summaries referred to above present
fairly, in all material respects, the gross income and direct operating expenses
described in Note 2 for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.
/s/ Friedman Alpren & Green
February 26, 1997
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HIGH POINTE CLUB APARTMENTS
HISTORICAL SUMMARIES OF GROSS INCOME AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
---------- ---------- ----------
Revenues
Rentals $1,683,751 $1,666,451 $1,599,521
Miscellaneous income 11,406 6,705 2,011
---------- ---------- ----------
1,695,157 1,673,156 1,601,532
---------- ---------- ----------
Expenses
Administrative and management 244,859 258,441 260,704
Operating 273,041 247,913 250,136
Repairs and maintenance 207,774 216,686 207,731
Real estate taxes and insurance 176,220 175,176 176,807
---------- ---------- ----------
901,894 898,216 895,378
---------- ---------- ----------
Excess of gross income over
direct operating expenses $ 793,263 $ 774,940 $ 706,154
========== ========== ==========
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HIGH POINTE CLUB APARTMENTS
NOTES TO HISTORICAL SUMMARIES OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1 - ORGANIZATION
RHA Inv., Inc. was incorporated pursuant to the laws of the
Commonwealth of Pennsylvania on October 12, 1988 to complete the
development of, and own and operate High Pointe Club Apartments, a 240-unit
garden apartment complex, in Harrisburg, Pennsylvania.
2 - BASIS OF PRESENTATION
The accompanying Historical Summaries were prepared for the purpose of
complying with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission and are not intended to be a complete presentation of the
Apartments' revenues and expenses. Accordingly, the Historical Summaries
include the income and direct operating expenses of High Pointe Club
Apartments, and exclude interest income, depreciation, amortization,
interest expense and other financing charges. Also excluded is an insurance
reimbursement received in 1994.
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(b). Pro Forma Financial Information
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
The following tables of unaudited pro forma consolidated data of the
Trust have been prepared from the historical consolidated financial
statements of the Trust, as adjusted to give effect to a significant
acquisition (the purchase of tax-exempt First Mortgage Bonds,
hereinafter referred to as the "Highpointe Bonds"). The accompanying
pro forma balance sheet of the Trust has been prepared as if this
investment had been consummated on June 30, 1997. The accompanying pro
forma statements of income and other financial data for the year ended
December 31, 1996 and the six months ended June 30, 1997 have been
prepared as this investment as well as a previous investment on May 7,
1997 (hereinafter referred to as the "Lexington Trails Bonds") had been
consummated as of January 1, 1996 and January 1, 1997 respectively. The
unaudited pro forma financial data does not purport to be indicative of
what the results of the Trust would have been had the transactions been
completed on the dates assumed, nor is such financial data necessarily
indicative of the results of operations of the Trust that may exist in
the future. The unaudited pro forma financial data must be read in
conjunction with the Notes therein and with the historical Consolidated
Financial Statements and the related Notes of the Registrant.
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
Pro Forma Pro Forma
Historical Adjustments Total
---------- ------------ -----------
Revenues:
Interest Income:
First Mortgage Bonds $1,127,980 $441,000 (a) $ 1,822,314
(12,388)(b)
292,500 (f)
(26,778)(g)
Tax-Exempt Securities 2,054 -- 2,054
Marketable Securities 262,381 (147,000)(d) 42,256
(73,125)(i)
---------- ------------ -----------
Total revenues 1,392,415 474,209 1,866,624
---------- ------------ -----------
Expenses:
General and administrative 68,013 -- 68,013
General and administrative-
related parties 139,007 -- 139,007
Loan serving fees 37,946 12,250 (c) 58,321
8,125 (h)
Amortization of organization costs 10,000 -- 10,000
---------- ------------ -----------
Total expenses 254,966 20,375 275,341
---------- ------------ -----------
Net income $1,137,449 $ 453,834 $ 1,591,283
========== ============ ===========
Allocation of Net Income:
Shareholders $1,067,015 $ 408,953 $ 1,475,968
Manager 10,778 4,131 14,909
Special distributions to Manager 59,656 24,500 (e) 100,406
16,250 (j)
---------- ------------ -----------
Net income $1,137,449 $ 453,834 $ 1,591,283
========== ============ ===========
Net income per weighted
average share-shareholders $ 0.89 $ 0.34 $ 1.23
========== ============ ===========
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME FOR
THE YEAR ENDED DECEMBER 31, 1996
(a) Represents interest income on the Lexington Trails Bonds for the period
1/1/96-12/31/96.
(b) Represents amortization of loan origination costs associated with the
Lexington Trails Bonds for the period 1/1/96-12/31/96.
(c) Represents loan servicing fees for Lexington Trails Bonds for the period
1/1/96-12/31/96.
(d) Represents reduction in interest income resulting from the use of proceeds
to purchase the Lexington Trails Bonds on 1/1/96.
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(e) Represents the accrued special distribution to Manager associated with the
Lexington Trails bonds for the period 1/1/96-12/31/96.
(f) Represents interest income on the Highpointe Bonds for the period
1/1/96-12/31/96.
(g) Represents amortization of loan origination costs associated with the
Highpointe Bonds for the period 1/1/96-12/31/96.
(h) Represents loan servicing fees for the Highpointe Bonds for the period
1/1/96-12/31/96.
(i) Represents reduction in interest income resulting from the use of proceeds
to purchase the Highpointe Bonds on 1/1/96.
(j) Represents the accrued special distribution to Manager associated with the
Highpointe Bonds for the period 1/1/96-12/31/96.
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UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
Pro Forma Pro Forma
Historical Adjustments Total
---------- ------------ -----------
Revenues:
Interest Income:
First Mortgage Bonds $ 744,181 $ 147,000 (c) $ 1,019,913
(4,129)(a)
146,250 (i)
(13,389)(g)
Tax-Exempt Securities 3,277 -- 3,277
Marketable Securities 131,714 (49,000)(b) 33,964
(48,750)(h)
---------- ------------ -----------
Total revenues 879,172 177,982 1,057,154
---------- ------------ -----------
Expenses:
General and administrative 37,141 -- 37,141
General and administrative-
related parties 66,808 -- 66,808
Loan serving fees 21,217 4,063(d) 29,309
4,029(j)
Amortization of organization costs 5,000 -- 5,000
---------- ------------ -----------
Total expenses 130,166 8,092 138,258
---------- ------------ -----------
Net income $ 749,006 $ 169,890 $ 918,896
========== ============ ===========
Allocation of Net Income:
Shareholders $ 702,349 $ 152,062 $ 854,411
Manager 7,094 1,536 8,630
Special distributions to Manager 39,563 8,167(d) 55,855
8,125(j)
---------- ------------ -----------
Net income $ 749,006 $ 169,890 $ 918,896
========== ============ ===========
Net income per weighted
average share-shareholders $ 0.48 $ 0.10 $ 0.58
========== ============ ===========
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UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Historical Adjustments Total
----------- ----------- -------------
<S> <C> <C> <C>
ASSETS:
Investment in First Mortgage Bonds-
at fair value $21,166,640 $ 3,250,000 (e) $ 24,619,844
203,204 (f)
Cash and cash equivalents 178,965 -- 178,965
Marketable securities 4,600,000 (3,250,000) (e) 1,350,000
Deferred costs 203,204 (203,204) (f) 0
Organization costs (net of accumulated
amortization of $22,500) 27,500 -- 27,500
Accrued interest receivable 154,016 -- 154,016
----------- ----------- -------------
Total assets $26,330,325 $ 0 $ 26,330,325
=========== =========== =============
LIABILITES AND SHAREHOLDERS' EQUITY
Liabilities:
Due to affiliates $ 384,854 $ -- $ 384,854
Accounts payable 16,652 -- 16,652
----------- ----------- -------------
Total Liabilities 401,506 0 401,506
----------- ----------- -------------
Shareholders' equity:
Beneficial owners' equity-manager (11,088) -- (11,088)
Beneficial owners' equity-shareholders
(1,469,956 shares issued and outstanding)
25,910,165 -- 25,910,165
Treasury shares of beneficial
interest (4,235 shares) (80,457) -- (80,457)
Net unrealized gain on First Mortgage
Bonds 110,199 -- 110,199
----------- ----------- -------------
Total shareholders' equity 25,928,819 0 25,928,819
----------- ----------- -------------
Total liabilities and shareholders' equity $26,330,325 $ 0 $ 26,330,325
=========== =========== =============
</TABLE>
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX
MONTHS ENDED AND AS OF JUNE 30, 1997
(a) Represents amortization of loan origination costs associated with the
Lexington Trails Bonds for the period 1/1/97-5/07/97 (period before date of
purchase).
(b) Represents reduction of interest income from 1/1/97 - 5/07/97 (period
before date of purchase) resulting from the use of proceeds to purchase the
Lexington Trails Bonds.
(c) Represents interest income on the Lexington Trails Bonds for the period
1/1/97 - 5/07/97 (period before date of purchase).
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(d) Represents accrued loan servicing fees and accrued special distribution to
Manager associated with Lexington Trails Bonds for the period
1/1/97-5/07/97 (period before date of purchase).
(e) Represents the purchase of the Highpointe Bonds on 1/1/97.
(f) Represents the reclass of loan origination costs associated with the
Highpointe Bonds.
(g) Represents amortization of loan origination costs associated with the
Highpointe Bonds for the period 1/1/97-6/30/97.
(h) Represents reduction of interest income resulting from the use of proceeds
to purchase the Highpointe Bonds on 1/1/97.
(i) Represents interest income on the Highpointe Bonds for the period 1/1/97 -
6/30/97.
(j) Represents accrued loan servicing fees and accrued special distribution to
Manager associated with Highpointe Bonds for the period 1/1/97-6/30/97.
(c). Exhibits
--------
10.1 Redevelopment Authority of the County of Dauphin Multifamily Housing
Revenue Bond (High Pointe Club Apartments Project), Series 1989, in the
principal amount of $3,250,000.00 dated September 2, 1997, previously
filed with the 8-K filed on September 10, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
American Tax-Exempt Bond Trust
(Registrant)
BY: /s/ Stuart J. Boesky
--------------------
Stuart J. Boesky
Executive Vice President and
November 7, 1997 Chief Operating Officer
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