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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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) FEBRUARY 19, 1997
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
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(Exact name of registrant as specified in its charter)
MARYLAND 1-13232 84-1259577
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 757-8101
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Item 5. OTHER EVENTS
On February 19, 1997, the Board of Directors of Apartment Investment
and Management Company, a Maryland corporation ("AIMCO"), approved a Letter
Agreement, dated February 13, 1997 (the "Letter Agreement"), among AIMCO, two
affiliates of the Harvard Private Capital Group, Demeter Holdings Corporation, a
Massachusetts corporation ("Demeter"), and Phemus Corporation, a Massachusetts
corporation ("Phemus"), and Capricorn Investors, L.P., a Delaware limited
partnership ("Capricorn" and, together with Demeter and Phemus, the "Sellers"),
which provides for AIMCO to acquire from the Sellers their interests in certain
entities that directly or indirectly own up to 11,000 multifamily apartment
units managed by NHP Incorporated, a Delaware corporation ("NHP"). The Letter
Agreement also provided that AIMCO will invest cash or assets of approximately
$13 million to acquire a 50% interest in a joint venture with the Sellers that
will own up to 10,000 multifamily apartment units managed by NHP, and AIMCO will
invest approximately $3.4 million to acquire a 25% interest in a joint venture
with the Sellers that will own interests in approximately 52,000 affordable
housing units, 12,500 Class C apartment units and other assets.
The Letter Agreement also provides for AIMCO to acquire from Demeter
and Capricorn approximately 6.93 million shares of common stock of NHP ("NHP
Stock") for consideration of $20 per share, plus either (i) shares of NHP's
mortgage subsidiary or (ii) $3.05 per share of NHP Stock. The purchase price
will be paid in shares of AIMCO Class A Common Stock ("AIMCO Stock"), with
the number of shares of AIMCO Stock determined using a price of $26.75 per
share of AIMCO Stock. The Letter Agreement provides for Demeter to receive
cash to the extent that it would otherwise acquire, directly and indirectly,
shares of AIMCO Stock representing more than 8.7% of the outstanding shares
of AIMCO Stock (the limit in AIMCO's Articles of Incorporation). On February
20, 1997, AIMCO issued a press release describing the terms of the Letter
Agreement. The text of the press release is filed as Exhibit 99.1 hereto and
is incorporated herein by reference.
By letter dated February 19, 1997, AIMCO has proposed a transaction to
the Board of Directors of NHP pursuant to which (i) NHP would merge with AIMCO
or one of its subsidiaries (the "Merger"), and (ii) NHP stockholders would
receive $20 per share of NHP Stock, payable in shares of AIMCO Stock, with the
number of shares determined using a price of $26.75 per share of AIMCO Stock.
The Merger would be conditioned on the prior distribution (the "Spin-Off") of
all of the outstanding capital stock of NHP's mortgage subsidiary to NHP
stockholders. Alternatively, AIMCO may elect to waive such condition and either
(i) increase the Merger consideration to NHP stockholders by $3.05 per share of
NHP Stock, or (ii) subsequently distribute shares in such subsidiary to those
persons who were NHP stockholders immediately prior to the Merger.
Consequently, NHP stockholders would be entitled to receive approximately 0.75
shares of AIMCO Stock in the Merger (or approximately 0.86 shares of AIMCO Stock
if the Spin-Off has not yet occurred). The
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amount, if any, by which (i) NHP's Free Cash Flow (as defined below) for the
period from February 1, 1997, until the earlier of the effective date of the
Spin-Off or the Merger, exceeds (ii) NHP's severance costs, transaction costs
and transition costs in respect of such transactions, would be contributed to
the mortgage subsidiary and included in the Spin-Off. "NHP's Free Cash Flow"
for any period means NHP's earnings before interest, taxes, depreciation and
amortization for such period less (a) the amount of cash payments made in
respect of taxes and interest during such period, and (b) $500,000 for each
month (or ratable portion thereof) included in such period.
AIMCO's Merger proposal to NHP's Board of Directors is subject to
stockholder approval, the approval of all appropriate governmental and
regulatory authorities, completion of due diligence, as well as the execution of
a definitive agreement that would contain representations, warranties,
covenants, conditions and other terms customary for a transaction of this type.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
Not applicable.
(b) Pro Forma Financial Information
Not applicable.
(c) Exhibits
The following exhibits are filed with this report:
Exhibit
Number Description
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99.1 Press Release of Apartment Investment and Management Company, dated
February 20, 1997
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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: March 6, 1997 By: /s/ Leeann Morein
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Leeann Morein
Senior Vice President, Chief Financial
Officer and Secretary
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EXHIBIT INDEX TO FORM 8-K
Sequentially
Exhibit Numbered
Number Description Page
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99.1 Press Release of Apartment Investment and Management
Company, dated February 20, 1997
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EXHIBIT 99.1
AIMCO
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
Apartment Investment and Management Company Announces Agreement to Acquire
Interests in 21,000 Apartment Units and an Investment in NHP Incorporated
DENVER, Feb. 20 /PRNewswire/ -- Apartment Investment and Management Company
(NYSE: AIV) ("AIMCO") announced today that its Board of Directors has approved
an agreement with Demeter Holdings Corporation ("Demeter"), an affiliate of The
Harvard Private Capital Group, and Capricorn Investors, L.P. ("Capricorn"),
pursuant to which AIMCO will acquire all of Demeter's and Capricorn's 6.93
million shares of NHP Incorporated ("NHP") common stock at a purchase price of
$20.00 per share, payable in 3.2 million shares of Class A Common Stock of AIMCO
and $53 million cash. NHP is the nation's second largest manager of apartment
communities, managing over 700 apartment communities containing over 130,000
apartment units at January 31, 1997. Demeter's and Capricorn's shares represent
approximately 53% of NHP's outstanding shares of common stock. NHP's shares of
common stock are listed on the NASDAQ Stock Market under the symbol "NHPI."
The agreement also provides for AIMCO to acquire from Demeter and Capricorn
interests in certain entities that, directly or indirectly, own conventional and
affordable multifamily apartment properties managed by NHP. Pursuant to the
agreement, AIMCO's operating partnership, AIMCO Properties, L.P. ("AIMCO OP"),
will acquire Demeter's and Capricorn's controlling interests in limited
partnerships that own 18 conventional apartment communities containing 7,278
apartment units for an aggregate price of approximately $24.5 million, payable
in cash or, at the sellers' option, units of limited partnership interest in
AIMCO OP ("OP Units".) AIMCO OP has an option to acquire Demeter's and
Capricorn's interests in entities that own an additional 15 conventional
apartment communities containing 3,800 apartment units. AIMCO estimates that
the aggregate value of the 11,078 apartment units is approximately $574 million
and the properties are subject to approximately $462 million in debt. Upon
completion of such acquisition, AIMCO OP intends to make separate offers to the
limited partners of the various partnerships to acquire their interests in the
limited partnerships.
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The agreement also provides for the formation of a joint venture with Demeter
and Capricorn in which AIMCO OP will have a 50% interest. The joint venture
would be managed equally by Demeter and Capricorn, on the one hand, and AIMCO OP
on the other. Demeter and Capricorn will contribute to the venture their
interests in entities that own 24 apartment communities containing 5,464
apartment units, and, at AIMCO OP's option, Demeter's and Capricorn's interests
in entities that own an additional 20 apartment communities containing 4,532
apartment units. AIMCO estimates that the aggregate value of the 9,996
apartment units is approximately $259 million and the properties are subject to
approximately $221 million in debt. AIMCO will contribute cash or other assets
valued at approximately $13 million and Demeter and Capricorn will contribute
assets valued at approximately $13 million to form the joint venture.
Also pursuant to the agreement, AIMCO OP will invest approximately $3.4 million
to acquire a 25% interest in entities owned by Demeter and Capricorn that own
interests in 52,741 affordable housing units and 12,588 "Class C" apartment
units and other assets.
AIMCO also intends to make a merger proposal to NHP's Board of Directors
pursuant to which NHP would merge into AIMCO and AIMCO would offer to acquire
the remaining stockholders' interests in NHP for $20 per NHP share to be paid in
AIMCO common stock. The AIMCO proposal contemplates that NHP's Washington
Mortgage Financial Group, Ltd. subsidiary will be spun off to NHP stockholders
(including Demeter and Capricorn but other than AIMCO) prior to the merger.
Closing of the transactions is subject to completion of additional documentation
and customary closing conditions, including all necessary governmental
approvals, the continuation of AIMCO's status as a REIT under federal tax laws,
as well as certain rights of first refusal of NHP with respect to the purchase
of interests in properties managed by NHP. The closing of the real estate
transactions with Demeter and Capricorn and the acquisition by AIMCO of
Demeter's and Capricorn's interest in NHP is expected to occur on or about April
1, 1997.
Based on the historical performance of NHP and the properties in which interests
will be acquired, AIMCO expects that the proposed acquisitions will be accretive
and will contribute, on an annualized basis, between $0.30 to $0.35 per share to
AIMCO's Funds From Operations ("FFO") and Cash Earned For Shareholders ("CEFS"),
AIMCO's measure of
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economic profitability, assuming that AIMCO issues 7.79 million shares of Class
A common stock for NHP and 5.74 million OP Units are issued as consideration for
the real estate transactions, assuming a 30% level of acceptance from the
limited partners. However, the foregoing statements relating to FFO and CEFS
are forward-looking statements that involve numerous risks and uncertainties
that could result in actual results differing materially from the expectations
set forth above. Some of the factors that could affect the foregoing
expectations include general economic conditions, capital market risks, local
real estate conditions such as oversupply of apartments or a reduction in demand
for apartments in the area, competition in rental markets and from other
property management companies, AIMCO's ability to refinance the existing
mortgage debt, increases in interest rates, increases in operating costs
(including real estate taxes), potential environmental liabilities, as well as
other risks detailed from time to time in AIMCO's filings with the Securities
and Exchange Commission.
A conference call will be conducted on Friday, February 21, 1997 at 1:00 p.m.
Eastern Time to discuss the proposed transaction. You can participate in the
conference call by dialing (800) 374-0616 approximately five minutes before the
conference call is scheduled to begin and indicating that you wish to join the
AIMCO/NHP conference call.
AIMCO is a real estate investment trust with headquarters in Denver, Colorado
and 10 regional and local offices, which holds a geographically diversified
portfolio of apartment communities, primarily serving the middle market. As of
January 31, 1997, AIMCO owned or controlled 94 apartment communities containing
23,764 apartment units and managed 18,546 apartment units in 135 apartment
communities for third parties and affiliates, bringing the total managed
portfolio to 229 apartment communities containing 42,310 apartment units located
in 15 states, primarily in the Sunbelt region of the United States. Upon
completion of all of the transactions contemplated under the agreement with
Demeter and Capricorn, AIMCO will own or control 127 apartment communities
containing 34,842 apartment units, will have an equity interest in 44 apartment
communities containing 9,996 apartment units and will manage approximately 760
conventional and affordable apartment communities containing approximately
131,000 apartment units, bringing the total managed portfolio to approximately
930 apartment communities containing approximately 176,000 apartment units
located in 24 states.
SOURCE: Apartment Investment and Management Company
02/20/97
CONTACT: Peter Kompaniez, Vice Chairman, 909-336-4821, or Leeann Morein,
Senior Vice President, 303-757-8101 or E-Mail:
[email protected]/
(AIV NHPI)
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