SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 1, 1998
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 2. Acquisition or Disposition of Assets
Pursuant to a Purchase and Sale Agreement dated January 12, 1998 (the
"Freeport Purchase Agreement") between Freeport Merchants Limited
Partnership and Grove Corporation, Grove Property Trust (the "Company")
acquired 42 Main St., and 6 Mill Street ("Freeport"), two retail complexes
located in Freeport, Maine, from a non-affiliated party. The acquisition of
Freeport on April 1, 1998 was effected through Grove Operating L.P. (the
"Operating Partnership"). The purchase price for Freeport was $7.2 million
which was paid with funds from the Company's revolving credit facility and
with the assumption of an existing $4.0 million mortgage. The purchase price
for Freeport was determined by arms' length negotiation between the Company
and Freeport Merchants Limited Partnership.
Pursuant to a Contribution Agreement dated March 15, 1998 (the "A.N.E.
Contribution Agreement") between A.N.E. Associates, Limited Partnership, an
affiliated partnership, and the Operating Partnership, the Company acquired
Coachlight Village Apartments ("Coachlight Village"), a residential apartment
community located in Agawam, Massachusetts. The acquisition of Coachlight
Village, which was effective April 1, 1998, was effected through the
Operating Partnership. The purchase price for the Coachlight Village was
$3.4 million, which was paid with funds from the Company's revolving credit
facility and the issuance of 5,818 Grove Operating L.P. operating partnership
units ("Common Units").
Pursuant to a Purchase and Sale Agreement dated March 26, 1998 (the "Village
Park Purchase Agreement") between Village Park Holding Company, LLC and
Village Park Holding Company II, LLC; and Grove Corporation, the Company
acquired Village Park Apartments and Winchester Woods Apartments ("Village
Park") two residential apartment communities located in Riverside, RI. The
acquisition of Village Park which was effective June 1, 1998 was effected
through the Operating Partnership. The purchase price for Village Park was
$19.4 million, which was financed with the assumption of a $2.4 million loan
and $17 million from new long-term mortgage financing. The purchase price
for Village Park was determined by arms' length negotiation between the
Company and Village Park Holding Company, LLC and Village Park Holding
Company II, LLC.
Each of the transaction is described in more detail below:
Freeport
Freeport contains two retail complexes totaling 25,000 square feet located in
Freeport, Maine. Both buildings were originally constructed in 1985. The
company intends to continue to operate both properties as retail complexes.
Freeport was acquired from a non-affiliated party pursuant to the Freeport
Purchase Agreement. The property was acquired by the Operating Partnership,
through GPT-Freeport, LLC, a limited liability company in which the Operating
Partnership is the sole member. The purchase price of $7.2 million was paid
with funds from the Company's revolving credit facility and with the
assumption of an existing $4.0 million mortgage.
<PAGE>
Coachlight Village
Coachlight Village is an 88-unit apartment complex located in Agawam,
Massachusetts which was originally constructed in 1966. The Company intends
to continue to operate the complex as rental apartments.
Coachlight Village Apartments was acquired from an affiliated party pursuant
to the A.N.E. Contribution Agreement. The purchase price of $3.4 million was
paid with funds from the Company's revolving credit facility and the issuance
of 5,818 Common Units valued at $10.50 per Common Unit.
Of the 5,818 Common Units issued, 485 Common Units were issued to Damon
Navarro, the Chairman of the Board, President and Chief Executive Officer and
a Trust Manager and 485 Common Units were issued to Brian Navarro, Executive
Vice President - Acquisitions.
Village Park and Winchester Woods
Village Park and Winchester Woods included a total of 478 units in two
communities located in Riverside, Rhode Island, which was originally
constructed in 1973 and 1989 respectively. The Company intends to continue to
operate the complex as rental apartments.
Village Park and Winchester Woods were acquired from a non-affiliated party
pursuant to the Village Park Purchase Agreement. The properties were acquired
by the Operating Partnership, through GPT-East Providence, LLC and
GPT-Winchester Wood, LLC, limited liability companies in which the Operating
Partnership is the sole member. The purchase price of $19.4 million was
paid with the assumption of a $2.4 million loan and $17 million from new
long-term mortgage financing.
Item 5. Other Events
On June 1, 1998, certain affiliates of the Company (the "Grove Affiliates")
obtained a $63 million 10 year term loan from Lehman Brothers Holdings Inc.
(the "Lehman Financing") at an effective fixed interest rate of approximately
6.7%, which term loan is secured by seventeen properties owned by the Grove
Affiliates. The net proceeds of the Lehman Financing have been used by the
Grove Affiliates to refinance approximately $15 million of existing mortgage
indebtedness, to acquire Village Park for approximately $17 million, and the net
remaining proceeds, after closing costs, were used to pay down the balance on
the Company's revolving credit facility.
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Freeport Properties
Combined Statements of Revenues and Certain Expenses for the Three Months
Ended March 31, 1998 (Unaudited) and for the Year Ended December 31, 1997.
Coachlight Village
Statements of Revenues and Certain Expenses for the Three Months Ended March
31, 1998 (Unaudited) and for the Years Ended December 31, 1997, 1996 and 1995.
Village Park and Winchester Woods
Combined Statements of Revenues and Certain Expenses for the Three Months
Ended March 31, 1998 (Unaudited) and for the Year Ended December 31, 1997.
(b) Pro Forma Financial Statements:
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998. Pro
Forma Condensed Consolidated Statements of Income for the Three Months Ended
March 31, 1998 (Unaudited) and for the Year Ended December 31, 1997.
(c) Exhibits.
Exhibit No. Description
2.1 Purchase and Sale Agreement dated January 12, 1998 between Freeport
Merchants Limited Partnership and Grove Corporation, as Purchaser will
be included in an amendment to this report as soon as practicable, but
no later than 60 days after the date on which this report is required
to be filed.
2.2 Contribution Agreement dated March 15, 1998 between A.N.E. Associates,
Limited Partnership and Operating L.P., as Purchaser will be included
in an amendment to this report as soon as practicable, but no later
than 60 days after the date on which this report is required to be
filed.
2.3 Purchase and Sale Agreement dated March 26, between Village Park
Holding Company, LLC and Village Park Holding Company II, LLC; and
Grove Corporation as Purchaser will be included in an amendment to
this report as soon as practicable, but no later than 60 days after
the date on which this report is required to be filed.
<PAGE>
Grove Property Trust
Financial Statements of Properties Acquired and Pro Forma
Financial Information
Table of Contents
Item 7
Pro Forma Condensed Consolidated Financial Statements (Unaudited):
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998....... F-3
Notes to Pro Forma Condensed Consolidated Balance Sheet................... F-5
Pro Forma Condensed Consolidated Statements of Income for the Three Months
Ended March 31, 1998 and for the Year Ended December 31, 1997........... F-6
Notes to Pro Forma Condensed Consolidated Statements of Income............ F-9
Properties Acquired:
Freeport Properties
Financial Statements:
Report of Independent Auditors............................................ F-14
Combined Statements of Revenues and Certain Expenses for the Three Months Ended
March 31, 1998 (Unaudited) and for the Year Ended December 31, 1997..... F-15
Notes to the Combined Statements of Revenues and Certain Expenses. ....... F-16
Coachlight Village
Financial Statements:
Report of Independent Auditors............................................ F-18
Statements of Revenues and Certain Expenses for the Three Months Ended
March 31, 1998 (Unaudited) and for the Years Ended December 31, 1997, 1996
and 1995................................................................ F-19
Notes to the Statements of Revenues and Certain Expenses.................. F-20
<PAGE>
Village Park and Winchester Woods
Financial Statements:
Report of Independent Auditors............................................ F-22
Combined Statements of Revenues and Certain Expenses for the Three Months Ended
March 31, 1998 (Unaudited) and for the Year Ended December 31, 1997..... F-23
Notes to the Combined Statements of Revenues and Certain Expenses......... F-24
<PAGE>
Grove Property Trust
Pro Forma Condensed Consolidated Balance Sheet
March 31, 1998
(Unaudited)
This unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as
if: (i) acquisitions completed after March 31, 1998, had occurred on March 31,
1998, (ii) Grove Operating Partnership, L.P. (the "Operating Partnership")
drew-down on Grove Property Trust's (the "Company") Credit Facility and/or
issued Operating Partnership Units to purchase such properties. The unaudited
Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction
with the consolidated financial statements and notes thereto of the Company, on
Form 10-K for the year ended December 31, 1997, on Form 10-Q for the three
months ended March 31, 1998 and Form 8-K, as amended, dated January 21, 1998,
all as filed with the Securities and Exchange Commission. 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)
March 31, 1998
(Unaudited)
<CAPTION>
April through
Historical June 1998
Company Acquisitions Pro Forma
(A) (B) Consolidated
--------------------------------------------
<S> <C> <C> <C>
Assets
Real estate, net $151,324 $ 29,936 $181,260
Cash and cash equivalents, including resident
security deposits 1,509 - 1,509
Deferred charges, net 825 - 825
Due from affiliates 546 - 546
Other assets 1,749 31 1,780
================================================
Total assets $155,953 $ 29,967 $185,920
================================================
Liabilities and shareholders' equity
Mortgage notes payable $ 33,405 $ 23,405 $ 56,810
Revolving credit facility 23,000 6,502 29,502
Accounts payable and other liabilities 1,893 - 1,893
Due to affiliates 94 - 94
Resident security deposits 1,963 - 1,963
Distributions payable 1,948 - 1,948
--------------------------------------------
Total liabilities 62,303 29,907 92,210
--------------------------------------------
Minority interests in consolidated 1,133 - 1,133
partnerships
Minority interest in operating partnership 24,250 60 24,310
Shareholders' equity:
Common shares 84 - 84
Additional paid-in capital 68,995 - 68,995
Distributions in excess of earnings (812) - (812)
--------------------------------------------
Total shareholders' equity 68,267 - 68,267
============================================
Total liabilities and shareholders' equity $ 155,953 $ 29,967 $ 185,920
============================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Balance Sheet
March 31, 1998
(Unaudited)
(In thousands, except share data)
(A) Balance sheet data was derived from the Company's consolidated financial
statements as of March 31, 1998, as filed on its Form 10-Q.
(B) Balance sheet data reflects the following property acquisitions which were
consummated by the Company during April through June 1998, as follows:
<CAPTION>
Uses of Funds Sources of Funds
Revolving Mortgage Operations
Number of Purchase Other Credit Notes Partnership
Property Location Units Sq. Date Price Assets Facility Payable Units
Ft. Acquired
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1.Freeport Freeport,ME 25,000 Sq. FT April 1,1998 $ 7,175 $ 31 $ 3,201 $ 4,005 -
2.Coachlight Agawam, MA 88 units April 1, 1998 3,361 - 3,301 - 60
Village
3.Village Park
and Riverside, RI 478 units June 1, 1998 19,400 - - 19,400 -
WinchesterWoods
==========================================================
$29,936 $ 31 $ 6,502 $23,405 $ 60
===========================================================
</TABLE>
<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 Grove Property Services Limited
Partnership and Property Partnerships and completed various other 1997 and
January 1998 property acquisitions and Coachlight Village, Freeport Properties,
Village Park and Winchester Woods (the "April through June 1998 Acquisitions"),
(ii) the Consolidation Transactions (see notes to Pro Forma Condensed
Consolidation Statements of Income), including the New Equity Investment and
Refinancings and (iii) the November 1997 Offerings and the application of the
net proceeds therefrom as if all had occurred as of January 1, 1997. The
unaudited Pro Forma Condensed Consolidated Statements of Income should be read
in conjunction with the consolidated financial statements of the Company, Grove
Property Services Limited Partnership and Property Partnerships and various
other properties acquired during 1997 and January 1998 and the April through
June 1998 Acquisitions, which financial statements are included herein or have
been filed with the Securities and Exchange Commission on various Forms 8-K, as
amended, during 1997 and 1998, Form 10-K for the year ended December 31, 1997
and Form 10-Q for the three months ended March 31, 1998. 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)
Three Months Ended March 31, 1998
----------------------------------------------------------------
<CAPTION>
Pro Forma
Consolidated
Without April
Historical January April through
Company 1998 through June 1998 Pro Forma
(A) Acquisition June 1998 Acquisitions Consolidated
(B) Acquisitions (C)
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue:
Rental income $ 7,441 $ 78 $ 7,519 $ 1,156 $ 8,675
Property management 94 - 94 - 94
Interest and other 53 1 54 23 77
------------ ------------ ------------ ------------ ------------
Total revenues 7,588 79 7,667 1,179 8,846
------------ ------------ ------------ ------------ ------------
Expenses:
Real estate taxes 779 8 787 139 926
Other property operating 2,647 22 2,669 266 2,935
Interest expense 1,002 33 (D) 1,035 523 1,558
Depreciation and amortization 1,179 12 (F) 1,191 212 1,403
General and administrative 355 - 355 - 355
------------ ------------ ------------ ------------ ------------
Total expenses 5,962 75 6,037 1,140 7,177
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Income before minority 1,626 4 1,630 39 1,669
interests
Minority interests in earnings
of consolidated partnerships 17 - 17 - 17
Minority interest in earnings
of Operating Partnership 422 - 422 12 (K) 434
============ ============ ============ ============ ============
Net income $ 1,187 $ 4 $ 1,191 $ 27 $ 1,218
============ ============ ============ ============ ============
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
<TABLE>
Grove Property Trust
Pro Forma Condensed Consolidated Statements of Income (Continued)
(Unaudited)
<CAPTION>
Year Ended December 31, 1997
--------------------------------------------------------------------------------
Pro
Forma
1997 and Consolidated April
January Without through
Historical 1998 Management April June
Company Pro Forma Company through 1998 Pro Forma
(A) AcquisitionAdjustments AdjustmentsJune 1998 Acquisition Consolidated
(B) Acquisitions (C)
----------- ---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Rental income $17,111 $12,450 $ - $ (9)(H) $29,552 $ 4,579 $34,131
Property management 518 - - (207)(I) 311 - 311
Interest and other 309 239 - (4)(H) 544 112 656
----------- ---------- ----------- ---------- ----------- ---------- -----------
Total revenues 17,938 12,689 - (220) 30,407 4,691 35,098
----------- ---------- ----------- ---------- ----------- ---------- -----------
Expenses:
Related party management fees 22 185 - (207)(I) - - -
Real estate taxes 1,770 1,308 - - 3,078 526 3,604
Other property operating 6,078 4,910 (20)(H) (71)(H)
135(H) 11,032 1,126 12,158
Interest expense 2,741 - 1,475(D) - 4,216 2,092 6,308
Depreciation and amortization 2,701 - 10(E)
2,172(F) - 4,883 848 5,731
General and administrative 908 - 30(G) 71(H)
(35)(H) 974 - 974
----------- ---------- ----------- ---------- ----------- ---------- -----------
Total expenses 14,220 6,403 3,632 (72) 24,183 4,592 28,775
----------- ---------- ----------- ---------- ----------- ---------- -----------
Income before minority 3,718 6,286 (3,632) (148) 6,224 99 6,323
interests
Minority interests in earnings
of consolidated partnerships 155 - 23(J) - 132 - 132
Minority interest in earnings
of Operating Partnership 1,267 - - - 1,267 361(K) 1,628
=========== ========== =========== ========== =========== ========== ===========
Net income $ 2,296 $ 6,286 $(3,609) $ (148) $ 4,825 $ (262) $ 4,563
=========== ========== =========== ========== =========== ========== ===========
<FN>
See accompanying notes.
</FN>
</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 Grove Property Services Limited Partnership (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 with the Securities and Exchange
Commission on the Company's Form 10-K for the year ended December 31, 1997
and on Form 10-Q for the three months ended March 31, 1998.
(B) The historical financial statements of the Company contain results of
operations data for the properties and Management Company identified 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 -Acquisitions Date Acquired
1. Grove Property Services Limited Partnership and Property
Partnerships (20 properties and management company) March 14,1997
2. Four Winds June 1, 1997
3. Brooksyde June 1, 1997
4. River's Bend June 1, 1997
5. Greenfield Village July 1, 1997
6. Glastonbury Center September 1, 1997
7. Summit & Birch Hill September 1, 1997
8. Corner Block and Wharf Building (2 properties) October 31, 1997
9. High Meadow Apartments October 31, 1997
10. Village Arms December 31, 1997
11. Ribbon Mill December 31, 1997
12. Briar Knoll December 31, 1997
13. Hill Top December 31, 1997
14. Tangelwood January 23, 1998
<PAGE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Statements of Income (continued)
(C) The results of operations for Coachlight Village, Freeport Properties and
Village Park and Winchester Woods are included in this column. This column
also includes pro forma depreciation, interest expense and minority
interest in Operating Partnership.
(D)Represents the following:
Three Months
Ended Year Ended
March 31, December 31,
1998 1997 (1)
Pro forma interest expense on new
(or assumed) or refinanced
mortgage debt and the Revolving
Credit Facility $ 33 $ 3,739
Historical interest expense on
refinanced or retired mortgage debt - (2,264)
================================
$ 33 $ 1,475
================================
(1) The New Equity Investment was effective on March 14, 1997. The historical
financial information for the period March 15, 1997 to December 31, 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 ($45.3 million after costs) from the
November 1997 Offerings were received by the Company on January 1, 1997.
<PAGE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Statements of Income (continued)
(E) Represents the following:
Year
Ended December 31,
1997
Pro forma deferred financing cost amortization on
new or refinanced mortgage debt and the
Revolving Credit Facility $ 138
Historical deferred financing cost amortization on
refinanced or retired mortgage debt (128)
================
$ 10
================
(1) The New Equity Investment was effective on March 14, 1997. The historical
financial information for the period March 15, 1997 to December 31, 1997
already reflects this transaction.
(F) 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 1997
and 1998, to the extent depreciation was not reflected in the historical
financial statements during the period.
(G) Represents adjustment to record non-cash compensation expense in 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.
(H) Represents adjustments to: (i) exclude certain non-recurring expenses and
(ii) revenues, including (iii) those of the Management Company attributable
to brokerage and other services, (iv) reclassify certain expenses
historically classified by the Management Company as property operating
expenses to general and administrative expenses, (v) 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 which took effect after the November 1997 Offerings, and
(vi)
<PAGE>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Statements of Income (continued)
increase property operating costs subsequent to the Consolidation Transactions
to reflect the recombining of certain property leasing costs that the Management
Company provided prior to the Consolidation Transactions and that the Company
commenced providing subsequent to the November 1997 Offerings as follows:
Year Ended
December 31,
1997
Non-recurring property operating expenses $ 20
Non-recurring rental revenues 9
Non-recurring brokerage services 4
Reclassification of other property
operating to general and administrative 71
Decrease in general and administrative (35)
Increase in property operating expenses 135
(I) Elimination of intercompany management fees.
(J) Elimination of 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>
Grove Property Trust
Notes to Pro Forma Condensed Consolidated Statements of Income (continued)
(K) Based upon Operating Partnership Units, which are exchangeable on a
one-for-one basis into Common Shares, assumed to be owned by the 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 Offerings 4,500,000 -
April 1998 acquisition - 5,818
-----------------------------
8,453,829 3,014,944
=============================
73.71% 26.29%
=============================
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Trust Managers
Grove Property Trust
We have audited the combined statement of revenues and certain expenses of the
Freeport Properties (the "Properties") for the year ended December 31, 1997. The
combined statement of revenues and certain expenses is the responsibility of the
Properties' management. Our responsibility is to express an opinion on the
combined 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 combined 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 combined 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 combined statement of revenues and
certain expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined 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 of Grove Property
Trust, as described in Note 2, and is not intended to be a complete presentation
of the Properties' revenues and expenses.
In our opinion, the combined statement of revenues and certain expenses referred
to above presents fairly, in all material respects, the combined revenues and
certain expenses as described in Note 2 of the Freeport Properties for the year
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ ERNST & YOUNG LLP
March 26, 1998
New York, New York
<PAGE>
Freeport Properties
Combined Statements of Revenues and Certain Expenses
Three Months
Ended Year Ended
March 31, December 31,
1998 1997
------------------------------
(Unaudited)
Revenues:
Rental (Note 3) $ 204,377 $ 817,507
Other 1,410 5,650
-------------------------------
205,787 823,157
-------------------------------
Certain expenses:
Property operating and maintenance 13,810 55,236
Real estate taxes 14,760 59,040
-------------------------------
28,570 114,276
-------------------------------
Revenues in excess of certain expenses $ 177,217 $ 708,881
===============================
See accompanying notes
.
<PAGE>
Freeport Properties
Notes to the Combined Statements of Revenues and Certain Expenses
Year Ended December 31, 1997
1. Business
The accompanying Combined Statements of Revenues and Certain Expenses relate to
the operations of two retail buildings located in Freeport, Maine (the
"Properties"). The Properties were contracted to be acquired by Grove Property
Trust (the "Company") from an unrelated party on April 1, 1998.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Combined 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 the Company's Form 8-K.
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. Management fees were
also excluded as the Company will self-manage the Properties.
Use of Estimates
The preparation of the Combined 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 Combined
Statements of Revenues and Certain Expenses and accompanying notes. Actual
results could differ from those estimates.
Revenue Recognition
Rental income is recognized on a straight-line basis over the term of the
leases. Amounts so recognized over amounts contractually due pursuant to the
underlying leases amounted to $24,254 for the year ended December 31, 1997 and
$6,064 for the three months ended March 31, 1998 (unaudited).
<PAGE>
Freeport Properties
Notes to the Combined Statements of Revenues and Certain Expenses
(continued)
2. Summary of Significant Accounting Policies (continued)
Capitalization Policy
Ordinary repairs and maintenance are expensed as incurred; major replacements
and betterments are capitalized.
Unaudited Information
The Combined Statements of Revenues and Certain Expenses for the three months
ended March 31, 1998, is unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such information have been
included. The results of operations for this period are not necessarily
indicative of future results of operations of the Properties.
3. Leases
The Properties have entered into long-term net leases with tenants for
substantially all of the rentable space. Pursuant to the underlying leases, the
tenants are responsible for paying their pro-rata share of operating costs and
real estate taxes. Future minimum rents to be received pursuant to
non-cancelable operating leases in effect as of December 31, 1997 are as
follows:
For the year ending December 31:
1998 $ 619,268
1999 579,924
2000 475,448
2001 243,241
2002 70,569
===============
$ 1,988,450
===============
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Trust Managers
Grove Property Trust
We have audited the statements of revenues and certain expenses of Coachlight
Village (the "Property") for the years ended December 31, 1997, 1996 and 1995.
The statements of revenues and certain expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
statements of revenues and certain expenses 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 statements of revenues 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
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 statements of revenues and certain
expenses. We believe that our audits provides a reasonable basis for our
opinion.
The accompanying statements 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 of Grove Property Trust, 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 statements 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 Coachlight Village for the years ended
December 31, 1997, 1996 and 1995, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
March 26, 1998
New York, New York
<PAGE>
<TABLE>
Coachlight Village
Statements of Revenues and Certain Expenses
<CAPTION>
Three Months
Ended
March 31, Year Ended December 31,
1998 1997 1996 1995
----------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Rental $ 139,428 $ 559,453 $ 540,229 $ 543,439
Other 2,401 9,625 8,383 7,329
-----------------------------------------------------------
141,829 569,078 548,612 550,768
-----------------------------------------------------------
Certain expenses:
Property operating and maintenance 41,331 141,256 124,120 114,407
Real estate taxes 18,136 43,821 45,234 44,802
-----------------------------------------------------------
59,467 185,077 169,354 159,209
===========================================================
Revenues in excess of certain expenses $ 82,362 $ 384,001 $ 379,258 $ 391,559
===========================================================
<FN>
See accompanying notes.
</FN>
</TABLE>
<PAGE>
Coachlight Village
Notes to the Statements of Revenues and Certain Expenses
Year Ended December 31, 1997
1. Business
The accompanying Statements of Revenues and Certain Expenses relate to the
operations of a residential apartment building located in Agawan, Massachusetts,
commonly known as Coachlight Village (the "Property"). Grove Property Trust (the
"Company") contracted to acquire the Property from a related party on April 1,
1998.
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 the Company's Form 8-K. 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. Management fees were also excluded as the
Company will self-manage the Property.
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.
<PAGE>
Coachlight Village
Notes to the Statements of Revenues and Certain Expenses (continued)
2. Summary of Significant Accounting Policies (continued)
Capitalization Policy
Ordinary repairs and maintenance are expensed as incurred; major replacements
and betterments are capitalized.
Unaudited Information
The Statement of Revenues and Certain Expenses for the three months ended March
31, 1998, is unaudited. In the opinion of management, all adjustments necessary
for a fair presentation of such information have been included. The results of
operations for this period are not necessarily indicative of future results of
operations of the Property.
<PAGE>
Report of Independent Auditors
To the Shareholders and Board of Trust Managers
Grove Property Trust
We have audited the combined statement of revenues and certain expenses of
Village Park and Winchester Woods (the "Properties") for the year ended December
31, 1997. The combined statement of revenues and certain expenses is the
responsibility of the Properties' management. Our responsibility is to express
an opinion on the combined 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 combined 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 combined 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 combined statement of revenues and
certain expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined 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 of Grove Property
Trust, as described in Note 2, and is not intended to be a complete presentation
of the Properties' revenues and expenses.
In our opinion, the combined statement of revenues and certain expenses referred
to above presents fairly, in all material respects, the combined revenues and
certain expenses, as described in Note 2, of Village Park and Winchester Woods
for the year ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
May 15, 1998
New York, New York
<PAGE>
Village Park and Winchester Woods
Combined Statements of Revenues and Certain Expenses
Three Months
Ended Year Ended
March 31, December 31,
1998 1997
--------------------------------
(Unaudited)
Revenues:
Rental $ 812,348 $ 3,202,950
Other 19,312 96,974
--------------------------------
831,660 3,299,924
--------------------------------
Certain expenses:
Property operating and maintenance (Note 3) 210,420 929,772
Real estate taxes 105,800 423,198
--------------------------------
316,220 1,352,970
--------------------------------
Revenues in excess of certain expenses $ 515,440 $ 1,946,954
================================
See accompanying notes.
<PAGE>
Village Park and Winchester Woods
Notes to the Combined Statements of Revenues and Certain Expenses
Year Ended December 31, 1997
1. Business
The accompanying Combined Statements of Revenues and Certain Expenses relate to
the operations of two residential apartment buildings located in Riverside,
Rhode Island known as Village Park and Winchester Woods (collectively, the
"Properties"). Grove Property Trust (the "Company") has contracted to acquire
the Properties from an unrelated party on June 1, 1998.
During 1997, the Village Park property was collateral to a mortgage insured by
the U.S. Department of Housing and Urban Development (HUD). The HUD mortgage
note was repaid on April 30, 1998.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying Combined 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 the Company's Form 8-K.
Accordingly, the combined 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. Management fees were
also excluded as the Company will self-manage the Property.
Use of Estimates
The preparation of the Combined 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 Combined
Statements of Revenues and Certain Expenses and accompanying notes. Actual
results could differ from those estimates.
<PAGE>
Village Park and Winchester Woods
Notes to the Combined Statements of Revenues and Certain Expenses
(continued)
2. Summary of Significant Accounting Policies (continued)
Revenue Recognition
Rental income is recognized on a straight-line basis over the term of the
leases, which are generally one year.
Capitalization Policy
Ordinary repairs and maintenance are expensed as incurred; major replacements
and betterments are capitalized.
Unaudited Information
The Combined Statement of Revenues and Certain Expenses for the three months
ended March 31, 1998, is unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such information have been
included. The results of operations for this period are not necessarily
indicative of future results of operations of the Properties.
3. Related Party Transactions
Included in property operating and maintenance are allocated expenses of
$264,095 for the year ended December 31, 1997 and $66,715 for the three months
ended March 31, 1998 (unaudited), which were paid to affiliates of the prior
owner for on-site administrative costs and salary reimbursements.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GROVE PROPERTY TRUST
Date: June 1, 1998 By:/s/Joseph R. LaBrosse
----------------------------
Joseph R. LaBrosse
Cheif Financial Officer
<PAGE>
Exhibit Index
Exhibit No. Description
2.1 Purchase and Sale Agreement dated January 12, 1998 between Freeport
Merchants Limited Partnership and Grove Corporation, as Purchaser will
be included in an amendment to this report as soon as practicable, but
no later than 60 days after the date on which this report is required
to be filed.
2.2 Contribution Agreement dated March 15, 1998 between A.N.E. Associates,
Limited Partnership and Operating L.P., as Purchaser will be included
in an amendment to this report as soon as practicable, but no later
than 60 days after the date on which this report is required to be
filed.
2.3 Purchase and Sale Agreement dated March 26, between Village Park
Holding Company, LLC and Village Park Holding Company II, LLC; and
Grove Corporation as Purchaser will be included in an amendment to
this report as soon as practicable, but no later than 60 days after
the date on which this report is required to be filed.
