<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) MAY 5, 1997
------------------------
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
--------------------
NOT APPLICABLE
---------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS
ACQUISITION OF NHP SHARES
On May 5, 1997, AIMCO/NHP Holdings, Inc., a Delaware corporation
("ANHI") and a subsidiary of Apartment Investment and Management Company, a
Maryland corporation ("AIMCO"), acquired 6,496,071 shares (the "NHP Shares")
of common stock, par value $.01 per share ("NHP Common Stock"), of NHP
Incorporated, a Delaware corporation ("NHP"). The acquisition was made
pursuant to a Stock Purchase Agreement, dated as of April 16, 1997 (the
"Stock Purchase Agreement"), by and among AIMCO, Demeter Holdings
Corporation, a Massachusetts corporation ("Demeter"), and Capricorn
Investors, L.P., a Delaware limited partnership ("Capricorn"), the terms of
which were determined based on arms-length negotiations among AIMCO, Demeter
and Capricorn. In order to accommodate AIMCO's qualification as a real estate
investment trust, AIMCO owns a 95% non-voting interest in ANHI, and the
remaining 5% voting interest is owned by Terry Considine and Peter Kompaniez,
AIMCO's Chairman and Vice Chairman, respectively.
The NHP Shares were acquired from Demeter, Capricorn and two of
Capricorn's limited partners, The Peter and Pamela Mullin Family Charitable
Foundation and The Nash Family Foundation (together with Demeter and
Capricorn, collectively, the "Sellers"), for $72.6 million in cash and
2,142,857 shares of Class A Common Stock, par value $.01 per share ("AIMCO
Common Stock"), of AIMCO. ANHI is also obligated to deliver to the Sellers
the shares of NHP's commercial mortgage banking subsidiary, NHP Financial
Services, Ltd., a Delaware corporation, ("NHP Financial"), that ANHI will
receive in respect of the NHP Shares (or, under certain circumstances, $3.05
in cash per share of NHP Common Stock acquired). The cash portion of the
purchase price was financed with a short-term loan of $72.6 million obtained
from Bank of America National Trust and Savings Association and Smith Barney
Mortgage Capital Group, Inc. The NHP Shares represent approximately 51% of
the outstanding shares of NHP Common Stock. The Stock Purchase Agreement also
provides for AIMCO to acquire the remaining 434,051 shares of NHP Common
Stock owned by the Sellers. On a pro forma basis, giving effect to the
acquisition of the NHP Shares, AIMCO's pro forma net income and pro forma net
income per common share and equivalent for the year ended December 31, 1996
would be $8.7 million and $0.46 per share, respectively, compared to AIMCO's
historical net income and net income per common share and equivalent of $13
million and $1.04 per share, respectively. See also the pro forma financial
information previously filed as Item 7(b) of AIMCO's Current Report on Form
8-K, dated April 16, 1997, as amended by Amendment No. 1 thereto.
AIMCO intends to acquire the remaining interests in NHP pursuant to
an Agreement and Plan of Merger, dated as of April 21, 1997 (the "Merger
Agreement"), by and among AIMCO, AIMCO/NHP Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of AIMCO ("Merger Sub"), and NHP,
which provides for the merger (the "Merger") of Merger Sub with and into NHP.
In the Merger, holders of NHP Common Stock may elect to receive, for each
share of NHP Common Stock, either (i) 0.74766 shares of AIMCO Common Stock,
or (ii) a combination of 0.37383 shares of AIMCO Common Stock and $10 in
cash. Pursuant to rights ("Rights") to be distributed by NHP to NHP
stockholders of record as of May 2, 1997, NHP stockholders are entitled to
receive shares of NHP Financial upon the effectiveness of the Merger or on
December 1, 1997 if the Merger has not yet occurred. The Merger is
conditioned on, among other things, the approval of the stockholders of AIMCO
and NHP (excluding AIMCO) and certain governmental approvals.
AIMCO is continuing to negotiate the terms of a definitive agreement
with Demeter, Capricorn, Phemus Corporation, a Massachusetts corporation and
an affiliate of Demeter ("Phemus"), and J. Roderick Heller, III, NHP's
President and Chief Executive Officer, relating to the acquisition of certain
entities formerly owned by NHP that own direct and indirect interests in
partnerships that own conventional and affordable multifamily apartment
properties managed primarily by NHP, along with a captive insurance
subsidiary and certain related assets (collectively, the "NHP Real Estate
Companies"). In connection with the Merger Agreement, NHP has agreed to
waive its right of first refusal to purchase the NHP Real Estate Companies,
effective May 3, 1997, provided that such an agreement is entered into on
satisfactory terms no later than May 31, 1997.
NHP provides a broad array of real estate services nationwide
including property management, asset management, and mortgage banking and
servicing through NHP Financial, as well as a group of related services
including equity investments, purchasing, risk management and home health
care.
The NHP group of companies was formed in 1970 with the organization
of the National Corporation for Housing Partnerships ("NCHP") and The
National Housing Partnership (the "NHP Partnership"). Both NCHP and the NHP
Partnership were organized as private, for-profit entities pursuant to Title
IX of the Housing and Urban Development Act of 1968 and charged by Congress
to promote private investment in the production of low and moderate income
housing. In connection with their development and ownership of low and
moderate income housing, NCHP and the NHP Partnership developed systems for
providing property management and related services to such properties.
Beginning in the early 1980s, NCHP and the NHP Partnership capitalized on the
experience gained in the affordable housing market by expanding into the
development of, investment in, and provision of services to, conventional
multifamily properties. NHP was incorporated in Delaware in 1986 as a holding
corporation for NCHP, the NHP Partnership and other subsidiaries, in part to
provide greater flexibility to invest in and provide services to conventional
properties. NHP has subsequently ceased its development activities. In
connection with NHP's initial public offering of NHP Common Stock in August
1995, the NHP Real Estate Companies (including NCHP and the NHP Partnership)
were sold to Demeter, Phemus, Capricorn and Mr. Heller.
According to 1995 year-end data published by the National Multi
Housing Council and April 1994 data published by the United States Department
of Housing and Urban Development ("HUD"), NHP is the nation's second largest
property manager of multifamily properties and the largest manager of
affordable properties based on the number of units managed. As of December
31, 1996, NHP's management portfolio includes 457 affordable properties and
260 conventional properties containing 58,504 affordable units and 74,540
conventional units located in 38 states, the District of Columbia and Puerto
Rico.
1
<PAGE>
RISKS ASSOCIATED WITH THE NHP ACQUISITION
The acquisition of the NHP Shares and the proposed Merger represent the
largest acquisition ever undertaken by AIMCO, involving an aggregate purchase
price in excess of $260 million and the assumption of approximately $134.5
million of indebtedness. In addition to the risks typically associated with
other acquisitions, the acquisition of the NHP Shares, the proposed Merger
and the proposed acquisition of the NHP Real Estate Companies (together with
the distribution of shares of NHP Financial to the former NHP stockholders,
the "NHP Acquisition") involves the following risks and uncertainties:
RISKS OF LOSS OF REVENUE DUE TO TERMINATION OR OTHER LOSS OF PROPERTY
MANAGEMENT AGREEMENTS. NHP is substantially dependent on revenue received for
services performed under property management agreements, and would be adversely
affected if a significant number of these agreements were terminated. Contracts
with unaffiliated third parties are for terms ranging from 30 days to 5 years,
with most contracts being terminable within one year. There can be no assurance
that any such contract will be renewed when the term expires. NHP's management
contracts may be terminated or otherwise lost as a result of: (i) disposition of
the property in the ordinary course or as a result of financial distress of the
property owner; (ii) the general partner's fiduciary duty to other partners in
the partnership; (iii) willful misconduct, gross negligence or other conduct
constituting grounds for termination under such contracts; or (iv) termination
by HUD with respect to certain affordable properties managed by NHP.
RISKS OF NHP'S DEPENDENCE ON THE NHP REAL ESTATE COMPANIES FOR PROPERTY
MANAGEMENT REVENUES. NHP is substantially dependent on revenue from the
provision of services to properties controlled by the NHP Real Estate Companies.
In 1996, NHP derived approximately 67% of its property management revenue from
fees for services to properties controlled by the NHP Real Estate Companies.
Although, pursuant to certain agreements, the NHP Real Estate Companies are
required at least through the year 2020 (subject to certain conditions) to cause
NHP to be selected to provide services to each of the properties the NHP Real
Estate Companies control (and any property they may control in the future), the
NHP Real Estate Companies' obligations under these agreements are subject to
their fiduciary duties as general partner of the partnerships that own the
properties and other conditions provided for in such agreements, and there can
be no assurance that contracts to provide services to the properties controlled
by the NHP Real Estate Companies will be granted or, if granted, will not be
terminated. Although AIMCO is negotiating to acquire the NHP Real Estate
Companies, there can be no assurance as to the success of such negotiations or
that, if successful, such acquisition will be consummated.
RISK OF TERMINATION OF OXFORD CONTRACTS. In connection with AIMCO's
proposed acquisition of NHP, affiliates of Oxford Holding Corporation
(collectively, "Oxford"), which control a portfolio of properties managed by
NHP (collectively, the "Oxford Properties"), have indicated that they believe
that AIMCO's acquisition of NHP may give Oxford the right to terminate NHP's
contracts for the management of the Oxford Properties. Although AIMCO and NHP
dispute Oxford's contention, there can be no assurance that Oxford will not
seek to terminate such contracts. NHP received $12.9 million of management
fees from management of the Oxford Properties in 1996.
RISKS RELATING TO REGULATION OF AFFORDABLE HOUSING. As of December 31,
1996. NHP's management portfolio includes 58,504 units in 457 properties that
receive some form of interest rate or rental subsidy or are otherwise subject
to government programs aimed at providing low and moderate income housing
("affordable" units or properties). In addition, many of the partnerships in
which the NHP Real Estate Companies hold interests own affordable properties.
A substantial portion of the affordable properties were built or acquired by
the owners with the assistance of programs administered by HUD that provide
mortgage insurance, favorable financing terms, or rental assistance payments
to the owners. As a condition to the receipt of assistance under these and
other HUD programs, the properties must comply with various HUD requirements
including rents on these properties limited to amounts approved by HUD. HUD
approval is required for the Merger and the proposed acquisition of the NHP
Real Estate Companies, and before NHP or AIMCO may be appointed as manager of
additional HUD-assisted properties. There can be no assurance that HUD
approval will be received with respect to any particular action for which it
is required. In addition, under its regulations, HUD has the authority to
suspend or deny participation in HUD programs within a geographic region or
nationwide where a manager has committed criminal acts or evidenced a pattern
of consistently violating its contractual and regulatory responsibilities to
HUD. If HUD were to disapprove NHP (or AIMCO) as property manager for one or
more affordable properties, NHP's (or AIMCO's) ability to obtain property
management revenues from new properties would be impaired. In addition to the
effects of HUD regulation on NHP (or AIMCO) as a manager of affordable
properties, the business of NHP (or AIMCO) may be indirectly affected by
regulations generally applicable to the entities owning affordable
properties. In particular, HUD limits the rents that may be charged on
certain HUD-assisted properties to approved amounts and, if permitted rents
on a property were insufficient to cover costs, disposal of the property
might become necessary resulting in a loss of management fee revenue. As of
April 30, 1997, and in addition to the 432 HUD-assisted properties, NHP
manages 45 properties that receive assistance from agencies other than HUD or
are subject to regulation by agencies other than HUD.
RISKS RELATING TO UNCERTAINTY REGARDING STATUS OF FEDERAL SUBSIDIES. Many
of the units managed by NHP and many units owned by partnerships in which the
NHP Real Estate Companies hold interests are subsidized under Section 8 of the
United States Housing Act of 1937 ("Section 8"). These subsidies are generally
provided pursuant to project-based contracts with the owners of the properties
or, with respect to a limited number of units managed by NHP, pursuant to
vouchers received by tenants. For the past several years, various proposals have
been advanced by HUD, Congress and others proposing the restructuring of Section
8. These proposals generally seek to lower subsidized rents to market levels and
to lower required debt service costs as needed to ensure financial viability at
the reduced rents, but vary greatly as to how that result is to be achieved.
Some proposals include a phase-out of project-based subsidies on a
property-by-property basis upon expiration of a property's Housing Assistance
Payments Contract ("HAP Contract"), with a conversion to a tenant-based subsidy.
Under a tenant-based system, rent vouchers would be issued to qualified tenants
who then could elect to reside at a property of their choice, provided the
tenant has the financial ability to pay the difference between the selected
property's monthly rent and the value of the voucher, which would be established
based on HUD's regulated fair market rent for that geographic area. Congress has
not yet accepted any of these these restructuring proposals and instead has
elected to renew expiring Section 8 HAP Contracts for one year terms, generally
at existing rents. There can be no assurance that the proposed changes would not
significantly affect NHP's management portfolio and the real estate portfolios
of the partnerships in which the NHP Real Estate Companies hold interests.
Furthermore, there can be no assurance that changes in federal subsidies will
not be more restrictive than those currently proposed or that other changes in
policy will not occur. Any such changes could have an adverse effect on NHP's
property management revenues and the real estate portfolios of the partnerships
in which the NHP Real Estate Companies hold interests.
POSSIBLE CONFLICTS OF INTEREST. In connection with the NHP Acquisition,
AIMCO has acquired its interest in ANHI and expects to acquire an interest in
one or more additional new subsidiaries which will hold interests in NHP and
the NHP Real Estate Companies. As is the case with ANHI, in order to
accommodate the qualification of AIMCO as a real estate investment trust, it
is expected that AIMCO will own a 95% non-voting interest in such
subsidiaries, and individuals who are officers of AIMCO will own a 5%
controlling interest in such subsidiaries. As a result, conflicts of interest
may arise in transactions involving AIMCO and such individuals and
subsidiaries.
RISKS RELATING TO AIMCO'S REIT STATUS. In order for AIMCO to qualify for
taxation as a real estate investment trust, the value of any one issuer's
securities held by AIMCO generally may not exceed 5% of AIMCO's gross asset
value (determined at the close of each quarter of its taxable year). In
connection with the acquisition of the NHP Shares, AIMCO has acquired its
interest in ANHI. The value of AIMCO's interest in this new subsidiary is
currently slightly less than 5% of AIMCO's gross asset value. If AIMCO's
interest in ANHI would exceed 5% of AIMCO's value at any applicable
measurement date, AIMCO may be required to reduce the value of its investment
in ANHI.
RISKS ASSOCIATED WITH INTEGRATING NHP. The integration of NHP's business
with AIMCO's may place a significant burden on AIMCO's management. Such
integration is subject to risks commonly encountered in making such
acquisitions, including, among others, loss of key personnel of NHP, the
difficulty associated with assimilating the personnel and operations of NHP, the
disruption of AIMCO's ongoing business, the difficulty in maintaining uniform
standards, controls, procedures and policies, and the impairment of AIMCO's
reputation. No assurance exists that AIMCO will be able to integrate the two
businesses successfully. Failure of AIMCO to integrate the two businesses
successfully could have a material adverse effect on AIMCO's results of
operations.
2
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
The following financial statements of NHP, together with the
independent auditors' reports thereon, have been filed as Exhibit 99.4 to
AIMCO's Current Report on Form 8-K dated April 16, 1997, as amended by
Amendment No. 1 thereto (the "April 8-K"):
1. Consolidated Statements of Operations for the Years Ended
December 31, 1996, 1995 and 1994.
2. Consolidated Balance Sheets as of December 31, 1996 and 1995.
3. Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994.
4. Consolidated Statements of Shareholders' Equity (Deficit) for
the Years Ended December 31, 1996, 1995 and 1994.
(b) Pro Forma Financial Information.
Pro forma financial information has been previously filed as Item
7(b) of AIMCO's April 8-K.
(c) Exhibits.
Exhibit
Number Description
- ------- -----------
2.1 Stock Purchase Agreement, dated as of April 16, 1997, by and
among Apartment Investment and Management Company, Demeter
Holdings Corporation and Capricorn Investors, L.P.
(incorporated by reference to Exhibit 2.2 to Apartment Investment
and Management Company's Current Report on Form 8-K, dated
April 16, 1997, as amended by Amendment No. 1).
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: May 9, 1997 By: /s/ LEEANN MOREIN
--------------------------------------
Leeann Morein
Senior Vice President, Chief Financial
Officer and Secretary
4
