<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) DECEMBER 19, 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 December 19, 1996, AIMCO Properties, L.P., a Delaware limited
partnership (the "Operating Partnership") through which Apartment Investment
and Management Company ("AIMCO" and, together with its subsidiaries and other
controlled entities, the "Company") conducts substantially all of its business,
acquired Chesapeake Apartments for a total consideration of $7,950,000 in cash
(the "Chesapeake Acquisition"). The Chesapeake Apartments is a multifamily
apartment property comprised of 320 units located in Houston, Texas.
On December 23, 1996, the Operating Partnership acquired the Bay West
Apartments for a total consideration of $8,450,000 in cash (the "Bay West
Acquisition"). The Bay West Apartments is a multifamily apartment property
comprised of 376 units located in Tampa, Florida.
On December 27, 1996, the Operating Partnership acquired the Dolphins
Landing Apartments for a total consideration of $7,350,000, including cash
and 193,676 shares of Class A Common Stock of AIMCO (the "Dolphins Landing
Acquisition" and, together with the Chesapeake Acquisition and the Bay West
Acquisition, the "December Apartment Acquisitions"). The Dolphins Landing
Apartments is a multifamily apartment property comprised of 218 units located
in Corpus Christi, Texas.
On December 27, 1996, 12 partnerships controlled by the Company borrowed
an aggregate of $60,453,952 from NationsBank of Texas, N.A. to refinance
first mortgage loans on 13 multifamily apartment properties owned by such
partnerships and located in the Houston, Texas area (the "December Financing"
and, together with the December Apartment Acquisitions, the "December
Transactions"). Each of the loans is secured by one of the 13 properties and
is guaranteed, at least in part, by AIMCO and certain of its affiliates. The
aggregate amount of the obligations guaranteed is approximately $37,000,000.
This guaranty is secured by the Company's interests in the borrowers.
Pursuant to the Company's management stock acquisition plan, (i) on
October 1, 1996, AIMCO issued 379,750 shares of its Class A Common Stock to
certain executive officers (or entities controlled by them), and (ii) on
December 31, 1996, AIMCO issued an additional 515,500 shares of its Class A
Common Stock to three executive officers (or certain entities controlled by
them). All of the shares were issued at a price of $20.75, the closing price
of the Class A Common Stock on the New York Stock Exchange on August 29,
1996. In payment for such shares, the officers executed notes payable to
AIMCO bearing interest at 7.25% per annum, payable quarterly, and due in
2006. The notes used to pay for the 379,750 shares of Class A Common Stock
issued in October 1996 are secured by the shares purchased and are recourse
as to 25% of the principal owed. The notes used to pay for the 515,500 shares
issued in December 1996 are unsecured but are recourse as to 100% of the
principal owed.
The Pro Forma Financial Information included in this Report gives effect
to the December Transactions and certain other transactions, as more fully
described elsewhere in this Report. These other transactions include, among
others: (i) the Company's public offering and sale of 1,265,000 shares of
Class A Common Stock in November and December 1996, and the application of
the net proceeds thereof to pay indebtedness under the Company's Credit
Facility with Bank of America National Trust and Savings Association; (ii)
the Company's November 1996 acquisition of the general partners of 31 limited
partnerships (the "English Partnerships"), real estate and related assets
from J.W. English and related entities; (iii) the Company's November 1996
acquisition of a portion of the limited partnership interests in 25 of the
English Partnerships pursuant to offers (the "English Tender Offers") made to
the limited partners of such English Partnerships; (iv) the Company's
November 1996 incurrence of $12,500,000 of indebtedness pursuant to an
unsecured line of credit that currently bears interest at a rate of 7.125%
per annum, the proceeds of which were used to pay for limited partnership
interests acquired pursuant to the English Tender Offers; (v) the Company's
acquisition, in a series of related transactions completed on December 2,
1996, of general partnership interests in 21 limited partnerships that own 12
multifamily apartment properties, and loans made by the general partners and
their affiliates to such limited partnerships (the "December Partnership
Acquisitions"); and (vi) the Company's incurrence of approximately $54.9
million of indebtedness to finance the December Partnership Acquisitions,
which indebtedness is secured by mortgages on certain of the properties and
by certain of the acquired general partnership interests and loans.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
1. Historical Summary of Gross Income and Direct Operating Expenses
of Villa Ladera Apartments for the year ended December 31, 1995
and for the month ended January 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 (unaudited)
2. Apartment Investment and Management Company Pro Forma Condensed
Consolidated Statement of Operations for the nine months ended
September 30, 1996 (unaudited)
3. Apartment Investment and Management Company Pro Forma Condensed
Consolidated Statement of Operations for the nine months ended
September 30, 1995 (unaudited)
4. Apartment Investment and Management Company Pro Forma Condensed
Consolidated Statement of Operations for the year ended
December 31, 1995 (unaudited)
2
<PAGE>
(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: January 29, 1997 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 Summary of Gross Income and
Direct Operating Expenses of Villa Ladera Apartments (the Property) for the
year ended December 31, 1995. This Historical Summary is the responsibility
of the Property's management. Our responsibility is to express an opinion on
this Historical Summary 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 Historical Summary is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the 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 Historical Summary. We believe that our audit provides a reasonable
basis for our opinion.
The accompanying 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 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 Summary referred to above presents fairly, in
all material respects, the gross income and direct operating expenses as
described in Note 1 of Villa Ladera Apartments for the year ended December
31, 1995, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Dallas, Texas
January 8, 1997
F-1
<PAGE>
Villa Ladera Apartments
Historical Summary of Gross Income and
Direct Operating Expenses
ONE MONTH
ENDED YEAR ENDED
JANUARY 31, DECEMBER 31,
1996 1995
---------------------------
(UNAUDITED)
GROSS INCOME
Rental $ 144,041 $ 1,778,559
Other 7,121 26,698
---------------------------
Total gross income 151,162 1,805,257
---------------------------
DIRECT OPERATING EXPENSES
Repairs and maintenance 4,488 187,206
Utilities and other property operating 17,463 239,527
Advertising -- 14,391
General and administrative 3,041 93,733
Real estate taxes 5,669 79,627
Management fees 6,227 75,279
---------------------------
Total direct operating expenses 36,888 689,763
---------------------------
Excess of gross income over direct
operating expenses $ 114,274 $ 1,115,494
---------------------------
---------------------------
SEE ACCOMPANYING NOTES.
F-2
<PAGE>
Villa Ladera Apartments
Notes to Summary of Gross Income and
Direct Operating Expenses
December 31, 1995
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying Historical Summaries of Gross Income and Direct Operating
Expenses include the accounts of Villa Ladera Apartments (the Property), a
multifamily residential community located in Albuquerque, New Mexico,
containing 280 units. Apartment Investment and Management Company (the
Company) acquired the Property on January 31, 1996 from Villa Ladera
Associates, Ltd. (the Partnership).
The accompanying 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 of the Company.
The Historical Summary is not intended to be a complete presentation of
income and expenses of the Property 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 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 Summary for
the year ended December 31, 1995. In the opinion of management of the
Property, all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the information 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.
F-3
<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 purchase of three multifamily apartment
properties (the "December Acquisitions") and the incurrence of indebtedness
and issuance of 193,676 shares of the Company's Class A Common Stock at a
price of $25.30 per share to finance such acquisitions; (ii) the sale of
1,265,000 shares of the Company's Class A Common Stock at $23.428 per share
and the application of the net proceeds thereof to pay indebtedness under the
Company's Credit Facility (the "Credit Facility") with Bank of America
National Trust and Savings Association (the "Third Public Offering"); (iii) 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 (iv) the incurrence of indebtedness to finance the
acquisitions of the Partnership Interests, and the refinancing of certain
indebtedness assumed in connection with 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 Third Public Offering and the application of net proceeds
thereof; (ii) the acquisition of the Partnership Interests, the incurrence of
indebtedness to finance such acquisitions, and the refinancing of certain
indebtedness assumed; (iii) the acquisition of 15 properties in 1995 and
during the year ended December 31, 1996 (the "1995 and 1996 Acquisitions"),
to the extent such acquisitions occurred during the year ended December 31,
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, the
incurrence of indebtedness to finance such acquisitions, and the refinancing
of certain indebtedness assumed; (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").
F-4
<PAGE>
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 in the
Company's Annual Report on Form 10-K for the year ended December 31, 1995,
the Company's Quarterly Reports on Form 10-Q for each of the quarters ended
March 31, 1996, June 30, 1996, and September 30, 1996, and the Company's
Current Reports on Form 8-K dated December 29, 1995, January 1, 1996, and
November 21, 1996, in each case, as amended to date.
F-5
<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 $233,643 (A) $734,532
Cash and cash equivalents . . . . . . . . . . . . . . . . . 1,115 11,775 (B) 12,890
Restricted cash . . . . . . . . . . . . . . . . . . . . . . 9,591 7,012 (C) 16,603
Real estate held for sale . . . . . . . . . . . . . . . . . -- 6,359 (D) 6,359
Accounts receivable . . . . . . . . . . . . . . . . . . . . 2,161 260 (E) 2,421
Deferred financing costs. . . . . . . . . . . . . . . . . . 7,909 2,821 (F) 10,730
Note receivable . . . . . . . . . . . . . . . . . . . . . . 2,893 (2,893)(G) --
Other assets. . . . . . . . . . . . . . . . . . . . . . . . 7,305 16,758 (H) 24,063
-------- ------------ ---------
$531,863 $275,735 $807,598
-------- ------------ ---------
-------- ------------ ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Secured long-term notes payable . . . . . . . . . . . . . . $176,635 $ 65,475 (I) $242,110
Secured long-term tax-exempt bond financing . . . . . . . . 75,837 -- 75,837
Secured short-term financing. . . . . . . . . . . . . . . . 52,300 127,611 (J) 179,911
Unsecured short-term financing. . . . . . . . . . . . . . . -- 12,500 (K) 12,500
Accounts payable, accrued and other liabilities . . . .. . 8,908 7,554 (L) 16,462
Resident security deposits and prepaid rents. . . . . . . . 3,125 1,360 (M) 4,485
-------- ------------ ---------
316,805 214,500 531,305
Commitments and contingencies
Minority interest in other partnerships . . . . . . . . . . -- 10,407 (N) 10,407
Minority interest in Operating Partnership. . . . . . . . . 42,760 16,792 (O) 59,552
-------- ------------ ---------
42,760 27,199 69,959
Stockholders' equity:
Class A Common Stock ($.01 par value) . . . . . . . . . . . 118 15 (P) 133
Class B Common Stock ($.01 par value) . . . . . . . . . . . 6 0 6
Additional paid-in capital. . . . . . . . . . . . . . . . . 184,582 34,021 (Q) 218,603
Accumulated deficit . . . . . . . . . . . . . . . . . . . . (12,408) (12,408)
-------- ------------ ---------
172,298 34,036 206,334
-------- ------------ ---------
$531,863 $275,735 $807,598
-------- ------------ ---------
-------- ------------ ---------
</TABLE>
The accompanying notes are an integral part of the pro forma
condensed consolidated financial statements.
F-6
<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>
ACTUAL ADJUSTMENTS PRO FORMA
-------- ------------- -------------
<S> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues . . . . . . . . . . . . . $ 70,392 $ 39,803 (R) $110,195
Property operating expenses. . . . . . . . . . . . . . . . . (27,111) (22,863)(R) (49,974)
Owned property management expense. . . . . . . . . . . . . . (1,999) (1,724)(R) (3,723)
--------- ------------ ---------
Income from property operations before depreciation. . . . . 41,282 15,216 56,498
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . (13,716) (6,614)(R) (20,330)
--------- ------------ ---------
Income from property operations. . . . . . . . . . . . . . . 27,566 8,602 36,168
SERVICE COMPANY BUSINESS . . . . . . . . . . . . . . . . . .
Management fees and other income . . . . . . . . . . . . . . 5,442 1,794 (S) 7,236
Management and other expenses. . . . . . . . . . . . . . . . (3,449) (1,184)(S) (4,633)
Corporate overhead allocation. . . . . . . . . . . . . . . . (443) -- (443)
Amortization of management company goodwill. . . . . . . . . (344) (113)(S) (457)
Other assets depreciation and amortization . . . . . . . . . (154) (335)(T) (489)
--------- ------------ ---------
Income from service company business . . . . . . . . . . . . 1,052 162 1,214
Minority interests in service company business . . . . . . . (10) -- (10)
--------- ------------ ---------
Company's share of income from service company business. . . 1,042 162 1,204
GENERAL AND ADMINISTRATIVE EXPENSES. . . . . . . . . . . . . (943) -- (943)
INTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . . (16,775) (10,762)(U) (27,537)
INTEREST INCOME. . . . . . . . . . . . . . . . . . . . . . . 242 242
--------- ------------ ---------
INCOME BEFORE GAIN ON DISPOSITION OF PROPERTY AND
MINORITY INTEREST IN OPERATING PARTNERSHIP. . . . . . . . . 11,132 (1,998) 9,134
GAIN ON DISPOSITION OF PROPERTY. . . . . . . . . . . . . . . 64 (64)(V) --
--------- ------------ ---------
Income before minority interests . . . . . . . . . . . . . . 11,196 (2,062) 9,134
Minority interest in other partnerships. . . . . . . . . . . -- 2,939 (W) 2,939
--------- ------------ ---------
Income before minority interest in Operating Partnership . . 11,196 877 12,073
MINORITY INTEREST IN OPERATING PARTNERSHIP . . . . . . . . . (1,845) (600)(X) (2,445)
--------- ------------ ---------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,351 $ 277 $ 9,628
--------- ------------ ---------
--------- ------------ ---------
Net income allocable to preferred stockholder. . . . . . . . $ -- $ --
Net income allocable to common stockholders. . . . . . . . . $ 9,351 $ 9,628
Weighted average common shares and common share
equivalents outstanding . . . . . . . . . . . . . . . . . . 12,127 13,791
Net income per common share and common share equivalent. . . $ 0.77 $ 0.70
</TABLE>
F-7
<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>
ACTUAL ADJUSTMENTS PRO-FORMA
-------- ------------- -------------
<S> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues . . . . . . . . . . . . $ 55,653 $ 47,462 (R) $103,115
Property operating expenses. . . . . . . . . . . . . . . . (22,609) (26,028)(R) (48,637)
Owned property management expense. . . . . . . . . . . . . (1,707) (1,905)(R) (3,612)
--------- ------------ ---------
Income from property operations before depreciation. . . . 31,337 19,529 50,866
Depreciation . . . . . . . . . . . . . . . . . . . . . . . (11,067) (8,873)(R) (19,940)
--------- ------------ ---------
Income from property operations. . . . . . . . . . . . . . 20,270 10,656 30,926
SERVICE COMPANY BUSINESS
Management fees and other income . . . . . . . . . . . . . 5,980 2,173 (S) 8,153
Management and other expenses. . . . . . . . . . . . . . . (3,518) (1,621)(S) (5,139)
Corporate overhead allocation . . .. . . . . . . . . . . . -- -- --
Amortization of management company goodwill. . . . . . . . (307) (121)(S) (428)
Other assets depreciation and amortization . . . . . . . . (114) (335)(T) (449)
--------- ------------ ---------
Income from service company business. . . . .. . . . . . . 2,041 96 2,137
Minority interests in service company business. . . . .. . (20) 0 (20)
--------- ------------ ---------
Company's share of income from service company business. . 2,021 96 2,117
GENERAL AND ADMINISTRATIVE EXPENSES . . . . .. . . . . . . (1,709) -- (1,709)
INTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . (8,391) (12,030)(U) (20,421)
INTEREST INCOME. . . . . . . . . . . . . . . . . . . . . . 497 -- 497
--------- ------------ ---------
INCOME BEFORE GAIN ON DISPOSITION OF PROPERTY AND
MINORITY INTERESTS. . . . . . . . . . . . . . . . . . . . 12,688 (1,278) 11,410
GAIN ON DISPOSITION OF PROPERTY . . . .. . . . . . . . . . -- -- --
--------- ------------ ---------
Income before minority interests. . . .. . . . . . . . . . 12,688 (1,278) 11,410
MINORITY INTEREST IN OTHER PARTNERSHIPS. . . . . . . . . . -- 3,682 (W) 3,682
--------- ------------ ---------
INCOME BEFORE MINORITY INTEREST IN OPERATING PARTNERSHIP . 12,688 2,404 15,092
Minority interest in Operating Partnership . . . . . . . . (1,228) (1,812)(X) (3,040)
--------- ------------ ---------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . $ 11,460 $ 592 $ 12,052
--------- ------------ ---------
--------- ------------ ---------
Net income allocable to preferred stockholder. . . . . . . $ 5,169 $ 5,169
Net income allocable to common stockholders. . . . . . . . $ 6,291 $ 6,883
Weighted average common shares and common share
equivalents outstanding . . . . . . . . . . . . . . . . . 9,622 14,160
Net income per common share and common share equivalent. . $ 0.65 $ .49
</TABLE>
F-8
<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>
ACTUAL ADJUSTMENTS PRO-FORMA
-------- ------------- -------------
<S> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues . . . . . . . . . . . . $ 74,947 $ 63,863 (R) $138,810
Property operating expenses . . . .. . . . . . . . . . . . (30,150) (35,658)(R) (65,808)
Owned property management expense . . . .. . . . . . . . . (2,276) (2,695)(R) (4,971)
--------- ------------ ---------
Income from property operations before depreciation. . . . 42,521 25,510 68,031
Depreciation. . . . . . . . . . . . . . . . . . . . . . . (15,038) (11,891)(R) (26,929)
--------- ------------ ---------
Income from property operations. . . . . . . . . . . . . . 27,483 13,619 41,102
SERVICE COMPANY BUSINESS
Management fees and other income . . . . . . . . . . . . . 8,132 2,923 (S) 11,055
Management and other expenses. . . . . . . . . . . . . . . (4,953) (2,050)(S) (7,003)
Corporate overhead allocation. . . . . . . . . . . . . . . (581) -- (581)
Amortization of management company goodwill. . . . . . . . (428) (161)(S) (589)
Other assets depreciation and amortization . . . . . . . . (168) (446)(T) (614)
--------- ------------ ---------
Income from service company business . . . . . . . . . . . 2,002 266 2,268
Minority interests in service company business . . . . . . (29) -- (29)
--------- ------------ ---------
Company's share of income from service company business. . 1,973 266 2,239
GENERAL AND ADMINISTRATIVE EXPENSES. . . . . . . . . . . . (1,804) -- (1,804)
INTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . (13,322) (17,513)(U) (30,835)
INTEREST INCOME. . . . . . . . . . . . . . . . . . . . . . 658 -- 658
--------- ------------ ---------
INCOME BEFORE GAIN ON DISPOSITION OF PROPERTY AND MINORITY
INTERESTS. . . . . . . . . . . . . . . . . . . . . . . . . 14,988 (3,628) 11,360
Gain on disposition of property. . . . . . . . . . . . . . -- -- --
--------- ------------ ---------
Income before minority interests . . . . . . . . . . . . . 14,988 (3,628) 11,360
Minority interest in other partnerships. . . . . . . . . . -- 4,997 (W) 4,997
--------- ------------ ---------
INCOME BEFORE MINORITY INTEREST IN OPERATING PARTNERSHIP . 14,988 1,369 16,357
Minority interest in Operating Partnership . . . . . . . . (1,613) (1,709)(X) (3,322)
--------- ------------ ---------
NET INCOME. . . . . . . . . . . . . . . . . . . . . . . . $ 13,375 $ (340) $ 13,035
--------- ------------ ---------
--------- ------------ ---------
Net income allocable to preferred stockholder. . . . . . . $ 5,169 $ 5,169
Net income allocable to common stockholders. . . . . . . . $ 8,206 $ 7,866
Weighted average common shares and common share
equivalents outstanding . . . . . . . . . . . . . . . . . 9,579 14,032
Net income per common share and common share equivalent. . $ 0.86 $ 0.56
</TABLE>
F-9
<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>
<C> <S> <C>
(A) INCREASE IN REAL ESTATE
Purchase of the Partnership Interests. . . . . . . . . . . . . . . . . . $209,692
Purchase of the December Acquisitions. . . . . . . . . . . . . . . . . . 23,951
--------
Net change in real estate. . . . . . . . . . . . . . . . . . . . . . . . $233,643
--------
(B) INCREASE IN CASH AND CASH EQUIVALENTS
Net Offering Proceeds:
Proceeds of the Offering . . . . . . . . . . . . . . . . . . . . . . . $ 30,992
Costs of the Offering. . . . . . . . . . . . . . . . . . . . . . . . . (1,856)
--------
Net Offering Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 29,136
Less Use of Proceeds
Repayment of the Credit Facility . . . . . . . . . . . . . . . . . . . (29,136)
Other changes in cash and cash equivalents
Increase in cash and cash equivalents attributable to the consolidation
of the Partnership Interests. . . . . . . . . . . . . . . . . . . . . $ 9,717
Increase in cash attributable to the refinancing of certain
indebtedness assumed in connection with the acquisition of the
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . 2,058
--------
Net change in cash and cash equivalents. . . . . . . . . . . . . . . . . $ 11,775
--------
(C) INCREASE IN RESTRICTED CASH
Increase in restricted cash attributable to the consolidation of
the Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . $ 1,939
Increase in restricted cash attributable to the December Acquisitions. . 5,073
--------
7,012
--------
(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
Increase in deferred financing costs attributable to the
refinancing of certain indebtedness assumed in connection with the
acquisition of the Partnership Interests. . . . . . . . . . . . . . . . 894
--------
Net change in deferred financing costs . . . . . . . . . . . . . . . . . $ 2,821
--------
(G) DECREASE IN NOTES RECEIVABLE
Decrease in notes receivable attributable to the purchase of the
Partnership Interests . . . . . . . . . . . . . . . . . . . . . . . . . $ (2,893)
F-10
<PAGE>
(H) INCREASE IN OTHER ASSETS
Increase in other assets attributable to the consolidation of the
Partnership Interests. . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,741
Increase in other assets attributable to the purchase of the
December Acquisitions 17
--------
Net change in other assets $ 16,758
--------
(I) 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. . . . . . . . . . . . . . . . . . . . . $122,236
Decrease in secured long-term notes payable in connection with the
refinancing of certain indebtedness assumed in connection with
the acquisition of the Partnership Interests (56,761)
--------
Net change in long-term notes payable $ 65,475
--------
(J) INCREASE IN SECURED SHORT-TERM FINANCING, NET
Borrowings of short-term financing to purchase the Partnership
Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 44,714
Borrowings of short-term financing to purchase the December
Acquisitions 18,961
Increase in secured short-term financing in connection with the
refinancing of certain indebtedness assumed in connection with the
acquisition of the Partnership Interests . . . . . . . . . . . . . . . . 60,454
Increase in secured short-term financing for indebtedness secured by
properties owned by partnerships in which the Company purchased
Partnership Interests. . . . . . . . . . . . . . . . . . . . . . . . . . 27,545
Increase in secured short-term financing for indebtedness secured by
the December Acquisitions. . . . . . . . . . . . . . . . . . . . . . . . 5,073
Repayment on Credit Facility with proceeds of the Offering (29,136)
--------
$127,611
(K) INCREASE IN UNSECURED SHORT-TERM FINANCING
Borrowings of short-term financing to purchase the
Partnership Interests. . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,500
(L) 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
Increase in accounts payable, accrued and other liabilities
attributable to the purchase of the December Acquisitions 7
--------
Net change in accounts payable, accrued and other liabilities $ 7,554
--------
(M) 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
Increase in resident security deposits and prepaid rents
attributable to the purchase of the December Acquisitions 100
--------
Net increase in resident security deposits and prepaid rents $ 1,360
--------
(N) INCREASE IN MINORITY INTERESTS IN OTHER PARTNERSHIPS
Increase in minority interests in connection with the purchase of
the Partnership interests. . . . . . . . . . . . . . . . . . . . . . . . $ 10,407
(O) INCREASE IN MINORITY INTERESTS IN OPERATING PARTNERSHIP
OP Units issued in connection with the purchase of the Partnership
Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,792
(P) INCREASE IN STOCKHOLDERS' EQUITY
Par value of 1,265,000 shares of Common Stock issued in connection
with the Offering $ 13
Par value of 193,676 shares of Common Stock issued in connection
with the purchase of the December Acquisitions 2
--------
Net change in stockholders' equity $ 15
--------
(Q) INCREASE IN ADDITIONAL PAID-IN CAPITAL
Proceeds of the Offering in excess of par value of Common Stock
issued $ 30,979
Costs of the Offering (1,856)
--------
Net proceeds from the Offering 29,123
Value in excess of par value for the issuance of Common Stock in
connection with the purchase of the December Acquisitions 4,898
--------
Net increase in additional paid-in capital $ 34,021
--------
</TABLE>
F-11
<PAGE>
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>
(R) 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 . . . 5,632 18,216 23,779
Sold Properties. . . . . . . . . (3,363) (4,051) (5,448)
--------- --------- ---------
$ 39,803 $ 47,462 $ 63,863
--------- --------- ---------
Property operating expenses:
Partnership Interests. . . . . . $(22,001) $(20,957) $(28,779)
1995 and 1996 Acquisitions . . . (2,736) (7,580) (10,197)
Sold Properties. . . . . . . . . 1,874 2,509 3,318
--------- --------- ---------
$(22,863) $(26,028) $(35,658)
--------- --------- ---------
Owned property management expense:
Partnership Interests. . . . . . $ (1,644) $ (1,410) $ (2,010)
1995 and 1996 Acquisitions . . . (208) (668) (915)
Sold Properties. . . . . . . . . 128 173 230
--------- --------- ---------
$ (1,724) $ (1,905) $ (2,695)
--------- --------- ---------
Depreciation:
Partnership Interests. . . . . . $ (5,911) $ (5,568) $ (7,422)
1995 and 1996 Acquisitions . . . (1,150) (3,824) (5,171)
Sold Properties. . . . . . . . . 447 519 702
--------- --------- ---------
$ (6,614) $ (8,873) $(11,891)
--------- --------- ---------
(S) 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
--------- --------- ---------
Management and other expenses
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)
F-12
<PAGE>
--------- --------- ---------
$ (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)
--------- --------- ---------
(T) OTHER ASSETS DEPRECIATION AND AMORTIZATION
Increase in amortization of management
contract in connection with the
purchase of the Partnership
Interests. . . . . . . . . . . . . . . $ (335) $ (335) $ (446)
--------- --------- ---------
(U) 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)
Decrease in interest expense resulting
from the paydown on the Credit Facility
with proceeds from the Offering . . . . 1,573 1,698 2,253
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)
Increase in interest expense associated
with additional borrowings in
connection with the purchase of the
December Acquisitions . . . . . . . . . (1,018) (1,099) (1,458)
Decrease in interest expense resulting
from the refinancing of certain
indebtedness assumed in connection with
the acquisition of the Partnership
Interests . . . . . . . . . . . . . . . 847 870 1,160
--------- --------- ---------
$(10,762) $(12,030) $(17,513)
--------- --------- ---------
(V) GAIN ON DISPOSITION OF PROPERTY
Elimination of gain on disposition
of Sold Properties . . . . . . . . . . $ (64) -- --
--------- --------- ---------
(W) MINORITY INTEREST IN OTHER PARTNERSHIPS
Increase in minority interest in
other partnerships for interests
owned by others in partnerships of
which Partnership Interests were
purchased by the Company . . . . . . . $ 2,939 $ 3,682 $ 4,997
--------- --------- ---------
(X) 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 . . . . . . . . . . . . . $ (600) $ (1,812) $ (1,709)
--------- --------- ---------
Minority interest percentage for
period . . . . . . . . . . . . . . . . 20.25% 20.14% 20.31%
</TABLE>
F-13
<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 the inclusion in the Company's Current Report on Form 8-K,
dated December 19, 1996, filed with the Securities and Exchange Commission,
of our report dated January 8, 1997 with respect to the audit of the
Historical Summary of Gross Income and Direct Operating Expenses of Villa
Ladera Apartments for the year ended December 31, 1995 and the incorporation
by reference of such report 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 on 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-3 (No. 333-17431), 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
January 28, 1997
