SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 2
to
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): October 31, 1997
GROVE PROPERTY TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-13080 06-1391084
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File No.) Identification Number)
598 Asylum Avenue, Hartford, Connecticut 06105
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (860) 246-1126
N/A
(Former name or former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
October 1997 Property Acquisitions - Affiliates
Statements of Revenue and Certain Expenses for the nine months ended September
30, 1997 and the years ended December 31, 1996 and 1995.
October 1997 Property Acquisitions - Non-Affiliates
Statements of Revenues and Certain Expenses for the nine months ended September
30, 1997 and the year ended December 31, 1996.
(b) Pro Forma Financial Statements.
Pro Forma Condensed Balance Sheet as of September 30, 1997. Pro Forma Condensed
Consolidated Statements of Operations for the year ended December 31, 1996 and
the nine months ended September 30, 1997.
(c) Exhibits.
Exhibit No. Description
2.1 Solicitation of Consent and Offer to Exchange Certain
Outstanding Units of Limited Partnership Interest, dated
as of June 19, 1997, as amended by Supplement dated
August 13, 1997, by Grove Operating, L.P. to certain
limited partners of Grove-Coastal Associates Limited
Partnership (incorporated by reference to Exhibit 2.5 to
Amendment No. 2 to the Company's Registration Statement
on Form S-3 (No.
333-38183))
2.2 Purchase and Sale Agreement dated September 5, 1997 between Werner
Kunzli and Grove Corporation (incorporated by reference to Exhibit
2.4 to Amendment No. 2 to the Company's Registration Statement
on Form S-3 (No. 333-38183))
<PAGE>
Grove Property Trust
Financial Statements of Properties Acquired and ProForma
Financial Information
Table of Contents
Item 7
Pro Forma Condensed Consolidated Financial Statements (Unaudited):
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1997.......5
Notes to Pro Forma Condensed Consolidated Balance Sheet.......................6
Pro Forma Condensed Consolidated Statements of Income for the Nine Months
Ended September 30, 1997 and the Year Ended December 31, 1996..............8
Notes to Pro Forma Condensed Consolidated Statements of Income...............11
October 1997 Property Acquisitions-Affiliates
Financial Statements:
Report of Independent Auditors...............................................16
Statements of Revenue and Certain Expenses for the Nine Months
Ended September 30, 1997 (Unaudited) and for the Years Ended
December 31, 1996 and 1995................................................17
Notes to the Statements of Revenue and Certain Expenses......................18
October 1997 Property Acquisition-Non-Affiliates
Financial Statements:
Report of Independent Auditors...............................................20
Statements of Revenues and Certain Expenses for the Nine Months Ended
September 30, 1997 (Unaudited) and for the Year Ended December 31, 1996...21
Notes to the Statements of Revenues and Certain Expenses.....................22
<PAGE>
Grove Property Trust
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1997
(Unaudited)
This unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as
if: (i) acquisitions completed after September 30, 1997, had occurred on
September 30, 1997, (ii) the Operating Partnership issued Common Units, used
working capital and/or drew down on the Credit Facility to purchase such
properties and (iii) the Company completed the November 1997 Offering on
September 30, 1997, and used the net proceeds therefrom to repay indebtedness
outstanding under the Credit Facility and certain mortgage notes payable and for
working capital. The unaudited Pro Forma Condensed Consolidated Balance Sheet
should be read in conjunction with the financial statements and notes thereto of
the Company, as filed on Form 10-KSB, as amended, for the year ended December
31, 1996, on Form 10-QSB for the nine-months ended September 30, 1997, Form S-2
and various Form 8-K's filed during 1997. In management's opinion, all
adjustments necessary to present fairly the effects of the above mentioned
transactions have been made.
The pro forma information is not necessarily indicative of the results that
would have been reported had such events actually occurred on the date
specified, nor is it indicative of the Company's future results.
<PAGE>
<TABLE>
Grove Property Trust
Pro Forma Condensed Consolidated Balance Sheet (continued)
September 30, 1997
(Unaudited)
<CAPTION>
Post
September
Historical 30, 1997
Company Acquisitions As Adjusted Pro Forma
(A) (B) Consolidated The Offering Consolidated
--------------- -------------- --------------- --------------- ---------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Assets
Real estate, net $ 112,014 $ 8,725 $ 120,739 $ - $ 120,739
Cash and cash equivalents, including
resident security deposits 1,158 - 1,158 2,962(C) 4,120
Deferred costs, net 1,351 - 1,351 - 1,351
Due from affiliates 602` - 602 - 602
Other assets 1,315 - 1,315 - 1,315
=============== ============== =============== =============== ===============
Total assets $ 116,440 $ 8,725 $ 125,165 $ 2,962 $ 128,127
=============== ============== =============== =============== ===============
Liabilities and Shareholders' Equity
Mortgage notes payable $ 53,862 $ - $ 53,862 $ (24,250)(C) $ 29,612
Revolving Credit Facility 11,125 7,164 18,289 (18,289)(C) -
Accounts payable and other liabilities 1,763 - 1,763 - 1,763
Due to affiliates 843 - 843 - 843
Resident security deposits 1,429 - 1,429 - 1,429
Dividends payable 1,166 - 1,166 - 1,166
--------------- -------------- --------------- --------------- ---------------
Total liabilities 70,188 7,164 77,352 (42,539) 34,813
--------------- -------------- --------------- --------------- ---------------
Minority interests in consolidated
partnerships 1,560 - 1,560 - 1,560
Minority interest in Operating
Partnership 20,831 1,561 22,392 1,693(D) 24,085
Shareholders' equity:
Common shares 40 - 40 45(C) 85
Additional paid-in capital 24,590 - 24,590 45,456(C)
(1,693)(D) 68,353
Distributions in excess of earnings (769) - (769) - (769)
--------------- -------------- --------------- --------------- ---------------
Total shareholders' equity 23,861 - 23,861 43,808 67,669
--------------- -------------- --------------- --------------- ---------------
Total liabilities and shareholders' $ 116,440 $ 8,725 $ 125,165 $ 2,962 $ 128,127
equity
=============== ============== =============== =============== ===============
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Balance Sheet
September 30, 1997
(Unaudited)
(In thousands, except share data)
(A) Balance sheet data was derived from the Company consolidated financial
statements as of September 30, 1997 (Unaudited), as filed on its Form
10-QSB.
(B) Balance sheet data reflects the following property acquisitions which
were consummated by the Company after September 30, 1997 as follows (in
thousands):
<TABLE>
<CAPTION>
Number of Revolving Value of
Units or Purchase Credit OP
Properties Location Square Feet Date Acquired Price(2) Facility Units(1)
- ---------------------------- ----------------- ------------- ------------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
1. Corner Block and Wharf
Building (2 Edgartown, MA 16,427 sq ft October 31, 1997 $ 4,421 $ 2,860 $ 1,561
properties)(2)
2. High Meadow Apartments
Ellington, CT 100 October 31, 1997 4,050 4,050 -
----------- ------------ -----------
8,471 6,910 1,561
Acquisition costs 254 254 -
=========== ============ ===========
$ 8,725 $ 7,164 $ 1,561
=========== ============ ===========
<FN>
(1) Operating Partnership ("OP") Unit Holders are represented on the
accompanying pro forma condensed consolidated balance sheet as
"minority interest in Operating Partnership." The value ascribed to
the OP Units for 1. above was $10.50 per OP Unit, representing actual
amounts.
(2) These Properties are retail centers.
</FN>
</TABLE>
(C) Balance sheet data reflects the November 1997 Offering consummated in
November 1997 and the application of the net proceeds therefrom as follows:
<TABLE>
<CAPTION>
Mortgage Revolving
Notes Credit Common Paid in
Cash Payable Facility Stock Capital
---- ------- -------- ----- -------
<S> <C> <C> <C> <C> <C>
1. Gross proceeds from the Offerings(1) $ 48,938 $ - $ - $ 45 $ 48,893
2. Costs of the Offerings (2) (3,437) - - - (3,437)
3. Paydown of debt (42,539) (24,250) (18,289) - -
------- ------- ------- -------- --------
$ 2,962 $ (24,250) $ (18,289) $ 45 $ 45,456
========== ========== ========== ========== ==========
<FN>
(1) 4,500,000 shares at $10.875 per share.
(2) Includes underwriters' discount and an estimated $1,200,000 of other
costs and expenses.
</FN>
</TABLE>
<PAGE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Balance Sheet (continued)
(D) Represents a reallocation between shareholders' equity and minority interest
in the Operating Partnership upon consummation of the November 1997 Offerings
based upon pro forma: (i) shares of common stock (8,453,829) and (ii) OP Units
not owned by the Company (3,009,126). See Note (K) in the Notes to Pro Forma
Condensed Consolidated Statements of Income included herein.
<PAGE>
Grove Property Trust
Pro Forma Condensed Consolidated Statements of Income
(Unaudited)
These unaudited Pro Forma Condensed Consolidated Statements of Income are
presented as if (i) the Company had acquired GPS and Property Partnerships, the
October 1997 Property Acquisitions-Affiliates, the October 1997 Property
Acquisition-Non-Affiliates and various other property acquisitions consummated
in 1997, (ii) the Consolidation Transactions, including the New Equity
Investment and Refinancings and (iii) the November 1997 Offering and the
application of the net proceeds therefrom as if all had occurred as of January
1, 1996. The unaudited Pro Forma Condensed Consolidated Statements of Income
should be read in conjunction with the financial statements of the Company, GPS
and Property Partnerships, October 1997 Property Acquisitions-Affiliates,
October 1997 Property Acquisitions-Non-Affiliates and various other properties
acquired during 1997, which financial statements are filed herein or have been
filed on Form 10-KSB, as amended for the year ended December 31, 1996, Form
10-QSB for the nine months ended September 30, 1997, Form S-2 and various Form
8-K's filed during 1997, including the Financial Statements included herein for
the October 1997 Property Acquisitions-Affiliaties and 1997 Property
Acquisition-Non-Affiliates. In management's opinion, all adjustments necessary
to present fairly the effects of the above mentioned transactions have been
made.
The pro forma information is not necessarily indicative of the results that
would have been reported had such events actually occurred on the date
specified, nor is it indicative of the Company's future results.
<PAGE>
<TABLE>
Grove Property Trust
Pro Forma Condensed Consolidated Statements of Income (Continued)
(Unaudited)
<CAPTION>
Nine Months Ended September 30, 1997
------------------------------------------------------------------------------
Historical
Company Acquisitions Pro Forma Company Pro Forma
(A) (B) Adjustments Adjustments Consolidated
--------------- -------------- --------------- --------------- ---------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 10,944 $ 7,643 $ - $ (9)(G) $ 18,578
Property management 380 321 - (355)(H) 346
Interest and other 212 241 - (4)(G) 449
--------------- -------------- --------------- --------------- ---------------
Total revenues 11,536 8,205 - (368) 19,373
--------------- -------------- --------------- --------------- ---------------
Expenses:
Related party management fees 22 333 - (355)(H) -
Real estate taxes 1,143 781 - - 1,924
Other property operating 3,741 3,199 (20) (G) 135 (G)
(71)(G) 6,984
General and administrative 610 36 30 (F)
(35) (G) 71 (G) 712
--------------- -------------- --------------- --------------- ---------------
Total operating expenses 5,516 4,349 (25) (220) 9,620
--------------- -------------- --------------- --------------- ---------------
Net operating income 6,020 3,856 25 (148) 9,753
Interest expense 1,732 853 (971) (C) - 1,614
Depreciation and amortization 2,380 617 (19) (D)
1,019 (E) - 3,997
--------------- -------------- --------------- --------------- ---------------
Income before minority interests 1,908 2,386 (4) (148) 4,142
Minority interests in earnings of
consolidated partnerships 114 - (23) (J) - 91
Minority interests in earnings of
Operating Partnership 658 - 405 (K) - 1,063
=============== ============== =============== =============== ===============
Net income $ 1,136 $ 2,386 $ (386) $ (148) $ 2,988
=============== ============== =============== =============== ===============
See accompanying notes.
</TABLE>
<PAGE>
<TABLE>
Grove Property Trust
Pro Forma Condensed Consolidated Statements of Income (Continued)
(Unaudited)
<CAPTION>
Year Ended December 31, 1996
------------------------------------------------------------------------------
Historical
Company Acquisitions Pro Forma Company Pro Forma
(A) (B) Adjustments Adjustments Consolidated
--------------- -------------- --------------- --------------- ---------------
(In thousands)
<S> <C> <C> <C> <C> <C>
Revenues:
Rental income $ 2,046 $ 21,515 $ - $ (30) (G) $ 23,531
Property management - 777 - (396) (H) 381
Interest and other 36 1,266 (138) (G) (307)(G)
(204) (G)
(100) (I) 553
--------------- -------------- --------------- --------------- ---------------
Total revenues 2,082 23,558 (138) (1,037) 24,465
--------------- -------------- --------------- --------------- ---------------
Expenses:
Related party management fees 109 287 - (396) (H) -
Real estate taxes 208 2,382 - - 2,590
Other property operating 656 8,914 (149) (G) (492) (G) 8,929
General and administrative 67 344 120 (F) -
(74) (G) 492 (G) 949
--------------- -------------- --------------- --------------- ---------------
Total operating expenses 1,040 11,927 (103) (396) 12,468
--------------- -------------- --------------- --------------- ---------------
Net operating income 1,042 11,631 (35) (641) 11,997
Interest expense 394 3,814 (1,934) (C) - 2,274
Depreciation and amortization 387 3,011 (5)(D)
1,912 (E) - 5,305
--------------- -------------- --------------- --------------- ---------------
Income before minority interest 261 4,806 (8) (641) 4,418
Minority interest in earnings of -
Operating Partnership - 1,160 (K) - 1,160
=============== ============== =============== =============== ===============
Net income $ 261 $ 4,806 $(1,168) $ (641) $ 3,258
=============== ============== =============== =============== ===============
See accompanying notes.
</TABLE>
<PAGE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except share data)
On March 14, 1997, the Company entered into a series of Consolidation
Transactions. The Consolidation Transactions were a business combination of the
Company and GPS (the Management Company) and Property Partnerships in connection
with the formation of an umbrella REIT. In addition, the Company simultaneously
issued 3,333,333 common shares at $9 per share ("New Equity Investment") and
retired or refinanced certain mortgage and credit facility debt ("Refinancing").
The effect of these transactions on the accompanying pro forma Condensed
Consolidated Statements of Income is reflected as outlined in the Notes below.
(A) Historical results of operations data were derived from the financial
statements of the Company as filed on the Company's Form 10-KSB, as
amended, for the year ended December 31, 1996 and on Form 10-QSB, for the
nine months ended September 30, 1997.
(B) The historical financial statements of the Company contain results of
operations data for the properties and management company below from the
date of acquisition to the end of the respective period. The results of
operations from the beginning of the respective period to the acquisition
date is included in this column.
Property/Entity Date Acquired
- --------------- -------------
1. Cambridge January 12, 1996
2. Grove Property Services Limited Partnership
and Property Partnerships (20 properties
and management company)(1) March 14, 1997
3. Four Winds June 1, 1997
4. Brooksyde June 1, 1997
5. River's Bend June 1, 1997
6. Greenfield Village July 1, 1997
7. Glastonbury Center September 1, 1997
8. Summit & Birch Hill September 1, 1997
9. Corner Block and Wharf Building (2 properties) October 31, 1997
10. High Meadow Apartments October 31, 1997
(1) The historical financial statements of Grove Property Services Limited
Partnership and Property Partnerships for the year ended December 31,
1996, include a property (Talcott Forest) which was not included in the
Consolidation Transactions and has been omitted herein.
<PAGE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Statements of Income (continued)
(C) Represents the following:
Nine Months Ended Year Ended
September 30, December 31,
1997(1) 1996
------- ----
Pro forma interest expense on new or
refinanced mortgage debt and the Revolving
Credit Facility $ 475 $ 1,530
Historical interest expense on refinanced or
retired mortgage debt (1,446) (3,464)
------ ------
$ (971) $ (1,934)
============= =========
(1) The New Equity Investment was effective on March 14, 1997. The historical
financial information for the period March 15, 1997 to September 30, 1997
already takes effect for this transaction.
Pro forma interest expense is based on rates ranging from 6.5% to 8.3% per annum
and assumes proceeds of $30 million ($27.5 million after costs) from the New
Equity Investment and $48.9 million ($45.5 million after costs) from the
November 1997 Offering were received by the Company on January 1, 1996.
(D) Represents the following:
Nine Months Ended Year Ended
September 30, December 31,
1997(1) 1996
------- ----
Pro forma deferred financing amortization
expense on new or refinanced
mortgage debt and the Revolving Credit Facility $ 30 $ 138
Historical deferred financing amortization
expense on refinanced or retired mortgage
debt (49) (143)
--- ----
$ (19) $ (5)
======= =============
(1) The New Equity Investment was effective on March 14, 1997. The historical
financial information for the period March 15, 1997 to September 30, 1997
already reflects this transaction.
<PAGE>
(E) Represents adjustment to record depreciation on the excess of the
purchase price relating to the purchase of certain partnership interests
from partners, over the net book amount and for properties acquired during
or after the nine months ended September 30, 1997, to the extent
depreciation was not reflected in the historical financial statements
during the nine months ended September 30, 1997.
(F) Represents adjustment to record non-cash compensation expense in 1996 and
the first quarter of 1997 associated with the Deferred Stock Grants
granted to Executive Officers in connection with the consummation of the
Consolidation Transactions, pursuant to the 1996 Plan. Such compensation
expense was recorded by the Company commencing March 15, 1997 in its
historical financial statements.
(G) Represents adjustments to: (i) provide for elimination adjustments as a
result of combining the operating properties with the management company,
which historically charged properties a management fee, (ii) exclude
certain non-recurring revenues and expenses including those of Grove
Property Services Limited Partnership attributable to brokerage and other
services and sales of apartment units, (iii) reclassify certain expenses
historically classified by Grove Property Services Limited Partnership as
property operating expenses to general and administrative expenses, (iv)
decrease general and administrative expenses to reflect the cost savings
(predominately professional fees) associated with operating all Properties
on a combined, self-managed basis offset by an increase in compensation
expense to the Company's officers to take effect after the November 1997
Offering, and (v) increase property operating costs subsequent to the
Consolidation Transactions to reflect the recombining of certain property
leasing costs that GPS provided prior to the Consolidation Transaction and
that the Company will commence providing subsequent to the November 1997
Offering as follows:
<PAGE>
Year
Nine Months Ended
September 30, Ended December 31,
1997(1) 1996
------- ----
(i) Non-recurring property operating
expenses $ 20 $ 149
(ii) Non-recurring rental revenues 9 30
(iii) Non-recurring other revenues - 204
(iv) Gain on sales of apartments - 138
(v) Brokerage services-other revenues. 4 307
(vi) Reclassification of other property
operating to general and (iii)
administrative 71 492
(vii) Decrease in general and
administrative (35) (74)
(viii)Increase in property operating
expenses 135 -
(1) The New Equity Investment was effective on March 14, 1997. The
historical financial information for the period March 15, 1997 to
September 30, 1997 already takes effect for this transaction.
(H) Elimination of intercompany management fees.
(I) Elimination of non-recurring commission received in 1996
from an affiliate.
(J) To eliminate minority interest in a consolidated partnership
acquired in June 1997) where the Company acquired the remaining
interest in such property partnership on September 30, 1997.
<PAGE>
(K) Based upon Operating Partnership ("OP") Units (OP Units are exchangeable
on a one-for-one basis into Common Shares) assumed to be owned by Limited
Partners and Common Shares assumed to be outstanding as follows:
Operating
Common Shares Partnership Units
------------------------------------
Grove Property Trust at December 31, 1996 620,102 -
New Equity in March 1997 3,333,333 -
Consolidation Transactions in March 1997:
affiliates - 909,115
non-affiliates - 1,205,324
June 1997 acquisitions - 420,183
Exercise of stock options in May 1997 394 -
September 1997 acquisitions - 325,836
October 1997 acquisitions - 148,668
The November 1997 Offering 4,500,000 -
--------------------------------
8,453,829 3,009,126
==================================
73.75% 26.25%
==================================
See accompanying notes.
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Trust Managers
Grove Property Trust
We have audited the statements of revenue and certain expenses of the October
1997 Property Acquisitions-Affiliates (the "Properties") for the years ended
December 31, 1996 and 1995. The statements of revenue and certain expenses are
the responsibility of the Properties' management. Our responsibility is to
express an opinion on the statements of revenue and certain expenses 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 statements of revenue and certain expenses are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statements of revenue and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statements of revenue and certain expenses. We believe that
our audit provides a reasonable basis for our opinion.
The accompanying statements of revenue and certain expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K, as described in Note 2 and is not
intended to be a complete presentation of the Properties' revenues and expenses.
In our opinion, the statements of revenue and certain expenses referred to above
present fairly, in all material respects, the revenue and certain expenses as
described in Note 2 of the October 1997 Property Acquisitions-Affiliates 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
<PAGE>
<TABLE>
October 1997 Property Acquisitions-Affiliates
Statements of Revenues and Certain Expenses
<CAPTION>
Nine Months Years Ended
Ended December 31,
September 30, -----------------------------------
1997 1996 1995
---------------- ----------------- -----------------
(Unaudited)
(In thousands)
<S> <C> <C> <C>
Revenue:
Rental income $ 379 $ 400 $ 392
---------------- ----------------- -----------------
Certain expenses:
Property operating and maintenance 39 35 37
Real estate taxes 17 23 18
Related party management fees 24 24 24
---------------- ----------------- -----------------
80 82 79
---------------- ----------------- -----------------
Revenue in excess of certain expenses $ 299 $ 318 $ 313
================ ================= =================
See accompanying notes.
</TABLE>
<PAGE>
October 1997 Property Acquisitions-Affiliates
Notes to the Statements of Revenues and Certain Expenses
Years Ended December 31, 1996 and 1995
1. Business
The accompanying Statements of Revenue and Certain Expenses relate to the
operations of two retail properties (approximately 16,400 sq.ft.) known as
Corner Block and Wharf Building located in Edgartown, Massachusetts
("Properties"). The Properties were acquired by Grove Property Trust (the
"Company") on October 31, 1997. The Properties were previously owned by
affiliates of the Company.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Statements of Revenue and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K, of the Company. Accordingly, the
financial statements exclude certain expenses that may not be comparable to
those expected to be incurred by the Company in the proposed future operations
of the Properties. Items excluded consist of depreciation, amortization,
interest and certain non-operating expenses.
Use of Estimates
The preparation of the Statements of Revenue and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the Statements of
Revenue and Certain Expenses and accompanying notes. Actual results could differ
from those estimates.
Revenue Recognition
Rental income attributable to leases is recognized on a straight-line basis over
the term of the leases, which are generally for one year.
<PAGE>
October 1997 Property Acquisitions-Affiliates
Notes to the Statements of Revenues and Certain Expenses (continued)
2. Summary of Significant Accounting Policies (continued)
Interim Unaudited Information
The accompanying interim Statement of Revenue and Certain Expenses for the nine
months ended September 30, 1997 is unaudited, however, in the opinion of
management, all adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the Statement of Revenue and Certain
Expenses for this interim period have been included. The results of this interim
period are not necessarily indicative of the results to be obtained for a full
fiscal year.
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Trust Managers
Grove Property Trust
We have audited the statement of revenues and certain expenses of the October
1997 Property Acquisition-Non-Affiliates (the "Property") for the year ended
December 31, 1996. The statement of revenues and certain expenses is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the statement of revenues and certain expenses 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 revenues and certain expenses is free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the statement of revenues and certain
expenses. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenues and certain expenses. 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 Form 8-K, as described in Note 2 and is not
intended to be a complete presentation of the Property's revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to above
presents fairly, in all material respects, the revenues and certain expenses as
described in Note 2 of the October 1997 Property Acquisition-Non-Affiliates for
the year ended December 31, 1996, in conformity with generally accepted
accounting principles.
Ernst & Young LLP
New York, New York
October 3, 1997
<PAGE>
October 1997 Property Acquisition-Non-Affiliates
Statements of Revenues and Certain Expenses
Nine Months
Ended Year Ended
September 30, December 31,
1997 1996
---------------- -----------------
(Unaudited)
(In thousands)
Revenues:
Rental income $ 509 $ 626
Other 11 18
---------------- -----------------
520 644
---------------- -----------------
Certain expenses:
Property operating and maintenance 223 313
Real estate taxes 42 54
---------------- -----------------
265 367
---------------- -----------------
Revenues in excess of certain expenses $ 255 $ 277
================ =================
See accompanying notes.
<PAGE>
October 1997 Property Acquisition-Non-Affiliates
Notes to the Statements of Revenues and Certain Expenses
Year Ended December 31, 1996
1. Business
The accompanying Statements of Revenues and Certain Expenses relate to the
operations of a property known as High Meadow (a residential apartment building
located in Ellington, Connecticut) (the "Property"). Grove Property Trust (the
"Company") acquired the Property from an unrelated party on October 31, 1997.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Statements of Revenues and Certain Expenses were prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in Form 8-K, of the Company. Accordingly, the
financial statements exclude certain expenses that may not be comparable to
those expected to be incurred by the Company in the proposed future operations
of the Property. Items excluded consist of depreciation, amortization, interest
and certain non-operating expenses.
Use of Estimates
The preparation of the Statements of Revenues and Certain Expenses in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the Statements of
Revenues and Certain Expenses and accompanying notes. Actual results could
differ from those estimates.
Revenue Recognition
Rental income attributable to leases is recognized on a straight-line basis over
the term of the leases, which are generally one year.
Interim Unaudited Information
The accompanying Statement of Revenues and Certain Expenses for the nine months
ended September 30, 1997 is unaudited, however, in the opinion of management,
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the Statement of Revenues and Certain Expenses for
this interim period have been included. The results of this interim period are
not necessarily indicative of the results to be obtained for a full fiscal year.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this this amendment to its report to be signed on its
behalf by the undersigned hereunto duly authorized.
GROVE PROPERTY TRUST
Date: December 9, 1997 By: /s/ Joseph R. LaBrosse
---------------------------
Joseph R. LaBrosse
Chief Financial Officer
<PAGE>
<PAGE>
Exhibit Index
Exhibit No. Description
----------- -----------
2.1 Solicitation of Consent and Offer to Exchange Certain
Outstanding Units of Limited Partnership Interest, dated
as of June 19, 1997, as amended by Supplement dated
August 13, 1997, by Grove Operating, L.P. to certain
limited partners of Grove-Coastal Associates Limited
Partnership (incorporated by reference to Exhibit 2.5 to
Amendment No. 2 to the Company's Registration Statement
on Form S-3 (No.
333-38183))
2.2 Purchase and Sale Agreement dated September 5, 1997
between Werner Kunzli and Grove Corporation
incorporated by reference to Exhibit 2.4 to Amendment
No. 2 to the Company's Registration Statement on
Form S-3 (No. 333-38183))
