<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
Amendment No. 1
to
[X]ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file No. 1-13080
GROVE PROPERTY TRUST
(Name of Small Business Issuer in Its Charter)
Maryland 06-1391084
State of Incorporation or Organization) (I.R.S. Employer Identification No.)
598 Asylum Avenue, Hartford, Connecticut 06105
(Address of Principal Executive Offices) (Zip Code)
(860) 520-4789
(Issuer's Telephone Number)
GROVE REAL ESTATE ASSET TRUST
(Former Name)
Securities registered under Section 12(b) of
the Exchange Act:
Title of Each Class: Name of Each Exchange on Which Registered:
Common Shares of Beneficial American Stock Exchange, Inc.
Interest, $.01 par value
Securities registered under Section 12(g) of the Exchange Act: None
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes: X No:
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. __
The issuer's revenues for the 1996 fiscal year were $2,082,239.
The aggregate market value of voting stock held by non-affiliates as of October
29, 1997 was $35,412,723.
The number of Common Shares of Beneficial Interest outstanding as of October 29,
1997 was 3,953,829.
DOCUMENTS INCORPORATED BY REFERENCE:
Definitive proxy statement for 1997 Annual Meeting of
Shareholders - Part III of Form 10-KSB
<PAGE>
PART I
Item 7. Financial Statements
Financial statements and supplementary financial information are contained on
pages F-1 to F-13 of this report.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
caused this amendment to its report to be signed on its behalf by the
undersigned, thereunto duly authorized.
REGISTRANT:
GROVE PROPERTY TRUST
Date: October 30, 1997 By:/s/ Joseph R. LaBrosse
----------------------
Name: Joseph R. LaBrosse
Title: Chief Financial Officer,
Secretary, Treasurer, and
Trust Manager
<PAGE>
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following financial statements of the Registrant and its subsidiaries
required to be included in Item 13(a)(1) are listed below:
GROVE PROPERTY TRUST
Page
----
Report of Independent Certified Public Accountants F-2
Balance Sheet as of December 31, 1996 F-3
Income Statements for the years ended December 31, 1996
and 1995 F-4
Statements of Shareholders' Equity for the years ended
December 31, 1996 and 1995 F-5
Statements of Cash Flows for the years ended December 31, 1996
and 1995 F-6
Notes to Financial Statements F-7 - F-13
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Shareholders and Board of Trust Managers
Grove Property Trust
We have audited the accompanying balance sheet of Grove Property Trust (formerly
known as Grove Real Estate Asset Trust) as of December 31, 1996 and the related
statements of income, changes in shareholders' equity, and cash flows for the
years ended December 31, 1996 and 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements 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 assurances 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 audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Grove Property Trust as of
December 31, 1996, and the results of its operations and its cash flows for the
years ended December 31, 1996 and 1995 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
New York, New York
September 2, 1997
F-2
<PAGE>
GROVE PROPERTY TRUST
BALANCE SHEET
December 31,
1996
ASSETS
Real estate assets:
Land ................................................. $ 920,293
Buildings and improvements ........................... 8,528,075
Furniture, fixtures and equipment .................... 349,768
-----------
9,798,136
Less - accumulated depreciation ...................... (1,049,815)
-----------
Net real estate assets ....................... 8,748,321
Cash and cash equivalents .................................... 381,340
Cash - resident security deposits ............................ 157,537
Deferred charges, net of accumulated amortization
of $5,762 and $11,736, respectively ..................... 222,930
Other assets ................................................. 10,482
-----------
Total assets ................................................ $ 9,520,610
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable ............................... $ 5,668,578
Accounts payable, accrued expense and other .......... 72,054
Due to affiliates .................................... 19,190
Resident security deposits ........................... 157,537
Dividends payable .................................... 120,750
-----------
Total liabilities ............................................ 6,038,109
-----------
Commitments and subsequent event ............................. --
Shareholders' equity:
Preferred shares, $.01 par value per share,
4,000,000 shares authorized; no shares
issued or outstanding ............................ --
Common shares, $.01 par value per share,
10,000,000 shares authorized; 525,000
shares issued and outstanding .................... 5,250
Additional paid-in capital ........................... 3,913,176
Distributions in excess of earnings .................. (435,925)
-----------
Total equity ................................................. 3,482,501
-----------
Total liabilities and shareholders' equity ................... $ 9,520,610
===========
See accompanying notes.
F-3
<PAGE>
GROVE PROPERTY TRUST
INCOME STATEMENTS
Years Ended December 31,
-------------------------------
1996 1995
Revenues:
Rental income ....................... $2,046,390 $1,287,013
Interest and other income ........... 35,849 29,902
------ ------
Total revenues .................. 2,082,239 1,316,915
--------- ---------
Expenses:
Property operating and maintenance .. 655,821 406,227
Real estate taxes ................... 208,302 147,770
Related party management fees ....... 108,731 66,781
General and administrative .......... 66,798 56,363
------ ------
Total expenses .................. 1,039,652 677,141
--------- -------
1,042,587 639,774
Interest expense ........................ 394,657 85,103
Depreciation and amortization ........... 386,641 216,413
------- -------
Net income .............................. $ 261,289 $ 338,258
========== ==========
Net income per common share ............. $ 0.42 $ 0.55
========== ==========
Weighted average number of shares ....... 620,102 620,102
======= =======
See accompanying notes.
F-4
<PAGE>
GROVE PROPERTY TRUST
STATEMENT OF SHAREHOLDERS' EQUITY
Additional Distributions
Common Paid-in in Excess of
Shares Capital Net Income
------ ------- ----------
Shareholders' equity, January 1, 1995.... $ 5,250 $ 3,913,176 $ (78,659)
Net income ...................... 338,258
Declared dividends .............. (475,125)
-------- --------- --------
Shareholders' equity, December 31, 1995 5,250 3,913,176 (215,526)
Net income 261,289
Declared dividends.............. (481,688)
-------- --------- ---------
Shareholders' equity, December 31, 1996 $ 5,250 $ 3,913,176 $ (435,925)
========= ========= ========
See accompanying notes.
F-5
<PAGE>
GROVE PROPERTY TRUST
STATEMENTS OF CASH FLOWS
Years Ended December 31,
-------------------------------
1996 1995
---- ----
Cash flows from operating activities:
Net income ........................................... $261,289 $338,258
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization .................. 386,641 216,413
Imputed interest - mortgage .................... 37,508 34,892
(Increase) decrease in other assets ............ (7,670) 4,472
Increase (decrease) in accounts payable, accrued
expenses and other ..................... 40,751 (8,891)
------ ------
Net cash provided by operating activities 718,519 585,144
------- -------
Cash flows from investing activities:
Deferred charges ..................................... (174,079) --
Other ................................................ (2,714) --
Additions to real estate assets ...................... (125,634) (99,002)
-------- -------
Net cash used in investing activities .... (302,427) (99,002)
-------- -------
Cash flows from financing activities:
Net proceeds from mortgage payable on acquisition .... 220,198 --
Financing costs ...................................... (21,000) (23,000)
Repayment of mortgage payable ........................ (58,961) --
Payments to affiliates ............................... (78,338) (22,929)
Dividends paid ....................................... (480,376) (472,500)
-------- --------
Net cash used in financing activities (418,477) (518,429)
-------- --------
Net decrease in cash and cash equivalents ............. (2,385) (32,287)
Cash and cash equivalents, beginning of period ........ 383,725 416,012
------- -------
Cash and cash equivalents, end of period .............. $381,340 $383,725
======= =======
See accompanying notes.
F-6
<PAGE>
GROVE PROPERTY TRUST
NOTES TO FINANCIAL STATEMENTS
1. FORMATION AND BUSINESS OF THE COMPANY
Grove Property Trust (the "Company" or "GPT"), formerly Grove Real Estate
Asset Trust ("GREAT") was organized in the State of Maryland on April 4,
1994, as a Real Estate Investment Trust ("REIT"). As of December 31, 1996,
the Company operated four properties with a total of 257 residential
apartments. The Company purchased three properties, (the "Original
Properties") on June 23, 1994, and the fourth property was acquired in
January 1996 (collectively, the "Properties").
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during
the reporting period.
Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with an original
maturity of three months or less at the time of the purchase to be cash
equivalents.
Real Estate Assets and Depreciation
The Original Properties were recorded at their historical cost due to the
controlling relationship between the principals of the entities previously
operating the Properties (the "Grove Affiliates"). The portion of the
purchase price attributable to the net assets acquired from Grove
Affiliates exceeds their amortized historical cost. Accordingly, the excess
amount is reflected as a decrease in equity for accounting purposes. All
real estate assets purchased subsequent to the initial acquisitions have
been recorded at cost. Depreciation is provided using the straight-line
method over the estimated useful lives of the assets (7 to 27.5 years).
Long-Lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of " (FAS No. 121),
which requires long-lived assets to be reviewed for impairment when events
or circumstances indicate that an impairment might exist. When an
impairment indicator is present, assets must be grouped at the lowest level
for which there are identifiable cash flows. If the sum of the undisclosed
cash flows is less than the carrying amounts of the assets, an impairment
loss must be recorded. The impairment loss is measured by comparing the
fair value of the assets with their carrying amount. To date, no losses
have been recognized.
Per Share Data
Net income per common share is based on the weighted average number of
shares outstanding during each year. Common stock equivalents (options and
warrants) did not have a dilutive effect on net income per share for any
year presented. On February 10, 1997, the Board of Trust Managers of the
Company declared a stock dividend aggregating 26,250 Common Shares and the
concurrent effectuation of a 1.125-for-one common stock split. All shares
outstanding and per share amounts have been restated to reflect these
changes in capital structure.
F-7
<PAGE>
GROVE PROPERTY TRUST NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
In February 1997, the Financial Accounting Standard Board issued Statement
No. 128, Earnings Per Share, which is required to be adopted on December
31, 1997. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. The impact of
Statement 128 on the calculation of primary and fully diluted earnings per
share for the years ended December 31, 1996 and 1995, is not material.
Stock-Based Compensation
Effective in fiscal year 1996, the Company adopted Financial Accounting
Standard No. 123, "Accounting for Stock-Based Compensation." This statement
defines a fair value based method of accounting for employee stock
compensation plans. However, it also allows an entity to continue to
measure compensation cost for those plans in accordance with Accounting
Principle Board (APB) Opinion No. 25, "Accounting for Stock Issued to
Employees." Under APB No. 25, compensation cost is the excess, if any, of
the quoted market price of the stock at the grant date over the amount the
employee must pay to acquire the stock. The company has elected to continue
to account for its employee stock compensation plans under APB No. 25.
Income Taxes and Dividends
The Company has made the election to be taxed as a REIT under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code").
A REIT will generally not be subject to federal income tax to the extent it
distributes at least 95% of its taxable income to its shareholders and
complies with other requirements. Accordingly, no provision has been made
for federal income taxes for the Company in the accompanying financial
statements. Even though the Company qualifies for taxation as a REIT, the
Company may be subject to certain state and local taxes on its income and
property and to federal income and excise taxes on its undistributed
income, if any. Shareholders are taxed on dividends declared and must
report such dividends as either ordinary income, short term gains, long
term gains, or as a return of capital. The federal income tax
characteristics of dividends paid by the Company consisted of:
1996 1995
Ordinary income 97.46% 83.22%
Return of principal 2.54% 16.78%
Advertising
The Company expenses advertising costs as incurred. Advertising costs
were $24,000 and $17,000 in 1996 and 1995, respectively.
Deferred Charges
Deferred charges, consisting principally of loan costs, are amortized on a
straight line basis over the term of the related obligation.
Rental Income
Rental income attributable to leases is recognized on a straight-line basis
over the term of the leases, which are generally for one year. The Company
generally requires tenants to provide a cash security deposit equal to one
month's rent or pay the last month's rent in advance. Such amounts are
deposited into a restricted bank account and the Company records an
offsetting liability.
3. Acquisition
On January 12, 1996, the Company purchased the assets and operations of
Grove Cambridge Associates Limited Partnership ("Cambridge"), a ninety-two
multifamily apartment complex located in Norwich, Connecticut, for
$4,250,000, which was funded with a $4,500,000 mortgage note payable.
F-8
<PAGE>
GROVE PROPERTY TRUST NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
The results of Cambridge's operations have been combined with those of
the Company since the date of acquisition.
The unaudited pro forma information for the period set forth below gives
effect to the transaction as if it had occurred at the beginning of the
period. The pro forma information is presented for informational purposes
only and is not necessarily indicative of the results of operations that
actually would have been achieved had the acquisition been consummated as
of that time. The pro forma results for 1996 are not materially different
from the reported amounts.
Pro Forma Year Ended December 31, 1995 (in thousands, except share data):
Revenues $2,079
Net income 278
Net income per common share $ 0.45
4. MORTGAGE NOTES PAYABLE
Mortgage notes payable consist of the following:
1996
Southington Apartments note $ 1,227,539
Cambridge Estates note 4,441,039
---------
Total $ 5,668,578
=========
The mortgage note on the Southington Apartments property which has a face
amount of $1,250,000, has an imputed interest rate of 7.25% due in monthly
interest payments of $4,167 through June 1997 and monthly principal and
interest payments of $8,527 through July 2013. The note is collateralized
by the property and 15% of the face amount is guaranteed by certain
executive officers and shareholders of the Company.
The Cambridge note payable had an original principal balance of $4,500,000
with interest payable at 7.04%. Monthly principal and interest payments of
$31,920 are due through January 2006. The note is collateralized by the
Cambridge property and by first mortgage liens on two additional
properties.
Aggregate annual maturities of mortgage notes payable are as follows:
Years ending December 31,
1997 $ 54,512
1998 86,056
1999 92,418
2000 102,579
2001 110,951
Thereafter 5,222,062
---------
Total $ 5,668,578
=========
Interest paid was $379,666 and $84,892 in 1996 and 1995, respectively.
5. INITIAL CREDIT FACILITY
The Company entered into a Initial Credit Facility concurrent with its
initial public offering ("IPO") in 1994. The Credit Facility, which
provided for up to $3.0 million in borrowings, was expected to be used to
finance acquisitions of properties, re-development and renovation costs and
expenses, and for working capital purposes related to future acquisitions.
The Credit Facility was not drawn upon, and was terminated in January 1996.
In March 1997, the Company entered into a new credit facility (see Note
10).
F-9
<PAGE>
GROVE PROPERTY TRUST NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
6. 1994 STOCK OPTION PLAN
The Company has adopted a stock option plan in 1994 (the "1994 Plan") for a
maximum of 118,120 common shares for key employees and non-employees of the
Company. Options are granted at the market price of the Company's common
stock on the date of grant, become exercisable in increments of 33 1/3% per
year on each of the first three anniversaries of the date of grant and have
a maximum term of ten years. In May 1997, an employee exercised options on
394 Common Shares.. Information regarding the Company's stock option plan
is summarized below. In March 1997, the Company instituted an additional
stock option plan (see Note 10).
1996 1995
-------------------------- ----------------------
Weighted Weighted
Average Average
Exercise Exercise
Options Price Options Price
------- ----- ------- -----
Outstanding at beginning
of year 69,689 $ 9.31 66,146 $ 9.42
Granted 48,428 $ 7.29 3,543 $ 7.20
------ -------
Outstanding at end
of year 118,117 $ 8.48 69,689 $ 9.31
======= ======
Options exercisable at
end of year 45,272 $ 9.36 22,049 $ 9.42
====== ======
The Company accounts for stock option grants under its Plan in accordance
with APB No. 25. Accordingly, no compensation cost has been recognized for
stock option grants since the options have exercise prices equal to the
market value of the Company's common stock at the date of grant. The pro
forma compensation cost for the Company's 1994 Plan determined in
accordance with FAS No. 123 was not material for 1996 and 1995.
7. UNDERWRITER WARRANTS
In conjunction with the IPO, the managing underwriter was granted
Underwriter Warrants to purchase 47,248 Common Shares. The Underwriter
Warrants are exercisable at $11.31 per Common Share and expire in June
1999. No warrants have been exercised as of December 31, 1996.
8. RELATED PARTY TRANSACTIONS
Management Fee
On June 23, 1994, the Company entered into a Management Agreement (the
"Agreement") with Grove Property Services Limited Partnership ("GPS), an
affiliated company which provides operating and support functions requisite
to the operation of the Properties. The Agreement provides for a management
fee equal to 5% of gross monthly revenues, as defined, and was terminated
pursuant to the Consolidated Transactions in March 1997. Management fees
incurred in 1996 and 1995 were $108,731 and $66,781, respectively.
Operating Expenses and Non-Operating Expenses
Certain operating and non-operating expenses include amounts allocated to
the Company by GPS. These charges reflect an allocation of the cost of
services required by the Company, which are outside the scope of services
customarily included in the property management fees. Total costs of
$10,952 were allocated in 1996.
Rent to Related Party
The Company's executive offices are leased from an affiliated company for
$500 per month under a three year lease which expired in June 1997; rent
expense related thereto was $6,000 in 1996 and 1995. The lease was
subsequently extended on a month-to-month basis at comparable rent.
F-10
<PAGE>
GROVE PROPERTY TRUST NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosures of estimated fair value were determined by management
using available market information and appropriate valuation methodologies.
Judgment is necessary to interpret market data and develop estimated fair value.
Accordingly, the estimates presented herein are not necessarily indicative of
the amounts the Company could realize on disposition of the financial
instruments. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value of amounts.
Cash equivalents, accounts receivable, accounts payable and other accruals,
because of their short term nature, approximate fair value. Mortgage notes are
also carried at amounts that approximate their fair values. Fair values of
mortgage notes were estimated using discounted cash flow analyses, based on
interest rates currently available to the Company for issuance of debt with
similar terms and remaining maturities.
10. SUBSEQUENT EVENT
On March 14, 1997, GPT completed a series of transactions pursuant to which the
Company was transformed into a self-administered and self-managed REIT with
control over a portfolio of 23 multi-family residential projects and a
neighborhood shopping center in the Northeastern United States. A summary of the
steps involved in these Consolidation Transactions are as follows:
GPT formed an Operating Partnership to serve as the vehicle for the
consolidation of ownership and/or control of the operations and assets
liabilities of the Company.
Pursuant to an Exchange Offer, the Operating Partnership purchased from the
Limited Partners of certain Property Partnerships, the outstanding
partnership units of each of the Property Partnerships in exchange for
Common Units of the Operating Partnership, or, in certain circumstances,
cash. The number of Common Units received by a Limited Partner (1,205,324
in the aggregate, excluding Grove Companies) was calculated based upon such
partners' interest in the applicable partnership as applied to the value of
the property partnership associated therewith.
Immediately prior to the consummation of the Consolidation Transactions,
GPT declared and issued a stock dividend aggregating 26,222 Common Shares
and concurrently effected a stock split of 1.125 to 1, thereby issuing on a
pro rata basis a total of 95,102 Common Shares to the holders of the
currently issued and outstanding Common Shares. The Company retroactively
adjusted all share and per share amounts in the accompanying financial
statements to reflect these transactions.
GPT issued 3,333,333 Common Shares to new equity investors in exchange for
$30 million.
Pursuant to a Contribution Agreement among GPT, certain companies and
individuals affiliated with GPT (the "Grove Companies") and the Operating
Partnership, substantially all of the assets and operations of GPT, the
management services division of Grove Property Services Limited Partnership
and the Grove Companies' interests in the acquired Property Partnerships
were transferred to the Company.
In exchange for the above, the Grove Companies received an aggregate of
909,115 Common Units in the Operating Partnership and a cash payment of
$177,669 from GPT, and GPT received 620,102 Common Units in the Operating
Partnership. Additionally, GPT contributed to the Operating Partnership the
proceeds received from new equity investment ($30 million less related
costs) in exchange for a number of additional Common Units equal to the
number of Common Shares issued by GPT to the new equity investors.
F-11
<PAGE>
GROVE PROPERTY TRUST NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
Revolving Credit Facility and Mortgage Loan Refinancings
In connection with the Consolidation Transactions, the Operating Partnership
entered into a three-year secured revolving acquisition and working capital
facility ("Revolving Credit Facility") of up to $25 million and an approximately
$15.1 million ten-year term mortgage loan. Borrowings under the Revolving Credit
Facility are collateralized by certain properties and bear interest, payable
monthly, at a floating rate of 1.2% above the 30, 60 or 90 day LIBOR. The
Operating Partnership is required to maintain certain financial covenants.
The Company used a portion of the proceeds from the new equity investment,
together with borrowings under the $15.1 million ten-year mortgage loan to
paydown or refinance approximately $39.3 million of mortgage indebtedness of the
Property Partnerships and to acquire certain minority interests in certain of
the Property Partnerships.
Property Acquisitions
Effective on June 1, 1997, the Company acquired two residential apartment
complexes through the Operating Partnership. These acquisitions were completed
by the Operating Partnership through the acquisition of the assets (other than
certain amounts of cash) and the assumption of liabilities of Northeast
Apartments I Limited Partnership, the owner of Four Winds Apartments, and of
West Hartford Center Associates, Limited Partnership, the owner of Brooksyde
Apartments. In addition, simultaneously with the acquisition of Four Winds
Apartments and Brooksyde Apartments, the Company acquired an interest in Windsor
Arbor Limited Partnership ("Windsor"), the owner of River's Bend Apartments, and
anticipates that it will acquire, pursuant to certain put and call options, the
remaining limited partnership interest in Windsor on or before December 31, 1997
for $4.9 million. Commencing June 1, 1997, the Company will consolidate Windsor
in its financial statements.
Upon consummation of the June 1, 1997 transactions referred to above, the
Operating Partnership issued an aggregate of 420,183 Common Units valued at $10
per unit, which under certain circumstances, could be redeemed for an equal
number of Common Shares of the Company. The Company also assumed mortgage debt
on Four Winds Apartments and Brooksyde Apartments in the aggregate remaining
principal amount of $6.2 million. Additionally, the Windsor Arbor investment is
encumbered by $8.6 million mortgage debt. To complete these transactions, the
Company borrowed $1.825 million under its Revolving Credit Facility and used
$68,000 of its available cash.
Four Winds Apartments is a 168-unit apartment community located in North Fall
River, Massachusetts. Brooksyde Apartments is an 80-unit apartment community
located in West Hartford, Connecticut. River's Bend Apartments is a 432-unit
condominium community located in Windsor, Connecticut, of which 349 units are
own by Windsor.
On July 1, 1997, the Company purchased 127 condominium units constituting a part
of Greenfield Village Condominium in Rocky Hill, Connecticut. The purchase was
made pursuant to a Purchase and Sale Agreement dated May 14, 1997, between
Highland Income Partners, L.P. and Grove Corporation, an affiliate of the
Company. The $4,282,500 purchase price for Greenfield Village was paid utilizing
a portion of the Company's cash and borrowings under the Revolving Credit
Facility. In addition, Grove Rocky Hill assumed certain obligations of the
seller, principally related security deposits held by the seller. In connection
with the purchase of Greenfield Village, the Company paid $107,000 for expense
and overhead reimbursement to National Realty Services, L.P., a limited
partnership owned by four of the executive officers of the Company.
Pursuant to two Offers of Exchange All Outstanding Limited Partnership Interests
in two affiliated partnerships, effective September 1, 1997, the Company
acquired three residential apartment communities through the Operating
Partnership. These acquisition were completed by the Operating Partnership
through the acquisition of the assets and the assumption of liabilities of
Heritage Court Associates Limited Partnership, the owner of the Glastonbury
Center Apartments, and of Farmington Summit Associates Limited Partnership, the
owner of Summit Apartments and Birch Hill Apartments.
F-12
<PAGE>
GROVE PROPERTY TRUST NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
Upon consummation of the transactions, the Operating Partnership issued and
aggregate of 328,332 Common Units valued at $10.50 per unit, which under certain
circumstances, could be redeemed for an equal number of Common Shares of the
Company. The Company also assumed mortgage debt on Summit Apartments, Birch Hill
Apartments and Glastonbury Apartments in the aggregate remaining principal
amount of $9.8 million. To complete these transactions, the Company borrowed
$750,000 under its Revolving Credit Facility, assumed a current liability of
$1.1 million (subsequently paid), including approximately $200,000 due to an
affiliate, and paid the balance from its available cash.
Summit Apartments and Birch Hill Apartments have a total of 184 apartments and
are located in Farmington Connecticut. Glastonbury Apartments is a 104-unit
apartment community located in Glastonbury, Connecticut.
1996 Stock Option Plan
In March 1997, the Company instituted an additional stock option plan ("1996
Plan"). The Company reserved a total of 900,000 common shares, subject to
adjustment, pursuant to the 1996 Plan. The provisions of the 1996 Plan are
similar to the 1994 Plan (see Note 6). Pursuant to the Consolidation
Transactions, the Company granted 300,000 options to certain executive officers
and non-employee Board of Trust Managers. Each non-employee Board to Trust
Manager received 5,000 options per year.
F-13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
DECEMBER 31, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
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<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-01-1996
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0
0
<COMMON> 5,250
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<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
