<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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) NOVEMBER 21, 1996
----------------------
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
--------------------------------------------
(Exact name of registrant as specified in its charter)
MARYLAND 1-13232 84-1259577
- ------------------------------ ------------------- -------------------------
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
1873 SOUTH BELLAIRE STREET, SUITE 1700, DENVER, CO 80222-4348
- ---------------------------------------------------- -------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 757-8101
------------------------
<PAGE>
Item 5. OTHER EVENTS.
On November 21, 1996, Apartment Investment and Management Company (the
"Company") agreed to sell 1,100,000 shares of its Class A Common Stock, par
value $.01 per share ("Common Stock"), to Raymond James & Associates, Inc.
(the "Underwriter"), at a price of $23.428 per share. The Underwriter intends
to offer the shares to the public at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Company will use the $25,770,800 of proceeds from the sale of the
shares to pay expenses of the offering and to repay indebtedness outstanding
under the Company's credit facility with Bank of America National Trust and
Savings Association. The Company has also granted the Underwriter an option
to purchase up to 165,000 additional shares of Common Stock at a price of
$23.428 per share, solely to cover over-allotments, if any.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
1. Historical Summaries of Gross Income and Direct Operating Expenses
of Somerset Village Apartments for the years ended December 31,
1995 and 1994, and for the period from June 10, 1993 through
December 31, 1993 and for the five months ended May 31, 1996
(unaudited), together with the Report of Independent Auditors
2. Combined Historical Summary of Gross Income and Direct
Operating Expenses of Sycamore Creek Apartments and Tustin
Woods Apartments for the year ended December 31, 1995 and for
the three months ended March 31, 1996 (unaudited), together
with the Report of Independent Auditors
(b) Pro Forma Financial Information
1. Apartment Investment and Management Company Pro Forma Condensed
Consolidated Balance Sheet as of September 30, 1996
2. Apartment Investment and Management Company Pro Forma Condensed
Consolidated Statement of Operations for the nine months ended
September 30, 1996
3. Apartment Investment and Management Company Pro Forma Condensed
Consolidated Statement of Operations for the nine months ended
September 30, 1995
2
<PAGE>
4. Apartment Investment and Management Company Pro Forma Condensed
Consolidated Statement of Operations for the year ended December
31, 1995
(c) Exhibits
The following exhibits are filed with this report:
Exhibit
Number Description
- ------- -----------
23.1 Consent of Ernst & Young LLP
3
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
Date: November 21, 1996 By: /s/ LEEANN MOREIN
------------------------------------
Leeann Morein
Senior Vice President, Chief
Financial Officer and Secretary
4
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Apartment Investment and Management Company
We have audited the accompanying Historical Summaries of Gross Income and
Direct Operating Expenses of Somerset Village Apartments (the Property) for the
years ended December 31, 1995 and 1994, and for the period from June 10, 1993
through December 31, 1993. These Historical Summaries are the responsibility of
the Property's management. Our responsibility is to express an opinion on these
Historical Summaries based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the Historical Summaries are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the Historical Summaries. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the Historical
Summaries. We believe that our audits provide a reasonable basis for our
opinion.
The accompanying Historical Summaries have been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Current Report on Form 8-K, dated November 21,
1996, of Apartment Investment and Management Company, as described in Note 1
and are not intended to be a complete presentation of the income and expenses
of the Property.
In our opinion, the Historical Summaries referred to above present fairly,
in all material respects, the gross income and direct operating expenses as
described in Note 1 of Somerset Village Apartments for the years ended December
31, 1995 and 1994, and for the period from June 10, 1993 through December 31,
1993, in conformity with generally accepted accounting principles.
/s/ ERNST & YOUNG LLP
Dallas, Texas
April 2, 1996
F-1
<PAGE>
SOMERSET VILLAGE APARTMENTS
HISTORICAL SUMMARIES OF GROSS INCOME AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
PERIOD FROM
PERIOD FROM JUNE 10,
JANUARY 1, YEAR ENDED YEAR ENDED 1993 THROUGH
1996 THROUGH DECEMBER 31, DECEMBER 31, DECEMBER 31,
MAY 31, 1996 1995 1994 1993
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
(UNAUDITED)
GROSS INCOME
Rental............................................... $ 1,275,595 $2,918,902 $2,742,152 $ 903,193
Other................................................ 97,329 264,897 239,702 70,912
-------------- ------------ ------------ ------------
Total gross income................................. 1,372,924 3,183,799 2,981,854 974,105
DIRECT OPERATING EXPENSES
Repairs and maintenance.............................. 30,236 101,501 57,206 55,308
Utilities and other property operating............... 249,146 655,292 608,657 198,854
Advertising.......................................... 13,451 39,941 39,085 9,568
General and administrative........................... 12,757 31,038 24,981 6,601
Real estate taxes.................................... 65,654 174,080 242,671 52,281
Management fees...................................... 55,452 128,937 121,400 34,703
-------------- ------------ ------------ ------------
Total direct operating expenses.................... 426,696 1,130,789 1,094,000 357,315
-------------- ------------ ------------ ------------
Excess of gross income over direct operating
expenses............................................ $ 946,228 $2,053,010 $1,887,854 $ 616,790
-------------- ------------ ------------ ------------
-------------- ------------ ------------ ------------
</TABLE>
F-2
<PAGE>
SOMERSET VILLAGE APARTMENTS
NOTES TO HISTORICAL SUMMARIES OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
YEAR ENDED DECEMBER 31, 1995
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying Historical Summaries of Gross Income and Direct Operating
Expenses include the accounts of Somerset Village Apartments (the Property), a
486-unit multifamily residential community located in Salt Lake City, Utah.
Apartment Investment and Management Company (the Company) acquired the Property
on May 31, 1996 from Somerset Utah L.P., an affiliated entity.
The accompanying Historical Summaries have been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission for inclusion in the Current Report on Form 8-K, dated November 21,
1996, of the Company. The Historical Summaries are not intended to be a
complete presentation of income and expenses of the Property for the years
ended December 31, 1995 and 1994, and the period from June 10, 1993 through
December 31, 1993, as certain costs such as depreciation, amortization,
interest, and other debt service costs have been excluded. These costs are
not considered to be direct operating expenses.
INTERIM UNAUDITED FINANCIAL INFORMATION
The accompanying interim unaudited Historical Summary has been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and was prepared on the same basis as the Historical Summaries for the years
ended December 31, 1995 and 1994, and the period from June 10, 1993 through
December 31, 1993. In the opinion of management of the Property, all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the Historical Summary for this interim period have been
made. The excess of gross income over direct operating expenses for such interim
period is not necessarily indicative of the excess of gross income over direct
operating expenses for the full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Rental income is recorded when due from residents. Leases generally have
terms of no more than one year.
CAPITALIZATION POLICY
Ordinary repairs and maintenance are expensed as incurred; major
replacements and betterments are capitalized.
3. TRANSACTIONS WITH AFFILIATES
Property Asset Management of the Southwest L.L.C., an affiliate of the
Company, has managed the Property for a fee equal to 4% of gross property
revenue.
F-3
<PAGE>
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Apartment Investment and Management Company
We have audited the accompanying Combined Historical Summary of Gross Income
and Direct Operating Expenses of Sycamore Creek Apartments and Tustin Woods
Apartments (the Properties) for the year ended December 31, 1995. This Combined
Historical Summary is the responsibility of the Properties' management. Our
responsibility is to express an opinion on this Combined Historical Summary
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the Combined Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the Combined Historical Summary. 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 Historical Summary. We believe that our audits provide a reasonable
basis for our opinion.
The accompanying Combined Historical Summary has been prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K, dated
November 21, 1996, of Apartment Investment and Management Company, as
described in Note 1 and are not intended to be a complete presentation of the
income and expenses of the Properties.
In our opinion, the Combined Historical Summary referred to above presents
fairly, in all material respects, the gross income and direct operating expenses
as described in Note 1 of Sycamore Creek Apartments and Tustin Woods Apartments
for the year ended December 31, 1995, in conformity with generally accepted
accounting principles.
/s/ ERNST & YOUNG LLP
Dallas, Texas
November 19, 1996
F-4
<PAGE>
SYCAMORE CREEK APARTMENTS AND TUSTIN WOODS APARTMENTS
COMBINED HISTORICAL SUMMARIES OF GROSS INCOME
AND DIRECT OPERATING EXPENSES
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, 1996 1995
-------------- ------------
(UNAUDITED)
<S> <C> <C>
GROSS INCOME
Rental.............................................................................. $ 653,078 $2,583,674
Other............................................................................... 32,106 132,313
------------- ------------
Total gross income................................................................ 685,184 2,715,987
DIRECT OPERATING EXPENSES
Repairs and maintenance............................................................. 88,067 327,445
Utilities and other property operating.............................................. 101,627 435,940
Advertising......................................................................... 2,583 13,441
General and administrative.......................................................... 22,714 91,166
Real estate taxes................................................................... 17,924 71,695
Management fees..................................................................... 25,454 101,465
------------- ------------
Total direct operating expenses................................................... 258,369 1,041,152
------------- ------------
Excess of gross income over direct operating expenses............................... $ 426,815 $1,674,835
------------- ------------
------------- ------------
</TABLE>
F-5
<PAGE>
SYCAMORE CREEK APARTMENTS AND TUSTIN WOODS APARTMENTS
NOTES TO COMBINED HISTORICAL SUMMARIES OF GROSS INCOME AND
DIRECT OPERATING EXPENSES
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying Combined Historical Summaries of Gross Income and Direct
Operating Expenses include the accounts of Sycamore Creek Apartments and Tustin
Woods Apartments (the Properties), multifamily residential communities located
in Tustin, California, containing 232 and 104 units, respectively. Apartment
Investment and Management Company (the Company) acquired the Properties on April
22, 1996 from Thoner-Pankey Joint Venture (the Joint Venture).
The accompanying Combined Historical Summaries have been prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in the Current Report on Form 8-K, dated
November 21, 1996, of the Company. The Combined Historical Summaries are not
intended to be a complete presentation of income and expenses of the
Properties for the year ended December 31, 1995, as certain costs such as
depreciation, amortization, interest, and other debt service costs have been
excluded. These costs are not considered to be direct operating expenses.
INTERIM UNAUDITED FINANCIAL INFORMATION
The accompanying interim unaudited Combined Historical Summary has been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission and was prepared on the same basis as the Combined Historical Summary
for the year ended December 31, 1995. In the opinion of management of the
Properties, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the Combined Historical Summary for this
interim period have been made. The excess of gross income over direct operating
expenses for such interim period is not necessarily indicative of the excess of
gross income over direct operating expenses for the full year.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Rental income is recorded when due from residents. Leases generally have
terms of no more than one year.
CAPITALIZATION POLICY
Ordinary repairs and maintenance are expensed as incurred; major
replacements and betterments are capitalized.
3. TRANSACTIONS WITH AFFILIATES
Birmingham Realty Services, Inc., an affiliate of the Joint Venture, managed
the Properties for a fee equal to 4% of gross rental receipts, as defined.
F-6
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA FINANCIAL INFORMATION
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as
of September 30, 1996 is based on the unaudited historical financial data of
Apartment Investment and Management Company (the "Company") and has been
prepared as if each of the following transactions had occurred as of
September 30, 1996: (i) the sale of 1,100,000 shares of the Company's Class A
Common Stock at $23.428 per share and the application of the net proceeds
thereof to repay indebtedness under the Company's Credit Facility (the
"Credit Facility") with Bank of America National Trust and Savings
Association (the "Offering"); and (ii) the acquisition of the general partners
of 31 limited partnerships (the "English Partnerships"), real estate and
related assets from J.W. English and related entities; limited
partnership interests acquired pursuant to offers made to the limited partners
of 25 of the English Partnerships; and general partnership interests and loans
relating to 21 limited partnerships which own 12 multifamily apartment
properties (collectively, the "Partnership Interests"), and the incurrence of
indebtedness to finance such acquisitions.
The unaudited Pro Forma Condensed Consolidated Statement of Operations
for the nine months ended September 30, 1996 is based on the unaudited
historical financial data of the Company and has been prepared as if each of
the following transactions had occurred on January 1, 1996: (i) the
completion of the Offering; (ii) the acquisition of the Partnership Interests
and the incurrence of indebtedness to finance such acquisitions; (iii) the
acquisition of 12 properties in 1995 and during the nine months ended
September 30, 1996 (the "1995 and 1996 Acquisitions"), to the extent such
acquisitions occurred during the nine months ended September 30, 1996, and
the assumption of indebtedness in connection with such acquisitions; (iv) the
disposition of the four properties sold in the third quarter of 1996 (the
"Sold Properties"); (v) the repayment of certain indebtedness with borrowings
under the Credit Facility and the issuance of units ("OP Units") of limited
partnership interest in AIMCO Properties, L.P. (the "Operating Partnership");
and (vi) the purchase of a management company.
The unaudited Pro Forma Condensed Consolidated Statements of Operations
for the year ended December 31, 1995 and the nine months ended September 30,
1995 are based on the audited and unaudited, respectively, historical
financial data of the Company and have been prepared as if each of the
following transactions had occurred on January 1, 1995: (i) the completion of
the Offering; (ii) the acquisition of the Partnership Interests and the
incurrence of indebtedness to finance such acquisitions; (iii) the 1995 and
1996 Acquisitions and the assumption of indebtedness in connection with such
acquisitions; (iv) the disposition of the Sold Properties; (v) the repayment
of certain indebtedness with borrowings under the Credit Facility and the
issuance of OP Units; (vi) the purchase of a management company; and (vii)
the sale of 2,706,423 shares of Class A Common Stock at $19.125 per share
(the "Second Public Offering").
The unaudited pro forma Consolidated Statements of Operations are not
necessarily indicative of what the Company's financial position or results of
operations would have been assuming the completion of the transactions
described above at the beginning of the periods indicated, nor do they
purport to project the Company's financial position at any future date or its
results of operations for any future period.
In the opinion of management, the historical operating data for the nine
months ended September 30, 1996 and 1995 include all adjustments (consisting
only of recurring adjustments) necessary to present fairly the information
set forth therein. The results for the nine months ended September 30, 1996
are not necessarily indicative of the results to be obtained for the year
ended December 31, 1996. The following information should be read in
conjunction with the financial statements and notes thereto included or
incorporated by reference in this Prospectus Supplement and the accompanying
Base Prospectus.
F-7
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ACTUAL ADJUSTMENTS PRO FORMA
---------- -------------- -----------
<S> <C> <C> <C>
ASSETS
Real estate--net of accumulated depreciation of $78,820.................. $ 500,889 $ 206,431(A) $ 707,320
Cash and cash equivalents................................................ 1,115 9,717(B) 10,832
Restricted cash.......................................................... 9,591 1,939(C) 11,530
Real estate held for sale................................................ -- 6,359(D) 6,359
Accounts receivable...................................................... 2,161 260(E) 2,421
Deferred financing costs................................................. 7,909 1,927(F) 9,836
Notes receivable from affiliates......................................... -- 6,152(G) 6,152
Note receivable.......................................................... 2,893 -- 2,893
Investment in other partnerships......................................... -- 8,919(H) 8,919
Other assets............................................................. 7,305 7,822(I) 15,127
---------- -------------- -----------
$ 531,863 $ 249,526 $ 781,389
---------- -------------- -----------
---------- -------------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured long-term notes payable.......................................... $ 176,635 $ 152,674(J) $ 329,309
Secured long-term tax-exempt bond financing.............................. 75,837 -- 75,837
Secured short-term financing............................................. 52,300 31,944(K) 84,244
Notes payable to affiliates.............................................. -- 5,689(L) 5,689
Accounts payable, accrued and other liabilities.......................... 8,908 7,547(M) 16,455
Resident security deposits and prepaid rents............................. 3,125 1,260(N) 4,385
---------- -------------- -----------
316,805 199,114 515,919
---------- -------------- -----------
Commitments and contingencies
Minority interest in other partnerships.................................. -- 8,350(O) 8,350
Minority interest in Operating Partnership............................... 42,760 16,792(P) 59,552
---------- -------------- -----------
42,760 25,142 67,902
Stockholders' equity:
Class A Common Stock ($.01 par value).................................. 118 11(Q) 129
Class B Common Stock ($.01 par value).................................. 6 -- 6
Additional paid-in capital............................................. 184,582 25,259(R) 209,841
Accumulated deficit.................................................... (12,408) -- (12,408)
---------- -------------- -----------
172,298 25,270 197,568
---------- -------------- -----------
$ 531,863 $ 249,526 $ 781,389
---------- -------------- -----------
---------- -------------- -----------
</TABLE>
The accompanying notes are an integral part of the pro forma
condensed consolidated financial statements.
F-8
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
OFFERING
ACTUAL ADJUSTMENTS ADJUSTED ADJUSTMENTS PRO FORMA
-------- ------------ --------- ------------ ----------
<S> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues..................... $ 70,392 $ 36,547(S) $ 106,939 -- $106,939
Property operating expenses............................ (27,111) (20,779)(S) (47,890) -- (47,890)
Owned property management expense...................... (1,999) (1,573)(S) (3,572) -- (3,572)
-------- ------------ --------- ------------ ----------
Income from property operations before depreciation.... 41,282 14,195 55,477 -- 55,477
Depreciation........................................... (13,716) (5,968)(S) (19,684) -- (19,684)
-------- ------------ --------- ------------ ----------
Income from property operations........................ 27,566 8,227 35,793 -- 35,793
-------- ------------ --------- ------------ ----------
SERVICE COMPANY BUSINESS...............................
Management fees and other income....................... 5,442 1,794(T) 7,236 -- 7,236
Management and other expenses.......................... (3,449) (1,184)(T) (4,633) -- (4,633)
Corporate overhead allocation.......................... (443) -- (443) -- (443)
Amortization of management company goodwill............ (344) (113)(T) (457) -- (457)
Other assets depreciation and amortization............. (154) (335)(U) (489) -- (489)
-------- ------------ --------- ------------ ----------
Income from service company business................... 1,052 162 1,214 -- 1,214
Minority interests in service company business......... (10) -- (10) -- (10)
-------- ------------ --------- ------------ ----------
Company's share of income from service company
business............................................. 1,042 162 1,204 -- 1,204
-------- ------------ --------- ------------ ----------
GENERAL AND ADMINISTRATIVE EXPENSES.................... (943) -- (943) -- (943)
INTEREST EXPENSE....................................... (16,775) (12,164)(V) (28,939) 1,374(Z) (27,565)
INTEREST INCOME........................................ 242 -- 242 -- 242
-------- ------------ --------- ------------ ----------
INCOME BEFORE GAIN ON DISPOSITION OF PROPERTY AND
MINORITY INTEREST IN OPERATING PARTNERSHIP........... 11,132 (3,775) 7,357 1,374 8,731
GAIN ON DISPOSITION OF PROPERTY........................ 64 (64)(W) -- -- --
-------- ------------ --------- ------------ ----------
Income before minority interests....................... 11,196 (3,839)(X) 7,357 1,374 8,731
MINORITY INTEREST IN OTHER PARTNERSHIPS................ -- 2,404(X) 2,404 -- 2,404
------------ --------- ------------ ----------
Income before minority interest in Operating
Partnership.......................................... 11,196 (1,435) 9,761 1,374 11,135
MINORITY INTEREST IN OPERATING PARTNERSHIP............. (1,845) (312)(Y) (2,157) (148)(AA) (2,305)
-------- ------------ --------- ------------ ----------
Net income............................................. $ 9,351 $ (1,747) $ 7,604 $ 1,226 $ 8,830
-------- ------------ --------- ------------ ----------
-------- ------------ --------- ------------ ----------
Net income allocable to preferred stockholder.......... $ -- $ -- $ --
-------- --------- ----------
-------- --------- ----------
Net income allocable to common stockholders............ $ 9,351 $ 7,604 $ 8,830
-------- --------- ----------
-------- --------- ----------
Weighted average common shares and common share
equivalents outstanding.............................. 12,127 12,331 13,431
-------- --------- ----------
-------- --------- ----------
Net income per common share and common share
equivalent........................................... $ 0.77 $ 0.62 $ 0.66
-------- --------- ----------
-------- --------- ----------
</TABLE>
F-9
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
OFFERING
ACTUAL ADJUSTMENTS ADJUSTED ADJUSTMENTS PRO FORMA
---------- -------------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues..................... $ 55,653 $ 44,537(S) $ 100,190 -- $ 100,190
Property operating expenses............................ (22,609) (24,462)(S) (47,071) -- (47,071)
Owned property management expense...................... (1,707) (1,758)(S) (3,465) -- (3,465)
---------- -------------- ---------- ------ -----------
Income from property operations before depreciation.... 31,337 18,317 49,654 -- 49,654
Depreciation........................................... (11,067) (8,227)(S) (19,294) -- (19,294)
---------- -------------- ---------- ------ -----------
Income from property operations........................ 20,270 10,090 30,360 -- 30,360
---------- -------------- ---------- ------ -----------
SERVICE COMPANY BUSINESS
Management fees and other income....................... 5,980 2,173(T) 8,153 -- 8,153
Management and other expenses.......................... (3,518) (1,621)(T) (5,139) -- (5,139)
Corporate overhead allocation.......................... -- -- -- -- --
Amortization of management company goodwill............ (307) (121)(T) (428) -- (428)
Other assets depreciation and amortization............. (114) (335)(U) (449) -- (449)
---------- -------------- ---------- ------ -----------
Income from service company business................... 2,041 96 2,137 -- 2,137
Minority interests in service company business......... (20) 0 (20) -- (20)
---------- -------------- ---------- ------ -----------
Company's share of income from service company
business.............................................. 2,021 96 2,117 -- 2,117
---------- -------------- ---------- ------ -----------
GENERAL AND ADMINISTRATIVE EXPENSES.................... (1,709) -- (1,709) -- (1,709)
INTEREST EXPENSE....................................... (8,391) (13,499)(V) (21,890) 1,374(Z) (20,516)
INTEREST INCOME........................................ 497 -- 497 -- 497
---------- -------------- ---------- ------ -----------
INCOME BEFORE GAIN ON DISPOSITION OF PROPERTY AND
MINORITY INTERESTS.................................... 12,688 (3,313) 9,375 1,374 10,749
GAIN ON DISPOSITION OF PROPERTY........................ -- -- -- -- --
---------- -------------- ---------- ------ -----------
Income before minority interests....................... 12,688 (3,313) 9,375 1,374 10,749
MINORITY INTEREST IN OTHER PARTNERSHIPS................ -- 3,140(X) 3,140 -- 3,140
---------- -------------- ---------- ------ -----------
INCOME BEFORE MINORITY INTEREST IN OPERATING
PARTNERSHIP........................................... 12,688 (173) 12,515 1,374 13,889
Minority interest in Operating Partnership............. (1,228) (1,513)(W) (2,741) (120)(AA) (2,861)
---------- -------------- ---------- ------ -----------
NET INCOME............................................. $ 11,460 $ (1,686) $ 9,774 $ 1,254 $ 11,028
---------- -------------- ---------- ------ -----------
---------- -------------- ---------- ------ -----------
Net income allocable to preferred stockholder.......... $ 5,169 $ 5,169 $ 5,169
---------- ---------- -----------
---------- ---------- -----------
Net income allocable to common stockholders............ $ 6,291 $ 4,605 $ 5,859
---------- ---------- -----------
---------- ---------- -----------
Weighted average common shares and common share
equivalents outstanding............................... 9,622 12,702 13,802
---------- ---------- -----------
---------- ---------- -----------
Net income per common share and common share
equivalent............................................ $ 0.65 $ 0.36 $ 0.42
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
F-10
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
OFFERING
ACTUAL ADJUSTMENTS ADJUSTED ADJUSTMENTS PRO FORMA
---------- -------------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues............. $ 74,947 $ 59,931(S) $ 134,878 $ -- $ 134,878
Property operating expenses.................... (30,150) (33,397)(S) (63,547) -- (63,547)
Owned property management expense.............. (2,276) (2,492)(S) (4,768) -- (4,768)
---------- -------------- ---------- ------ -----------
Income from property operations before
depreciation.................................. 42,521 24,042 66,563 -- 66,563
Depreciation................................... (15,038) (11,030)(S) (26,068) -- (26,068)
---------- -------------- ---------- ------ -----------
Income from property operations................ 27,483 13,012 40,495 -- 40,495
---------- -------------- ---------- ------ -----------
SERVICE COMPANY BUSINESS
Management fees and other income............... 8,132 2,923(T) 11,055 -- 11,055
Management and other expenses.................. (4,953) (2,050)(T) (7,003) -- (7,003)
Corporate overhead allocation.................. (581) -- (581) -- (581)
Amortization of management company goodwill.... (428) (161)(T) (589) -- (589)
Other assets depreciation and amortization..... (168) (446)(U) (614) -- (614)
---------- -------------- ---------- ------ -----------
Income from service company business........... 2,002 266 2,268 -- 2,268
Minority interests in service company
business...................................... (29) -- (29) -- (29)
---------- -------------- ---------- ------ -----------
Company's share of income from service company
business...................................... 1,973 266 2,239 -- 2,239
---------- -------------- ---------- ------ -----------
GENERAL AND ADMINISTRATIVE EXPENSES............ (1,804) -- (1,804) -- (1,804)
INTEREST EXPENSE............................... (13,322) (19,468)(V) (32,790) 1,832(Z) (30,958)
INTEREST INCOME................................ 658 -- 658 -- 658
---------- -------------- ---------- ------ -----------
INCOME BEFORE GAIN ON DISPOSITION OF PROPERTY
AND MINORITY INTERESTS........................ 14,988 (6,190) 8,798 1,832 10,630
Gain on disposition of property................ -- -- -- -- --
---------- -------------- ---------- ------ -----------
Income before minority interests............... 14,988 (6,190) 8,798 1,832 10,630
Minority interest in other partnerships........ -- 4,274(X) 4,274 -- 4,274
---------- -------------- ---------- ------ -----------
INCOME BEFORE MINORITY INTEREST IN OPERATING
PARTNERSHIP................................... 14,988 (1,916) 13,072 1,832 14,904
Minority interest in Operating Partnership..... (1,613) (1,276)(W) (2,889) (196)(AA) (3,085)
---------- -------------- ---------- ------ -----------
NET INCOME..................................... $ 13,375 $ (3,192) $ 10,183 $ 1,636 $ 11,819
---------- -------------- ---------- ------ -----------
---------- -------------- ---------- ------ -----------
Net income allocable to preferred
stockholder................................... $ 5,169 $ 5,169 $ 5,169
---------- ---------- -----------
---------- ---------- -----------
Net income allocable to common
stockholders.................................. $ 8,206 $ 5,014 $ 6,650
---------- ---------- -----------
---------- ---------- -----------
Weighted average common shares and common share
equivalents outstanding....................... 9,579 12,573 13,673
---------- ---------- -----------
---------- ---------- -----------
Net income per common share and common share
equivalent.................................... $ 0.86 $ 0.40 $ 0.49
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
F-11
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
1. METHOD OF ACCOUNTING
The 1995 and 1996 Acquisitions have been recorded as purchases. The
Partnership Interests have been presented on a consolidated basis as the Company
has controlling interests in the partnerships. All significant intercompany
balances and transactions have been eliminated in consolidation.
2. ADJUSTMENTS FOR PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
The adjustments reflected in the Pro Forma Condensed Consolidated Balance
Sheet as of September 30, 1996 are as follows:
<TABLE>
<S> <C> <C>
(A) INCREASE IN REAL ESTATE
Purchase of the Partnership Interests.............................. $ 206,431
(B) INCREASE IN CASH AND CASH EQUIVALENTS
Net Offering proceeds:
Proceeds of the Offering........................................... $ 26,950
Costs of the Offering.............................................. (1,680)
---------
Net Offering proceeds.............................................. 25,270
Less use of proceeds:
Repayment of Credit Facility....................................... (25,270)
Other changes in cash and cash equivalents:
Increase in cash and cash equivalents attributable to the
consolidation of
the Partnership Interests....................................... 9,717
---------
Net change in cash and cash equivalents............................ $ 9,717
---------
---------
(C) INCREASE IN RESTRICTED CASH
Increase in restricted cash attributable to the consolidation of
the Partnership Interests......................................... $ 1,939
(D) INCREASE IN REAL ESTATE HELD FOR SALE
Purchase of real estate held for sale in connection with the
purchase of the Partnership Interests............................. $ 6,359
(E) INCREASE IN ACCOUNTS RECEIVABLE
Increase in accounts receivable attributable to the consolidation
of the Partnership Interests...................................... $ 260
(F) INCREASE IN DEFERRED FINANCING COSTS
Increase in deferred financing costs attributable to the
consolidation of the Partnership Interests........................ $ 1,927
(G) INCREASE IN NOTES RECEIVABLE FROM AFFILIATES
Interest-bearing loan made to certain of the English limited
partnerships, net of amount eliminated in consolidation........... $ 6,152
(H) INCREASE IN INVESTMENT IN OTHER PARTNERSHIPS
Purchase of general partnership interests in the English limited
partnerships...................................................... $ 8,919
(I) INCREASE IN OTHER ASSETS
Increase in other assets attributable to the consolidation of the
Partnership Interests............................................. $ 7,822
(J) INCREASE IN SECURED LONG-TERM NOTES PAYABLE
Increase in secured long-term notes payable for indebtedness
secured by properties owned by partnerships in which the Company
purchased Partnership Interests................................... $ 152,674
</TABLE>
F-12
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. ADJUSTMENTS FOR PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET (CONTINUED)
<TABLE>
<S> <C> <C>
(K) INCREASE IN SECURED SHORT-TERM FINANCING, NET
Borrowings of short-term financing to purchase the Partnership
Interests......................................................... $ 57,214
Repayment on Credit Facility with proceeds of the Offering......... (25,270)
---------
$ 31,944
---------
---------
(L) INCREASE IN NOTES PAYABLE TO AFFILIATES
Increase in notes payable attributable to the consolidation of the
Partnership Interests............................................. $ 5,689
(M) INCREASE IN ACCOUNTS PAYABLE, ACCRUED AND OTHER LIABILITIES
Increase in accounts payable, accrued and other liabilities
attributable to the consolidation of the Partnership Interests.... $ 7,547
(N) INCREASE IN RESIDENT SECURITY DEPOSITS AND PREPAID RENTS
Increase in resident security deposits and prepaid rents
attributable to the consolidation of the Partnership Interests.... $ 1,260
(O) INCREASE IN MINORITY INTERESTS IN OTHER PARTNERSHIPS
Increase in minority interests in connection with the purchase of
the Partnership interests......................................... $ 8,350
(P) INCREASE IN MINORITY INTERESTS IN OPERATING PARTNERSHIP
OP Units issued in connection with the purchase of the Partnership
Interests......................................................... $ 16,792
(Q) INCREASE IN STOCKHOLDERS' EQUITY
Par value of 1,100,000 shares of Common Stock issued in connection
with the Offering................................................. $ 11
(R) INCREASE IN ADDITIONAL PAID-IN CAPITAL
Proceeds of the Offering in excess of par value of Common Stock
issued............................................................ $ 26,939
Costs of the Offering.............................................. (1,680)
---------
Net Offering proceeds.............................................. $ 25,259
---------
---------
</TABLE>
F-13
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ADJUSTMENTS FOR PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
The pro forma adjustments reflected in the Pro Forma Condensed Consolidated
Statements of Operations for the nine months ended September 30, 1996 and 1995
and the year ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1996 1995 1995
------------- ------------- ------------
<S> <C> <C> <C> <C>
(S) RENTAL PROPERTY OPERATIONS
Additions to reflect the historical operations for
the Partnership Interests, the 1995 and 1996
Acquisitions and the Sold Properties for the
period presented:
Rental and other property revenues:
Partnership Interests.............................. $ 37,534 $ 33,297 $ 45,532
1995 and 1996 Acquisitions......................... 2,376 15,291 19,847
Sold Properties.................................... (3,363) (4,051) (5,448)
------------- ------------- ------------
$ 36,547 $ 44,537 $ 59,931
------------- ------------- ------------
------------- ------------- ------------
Property operating expenses:
Partnership Interests.............................. $ (22,001) $ (20,957) $ (28,779)
1995 and 1996 Acquisitions......................... (652) (6,014) (7,936)
Sold Properties.................................... 1,874 2,509 3,318
------------- ------------- ------------
$ (20,779) $ (24,462) $ (33,397)
------------- ------------- ------------
------------- ------------- ------------
Owned property management expense:
Partnership Interests.............................. $ (1,644) $ (1,410) $ (2,010)
1995 and 1996 Acquisitions......................... (57) (521) (712)
Sold Properties.................................... 128 173 230
------------- ------------- ------------
$ (1,573) $ (1,758) $ (2,492)
------------- ------------- ------------
------------- ------------- ------------
Depreciation:
Partnership Interests.............................. $ (5,893) $ (5,550) $ (7,398)
1995 and 1996 Acquisitions......................... (522) (3,196) (4,334)
Sold Properties.................................... 447 519 702
------------- ------------- ------------
$ (5,968) $ (8,227) $ (11,030)
------------- ------------- ------------
------------- ------------- ------------
(T) SERVICE COMPANY BUSINESS
Management fees and other income
Increase in management fees and other
income resulting from the purchase of a
management company.............................. $ 767 $ 1,274 $ 1,544
Increase in management fees and other
income resulting from the purchase of
the Partnership Interests....................... 1,082 1,028 1,555
Elimination of management fees earned
by the Company on the 1995 and 1996
Acquisitions.................................... (55) (129) (176)
------------- ------------- ------------
$ 1,794 $ 2,173 $ 2,923
------------- ------------- ------------
------------- ------------- ------------
</TABLE>
F-14
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ADJUSTMENTS FOR PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1996 1995 1995
------------- ------------- ------------
Management and other expenses
<S> <C> <C> <C> <C>
Increase in management and other
expenses resulting from the purchase
of a management company......................... $ (734) $ (1,171) $ (1,450)
Increase in management and other
expenses resulting from the purchase of
the Partnership Interests....................... (450) (450) (600)
------------- ------------- ------------
$ (1,184) $ (1,621) $ (2,050)
------------- ------------- ------------
------------- ------------- ------------
Amortization of management company goodwill
Increase in amortization of management
company goodwill in connection with the
purchase of a management company................ $ (60) $ (68) $ (90)
Increase in amortization of management
company goodwill in connection with the
purchase of the Partnership Interests........... (53) (53) (71)
------------- ------------- ------------
$ (113) $ (121) $ (161)
------------- ------------- ------------
------------- ------------- ------------
(U) OTHER ASSETS DEPRECIATION AND AMORTIZATION
Increase in amortization of management contract in
connection with the purchase of the Partnership
Interests......................................... $ (335) (335) (446)
------------- ------------- ------------
(V) INTEREST EXPENSE
Increase in interest expense resulting from
borrowings in connection with the purchase of
Partnership Interests............................. $ (2,096) $ (2,096) $ (2,794)
Increase in interest expense associated with
mortgages assumed in the purchase of certain of
the 1995 and 1996 Acquisitions.................... (35) (1,144) (2,752)
Net decrease in interest expense resulting from the
repayment of mortgages assumed in the purchase of
certain of the 1995 and 1996 Acquisitions with
borrowings on the Credit Facility and the paydown
on the Credit Facility with proceeds from the sale
of the four Sold Properties....................... 976 73 98
Increase in interest expense attributable to the
consolidation of the Partnership Interests........ (11,009) (10,332) (14,020)
------------- ------------- ------------
$ (12,164) $ (13,499) $ (19,468)
------------- ------------- ------------
------------- ------------- ------------
(W) GAIN ON DISPOSITION OF PROPERTY
Elimination of gain on disposition of Sold
Properties........................................ $ (64) -- --
(X) MINORITY INTEREST IN OTHER PARTNERSHIPS
</TABLE>
F-15
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
3. ADJUSTMENTS FOR PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, SEPTEMBER 30, DECEMBER 31,
1996 1995 1995
------------- ------------- ------------
Increase in minority interest in other partnerships
for interests owned by others in partnerships of
which Partnership Interests were purchased by the
Company........................................... $ 2,404 $ 3,140 $ 4,274
<S> <C> <C> <C> <C>
(Y) MINORITY INTEREST IN OPERATING PARTNERSHIP
Increase in minority interest for OP Units issued
in connection with the purchase of the Partnership
Interests and the 1995 and 1996 Acquisitions...... $ (312) $ (1,513) $ (1,276)
Minority interest percentage for period............ 22.1% 21.9% 22.1%
</TABLE>
4. OFFERING ADJUSTMENTS FOR PRO FORMA CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
(Z) INTEREST EXPENSE
Decrease in interest expense resulting
from the repayment of the Credit
Facility with proceeds from the
Offering.............................. $ 1,374 $ 1,374 $ 1,832
MINORITY INTEREST IN OPERATING
(AA) PARTNERSHIP
Decrease in minority interest
percentage resulting from the issuance
of 1,100,000 shares of Common Stock in
connection with the Offering.......... $ (139) $ (104) $ (189)
Minority interest percentage for
period................................ 20.7% 20.6% 20.7%
</TABLE>
F-16
<PAGE>
EXHIBIT INDEX TO FORM 8-K
Exhibit
Number Description
- ------- -----------
23.1 Consent of Ernst & Young LLP
<PAGE>
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP
We consent to (i) the reference to our firm under the caption "Experts" in
the Prospectus Supplement of Apartment Investment and Management Company (the
"Company"), dated November 22, 1996, relating to 1,100,000 shares of the
Company's Class A Common Stock, (ii) the inclusion therein, and in the
Company's Current Report on Form 8-K, dated November 21, 1996, filed with the
Securities and Exchange Commission, of our report dated April 2, 1996
with respect to the audit of the Historical Summary of Gross Income and
Direct Operating Expenses of Somerset Village for the years ended December
31, 1995 and 1994 and for the period from June 10, 1993 through December 31,
1993, and our report dated November 19, 1996 with respect to the audit of
the Combined Historical Summary of Gross Income and Direct Operating Expenses
of Sycamore Creek Apartments and Tustin Woods Apartments for the year ended
December 31, 1995, and (iii) the incorporation by reference of such reports in
the Company's Registration Statement on Form S-3 (No. 33-98338), the
Company's Registration Statement on Form S-3 (No. 333-828), the
Company's Registration Statement no Form S-3 (No. 333-4542), the
Company's Registration Statement on Form S-3 (No. 333-4546), the
Company's Registration Statement on Form S-3 (No. 333-8997), the
Company's Registration Statement on Form S-8 (No. 333-4550), the
Company's Registration Statement on Form S-8 (No. 333-4548), and the
Company's Registration Statement on Form S-8 (No. 333-14481).
ERNST & YOUNG LLP
Dallas, Texas
November 20, 1996
