|
|
|
|
|
|
|
|
|
|
|
|
|
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K/A
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): March 22, 1999
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 1934 Act File Number: 1-13174
Maryland 54-1681655
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2345 Crystal Drive
Crystal City, VA 22202
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number including area code: (703) 920-8500
<PAGE>
Item 2. Property Acquisitions
- ------- ---------------------
On January 5, 1999, Charles E. Smith Residential Realty L.P. ("the
Operating Partnership"), of which Charles E. Smith Residential Realty, Inc.
("the Company") is the sole general partner, acquired a high-rise apartment
property located in Crystal City, Virginia ("Buchanan House") for a purchase
price of approximately $60 million, from a private investment company. The
Buchanan House has 442 apartment units, averaging 1,173 square feet in size.
The property also includes a 900+ car commercial parking garage and 70,000
square feet of commercial/retail space.
The total capitalized cost of $65.5 million includes $5.0 million of initial
capital improvements which the Company plans to invest in the property. The
acquisition was financed with the proceeds from the December 1998 sale of
Marbury Plaza (a 672 unit property in southeast Washington, D.C.), assumed debt
of $7.4 million and $34.9 million of cash drawn on the Company's bank line of
credit.
Item 7. Financial Statements and Exhibits
- ------- ---------------------------------
The following pro forma financial information is included as a first amendment
to the Form 8-K dated January 5, 1999 and filed on January 20, 1999 for the
Company.
(A) Pro forma financial information beginning at page F-2
(B) Historical financial information for Buchanan House beginning at page F-8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, hereunto duly authorized, on this 22nd day of
March 1999.
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
By: /s/ W. D. Minami
------------------------------------------
W. D. Minami
Senior Vice President and Chief Financial
Officer of the Registrant
By: /s/ Steven. E. Gulley
-------------------------------------------
Steven E. Gulley
Vice President and Chief Accounting Officer
of the Registrant
3
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA INFORMATION
<TABLE>
<CAPTION>
Page
----
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
<S> <C>
Pro Forma (Unaudited) Consolidated Balance Sheet F-3
as of September 30, 1998
Pro Forma (Unaudited) Consolidated Statement of F-4
Operations for the nine months ended September 30, 1998
Pro Forma (Unaudited) Consolidated Statement of F-5
Operations for the year ended December 31, 1997
Notes and Management's Assumptions to Unaudited Pro Forma
Consolidated Financial Information F-6
ACQUISITION PROPERTY
Report of Independent Public Accountants - Buchanan House F-7
Statements of Revenues and Certain Expenses of Buchanan House F-8
for the nine months ended September 30, 1998 (Unaudited) and
the year ended December 31, 1997
Notes to Statements of Revenues and Certain Expenses of F-9
Buchanan House for the nine months ended September 30,
1998 (Unaudited) and the year ended December 31, 1997
</TABLE>
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1998 and
the unaudited Pro Forma Consolidated Statements of Operations for the nine
months ended September 30, 1998 and the year ended December 31, 1997 are based
on the historical financial statements of the Company and the Operating
Partnership.
The unaudited Pro Forma Consolidated Balance Sheet as of September 30, 1998 is
presented as if the Buchanan House acquisition had occurred on September 30,
1998. The unaudited Pro Forma Consolidated Statements of Operations for the nine
months ended September 30, 1998 and the year ended December 31, 1997 are
presented as if the Buchanan House acquisition had occurred at the beginning of
each of those periods. The unaudited pro forma information should be read in
conjunction with the historical financial statements and notes related thereto
appearing in the Company's Forms 10-Q and 10-K.
Preparation of the pro forma financial information was based on assumptions
considered appropriate by the Company's management. The pro forma financial
information is unaudited and is not necessarily indicative of the results which
would have occurred if the acquisition had been consummated at the beginning of
the periods presented, nor does it purport to represent the future financial
position and results of operations for future periods. In management's opinion,
all adjustments necessary to reflect the effects of the transaction have been
made.
F-2
<PAGE>
<TABLE>
<CAPTION>
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED) (IN THOUSANDS)
Other
ASSETS Historical Buchanan(A) Adjustments Pro-forma
----------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
Rental property, net $ 952,063 $ 65,500(B) $1,017,563
Rental property under construction 106,562 106,562
Cash and cash equivalents 13,116 (13,116) -
Tenants' security deposits 2,649 235 2,884
Escrow funds 10,650 (4,596) 6,054
Investment in and advances to Property Service Businesses 26,392 26,392
Deferred charges, net 14,956 14,956
Other assets 16,387 16,387
----------- ----------
Total Assets $ 1,142,775 $1,190,798
=========== ==========
LIABILITIES AND EQUITY
Liabilities
Mortgage loans $ 482,476 $ 7,373 $ 489,849
Lines of credit 244,500 34,915 279,415
Construction loans 25,572 25,572
Accounts payable and accrued expenses 22,650 5,500 28,150
Security deposits 2,649 235 2,884
----------- ----------
Total Liabilities 777,847 825,870
----------- ----------
Minority Interest 100,941 100,941
Shareholders' equity:
Preferred Stock
Series A Cumulative Convertible Redeemable
Preferred Stock 71,500 71,500
Series B Cumulative Convertible Redeemable
Preferred Stock 27,757 27,757
Series C Cumulative Redeemable Preferred Stock 50,000 50,000
Common Stock 175 175
Additional paid-in capital 126,806 126,806
Retained deficit (12,251) (12,251)
Total shareholders' equity 263,987 263,987
----------- ----------
Total Liabilities and Shareholders' equity $ 1,142,775 $1,190,798
=========== ==========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Other
Historical Buchanan Adjustments Pro-forma
----------- ----------- ------------ ------------
RENTAL PROPERTIES
<S> <C> <C> <C> <C>
Revenues $ 183,488 $ 5,677 $ - $ 189,165
Expenses
Operating costs (62,482) (1,686) 130 (A) (64,038)
Real estate taxes (12,722) (439) (13,161)
Depreciation and amortization (21,445) - (1,226)(B) (22,671)
----------- ----------- ----------- ------------
Total expenses (96,649) (2,125) (1,096) (99,870)
----------- ----------- ----------- ------------
Equity in income of Property Service Businesses 5,584 5,584
Corporate general and administrative expenses (6,405) (6,405)
Interest income 855 855
Interest expense (35,071) (426)(C) (1,953)(C) (37,450)
----------- ----------- ----------- ------------
Income before gain on sale, loss on unused treasury
lock and extraordinary item 51,802 3,126 (3,049) 51,879
Gain on sale of property 3,120 3,120
Loss on unused treasury lock (4,923) (4,923)
----------- ------------
Income before extraordinary item 49,999 50,076
Extraordinary item - loss on extinguishment
of debt (4,702) (4,702)
----------- -----------
Net income of the Operating Partnership 45,297 45,374
Minority Interest (18,977) (32)(D) (19,009)
----------- -----------
Net income 26,320 26,365
Less: Income attributable to preferred shares (7,938) (7,938)
----------- ------------
Net income attributable to common shares $ 18,382 $ 18,427
=========== ============
Net income per common share - basic $ 1.16 $ 1.16
=========== ============
Net income per common share - diluted $ 1.15 (E) $ 1.15
=========== ============
Weighted average shares outstanding - basic 15,870 15,870
=========== ============
Weighted average shares outstanding - diluted 16,048 16,048
========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
<TABLE>
<CAPTION>
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Other
Historical Buchanan Adjustments Pro-forma
------------ -------------- ------------ ------------
RENTAL PROPERTIES
<S> <C> <C> <C> <C>
Revenues $ 200,104 $ 7,445 $ - $ 207,549
Expenses
Operating costs (71,425) (2,385) 200 (A) (73,610)
Real estate taxes (12,402) (388) (12,790)
Depreciation and amortization (20,666) - (1,635)(B) (22,301)
------------ -------------- ------------ ------------
Total expenses (104,493) (2,773) (1,435) (108,701)
------------ -------------- ------------ ------------
Equity in income of Property Service Businesses 7,597 7,597
Corporate general and administrative expenses (6,563) (6,563)
Interest income 1,063 48 1,111
Interest expense (45,411) (577)(C) (2,744)(C) (48,732)
------------ -------------- ------------ ------------
Income before extraordinary item 52,297 4,143 (4,179) 52,261
Extraordinary item - loss on extinguishment
of debt (87) (87)
------------ ------------
Net income of the Operating Partnership 52,210 52,174
-
Minority Interest (25,617) 18 (D) (25,599)
------------ ------------
Net income 26,593 26,575
Less: Income attributable to preferred shares (1,881) (1,881)
------------ ------------
Net income attributable to common shares $ 24,712 $ 24,694
=========== ===========
Net income per common share - basic $ 1.87 $ 1.87
=========== ===========
Net income per common share - diluted $ 1.86 (E) $ 1.86
=========== ===========
Weighted average shares outstanding - basic 13,218 13,218
=========== ===========
Weighted average shares outstanding - diluted 13,379 13,379
=========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
<PAGE>
CHARLES E. SMITH RESIDENTIAL REALTY, INC.
NOTES AND MANAGEMENT'S ASSUMPTIONS TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL INFORMATION
(UNAUDITED) (DOLLAR AMOUNTS IN THOUSANDS)
1. Basis of Presentation
The unaudited Pro Forma Consolidated Balance Sheet as of Sept. 30, 1998 and
unaudited Pro Forma Consolidated Statements of Operations for the nine months
ended Sept. 30, 1998 and the year ended December 31, 1997 are based on the
historical financial statements of the Company and Operating Partnership.
The unaudited Pro Forma Consolidated Balance Sheet as of Sept. 30, 1998 is
presented as if the acquisition had occurred by September 30, 1998. The
unaudited Pro Forma Consolidated Statements of Operations for the nine months
ended ended September 30, 1998 and the year ended December 31, 1997 are
presented as if the acquisition had occurred at the beginning of each of
those periods. The unaudited pro forma information should be read in
conjunction with the historical financial statements and notes related
thereto appearing in the Company's Forms 10-Q and 10-K.
2. Adjustments to Pro Forma Consolidated Balance Sheet
(A) Acquisition of Buchanan House
Purchase price of rental property $60,000
Initial capital improvements $5,000
Acquisition costs 500
---------
Cost basis of rental property $65,500
=========
Proceeds from line of credit $34,915
Proceeds from sale of Marbury 17,712
Assumption of mortgage loans 7,373
Other 5,500
---------
$65,500
==========
(B) Historical and Pro Forma balances for the rental property acquired
are as follows:
Historical Purchase Pro Forma
9/30/98 Adjustment 9/30/98
--------------------------------
Buchanan $9,099 $ 56,401 $65,500
3. Adjustments to Pro Forma Consolidated Statements of Operations
(A) Operating expenses have been adjusted to eliminate management fees
since the Company's affiliate manages owned properties.
(B) Depreciation and amortization has been adjusted based on the
allocated purchase price of the assets acquired and an estimated
useful life of 40 years, as if the purchase occurred on January 1,
1998 for the nine months ended Sept. 30, 1998 and January 1, 1997 for
the year ended December 31, 1997.
(C) Represents interest expense for draws on the line of credit (assuming
a weighted average interest rate of 7.34% and 7.86% for the nine
months ended September 30, 1998 and the year ended December 31, 1997,
respectively) and interest expense for the assumed mortgage loan
related to the acquisition.
(D) To reflect the minority interest shareholders interest in the
Buchanan acquisition.
(E) Minority Interest is adjusted in the calculation of diluted earnings
per common share to reflect the change in ownership interest after
the inclusion of common stock equivalents.
<PAGE>
Report of Independent Public Accountants
To Charles E. Smith Residential Realty, Inc.
We have audited the accompanying statement of revenues and certain expenses of
Buchanan House (the "Property") for the year ended December 31, 1997. This
statement is the responsibility of the Property's management. 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 an audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 Charles E. Smith
Residential Realty, Inc. Material amounts, described in Note 1 to the
statements of revenue and certain expenses, that would not be comparable to
those resulting from the proposed future operations of the Property are excluded
and the statement is not intended to be a complete presentation of the revenues
and expenses of this property.
In our opinion, the statement referred to above presents fairly, in all material
respects, the revenues and certain expenses of Buchanan House for the year ended
December 31, 1997 in conformity with generally accepted accounting principles.
/s/ ARTHUR ANDERSEN LLP
Washington, D.C.
March 8, 1999
<PAGE>
BUCHANAN HOUSE
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED)
AND THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30, 1998 YEAR ENDED
(UNAUDITED) December 31, 1997
-------------------------- --------------------
<S> <C> <C>
Residential rental income $ 4,397,871 $ 5,660,810
Retail rental income 753,875 1,042,593
Parking income 424,593 571,502
Other income 100,960 218,422
-------------------------- --------------------
Total Revenue 5,677,299 7,493,327
-------------------------- --------------------
CERTAIN EXPENSES:
Payroll and related costs 446,502 624,745
Utilities 489,391 615,703
Repairs and maintenance 216,688 318,916
Real estate taxes 439,332 388,474
Administrative 241,329 247,579
Management fees 130,240 199,894
Other expenses 162,050 378,024
-------------------------- --------------------
Total Certain Expenses 2,125,532 2,773,335
-------------------------- --------------------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 3,551,767 $ 4,719,992
========================= ===================
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
BUCHANAN HOUSE
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 (UNAUDITED) AND FOR
THE YEAR ENDED DECEMBER 31, 1997
1. Basis of Presentation
---------------------
The accompanying statements of revenues and certain expenses relate to the
operations of Buchanan House (the "Property") which is a residential
apartment building containing 442 residential units, with adjoining retail
space in Arlington, Virginia. The Property was acquired by Charles E. Smith
Residential Realty, Inc. (the "Company") on January 5, 1999.
Significant Accounting Policies
-------------------------------
The accompanying statements were prepared on the accrual basis accounting.
Rental income attributable to residential leases is recognized when due from
tenants. Rental income from retail tenants is recorded on a straight-line
basis over the term of the related lease.
Interim Financial Information
-----------------------------
The interim statements of revenues and certain expenses are unaudited but
reflect all adjustments which are, in the opinion of management, necessary to
a fair presentation of the interim periods presented. The adjustments consist
of normal recurring accruals.
The statements of revenues and certain expenses for interim periods will not
necessarily be indicative of the operating results of the fiscal year.
|
|