<PAGE>
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) OCTOBER 15, 1997
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APARTMENT INVESTMENT AND MANAGEMENT COMPANY
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(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
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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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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Item 5. OTHER EVENTS
On August 22, 1997, AIMCO Properties, L.P., a Delaware limited
partnership and ("AIMCO Properties") a subsidiary limited partnership of
Apartment Investment and Management Company, a Maryland corporation ("AIMCO"
and, together with its majority-owned subsidiaries and controlled entities,
the "Company"), entered into a Purchase and Sale Agreement (the "Purchase
Agreement") with 27 limited partnerships affiliated with Winthrop Financial
Associates for the purchase of portfolio of 35 multifamily residential
properties (collectively, the "Thirty-five Acquisition Properties"). The
Purchase Agreement is included as an exhibit to this report and incorporated
by this reference. The Purchase Agreement provides AIMCO Properties with a
"due diligence" period to inspect the Thirty-five Acquisition Properties.
This period was extended from October 6, 1997 to October 13, 1997 pursuant to
a Letter Agreement, dated October 6, 1997, a copy of which is included as an
exhibit to this report and incorporated herein by this reference, and from
October 13, 1997 to October 15, 1997 pursuant to a Letter Agreement, dated
October 13, 1997, a copy of which is included as an exhibit to this report
and incorporated herein by this reference. The Company determined not to
exercise its option to terminate the Purchase Agreement as of October 15,
1997, and, as of such date, became committed to purchasing the Thirty-five
Acquisition Properties. The Company also amended the purchase price for the
Thirty-five Acquisition Properties pursuant to a Letter Agreement, dated
October 15, 1997, a copy of which is included as an exhibit to this report
and incorporated herein by this reference.
The 35 garden-style apartment communities are located in seven
states, have an average age of 17 years and contain 8,175 apartment units.
Fifteen of the apartment communities are located in Arizona, with 2,602 units
in Phoenix and 816 units in Tucson, eleven apartment communities with 2,075
units are located throughout Texas; two apartment communities with 1,223
units are located in Florida, two apartment communities with 494 units are
located in Michigan, three apartment communities with 536 units are located
in Georgia, one apartment community with 293 units is located in Illinois and
one apartment community with 136 units is located in North Carolina.
The closing of the acquisition of the Thirty-five Acquisition
Properties is expected to occur October 31, 1997, subject to customary
closing conditions. The aggregate purchase price for the Thirty-five
Acquisition Properties, including transaction costs, is approximately $262
million. The Company will pay aggregate consideration of $253.5 million,
including the assumption of $8.3 million in mortgage indebtedness, to
complete the purchase. The Company has also budgeted an additional $16
million in initial capital expenditures which will be incurred subsequent to
the acquisition of the Thirty-five Acquisition Properties. A copy of the
Company's Press Release, dated October 17, 1997, is incorporated herein by
this reference.
1
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Businesses Acquired
Combined Statement of Revenues and Certain Expenses of the
Thirty-five Acquisition Properties for the year ended December 31, 1996 and
the six months ended June 30, 1997 (unaudited), together with the Independent
Auditor's Report (included as Exhibit 99.1 to this Report and incorporated
herein by this reference).
(b) Pro Forma Financial Information
The required pro forma financial information is included as Exhibit
99.2 to this Report and incorporated herein by this reference.
2
<PAGE>
(c) Exhibits
The following exhibits are filed with this report:
Exhibit
Number Description
- ------ -----------
23.1 Consent of Deloitte & Touche LLP.
99.1 Combined Statement of Revenues and Certain Expenses of
the Thirty-five Acquisition Properties for the year ended
December 31, 1996 and the six months ended June 30, 1997
(unaudited), together with the Independent Auditor's Report.
99.2 Pro Forma Financial Information of Apartment Investment and Management
Company.
99.3 Purchase and Sale Agreement and Joint Escrow Instructions, made and
entered into as of August 22, 1997, by and between AIMCO Properties,
L.P., a Delaware limited partnership, and each of the parties
identified on Exhibit "A" attached thereto.
99.4 Letter Agreement, dated October 6, 1997, between AIMCO Properties,
L.P. and each of the parties identified on Exhibit "A" attached to the
Purchase and Sale Agreement and Joint Escrow Instructions, made and
entered into as of August 22, 1997, by and between AIMCO
Properties, L.P., a Delaware limited partnership, and each of the
parties identified on Exhibit "A" attached thereto.
99.5 Letter Agreement, dated October 13, 1997, between Allan G. Mutchnik,
Counsel to AIMCO Properties, L.P., a Delaware limited partnership,
and William W. Post, counsel to each of the parties identified on
Exhibit "A" attached to the Purchase and Sale Agreement and Joint
Escrow Instructions, made and entered into as of August 22, 1997,
by and between AIMCO Properties, L.P., a Delaware limited
partnership, and each of the parties identified on Exhibit "A"
attached thereto.
99.6 Letter Agreement, dated October 15, 1997, between AIMCO Properties,
L.P., a Delaware limited partnership, and each of the parties
identified on Exhibit "A" attached to the Purchase and Sale
Agreement and Joint Escrow Instructions, made and entered into as of
August 22, 1997, by and between AIMCO Properties, L.P., a Delaware
limited partnership, and each of the parties identified on
Exhibit "A" attached thereto.
99.7 Press release of Apartment Investment and Management Company, dated
October 17, 1997.
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: October 21, 1997 By: /s/ Leeann Morein
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Leeann Morein
Senior Vice President, Chief
Financial Officer and Secretary
4
<PAGE>
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
Sequentially
Exhibit Numbered
Number Description Page
- ------ ----------- ----
23.1 Consent of Deloitte & Touche LLP.
99.1 Combined Statement of Revenues and Certain Expenses of the Thirty-five
Acquisition Properties for the year ended December 31, 1996 and the
six months ended June 30, 1997 (unaudited), together with the
Independent Auditor's Report.
99.2 Pro Forma Financial Information of Apartment Investment and Management
Company.
99.3 Purchase and Sale Agreement and Joint Escrow Instructions, made and
entered into as of August 22, 1997, by and between AIMCO Properties,
L.P., a Delaware limited partnership, and each of the parties
identified on Exhibit "A" attached thereto.
99.4 Letter Agreement, dated October 6, 1997, between AIMCO Properties,
L.P. and each of the parties identified on Exhibit "A" attached to the
Purchase and Sale Agreement and Joint Escrow Instructions, made and
entered into as of August 22, 1997, by and between AIMCO
Properties, L.P., a Delaware limited partnership, and each of the
parties identified on Exhibit "A" attached thereto.
99.5 Letter Agreement, dated October 13, 1997, between Allan G. Mutchnik,
Counsel to AIMCO Properties, L.P., a Delaware limited partnership,
and William W. Post, counsel to each of the parties identified on
Exhibit "A" attached to the Purchase and Sale Agreement and Joint
Escrow Instructions, made and entered into as of August 22, 1997,
by and between AIMCO Properties, L.P., a Delaware limited
partnership, and each of the parties identified on Exhibit "A"
attached thereto.
99.6 Letter Agreement, dated October 15, 1997, between AIMCO Properties,
L.P., a Delaware limited partnership, and each of the parties
identified on Exhibit "A" attached to the Purchase and Sale
Agreement and Joint Escrow Instructions, made and entered into as of
August 22, 1997, by and between AIMCO Properties, L.P., a Delaware
limited partnership, and each of the parties identified on
Exhibit "A" attached thereto.
99.7 Press release of Apartment Investment and Management Company, dated
October 17, 1997.
<PAGE>
INDEPENDENT AUDITORS CONSENT
We consent to the incorporation by reference in Registration Statements on
Form S-3 (No. 333-26415), (No. 333-98338), (No. 333-828), (No. 333-4542),
(No. 333-4546), (No. 333-08997), (No. 333-17431), (No. 333-14481), (No.
333-20755), (No. 333-36531) and (No. 333-36537) and Registration Statements
on Form S-8 (No. 333-4550), (No. 333-4548) and (No. 333-36803) of Apartment
Investment and Management Company (AIMCO) of our report dated October 20, 1997
with respect to the Combined Statement of Revenues and Certain Expenses of
the Thirty-five Acquisition Properties, as listed in Appendix A to this
consent, for the year ended December 31, 1996, appearing in this Current
Report on Form 8-K of AIMCO.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 20, 1997
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Winthrop Financial Associates, a Limited Partnership:
We have audited the accompanying combined statement of revenues and certain
expenses of the Thirty-five Acquisition Properties, as defined in Note 1,
for the year ended December 31, 1996. This financial statement is the
responsibility of Winthrop Financial Associates, a Limited Partnership. Our
responsibility is to express an opinion on the combined statement of revenues
and certain expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform our audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The accompanying combined statement of revenue and certain expenses was
prepared in compliance with the rules and regulations of the Securities and
Exchange Commission and, as described in Note 1, is not intended to be a
complete presentation of the Thirty-five Acquisition Properties' combined
revenues and expenses.
In our opinion, the combined financial statement referred to above presents
fairly, in all material respects, the combined revenues and certain expenses
of the Thirty-five Acquisition Properties, as described in Note 1, for the
year ended December 31, 1996 in conformity with generally accepted accounting
principles.
/s/ DELOITTE & TOUCHE LLP
Boston, Massachusetts
October 20, 1997
<PAGE>
THIRTY-FIVE ACQUISITION PROPERTIES
COMBINED STATEMENT OF REVENUES
AND CERTAIN EXPENSES (NOTE 1)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30, 1997 For the Year Ended
(unaudited) December 31, 1996
------------------- ------------------
<S> <C> <C>
REVENUES:
Rental income $ 23,418,373 $ 46,222,723
Other income 1,292,967 2,548,596
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Total Revenues 24,711,340 48,771,319
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CERTAIN EXPENSES:
Leasing 420,368 896,251
Payroll and benefits 2,770,142 5,511,042
General and administrative 349,448 811,782
Management fees 1,193,422 2,312,595
Utilities 2,433,382 5,197,562
Repairs and maintenance 1,662,901 3,573,401
Janitorial 78,134 169,629
Painting and decorating 521,505 1,189,789
Insurance 527,711 906,375
Payroll Taxes 1,931,967 3,639,997
Interest 450,989 842,002
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Total Certain Expenses 12,339,969 25,050,425
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REVENUES IN EXCESS OF CERTAIN EXPENSES $ 12,371,371 $ 23,720,894
------------- -------------
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</TABLE>
See notes to Combined Statement of Revenues and Certain Expenses.
<PAGE>
THIRTY-FIVE ACQUISITION PROPERTIES
NOTES TO COMBINED STATEMENT OF REVENUES
AND CERTAIN EXPENSES
Note 1 - ORGANIZATION AND BASIS OF PRESENTATION
ORGANIZATION
The accompanying combined statement of revenues and certain expenses (the
Statement) includes the combined operations of thirty-five multi-family
properties (Thirty-five Acquisition Properties) owned or controlled by
Winthrop Financial Associates, a Limited Partnership
Apartment Investment and Management Company (AIMCO), an unaffiliated party to
the Thirty-five Properties, has entered into a Purchase and Sale Agreement
related to the acquisition of the Thirty-five Acquisition Properties through
AIMCO Properties, L.P. (the Operating Partnership). A wholly owned
subsidiary of AIMCO is the sole general partner and a wholly owned subsidiary
of AIMCO is a limited partner which owns a majority interest in the Operating
Partnership. The Thirty-five Acquisition Properties are as follows:
<TABLE>
<CAPTION>
Property Name Location Number of Units
------------- -------- ---------------
<S> <C> <C>
ARIZONA BASED:
Timbertree Apartments Phoenix, Arizona 387
Blossomtree Apartments Scottsdale, Arizona 125
Ferntree (Colonnade) Apartments Phoenix, Arizona 196
Foothills Apartments Tucson, Arizona 270
Fox Bay Apartments Tucson, Arizona 232
Foxtree Apartments Tempe, Arizona 487
Grovetree (The Arbors) Apartments Tempe, Arizona 200
Hazeltree Apartments Phoenix, Arizona 310
Orchidtree Apartments Scottsdale, Arizona 278
Quailtree Apartments Phoenix, Arizona 184
Rivercrest Apartments Tucson, Arizona 210
Shadetree Apartments Tempe, Arizona 123
Silktree Apartments Phoenix, Arizona 86
Twinbridge Apartments Tucson, Arizona 104
Wickertree Apartments Phoenix, Arizona 226
Total Arizona 3418
FLORIDA BASED
Freedom Place Apartments Jacksonville, Florida 352
Village Park Apartments North Miami, Florida 871
Total Florida 1223
GEORGIA BASED
Windsor Landing Apartments Morrow, Georgia 200
Beacon Hill Apartments Chamblee, Georgia 120
Islandtree Apartments Whitemarsh Island, Georgia 216
Total Georgia 536
ILLINOIS BASED
Yorktree Apartments Carol Stream, Illinois 293
<PAGE>
<S> <C> <C>
MICHIGAN BASED
Hiddentree Apartments East Lansing, Michigan 261
Pine Creek Apartments Cleo, Michigan 233
Total Michigan 494
NORTH CAROLINA BASED
Shadow Lake Apartments Greensboro, North Carolina 136
TEXAS BASED
Brant Rock Village Apartments Houston, Texas 84
Surrey Oaks Apartments Bedford, Texas 152
Sand Castles Apartments League City, Texas 138
Tall Timbers Apartments Houston, Texas 256
Woodhollow Apartments Austin, Texas 108
Olmos Club Apartments San Antonio, Texas 134
Polo Park Apartments Midland, Texas 184
Wildflower Apartments Midland, Texas 264
Wydewood Apartments Midland, Texas 218
The Hills Apartments Austin, Texas 336
Sand Pebble Apartments El Paso, Texas 208
Total Texas 2082
</TABLE>
The properties will be acquired for cash and the assumption of debt.
BASIS OF PRESENTATION
The accompanying Statement was prepared to comply with the rules and regulations
of the Securities and Exchange Commission (the SEC).
The accounts of each of the Thirty-five Acquisition Properties are combined
in the Statement. There are no interproperty accounts to be eliminated. The
accompanying Statement is not representative of the actual operations for the
period presented as certain revenues and expenses have been excluded that may
not be comparable to the revenues and expenses expected to be incurred by the
Operating Partnership in the proposed future operations of the Thirty-five
Acquisition Properties. Revenues excluded consists of interest income.
Expenses excluded consist of depreciation, amortization, interest on
non-assumed debt and other costs not directly related to the expected future
operations of the Thirty-five Acquisition Properties.
INTERIM UNAUDITED COMBINED STATEMENT OF REVENUES AND CERTAIN EXPENSES
The combined statement of revenues and certain expenses for the six months
ended June 30, 1997 is unaudited: however, in the opinion of management, all
adjustments necessary for the fair presentation of the combined statement of
revenues and certain expenses for such interim period have been included.
The results for the six months ended June 30, 1997 are not necessarily
indicative of the results to be obtained for the year ending December 31,
1997.
INCOME RECOGNITION
The multifamily properties have operating leases with terms generally of one
year or less. Rental income is recognized when earned.
ESTIMATES
The preparation of a financial statement in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses during
the reporting period. The ultimate results could differ from those estimates.
<PAGE>
Note 2 - PLANNED TRANSACTION
AIMCO has entered into a Purchase and Sale Agreement to acquire the
Thirty-five Acquisition Properties through the purchase of a fee simple
interest in the properties. The purchase price for the Thirty-five
Acquisition Properties shall be $253,500,000. The purchase price is to be
paid by the assumption of outstanding debt, as described below, and the
payment of cash. The balance to be paid in cash is to be adjusted for the
following: the buyer's share of closing costs; deposits made by the buyer;
security deposits which were paid by tenants to or for the account of the
Thirty-five Acquisition Properties; accrued interest on such deposits if and
to the extent that such interest is payable to the tenants; expenses and
other sums owed to the Thirty-five Acquisition Properties for work or
disputes which occur prior to the closing date; and prorated amounts, if any,
for operating activities which may accrue or inure to the Thirty-five
Acquisition Properties as of the closing date.
The following table and description of terms present unaudited information as
of October 18, 1997, regarding the debt that will be assumed by AIMCO in
connection with the acquisition of the Thirty-five Acquisition Properties.
The instrument described below is secured by a first lien on the rental
property.
<TABLE>
<CAPTION>
Name and Location of Property Stated Interest Rate Monthly Payment Maturity Date Balance
- ----------------------------- -------------------- --------------- ------------- -------
<S> <C> <C> <C> <C>
The Hills Apartments, Austin, Texas 10.04% $77,206 May 1, 2002 $8,262,882
</TABLE>
The mortgage to be assumed in conjunction with the Hills Apartments property
acquisition represents a mortgage payable which is subject to a prepayment
penalty. This deed of trust note is held by Midland Loan Services, L.P..
Under the terms of this note, no prepayments may occur prior to January l,
2002, without the payment of prepayment penalties.
Principal payments on the debt to be assumed in connection with the proposed
acquisition of the Hills Apartments are due as follows:
1997(three months)................................ $ 24,423
1998.............................................. 104,032
1999.............................................. 114,969
2000.............................................. 127,059
2001.............................................. 140,420
Thereafter........................................ 7,751,979
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Total........................................ $ 8,262,882
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Note 3 - RELATED PARTY TRANSACTIONS
Pursuant to management agreements, all of the Properties are managed by an
affiliate of Winthrop Financial Associates, a Limited Partnership. The
Properties pay management fees at rates that range from 4% to 5% of operating
cash receipts.
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<PAGE>
APPENDIX A
The following are thirty-five multi-family properties AIMCO has entered into a
Purchase and Sale agreement to acquire, hereafter referred to as the Thirty-five
Acquisition Properties.
Property Name
-------------
Brant Rock Village Apartments
Freedom Place Apartments
Surrey Oaks Apartments
Sand Castles Apartments
Shadow Lake Apartments
Tall Timbers Apartments
Woodhollow Apartments
Windsor Landing Apartments
Olmos Club Apartments
Timbertree Apartments
Beacon Hill Apartments
Blossomtree Apartments
Ferntree (Colonnade) Apartments
Foothills Apartments
Fox Bay Apartments
Foxtree Apartments
Grovetree (The Arbors) Apartments
Hazeltree Apartments
Hiddentree Apartments
Islandtree Apartments
Orchidtree Apartments
Pine Creek Apartments
Polo Park Apartments
Quailtree Apartments
Rivercrest Apartments
Sand Pebble Apartments
Shadetree Apartments
Silktree Apartments
Twinbridge Apartments
Village Park Apartments
Wickertree Apartments
Wildflower Apartments
Wydewood Apartments
Yorktree Apartments
The Hills Apartments
<PAGE>
PRO FORMA FINANCIAL INFORMATION OF
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
INTRODUCTION
On May 5, 1997, pursuant to a Stock Purchase Agreement, dated as of April
16, 1997 (the "Stock Purchase Agreement"), Apartment Investment and
Management Company, a Maryland corporation ("AIMCO" and, together with its
majority-owned subsidiaries and controlled entities, the "Company"), acquired
2,866,073 shares of common stock ("NHP Common Stock") of NHP Incorporated
("NHP") in exchange for 2,142,857 shares of AIMCO's Class A Common Stock
("AIMCO Common Stock"). AIMCO contributed such shares of NHP Common Stock to
its wholly owned subsidiary, AIMCO-LP, Inc., which contributed such shares of
NHP Common Stock to AIMCO's operating partnership, AIMCO Properties, L.P.
(the "Operating Partnership"), in exchange for additional partnership
interests in the Operating Partnership. The Operating Partnership contributed
such shares of NHP Common Stock to AIMCO's unconsolidated subsidiary,
AIMCO/NHP Holdings, Inc. ("ANHI"), in exchange for 95,000 shares of ANHI's
Series A Preferred Stock. Also, on May 5, 1997, pursuant to the Stock
Purchase Agreement, ANHI acquired 3,630,000 shares of NHP Common Stock for
$72.6 million in cash. Such cash consideration was obtained by ANHI from the
proceeds of a loan made pursuant to a Credit Agreement (the "ANHI Credit
Facility"). The acquisition of 6,496,073 shares of NHP Common Stock by AIMCO
and ANHI on May 5, 1997, is hereinafter referred to as the "Initial NHP Stock
Purchase."
On June 3, 1997, the Company acquired a group of companies (the "NHP
Real Estate Companies") previously owned by NHP that hold interests in
partnerships that own 534 conventional and affordable multifamily apartment
properties (the "NHP Properties") containing 87,659 units, a captive
insurance subsidiary and certain related assets (the "NHP Real Estate
Acquisition"). A substantial majority of the NHP Properties are currently
managed by NHP pursuant to a long-term agreement (the "Master Property
Management Agreement"). AIMCO is currently engaged in a reorganization (the
"NHP Real Estate Reorganization") of its interests in the NHP Real Estate
Companies, which will result in the vast majority of the assets of the NHP
Real Estate companies being owned by a limited partnership (the
"Unconsolidated Partnership") in which the Operating Partnership will hold a
99% limited partner interest and certain directors and officers of AIMCO will,
directly or indirectly, hold a 1% general partner interest.
1
<PAGE>
On August 26, 1997, AIMCO sold 2,400,000 shares of AIMCO Common Stock to
an institutional investor, at a price of $31.60 per share, and used
substantially all of the net proceeds from such sale to purchase 3,717,000
shares of NHP Common Stock from ANHI for an aggregate price of $74.3 million
(the "August 1997 Stock Offering"). ANHI used the proceeds from its sale of
such shares of NHP Common Stock to repay its outstanding borrowings under the
ANHI Credit facility, and then terminated the ANHI Credit Facility.
On September 12, 1997, AIMCO sold 2,373,418 shares of AIMCO Common Stock
to an institutional investor at a price of $31.60 per share, and sold 279,000
shares of AIMCO Common Stock to another institutional investor at a price of
$33.125 per share. AIMCO used $40 million in proceeds from such sales to
purchase 2,000,000 shares of NHP Common Stock from ANHI (the "Second ANHI
Stock Transfer" and, together with the First ANHI Stock Transfer, the "ANHI
Stock Transfers"), $7,039,500 of such proceeds to purchase an additional
351,975 shares of NHP Common Stock pursuant to the Stock Purchase Agreement,
and $35,462,000 of such proceeds to reduce the amount outstanding under
AIMCO's credit facility. On September 12, 1997, AIMCO also acquired an
additional 82,074 shares of NHP Common Stock pursuant to the Stock Purchase
Agreement in exchange for 61,364 shares of AIMCO Common Stock. AIMCO's
acquisition of an aggregate of 434,049 shares of NHP Common Stock on
September 12, 1997 pursuant to the Stock Purchase Agreement, is hereinafter
referred to as the "Subsequent NHP Stock Purchase" and, together with the
Initial NHP Stock Purchase, the "NHP Stock Purchase." AIMCO's sale of an
aggregate of 2,652,418 shares of AIMCO Common Stock on September 12, 1997,
and the application of the net proceeds thereof is hereinafter referred to as
the "September 1997 Stock Offerings."
On August 22, 1997, the Company entered into a Purchase and Sale
Agreement with 27 limited partnerships affiliated with Winthrop Financial
Associates for the purchase of a portfolio of 35 multifamily residential
properties (the "Thirty-five Acquisiton Properties"). The agreement was
subject to termination in the sole and absolute discretion of the Company
during a due diligence period. On October 15, 1997, the due diligence period
expired and the Company became committed to acquire the Thirty-five
Acquisition Properties.
AIMCO is seeking to acquire the remaining outstanding shares of NHP
Common Stock pursuant to a proposed merger (the "Merger") of AIMCO/NHP
Acquisition Corp., a wholly owned subsidiary of AIMCO ("Merger Sub"), with
and into NHP, with NHP being the surviving corporation after the Merger and
becoming a wholly owned subsidiary of AIMCO. The NHP Merger would be effected
pursuant to an Agreement and Plan of Merger, dated as of April 21, 1997 (the
"Merger Agreement"), by and among AIMCO, NHP and Merger Sub. The Merger
Agreement provides that, upon consummation of the Merger, each outstanding
share of NHP Common Stock, other than NHP Common Stock held by NHP, AIMCO or
Merger Sub, will be converted (subject to certain exceptions) into the right
to receive: (i) 0.74766 shares of AIMCO Common Stock (the "Stock
Consideration"), or (ii) at the election of the holder, 0.37383 shares of
AIMCO Common Stock and $10.00 in cash (the "Mixed Consideration"). As of
August 31, 1997, there were 12,916,939 shares of NHP Common Stock outstanding
and 891,250 outstanding options to purchase NHP Common Stock. In the Merger,
outstanding options
2
<PAGE>
to purchase shares of NHP Common Stock will be converted into options to
purchase shares of AIMCO Common Stock.
Immediately following the Merger, NHP will be a wholly owned subsidiary
of AIMCO. However, immediately following the Merger, AIMCO intends to engage
in a restructuring (the "NHP Reorganization") of the assets and operations of
NHP, possibly along regional or functional lines, that will result in the
Master Property Management Agreement being terminated and NHP's operations
being conducted through ANHI and/or other unconsolidated subsidiaries of
AIMCO (together with ANHI, the "Unconsolidated Subsidiaries"). It is expected
that the Unconsolidated Subsidiaries will have an ownership structure similar
to ANHI, in which the Company holds a 95% economic interest through ownership
of shares of non-voting preferred stock, and certain directors and officers
of AIMCO hold a 5% economic interest through direct or indirect ownership of
all of the outstanding shares of common stock. As a result of the controlling
ownership interest in the Unconsolidated Subsidiaries held by such directors
and officers, AIMCO will account for its interest in the Unconsolidated
Subsidiaries on the equity method.
Pursuant to rights distributed to NHP stockholders in May 1997 (the
"Rights Distribution"), subject to certain conditions, on the earlier of the
effective time of the Merger or December 1, 1997, all of the outstanding
shares of common stock of The WMF Group, Ltd., a wholly owned subsidiary of
NHP ("WMF"), will be distributed to NHP stockholders (the "WMF Spin-Off").
Shares of WMF common stock issued to AIMCO and ANHI in the WMF Spin-Off will
be transferred to the sellers of NHP Common Stock under the Stock Purchase
Agreement.
3
<PAGE>
PRO FORMA FINANCIAL INFORMATION (PRE-MERGER)
The following unaudited Pro Forma Consolidated Balance Sheet (Pre-Merger)
of AIMCO as of June 30, 1997 has been prepared as if each of the following
transactions had occurred as of June 30, 1997: (i) the issuance, pursuant to
the Apartment Investment and Management Company 1997 Stock Award and
Incentive Plan (the "AIMCO Stock Plan"), of 1,100,000 shares of AIMCO Common
Stock financed with notes receivable of $33,000,000 (the "July 1997 Stock
Sale"); (ii) AIMCO's August 1997 sale of 750,000 shares of its Class B
Preferred Stock and the application of the net proceeds thereof to repay
indebtedness (the "Preferred Stock Offering"); (iii) the August 1997 Stock
Offering; (iv) the September 1997 Stock Offerings; (v) the Subsequent NHP
Stock Purchase; (vi) the Company's purchase of 886,600 shares of common stock
of Ambassador Apartments, Inc. (the "Ambassador Stock Acquisition"); (vii)
the Company's receipt of a dividend from ANHI from proceeds ANHI received
from the ANHI Stock Transfers (the "ANHI Dividend"); (viii) the purchase of
third-party notes payable secured by three properties owned by real estate
partnerships in which the Company acquired ownership interests in the NHP
Real Estate Acquisition, and the conversion of such notes payable into loans
from the general partner (the "Loan Acquisitions"); (ix) the purchase of land
leased by two properties owned by real estate partnerships in which the
Company acquired ownership interests in the NHP Real Estate Acquisition (the
"Land Lease Acquisitions"); (x) the payment of third-party notes payable
secured by one property owned by a real estate partnership in which the
Company acquired ownership interests in the NHP Real Estate Acquisition (the
"Property Loan Payment"); (xi) the Company's purchase of the Sawgrass
Apartments (the "Sawgrass Acquisition"); (xii) the Company's purchase of an
interest in a partnership owning the Morton Towers Apartments (the "Morton
Towers Acquisition"); (xiii) the Company's acquisition of the Los Arboles
Apartments (the "Los Arboles Acquisition"); (xiv) the Company's probable
acquisition of 35 multifamily apartment properties from Winthrop Financial
Associates (the "Winthrop Acquisition"); and (xv) the Company's probable
disposition of five real estate properties (the "1997 Dispositions").
The following unaudited Pro Forma Consolidated Statement of Operations
(Pre-Merger) of AIMCO for the year ended December 31, 1996 has been prepared
as if each of the following transactions had occurred as of January 1, 1996:
(i) the Initial NHP Stock Purchase and the ANHI Stock Transfers; (ii) the NHP
Real Estate Acquisition; (iii) the NHP Real Estate Reorganization (iv) the
Company's acquisition of (a) the Tustin East Village and The Californian
apartments in June 1997, (b) the Vinings at the Waterways in June 1997, (c)
the Stonebrook Apartments in May 1997, and (d) The Bay Club at Aventura in
April 1997 (collectively, the "Recent Property Acquisitions"); (v) AIMCO's
sale of 1,265,000 shares of AIMCO Common Stock in November 1996, and the
application of the net proceeds thereof to repay indebtedness (the "November
1996 Stock Offering"); (vi) AIMCO's sale of 2,015,000 shares of AIMCO Common
Stock in February 1997, and the application of the net proceeds thereof to
repay indebtedness (the "February 1997 Stock Offering"); (vii) AIMCO's sale
of an aggregate of 2,300,000 shares of AIMCO Common Stock in May 1997, and
the application of the net proceeds thereof to repay indebtedness (the "May
1997 Stock Offering"); (viii) the Preferred Stock Offering; (ix) the August
1997 Stock Offering; (x) the September 1997 Stock Offerings; (xi) the ANHI
Dividend; (xii) the Ambassador Stock Acquisition; (xiii) the Subsequent NHP
Stock Purchase; (xiv) the Loan Acquisitions; (xv) the Land Lease
Acquisitions; (xvi) the Property Loan Payment; (xvii) the Sawgrass
Acquisition; (xviii) the Morton Towers Acquisition; (xix) the Los Arboles
Acquisition; (xx) the Company's acquisition during 1996 of (a) seven
multifamily apartment properties, (b) general and limited partnership
interests in limited partnerships owning 22 multifamily apartment properties,
and (c) general partnership interests in and loans to limited partnerships
owning 12 multifamily apartment properties, and the related issuance of AIMCO
Common Stock and Partnership Common Units of AIMCO Properties, L.P., and the
incurrence
4
<PAGE>
of indebtedness to finance such acquisitions, and the refinancing of such
indebtedness (the "1996 Acquisitions"); (xxi) the Winthrop Acquisition;
(xxii) the Company's disposition of four multifamily apartment properties in
1996 (the "1996 Dispositions"); (xxiii) the 1997 Dispositions; and (xxiv) the
Company's purchase of a management company in the third quarter of 1996 (the
"Management Company Acquisition"). The July 1997 Stock Sale has no impact on
the Pro Forma Statement of Operations.
The following unaudited Pro Forma Consolidated Statement of Operations
(Pre-Merger) of AIMCO for the six months ended June 30, 1997 is based on the
unaudited historical financial statements of AIMCO and has been prepared as
if each of the following transactions had occurred as of January 1, 1996: (i)
the Initial NHP Stock Purchase and the ANHI Stock Transfers; (ii) the NHP
Real Estate Acquisition; (iii) the Recent Property Acquisitions; (iv) the
February 1997 Stock Offering; (v) the May 1997 Stock Offering; (vi) the
Preferred Stock Offering; (vii) the August 1997 Stock Offering; (viii) the
September 1997 Stock Offerings; (ix) the ANHI Dividend; (x) the Ambassador
Stock Acquisition; (xi) the Subsequent NHP Stock Purchase; (xii) the Loan
Acquisitions; (xiii) the Land Lease Acquisitions; (xiv) the Property Loan
Payment; (xv) the Sawgrass Acquisition; (xvi) the Morton Towers Acquisition;
(xvii) the Los Arboles Acquisition; (xviii) the Winthrop Acquisition; and
(xix) the 1997 Dispositions. The July 1997 Stock Sale has no impact on the
Pro Forma Statement of Operations.
The following Pro Forma Financial Information (Pre-Merger) is based, in
part, on the following historical financial statements, which have been
previously filed by AIMCO: (i) the Consolidated Financial Statements of AIMCO
for the year ended December 31, 1996 and the six months ended June 30, 1997;
(ii) the restated Consolidated Financial Statements of NHP for the year ended
December 31, 1996 (which have been restated to reflect WMF as a discontinued
operation as a result of the Rights Distribution) and for the six months
ended June 30, 1997; (iii) the Combined Financial Statements of the NHP Real
Estate Companies for the year ended December 31, 1996 and the three months
ended March 31, 1997; (iv) the Financial Statements of NHP Southwest
Partners, L.P. for the year ended December 31, 1996 and the three months
ended March 31, 1997; (v) the Combined Financial Statements of the NHP New LP
Entities for the year ended December 31, 1996 and the three months ended
March 31, 1997; (vi) the Combined Financial Statements of the NHP Borrower
Entities for the year ended December 31, 1996 and the three months ended
March 31, 1997; (vii) the Historical Summary of Gross Income and Certain
Expenses of The Bay Club at Aventura for the year ended December 31, 1996 and
the three months ended March 31, 1997; and (viii) the Historical Summary of
Gross Income and Direct Operating Expenses of Morton Towers for the year
ended December 31, 1996 and the six months ended June 30, 1997. The following
Pro Forma Financial Information (Pre-Merger) is also based on the Combined
Statement of Revenues and Certain Expenses of the Thirty-five Acquisition
Properties for the year ended December 31, 1996 and the six months ended
June 30, 1997, which is filed with AIMCO's Current Report on Form 8-K, dated
October 15, 1997, to which this Pro Forma Financial Information is an
exhibit. The following Pro Forma Financial Information (Pre-Merger) should be
read in conjunction with such financial statements and the notes thereto. In
the opinion of AIMCO's management, all material adjustments necessary to
reflect the effects of these transactions have been made.
The following unaudited Pro Forma Financial Information (Pre-Merger) has
been prepared using the purchase method of accounting whereby the assets and
liabilities of NHP are adjusted to estimated fair market value, based upon
preliminary estimates, which are subject to change as additional information
is obtained. The allocations of purchase costs are subject to final
determination based upon estimates and other evaluations of fair market
value. Therefore, the allocations reflected in the following unaudited Pro
Forma Financial Information (Pre-Merger) may differ from the amounts
ultimately determined.
The following unaudited Pro Forma Financial Information (Pre-Merger) is
presented for informational purposes only and is not necessarily indicative
of the financial position or results of operations of AIMCO that would have
occurred if such transactions had been completed on the dates indicated, nor
does it purport to be indicative of future financial positions or results of
operations. In the opinion of AIMCO's management, all material adjustments
necessary to reflect the effects of these transactions have been made. The
unaudited Pro Forma Consolidated Statement of Operations (Pre-Merger) of
AIMCO for the six months ended June 30, 1997 is not necessarily indicative of
the results of operations to be expected for the year ending December 31,
1997.
5
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (PRE-MERGER)
AS OF JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
AIMCO STOCK PROPERTY WINTHROP PROPERTY PRO FORMA
HISTORICAL(A) OFFERINGS(B) ACQUISITIONS(C) ACQUISITION(D) DISPOSITIONS(E) TOTAL
------------ ----------- --------------- -------------- --------------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Real estate.............................. $ 945,969 $ -- 12,460(K) $ 261,500 $ -- $1,304,185
9,724(L)
12,462(M)
62,070(N)
Real estate held for sale................ 25,945 -- -- (19,072) 6,873
Investments in and notes receivable from
real estate partnerships............... 151,547 -- 24,000(O) -- 175,547
Investment in and notes receivable from
Unconsolidated Subsidiaries............ 57,231 (38,000)(F) 225(P) -- 19,456(S)
Investment in NHP Common Stock........... -- 74,340(G) -- --
48,681(H) 123,021
Cash and cash equivalents................ 21,521 -- -- -- 21,521
Restricted cash.......................... 17,963 -- -- (812) 17,151
Investment in management contracts....... 10,480 -- -- -- 10,480
Accounts receivable...................... 18,870 -- 767(N) (26) 19,611
Deferred financing costs................. 7,184 -- 858(L) 1,266 -- 9,308
Other assets............................. 16,180 -- (225)(P) (75)
57(N)
19,881(Q) 35,818
------------ ----------- --------------- -------------- --------------- ----------
$1,272,890 $ 85,021 $ 142,279 $ 262,766 $ (19,985) $1,742,971
------------ ----------- --------------- -------------- --------------- ----------
------------ ----------- --------------- -------------- --------------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured long-term notes payable.......... $ 464,780 $ -- $ (28,703)(O) $ 8,345 $ -- $ 436,882
(7,540)(R)
Secured short-term financing............. 71,878 (71,878)(I) 52,703(O) 254,421 (9,869) 291,724
(35,462)(H) 7,540(R)
(38,000)(F) 12,460(K)
10,582(L)
12,462(M)
5,006(N)
19,881(Q)
Secured long-term tax-exempt bond
financing.............................. 74,799 -- -- -- -- 74,799
Unsecured short-term financing........... 33,000 -- -- -- -- 33,000
Accrued management contract liability.... 106,615 -- -- -- -- 106,615
Accounts payable, accrued and other
liabilities............................ 56,997 (2,222)(I) 877(N) -- (7,423) 48,229
Resident security deposits and prepaid
rents.................................. 6,353 -- 2,255(N) -- (28) 8,580
------------ ----------- --------------- -------------- --------------- ----------
814,422 (147,562) 87,523 262,766 (17,320) 999,829
------------ ----------- --------------- -------------- --------------- ----------
Minority interest in other partnerships and
corporations........................... 6,625 -- 12,726(N) -- -- 19,351
Minority interest in Operating
Partnership............................ 63,366 -- 42,030(N) -- -- 105,396
Class B Preferred Stock ($.01 par value). -- 75,000(I) -- -- -- 75,000
Class A Common Stock ($.01 par value).... 221 11(J) -- -- --
24(G)
27(H) 283
Class B Common Stock ($.01 par value).... 3 -- -- -- -- 3
Additional paid-in capital............... 417,487 (900)(I) -- -- --
32,989(J)
74,316(G)
84,116(H) 608,008
Notes due on common stock purchases...... (7,603) (33,000)(J) -- -- -- (40,603)
Retained earnings (distributions in excess
of earnings)........................... (21,631) -- -- -- (2,665) (24,296)
------------ ----------- --------------- -------------- --------------- ----------
388,477 232,583 -- -- (2,665) 618,395
------------ ----------- --------------- -------------- --------------- ----------
$1,272,890 $ 85,021 $ 142,279 $ 262,766 $ (19,985) $1,742,971
------------ ----------- --------------- -------------- --------------- ----------
------------ ----------- --------------- -------------- --------------- ----------
</TABLE>
6
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (PRE-MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's unaudited condensed consolidated financial position as of
June 30, 1997, which includes the acquisition of the NHP Real Estate
Companies (including the NHP Real Estate Reorganization) and the Initial
NHP Stock Purchase.
(B) Represents adjustments to reflect (i) the July 1997 Stock Sale; (ii) the
Preferred Stock Offering; (iii) the August 1997 Stock Offering; (iv) the
September 1997 Stock Offerings; (v) the Ambassador Stock Acquisition;
(vi) the Subsequent NHP Stock Purchase; and (vii) the ANHI Dividend.
(C) Represents adjustments to reflect (i) the Loan Acquisitions; (ii) the Land
Lease Acquisitions; (iii) the Property Loan Payment; (iv) the Sawgrass
Acquisition; (v) the Morton Towers Acquisition; and (vi) the Los Arboles
Acquisition.
(D) Represents adjustments for the Winthrop Acquisition, with a purchase
price of $261,500, including $8,000 related to closing costs. AIMCO will
assume a mortgage loan in the amount of $8,345, which bears interest at a
rate of 10.04% and matures on April 1, 2002. In addition, AIMCO will finance
the remainder of the purchase price of $254,421, including $1,266 in
deferred financing costs, which will bear interest at a variable rate of
LIBOR plus 2.00% and matures in two years.
(E) Represents adjustments to reflect the 1997 Dispositions comprised of five
properties containing 916 apartment units.
(F) Represents adjustments for the ANHI Dividend, which was used to reduce
amounts outstanding under secured short-term financing.
(G) Represents the issuance of 2,400,000 shares of AIMCO Common Stock in the
August 1997 Stock Offering, resulting in net proceeds of $74,340, and the
application of such net proceeds to purchase 3,717,000 shares of NHP
Common Stock from ANHI.
(H) Represents the issuance of 2,652,418 shares of AIMCO Common Stock in the
September 1997 Stock Offerings, resulting in net proceeds of $82,502, and
the application of such net proceeds to purchase 2,000,000 shares of
NHP Common Stock from ANHI, to effect the Subsequent NHP Stock Purchase and
to reduce amounts outstanding under secured short-term financing. Also
represents adjustments for the 61,364 shares of AIMCO Common Stock issued
in connection with the Subsequent NHP Stock Purchase with a value of $1,641.
(I) Represents the issuance of 750,000 shares of AIMCO Class B Preferred Stock
at $100 per share; the payment of transaction costs of $900 incurred in the
Preferred Stock Offering and the repayment of $71,878 of secured short-term
financing and the payment of accrued liabilities of $2,222 with the net
proceeds of the Preferred Stock Offering.
(J) Represents the issuance of 1,100,000 shares of AIMCO Common Stock in the
July 1997 Stock Sale and the notes receivable from officers financing such
sale of $33,000, which are reflected as a reduction of shareholders' equity
until actually paid.
(K) Represents adjustments for the Land Lease Acquisitions, which were financed
with secured short-term financing.
(L) Represents adjustments for the Sawgrass Acquisition, which was financed with
new secured short-term financing, for which deferred loan costs of $858 were
incurred.
(M) Represents adjustments for the Los Arboles Acquisition, which was financed
with secured short-term financing.
(N) Represents adjustments for the Morton Towers Acquisition, which was financed
with secured short-term financing and issuance of 1.4 million OP Units
valued at $42,030.
(O) Represents adjustments for the Loan Acquisitions, which were financed with
secured short-term financing. The general partner loans from AIMCO to two
of the real estate partnerships totaling $28,703 are eliminated upon
consolidation of the real estate partnerships into AIMCO's financial
statements.
(P) Represents the reclassification of the investment in one of the
Unconsolidated Subsidiaries from other assets to investment in and notes
receivable from Unconsolidated Subsidiaries.
7
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (PRE-MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(Q) Represents adjustments for the Ambassador Stock Acquisition.
(R) Represents adjustments for the Property Loan Payment, which was financed
with borrowings of secured short-term financing.
(S) Amount represents investment in preferred stock of the Unconsolidated
Subsidiaries of $19,546 and retained earnings of $(90). The combined Pro
Forma Balance Sheet (Pre-Merger) of the Unconsolidated Subsidiaries as of
June 30, 1997 is presented below. At June 30, 1997, the Unconsolidated
Subsidiaries include (i) ANHI, which owned 51.3% of the outstanding shares
of NHP Common Stock prior to the ANHI Stock Transfers, and (ii) an
Unconsolidated Subsidiary which owns the general partnership interest, and
therefore controls, one real estate partnership, owning fourteen real estate
properties with 2,725 apartment units. Interests held by limited partners in
the real estate partnerships controlled by the Unconsolidated Subsidiary are
reflected as minority interest in consolidated partnerships.
<TABLE>
<CAPTION>
ADJUSTMENTS
-----------------------------
HISTORICAL ANHI STOCK UNCONSOLIDATE PRO FORMA
(i) TRANSFERS (ii) NHP (iii) TOTAL (vi)
------------ -------------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Real estate............................................................ $ 143,638 $ -- $ (97,745) $ 45,893
Investment in NHP Common Stock......................................... -- (74,340)(iv) 129,831 15,491
(40,000)(v)
Cash and cash equivalents.............................................. 3,280 1,740 (iv) (2,040) 4,980
2,000 (v)
Restricted cash........................................................ 2,979 -- (2,218) 761
Investment in management contracts..................................... 101,661 -- (101,537) 124
Goodwill............................................................... 87,388 -- (87,388) --
Deferred financing costs............................................... 4,718 -- (4,124) 594
Other assets........................................................... 61,480 -- (61,127) 353
------------ -------------- ------------- -----------
$ 405,144 $ (110,600) $ (226,348) $ 68,196
------------ -------------- ------------- -----------
------------ -------------- ------------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable....................................... $ 96,481 $ -- $ (71,005) $ 25,476
Secured short-term financing........................................... 72,600 (72,600)(iv) -- --
Unsecured short-term financing......................................... 71,145 -- (71,145) --
Accounts payable and other liabilities................................. 37,729 -- (36,739) 990
Deferred tax liability................................................. 10,124 -- (10,124) --
------------ -------------- ------------- -----------
288,079 (72,600) (189,013) 26,466
Minority interest in consolidated partnerships......................... 59,609 -- (37,335) 22,274
Preferred Stock........................................................ 57,546 (38,000)(v) -- 19,546
Common Stock........................................................... -- 2,000 (v) -- 2,000
Retained earnings...................................................... (90) (2,000)(v) -- (2,090)
------------ -------------- ------------- -----------
57,456 (38,000) -- 19,456
------------ -------------- ------------- -----------
$ 405,144 $ (110,600) $ (226,348) $ 68,196
------------ -------------- ------------- -----------
------------ -------------- ------------- -----------
</TABLE>
- ------------------------------
(i) Represents the combined unaudited Unconsolidated Subsidiaries'
consolidated financial position as of June 30, 1997.
(ii) Represents the sale of 5,717,000 shares of NHP Common Stock to AIMCO for
$114,340 and the use of proceeds from the sales.
(iii) Represents the adjustments to ANHI's balance sheet to reflect the
reduction in ownership of NHP Common Stock from 51.3% to 6.03% following
the ANHI Stock Transfers. As a result of the sales of such shares of NHP
Common Stock to AIMCO, ANHI's investment in NHP Common Stock is accounted
for on the equity method.
(iv) Represents the sale of 3,717,000 shares of NHP Common Stock to AIMCO for
$74,340 and the repayment of the ANHI Credit Facility of $72,600 and the
receipt of cash of $1,740 with the proceeds from the sale.
(v) Represents the sale of 2,000,000 shares of NHP Common Stock to AIMCO for
$40,000 and the distribution of such proceeds to the stockholders of ANHI.
The holders of the common stock of ANHI used the distribution of $2,000 to
make a payment on the note receivable to ANHI for the such common stock.
(vi) The pre-Merger pro forma total for the Unconsolidated Subsidiaries
represents the investment in NHP Common Stock of 6.03% and the
consolidated financial position of one real estate partnership owning
fourteen real estate properties containing 2,725 apartment units in which
the Unconsolidated Subsidiaries own the 1% general partnership interest.
8
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
------------------------------------------------------------------
NHP REAL
AIMCO ESTATE NHP REAL ESTATE NHP STOCK WINTHROP PRO FORMA
HISTORICAL(A) ADJUSTMENTS(B) COMPANIES(C) ACQUISITION(D) PURCHASE(E) ACQUISITION(F) TOTAL
---------- -------------- ------------ --------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property
revenues.................... $ 100,516 $ 73,744(G) $ 29,243 $(13,391)(O) $-- $ 48,771(T) $ 238,883
Property operating expenses... (38,400) (41,419)(G) (18,125) 9,286(O) -- (21,896)(T) (110,554)
Owned property management
expense..................... (2,746) (2,552)(G) (1,293) 635(O) -- (2,313)(T) (8,269)
---------- -------------- ------------ --------------- ----------- ----------- ---------
Income from property
operations before
depreciation................ 59,370 29,773 9,825 (3,470) -- 24,562 120,060
Depreciation.................. (19,556) (14,202)(G) (3,904) 996(O) -- (9,153)(T) (45,819)
---------- -------------- ------------ --------------- ----------- ----------- ---------
Income from property
operations.................. 39,814 15,571 5,921 (2,474) -- 15,409 74,241
---------- -------------- ------------ --------------- ----------- ----------- ---------
SERVICE COMPANY BUSINESS
Management fees and other
income...................... 8,367 1,962(H) 7,173(N) -- -- -- 17,502
Management and other
expenses.................... (5,352) (1,254)(H) (8,210)(N) 1,254(P) -- -- (13,562)
Corporate overhead
allocation.................. (590) -- -- -- -- -- (590)
Amortization of management
contracts and depreciation
and amortization of other
assets...................... (718) (508)(I) -- -- -- -- (1,226)
---------- -------------- ------------ --------------- ----------- ----------- ---------
1,707 200 (1,037) 1,254 -- -- 2,124
Minority interest in service
company business............ 10 -- -- -- -- -- 10
---------- -------------- ------------ --------------- ----------- ----------- ---------
Company's share of income from
service company business.... 1,717 200 (1,037) 1,254 -- -- 2,134
---------- -------------- ------------ --------------- ----------- ----------- ---------
General and administrative
expense..................... (1,512) -- -- -- -- -- (1,512)
Interest expense.............. (24,802) (8,169)(J) (10,400) (1,578)(Q) -- (20,527)(U) (65,476)(W)
Interest income............... 523 2,199(K) 2,000 -- -- -- 4,722
---------- -------------- ------------ --------------- ----------- ----------- ---------
Income (loss) before equity in
earnings of unconsolidated
subsidiaries, gain on
disposition of property and
minority interests.......... 15,740 9,801 (3,516) (2,798) -- (5,118) 14,109
Equity in earnings of
unconsolidated
corporations................ -- -- -- -- 5,339(S) -- 5,339(Z)
Equity in losses of
partnerships................ -- 442(L) (5,726) (2,546)(R) -- -- (7,830)
Gain on disposition of
property.................... 44 (44)(G) -- -- -- -- --
---------- -------------- ------------ --------------- ----------- ----------- ---------
Income (loss) before minority
interests................... 15,784 10,199 (9,242) (5,344) 5,339 (5,118) 11,618
Minority interest in other
partnerships................ (111) 2,523(M) -- 254(O) -- -- 2,666
---------- -------------- ------------ --------------- ----------- ----------- ---------
Income (loss) before minority
interest in Operating
Partnership................. 15,673 12,722 (9,242) (5,090) 5,339 (5,118) 14,284
Minority interest in Operating
Partnership................. (2,689) (2,490)(V) -- -- 2,217(V) 909(V) (2,053)
---------- -------------- ------------ --------------- ----------- ----------- ---------
Net income (loss)............. $ 12,984 $ 10,232 $ (9,242) $ (5,090) $7,556 $ (4,209) $ 12,231
---------- -------------- ------------ --------------- ----------- ----------- ---------
---------- -------------- ------------ --------------- ----------- ----------- ---------
Net income allocable to
preferred stockholders...... $ -- $ 5,344(X)
---------- ---------
---------- ---------
Net income allocable to common
stockholders................ $ 12,984 $ 6,887
---------- ---------
---------- ---------
Net income per common
share(Y).................... $ 1.04 $ 0.26
---------- ---------
---------- ---------
Weighted average number of
common shares and common
share equivalents
outstanding................. 12,427 $ 26,592
---------- ---------
---------- ---------
</TABLE>
- --------------------------
(A) Represents AIMCO's audited consolidated results of operations for the year
ended December 31, 1996.
9
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(B) Represents adjustments to reflect the following as if they had occurred on
January 1, 1996: (i) the Recent Property Acquisitions; (ii) the November
1996 Stock Offering; (iii) the February 1997 Stock Offering; (iv) the May
1997 Stock Offering; (v) the August 1997 Stock Offering; (vi) the Preferred
Stock Offering; (vii) the September 1997 Stock Offerings; (viii) the ANHI
Dividend; (ix) the Ambassador Stock Acquisition; (x) the Subsequent NHP
Stock Purchase; (xi) the Loan Acquisitions; (xii) the Land Lease
Acquisitions; (xiii) the Property Loan Payment; (xiv) the Sawgrass
Acquisition; (xv) the Morton Towers Acquisition; (xvi) the Los Arboles
Acquisition; (xvii) the 1997 Dispositions; (xviii) the 1996 Acquisitions;
(xix) the 1996 Dispositions; and (xx) the Management Company Acquisition.
(C) Represents the audited historical combined results of operations of the NHP
Real Estate Companies for the year ended December 31, 1996, excluding gain
on disposition of real estate investments.
(D) Represents the adjustment to reflect the acquisition of the NHP Real
Estate Companies as if it had occurred on January 1, 1996. The
historical financial statements of the NHP Real Estate Companies
consolidate certain real estate partnerships in which they have an
interest that will be presented on the equity method by AIMCO, as a
result of the NHP Real Estate Reorganization. If AIMCO is not in a
position to control the partnership or the real estate assets owned by
any partnership in which it has an interest, such partnership is not
consolidated. Factors which preclude control include, but are not
limited to, not controlling a majority of the general partner interest,
and not owning sufficient interest to control the partnership when there
exists the presence of significant limited partner rights, including the
right to vote on a sale of real estate owned by the partnership or the
refinancing of debt. As a part of the NHP Real Estate Reorganization,
AIMCO transferred its ownership interests in certain partnerships to an
unconsolidated subsidiary or partnership in which AIMCO does not
exercise control; therefore, AIMCO does not consolidate such
partnerships. In addition, represents adjustments to record additional
depreciation and amortization related to the increased basis in the
assets of the NHP Real Estate Companies as a result of the allocation of
the purchase price of the NHP Real Estate Companies and additional
interest expense incurred in connection with borrowings incurred by
AIMCO to consummate the NHP Real Estate Acquisition.
(E) Represents AIMCO's equity in earnings of the Unconsolidated
Subsidiaries, assuming the NHP Stock Purchases occurred on January 1,
1996. AIMCO owns 5,717,000 shares of NHP Common Stock (representing
47.62% of the shares outstanding as of June 30, 1997), and the Operating
Partnership owns a 95% economic interest in ANHI, which owns 779,073
shares of NHP Common Stock (representing 6.03% of such outstanding
shares as of June 30, 1997).
(F) Represents adjustments to reflect the Winthrop Acquisition as if it had
occurred on January 1, 1996.
(G) Represents the pro forma operating results of the 1996 Acquisitions, the
Recent Property Acquisitions, the Sawgrass Acquisition, the Morton Towers
Acquisition, and the Los Arboles Acquisition less the operating results for
the 1996 Dispositions and the 1997 Dispositions. These pro forma
operating results are based on historical results of the properties, except
depreciation, which is based on AIMCO's investment in the properties.
(H) Represents the pro forma operating results of the management companies
acquired by AIMCO since January 1, 1996. These pro forma operating results
are based on historical results of the management companies; however, they
have been adjusted to eliminate management fee income earned by the
respective management companies from the properties which are consolidated.
(I) Represents amortization of the intangible assets related to management
contracts acquired in the Management Company Acquisition. Management
contracts are amortized using the straight-line method over the terms of the
related management contracts.
10
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(J) Represents adjustments to interest expense for the following:
<TABLE>
<S> <C>
Borrowings on AIMCO's Credit Facility and other loans and mortgages
assumed in connection with the 1996 Acquisitions........................ $ (16,887)
Borrowings on AIMCO's Credit Facility and other loans and mortgages
assumed in connection with the Recent Property Acquisitions............. (8,192)
Borrowings on AIMCO's new secured short-term financing in connection with
the Sawgrass Acquisition................................................ (898)
Borrowings on AIMCO's Credit Facility in connection with the Los Arboles
Acquisition............................................................. (897)
Borrowings on AIMCO's Credit Facility in connection with the Morton Towers
Acquisition............................................................. (360)
Borrowings on AIMCO's Credit Facility in connection with the Land Lease
Acquisitions............................................................ (1,440)
Borrowings on AIMCO's Credit Facility in connection with the Loan
Acquisitions............................................................ (3,795)
Borrowings on AIMCO's Credit Facility in connection with the Ambassador
Stock Acquisition....................................................... (1,431)
Reduction in interest for the payment of loans in connection with the Loan
Acquisitions and the Property Loan Payment.............................. 3,327
Repayments on AIMCO's Credit Facility and other indebtedness with proceeds
from the 1996 Dispositions, the 1997 Dispositions, the November
1996 Stock Offering, the February 1997 Stock Offering, the May 1997
Stock Offering, the Preferred Stock Offering, and the September 1997
Stock Offerings......................................................... 19,669
Repayments on AIMCO's Credit Facility with proceeds from the ANHI
Dividend................................................................ 2,735
---------
$ (8,169)
---------
---------
</TABLE>
(K) Represents adjustment to interest income in connection with the Loan
Acquisitions. Interest income is eliminated upon consolidation for two of
the loans purchased. In addition, interest income of $442, related to a loan
with a real estate partnership accounted for on the equity method in which
AIMCO has a 16.72% ownership interest, has been eliminated against equity in
losses of partnerships.
(L) Represents adjustment to eliminate interest expense on the portion of the
general partner loan owned by AIMCO on one of the real estate partnerships
as a result of the Loan Acquisitions.
(M) Represents the minority interest in consolidated real estate partnerships.
(N) Represents revenues and expenses from ancillary businesses purchased from
the NHP Real Estate Companies.
(O) Represents adjustments to present the net historical operations of certain
real estate partnerships on the equity method that were previously
consolidated by the NHP Real Estate Companies.
(P) Represents a reduction in personnel costs pursuant to a restructuring plan,
approved by AIMCO senior management, assuming that the acquisition of the
NHP Real Estate Companies had occurred on January 1, 1996 and that the
restructuring plan was completed on January 1, 1996. The restructuring plan
specifically identifies all significant actions to be taken to complete the
restructuring plan, including the reduction of personnel, job functions,
location and the date of completion.
11
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(Q) Represents (i) interest of $4,016 related to borrowings on AIMCO's Credit
Facility of $55,807 to finance the NHP Real Estate Acquisition; offset by
(ii) a decrease in interest of $2,438 related to the presentation of certain
real estate partnerships on the equity method.
(R) Represents (i) adjustments of $1,208 related to the presentation of certain
real estate partnerships on the equity method that were previously
consolidated by the NHP Real Estate Companies as a result of the NHP Real
Estate Reorganization; and (ii) adjustments of $1,338 representing
amortization of the increased basis in investments in real estate
partnerships, as a result of the allocation of the combined purchase price
of NHP and the NHP Real Estate Companies, based on an estimated average life
of 17.5 years.
(S) Represents adjustments as if the NHP Stock Purchase and the ANHI Stock
Transfers occurred on January 1, 1996, resulting in (i) AIMCO's equity in
earnings of the Unconsolidated Subsidiaries' operating results of $355,
primarily representing 6.03% of NHP's results of operations; and (ii)
AIMCO's equity in earnings of $4,984 for its 47.62% interest in NHP.
(T) Represents the pro forma operating results of the Winthrop Acquisition as
if it had occurred on January 1, 1996. These pro forma operating results
are based on historical results of the properties, except depreciation,
which is based on AIMCO's investment in the properties.
(U) Represents (i) interest of $842 related to the mortgage assumed in
connection with the Winthrop Acquisition at an interest rate of 10.04%;
(ii) interest of $19,052 related to the borrowings for the Winthrop
Acquisition at an interest rate of LIBOR plus 2.00%; and (iii)
amortization of deferred financing costs of $633 related to the
borrowings for the Winthrop Acquisition.
(V) Represents adjustments to minority interest in the Operating Partnership
assuming the Recent Property Acquisitions, the November 1996 Stock
Offering, the February 1997 Stock Offering, the May 1997 Stock Offering,
the July 1997 Stock Sale, the Preferred Stock Offering, the August 1997
Stock Offering, the September 1997 Stock Offerings, the ANHI Dividend,
the Ambassador Stock Acquisition, the Loan Acquisitions, the Land Lease
Acquisitions, the Property Loan Payment, the Sawgrass Acquisition, the
Morton Towers Acquisition, the Los Arboles Acquisition, the 1996
Acquisitions, the 1996 Dispositions, the 1997 Dispositions, the Management
Company Acquisition, the NHP Stock Purchase, the NHP Real Estate
Acquisition, and the Winthrop Acquisition had occurred as of January 1,
1996. On a pro forma basis, without giving effect to the NHP Stock
Purchase and the NHP Real Estate Acquisition, as of December 31, 1996, the
minority interest percentage is approximately 18.24%. On a pro forma
basis, giving effect to the NHP Stock Purchase and the NHP Real Estate
Acquisition, as of December 31, 1996, the minority interest percentage is
approximately 17.75%.
(W) The pro forma amounts presented assume an average interest rate of 7.88%
per annum (on floating rate debt, representing LIBOR plus 1.45% on AIMCO's
Credit Facility) on outstanding debt obligations with a weighted average
term of 8.34 years. An increase of 0.25% in the interest rate would
increase pro forma interest expense to $66,715, decrease net income
applicable to common shareholders to $5,867 and decrease net income per
common share to $0.22.
(X) Represents net income allocable to holders of the AIMCO Class B Preferred
Stock as if the Preferred Stock Offering had occurred on January 1, 1996.
(Y) In February 1997, the Financial Accounting Standards Board issued Statement
128 which specifies the computation, presentation and disclosure
requirements for basic earnings per share and diluted earnings per share.
AIMCO's management believes that adoption of Statement 128 will not have a
material effect on the earnings per share of AIMCO.
12
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(Z) Amount represents (i) AIMCO's equity in earnings of the
Unconsolidated Subsidiaries' operating results of $355, detailed below;
and (ii) AIMCO's equity in earnings of $4,984 for its 47.62% interest
in NHP. The combined Pro Forma Statement of Operations (Pre-Merger) of
the Unconsolidated Subsidiaries for the year ended December 31, 1996 is
presented below, which is based on a series of transactions, including
(i) the Initial NHP Stock Purchase, resulting in ANHI owning 51.3% of
NHP, (ii) the ANHI Stock Transfers, resulting in ANHI owning 6.03% of
NHP, and the (iii) contribution, from AIMCO to one of the
Unconsolidated Subsidiaries, of the general partnership interest, and
therefore controlling interest, in one real estate partnership (the
"Consolidated Real Estate Partnership"), owning fourteen real estate
properties with 2,725 apartment units. Interests held by limited
partners in the real estate partnerships controlled by the
Unconsolidated Subsidiary are reflected as minority interest in
consolidated partnerships.
<TABLE>
<CAPTION>
CONTRIBUTE
NHP STOCK NHP ANHI STOCK REAL PRO FORMA
PURCHASE(i) HISTORICAL(ii) ADJUSTMENTS(iii) TRANSFERS(iv) ESTATE(v) TOTAL
----------- ------------ --------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues... $ -- $ -- $ 11,002 (vi) $ (11,002) $ 12,777 $ 12,777
Property operating expenses.......... -- -- (5,937)(vi) 5,937 (8,665) (8,665)
Owned property management expense.... -- -- (853)(vi) 853 (613) (613)
----------- ------------ --------------- ------------ ----------- -----------
Income from property operations
before depreciation................ -- -- 4,212 (4,212) 3,499 3,499
Depreciation......................... -- -- (3,108)(vi) 3,108 (1,606) (1,606)
----------- ------------ --------------- ------------ ----------- -----------
Income from property operations...... -- -- 1,104 (1,104) 1,893 1,893
----------- ------------ --------------- ------------ ----------- -----------
Management fees and other income..... -- 194,979 (127,266)(vii) (67,713) -- --
Management and other expenses........ -- (153,907) 127,266 (vii) 16,987 --
9,654 (viii) --
Amortization of management contracts
and goodwill and depreciation and
amortization of other assets....... -- (6,321) (3,660)(ix) 9,981 (41) (41)
----------- ------------ --------------- ------------ ----------- -----------
-- 34,751 5,994 (40,745) (41) (41)
----------- ------------ --------------- ------------ ----------- -----------
General and administrative........... -- (14,074) -- 14,074 -- --
Interest expense..................... (5,932) (3,982) (4,082)(vi) 13,996 (2,640) (2,640)
Interest income...................... -- 747 -- (747) -- --
----------- ------------ --------------- ------------ ----------- -----------
Income before income taxes, equity in
earnings and minority interests.... (5,932) 17,442 3,016 (14,526) (788) (788)
Income tax provision................. -- (6,977) (135)(x) 7,112 -- (249)
(249)(xiii)
Equity in earnings of NHP............ -- -- (3,086)(xi) 3,717 (xiv) -- 631
Minority interest in NHP............. -- -- (3,652)(xii) 3,652 -- --
Minority interest in partnerships.... -- -- 11 (vi) (11) 780 780
----------- ------------ --------------- ------------ ----------- -----------
Net income........................... $ (5,932) $ 10,465 $ (3,846) $ (305) $ (8) $ 374
----------- ------------ --------------- ------------ ----------- -----------
----------- ------------ --------------- ------------ ----------- -----------
Income attributable to preferred
stockholder........................ $ 355
-----------
-----------
Income attributable to common
stockholder........................ $ 19
-----------
-----------
</TABLE>
- --------------------------
(i) Represents interest expense related to indebtedness of $72,765 (including
deferred financing costs) incurred pursuant to the ANHI Credit Facility to
finance the cash portion of the Initial NHP Stock Purchase.
(ii) Represents the historical operating results of NHP for the year ended
December 31, 1996, which have been restated to reflect WMF as a
discontinued operation as a result of the Rights Distribution.
(iii) Represents adjustments for the following: (i) operating results of the
real estate held for investment, which was held for sale by NHP; (ii) an
adjustment to offset on-site personnel and general and administrative cost
13
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
reimbursement against the related revenue; (iii) a reduction in
personnel costs pursuant to a restructuring plan; (iv) incremental
depreciation and amortization resulting from stating the tangible
and intangible assets related to the property management and other
businesses operated by ANHI at their respective fair values; (v)
adjustment to the estimated Federal and state tax provisions; and
(vi) the allocation of 48.7% of NHP's income owned by other
stockholders to minority interest.
(iv) Represents the sale of 5,717,000 shares of NHP Common Stock to AIMCO
reducing ANHI's ownership of NHP Common Stock from 51.3% to 6.03%;
therefore, ANHI will account for its investment in NHP on the equity
method.
(v) Represents the results of operations of the Consolidated Real Estate
Partnership as if the contribution of the general partnership interest
from AIMCO to the Unconsolidated Subsidiary had occurred on January 1,
1996.
(vi) Represents the operating results of the real estate held for investment
by AIMCO, which was previously held for sale by NHP.
(vii) Represents an adjustment to offset certain property management costs and
related reimbursements against the related revenue.
(viii) Represents a reduction in personnel costs pursuant to a restructuring
plan, approved by AIMCO senior management, assuming that the acquisition
of NHP had occurred on January 1, 1996 and that the restructuring plan
was completed on January 1, 1996. The restructuring plan specifically
identifies all significant actions to be taken to complete the
restructuring plan, including the reduction of personnel, job functions,
location and the date of completion.
(ix) Represents depreciation and amortization of the tangible and
intangible assets related to the property management and other
businesses operated by ANHI, including amortization of management
contracts of $1,899, depreciation of furniture, fixtures and
equipment of $669, and amortization of goodwill of $4,335, less
ANHI's 51.3% share of NHP's historical depreciation and
amortization of $3,243. Management contracts are amortized using
the straight-line method over the weighted average life of 14.7
years. Furniture, fixtures and equipment are depreciated using the
straight-line method over the estimated life of 5 years. Goodwill
is amortized using the straight-line method over 20 years.
(x) Represents the adjustment to the estimated Federal and state tax
provisions calculated on the operating results of ANHI, excluding
the amortization of goodwill which is not deductible for tax
purposes.
(xi) Represents the equity in earnings of NHP attributable to ANHI's ownership
of 51.3% of the NHP Common Stock outstanding as a result of the Initial
NHP Stock Purchase.
(xii) Represents the share of NHP income attributable to the 48.7% of the NHP
Common Stock owned by other stockholders.
(xiii) Represents the adjustment to the estimated Federal and state tax
provisions calculated on the operating results of ANHI, as adjusted for
the ANHI Stock Transfers.
(xiv) Represents the adjustment for the reduction in equity in earnings of NHP
resulting from the ANHI Stock Transfers, reducing ANHI's investment in
NHP from 51.3% to 6.03% as of January 1, 1996.
14
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
-------------------------------------------------
AIMCO NHP REAL ESTATE NHP STOCK WINTHROP PRO FORMA
HISTORICAL(A) ADJUSTMENTS(B) ACQUISITION(C) PURCHASES(D) ACQUISITION(E) TOTAL
------------- --------------- --------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues.... $ 79,719 $ 11,684(F) $ 6,660(J) $ -- $ 24,711(R) $122,774
Property operating expenses........... (31,160) (5,535)(F) (2,941)(J) -- (10,696)(R) (50,332)
Owned property management expense..... (2,734) (181)(F) (282)(J) -- (1,193)(R) (4,390)
------------- ------- ------- ----- --------- --------
Income from property operations before
depreciation........................ 45,825 5,968 3,437 -- 12,822 68,052
Depreciation.......................... (15,046) (2,630)(F) (1,346)(J) -- (4,576)(R) (23,598)
------------- ------- ------- ----- --------- --------
Income from property operations....... 30,779 3,338 2,091 -- 8,246 44,454
------------- ------- ------- ----- --------- --------
SERVICE COMPANY BUSINESS
Management fees and other income...... 5,605 -- 1,405(K) -- -- 7,010
Management and other expenses......... (2,643) -- (4,878)(K) -- -- (4,906)
2,615(L)
Corporate overhead allocation......... (294) -- -- -- -- (294)
Amortization of management contracts
and depreciation and amortization of
other assets........................ (635) -- -- -- -- (635)
------------- ------- ------- ----- --------- --------
2,033 -- (858) -- -- 1,175
------------- ------- ------- ----- --------- --------
Minority interest in service company
business............................ (2) -- -- -- -- (2)
------------- ------- ------- ----- --------- --------
Company's share of income from service
company business.................... 2,031 -- (858) -- -- 1,173
------------- ------- ------- ----- --------- --------
General and administrative expense.... (784) -- -- -- -- (784)
Interest expense...................... (20,604) 2,329(G) (3,391)(J) -- (10,514)(S)
(1,631)(M) (33,811)(U)
Interest income....................... 1,341 1,099(H) 540(K) -- -- 2,980
------------- ------- ------- ----- --------- --------
Income (loss) before equity in
earnings of unconsolidated
subsidiaries and minority
interests........................... 12,763 6,766 (3,249) -- (2,268) 14,072
Equity in earnings of unconsolidated
corporations........................ (86) -- -- 86(O) --
40(P)
571(Q) 611(X)
Equity in losses of partnerships...... (379) 221(I) (2,664)(J) -- --
(558)(N) (3,380)
------------- ------- ------- ----- --------- --------
Income (loss) before minority
interests........................... 12,298 6,987 (6,471) 697 (2,268) 11,243
Minority interest in other
partnerships........................ (565) (239) 16(J) -- -- (788)
------------- ------- ------- ----- --------- --------
Income (loss) before minority interest
in Operating Partnership............ 11,733 6,748 (6,455) 697 (2,268) 10,455
Minority interest in Operating
Partnership......................... (1,616) (1,319) 899(T) (20)(T) 351(T) (1,705)
------------- ------- ------- ----- --------- --------
Net income (loss)..................... $ 10,117 $ 5,429 $ (5,556) $ 677 $ (1,917) $ 8,750
------------- ------- ------- ----- --------- --------
------------- ------- ------- ----- --------- --------
Net income allocable to preferred
stockholder......................... $ -- $ 2,672(V)
------------- --------
------------- --------
Net income allocable to common
stockholders........................ $ 10,117 $ 6,078
------------- --------
------------- --------
Net income per common share (W)....... $ 0.55 $ 0.21
------------- --------
------------- --------
Weighted average number of common
shares and common share equivalents
outstanding......................... 18,559 $ 28,281
------------- --------
------------- --------
</TABLE>
15
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's unaudited consolidated results of operations for the six
months ended June 30, 1997.
(B) Represents adjustments to reflect the following as if they had occurred on
January 1, 1996: (i) the Recent Property Acquisitions; (ii) the February
1997 Stock Offering; (iii) the May 1997 Stock Offering; (iv) the Preferred
Stock Offering (v) the September 1997 Stock Offerings; (vi) the ANHI
Dividend; (vii) the Ambassador Stock Acquisition; (viii) the Subsequent
NHP Stock Purchase; (ix) the Loan Acquisitions; (x) the Land Lease
Acquisitions; (xi) the Property Loan Payment; (xii) the Sawgrass
Acquisition; (xiii) the Morton Towers Acquisition; (xiv) the Los Arboles
Acquisition; and (xv) the 1997 Dispositions.
(C) Represents the adjustment to reflect the acquisition of the NHP Real
Estate Companies as if it had occurred on January 1, 1996. The
historical financial statements of the NHP Real Estate Companies
consolidate certain real estate partnerships in which they have an
interest that will be presented on the equity method by AIMCO as a
result of the NHP Real Estate Reorganization. If AIMCO is not in a
position to control the partnership or the real estate assets owned by
any partnership in which it has an interest, such partnership is not
consolidated. Factors which preclude control include, but are not
limited to, not controlling a majority of the general partner interest,
and not owning sufficient interest to control the partnership when there
exists the presence of significant limited partner rights, including the
right to vote on a sale of real estate owned by the partnership or the
refinancing of debt. As part of the NHP Real Estate Reorganization,
AIMCO transferred its ownership interests in certain partnerships to an
unconsolidated subsidiary or partnership in which AIMCO does not
exercise control; therefore, AIMCO does not consolidate such
partnerships. In addition, represents adjustments to record additional
depreciation and amortization related to the increased basis in the
assets of the NHP Real Estate Companies as a result of the allocation of
the purchase price of the NHP Real Estate Companies and additional
interest expense incurred in connection with borrowings incurred by
AIMCO to consummate the NHP Real Estate Acquisition.
(D) Represents the adjustment to reflect AIMCO's purchase of the 5,717,000
shares of NHP Common Stock from ANHI with the proceeds from the August 1997
Stock Offering and the September 1997 Stock Offerings as if they had
occurred on January 1, 1996 and the corresponding adjustments to the equity
in earnings of the Unconsolidated Subsidiaries.
(E) Represents adjustments to reflect the Winthrop Acquisition as if it had
occurred on January 1, 1996.
(F) Represents adjustments to reflect the Recent Property Acquisitions the
Sawgrass Acquisition, the Morton Towers Acquisition, and the Los Arboles
Acquisition, less the 1997 Dispositions as if they had occurred on
January 1, 1996. These pro forma operating results are based on historical
results of the properties, except for depreciation, which is based on
AIMCO's investment in the properties.
16
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(G) Represents adjustments to interest expense for the following:
<TABLE>
<S> <C>
Borrowings on AIMCO's Credit Facility and other loans and mortgages assumed
in connection with the Recent Property Acquisitions...................... $ (2,961)
Borrowings on AIMCO's new secured short-term financing in connection with
the Sawgrass Acquisition................................................. (458)
Borrowings on AIMCO's Credit Facility in connection with the Los Arboles
Acquisition.............................................................. (443)
Borrowings on AIMCO's Credit Facility in connection with the Morton Towers
Acquisition.............................................................. (178)
Borrowings on AIMCO's Credit Facility in connection with the Land Lease
Acquisitions............................................................. (711)
Borrowings on AIMCO's Credit Facility in connection with the Loan
Acquisitions............................................................. (1,873)
Borrowings on AIMCO's Credit Facility in connection with the Ambassador
Stock Acquisition......................................................... (707)
Reduction in interest for the payment of loans in connection with the Loan
Acquisitions and the Property Loan Payment............................... 1,680
Repayments on AIMCO's Credit Facility and other indebtedness with proceeds
from the 1997 Dispositions, the February 1997 Stock Offering, the May
1997 Stock Offering, the Preferred Stock Offering, and the September 1997
Stock Offerings.......................................................... 6,629
Repayments on AIMCO's Credit Facility with proceeds from the ANHI
Dividend................................................................. 1,351
---------
$ 2,329
---------
---------
</TABLE>
(H) Represents adjustments to interest income in connection with the Loan
Acquisitions. Interest income is eliminated upon consolidation for two of
the loans purchased. In addition, interest income of $221, related to a loan
with a real estate partnership accounted for on the equity method in which
AIMCO has a 16.72% ownership interest, has been eliminated against equity in
losses of partnerships.
(I) Represents adjustment to eliminate interest expense on the portion of the
general partner loan owned by AIMCO on one of the real estate partnerships
as a result of the Loan Acquisitions.
(J) Represents adjustments to reflect the acquisition of the NHP Real Estate
Companies and the corresponding historical results of operations as if they
had occurred on January 1, 1996, including reflecting the NHP Real Estate
Reorganization.
(K) Represents the adjustment to record the revenues and expenses from ancillary
businesses purchased from the NHP Real Estate Companies as if the
acquisition had occurred on January 1, 1996.
(L) Represents a reduction in personnel costs pursuant to a restructuring plan,
approved by AIMCO senior management, assuming that the acquisition of the
NHP Real Estate Companies had occurred on January 1, 1996 and that the
restructuring plan was completed on January 1, 1996. The restructuring plan
specifically identifies all significant actions to be taken to complete the
restructuring plan, including the reduction of personnel, job functions,
location and the date of completion.
(M) Represents the increase in interest expense related to borrowings on AIMCO's
Credit Facility of $55,807 to finance the NHP Real Estate Acquisition.
17
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(N) Represents amortization of the increased basis in investment in real estate
partnerships, as a result of the allocation of the purchase price of the NHP
Real Estate Companies, based on an estimated average life of 17.5 years.
(O) Represents the reversal of operating results generated by AIMCO's
Unconsolidated Subsidiaries during the historical period of ownership from
May 3, 1977 to June 30, 1997 when one of the Unconsolidated Subsidiaries
held a 51.3% interest in NHP.
(P) Represents AIMCO's equity in earnings of the Unconsolidated Subsidiaries'
operating results, primarily representing 6.03% of NHP's results of
operations, as if the NHP Stock Purchase and the ANHI Stock Transfers
occurred on January 1, 1996.
(Q) Represents AIMCO's equity in earnings for its 47.62% interest in NHP as if
the ANHI Stock Transfers occurred on January 1, 1996.
(R) Represents the pro forma operating results of the Winthrop Acquisition as
if it had occurred on January 1, 1996. These pro forma operating results
are based on historical results of the properties, except depreciation,
which is based on AIMCO's investment in the properties.
(S) Represents (i) interest of $451 related to the mortgage assumed in
connection with the Winthrop Acquisition at an interest rate of 10.04%;
(ii) interest of $9,746 related to the borrowings for the Winthrop
Acquisition at an interest rate of LIBOR plus 2.00%; and (iii)
amortization of deferred financing costs of $317 related to the
borrowings for the Winthrop Acquisition.
(T) Represents adjustments to minority interest in the Operating Partnership
assuming the Recent Property Acquisitions, the February 1997 Stock
Offering, the May 1997 Stock Offering, the July 1997 Stock Sale, the
Preferred Stock Offering, the August 1997 Stock Offering, the September
1997 Stock Offerings, the ANHI Dividend, the Ambassador Stock
Acquisition, the Loan Acquisitions, the Land Lease Acquisitions, the
Property Loan Payment, the Sawgrass Acquisition, the Morton Towers
Acquisition, the Los Arboles Acquisition, the NHP Stock Purchase, the NHP
Real Estate Acquisitions and the Winthrop Acquisition had occurred as of
January 1, 1996. On a pro forma basis, giving effect to these
transactions, as of June 30, 1997, the minority interest percentage is
approximately 15.47%.
(U) The pro forma amounts presented assume an average interest rate of 8.01%
per annum (on floating rate debt, representing LIBOR plus 1.45% on
AIMCO's Credit Facility) on outstanding debt obligations with a weighted
average term of 7.34 years. An increase of 0.25% in the interest rate
would increase pro forma interest expense to $34,431, decrease net income
applicable to common shareholders to $5,556 and decrease net income per
common share to $0.20.
(V) Represents the net income allocated to holders of the AIMCO Class B
Preferred Stock as if the Preferred Stock Offering had occurred as of
January 1, 1996.
(W) In February 1997, the Financial Accounting Standards Board issued Statement
128 which specifies the computation, presentation and disclosure
requirements for basic earnings per share and diluted earnings per share.
AIMCO's management believes that adoption of Statement 128 will not have a
material effect on the earnings per share of AIMCO.
18
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(X) Amount represents (i) AIMCO's equity in earnings of the
Unconsolidated Subsidiaries' operating results of $40, detailed below;
and (ii) AIMCO's equity in earnings of $571 for its 47.62% interest in
NHP. The combined Pro Forma Statement of Operations (Pre-Merger) of the
Unconsolidated Subsidiaries for the six months ended June 30, 1997 is
presented below, which is based on a series of transactions, including
the Initial NHP Stock Purchase, resulting in ANHI owning 51.3% of NHP,
the ANHI Stock Transfers, resulting in ANHI owning only 6.03% of NHP, and
the contribution, from AIMCO to one of the Unconsolidated Subsidiaries,
of the general partnership interest, and therefore controlling interest,
in one real estate partnership, owning fourteen real estate properties
with 2,725 apartment units. Interests held by limited partners in the
real estate partnerships controlled by the Unconsolidated Subsidiary are
reflected as minority interest in consolidated partnerships.
<TABLE>
<CAPTION>
CONTRIBUTE
ANHI REAL PRE-MERGER
HISTORICAL STOCK ESTATE PRO FORMA
(i) TRANSFERS (ii) (iii) TOTAL
------------ -------------- ----------- -----------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues........................ $ 4,103 $ (3,067) $ 5,182 $ 6,218
Property operating expenses............................... (2,403) 1,716 (3,433) (4,120)
Owned property management expense......................... (198) 147 (257) (308)
------------ -------------- ----------- -----------
Income from property operations before depreciation....... 1,502 (1,204) 1,492 1,790
Depreciation.............................................. (654) 520 (669) (803)
------------ -------------- ----------- -----------
848 (684) 823 987
------------ -------------- ----------- -----------
SERVICE COMPANY BUSINESS
Management fees and other income.......................... 11,800 (11,800) -- --
Management and other expenses............................. (2,899) 2,899 -- --
Amortization of management contracts and goodwill and
depreciation and amortization of other assets........... (1,819) 1,815 (17) (21)
------------ -------------- ----------- -----------
7,082 (7,086) (17) (21)
------------ -------------- ----------- -----------
General and administrative................................ (2,700) 2,700 -- --
Interest expense.......................................... (3,153) 2,986 (835) (1,002)
Interest income........................................... 440 (440) -- --
------------ -------------- ----------- -----------
Income before income taxes, equity in earnings and
minority interests...................................... 2,517 (2,524) (29) (36)
Income tax provision...................................... (940) 940
(27)(iv) (27)
Equity in earnings of NHP................................. -- 72(v) 72
Minority interest in NHP.................................. (1,568) 1,568 --
Minority interest in partnerships......................... 6 -- 27 33
------------ -------------- ----------- -----------
Net income................................................ $ 15 $ 29 $ (2) $ 42
------------ -------------- ----------- -----------
------------ -------------- ----------- -----------
Income attributable to preferred stockholder.............. $ 40
-----------
-----------
Income attributable to common stockholder................. $ 2
-----------
-----------
</TABLE>
19
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (PRE-MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(i) Represents the unaudited combined results of operations of the
Unconsolidated Subsidiaries for the six months ended June 30, 1997,
excluding the income from discontinued operations of WMF.
(ii) Represents the sale of 5,717,000 shares of NHP Common Stock to AIMCO
reducing ANHI's ownership of NHP Common Stock from 51.3% to 6.03%;
therefore, ANHI will account for its investment in NHP on the equity
method.
(iii) Represents the results of operations of the Consolidated Real Estate
Partnership as if the contribution of the general partnership interest
from AIMCO to the Unconsolidated Subsidiary had occurred on January 1,
1996.
(iv) Represents the adjustment to the estimated Federal and state tax
provisions calculated on the operating results of ANHI, as adjusted for
the ANHI Stock Transfers.
(v) Represents the adjustment for the reduction in equity in earnings of NHP
resulting from the ANHI Stock Transfers, reducing ANHI's investment in NHP
from 51.3% to 6.03% as of January 1, 1996.
20
<PAGE>
PRO FORMA FINANCIAL INFORMATION (MERGER)
The following Pro Forma Condensed Consolidated Balance Sheet (Merger) of
AIMCO as of June 30, 1997 has been prepared as if each of the following
transactions had occurred as of June 30, 1997: (i) the Merger; (ii) the WMF
Spin-Off; (iii) the NHP Reorganization; and (iv) each of the transactions
reflected in the Pro Forma Condensed Consolidated Balance Sheet (Pre-Merger)
of AIMCO as of June 30, 1997, included elsewhere here in. The following Pro
Forma Condensed Consolidated Statements of Operations (Merger) of AIMCO for
the year ended December 31, 1996 and the six months ended June 30, 1997 have
been prepared as if each of the following transactions had occurred as of
January 1, 1996 (i) the Merger; (ii) the WMF Spin-Off; (iii) the NHP
Reorganization; and (iv) each of the transactions reflected in the Pro Forma
Condensed Consolidated Statements of Operations (Pre-Merger) of AIMCO for the
year ended December 31, 1996 and the six months ended June 30, 1997 included
elsewhere herein.
The following Pro Forma Financial Information (Merger) assumes that ANHI
elects to receive Mixed Consideration, and all other NHP stockholders elect
to receive Stock Consideration. However, the notes to the pro forma financial
statements disclose the effect of all NHP stockholders electing to receive
Mixed Consideration. The Pro Forma Financial Information (Merger) also
assumes that no NHP stockholder will receive cash in lieu of shares in excess
of the Ownership limit in AIMCO's Charter or fractional shares.
The following Pro Forma Financial Information (Merger) is based, in part,
on the Pro Forma Financial Information (Pre-Merger) included elsewhere
herein. The Pro Forma Financial Information (Pre-Merger) gives effect to all
material transactions of AIMCO prior to the Merger and as of the date hereof,
including the NHP Stock Purchase, the ANHI Stock Transfers, the NHP Real
Estate Acquisition, the NHP Real Estate Reorganization, certain acquisitions
and dispositions, certain completed sales of shares of AIMCO Common Stock and
the sale of shares of the AIMCO Class B Preferred Stock. See "Pro Forma
Financial Information (Pre-Merger)." The Pro Forma Financial Information
(Merger) is also based, in part, on the following historical financial
statements, which have been previously filed by AIMCO: (i) the Consolidated
Financial Statements of AIMCO for the year ended December 31, 1996 and the
six months ended June 30, 1997; (ii) the restated Consolidated Financial
Statements of NHP for the year ended December 31, 1996 (which have been
restated to reflect WMF as a discontinued operation as a result of the Rights
Distribution) and for the six months ended June 30, 1997; (iii) the Combined
Financial Statements of the NHP Real Estate Companies for the year ended
December 31, 1996 and the three months ended March 31, 1997; (iv) the
Financial Statements of NHP Southwest Partners, L.P. for the year ended
December 31, 1996 and the three months ended March 31, 1997; (v) the Combined
Financial Statements of the NHP New LP Entities for the year ended December
31, 1996 and the three months ended March 31, 1997; (vi) the Combined
Financial Statements of the NHP Borrower Entities for the year ended December
31, 1996 and the three months ended March 31, 1997; (vii) the Historical
Summaries of Gross Income and Certain Expenses of The Bay Club at Aventura
for the year ended December 31, 1996 and the three months ended March 31,
1997; (viii) the Historical Summaries of Gross Income and Direct Operating
Expenses of Morton Towers for the year ended December 31, 1996 and the six
months ended June 30, 1997; and (ix) the Combined Statement of Revenues and
Certain Expenses of the Thirty-five Acquisition Properties for the year ended
December 31, 1996 and the six months ended June 30, 1997. The Pro Forma
Financial Information (Merger) should be read in conjunction with such
financial statements and the notes thereto.
The unaudited Pro Forma Financial Information (Merger) has been prepared
using the purchase method of accounting whereby the assets and liabilities of
NHP are adjusted to estimated fair market value, based upon preliminary
estimates, which are subject to change as additional information is obtained.
The allocations of purchase costs are subject to final determination based upon
estimates and other evaluations of fair market value. Therefore, the allocations
reflected in the following unaudited Pro Forma Financial Information (Merger)
may differ from the amounts ultimately determined.
The unaudited Pro Forma Financial Information (Merger) is presented for
informational purposes only and is not necessarily indicative of the financial
position or results of operations of AIMCO that would have occurred if such
transactions had been completed on the dates indicated, nor does it purport to
be indicative of future financial positions or results of operations. In the
opinion of AIMCO's management, all material adjustments necessary to reflect the
effects of these transactions have been made. The unaudited Pro Forma
Consolidated Statement of Operations (Merger) for the six months ended June 30,
1997 is not necessarily indicative of the results of operations to be expected
for the year ending December 31, 1997.
21
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE- MERGER --------------------------------------------------- MERGER
PRO FORMA NHP MERGER NHP REOR- PRO FORMA
TOTAL(A) HISTORICAL(B) ADJUSTMENTS(C) GANIZATION(D) TOTAL
---------- ------------- -------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C>
ASSETS
Real estate............................. $1,304,185 $ 89,952 $ 14,369(E) $ (88,242)(J)
(105,435)(K) $1,214,829
Real estate held for sale............... 6,873 -- -- -- 6,873
Investments in real estate
partnerships.......................... 175,547 -- -- (19,592)(J)
(22,049)(J)
36,918(K) 170,824
Investment in and notes receivable from
Unconsolidated Subsidiaries........... 19,456 -- -- 63,879(J)
40,000(L)(M)
17,004(J)
17,605(L)(N) 157,944(R)
Investment in NHP Common Stock.......... 123,021 -- 15,581(F) --
119,737(G)
(258,339)(E) --
Cash and cash equivalents............... 21,521 2,040 -- (1,136)(K)
(904)(L) 21,521
Restricted cash......................... 17,151 2,218 -- (1,975)(K)
(243)(L) 17,151
Investment in management contracts...... 10,480 46,957 111,533(E) (51,131)(L)(O)
(106,615)(H) 11,224
Goodwill related to service provider
businesses............................ -- -- 40,000(E) (40,000)(L)(P) --
Goodwill................................ -- 5,579 94,489(E) (34,665)(L)(P) 65,403
Accounts receivable..................... 19,611 17,292 -- (17,292)(L) 19,611
Deferred financing costs................ 9,308 1,201 -- (1,201)(K) 9,308
Net deferred tax asset.................. -- 12,797 (6,000)(I) --
(6,797)(E) --
Other assets............................ 35,818 54,442 (6,505)(E) (774)(K)
(22,979)(I) (24,184)(L) 35,818
---------- ------------- -------------- ---------- ---------------
$1,742,971 $232,478 $ (11,526) $(233,417) $1,730,506
---------- ------------- -------------- ---------- ---------------
---------- ------------- -------------- ---------- ---------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Secured long-term notes payable......... $ 436,882 $ 71,005 $ -- $ (49,000)(J)
(71,005)(K) $ 387,882
Secured short-term financing............ 291,724 -- 7,791(F) (400)(K) 299,115(Q)
Secured long-term tax-exempt
financing............................. 74,799 -- -- -- 74,799
Unsecured short-term financing.......... 33,000 71,145 -- (71,145)(L) 33,000
Accrued management contract liability... 106,615 -- (106,615)(H) -- --
Accounts payable, accrued and other
liabilities........................... 48,229 16,809 5,497(E) (2,013)(K)
(16,793)(L) 51,729
Resident security deposits and prepaid
rents................................. 8,580 -- -- -- 8,580
Other long-term liabilities............. -- 14,567 -- (14,567)(L) --
Deferred tax liability.................. -- -- 8,309(E) (8,309)(L) --
---------- ------------- -------------- ---------- ---------------
999,829 173,526 (85,018) (233,232) 855,105
---------- ------------- -------------- ---------- ---------------
Minority interest in other partnerships
and corporations...................... 19,351 -- -- (185)(K) 19,166
Minority interest in Operating
Partnership........................... 105,396 -- -- -- 105,396
Class B Preferred Stock ($.01 par
value)................................ 75,000 -- -- -- 75,000
Class A Common Stock ($.01 par value)... 283 129 3(F) --
45(G)
(129)(E) 331
Class B Common Stock ($.01 par value)... 3 -- -- -- 3
Additional paid-in capital.............. 608,008 132,672 7,787(F) --
119,692(G)
(132,672)(E)
4,917(E) 740,404
Notes due on common stock purchases..... (40,603) -- -- -- (40,603)
Retained earnings (distributions in
excess of earnings)................... (24,296) (73,849) (28,979)(I)
102,828(E) -- (24,296)
---------- ------------- -------------- ---------- ---------------
618,395 58,952 73,492 -- 750,839(Q)
---------- ------------- -------------- ---------- ---------------
$1,742,971 $232,478 $ (11,526) $(233,417) $1,730,506
---------- ------------- -------------- ---------- ---------------
---------- ------------- -------------- ---------- ---------------
The pro forma statement above is presented assuming all NHP stockholders (other than ANHI) elect to receive Stock
Consideration in the Merger. See note (Q) for the effect on the pro forma statement assuming all NHP Stockholders elect to
receive Mixed Consideration in the Merger.
</TABLE>
22
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's pro forma consolidated financial position as of June 30,
1997, which gives effect to the NHP Stock Purchase, the ANHI Stock
Transfers, the NHP Real Estate Acquisition, the NHP Real Estate
Reorganization, certain acquisitions and dispositions, certain completed
sales of shares of AIMCO Common Stock and the sale of the shares of AIMCO
Class B Preferred Stock. See "Pro Forma Financial Information
(Pre-Merger)."
(B) Represents the unaudited consolidated financial position of NHP as of June
30, 1997.
(C) Represents the following adjustments occurring as a result of the Merger:
(i) the issuance of 4,767,365 shares of AIMCO Common Stock, valued at
$127,527 (based on $26.75 per share, the closing sale price on the New
York Stock Exchange ("NYSE") of the AIMCO Common Stock on February 13,
1997, the date on which a letter agreement was entered into relating to
the Merger), as Merger Consideration to holders of NHP Common Stock
outstanding as of August 31, 1997 (including 291,240 shares, valued at
$7,790, issued to ANHI and 4,476,125 shares, valued at $119,737, issued to
NHP stockholders); (ii) the additional purchase price consideration of
$4,917 for the Merger resulting from the NHP Stock Options, which vested
upon the consummation of the NHP Stock Purchase and will be converted to
options to purchase shares of AIMCO Common Stock; (iii) the allocation of
the combined purchase price of NHP and the NHP Real Estate Companies
based on the preliminary estimates of relative fair value of the combined
assets and liabilities of NHP and the NHP Real Estate Companies; and (iv)
the elimination of the net assets of WMF as a result of the WMF Spin-Off.
(D) Represents adjustments related to the NHP Reorganization, whereby AIMCO will
contribute to the combined Unconsolidated Subsidiaries: (i) certain assets
and liabilities of NHP, primarily related to the management operations and
other businesses owned by NHP; and (ii) sixteen real estate properties
containing 3,625 apartment units and the related liabilities, and interests
in four real estate partnerships owning four real estate properties
containing 2,836 apartment units. In addition, AIMCO will contribute twelve
real estate properties containing 2,905 apartment units to the
Unconsolidated Partnership. The adjustments reflect the transfer of assets
valued at AIMCO's new basis resulting from the allocation of the combined
purchase price of NHP and the NHP Real Estate Companies. AIMCO will receive
notes payable from the Unconsolidated Subsidiaries as consideration for
certain assets sold and will receive equity, in the form of preferred stock
in exchange for certain assets contributed. The businesses of NHP that will
be contributed to and operated by the Unconsolidated Subsidiaries have
goodwill associated with them; therefore, a portion of the goodwill has been
transferred to the Unconsolidated Subsidiaries. The net deferred tax
liability is assumed by the Unconsolidated Subsidiaries as it resulted from
the assets and liabilities transferred to the Unconsolidated Subsidiaries.
(E) On a pro forma basis, AIMCO currently has an investment in NHP Common Stock
of $123,021, comprised of 6,151,049 shares of NHP Common Stock. In
connection with the Merger, (i) AIMCO will issue 291,240 shares of AIMCO
Common Stock valued at $7,790 (based on $26.75 per share, the closing
sale price on the NYSE of the AIMCO Common Stock on February 13, 1997)
and pay cash of $7,791 to acquire 779,073 shares of NHP Common Stock
owned by ANHI; and (ii) AIMCO will issue 4,476,125 shares of AIMCO
Common Stock valued at $119,737 (based on $26.75 per share, the closing
sale price on the NYSE of the AIMCO Common Stock on February 13, 1997),
assuming all NHP stockholders elect to receive Stock Consideration, to
acquire the shares of NHP Common Stock owned by the NHP stockholders.
AIMCO's investment in NHP Common Stock of $258,339, which will be
eliminated upon completion of the Merger, is as follows:
<TABLE>
<S> <C>
Amount of NHP Common Stock at pre-Merger................................................ $ 123,021
Purchase NHP Common Stock from ANHI..................................................... 15,581
Purchase NHP Common Stock from public................................................... 119,737
---------
Total Investment........................................................................ $ 258,339
---------
---------
</TABLE>
At June 30, 1997, NHP has a deferred tax asset in the amount of
$12,797. In connection with the WMF Spin-Off, the deferred tax asset will
be reduced by $6,000, which relates to net operating loss carryforwards
which will be utilized to reduce taxable gains related to the WMF
Spin-Off. The remaining deferred tax asset of $6,797 was netted against
the deferred tax liability of $15,106, of which the primary component is
the difference between the new basis of the management contracts, as a
result of the combined purchase price of NHP and the NHP Real Estate
Companies, and the historical tax basis.
23
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
The total purchase price of NHP is $450,588, as follows:
<TABLE>
<S> <C>
Cash paid in the NHP Stock Purchase..................................................... $ 79,640
Issuance of 2,204,221 shares of AIMCO Common Stock in connection with the NHP Stock
Purchase at $26.75 per share.......................................................... 58,962
Issuance of 4,767,365 shares of AIMCO Common Stock in the Merger, at $26.75 per share... 127,527
Cash paid to ANHI as Mixed Consideration in the Merger.................................. 7,791
Assumption of NHP liabilities........................................................... 173,526
Transaction and severance costs......................................................... 5,497
Generation of deferred tax liability.................................................... 8,309
Consideration for NHP Stock Options outstanding......................................... 4,917
Less: Consideration given to ANHI in Merger............................................. (15,581)
---------
Total................................................................................... $ 450,588
---------
---------
</TABLE>
This amount was allocated to the various assets of NHP to be acquired in the
Merger, as follows:
<TABLE>
<S> <C>
Purchase price.......................................................................... $ 450,588
Historical basis of NHP's assets acquired............................................... (203,499)
---------
Step up to record fair value of NHP's assets purchased.................................. $ 247,089
---------
---------
</TABLE>
The step-up was applied to NHP's assets as follows:
<TABLE>
<S> <C>
Real estate............................................................................. $ 14,369
Investment in management contracts...................................................... 111,533
Reduction in value of other assets...................................................... (6,505)
Reclassification of deferred tax asset.................................................. (6,797)
Goodwill related to service provider businesses......................................... 40,000
Goodwill................................................................................ 94,489
---------
Total................................................................................... $ 247,089
---------
---------
</TABLE>
The goodwill related to service provider businesses of $40,000 is
the fair value of the identifiable intangible assets related to several
service provider businesses owned by NHP, including businesses that
provide (i) group purchasing services; (ii) comprehensive risk-management
and insurance services; (iii) asset management services; (iv) the
origination and underwriting of investments and long-term asset
management services to institutional investors that finance apartment
developments qualifying for the federal low-income housing tax credit
program; (v) home health care assistance to residents; and (vi) the
placement of insurance coverage for master insurance programs and loss
prevention services.
Goodwill of $94,489 represents the consideration paid in excess of
identifiable tangible assets and identifiable intangible assets, based on
the preliminary valuation of the tangible and intangible assets.
As of June 30, 1997, NHP's shareholder's equity was $58,952, which
is detailed as follows:
<TABLE>
<S> <C>
Common stock............................................................................ $ 129
Additional paid-in capital.............................................................. 132,672
Retained earnings, of which $28,979 is attributable to WMF.............................. (73,849)
---------
Total shareholders' equity.............................................................. $ 58,952
---------
---------
</TABLE>
Upon completion of the Merger, the entire amount of common stock and
additional paid-in capital is eliminated, along with $102,828 of retained
deficit, representing the total amount of $(73,849), less the $28,979
allocated to WMF.
24
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(F) Represents the issuance of 291,240 shares of AIMCO Common Stock, valued at
approximately $7,790, and borrowings incurred to fund the cash portion of
the Mixed Consideration payable to ANHI of $7,791, in exchange for 779,073
shares of NHP Common Stock owned by ANHI prior to the Merger.
(G) Represents the issuance of 4,476,125 shares of AIMCO Common Stock, valued at
approximately $119,737, to NHP stockholders, in exchange for all of the
shares of NHP Common Stock not owned by AIMCO or ANHI prior to the Merger,
assuming that all NHP stockholders elect to receive Stock Consideration. In
the Merger, NHP stockholders may elect to receive Stock Consideration or
Mixed Consideration. If all NHP stockholders elect to receive Mixed
Consideration, 2,238,063 fewer shares of AIMCO Common Stock would be issued
with a resulting decrease in stockholders' equity of $59,868 and an increase
in unsecured financing of approximately $59,868 (assuming the cash portion
of the Mixed Consideration is financed with additional borrowings.)
(H) Represents the elimination of the accrued liability related to management
contracts acquired in connection with the NHP Real Estate Acquisition.
Subsequent to the Merger, AIMCO will control all parties to the Master
Property Management Agreement and will eliminate such agreement.
(I) Represents the elimination of the net assets of WMF which are being
distributed as a result of the WMF Spin-Off.
(J) Represents the contribution from AIMCO to the Unconsolidated Subsidiaries,
at AIMCO's new basis as a result of the allocation of the combined purchase
prices of NHP and the NHP Real Estate Companies, of sixteen real estate
properties containing 3,625 apartment units and the related liabilities, and
the investment in four real estate partnerships owning four real estate
properties containing 2,836 apartment units and the related mortgage notes
payable, which bear interest at 7.98% per annum and mature in four years.
The real estate and the related mortgage notes payable are being contributed
to the Unconsolidated Subsidiaries to reduce future income taxes. In
exchange for such assets, AIMCO will receive notes receivable from the
Unconsolidated Subsidiaries of $63,879 and preferred stock of $17,004.
Certain of the interests in the real estate partnerships contributed to the
Unconsolidated Subsidiaries with a new basis of $22,049 will be controlled
by the Unconsolidated Subsidiaries and, therefore, the assets and
liabilities of such real estate partnerships are consolidated by the
Unconsolidated Subsidiaries. Prior to being contributed to the
Unconsolidated Subsidiaries, such interests in real estate partnerships had
been held by the Unconsolidated Partnership. The remainder of the interests
in real estate partnerships with a new basis of $19,592 will be accounted
for by the Unconsolidated Subsidiaries on the equity method.
(K) Represents the contribution to the Unconsolidated Partnership, at AIMCO's
new basis as a result of the allocation of the combined purchase prices of
NHP and the NHP Real Estate Companies, of the real estate owned by NHP prior
to the Merger, comprised of twelve real estate properties containing 2,905
apartment units.
(L) Represents certain assets and liabilities of NHP, primarily related to the
management operations and other businesses owned by NHP, contributed by
AIMCO to the Unconsolidated Subsidiaries, valued at AIMCO's new basis
resulting from the allocation of the combined purchase price of NHP and the
NHP Real Estate Companies.
(M) Pursuant to the NHP Reorganization, AIMCO is selling certain net assets to
the Unconsolidated Subsidiaries. In exchange for such assets, AIMCO will
receive a note receivable from the Unconsolidated Subsidiaries. The note
will bear interest at 10% per annum and mature in ten years.
(N) Represents the increase in AIMCO's investment in the Unconsolidated
Subsidiaries to reflect the contribution of the equity in certain assets and
liabilities to the Unconsolidated Subsidiaries.
(O) Represents the contribution to the Unconsolidated Subsidiaries of the
management operations and other businesses of NHP at AIMCO's new basis as a
result of the allocation of the combined purchase prices of NHP and the NHP
Real Estate Companies. The average remaining life of the management
contracts contributed is 14.66 years.
(P) Represents the contribution of the goodwill related to the management
operations and the service provider businesses of NHP that are being
contributed to, and will be operated by the Unconsolidated Subsidiaries. The
goodwill related to the management operations and the goodwill related to
the service provider businesses are both deemed to have a life of 20 years.
(Q) Pursuant to the Merger, NHP stockholders may elect to receive Stock
Consideration or Mixed Consideration. If all NHP stockholders elect to
receive Mixed Consideration in the Merger, 2,238,063 fewer shares of AIMCO
Common Stock would be issued with a resulting decrease in stockholders'
equity of $59,868 and an increase in unsecured financing of approximately
$59,868 (assuming the cash portion of the Mixed Consideration is financed
with additional borrowings).
25
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(R) Amount represents notes receivable from the Unconsolidated Subsidiaries of
$103,879, investment in preferred stock of the Unconsolidated Subsidiaries
of $54,155, and retained earnings of $(90). The combined Pro Forma Balance
Sheet (Merger) of the Unconsolidated Subsidiaries as of June 30, 1997 is
presented below, which reflects the effects of the Merger and the NHP
Reorganization as if such transactions had occurred as of June 30, 1997.
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER -------------------------------
PRO FORMA NHP REORGANIZA- MERGER PRO
TOTAL(i) MERGER(ii) TION(iii) FORMA TOTAL
----------- ----------- ------------------ -----------
<S> <C> <C> <C> <C>
ASSETS
Real estate.......................................... $ 45,893 $ -- $ 88,242 (iv) $ 134,135
Investment in real estate partnerships............... -- -- 19,592 (iv) 19,592
Investment in NHP Common Stock....................... 15,491 (15,581) 90 (iv) --
Cash and cash equivalents............................ 4,980 7,791 904 (v) 13,675
Restricted cash...................................... 761 -- 243 (v) 1,004
Investment in management contracts................... 124 -- 51,131 (v) 51,255
Goodwill related to service provider businesses...... -- -- 40,000 (v) 40,000
Goodwill............................................. -- -- 34,665 (v) 34,665
Deferred financing costs............................. 594 -- -- 594
Investment in parent................................. -- 7,790 -- 7,790
Other assets......................................... 353 -- 41,476 (v)
(90)(iv) 41,739
----------- ----------- -------- -----------
$ 68,196 $ -- $ 276,253 $ 344,449
----------- ----------- -------- -----------
----------- ----------- -------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Mortgage and other notes payable..................... $ 25,476 $ -- $ 49,000 (iv)(vi) $ 74,476
Notes payable to AIMCO............................... -- -- 40,000 (v)(vii)
63,879 (iv)(vii) 103,879
Unsecured short-term financing....................... -- -- 71,145 (v)(viii) 71,145
Accounts payable and other liabilities............... 990 -- 16,793 (v) 17,783
Other long-term liabilities.......................... -- 14,567 (v) 14,567
Deferred tax liability............................... -- -- 8,309 (v)(ix) 8,309
----------- ----------- -------- -----------
26,466 -- 263,693 290,159
Minority interest in consolidated partnerships....... 22,274 -- (22,049)(iv)(x) 225
Preferred Stock...................................... 19,546 -- 17,605 (v)
17,004 (iv) 54,155
Common Stock......................................... 2,000 -- -- 2,000
Retained earnings.................................... (2,090) -- -- (2,090)
----------- ----------- -------- -----------
19,456 -- 34,609 54,065
----------- ----------- -------- -----------
$ 68,196 $ -- $ 276,253 $ 344,449
----------- ----------- -------- -----------
----------- ----------- -------- -----------
</TABLE>
(i) Represents the combined Unconsolidated Subsidiaries' pro forma
consolidated financial position as of June 30, 1997, which gives
effect to the ANHI Stock Transfers, reducing ANHI's ownership of
NHP Common Stock from 51.2% to 6.03%. See "Pro Forma Financial
Information (Pre-Merger)."
(ii) In connection with the Merger, AIMCO will acquire all of the
outstanding shares of NHP Common Stock, including shares owned by
ANHI. ANHI will elect to receive Mixed Consideration of 291,217
shares of AIMCO Common Stock valued at approximately $7,790 (based
on $26.75 per share, the market price per share of AIMCO Common
Stock on February 13, 1997) and cash of $7,791 in exchange for the
779,073 shares of NHP Common Stock owned by ANHI.
26
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (MERGER)
AS OF JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(iii) Represents adjustments related to the NHP Reorganization, whereby
AIMCO will contribute or sell to the combined Unconsolidated
Subsidiaries: (i) certain assets and liabilities of NHP, primarily
related to the management operations and other businesses owned by
NHP; and (ii) sixteen real estate properties containing 3,625
apartment units and the related liabilities, and interests in four
real estate partnerships owning four real estate properties
containing 2,836 apartment units. In addition, AIMCO will
contribute twelve real estate properties containing 2,905
apartment units to the Unconsolidated Partnership. The adjustments
reflect the transfer of assets valued at AIMCO's new basis
resulting from the allocation of the combined purchase price of
NHP and the NHP Real Estate Companies. AIMCO will receive notes
payable from the Unconsolidated Subsidiaries as consideration for
certain assets sold and will receive equity, in the form of
preferred stock in exchange for certain assets contributed. The
businesses of NHP that will be contributed to and operated by the
Unconsolidated Subsidiaries have goodwill associated with them;
therefore, a portion of the goodwill has been transferred to the
Unconsolidated Subsidiaries. The net deferred tax liability is
assumed by the Unconsolidated Subsidiaries as it resulted from the
assets and liabilities transferred to the Unconsolidated
Subsidiaries.
(iv) Represents the contribution from AIMCO to the Unconsolidated
Subsidiaries, at AIMCO's new basis as a result of the allocation
of the combined purchase prices of NHP and the NHP Real Estate
Companies, of sixteen real estate properties containing 3,625
apartment units and the related liabilities, and interests in four
real estate partnerships owning four real estate properties
containing 2,836 apartment units and the related mortgage notes
payable, which bear interest at 7.98% per annum and mature in four
years. The real estate and the related mortgage note payable are
being contributed to the Unconsolidated Subsidiaries to reduce the
income tax provision. In exchange for such assets, AIMCO will
receive notes receivable from the Unconsolidated Subsidiaries of
$63,879 and preferred stock of $17,004. Certain of the interests
in the real estate partnerships contributed to the Unconsolidated
Subsidiaries with a new basis of $88,242 will be controlled by the
Unconsolidated Subsidiaries and, therefore, the assets and
liabilities of such real estate partnerships are consolidated by
the Unconsolidated Subsidiaries. Prior to being contributed to the
Unconsolidated Subsidiaries, such interests in real estate
partnerships had been held by the Unconsolidated Partnership. The
remainder of the interests in the real estate partnerships with a
new basis of $19,592 will be accounted for by the Unconsolidated
Subsidiaries on the equity method.
(v) Represents certain assets and liabilities of NHP, primarily
related to the management operations and other businesses owned by
NHP, contributed by AIMCO to the Unconsolidated Subsidiaries,
valued at AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(vi) Represents the mortgage note payable related to the real estate
contributed to the Unconsolidated Subsidiaries in conjunction with
the NHP Reorganization. The mortgage note payable bears interest
at 7.98% per annum and has a remaining life of four years.
(vii) Represents notes payable to AIMCO in exchange for certain of the
assets sold to the Unconsolidated Subsidiaries as part of the NHP
Reorganization. The notes bear interest at 10% per annum and have
an average life of ten years.
(viii) Represents the contribution of the NHP unsecured line of credit at
June 30, 1997 to the Unconsolidated Subsidiaries as part of the
NHP Reorganization. The NHP unsecured line of credit bears
interest at a floating rate of LIBOR plus 0.75% per annum (6.7% at
June 30, 1997) and has a remaining life of one year.
(ix) Represents the establishment of the estimated net deferred federal
and state tax liabilities at a combined rate of 40% for the
estimated difference between the book and tax basis of the net
assets (other than goodwill) of the Unconsolidated Subsidiaries.
The primary component of the deferred tax liability is the
difference between the new basis of the management contracts, as a
result of the allocation of the combined purchase price of NHP and
the NHP Real Estate Companies, and the historical tax basis.
(x) Represents adjustment to eliminate the minority interest in one
real estate partnership which owns fourteen real estate
properties. Prior to the Merger, the Unconsolidated Subsidiaries
owned the general partnership interests in the real estate
partnership and AIMCO owned virtually all of the limited
partnership interests. Pursuant to the NHP Reorganization, AIMCO
has contributed its limited partnership interests to the
Unconsolidated Subsidiaries, resulting in the Unconsolidated
Subsidiaries owning 99% of the real estate partnership.
27
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER ---------------------------------------------
PRO FORMA NHP MERGER NHP REOR-
TOTAL(A) HISTORICAL(B) ADJUSTMENTS(C) GANIZATION(D)
----------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues................................ $ 238,883 $ -- $ 11,002(E) $ (11,458)(L)
(11,002)(M)
Property operating expenses....................................... (110,554) -- (5,937)(E) 5,516(L)
5,937(M)
Owned property management expense................................. (8,269) -- (853)(E) 415(L)
853(M)
473(N)
----------- ------------- --------------- -------------
Income from property operations before depreciation............... 120,060 -- 4,212 (9,266)
Depreciation...................................................... (45,819) -- (3,650)(E) 3,088(L)
3,650(M)
----------- ------------- --------------- -------------
Income from property operations................................... 74,241 -- 562 (2,528)
----------- ------------- --------------- -------------
SERVICE COMPANY BUSINESS
Management fees and other income.................................. 17,502 194,979 (127,266)(F) (65,429)(O)
(1,851)(N)
Management and other expenses..................................... (13,562) (153,907) 127,266(F) 15,274(O)
9,654(G) 250(P)
Corporate overhead allocation..................................... (590) -- -- --
Amortization of management contracts and depreciation and
amortization of other assets.................................... (1,226) (6,321) (5,687)(H) 11,760(O)
----------- ------------- --------------- -------------
2,124 34,751 3,967 (39,996)
Minority interest in service company business..................... 10 -- -- --
----------- ------------- --------------- -------------
Company's share of income from service company business........... 2,134 34,751 3,967 (39,996)
----------- ------------- --------------- -------------
General and administrative expense................................ (1,512) (14,074) -- 14,074(O)
756(P)
Interest expense.................................................. (65,476) (3,982) (4,082)(E) 3,982(O)
(560)(I) 4,011(L)
4,082(M)
Interest income................................................... 4,722 747 -- (747)(O)
319(Q)
200(R)
----------- ------------- --------------- -------------
Income (loss) before equity in earnings of unconsolidated
subsidiaries, and minority interests............................ 14,109 17,442 (113) (15,847)
Equity in earnings of unconsolidated corporations................. 5,339 -- (4,984)(J) 1,928(S)
3,800(T)
6,069(T)
Equity in losses of partnerships.................................. (7,830) -- (6,016)(K) 2,138(L)
(3,508)(M)
1,378(N)
----------- ------------- --------------- -------------
Income (loss) before minority interests........................... 11,618 17,442 (11,113) (4,042)
Minority interest in other partnerships........................... 2,666 -- 11(E) (12)(L)
----------- ------------- --------------- -------------
Income (loss) before minority interest in Operating Partnership... 14,284 17,442 (11,102) (4,054)
Income tax provision.............................................. (6,977) -- 6,977(O)
Minority interest in Operating Partnership........................ (2,053) -- (117)(U) (398)(U)
----------- ------------- --------------- -------------
Net income (loss)................................................. $ 12,231 $ 10,465 $ (11,219) $ 2,525
----------- ------------- --------------- -------------
----------- ------------- --------------- -------------
Net income allocable to preferred stockholder..................... $ 5,344
-----------
-----------
Net income allocable to common stockholders....................... $ 6,887
-----------
-----------
Net income per common share(W).................................... $ 0.26
-----------
-----------
Weighted average number of common shares and common share
equivalents outstanding......................................... 26,592
-----------
-----------
<CAPTION>
PRO FORMA
TOTAL
-----------
<S> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues................................ $ 227,425
Property operating expenses....................................... (105,038)
Owned property management expense................................. (7,381)
-----------
Income from property operations before depreciation............... 115,006
Depreciation...................................................... (42,731)
-----------
Income from property operations................................... 72,275
-----------
SERVICE COMPANY BUSINESS
Management fees and other income.................................. 17,935
Management and other expenses..................................... (15,025)
Corporate overhead allocation..................................... (590)
Amortization of management contracts and depreciation and
amortization of other assets.................................... (1,474)
-----------
846
Minority interest in service company business..................... 10
-----------
Company's share of income from service company business........... 856
-----------
General and administrative expense................................ (756)
Interest expense.................................................. (62,025)(V)
Interest income................................................... 5,241
-----------
Income (loss) before equity in earnings of unconsolidated
subsidiaries, and minority interests............................ 15,591
Equity in earnings of unconsolidated corporations................. 12,152(X)
Equity in losses of partnerships.................................. (13,838)
-----------
Income (loss) before minority interests........................... 13,905
Minority interest in other partnerships........................... 2,665
-----------
Income (loss) before minority interest in Operating Partnership... 16,570
Income tax provision.............................................. --
Minority interest in Operating Partnership........................ (2,568)
-----------
Net income (loss)................................................. $ 14,002(V)
-----------
-----------
Net income allocable to preferred stockholder..................... $ 5,344
-----------
-----------
Net income allocable to common stockholders....................... $ 8,658(V)
-----------
-----------
Net income per common share(W).................................... $ 0.27(V)
-----------
-----------
Weighted average number of common shares and common share
equivalents outstanding......................................... 31,638(V)
-----------
-----------
</TABLE>
The pro forma statement above is presented assuming all NHP stockholders (other
than ANHI) elect to receive Stock Consideration. See note (V) for the effect on
the pro forma statement if all NHP stockholders elect to receive Mixed
Consideration.
28
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's pro forma results of operations for the year ended
December 31, 1996 which give effect to the NHP Stock Purchase, the ANHI
Stock Transfers, the NHP Real Estate Acquisition, the NHP Real Estate
Reorganization, certain acquisitions and dispositions, certain completed
sales of AIMCO Common Stock and the sale of the shares of AIMCO Class B
Preferred Stock. See "Pro Forma Financial Information (Pre-Merger)."
(B) Represents the audited consolidated results of operations of NHP for the
year ended December 31, 1996, which have been restated to reflect WMF as a
discontinued operation as a result of the Rights Distribution.
(C) Represents the following adjustments occurring as a result of the Merger:
(i) the reclassification of NHP's real estate held for sale to real estate
held for investment; (ii) the offsetting of on-site personnel and general
and administrative cost reimbursement against the related revenue; (iii) the
reduction in personnel costs, primarily severance costs, pursuant to a
restructuring plan; (iv) the incremental amortization of the purchase price
adjustment related to the management contracts, furniture, fixtures and
equipment, and goodwill; (v) the reversal of equity in earnings in NHP
during the pre-merger period when AIMCO held a 47.62% interest in NHP; and
(vi) the amortization of the increased basis in investments in real estate
partnerships based on the purchase price adjustment related to the real
estate and an estimated average life of 17.5 years.
(D) Represents adjustments related to the NHP Reorganization, whereby AIMCO will
contribute to the combined Unconsolidated Subsidiaries: (i) certain assets
and liabilities of NHP, primarily related to the management operations and
other businesses owned by NHP; and (ii) sixteen real estate properties
containing 3,625 apartment units and the related liabilities, and interests
in four real estate partnerships owning four real estate properties
containing 2,836 apartment units. In addition, AIMCO will contribute twelve
real estate properties containing 2,905 apartment units to the
Unconsolidated Partnership. The adjustments represent (i) the related
revenues and expenses primarily related to the management operations and
other businesses owned by NHP; and (ii) the historical results of operations
of such real estate properties and interests in such real estate
partnerships contributed, with additional depreciation and amortization
recorded related to AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(E) Represents the operating results of real estate held for investment by
AIMCO, which was classified as real estate held for sale by NHP prior to the
Initial NHP Stock Purchase.
(F) Represents the offsetting of on-site personnel and general and
administrative cost reimbursement against the related revenue.
(G) Represents a reduction in personnel costs, primarily severance costs,
pursuant to a restructuring plan, approved by AIMCO senior management,
specifically identifying all significant actions to be taken to complete the
restructuring plan, assuming that the Merger had occurred on January 1, 1996
and that the restructuring plan was completed on January 1, 1996.
(H) Represents incremental depreciation and amortization of the tangible and
intangible assets related to the property management and other business
operated by the Unconsolidated Subsidiaries, based on AIMCO's new basis as
adjusted by the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies, including amortization of management contracts of
$3,702, depreciation of furniture, fixtures and equipment of $1,302 and
amortization of goodwill of $7,004, less NHP's historical depreciation and
amortization of $6,321. Management contracts are amortized using the
straight-line method over the weighted average life of the contracts
estimated to be 14.7 years. Furniture, fixtures and equipment are
depreciated using the straight-line method over the estimated life of 5
years. Goodwill is amortized using the straight-line method over 20
years. The life of goodwill is currently under the review of the
Securities and Exchange Commission ("SEC"). AIMCO is in receipt of a
comment letter from the SEC that suggests a five-year life for goodwill,
rather than the 20-year life as presented herein. If the life of goodwill
were to be changed to five years, goodwill amortization would be $28,016,
net loss applicable to common shareholders would be $(5,361) and net loss
per common shareholder would be $(0.17).
(I) Represents the interest related to the indebtedness of $7,791 incurred to
finance the cash portion of the Mixed Consideration payable to ANHI. The
borrowings were made under AIMCO's Credit Facility, which bears interest at
LIBOR plus 1.70% per annum.
(J) Represents the reversal of equity in earnings in NHP during the period prior
to the Merger when AIMCO held a 47.62% interest in NHP, as a result of AIMCO
owning 100% of the NHP Common Stock pursuant to the Merger.
(K) Represents adjustment for amortization of the increased basis in investments
in real estate partnerships, as a result of the allocation of the combined
purchase price of NHP and the NHP Real Estate Companies, based on an
estimated average life of 17.5 years.
(L) Represents the results of operations of real estate contributed to the
Unconsolidated Subsidiaries, including sixteen real estate properties
containing 3,625 apartment units and interests in four real estate
partnerships owning four real estate properties containing 2,836 apartment
units.
29
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(M) Represents the contribution of NHP's twelve real estate properties
containing 2,905 apartment units to the Unconsolidated Partnership pursuant
to the NHP Reorganization.
(N) Represents the elimination of the income generated by the management
contracts which are related to the interests in real estate partnerships
owned by AIMCO or the Unconsolidated Partnership.
(O) Represents the historical income and expenses associated with certain assets
and liabilities of NHP that will be contributed to the Unconsolidated
Subsidiaries, primarily related to the management operations and other
businesses owned by NHP.
(P) Represents adjustments for management costs that will be incurred by the
Unconsolidated Subsidiaries rather than by AIMCO, primarily related to
personnel costs, for work performed on the businesses contributed to held by
the Unconsolidated Subsidiaries.
(Q) Represents the interest income of $6,388 earned on notes payable of $63,879
to AIMCO issued as consideration for certain real estate assets and
liabilities and interests in certain real estate partnerships sold to the
Unconsolidated Subsidiaries by AIMCO, net of the elimination of AIMCO's
share of the related interest expense of $6,069 reflected in the equity in
earnings of ANHI's operating results.
(R) Represents interest income of $4,000 earned on the notes receivable from the
Unconsolidated Subsidiaries, after elimination of AIMCO's share of $3,800 of
the related interest expense.
(S) Represents adjustment to AIMCO's equity in earnings of the Unconsolidated
Subsidiaries on a post-Merger basis, before elimination of interest expense
on notes receivable from the Unconsolidated Subsidiaries.
(T) Represents elimination of AIMCO's share of the related interest expense
reflected in the equity in earnings of ANHI's operating results.
(U) Represents adjustments to minority interest in the Operating Partnership
assuming the Merger had occurred as of January 1, 1996. On a pro forma
basis, giving effect to the Merger, as of December 31, 1996, the minority
interest percentage is approximately 13.63%, assuming that ANHI elects Mixed
Consideration and all other NHP stockholders elect Stock Consideration.
(V) Pursuant to the Merger, NHP stockholders may elect to receive Stock
Consideration or Mixed Consideration. Set forth below is a summary of the
pro forma net income applicable to holders of AIMCO Common Stock and net
income per common share (i) assuming that ANHI elects Mixed Consideration
and all other NHP stockholders, excluding AIMCO, elect to receive Stock
Consideration (Stock Consideration); and (ii) assuming all NHP stockholders,
excluding AIMCO but including ANHI, elect to receive Mixed Consideration
(Mixed Consideration). The detail below assumes an average interest rate of
7.19% per annum (representing LIBOR plus 1.70%, the current rate under
AIMCO's unsecured credit facility) on the additional borrowings of $59,868.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 4,304
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 16,570 $ 12,266
Minority interest in Operating Partnership.......................... (2,568) (1,981)
------------- -------------
Net income.......................................................... $ 14,002 $ 10,285
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 8,658 $ 4,941
------------- -------------
------------- -------------
Net income per share................................................ $ 0.27 $ 0.17
------------- -------------
------------- -------------
Minority interest percentage........................................ 13.63% 13.63%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 31,638 29,400
------------- -------------
------------- -------------
</TABLE>
30
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
Additionally, the following table presents the net impact to pro forma net
income applicable to holders of AIMCO Common Stock and net income per common
share assuming the interest rate increases by 0.25%.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 4,454
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 15,302 $ 10,848
Minority interest in Operating Partnership.......................... (2,395) (1,788)
------------- -------------
Net income.......................................................... $ 12,907 $ 9,060
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 7,563 $ 3,716
------------- -------------
------------- -------------
Net income per share................................................ $ 0.24 $ 0.13
------------- -------------
------------- -------------
Minority interest percentage........................................ 13.63% 13.63%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 31,638 29,400
------------- -------------
------------- -------------
</TABLE>
(W) In February 1997, the Financial Accounting Standards Board issued Statement
128 EARNINGS PER SHARE ("Statement 128") which specifies the computation,
presentation and disclosure requirements for basic earnings per share and
diluted earnings per share. AIMCO's management believes that adoption of
Statement 128 will not have a material effect on the earnings per share of
AIMCO.
31
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(X) The combined Pro Forma Statement of Operations (Merger) of the
Unconsolidated Subsidiaries for the year ended December 31, 1996 is
presented below, which reflects the effects of the Merger and the NHP
Reorganization as if these transactions had occurred as of January 1, 1996.
<TABLE>
<CAPTION>
PRE- ADJUSTMENTS
MERGER ------------------------------ MERGER
PRO FORMA NHP PRO FORMA
TOTAL(i) MERGER(ii) REORGANIZATION(iii) TOTAL
----------- ----------- ----------------- -----------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues.................... $ 12,777 $ -- $ 11,458 (iv) $ 24,235
Property operating expenses........................... (8,665) -- (5,516)(iv) (14,181)
Owned property management expense..................... (613) -- (415)(iv) (1,028)
----------- ----------- ------- -----------
Income from property operations before depreciation... 3,499 -- 5,527 9,026
Depreciation.......................................... (1,606) -- (3,088)(iv) (4,694)
----------- ----------- ------- -----------
Income from property operations....................... 1,893 -- 2,439 4,332
----------- ----------- ------- -----------
Management fees and other income...................... -- -- 65,429(v) 65,429
Management and other expenses......................... -- -- (15,524)(v) (15,524)
Amortization of management contracts and goodwill and
depreciation and amortization of other assets....... (41) -- (11,760)(v) (11,801))(ix)
----------- ----------- ------- -----------
(41) -- 38,145 38,104
----------- ----------- ------- -----------
General and administrative............................ -- -- (14,830)(v) (14,830)
Interest expense...................................... (2,640) -- (3,982)(v)
(3,910)(iv)
(4,000)(vi)
(6,388)(vi) (20,920)
Interest income....................................... -- -- 747(v) 747
----------- ----------- ------- -----------
Income before income taxes, equity in earnings and
minority interests.................................. (788) -- 8,221 7,433
Income tax provision.................................. (249) -- (3,431)(vii) (3,680)
Equity in earnings of NHP............................. 631 (631) -- --
Equity in losses of unconsolidated partnerships....... -- -- (1,358)(v) (1,358)
Minority interest in NHP.............................. -- -- -- --
Minority interest in partnerships..................... 780 -- (772)(viii) 8
----------- ----------- ------- -----------
Net income............................................ $ 374 $ (631) $ 2,660 $ 2,403
----------- ----------- ------- -----------
----------- ----------- ------- -----------
Income attributable to preferred stockholder.......... $ 355 $ 2,283
----------- -----------
----------- -----------
Income attributable to common stockholder............. $ 19 $ 120
----------- -----------
----------- -----------
</TABLE>
----------------------------
(i) Represents the combined Unconsolidated Subsidiaries' pro forma
consolidated statement of operations, which gives effect to the
ANHI Stock Transfers, reducing ANHI's ownership of NHP Common
Stock from 51.3% to 6.03% of the outstanding shares of NHP Common
Stock. See "Pro Forma Financial Information (Pre-Merger)."
(ii) Represents adjustments for the Merger. Subsequent to the Merger,
all of the outstanding shares of NHP Common Stock will be owned by
AIMCO.
(iii) Represents adjustments related to the NHP Reorganization, whereby
AIMCO will contribute to the combined Unconsolidated Subsidiaries:
(i) certain assets and liabilities of NHP, primarily related to
the management operations and other businesses owned by NHP; and
(ii) sixteen real estate properties containing 3,625 apartment
units and the related liabilities,
32
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE YEAR ENDED DECEMBER 31, 1996
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
and interests in four real estate partnerships owning four real
estate properties containing 2,836 apartment units. Adjustments
reflect (a) income and expenses associated with certain assets and
liabilities of NHP that will be contributed to the Unconsolidated
Subsidiaries, primarily related to the management operations and
other businesses owned by NHP; (b) adjustments for management
costs that will be incurred by the Unconsolidated Subsidiaries
rather than by AIMCO, primarily related to personnel costs, for
work performed on the businesses contributed to the Unconsolidated
Subsidiaries; (c) depreciation and amortization of the tangible
and intangible assets related to the management operations and
other business contributed to the Unconsolidated Subsidiaries; (d)
interest expense associated with NHP's historical notes payable
and on the notes payable to AIMCO; (e) historical interest income
of NHP; (f) income tax provision; and (g) the historical results
of operations of real estate properties and interests in real
estate partnerships contributed, with additional depreciation and
amortization recorded related to AIMCO's new basis resulting from
the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies.
(iv) Represents adjustments for the historical results of operations of
the real estate properties and interest in real estate
partnerships contributed, with additional depreciation and
amortization recorded related to AIMCO's new basis resulting from
the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies.
(v) Represents adjustments to reflect income and expenses associated
with certain assets and liabilities of NHP contributed.
(vi) Represents the interest expense incurred on notes payable to AIMCO
of $40,000 issued in connection with the sale of certain assets
and liabilities to the Unconsolidated Subsidiaries and $63,879
issued in connection with the sale of certain real estate assets
and related liabilities and interests in certain real estate
partnerships to the Unconsolidated Subsidiaries.
(vii) Represents the estimated Federal and state tax provisions, which
are calculated on the operating results of the Unconsolidated
Subsidiaries, excluding amortization of goodwill which is not
deductible for tax purposes. The Unconsolidated Subsidiaries
current tax provision for the year ended December 31, 1996 would
be approximately $80 which differs from the book tax provision
primarily due to differences in amortization of tangible and
intangible assets and expensing of lease and severance costs which
are included in purchase consideration for financial reporting.
(viii) Represents the reduction of minority interest in one real estate
partnership owning fourteen real estate properties containing
2,725 apartment units. As part of the NHP Reorganization, AIMCO
will contribute the limited partnership interests in the
partnership currently consolidated by the Unconsolidated
Subsidiaries. Therefore, the Unconsolidated Subsidiaries will own
99% of the interests in such partnership.
(ix) The life of good will is currently under the review of the Securities
and Exchange Commission. AIMCO is in receipt of a comment letter
from the SEC that suggests a five-year life for goodwill, rather
than the 20-year life as presented herein. If the life of goodwill
were to be changed to five years, amortization of management
contracts and goodwill and depreciation and amortization of other
assets would be $32,811 and net loss would be $(14,684).
33
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER -------------------------------------------- MERGER
PRO FORMA NHP MERGER NHP REOR- PRO FORMA
TOTAL(A) HISTORICAL(B) ADJUSTMENTS(C) GANIZATION(D) TOTAL
----------- ------------ --------------- ------------- -----------
<S> <C> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues................. $ 122,774 $ 2,916 $ 6,006(E) $ (6,188)(L)
(2,916)(M) $122,592
Property operating expenses........................ (50,332) (1,863) (3,786)(E) 2,362(L)
1,863(M) (51,756)
Owned property management expense.................. (4,390) -- (427)(E) 182(L)
237(N) (4,398)
----------- ------------ --------------- ------------- -----------
Income from property operations before
depreciation..................................... 68,052 1,053 1,793 (4,460) 66,438
Depreciation....................................... (23,598) (500) (852)(E) 1,504(L)
1,352(M) (22,094)
----------- ------------ --------------- ------------- -----------
Income from property operations.................... 44,454 553 941 (1,604) 44,344
----------- ------------ --------------- ------------- -----------
SERVICE COMPANY BUSINESS
Management fees and other income................... 7,010 101,687 (64,900)(F) (35,645)(O)
(926)(N) 7,226
Management and other expenses...................... (4,906) (79,633) 64,900(F) 14,003(O) (5,636)
Corporate overhead allocation...................... (294) -- -- -- (294)
Amortization of management contracts and
depreciation and amortization of other assets.... (635) (4,755) (1,249)(G) 5,880(O) (759)
----------- ------------ --------------- ------------- -----------
1,175 17,299 (1,249) (16,688) 537
Minority Interest in service company business...... (2) -- -- -- (2)
----------- ------------ --------------- ------------- -----------
Company's share of income from service company
business......................................... 1,173 17,299 (1,249) (16,688) 535
----------- ------------ --------------- ------------- -----------
General and administrative expense................. (784) (13,293) 5,546(H) 8,125(O) (406)
Interest expense................................... (33,811) (3,670) (2,304)(E) 3,670(O)
(277)(I) 2,006(L)
3,440(M) (30,946)(U)
Interest income.................................... 2,980 1,109 -- (1,109)(O)
159(P)
100(Q) 3,239
----------- ------------ --------------- ------------- -----------
Income (loss) before equity in earnings of
unconsolidated subsidiaries, and minority
interests........................................ 14,012 1,998 2,657 (1,901) 16,766
Equity in earnings of unconsolidated
corporations..................................... 611 -- (571)(J) (1,034)(R)
1,900(S)
3,035(S) 3,941(W)
Equity in losses of partnerships................... (3,380) -- (3,008)(K) 713(L)
(1,936)(M)
689(N) (6,922)
----------- ------------ --------------- ------------- -----------
Income (loss) before minority interests............ 11,243 1,998 (922) 1,466 13,785
Minority interest in other partnerships............ (788) -- 7(E) (10)(M) (791)
----------- ------------ --------------- ------------- -----------
Income (loss) before minority interest in Operating
Partnership...................................... 10,455 1,998 (915) 1,456 12,994
Income tax provision............................... -- (799) -- 799(O) --
Minority interest in Operating Partnership......... (1,705) -- 283(T) (270)(T) (1,692)
----------- ------------ --------------- ------------- -----------
Net income (loss).................................. $ 8,750 $ 1,199 $ (632) $ 1,985 $ 11,302(U)
----------- ------------ --------------- ------------- -----------
----------- ------------ --------------- ------------- -----------
Net income allocable to preferred stockholder...... $ 2,672 $ 2,672
----------- -----------
----------- -----------
Net income allocable to common stockholders........ $ 6,078 $ 8,630(U)
----------- -----------
----------- -----------
Net income per common share(V)..................... $ 0.21 $ 0.26(U)
----------- -----------
----------- -----------
Weighted average number of common shares and common
share equivalents outstanding.................... 28,281 33,307(U)
----------- -----------
----------- -----------
</TABLE>
The pro forma statement above is presented assuming all NHP stockholders
(other than ANHI) elect to receive Stock Consideration. See note (U) for the
effect on the pro forma statement assuming all NHP stockholders elect to receive
Mixed Consideration.
34
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(A) Represents AIMCO's pro forma results of operations for the six months ended
June 30, 1997, which gives effect to the NHP Stock Purchase, the ANHI Stock
Transfers, the NHP Real Estate Acquisition, the NHP Real Estate
Reorganization, certain acquisitions and dispositions, certain completed
sales of AIMCO Common Stock and the sale of the shares of AIMCO Class B
Preferred Stock. See "Pro Forma Financial Information (Pre-Merger)."
(B) Represents the unaudited consolidated results of operations of NHP for the
six months ended June 30, 1997.
(C) Represents the following adjustments occurring as a result of the Merger:
(i) the reclassification of NHP's real estate held for sale to real estate
held for investment; (ii) the offsetting of on-site personnel and general
and administrative cost reimbursement against the related revenue; (iii) the
reduction in personnel costs, primarily severance costs, pursuant to a
restructuring plan; (iv) the incremental amortization of the purchase price
adjustment related to the management contracts, furniture, fixtures and
equipment, and goodwill; (v) the reversal of equity in earnings in NHP
during the pre-merger period when AIMCO held a 47.62% interest in NHP; and
(vi) the amortization of the increased basis in investments in real estate
partnerships based on the purchase price adjustment related to the real
estate and an estimated average life of 17.5 years.
(D) Represents adjustments related to the NHP Reorganization, whereby AIMCO will
contribute or sell to the combined Unconsolidated Subsidiaries: (i) certain
assets and liabilities of NHP, primarily related to the management
operations and other businesses owned by NHP; and (ii) sixteen real estate
properties containing 3,625 apartment units and the related liabilities, and
interests in four real estate partnerships owning four real estate
properties containing 2,836 apartment units. In addition, AIMCO will
contribute twelve real estate properties containing 2,905 apartment units to
the Unconsolidated Partnership. The adjustments represent (i) the related
revenues and expenses primarily related to the management operations and
other businesses owned by NHP; and (ii) the historical results of operations
of such real estate properties and interests in such real estate
partnerships contributed, with additional depreciation and amortization
recorded related to AIMCO's new basis resulting from the allocation of the
combined purchase price of NHP and the NHP Real Estate Companies.
(E) Represents the operating results of real estate held for investment by
AIMCO, which was classified as real estate held for sale by NHP prior to the
Initial NHP Stock Purchase.
(F) Represents the offsetting of on-site personnel and general and
administrative cost reimbursement against the related revenue.
(G) Represents incremental depreciation and amortization of the tangible and
intangible assets related to the property management and other business
operated by the Unconsolidated Subsidiaries, based on AIMCO's new basis as
adusted by the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies, including amortization of management contracts of
$1,851, depreciation of furniture, fixtures and equipment of $651 and
amortization of goodwill of $3,502, less NHP's historical depreciation and
amortization of $4,755. Management contracts are amortized using the
straight-line method over the weighted average life of the contracts
estimated to be 14.7 years. Furniture, fixtures and equipment are
depreciated using the straight-line method over the estimated life of 5
years. Goodwill is amortized using the straight-line method over 20
years. The life of good will is currently under the review of the
Securities and Exchange Commission. AIMCO is in receipt of a comment
letter from the SEC that suggests a five-year life for goodwill, rather
than the 20-year life as presented herein. If the life of goodwill were
to be changed to five years, goodwill amortization would be $14,008, net
income applicable to common share holders would be $1,491 and net income
per common shareholder would be $0.04.
(H) Represents a reduction in personnel costs, primarily severance costs,
pursuant to a restructuring plan, approved by AIMCO senior management,
specifically identifying all significant actions to be taken to complete the
restructuring plan, assuming that the Merger had occurred on January 1, 1996
and that the restructuring plan was completed on January 1, 1996.
(I) Represents the interest related to the indebtedness of $7,791 incurred to
finance the cash portion of the Merger Consideration to ANHI. The borrowings
were made under AIMCO's Credit Facility, which bears interest at LIBOR plus
1.70% per annum.
(J) Represents the reversal of equity in earnings in NHP during the pre-merger
period when AIMCO held a 47.62% interest in NHP, as a result of AIMCO's
acquisition of 100% of the NHP Common Stock.
(K) Represents adjustment for amortization of the increased basis in investments
in real estate partnerships, as a result of the allocation of the combined
purchase price of NHP and the NHP Real Estate Companies, based on an
estimated average life of 17.5 years.
(L) Represents the results of operations of real estate contributed to the
Unconsolidated Subsidiaries, including sixteen real estate properties
containing 3,625 apartment units and interests in four real estate
partnerships owning four real estate properties containing 2,836 apartment
units.
35
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(M) Represents the contribution of NHP's twelve real estate properties
containing 2,905 apartment units to the Unconsolidated Partnership pursuant
to the NHP Reorganization.
(N) Represents the elimination of the income generated by the management
contracts which are related to the interests in real estate partnerships
owned by AIMCO or the Unconsolidated Partnership.
(O) Represents the historical income and expenses associated with certain assets
and liabilities of NHP that will be contributed to the Unconsolidated
Subsidiaries, primarily related to the management operations and other
businesses owned by NHP.
(P) Represents the interest income of $3,194 earned on notes payable of $63,879
to AIMCO issued as consideration for certain real estate assets and
liabilities and interests in certain real estate partnerships sold to the
Unconsolidated Subsidiaries by AIMCO, net of the elimination of AIMCO's
share of the related interest expense of $3,035 reflected in the equity in
earnings of ANHI's operating results.
(Q) Represents interest income of $2,000 earned on the notes receivable from the
Unconsolidated Subsidiaries, after elimination of AIMCO's share of $1,900 of
the related interest expense.
(R) Represents adjustment to AIMCO's equity in income (loss) of the
Unconsolidated Subsidiaries on a post-Merger basis, before elimination of
interest expense on notes receivable from the Unconsolidated Subsidiaries.
(S) Represents elimination of AIMCO's share of the related interest expense
reflected in the equity in earnings of ANHI's operating results.
(T) Represents adjustments to minority interest in the Operating Partnership
assuming the Merger had occurred as of January 1, 1996. On a pro forma
basis, giving effect to the Merger, as of June 30, 1997, the minority
interest percentage is approximately 11.97%, assuming that ANHI elects to
receive Mixed Consideration and all other NHP stockholders elect to receive
Stock Consideration.
(U) Pursuant to the Merger, NHP stockholders may elect to receive Stock
Consideration or Mixed Consideration. Set forth below is a summary of the
pro forma net income applicable to holders of AIMCO Common Stock and net
income per share of AIMCO Common Stock (i) assuming that ANHI elects Mixed
Consideration and all other NHP stockholders, excluding AIMCO, elect to
receive Stock Consideration (Stock Consideration); and assuming all NHP
stockholders, excluding AIMCO but including ANHI, elect to receive Mixed
Consideration (Mixed Consideration). The detail below assumes an average
interest rate of 7.36% per annum (representing LIBOR plus 1.70%, the current
rate under AIMCO's unsecured credit facility) on the additional borrowings
of $59,868.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 2,204
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 12,994 $ 10,790
Minority interest in Operating Partnership.......................... (1,692) (1,428)
------------- -------------
Net income.......................................................... $ 11,302 $ 9,362
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 8,630 $ 6,690
------------- -------------
------------- -------------
Net income per share................................................ $ 0.26 $ 0.22
------------- -------------
------------- -------------
Minority interest percentage in Operating Partnership............... 11.97% 11.97%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 33,307 31,069
------------- -------------
------------- -------------
</TABLE>
36
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
Additionally, the following table presents the net impact to pro forma net
income applicable to holders of AIMCO Common Stock and net income per share
of AIMCO Common Stock assuming the interest rate per annum increases by
0.25%.
<TABLE>
<CAPTION>
STOCK MIXED
CONSIDERATION CONSIDERATION
------------- -------------
<S> <C> <C>
Increase in interest expense........................................ $ -- $ 2,279
------------- -------------
------------- -------------
Income before minority interest in Operating Partnership (after
minority interest in other partnerships).......................... $ 12,365 $ 10,086
Minority interest in Operating Partnership.......................... (1,616) (1,343)
------------- -------------
Net income.......................................................... $ 10,749 $ 8,743
------------- -------------
------------- -------------
Net income attributable to common stockholders...................... $ 8,077 $ 6,071
------------- -------------
------------- -------------
Net income per share................................................ $ 0.24 $ 0.20
------------- -------------
------------- -------------
Minority interest percentage in Operating Partnership............... 11.97% 11.97%
------------- -------------
------------- -------------
Number of common shares and common share equivalents................ 33,307 31,069
------------- -------------
------------- -------------
</TABLE>
(V) In February 1997, the Financial Accounting Standards Board issued Statement
128 which specifies the computation, presentation and disclosure
requirements for basic earnings per share and diluted earnings per share.
AIMCO's management believes that adoption of Statement 128 will not have a
material effect on the earnings per share of AIMCO.
37
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
(W) The combined Pro Forma Statement of Operations (Merger) of the
Unconsolidated Subsidiaries for the six months ended June 30, 1997 is
presented below, which reflects the effects of the Merger and the NHP
Reorganization as if these transactions had occurred as of January 1, 1996.
<TABLE>
<CAPTION>
ADJUSTMENTS
PRE-MERGER ----------------------------- MERGER
PRO FORMA NHP REOR- PRO FORMA
TOTAL(i) MERGER(ii) GANIZATION(iii) TOTAL
----------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
RENTAL PROPERTY OPERATIONS
Rental and other property revenues....................... $ 6,218 $ -- $ 6,188 (iv) $ 12,406
Property operating expenses.............................. (4,120) -- (2,362)(iv) (6,482)
Owned property management expense........................ (308) -- (183)(iv) (491)
----------- --- ------- -----------
Income from property operations before depreciation...... 1,790 -- 3,643 5,433
Depreciation............................................. (803) -- (1,504)(iv) (2,307)
----------- --- ------- -----------
987 -- 2,139 3,126
----------- --- ------- -----------
SERVICE COMPANY BUSINESS
Management fees and other income......................... -- -- 35,645(v) 35,645
Management and other expenses............................ -- (14,003)(v) (14,003)
Amortization of management contracts and goodwill and
depreciation and amortization of other assets.......... (21) (5,880)(v) (5,901)(ix)
----------- --- ------- -----------
(21) -- 15,762 15,741
----------- --- ------- -----------
General and administrative............................... -- (8,125)(v) (8,125)
Interest expense......................................... (1,002) -- (3,670)(v)
(2,006)(iv)
(2,000)(vi) (11,872)
(3,194)(vi)
Interest income.......................................... -- -- 1,109(v) 1,109
----------- --- ------- -----------
Income before income taxes, equity in earnings and
minority interests..................................... (36) -- 15 (21)
Income tax provision..................................... (27) (318)(vii) (345)
Equity in earnings of NHP................................ 72 (72) -- --
Minority interest in partnerships........................ 33 (713)(viii) (680)
----------- --- ------- -----------
Net income............................................... $ 42 $ (72) $ (1,016) $ (1,046)
----------- --- ------- -----------
----------- --- ------- -----------
Income attributable to preferred stockholder............. $ 40 $ (994)
----------- -----------
----------- -----------
Income attributable to common stockholder................ $ 2 $ (52)
----------- -----------
----------- -----------
</TABLE>
---------------------------
(i) Represents the combined Unconsolidated Subsidiaries' pro forma
consolidated statement of operations as of June 30, 1997, which
gives effect to the ANHI Stock Transfers, reducing ANHI's
ownership of NHP Common Stock from 51.3% to 6.03%. See "Pro Forma
Financial Information (Pre-Merger)."
(ii) Represents adjustments for the Merger. Subsequent to the Merger,
all of the outstanding shares of NHP Common Stock will be owned by
AIMCO.
(iii) Represents adjustments related to the NHP Reorganization, whereby
AIMCO will contribute to the combined Unconsolidated Subsidiaries:
(i) certain assets and liabilities of NHP, primarily related to
the management operations and other businesses owned by NHP; and
(ii) sixteen real estate properties containing 3,625 apartment
units and the related liabilities, and interests in four real
estate partnerships owning four real estate properties containing
2,836 apartment units. Adjustments reflect (i) income and expenses
associated with certain assets and liabilities of NHP that will be
contributed to
38
<PAGE>
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (MERGER)
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(CONTINUED)
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
the Unconsolidated Subsidiaries, primarily related to the
management operations and other businesses owned by NHP; (ii)
adjustments for management costs that will be incurred by the
Unconsolidated Subsidiaries rather than by AIMCO, primarily
related to personnel costs, for work performed on the businesses
contributed to by the Unconsolidated Subsidiaries; (iii)
depreciation and amortization of the tangible and intangible
assets related to the management operations and other business
contributed to the Unconsolidated Subsidiaries; (iv) interest
expense associated with NHP's historical notes payable and on the
notes payable to AIMCO; (v) historical interest income of NHP;
(vi) income tax provision; and (vii) the historical results of
operations of real estate properties and interests in real estate
partnerships contributed, with additional depreciation and
amortization recorded related to AIMCO's new basis resulting from
the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies.
(iv) Represents adjustments for the historical results of operations of
the real estate properties and interest in real estate
partnerships contributed, with additional depreciation and
amortization recorded related to AIMCO's new basis resulting from
the allocation of the combined purchase price of NHP and the NHP
Real Estate Companies.
(v) Represents adjustments to reflect income and expenses associated
with certain assets and liabilities of NHP contributed.
(vi) Represents the interest expense incurred on notes payable to AIMCO
of $40,000 issued in connection with the sale of certain assets
and liabilities to the Unconsolidated Subsidiaries and $63,879
issued in connection with the sale of certain real estate assets
and related liabilities and interests in certain real estate
partnerships to the Unconsolidated Subsidiaries.
(vii) Represents the estimated Federal and state tax provisions, which
are calculated on the operating results of the Unconsolidated
Subsidiaries, excluding amortization of goodwill which is not
deductible for tax purposes. The Unconsolidated Subsidiaries
current tax benefit for the six months ended June 30, 1997 would
be approximately $255 which differs from the book tax provision
primarily due to differences in amortization of tangible and
intangible assets and expensing of lease costs which are included
in purchase consideration for financial reporting.
(viii) Represents the reduction of minority interest in one real estate
partnership owning fourteen real estate properties containing
2,725 apartment units. As part of the NHP Reorganization, AIMCO
will contribute the limited partnership interests in the
partnership currently consolidated by the Unconsolidated
Subsidiaries. Therefore, the Unconsolidated Subsidiaries will own
99% of the interests in such partnership.
(ix) The life of good will is currently under the review of the
Securities and Exchange Commission. AIMCO is in receipt of a
comment letter from the SEC that suggests a five-year life for
goodwill, rather than the 20-year life as presented herein. If the
life of goodwill were to be changed to five years, amortization of
management contracts and goodwill and depreciation and
amortization of other assets would be $16,405 and net loss would
be $(9,585).
39
<PAGE>
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
DATED
AUGUST 22, 1997
BY AND BETWEEN
AIMCO PROPERTIES, L.P.,
AS BUYER,
AND
[THE PARTIES IDENTIFIED ON EXHIBIT A
ATTACHED HERETO],
AS SELLER
<PAGE>
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
("AGREEMENT"), is made and entered into as of August 22, 1997 (the "EXECUTION
DATE"), by and between AIMCO PROPERTIES, L.P., a Delaware limited partnership
("BUYER"), and each of the parties identified on EXHIBIT "A" attached hereto
(collectively, "SELLER"), for the purpose of setting forth the agreement of the
parties and of instructing Commonwealth Land Title Company ("ESCROW AGENT") with
respect to the transactions contemplated by this Agreement.
R E C I T A L S:
A. Seller is the owner of an undivided fee simple interest in
certain parcels of real property described on EXHIBIT "B" attached hereto
(collectively, the "LAND PARCELS"), comprising thirty-five (35) multi-family
residential properties (each a "PROJECT," and collectively, the "PROJECTS").
The Land Parcels, together with the improvements, the balance of "Real
Property," "Personal Property," and the "Intangible Property" (each as
hereinafter defined), shall be collectively referred to herein as "Property."
B. Seller desires to sell and Buyer desires to purchase the
Property upon and subject to the terms and conditions set forth in this
Agreement.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the mutual covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Buyer and Seller hereby agree, and
instruct Escrow Agent, as follows:
1. AGREEMENT TO PURCHASE AND SELL.
Subject to all of the terms and conditions of this Agreement, Seller
agrees to sell, transfer and convey to Buyer, and Buyer agrees to acquire and
purchase from Seller, a good and marketable fee simple interest in the Property,
upon the terms and conditions set forth herein. Each representation, warranty
<PAGE>
and covenant made by Seller hereunder and any other term of this Agreement which
refers to Seller and Property (or any portion thereof) owned by Seller shall be
deemed to refer to each of the Sellers and to the one or more Projects owned by
such Sellers respectively.
2. PURCHASE PRICE.
The purchase price for the Property (the "PURCHASE PRICE") shall be
the sum of Two Hundred Sixty Million Dollars ($260,000,000), subject to
adjustment for prorations and closing costs as hereinafter provided, which shall
be payable as follows:
2.1 DEPOSIT. Upon the "Opening of Escrow" (as hereinafter
defined), Buyer shall deposit into "Escrow" (as hereinafter defined) the sum of
Two Million Six Hundred Thousand Dollars ($2,600,000) (which amount, together
with any and all interest and dividends earned thereon, shall hereinafter be
referred to as the "DEPOSIT") by wire transfer or by certified or bank check
payable to the order of Escrow Agent. Escrow Agent shall invest the Deposit in
insured money market accounts, certificates of deposit, United States Treasury
Bills or such other instruments as Buyer may instruct from time to time. At the
"Closing" (as hereinafter defined), the Deposit shall be paid to Seller and
credited against the Purchase Price. In the event that the sale of the Property
is not consummated for any reason, other than a default under this Agreement on
the part of Buyer, the Deposit shall be returned to Buyer.
2.2 LOAN OBLIGATIONS. Buyer shall have the option, in its sole and
absolute discretion, to either assume or fully prepay the "Loan Obligations" (as
hereinafter defined), pursuant to the provisions of Section 7 below, on the
"Closing Date" (as hereinafter defined); provided, however, Buyer's ability to
assume the Loan Obligations shall not be a condition precedent to Buyer's
obligation to close under the terms of this Agreement unless Buyer has elected
to terminate this Agreement pursuant to Section 7.2 hereof. At the Closing,
Buyer shall receive a credit towards the Purchase Price equal to the total
amount of the Loan Obligations assumed by Buyer (the "LOAN CREDIT AMOUNT").
2.3 CREDIT AMOUNT. On the Closing Date, Buyer shall receive as a
credit against the Purchase Price an amount (the "CREDIT AMOUNT") equal to the
sum of: (i) security deposits which were paid by "Tenants" (as hereinafter
defined) to or for the account of Seller, plus accrued interest, if and to the
extent required to be paid to such Tenants on such security deposits; (ii)
expenses and
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other sums owed by Seller to Tenants for work or disputes which occur prior to
the Closing Date (as evidenced in any written agreement or correspondence from
Seller or its agents, whereby Seller accepts or acknowledges responsibility for
such amounts); and (iii) the amount, if any, by which prorated amounts allocated
to Seller pursuant to Section 8.5.1 below exceed the prorated amount allocated
to Buyer pursuant to Section 8.5.1 below.
2.4 CASH. On the Closing Date, Buyer shall deposit into Escrow the
Purchase Price, adjusted as follows: (i) add Buyer's share of the closing costs
(as hereinafter provided) and (ii) subtract the sum of the Deposit, the Loan
Credit Amount and the Credit Amount, by wire transfer or by certified or bank
check payable to the order of the Escrow Agent.
3. OPENING OF ESCROW.
On or before the third (3rd) day after the Execution Date, Buyer and
Seller shall cause a purchase and sale escrow ("ESCROW") to be opened with
Escrow Agent by delivery to Escrow Agent of a fully executed copy of this
Agreement together with the Deposit (the "OPENING OF ESCROW"). This Agreement
shall constitute escrow instructions to the Escrow Agent as well as the
agreement of the parties. Escrow Agent is hereby appointed and designated to
act as the Escrow Agent and instructed to deliver, pursuant to the terms of this
Agreement, the documents and funds to be deposited into Escrow as herein
provided. The parties hereto shall execute such additional escrow instructions
(not inconsistent with this Agreement as determined by counsel for Buyer and
Seller) as Escrow Agent shall deem reasonably necessary for its protection,
including Escrow Agent's general provisions (as may be modified by Buyer, Seller
and Escrow Agent). In the event of any inconsistency between this Agreement and
such additional escrow instructions, the provisions of this Agreement shall
govern.
4. ACTIONS PENDING CLOSING.
4.1 DUE DILIGENCE PERIOD.
4.1.1 PROPERTY DOCUMENTS. Not later than five (5) days after
the Execution Date, Seller shall deliver to Buyer (at Seller's sole cost and
expense) true, correct and complete copies of all of the following to the extent
that the same are in the possession or control of Seller or its agents, auditors
or independent contractors: (a) service agreements, equipment leases and other
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contracts relating to the operation and management of the Property, excluding
Seller's management agreement (collectively, the "SERVICE CONTRACTS"); (b)
personal property lists; (c) government permits, approvals and licenses; (d)
existing title policies, reports and surveys; (e) Phase I Environmental Reports
and any engineering, soils and pest reports; and (f) 1995 and 1996 year-end
audited financial statements, 1995, 1996 and 1997 year-to-date income and
expense statements, current rent rolls, 1997 operating budgets and the most
recent tax statements and assessed value notices. From and after the Execution
Date, Seller shall make available for inspection by Buyer during normal business
hours at the Property or Seller's place of business located in Boston,
Massachusetts, such other property documentation as Buyer may reasonably
request, including, without limitation, the "Leases" (as defined herein), the
most current year's utility bills, appraisals, insurance policies, and all
correspondence with all governmental entities regarding the Property and
as-built plans and specifications to the extent available. All of the documents
and materials referred to in this Section 4.1.1 shall hereinafter be
collectively referred to as the "PROPERTY DOCUMENTS".
4.1.2 PROPERTY QUESTIONNAIRES. Not later than fifteen (15)
Business Days after the Execution Date, Seller shall deliver to Buyer a
completed property questionnaire for each Project in the form of EXHIBIT "C"
attached hereto (collectively, the "PROPERTY QUESTIONNAIRES"). Seller makes no
representation or warranty concerning the accuracy of the completed Property
Questionnaires, and will submit the same to assist Buyer in its due diligence
efforts only.
4.1.3 DILIGENCE TESTS. At all reasonable times during the
forty-five (45) day period commencing on the Execution Date (the "DUE DILIGENCE
PERIOD"), Buyer, its agents and representatives shall be entitled at Buyer's
sole cost and expense to (i) enter onto the Property during normal business
hours to perform any inspections, investigations, studies and tests of the
Property, including, without limitation, physical, structural, mechanical,
architectural, engineering, soils, geotechnical and environmental tests and ALTA
Surveys (or updates thereof) of each Land Parcel (collectively, the "SURVEYS")
that Buyer deems appropriate in its sole and absolute discretion; (ii) cause an
environmental assessment of the Property to be performed; (iii) review all
Property Documents and examine and copy any and all books and records maintained
by Seller or its agents (including, without limitation, all documents relating
to utilities, zoning and the access, subdivision and appraisal of, and all legal
requirements affecting, the Property); and (iv) investigate such other matters
as Buyer may desire; provided, however, that Buyer: (i) shall give Seller
reasonable prior notice of
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such inspections and/or investigations, including the name of Buyer's agents and
the description of the tests and inspections to be performed on the Property;
and (ii) Buyer shall use its reasonable efforts to minimize any interference
with the operation of the Property. Seller shall have the right to disapprove
of Buyer's agents and/or the methods of proposed tests and inspections on the
grounds that such proposed tests or inspections are not commercially reasonable,
in which case Buyer may propose reasonable alternative agents and/or testing
methods or terminate this Agreement as provided in Section 4.1.4 below. In the
event this Agreement is terminated, Buyer shall provide Seller a copy of any
environmental or engineering reports obtained by Buyer from third parties in
connection with any such tests and inspections. Prior to the Closing or the
termination of this Agreement, Buyer shall keep confidential any information
regarding the Property contained in any environmental or engineering reports and
shall not disclose such information to any third party other than potential
managers, lenders, underwriters, investors and the like (and their consultants
or attorneys engaged to review such reports) except as required by law or court
order or to comply with Buyer's securities reporting requirements. If any such
disclosure is made by Buyer, Buyer shall instruct any such third party to whom
such information is disclosed to keep such information confidential. Buyer, at
its own expense, shall restore any damage to the Property caused by any of the
tests or studies made by Buyer and/or its agents. Buyer shall indemnify and
hold harmless Seller and its agents from all claims, causes of action, costs,
losses, damages and reasonable attorneys' fees incurred by Seller or its agents
in connection with or arising out of any inspections carried on by or on behalf
of Buyer pursuant to this Section 4.1.3; provided, however, that Buyer shall not
indemnify Seller or its agents for any claim, loss or cause of action caused by
Seller's or its agents' gross negligence or willful misconduct or any physical
condition existing on the Property prior to Buyer's entry thereon. The
indemnification obligation set forth in this Section 4.1.3 shall survive the
termination of this Agreement or the Closing.
4.1.4 TERMINATION RIGHT. Buyer shall have the right at any
time on or before the last day of the Due Diligence Period (the "DUE DILIGENCE
TERMINATION DATE") to terminate this Agreement if Buyer determines in its sole
and absolute discretion that all or any portion of the Property is not
acceptable to Buyer (including, without in any way limiting the foregoing, a
determination by Buyer that consummation of the transactions contemplated by
this Agreement could jeopardize the status of Apartment Investment and
Management Company, a Maryland corporation, as a real estate investment trust,
as defined in Section 856 of the Internal Revenue Code of 1986). In the event
that Buyer delivers a written notice to Seller and Escrow Agent terminating its
rights hereunder on or
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before the Due Diligence Termination Date, then (i) Escrow Agent shall return
the Deposit to Buyer, (ii) Seller shall be responsible for the cancellation
charges of Escrow Agent and "Title Company" (as hereinafter defined), if any,
and (iii) this Agreement shall terminate and be of no further force or effect
and neither party shall have any further rights or obligations hereunder, other
than pursuant to any provision hereof which expressly survives the termination
of this Agreement.
4.2 TITLE.
4.2.1 TITLE AND SURVEY. Within ten (10) days after the
Execution Date, Seller shall, at Seller's sole cost and expense, cause (a)
Commonwealth Land Title Insurance Company (in such capacity, "TITLE COMPANY") to
issue a current preliminary report for an ALTA extended coverage (owner's)
policy of title insurance for each Project (collectively, the "PTRS"); (b) the
Title Company to deliver legible copies of all documents referenced as
exceptions in the PTRs (the "UNDERLYING DOCUMENTS"); (c) a search for filings
pursuant to the Uniform Commercial Code with regard to the Personal Property
(the "UCC SEARCH") to be performed; and (d) Surveys (or updates of existing
Surveys) for each Project to be prepared in accordance with ALTA / ACSM minimum
technical standards and the laws of the state(s) in which the applicable Project
is located, and showing, with respect to each Project, the entire Real Property,
adjoining streets and roads, including the points of ingress and egress thereto,
setting forth the exact location by metes and bounds and the exact dimensions of
the Real Property, a legal description of the Real Property, the exact location
of any Improvements, the location of parking areas on the Real Property, the
location of all easements on and upon the Real Property, together with all
rights-of-way and other matters relating to the Real Property. The PTRs, the
Underlying Documents, the Surveys and the UCC Search shall be collectively
referred to herein as the "TITLE DOCUMENTS." Promptly following the delivery of
the Title Documents to Buyer, Buyer and Seller agree to enter into an amendment
to this Agreement to supplement Exhibit "B" attached hereto with the true,
correct and complete legal descriptions of the Land Parcels.
4.2.2 BUYER'S REVIEW OF TITLE. On or before the Due
Diligence Termination Date, Buyer shall notify Seller and Escrow Agent in
writing of any objection which Buyer may have to any matters reported or shown
in the Title Documents or any updates thereof (provided, however, that Buyer
shall have an additional five (5) Business Days, regardless of the passage of
the Due Diligence Termination Date, following Buyer's receipt of any updates and
legible
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copies of all documents referenced therein to notify Seller of objections to
items shown on any such updates which were not disclosed on the previously
delivered Title Documents). In addition to the Leases, matters reported in or
shown by the Title Documents (or any updates thereof) and not timely objected to
by Buyer as provided above shall be deemed to be "PERMITTED EXCEPTIONS."
Notwithstanding anything to the contrary contained herein, Seller shall be
required to discharge and remove any and all liens affecting the Property which
secure an obligation to pay money, other than installments of real estate taxes
and/or special assessments not delinquent as of the Closing (collectively,
"LIENS") and, even though Buyer does not expressly disapprove such Liens, such
Liens shall not be Permitted Exceptions, except to the extent that Buyer obtains
a "Consent to Assumption" in respect of any "Loan" (as each such term is defined
in Section 7.1 hereof).
4.2.3 REMOVAL OR CURE OF TITLE OBJECTIONS. As a condition to
Closing, Seller shall take all reasonable action necessary to remove from title
to the Property any exceptions and matters so objected to by Buyer, or, in the
alternative, Seller shall use reasonable efforts to obtain for Buyer title
insurance from Title Company insuring over such exceptions or matters, such
insurance to be in form and substance satisfactory to Buyer. If Seller fails to
remove or satisfactorily insure over any exceptions or matters objected to by
Buyer on or before the Closing Date, then Buyer may, as its sole and exclusive
remedy, either: (a) terminate this Agreement, in which case Escrow Agent shall
return the Deposit (to the extent it has been delivered into Escrow) to Buyer,
Seller shall pay the cancellation charges of Escrow Agent and Title Company, if
any, and neither Seller nor Buyer shall have any further rights, liabilities or
obligations hereunder (except for those provisions which expressly survive the
termination of this Agreement); (b) discharge any objected to exceptions or
matters which may consist of deeds of trust, mortgages, mechanics' or
materialmans' liens, tax liens or other liens or charges which can be discharged
by the payment of an undisputed liquidated monetary obligation and deduct from
the Purchase Price the amount necessary to discharge such lien(s); (c) extend
the Closing Date to allow Seller a reasonable period of time to remove such
objected to exceptions or matters to the extent that Seller is diligently
working to cure or discharge such exceptions, not to exceed thirty (30) days; or
(d) proceed to a timely Closing whereupon such objected to exceptions or matters
shall be deemed to be Permitted Exceptions. In the event that Buyer fails to
make such election on a timely basis in accordance with the terms hereof, then
this Agreement shall terminate in accordance with terms of clause (a) above.
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4.2.4 CONDITION OF TITLE AT CLOSING. Upon the Closing,
Seller shall contribute, transfer and convey to Buyer fee simple title to the
Real Property by a duly executed and acknowledged deed (in the form of a special
warranty deed, limited warranty deed, or a similar type of deed, as applicable),
for the Real Property comprising each Project, in a form reasonably satisfactory
to Buyer (collectively, the "DEEDS"), subject only to the Permitted Exceptions
applicable to each such Project. Prior to Closing, Seller shall not take or
permit any action or commit or suffer any acts which would give rise to a
variance from the current legal descriptions of any of the Real Property, or
cause the creation of any exception or encumbrance against or respecting the
Real Property without the prior written consent of Buyer, which consent shall
not be unreasonably withheld or delayed. Nothing in this Section 4.2.4 shall
preclude Buyer from disapproving title matters in accordance with the provisions
of Sections 4.2.2 and 4.2.3 above.
5. DESCRIPTION OF PROPERTY.
5.1 THE IMPROVEMENTS. As used herein, the term "IMPROVEMENTS"
shall mean all buildings, improvements, structures and fixtures now or hereafter
located on or in any Land Parcel.
5.2 THE REAL PROPERTY. As used herein, the term "REAL PROPERTY"
shall include (i) the Land Parcels, (ii) the Improvements, (iii) all apparatus,
equipment and appliances affixed to and used in connection with the operation or
occupancy of any of the Land Parcels and/or any of the Improvements (such as
heating, air conditioning or mechanical systems and facilities used to provide
any utility services, refrigeration, ventilation, waste disposal or other
services) and now or hereafter located on or in any of the Land Parcels or any
of the Improvements, and (iv) all of the rights, privileges and easements
appurtenant to or used in connection with any of the Land Parcels and/or any of
the Improvements, including, without limitation, all minerals, oil, gas and
other hydrocarbon substances, all development rights, air rights, water, water
rights and water stock relating to any of the Land Parcels, all strips and
gores, all of Seller's right, title and interest in and to any streets, alleys,
easements, rights-of-way, public ways, or other rights appurtenant, adjacent or
connected to any of the Land Parcels.
5.3 THE PERSONAL PROPERTY. As used herein, the term "PERSONAL
PROPERTY" shall mean all of that certain tangible personal property, equipment
and supplies owned by Seller and situated at the Real Property and used by
Seller in connection with the use, operation, maintenance or repair of all or
any portion of
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the Real Property, including, without limitation, all Personal Property
described on EXHIBIT "D" attached hereto.
5.4 THE INTANGIBLE PROPERTY. As used herein, the term "INTANGIBLE
PROPERTY" shall mean all of that certain intangible property owned by Seller and
used by Seller in connection with all or any portion of the Real Property and/or
the Personal Property, including, without limitation, all of Seller's right,
title and interest in, to and under: (i) the Leases, all contract rights
(including, without limitation, Service Contracts), books, records, reports,
test results, environmental assessments, if any, as-built plans, specifications
and other similar documents and materials relating to the use, operation,
maintenance, repair, construction or fabrication of all or any portion of the
Real Property and/or the Personal Property; (ii) all rights, if any, in and to
the names listed on EXHIBIT "E" attached hereto; (iii) all transferable business
licenses, architectural, site, landscaping or other permits, applications,
approvals, authorizations and other entitlements affecting any portion of the
Real Property; and (iv) all transferable guarantees, warranties and utility
contracts relating to all or any portion of the Real Property.
6. CONDITIONS PRECEDENT TO CLOSING.
6.1 BUYER'S CONDITIONS. The obligation of Buyer to purchase the
Property in accordance with this Agreement is subject to the following
conditions precedent (and conditions concurrent, with respect to deliveries to
be made by the parties at Closing) (the "BUYER'S CLOSING CONDITIONS"), which
conditions may be waived, or the time for satisfaction thereof extended, by
Buyer only in a writing executed by Buyer.
6.1.1 TITLE. Title Company shall be prepared and irrevocably
committed to issue to Buyer (with an effective date not earlier than the Closing
Date), as to each Project, American Land Title Association extended coverage
owner's policies of title insurance in favor of Buyer for the Real Property with
liability coverage in such amounts as set forth on SCHEDULE 6.1.1 (collectively,
the "BUYER'S TITLE POLICIES"). Each of the Buyer's Title Policies shall show
fee title to the Real Property vested in Buyer or Buyer's nominee, with those
endorsements reasonably requested by Buyer and provided such endorsements are
available in the State where the Property is located, subject only to the
Permitted Exceptions.
6.1.2 SELLER'S DUE PERFORMANCE. All of the representations
and warranties of Seller set forth in this Agreement shall be true, correct and
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complete in all material respects as of the Closing Date, and Seller, on or
prior to the Closing Date, shall have complied with and/or performed all of the
obligations, covenants and agreements required on the part of Seller to be
complied with or performed pursuant to the terms of this Agreement. On the
Closing Date, Seller shall deliver a certificate, in the form of EXHIBIT "F"
attached hereto (the "SELLER'S CERTIFICATE").
6.1.3 PHYSICAL CONDITION OF PROPERTY. Subject to the
provisions of Section 12 below, the physical condition of the Property shall be
substantially the same on the Closing Date as on the expiration of the Due
Diligence Period, excepting casualties (which shall be governed by Section 12
below) and normal wear and tear.
6.1.4 BANKRUPTCY. No action or proceeding shall have been
commenced by or against Seller under the federal bankruptcy code or any state
law for the relief of debtors or for the enforcement of the rights of creditors
and no attachment, execution, lien or levy shall have attached to or been issued
with respect to their interests in the Property or any portion thereof.
6.1.5 LEASES. At the Closing, Seller shall assign all of its
rights and remedies under the Leases (including, without limitation, the right
to any security deposits and prepaid rent) to Buyer, free and clear of all liens
and encumbrances (other than Permitted Exceptions), and Buyer shall assume the
obligations of Seller with respect thereto, pursuant to an assignment of leases
and security deposits with respect to the Property in the form of EXHIBIT "G"
attached hereto (the "ASSIGNMENT OF LEASES").
6.1.6 BILL OF SALE. At the Closing, Seller shall deliver to
Buyer a bill of sale and assignment with respect to the Property in the form of
EXHIBIT "H" attached hereto (the "BILL OF SALE"), by which Seller shall transfer
to Buyer all the Personal Property and the Intangible Property, but excluding
the Leases, in each case free of all liens and encumbrances (other than
Permitted Exceptions).
6.1.7 NON-FOREIGN AFFIDAVIT. On or before the Closing,
Seller shall deliver to Buyer a Non-Foreign Affidavit in the form of EXHIBIT "I"
attached hereto (the "NON-FOREIGN AFFIDAVIT"), executed by Seller.
6.1.8 NO MORATORIA. No moratorium, statute, regulation,
ordinance, legislation, order, judgment, ruling or decree of any governmental
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agency or of any court shall have been enacted, adopted, issued, entered or
pending which is directed specifically at any Project and which would have a
material adverse effect on the value of any Project.
6.1.9 PROPERTY QUESTIONNAIRES. Seller shall have delivered
the Property Questionnaires to Buyer in accordance with the terms of Section
4.1.2 hereof.
6.2 FAILURE OF BUYER'S CLOSING CONDITIONS. Subject to Buyer's
rights under Section 13.2 hereof with respect to any default by Seller
(including, without limitation, any default in the performance of any covenants
of Seller set forth in this Section 6), if any of the Buyer's Closing Conditions
have not been fulfilled within the applicable time periods, Buyer may:
6.2.1 waive such Buyer's Closing Condition and close Escrow
in accordance with this Agreement, without adjustment or abatement of the
Purchase Price; or
6.2.2 terminate this Agreement by written notice to Seller
and to Escrow Agent, in which event Escrow Agent shall return the Deposit to
Buyer, all other documents, instruments and funds delivered into Escrow shall be
returned to the party that delivered the same into Escrow, Seller shall pay for
all of the cancellation charges of the Title Company and Escrow Agent (if any),
and Buyer shall be entitled to pursue all of its rights and remedies pursuant to
Section 13.2 below.
6.3 SELLER'S CONDITIONS. The obligation of Seller to contribute
the Property in accordance with this Agreement is subject to the following
conditions precedent (and conditions concurrent, with respect to deliveries to
be made by the parties at Closing) (the "SELLER'S CLOSING CONDITIONS"), which
conditions may be waived, or the time for satisfaction thereof extended, by
Seller only in a writing executed by Seller (provided, however, that any such
waiver shall not affect Seller's ability to pursue liquidated damages with
respect to any breach hereunder by Buyer):
6.3.1 BUYER'S DUE PERFORMANCE. All of the representations
and warranties of Buyer set forth in this Agreement shall be true, correct and
complete in all material respects as of the Closing Date, and Buyer, on or prior
to the Closing Date, shall have complied with and/or performed all of the
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obligations, covenants and agreements required on the part of Buyer to be
complied with or performed pursuant to the terms of this Agreement.
6.4 FAILURE OF SELLER'S CLOSING CONDITIONS. Subject to Seller's
rights under Section 13.1 hereof with respect to any default by Buyer, if any of
the Seller's Closing Conditions have not been fulfilled within the applicable
time periods, Seller may:
6.4.1 waive the Seller's Closing Conditions and close Escrow
in accordance with this Agreement, without adjustment of the Purchase Price; or
6.4.2 terminate this Agreement by written notice to Buyer and
to Escrow Agent, in which event all documents, instruments and funds delivered
into Escrow (other than the Deposit, which shall be disbursed in accordance with
the terms of Section 13.1 hereof) shall be returned to the party that delivered
the same into Escrow, Buyer shall pay for all of the cancellation charges of
Title Company and Escrow Agent, if any, and Seller shall be entitled to
liquidated damages only as set forth in Section 13.1 hereof.
7. LOAN ASSUMPTION.
7.1 LOAN OBLIGATIONS. The Projects are currently encumbered by
certain deeds of trust or mortgages securing the promissory notes identified on
SCHEDULE 7.1 attached hereto (each, a "LOAN" and collectively, the "LOAN
OBLIGATIONS"). The Buyer may seek written lender consents to the assumption by
Buyer of each of the Loans identified by Buyer as a Loan which Buyer wishes to
assume at the Closing (each, a "CONSENT TO ASSUMPTION"); provided, however, that
Buyer's receipt of any such Consent to Assumption shall not be a condition to
Buyer's obligation to close under the terms of this Agreement, unless Buyer has
elected to terminate this Agreement pursuant to Section 7.2 hereof. Buyer
shall pay all fees and related costs in connection with its assumption and/or
the prepayment of the Loan Obligations (including, without limitation, any
prepayment charges), which fees and costs shall not be credited against the
Purchase Price.
7.2 TERMINATION. In the event that Buyer delivers a written notice
to Seller and Escrow Agent terminating its rights hereunder on or before the Due
Diligence Termination Date, then (i) Escrow Agent shall return the Deposit to
Buyer, (ii) Seller and Buyer shall each be responsible for one-half (1/2) of the
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cancellation charges of Escrow Agent and Title Company, if any, and (iii) this
Agreement shall automatically terminate and be of no further force or effect and
neither party shall have any further rights or obligations hereunder, other than
pursuant to any provision hereof which expressly survives the termination of
this Agreement.
8. CLOSING.
8.1 CLOSING DATE. Subject to the provisions of this Agreement, the
"Closing" (as defined below) shall take place (i) on the date (the "CLOSING
DATE") which is the fifteenth (15th) day after the Due Diligence Termination
Date, and (ii) at the offices of Skadden, Arps, Slate, Meagher & Flom LLP in New
York, or on such other date or location upon which the parties hereto may agree
in writing. As used herein, the "CLOSING" shall mean the date upon which the
transactions contemplated by this Agreement are consummated, except to the
extent that the Deeds may be recorded in the Official Records of the appropriate
counties after the Closing.
8.2 DELIVERIES BY SELLER. On or before the Closing Date, Seller,
at its sole cost and expense, shall deliver or cause to be delivered into Escrow
the following documents and instruments, each dated as of the Closing Date, in
addition to the other items and payments required by this Agreement to be
delivered by Seller:
8.2.1 DEEDS. The original executed and acknowledged Deeds
conveying the Real Property to Buyer;
8.2.2 NON-FOREIGN AFFIDAVIT. The original Non-Foreign
Affidavit, executed by Seller;
8.2.3 ASSIGNMENT OF LEASES. Four (4) original executed and
acknowledged counterparts of the Assignment of Leases;
8.2.4 ASSIGNMENT OF SERVICE CONTRACTS. Four (4) original
executed counterparts of the Assignment of Service Contracts in the form of
EXHIBIT "J" attached hereto;
8.2.5 SELLER'S CERTIFICATE. The original executed Seller's
Certificate;
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8.2.6 BILL OF SALE. Four (4) original executed counterparts
of the Bill of Sale;
8.2.7 PROOF OF AUTHORITY. Such proof of Seller's authority
and authorization to enter into this Agreement and the transaction contemplated
hereby, and such proof of the power and authority of the individual(s) executing
or delivering any instruments, documents or certificates on behalf of Seller to
act for and bind Seller as may be reasonably required by Title Company or Buyer;
and
8.2.8 OTHER. Such other documents and instruments
(including, without limitation, affidavits reasonably required by the Title
Company to facilitate the issuance of the Buyer's Title Policies at the Closing
prior to the recordation of the Deeds), signed and properly acknowledged by
Seller, if appropriate, as may be reasonably required by Buyer, Title Company,
Escrow Agent, or otherwise in order to effectuate the provisions of this
Agreement and the Closing of the transactions contemplated herein.
8.3 DELIVERIES BY BUYER. On or before the Closing, Buyer shall
deliver or cause to be delivered into escrow (i) the balance of the Purchase
Price pursuant to Section 2.4 hereof and Buyer's share proration and Closing
Costs (as hereinafter defined), as provided in Sections 8.5 and 8.6 hereof,
respectively, (ii) four (4) original executed and acknowledged counterparts of
the Assignment of Leases, (iii) four (4) original executed counterparts of the
Assignment of Service Contracts, and (iv) such other documents and instruments,
signed and properly acknowledged by Buyer, if appropriate, as may reasonably be
required by Escrow Agent or otherwise in order to effectuate the provisions of
this Agreement and the closing of the transactions contemplated herein.
8.4 ACTIONS BY ESCROW AGENT. Provided that Escrow Agent shall not
have received written notice from Buyer or Seller of the failure of any
condition to the Closing or of the termination of the Escrow and this Agreement,
when Buyer and Seller have deposited into Escrow the documents and funds
required by this Agreement, and Title Company is irrevocably committed to issue
the Buyer's Title Policies, with an effective date not earlier than the Closing
Date, Escrow Agent shall, in the order and manner herein below indicated, take
the following actions:
8.4.1 FUNDS AND CERTIFICATES. Following Title Company's
written acknowledgment that it is prepared and irrevocably committed to issue
the
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Buyer's Title Policies (as evidenced by its delivery to Buyer of a "mark-up" of
the PTRs, or other evidence satisfactory to Buyer, on or prior to the Closing
Date), disburse all funds as follows:
8.4.1.1 pursuant to the "Closing Statement" (as
hereinafter defined), retain for Escrow Agent's own account all escrow fees and
costs, disburse to Title Company the fees and expenses incurred in connection
with the issuance of the Buyer's Title Policies, and disburse to any other
persons or entities entitled thereto the amount of any other Closing Costs;
8.4.1.2 disburse funds necessary to discharge and
release any and all Liens against the Property (other than Liens for which Buyer
has obtained a Consent to Assumption);
8.4.1.3 pay to Seller the remaining balance of the
cash deposited into Escrow by Buyer pursuant to Section 2.4 hereof, after all
disbursements pursuant to Sections 8.4.1.1 and 8.4.1.2 above have been
completed; and
8.4.1.4 disburse to Buyer any remaining funds in the
possession of Escrow Agent after payments pursuant to Sections 8.4.1.1, 8.4.1.2
and 8.4.1.3 above have been completed.
8.4.2 RECORDING. Cause the Deeds and any other documents
which the parties hereto may mutually direct to be recorded in the Official
Records and obtain conformed copies thereof for distribution to Buyer and
Seller.
8.4.3 DELIVERY OF DOCUMENTS. Deliver (a) to Buyer and Seller
each, two (2) originals of all documents deposited into Escrow, other than the
Deeds and the Non-Foreign Affidavits, and (b) to Buyer, the Non-Foreign
Affidavits.
8.5 PRORATIONS.
8.5.1 Rentals (including all pre-paid rent), revenues, and
other income, if any, from the Property; taxes, assessments and improvement
bonds (on the basis of each such item's current tax fiscal year of closing);
service or other contract fees; interest due and payable under any Loan
Obligations assumed by Buyer; an amount to Seller equal to the balance of any
escrow, impound or reserve accounts held by the holder of any Loan Obligations
assumed
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by Buyer which will inure to the benefit of Buyer; all utility deposits, if any;
and other expenses affecting the Property shall be prorated between Buyer and
Seller as of the Closing Date; provided, however, that Seller shall receive a
credit at the Closing in an amount equal to the rentals that are delinquent as
of the Closing Date, but only to the extent that such delinquent rentals are due
and owing from Tenants occupying a portion of the Property on the Closing Date;
and provided further, that Buyer shall be entitled to any and all payments
subsequently received in satisfaction of such delinquent rentals,
notwithstanding the fact that such rentals are attributable to a period prior to
Closing. For purposes of calculating prorations, Buyer shall be deemed to be
title holder of the Property, and therefore entitled to the income and
responsible for the expenses, after 12:01 a.m. on the Closing Date. After the
Closing, Seller shall have no right to proceed in any manner or make any claim
against Tenants for rents that were delinquent as of the Closing Date, except to
the extent that any such person no longer occupies any portion of the Property.
All non-delinquent real estate taxes or assessments on the Property shall be
prorated based on the actual current tax bill, but if such tax bill has not yet
been received by Seller by the Closing Date or if supplemental taxes are
assessed after the Closing for the period prior to the Closing, the parties
shall make any necessary adjustment after the Closing by cash payment to the
party entitled thereto so that Seller shall have borne all real property taxes,
including, without limitation, all supplemental taxes, allocable to the period
prior to the Closing and Buyer shall bear all real property taxes, including,
without limitation, all supplemental taxes, allocable to the period from and
after the Closing. If any expenses attributable to the Property and allocable
to the period prior to the Closing are discovered or billed after the Closing,
the parties shall make any necessary adjustment after the Closing by cash
payment to the party entitled thereto so that Seller shall have borne all
expenses allocable to the period prior to the Closing and Buyer shall bear all
expenses allocable to the period from and after the Closing. The provisions of
this Section 8.5 shall survive the Closing for a period of one (1) year.
8.5.2 Fifteen (15) days prior to the Closing, Escrow Agent
shall deliver to each of the parties for their review and approval a preliminary
closing statement (the "PRELIMINARY CLOSING STATEMENT") setting forth (i) the
proration amounts allocable to each of the parties pursuant to this Section 8.5,
and (ii) the Closing Costs. Based on each of the party's comments, if any,
regarding the Preliminary Closing Statement, Escrow Agent shall revise the
Preliminary Closing Statement and obtain from and deliver to Seller and Buyer,
at the Closing, a final, signed version of a closing statement (the "CLOSING
STATEMENT").
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8.6 CLOSING COSTS. Each party shall pay its own costs and expenses
arising in connection with the Closing (including, without limitation, its own
attorney and advisor fees), except the following costs (the "CLOSING COSTS"):
8.6.1 all documentary transfer, stamp, sales and other taxes
related to the transfer of the Property, which shall be paid by Seller;
8.6.2 Escrow Agent's escrow fees and costs, which shall be
paid one-half (1/2) by Seller and one-half (1/2) by Buyer;
8.6.3 the cost of the Surveys and the Buyer's Title Policies,
which shall be paid by Seller (excluding any endorsements thereto, which shall
be paid by Buyer);
8.6.4 all recording fees (other than recording fees
associated with any new purchase money financing), which shall be paid by
Seller; and
8.6.5 any and all prepayment penalties due and payable in
connection with the discharge and satisfaction of any Lien not assumed by Buyer
and any recording fees associated with any new purchase money financing, which
shall be paid by Buyer.
8.7 DELIVERIES OUTSIDE OF ESCROW. Seller shall deliver possession
of the Property, subject only to the Permitted Exceptions, to Buyer upon the
Closing. Further, Seller hereby covenants and agrees to deliver to Buyer, on or
prior to the Closing, the following items:
8.7.1 INTANGIBLE PROPERTY. The Intangible Property,
including, without limitation, the original Leases and the Property Documents.
8.7.2 PERSONAL PROPERTY. The Personal Property, including,
without limitation, any and all keys, pass cards, remote controls, security
codes, computer software and other devices relating to access to the
Improvements.
8.7.3 NOTICES.
8.7.3.1 NOTICES TO TENANTS. A letter for each
Project in form and substance reasonably acceptable to Buyer, duly executed by
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Seller, dated as of the Closing Date and addressed to each of the Tenants,
informing the Tenants of the transfer of the Property and the assignment of the
Leases to Buyer together with an instruction to pay all amounts due or to become
due under the Leases to Buyer.
8.7.3.2 SERVICE CONTRACTS NOTICES. A letter to each of the
vendors of the Service Contracts for the Property in form and substance
reasonably acceptable to Buyer, duly executed by Seller, dated as of the Closing
Date and addressed to each Service Contract vendor, informing said vendors of
the assignment of the Service Contracts to Buyer.
9. SELLER'S REPRESENTATIONS AND WARRANTIES.
Seller represents and warrants to and agrees with Buyer, as of the
Execution Date and as of the Closing, as follows:
9.1 TITLE. Seller is the legal and equitable owner of the
Property, and Seller has the full right to convey the Property to Buyer.
9.2 LEASES.
9.2.1 LEASE SCHEDULES. The schedules attached hereto as
SCHEDULE 9.2.1 (collectively, the "RENT ROLLS") are true, correct and complete
with respect to: (i) the leases, licenses, tenancies and other occupancy
agreements (whether written or oral) now in effect at each of the Projects (each
a "LEASE" and collectively, the "LEASES"), (ii) the identities of the tenants
under the Leases (the "TENANTS"), (iii) any delinquencies under the Leases, (iv)
the space occupied by the Tenants, (v) the commencement and expiration dates of
the Leases, (vi) the annual rents payable thereunder, and (vii) any outstanding
agreements, written or oral, to amend or otherwise modify any of the Leases.
9.2.2 DELIVERY OF LEASES. True and complete copies of all
Leases and all amendments, guarantees and other documents relating thereto shall
be made available to Buyer in accordance with Section 4.1.1 hereof; provided,
however, that for purposes of this Agreement, Buyer may rely on the data set
forth on the Rent Rolls.
9.2.3 SECURITY DEPOSITS. Except as set forth on the Rent
Rolls, there are no security deposits held by the landlord under any of the
Leases and there are no arrearages in rent or additional rent under any of the
Leases.
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9.2.4 NO TENANT DISPUTES. Except as set forth on the Rent
Rolls or on SCHEDULE 9.2.4 attached hereto, (i) Seller has not received any
written notice from any Tenant that Seller is in default under the terms of its
lease, and (ii) Seller has not received any written notification from any Tenant
that it disputes the computation of the rents payable pursuant to its Lease.
9.2.5 NO PRE-PAID RENT. No Tenant has paid any rent for more
than one (1) month in advance, except as may otherwise be set forth on the Rent
Rolls.
9.3 SERVICES TO TENANTS. All of the services required to be
supplied to each Tenant are presently being supplied and will continue to be
supplied through the Closing Date, and Seller has received no written notices of
any failure of Seller to supply any of said services to any tenant. Seller has
had no written notice from any Tenant of any items of work to be completed
pursuant to any of the Leases for the benefit of any Tenant and Seller has no
knowledge of any such work to be done except as may otherwise be set forth in
the Rent Rolls. No Tenant is entitled to any additional work during the term of
its Lease except as may be required by their Lease.
9.4 INTENTIONALLY OMITTED.
9.5 NO BROKER'S COMMISSIONS. There will be no brokerage or other
leasing commissions payable in connection with any of the Tenants under
presently existing Leases or new leases or amendments thereto following the
Closing.
9.6 ASSIGNMENT. All of the Leases are assignable to Buyer in
connection with the transfer of the Property without the necessity for any
approval, consent or additional payment, except as may be required by any Loan
Obligations which Buyer assumes.
9.7 EXISTING CONTRACTS. Except as set forth on the schedule
attached hereto as SCHEDULE 9.7, neither Seller nor any agent of Seller has
executed any service, maintenance, repair, management, supply or other contracts
affecting the Property which would be binding on Buyer subsequent to the
Closing. All of the contracts are either (i) assignable to Buyer in connection
with its purchase of the Property without the necessity for any approval,
consent or additional payment, or (ii) terminable upon delivery of 30 days'
prior notice. True, correct and complete copies of the contracts have been
delivered to Buyer.
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The contracts are free from any default by Seller and, to the best knowledge of
Seller, free from any default by any other party thereto.
9.8 INSURANCE. All premiums due on all insurance policies
maintained by Seller with respect to the Property have been paid by Seller and
Seller will maintain such insurance policies from the Execution Date through the
Closing Date or earlier termination of this Agreement. Seller has not received
and has no knowledge of any written notice or request from any insurance company
requesting the performance of any work or alteration with respect to all or any
portion of the Property. Seller has received no written notice from any
insurance company concerning any defects or inadequacies in the Property which,
if not corrected, would result in the termination of insurance coverage or
increase its cost.
9.9 LITIGATION. Except as disclosed on the schedule attached
hereto as SCHEDULE 9.9 (the "LITIGATION SCHEDULE), there is no action, suit or
proceeding pending or, to the knowledge of the Seller, threatened against or
affecting the Seller, or to which Seller is a party, in any court, before any
arbitrator or before or by any governmental body which: (i) in any manner
raises any question affecting the validity or enforceability of this Agreement
or any other agreement or instrument to which Seller is a party or by which it
is bound and that is or is to be used in connection with, or is contemplated by,
this Agreement, (ii) could materially and adversely affect the business,
financial position or results of operations of the Seller; (iii) could
materially and adversely affect the ability of the Seller to perform its
obligations hereunder, or under any document to be delivered pursuant hereto;
(vi) could create a lien on the Property, any part thereof or any interest
therein; or (v) could otherwise materially and adversely affect the Property,
any part thereof or any interest therein or the use, operation, condition or
occupancy thereof. Except for evictions or similar actions brought against
Tenants in the ordinary course of Seller's operation of the Property, Seller
shall not commence or allow to be commenced on its behalf any action, suit or
proceeding with respect to all or any portion of the Property without the prior
written consent of Buyer, which shall not be unreasonably withheld. No
attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization or other proceedings are pending, or, to
the best of Seller's knowledge, threatened, against Seller.
9.10 COMPLIANCE WITH LAWS. To Seller's knowledge, the Property is
in full compliance with all existing laws, rules, regulations, ordinances and
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orders of all applicable federal, state, city and other governmental authorities
in effect as of the date of this Agreement with respect to the Property
(collectively, "LAWS"), including, without limitation, (i) the Americans with
Disabilities Act, 42 U.S.C. Section 12102, et seq., together with all rules,
regulations and official interpretations promulgated pursuant thereto, and (ii)
all Laws with respect to zoning, building, fire and health codes and sanitation.
9.11 EMPLOYEES. There are no employees of Seller employed in
connection with the use, management, maintenance or operation of the Property
whose employment will continue after the Closing Date. There is no bargaining
unit or union contract relating to any employees of Seller.
9.12 CERTIFICATES OF OCCUPANCY. To Seller's knowledge, Seller has
all necessary valid, final and unconditional certificates of occupancy, or the
equivalent permitting required by the applicable licensing agency, for the
current use and occupancy of each of the Projects.
9.13 EXISTING APPROVALS. The documents set forth on SCHEDULE 9.13
attached hereto (collectively, the "APPROVALS") are in full force and effect
and, to Seller's knowledge, constitute all necessary or appropriate
certifications, approvals, consents, authorizations, waivers, licenses,
variances, permits, easements and rights of way, including proofs of dedication,
which are required by any governmental authority in connection with the
ownership, development, management, use and maintenance of the Property. None
of the Approvals has been assigned or encumbered except for any Loan Obligations
which may be assumed by Buyer. Seller has no knowledge of any governmental
action to suspend or revoke any of the Approvals.
9.14 CONDEMNATION; SPECIAL ASSESSMENTS. Except as disclosed on
SCHEDULE 9.14 attached hereto or depicted on any PTR, there is no pending or, to
the best of Seller's knowledge, contemplated condemnation, eminent domain or
similar proceeding or special assessment which would affect the Property or any
part thereof in any way whatsoever.
9.15 TOXIC OR HAZARDOUS MATERIALS.
9.15.1 DEFINITIONS.
(a) "ENVIRONMENTAL CLAIM" means any claim, action, cause of
action, investigation or written notice by any person or entity alleging
potential
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liability (including, without limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on or
resulting from (i) the manufacture, treatment, processing, distribution, use,
transport, handling, deposit, storage, disposal, leaking or other presence, or
release into the environment of any "Hazardous Substance" (as defined below) in,
at, on, under or about any location, whether or not owned or operated by Seller
or (ii) circumstances forming the basis of any violation, or alleged violation,
of any "Environmental Law" (as defined below).
(b) "ENVIRONMENTAL LAWS" means all applicable federal, state,
local and foreign laws and regulations relating to pollution or protection of
human health or the environment, including, without limitation, laws and
regulations relating to emissions, discharges, releases or threatened releases
of Hazardous Substances, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, including, without limitation, the Resource Conservation
and Recovery Act (42 U.S.C. 6901 ET SEQ.), as amended, and the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. 9601, ET
SEQ.), as amended.
(c) "HAZARDOUS SUBSTANCE" means any chemical, pollutant,
contaminant, waste, toxic substance, petroleum or petroleum product defined in,
governed under or regulated pursuant to any Environmental Laws, including,
without limitation, the Resource Conservation and Recovery Act (42 U.S.C. 6901
ET SEQ.), as amended, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. 9601, ET SEQ.), as amended, and any state analogs or
counterparts, as amended. Hazardous Substances shall exclude usual and
customary cleaning and other supplies necessary for the normal operations,
maintenance and/or occupancy of the Property that are used and stored in a safe
location in compliance with all Environmental Laws.
9.15.2 REPRESENTATIONS AND WARRANTIES. Seller represents and
warrants to and agrees with Buyer that, as of the Execution Date, and as of the
Closing, and except as disclosed in the reports which are set forth in SCHEDULE
9.15.2 attached hereto (the "REPORTS"): (i) to Seller's knowledge, Seller is in
compliance with all applicable Environmental Laws relating to the Property,
which compliance includes, but is not limited to, the possession by Seller of
all permits required under applicable Environmental Laws, and compliance with
the terms and conditions thereof; (ii) Seller has not received any written
communication, whether from a governmental authority, citizens group, employee
or
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otherwise, that alleges that Seller is not in such compliance and, to Seller's
knowledge, there are no circumstances that may prevent or interfere with such
compliance in the future; (iii) there is no Environmental Claim pending or
threatened with regard to the Property; (iv) to Seller's knowledge, there are no
past or present actions, activities, circumstances, conditions, events or
incidents relating to the Property, including, without limitation, the
manufacture, treatment, processing, distribution, use, transport, handling,
deposit, storage, disposal, leaking, or other presence or release of any
Hazardous Substance, that could form the basis of any Environmental Claim
against Seller or against any person or entity, including, without limitation,
persons or entities whose liability for any such Environmental Claim Seller has
or may have retained or assumed either contractually or by operation of law; and
(v) without in any way limiting the generality of the foregoing, (a) Seller has
not stored, disposed or arranged for the disposal of Hazardous Substances on the
Property, (b) there are no underground storage tanks located on the Property,
(c) there is no asbestos contained in or forming part of any Improvement,
including, without limitation, any building, building component, structure or
office space on the Property, and (d) no polychlorinated biphenyls (PCBs) are
used or stored at the Property.
9.15.3 SURVIVAL. Notwithstanding the limitations of any
provision to the contrary contained herein, the representations and warranties
set forth in Section 9.15.2 shall survive the Closing.
9.16 NO CONFLICTS. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement will not conflict with, or, with or without notice
or the passage of time or both, result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, deed of trust,
mortgage, loan agreement, or other document, or instrument or agreement, oral or
written, to which Seller is a party or by which Seller or all or any portion of
the Property is bound, or, to Seller's knowledge, any applicable regulation of
any governmental agency, or any judgment, order or decree of any court having
jurisdiction over Seller or all or any portion of the Property.
9.17 DUE ORGANIZATION; CONSENTS. Sellers are duly organized,
validly existing and in good standing as limited partnerships under the laws of
the State of their formation, with their principal place of business in the
Commonwealth of Massachusetts. All requisite action has been taken by Seller in
connection with entering into this Agreement, and will be taken prior to the
Closing in connection with the execution and delivery of the instruments refer-
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enced herein and the consummation of the transaction contemplated hereby. No
consent of any partner, shareholder, beneficiary, creditor, investor, judicial
or administrative body, governmental authority or other party is required in
connection herewith which has not been obtained, other than any Loan Obligations
which may be assumed by Buyer.
9.18 SELLER AUTHORITY; VALIDITY OF AGREEMENTS. Seller has full
right, power and authority to execute this Agreement and the instruments
referenced herein, to bind Seller to the terms hereof and thereof, to sell and
convey the Property to Buyer as provided in this Agreement, and to carry out its
obligations hereunder. This Agreement is, and all instruments, documents and
agreements to be executed by Seller in connection herewith shall be, duly
authorized, executed and delivered by Seller and (assuming this Agreement
constitutes a valid and binding obligation of Buyer) shall be valid, binding and
enforceable obligations of Seller (except as enforcement may be limited by (and
subject to) the provisions of the United States Bankruptcy Code and other
applicable laws which affect the rights and remedies of creditors generally).
9.19 FOREIGN INVESTMENT IN REAL PROPERTY TAX ACT. Seller is not a
foreign person within the meaning of 42 USCS Section 1445(f)(3).
9.20 TAXES. There are no liens for "Taxes" (as hereinafter defined)
upon all or any portion of the Property, except liens for Taxes that are not yet
due and payable. As used herein, the term "TAXES" shall mean all taxes,
charges, fees, levies or other assessments, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority upon all or any portion of the Property.
9.21 SELLER'S KNOWLEDGE. As used in this Agreement, the words "to
Seller's knowledge" or words of similar import shall be deemed to mean, and
shall be limited to, the actual (as distinguished from implied, imputed or
constructive) knowledge of the employees and officers of the general partners of
each of the Sellers, who are directly responsible for the ownership, operation,
management, and sale of the Property, without such persons having any obligation
to make any independent inquiry or investigation whatsoever. Prior to the
Execution Date, Seller delivered to Buyer a list of the names of such employees
and officers. Such employees and officers are the parties most familiar with
the condition and operation of the Property, and the subject matter of the
representations and warranties made by Seller contained in this Agreement.
Nothing in this Agreement shall be deemed to create or impose any personal
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liability of any kind whatsoever on any of the shareholders, directors,
officers, employees or agents of the general partners of each Seller or the
within named individual.
9.22 SURVIVAL OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement shall
survive the closing for a period of one (1) year after the Closing Date, and any
claim based upon any alleged breach thereof must be alleged (in writing) within
such one (1) year period. Failure to give notice of any alleged breach within
the time period specified herein shall constitute a waiver of any such claim.
Furthermore, Seller's liability for any such claim shall in no event exceed, (i)
with respect to any Project, the allocable portion of the Purchase Price set
forth on SCHEDULE 9.22, and (ii) with respect to the entire Property, the
aggregate amount of $26,000,000.00. In addition, and notwithstanding any other
provision of this Agreement, if, prior to the Closing, Buyer becomes aware of
any misrepresentation of Seller as a result of Seller's written disclosure to
Buyer or through a written report prepared for Buyer in connection with Buyer's
due diligence, and Buyer nevertheless proceeds to close on the Closing Date,
then Buyer shall be deemed to waive, and hereby waives, any such
misrepresentation.
10. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer represents and warrants to Seller, as of the Execution Date and
as of the Closing, as follows:
10.1 NO CONFLICTS. The execution and delivery of this Agreement,
the consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement will not conflict with, or, with or without notice
or the passage of time or both, result in a breach of any of the terms or
provisions of, or constitute a default under, any indenture, deed of trust,
mortgage, loan agreement, or other document or instrument to which Buyer is a
party or by which Buyer is bound, or any applicable regulation of any
governmental agency, or any judgment, order or decree of any court having
jurisdiction over Buyer or all or any portion of the Property.
10.2 DUE ORGANIZATION. Buyer is a limited partnership duly
organized and existing in good standing under the laws of the State of Delaware,
with its principal place of business in the State of Colorado. All requisite
partnership action has been taken by Buyer in connection with entering into this
Agreement, and will be taken prior to the Closing in connection with, the
execution and
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delivery of the instruments referenced herein and the consummation of the
transactions contemplated hereby.
10.3 WAIVERS OF DECEPTIVE TRADE PRACTICES ACT AS TO PROJECTS LOCATED
IN THE STATE OF TEXAS. With respect to that portion of the Property located in
the State of Texas, Buyer acknowledged and agrees, on its own behalf and on
behalf of its assigns and successors, that the Texas Deceptive Trade practices
- -- Consumer Protection Act, Subchapter E of Chapter 17 of the Texas Business and
Commerce Code (the "DTPA"), is not applicable to this transaction. Accordingly,
Buyer's rights and remedies with respect to this transaction, and with respect
to all acts or practices of Seller and/or Buyer, past, present, or future, in
connection with this transaction, shall be governed by legal principles other
than the DTPA. In furtherance thereof, Buyer agrees as follows:
(a) Buyer is a business consumer and that it seeks to acquire
by purchase or lease the goods or services that are the subject of this
Agreement for commercial or business use. Buyer further represents that it has
knowledge and experience in financial and business matters that enable it to
evaluate the merits and risks of the business transaction that is the subject of
this Agreement. Buyer also represents that it is not in a significantly
disparate bargaining position in relation to Seller.
(b) Buyer is owned or controlled by a corporation or entity
with assets of Twenty-five Million and No/100 Dollars ($25,000,000.00), or more.
(c) Buyer has been represented by legal counsel in seeking or
acquiring the goods or services that are the subject of this Agreement and that
the transaction contemplated in this Agreement does not involve the purchase or
lease of a family residence occupied or to be occupied as the residence of the
Buyer. Buyer shall cause its legal counsel to sign this Agreement in the space
provided at the end of this Agreement for the purpose of complying with
Section 17.42(a)(3) of the DTPA.
(d) Buyer agrees, on its own behalf and on behalf of its
assigns and successors, that all of its rights and remedies under the DTPA are
WAIVED and RELEASED forever, including specifically, without limitation, all
rights and remedies resulting from or arising out of any and all acts or
practices of Seller in connection with this transaction, whether such acts or
practices occur before or after the execution of this Agreement; PROVIDED,
HOWEVER,
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notwithstanding anything to the contrary herein, in accordance with
Section 17.42 of the DTPA, Buyer does not waive Section 17.555 of the DTPA.
(e) This provision shall survive the Closing or earlier
termination of this Agreement.
(f) This Section 10.3 is only applicable to the Projects
located in the State of Texas.
10.4 NO OTHER REPRESENTATION OR WARRANTIES; AS-IS. (a) Buyer
agrees that (i) except as, and solely to the extent, specifically set forth in
this Agreement, neither Seller nor any of the employees, agents or attorneys of
Seller make any verbal or written representations, warranties, promises or
guaranties whatsoever to Buyer, whether express or implied, of any sort or
nature relating to the condition (physical, financial or otherwise) or operation
of the Property, the access, fitness for any specific use, merchantability,
habitability, or the lie and topography, of all or any portion of the Property,
the existence, location or availability of utility lines for water, sewer,
drainage, electricity or any other utility, the income-producing potential of
the Property, the competition or market of the Property or the actual or
projected revenue and expenses of the Property, the laws, regulations and rules
applicable to the Property or the compliance (or non-compliance) of the Property
therewith, any environmental laws, regulation and rules (or other laws relative
to Hazardous Materials) applicable to the Property or the compliance (or
non-compliance) of the Property therewith, the quantity, quality or condition of
the articles of personal property included in the transactions contemplated
hereby, the use or occupancy of the Property or any part thereof or any other
matter or thing affecting or relating to the Property or the transactions
contemplated hereby, and Buyer has not relied upon any such representations,
warranties, promises or guarantees or upon any statements made in any
informational brochure with respect to the Property, and (ii) upon the
expiration of the Due Diligence Period and provided Buyer does not elect to
terminate the Agreement as provided for herein, Buyer will have examined the
Property, and based upon such examination, will be familiar with the physical
condition thereof, and will have conducted such investigations of the financial
affairs and management of the Property as Buyer considered appropriate, and
elected to proceed with the transaction having made and relied solely on (1)
Buyer's own independent investigation, inspection, analysis, appraisal,
examination and evaluation of the facts and circumstances, and (2) the express
representations and warranties of Seller as set forth in this Agreement.
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(b) Except as specifically provided in this Agreement, Buyer
agrees to accept the Property "as is" in its present condition, subject to
reasonable use, wear and tear of the Property between the date of this Agreement
and the Closing Date.
10.5 BUYER'S AUTHORITY; VALIDITY OF AGREEMENTS. Buyer has full
right, power and authority to accept the Property from Seller as provided in
this Agreement and to carry out its obligations hereunder. The individual(s)
executing this Agreement and the instruments referenced herein on behalf of
Buyer have the legal power, right and actual authority to bind Buyer to the
terms hereof and thereof. This Agreement is, and all other documents and
instruments to be executed and delivered by Buyer in connection with this
Agreement shall be, duly authorized, executed and delivered by Buyer and shall
be valid, binding and enforceable obligations of Buyer.
10.6 REPRESENTATIONS TRUE AS OF CLOSING DATE. All of the
representations, warranties and agreements of Buyer set forth in this Agreement
shall be true upon the Execution Date, and shall be deemed to be repeated at and
as of the Closing Date (except as otherwise set forth in writing to Seller).
11. ADDITIONAL COVENANTS.
11.1 ADDITIONAL COVENANTS OF SELLER. In addition to the covenants
and agreements of Seller set forth elsewhere in this Agreement, Seller covenants
and agrees that between the Execution Date and the Closing Date:
11.1.1 TITLE. Seller shall not directly or indirectly sell,
contribute, assign or create any right, title or interest whatsoever in or to
the Property, or create or permit to exist thereon any lien, charge or
encumbrance other than the Permitted Exceptions, or enter into any agreement to
do any of the foregoing, including, without limitation, any new leases (or
renewals, modifications or extensions of any Leases) (other than leases entered
into in the ordinary course of Seller's business) or any new service contracts
(or renewals, modifications or extensions of any existing service contracts),
without the prior written consent of Buyer (which consent shall not be
unreasonably withheld or delayed).
11.1.2 DEVELOPMENT ACTIVITIES. Seller shall not take any
actions with respect to the development of the Property, including, without
limitation, applying for, pursuing, accepting or obtaining any permits,
approvals or other development entitlements from any governmental or other
regulatory
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entities or finalizing or entering into any agreements relating thereto without
the prior written consent of Buyer (which consent may be granted or withheld in
Buyer's sole and absolute discretion). Seller hereby agrees to reasonably
cooperate with Buyer in Buyer's efforts to obtain such governmental approvals as
Buyer deems necessary to permit Buyer to operate the Property as Buyer wishes at
no cost to Seller, and provided no such approval shall be binding upon the
Property until after the Closing.
11.1.3 INTENTIONALLY OMITTED.
11.1.4 NOTICE OF CHANGE IN CIRCUMSTANCES. Seller shall
promptly notify Buyer of any change in any condition with respect to the
Property or any portion thereof or of any event or circumstance of which Seller
obtains actual knowledge subsequent to the Execution Date which (a) materially
and directly affects the Property or any portion thereof, or the use or
operation of the Property or any portion thereof, (b) makes any representation
or warranty of Seller to Buyer under this Agreement untrue or misleading in any
material respect, or (c) makes any covenant or agreement of Seller under this
Agreement incapable or substantially less likely of being performed.
11.1.5 NO DEFAULTS; MAINTENANCE OF PROPERTY. Seller shall not
default with respect to the performance of any material obligation relating to
the Property, including, without limitation, the payment of all amounts due and
the performance of all obligations with respect to any existing indebtedness or
existing leases or contracts affecting the Property. Seller shall operate and
maintain the Property in accordance with Seller's past practice and all
applicable Laws, rules and regulations affecting the Property or any portion
thereof. Except as otherwise expressly provided herein, Seller shall have no
obligation to make any material capital improvement to the Property.
11.1.6 EXCLUSIVE NEGOTIATIONS. Seller shall (i) remove the
Property from the market, and (ii) cease and refrain from any and all
negotiations with any other prospective optionees or purchasers of the Property.
11.1.7 SERVICE, MANAGEMENT AND EMPLOYMENT CONTRACTS. Seller
shall not enter into, extend, renew or replace any existing service, property
management or employment contracts in respect of the Property without the prior
written consent of Buyer (which consent may be withheld in Buyer's sole and
absolute discretion), unless the same shall be cancellable without penalty or
29
<PAGE>
premium, upon not more than thirty (30) days' notice from the owner of the
Property.
12. RISK OF LOSS.
12.1 CONDEMNATION. If, prior to the Closing, all or any material
portion of any of the Projects or any other part of the Property is taken by
condemnation or eminent domain (or is the subject of a pending or contemplated
taking which has not been consummated), Seller shall immediately notify Buyer of
such fact. In such event, Buyer shall have the option to terminate this
Agreement, either (i) in its entirety, provided that three (3) or more Projects
are so affected, or (ii) as to the Project or Projects so affected only, upon
written notice to Seller given not later than thirty (30) days after receipt of
such notice from Seller. If Buyer elects to terminate this Agreement in its
entirety, Escrow Agent shall return the Deposit to Buyer, the parties shall
equally share the cancellation charges of Escrow Agent and Title Company, if
any, and neither party shall have any further rights or obligations hereunder,
other than pursuant to any provision hereof which expressly survives the
termination of this Agreement If Buyer elects to terminate this Agreement only
as to the Project or Projects so affected, then the Purchase Price shall be
reduced by an amount equal to that portion of the Purchase Price allocable to
the affected Projects as set forth on Schedule 9.22. Notwithstanding the
foregoing, Buyer shall have no right to terminate this Agreement as a result of
any non-material taking of any portion of a Project. If Buyer does make its
election as described above or has no right to terminate this Agreement, Seller
shall assign and turn over to Buyer, and Buyer shall be entitled to receive and
keep, all awards for the taking by condemnation and Buyer shall be deemed to
have accepted the Property subject to the taking without reduction in the
Purchase Price.
12.2 CASUALTY. Prior to the Closing and notwithstanding the
pendency of this Agreement, the entire risk of loss or damage by earthquake,
flood, landslide, fire or other casualty shall be borne and assumed by Seller.
If, prior to the Closing any material part of the Improvements located on any of
the Land Parcels or any other part of the Property is damaged or destroyed by
earthquake, flood, landslide, fire or other casualty, Seller shall immediately
notify Buyer of such fact. In such event, Buyer shall have the option to
terminate this Agreement, either (i) in its entirety, provided that three (3) or
more Projects are so affected, or (ii) as to the Project or Projects so affected
only, in the same manner as provided in Section 12.1 hereof upon written notice
to Seller given not later than thirty (30) days after receipt of any such notice
from Seller. Buyer
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shall have no right to terminate this Agreement as a result of any
non-material damage or destruction of any portion of a Project. If Buyer does
not make an election as described in Section 12.1 or has no right to terminate
this Agreement, Seller shall assign and turn over, and Buyer shall be entitled
to receive and keep, all insurance proceeds payable with respect to such damage
or destruction (which shall then be repaired or not at Buyer's option and cost)
and Buyer shall receive as a credit against the Purchase Price an amount equal
to the deductible amount with respect to the insurance and the parties shall
proceed to the Closing pursuant to the terms hereof without modification of the
terms of this Agreement, and Buyer shall have the right to participate in any
adjustment of the insurance claim.
12.3 MATERIALITY. Materiality for the purposes of Sections 12.1 and
12.2 shall be deemed to mean a claim or loss in excess of $250,000 per Project.
13. REMEDIES.
13.1 DEFAULT BY BUYER. IN THE EVENT THAT THE ESCROW AND THIS
TRANSACTION FAIL TO CLOSE SOLELY AS A RESULT OF THE DEFAULT OF BUYER IN THE
PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, BUYER AND SELLER AGREE THAT
SELLER'S ACTUAL DAMAGES WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX.
THE PARTIES THEREFORE AGREE THAT IN THE EVENT THAT ESCROW AND THIS TRANSACTION
FAIL TO CLOSE SOLELY AS A RESULT OF THE DEFAULT OF BUYER IN THE PERFORMANCE OF
ITS OBLIGATIONS HEREUNDER, SELLER, AS SELLER'S SOLE AND EXCLUSIVE REMEDY, IS
ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF THE DEPOSIT (EXCLUSIVE OF
INTEREST AND DIVIDENDS EARNED THEREON). IN THE EVENT ESCROW FAILS TO CLOSE
SOLELY AS A RESULT OF BUYER'S DEFAULT, THEN (I) THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF BUYER AND SELLER HEREUNDER AND THE ESCROW CREATED HEREBY
SHALL TERMINATE, (II) ESCROW AGENT SHALL, AND IS HEREBY AUTHORIZED AND
INSTRUCTED TO, RETURN PROMPTLY TO BUYER AND SELLER ALL DOCUMENTS AND INSTRUMENTS
TO THE PARTIES WHO DEPOSITED THE SAME, (III) ESCROW AGENT SHALL DELIVER THE
DEPOSIT (EXCLUSIVE OF INTEREST AND DIVIDENDS EARNED THEREON) TO SELLER PURSUANT
TO SELLER'S INSTRUCTIONS, AND THE SAME SHALL BE THE FULL, AGREED AND LIQUIDATED
DAMAGES, AND (IV) ALL TITLE COMPANY AND
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ESCROW AGENT CANCELLATION CHARGES, IF ANY, SHALL BE CHARGED TO BUYER.
13.2 DEFAULT BY SELLER. IN THE EVENT THAT THE ESCROW AND THIS
TRANSACTION FAIL TO CLOSE SOLELY AS A RESULT OF A DEFAULT OF SELLER IN THE
PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT, BUYER SHALL HAVE THE RIGHT
TO EITHER:
(a) DECLARE THIS AGREEMENT TERMINATED, IN WHICH EVENT THE
DEPOSIT SHALL BE RETURNED TO BUYER AND SELLER SHALL PAY TO BUYER, AS LIQUIDATED
DAMAGES, THE SUM OF $2,600,000.00, SINCE BUYER AND SELLER AGREE THAT BUYER'S
ACTUAL DAMAGES WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX. UPON
TERMINATION OF THIS AGREEMENT AS PROVIDED HEREIN, ALL OF THE RIGHTS OF BUYER AND
SELLER HEREUNDER SHALL IMMEDIATELY TERMINATE, AND THIS AGREEMENT SHALL BE OF NO
FURTHER FORCE OR EFFECT, EXCEPT TO THE EXTENT BUYER IS ENTITLED TO, AND MAY
ENFORCE ITS RIGHTS TO COLLECT, THE SUMS SPECIFIED IN THIS SECTION 13.2(a); OR
(b) ENFORCE SPECIFIC PERFORMANCE OF THE OBLIGATIONS OF SELLER
HEREUNDER; PROVIDED, HOWEVER, IN EXERCISING ITS RIGHT OF SPECIFIC PERFORMANCE,
BUYER MAY NOT REQUIRE SELLER TO EXPEND IN EXCESS OF TWO MILLION SIX HUNDRED
THOUSAND DOLLARS ($2,600,000.00) TO CORRECT ANY DEFECT WHICH SELLER DID NOT
CAUSE; OR
(c) ONLY IN THE EVENT SPECIFIC PERFORMANCE OF THIS AGREEMENT
CANNOT BE OBTAINED BY REASON OF SELLER'S CONVEYANCE OR ENCUMBRANCE OF ALL OR ANY
PART OF THE PROPERTY SUBSEQUENT TO THE DATE OF THIS AGREEMENT, TERMINATE THIS
AGREEMENT, RECEIVE A FULL REFUND OF THE DEPOSIT, AND SEEK DAMAGES FOR THE BREACH
OF THIS AGREEMENT BY SELLER.
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SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE
PROVISIONS OF THIS SECTION 13, AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO
BE BOUND BY ITS TERMS.
- ------------------------------ -----------------------------------
Seller's Initials Buyer's Initials
14. BROKERS.
Buyer and Seller each hereby represent, warrant to and agree with each
other that it has not had, and shall not have, any dealings with any third party
to whom the payment of any broker's fee, finder's fee, commission or other
similar compensation shall or may become due or payable in connection with the
transaction contemplated hereby, other than Bear Stearns & Co., Inc., which
Seller agrees to pay pursuant to a separate agreement. Seller shall indemnify,
defend and hold Buyer harmless from and against any and all claims, losses,
damages, costs and expenses (including reasonable attorneys' fees, charges and
disbursements) incurred by Buyer by reason of any breach or inaccuracy of the
representation, warranty and agreement of Seller contained in this Section 14.
Buyer shall indemnify, protect, defend and hold Seller harmless from and against
any and all claims, losses, damages, costs and expenses (including reasonable
attorneys' fees, charges and disbursements) incurred by Seller by reason of any
breach or inaccuracy of the representation, warranty and agreement of Buyer
contained in this Section 14. The provisions of this Section 14 shall survive
the Closing or earlier termination of this Agreement.
15. INDEMNIFICATION.
Buyer hereby agrees to indemnify, defend and hold Seller harmless from and
against any claims, demands, obligations, losses, costs, damages, liabilities,
judgments or expenses (including reasonable attorneys' fees, charges and
disbursements) (collectively, "CLAIMS") arising out of or in connection with the
ownership, operation or maintenance of the Property after the Closing. Seller
hereby agrees to indemnify, defend and hold Buyer harmless from and against any
Claims arising out of or in connection with any and all obligations to,
liabilities to or claims asserted by any third parties pertaining to any injury
to or the death of any person or damage to property of any third parties in any
way
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relating to or arising out of Seller's ownership, operation or management of the
Property prior to the Closing (except to the extent same is caused by Buyer or
its agents). Each party shall do, execute and deliver, or shall cause to be
done, executed and delivered, all such further acts and instruments which the
other party may reasonably request in order to more fully effectuate the
indemnifications provided for in this Agreement. The provisions of this Section
15 shall survive the Closing.
16. MISCELLANEOUS PROVISIONS.
16.1 GOVERNING LAW. This Agreement and the legal relations between
the parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of New York, without regard to its principles of
conflicts of law. The parties each hereby irrevocably consent and submit to the
jurisdiction of the courts in the State of New York, for the purposes of all
legal proceedings arising out of or relating to this Agreement.
16.2 ENTIRE AGREEMENT; MODIFICATIONS; WAIVER.
16.2.1 ENTIRE AGREEMENT. This Agreement, including the
exhibits and schedules attached hereto, constitutes the entire agreement between
Buyer and Seller pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, letters of intent, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to
either party by the other party in connection with the subject matter hereof
except as specifically set forth herein or in the documents delivered pursuant
hereto or in connection herewith. Without in any way limiting the foregoing,
the parties expressly acknowledge and agree that the Letter of Intent, dated
July 18, 1997, is hereby terminated.
16.2.2 MODIFICATION. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
16.3 NOTICES. All notices, consents, requests, reports, demands,
deliveries or other communications hereunder (collectively, "NOTICES") shall be
in writing, signed by the party giving the same or by its attorney, and may be
given
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<PAGE>
personally, by registered or certified mail, or by Federal Express (or other
reputable overnight delivery service) as follows:
To Buyer: AIMCO Properties, L.P.
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Harry Alcock
Telephone: (303) 757-8101
and to: AIMCO Properties, L.P.
28200 Highway 189, Suite F-240
Lake Arrowhead, California 92352
Attention: Mr. Peter K. Kompaniez
Telephone: (909) 336-4826
With A Copy To: Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Allan G. Mutchnik, Esq.
Telephone: (213) 687-5391
To Seller: c/o First Winthrop Corporation
One International Place
Boston, Massachusetts 02110
Attention: Mr. Jeff Furber
Telephone: (617) 330-8600
With A Copy To: Post & Heymann, LLP
100 Jericho Quadrangle, Suite 214
Jericho, New York 11753
Attention: William W. Post, Esq.
Telephone: (516) 681-3636
To Escrow Commonwealth Land Title Company
Agent: 14643 Dallas Parkway
Suite 100, LB-61
Dallas, Texas 75240
Attention: Ms. Stacie Taylor
Telephone: (800) 846-4687
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or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given when received. Notices shall be deemed to be timely delivered
if such Notice is received by the intended recipient on or before 6:00 p.m. New
York time on the date of such Notice.
16.4 EXPENSES. Subject to the provision for payment of Closing
Costs in accordance with Section 8.6 hereof, whether or not the transactions
contemplated by this Agreement shall be consummated, all fees and expenses
incurred by any party hereto in connection with this Agreement shall be borne by
such party.
16.5 ASSIGNMENT.
16.5.1 SELLER'S RIGHT TO ASSIGN. Seller shall not have the
right to assign, this Agreement or any portion therefor to delegate any duties
or obligations arising under this Agreement, voluntarily, involuntarily or by
operation of law, without Buyer's prior written consent.
16.5.2 BUYER'S RIGHT TO ASSIGN. Buyer shall only have the
right, power and authority to assign this Agreement or any portion of this
Agreement or Buyer's rights hereunder or to delegate any duties or obligations
arising under this Agreement, voluntarily, involuntarily or by operation of law,
without Seller's consent, to any "Affiliate" of Buyer; provided, however, that
no such assignment or delegation shall relieve Buyer of its obligations or
liabilities under this Agreement. For the purposes of this Section 16.5.2,
"Affiliate" shall be defined as an entity which Buyer directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with the Buyer.
16.6 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
16.7 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of Section 16.5 hereof, all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the benefit
of, and
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be binding upon, their respective successors and assigns. Except as
specifically set forth or referred to herein, nothing herein expressed or
implied is intended or shall be construed to confer upon or give to any person
or entity, other than the parties hereto and their successors or permitted
assigns, any rights or remedies under or by reason of this Agreement.
16.8 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
16.9 HEADINGS. The Section headings of this Agreement are for
convenience of reference only and shall not be deemed to modify, explain,
restrict, alter or affect the meaning or interpretation of any provision hereof.
16.10 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
16.11 FURTHER ASSURANCES. In addition to the actions recited herein
and contemplated to be performed, executed, and/or delivered by Seller and
Buyer, Seller and Buyer agree to perform, execute and/or deliver or cause to be
performed, executed and/or delivered at closing or after Closing any and all
such further acts, instruments, deeds and assurances as may be reasonably
required to consummate the transactions contemplated hereby.
16.12 NUMBER AND GENDER. Whenever the singular number is used, and
when required by the context, the same includes the plural, and the masculine
gender includes the feminine and neuter genders.
16.13 CONSTRUCTION. This Agreement shall not be construed more
strictly against one party hereto than against any other party hereto merely by
virtue of the fact that it may have been prepared by counsel for one of the
parties.
16.14 EXHIBITS. All exhibits attached hereto are hereby incorporated
by reference as though set out in full herein.
16.15 ATTORNEYS' FEES. In the event that either party hereto brings
an action or proceeding against the other party to enforce or interpret any of
the
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covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
16.16 BUSINESS DAYS. As used herein, the term "BUSINESS DAY" shall
mean a day that is not a Saturday, Sunday or legal holiday. In the event that
the date for the performance of any covenant or obligation under this Agreement
shall fall on a Saturday, Sunday or legal holiday, the date for performance
thereof shall be extended to the next Business Day. Unless otherwise specified
herein, all references herein to a "day" or "days" shall refer to calendar days
and not Business Days.
16.17 CONFIDENTIALITY. Seller and Buyer and their representatives,
including any brokers or other professionals, shall keep the existence and terms
of this Agreement strictly confidential, except to the extent disclosure is
compelled by law or Buyer's (or Buyer's affiliates) securities reporting
requirements, and then only to the extent of such compulsion, and except to the
potential lenders, managers, underwriters, investors and the like and their
agents, employees, consultants, managers, accountants, lawyers and other
professional advisors on a need to know basis.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
BUYER:
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, Inc.,
Its: General Partner
By: /s/ Harry Alcock
----------------------------------
Name: Harry Alcock
Its: Vice President
SELLER:
(AS TO PROPERTIES 1-25
IDENTIFIED ON EXHIBIT "B)
BEACON APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
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BLOSSOM APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
COURT APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
FERN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
40
<PAGE>
FOOTHILLS APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
FOX BAY APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
FOX APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
41
<PAGE>
GROVE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
HAZEL APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
HIDDEN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
42
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ISLAND APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
ORCHID APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
PINE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
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POLO PARK APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
QUAIL APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
RIVER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
44
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SAND APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
SHADE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
SILK APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
45
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TIMBER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
TWIN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
WICKER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
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WILDFLOWER APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
WYDEWOOD APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
YORK APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
47
<PAGE>
(AS TO PROPERTY 26 IDENTIFIED ON
EXHIBIT "B")
WINTHROP-AUSTIN HOLDINGS, L.P.,
By: Fifteen Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
(AS TO PROPERTIES 27-35 IDENTIFIED
ON EXHIBIT "B")
WINTHROP FLORIDA APARTMENTS
LIMITED PARTNERSHIP
By: Fourteen Winthrop Properties, Inc.,
its sole general partner
By: /s/ Jeffrey D. Furber
-----------------------------
Name: Jeffrey D. Furber
Title: Vice President
48
<PAGE>
ESCROW AGENT:
The understand Escrow Agent accepts the foregoing Acquisition and Contribution
Agreement and Joint Escrow Instructions and agrees to act as Escrow Agent
thereunder in strict accordance with its terms.
COMMONWEALTH LAND TITLE INSURANCE COMPANY,
a Pennsylvania corporation
BY: /s/ STACIE TAYLOR
--------------------------
NAME: STACIE TAYLOR
TITLE: NTS COORDINATOR
49
<PAGE>
EXHIBIT "A"
LIST OF SELLERS
<PAGE>
SELLER
------
# OF
OPERATING PARTNERSHIP PROPERTY UNITS
--------------------- -------- -----
1. Beacon Apts., L.P., Beacon Hill 120
a Delaware limited partnership 3301 Henderson Mill
Chamblee, GA 30341
2. Blossom Apts. Limited Partnership, Blossomtree 125
a Delaware limited partnership 8750 East McDowell
Scottsdale, AZ 85257
3. Courts Apts., L.P., Village Park 871
a Delaware limited partnership 1822 N.E. 142nd Street
Miami, FL 33181
4. Fern Apts. Limited Partnership, Colonnade Apts. 197
a Delaware limited partnership 1930 East Camelback Road
Phoenix, AZ 85016
5. Foothills Apts. Limited Partnership, Foothills 270
a Delaware limited partnership 5441 North Swan Road
Tucson, AZ 85718
6. Fox Apts. Limited Partnership, Foxtree 487
a Delaware limited partnership 2100 North Scottsdale
Tempe, AZ 85281
7. Fox Bay Apts. Limited Partnership, Fox Bay 232
a Delaware limited partnership 3985 North Stone
Tucson, AZ 85705
8. Grove Apts. Limited Partnership, Grovetree (The Arbors) 200
a Delaware limited partnership 805 West Brown
Tempe, AZ 85281
9. Hazel Apts. Limited Partnership, Hazeltree 310
a Delaware limited partnership 2928 East Osborn Road
Phoenix, AZ 85016
10. Hidden Apts. Limited Partnership, Hiddentree 261
a Delaware limited partnership 410 Pine Forest Drive
East Lansing, MI 48823
1
<PAGE>
# OF
OPERATING PARTNERSHIP PROPERTY UNITS
--------------------- -------- -----
11. Island Apts., L.P., Islandtree 216
a Delaware limited partnership Two Johnny Mercer Blvd.
Whitemarsh Island, GA 31410
12. Orchid Apts. Limited Partnership, Orchidtree 278
a Delaware limited partnership 6801 East Camelback Road
Scottsdale, AZ 85251
13. Pine Apts. Limited Partnership, Pine Creek 233
a Delaware limited partnership 11650 Plaza Drive, Apt. 4
Clio, MI 48420
14. Polo Park Apts., L.P., Polo Park 184
a Delaware limited partnership 4700 Polo Parkway
Midland, TX 79705
15. Quail Apts. Limited Partnership, Quailtree 184
a Delaware limited partnership 4444 North Seventh Ave.
Phoenix, AZ 85013
16. River Apts. Limited Partnership, Rivercrest 210
a Delaware limited partnership 1001 West St. Marys
Tucson, AZ 85745
17. San Apts. Limited Partnership, Sand Pebble 208
a Delaware limited partnership 11280 Pebble Hills Blvd.
El Paso, TX 79936
18. Shade Apts. Limited Partnership, Shadetree 123
a Delaware limited partnership 801 East McKellips
Tempe, AZ 85281
19. Silk Apts. Limited Partnership, Silktree 86
a Delaware limited partnership 4815 East Thomas Road
Phoenix, AZ 85018
20. Timber Apts. Limited Partnership, Timbertree 387
a Delaware limited partnership 2800 West Sahuaro Drive
Phoenix, AZ 85029
2
<PAGE>
# OF
OPERATING PARTNERSHIP PROPERTY UNITS
--------------------- -------- -----
21. Twin Apts. Limited Partnership, Twinbridge 104
a Delaware limited partnership 201 West Blacklidge
Tucson, AZ 85705
22. Wicker Apts. Limited Partnership, Wickertree 226
a Delaware limited partnership 20003 North 23rd Avenue
Phoenix, AZ 85027
23. Wildflower Apts., L.P., Wildflower 264
a Delaware limited partnership 4301 Raleigh Court
Midland, TX 79707
24. Wydewood Apts., L.P., Wydewood 218
a Delaware limited partnership 4715 West Wadley Avenue
Midland, TX 79705
25. York Apts., L.P., Yorktree 293
a Delaware limited partnership 201 Flame Drive
Carol Stream, IL 60188
26. Winthrop-Austin Holdings, L.P., The Hills 336
a Delaware limited partnership 9009 Great Hills Trail
Austin, TX 78759
27. Winthrop Florida Apartments, Brant Rock 84
Limited Partnership, 12906 Brant Rock Dr.
a Maryland limited partnership Houston, TX 77082
28. Winthrop Florida Apartments, Freedom Place Club 352
Limited Partnership, 8335 Freedom Crossing
a Maryland limited partnership Jacksonville, FL 32256
29. Winthrop Florida Apartments, Olmos Club 134
Limited Partnership, 800 Basse Road
a Maryland limited partnership San Antonio, TX 78212
30. Winthrop Florida Apartments, Sand Castles 138
Limited Partnership, 2751 EFM 518
a Maryland limited partnership League City, TX 77573
3
<PAGE>
# OF
OPERATING PARTNERSHIP PROPERTY UNITS
--------------------- -------- -----
31. Winthrop Florida Apartments, Shadow Lake 136
Limited Partnership, 101 Meadowood Street
a Maryland limited partnership Greensboro, NC 27409
32. Winthrop Florida Apartments, Surrey Oaks 152
Limited Partnership, 3001 Crystral Springs
a Maryland limited partnership Bedford, TX 76021
33. Winthrop Florida Apartments, Tall Timbers 256
Limited Partnership, 13155 Woodforest Blvd.
a Maryland limited partnership Houston, TX 77015
34. Winthrop Florida Apartments, Windsor Landing 200
Limited Partnership, 7124 Southlake Parkway
a Maryland limited partnership Morrow, GA 30260
35. Winthrop Florida Apartments, Woodhollow 108
Limited Partnership, 3524 Greystone
a Maryland limited partnership Austin, TX 78731
4
<PAGE>
AIMCO PROPERTIES, L.P.
1873 SOUTH BELLAIRE STREET, 17TH FLOOR
DENVER, COLORADO 80222-4348
October 6, 1997
VIA FACSIMILE
First Winthrop Corporation
One International Place
Boston, Massachusetts 02110
Attention: Ms. Carolyn Tiffany
Re: Purchase and Sale Agreement and Joint Escrow Instructions,
dated as of August 22, 1997 (the "PURCHASE AGREEMENT"), by
and between AIMCO Properties, L.P., a Delaware limited
partnership (the "BUYER"), and each of the parties
identified on Exhibit "A" attached to the Purchase
Agreement (collectively, THE "SELLER")
----------------------------------------------------------
Dear Gentlemen:
The purpose of this letter ("Letter") is to reflect the agree-
ment between the Buyer and the Seller with respect to the amendment of the
Purchase Agreement. Sections 4.1.3 and 4.1.4 of the Purchase Agreement
are hereby amended so that the "Due Diligence Termination Date"
(as defined in the Purchase Agreement) shall be extended to 6:00 p.m.
New York time on Monday, October 13, 1997. Buyer and Seller further
agree to amend Section 8.1 of the Purchase Agreement so that the
"Closing Date" (as defined in the Purchase Agreement) shall be Friday,
October 31, 1997.
Except as otherwise expressly provided herein, the Purchase
Agreement shall remain unmodified and in full force and effect, and all
of the
<PAGE>
Post & Heymann, LLP
October 13, 1997
Page 2
terms and provisions of the Purchase Agreement, as herein modified, are
hereby ratified and reaffirmed by both the Buyer and the Seller.
This Letter may be executed in as many counterparts as may be deemed
necessary and convenient, and by the different parties hereto on
separate counterparts, each of which, when so executed, shall be deemed
an original, but all such counterparts shall constitute one and the same
instrument.
If this Letter accurately reflects the agreement of the Buyer and
the Seller, please execute a copy of this Letter where indicated below and
return a facsimile copy of it (with the original to follow by mail) to
Buyer as soon as possible to:
Paul A. Fuhrman, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, 34th Floor
Los Angeles, California 90071
Fax: (213) 687-5600
If you should have any questions, please feel free to either call
Harry Alcock at (303) 691-4344 or ask your attorney to call Paul Fuhrman
at (213) 687-5064.
Yours truly,
AIMCO PROPERTIES, L.P.
A Delaware limited partnership
By: AIMCO-GP, Inc.
Its.: General Partner
By: /s/ Harry Alcock
-----------------
Name: Harry Alcock
Its: Vice President
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 3
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE:
(AS TO PROPERTIES 1-25 IDENTIFIED ON
EXHIBIT "A" TO THE PURCHASE AGREEMENT)
BEACON APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
BLOSSOM APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 4
COURT APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
FERN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
FOOTHILLS APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 5
FOX BAY APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
FOX APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
GROVE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 6
HAZEL APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
HIDDEN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
ISLAND APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 7
ORCHID APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
PINE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
POLO PARK APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 8
QUAIL APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
RIVER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
SAND APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 9
SHADE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
SILK APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
TIMBER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 10
TWIN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
WICKER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
WILDFLOWER APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 11
WYDEWOOD APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
YORK APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
(AS TO PROPERTY 26 IDENTIFIED ON
EXHIBIT "A" TO THE PURCHASE AGREEMENT)
WINTHROP-AUSTIN HOLDINGS, L.P.
By: Fifteen Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 13, 1997
Page 12
(AS TO PROPERTIES 27-35 IDENTIFIED ON
EXHIBIT "A" TO THE PURCHASE AGREEMENT)
WINTHROP FLORIDA APARTMENTS,
LIMITED PARTNERSHIP
By: Fourteen Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
<PAGE>
[Letterhead of Skadden, Arps, Slate, Meagher & Flom LLP]
October 13, 1997
VIA FACSIMILE
Post & Heymann, LLP
100 Jericho Quadrangle, Suite 214
Jericho, New York 11753
Attention: William W. Post, Esq.
Re: Purchase and Sale Agreement and Joint Escrow
Instructions, dated as of August 22, 1997 (the
"PURCHASE AGREEMENT"), by and between AIMCO
Properties, L.P., a Delaware limited partnership
(the "BUYER"), and each of the parties identified
on Exhibit "A" attached to the Purchase Agreement
(collectively, THE "SELLER")
-----------------------------------------
Dear Gentlemen:
The purpose of this letter ("Letter") is to reflect the agreement
between the Buyer and the Seller with respect to the amendment of the
Purchase Agreement. Sections 4.1.3 and 4.1.4 of the Purchase Agreement are
hereby amended so that the "Due Diligence Termination Date" (as defined in
the Purchase Agreement) shall be extended to 4:00 p.m. New York time on
Wednesday, October 15, 1997. Buyer and Seller further agree to amend
Section 8.1 of the Purchase Agreement so that the "Closing Date" (as defined
in the Purchase Agreement) shall be Friday, October 31, 1997.
Except as otherwise expressly provided herein, the Purchase
Agreement shall remain unmodified and in full force and effect, and all of
the terms and provisions of the Purchase Agreement, as herein modified, are
hereby ratified and reaffirmed by both the Buyer and the Seller.
<PAGE>
Post & Heyman, LLP
October 13, 1997
Page 2
If this Letter accurately reflects the agreement of the Buyer and
the Seller, please execute a copy of this Letter where indicated below (on
behalf of Seller) and return a facsimile copy of it (with the original to
follow by mail) to me (on behalf of Buyer) as soon as possible, but in no
event later than 6:00 p.m. Los Angeles time today.
If you should have any questions, please feel free to call Susan Yoon
at (213) 687-5565.
Very truly yours,
/s/ Allan G. Mutchnik
Allan G. Mutchnik
Counsel to Buyer
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE:
POST & HEYMANN, LLP,
Counsel to Seller
By: /s/ William W. Post
----------------------------
William W. Post, Esq.
Partner
cc: Ms. Carolyn Tiffany
Mr. Harry Alcock
Susan Y. Yoon, Esq.
<PAGE>
AIMCO PROPERTIES, L.P.
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
October 15, 1997
VIA COURIER AND FACSIMILE
First Winthrop Corporation
One International Place
Boston, Massachusetts 02110
Attention: Ms. Carolyn Tiffany
Re: Purchase and Sale Agreement and Joint Escrow Instructions,
dated as of August 22, 1997 (the "PURCHASE AGREEMENT"), by
and between AIMCO Properties, L.P., a Delaware limited
partnership (the "BUYER"), and each of the parties
identified on Exhibit "A" attached to the Purchase Agreement
(collectively, the "SELLER")
Dear Ladies and Gentlemen:
The purpose of this letter ("Letter") is to reflect the agreement
between the Buyer and the Seller with respect to certain terms of the Purchase
Agreement. In consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Buyer and Seller agree as follows:
1. The Buyer hereby waives its termination rights under Sections
4.1.4 of the Purchase Agreement; provided, however, that nothing contained
herein is intended to waive any other rights that the Buyer may have under the
Purchase Agreement, including, without limitation, the Buyer's right to
terminate pursuant to Section 4.2.3 thereof.
2. Section 2 of the Purchase Agreement is hereby amended to reduce
the Purchase Price to Two Hundred Fifty Three Million Five Hundred Thousand
Dollars ($253,500,000), subject to the prorations and adjustments provided for
in the Purchase Agreement.
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 2
Except as otherwise expressly provided herein, the Purchase Agreement
shall remain unmodified and in full force and effect, and all of the terms and
provisions of the Purchase Agreement, as herein modified, are hereby ratified
and reaffirmed by both the Buyer and the Seller. This Letter may be executed in
as many counterparts as may be deemed necessary and convenient, and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed an original, but all such counterparts shall
constitute one and the same instrument.
If this Letter accurately reflects the agreement of the Buyer and the
Seller, please execute a copy of this Letter where indicated below and return a
facsimile copy of it (with the original to follow by mail) to Buyer as soon as
possible to:
Allan G. Mutchnik, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, 34th Floor
Los Angeles, California 90071
Fax: (213) 687-5600
If you should have any questions, please do not hesitate to call Harry
Alcock at (303) 691-4344.
Yours truly,
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, Inc.
Its: General Partner
By: /s/ Harry Alcock
-----------------------------------
Name: Harry Alcock
Its: Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 3
ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE:
(AS TO PROPERTIES 1-25 IDENTIFIED ON
EXHIBIT "A" TO THE PURCHASE AGREEMENT)
BEACON APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
BLOSSOM APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 4
COURT APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
FERN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
FOOTHILLS APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 5
FOX BAY APTS. LIMITED
PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
FOX APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
GROVE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 6
HAZEL APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
HIDDEN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
ISLAND APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 7
ORCHID APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
PINE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
POLO PARK APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 8
QUAIL APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
RIVER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
SAND APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 9
SHADE APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
SILK APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
TIMBER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 10
TWIN APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
WICKER APTS. LIMITED PARTNERSHIP
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
WILDFLOWER APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 11
WYDEWOOD APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
YORK APTS., L.P.
By: Eleven Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
(AS TO PROPERTY 26 IDENTIFIED ON
EXHIBIT "A" TO THE PURCHASE AGREEMENT)
WINTHROP-AUSTIN HOLDINGS, L.P.
By: Fifteen Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
First Winthrop Corporation
October 15, 1997
Page 12
(AS TO PROPERTIES 27-35 IDENTIFIED ON
EXHIBIT "A" TO THE PURCHASE AGREEMENT)
WINTHROP FLORIDA APARTMENTS,
LIMITED PARTNERSHIP
By: Fourteen Winthrop Properties, Inc.,
its sole general partner
By: /s/
--------------------------
Name: Michael L. Ashmer
Title: CEO
<PAGE>
Exhibit 99.7
[AIMCO LETTERHEAD]
Apartment Investment And Management Company Announces Agreement To Acquire
8,175 Apartment Units From Winthrop Financial Associates
DENVER, Oct. 17 /PRNewswire/ -- Apartment Investment and Management
Company ("AIMCO") (NYSE: AIV) announced that it has finalized an agreement
with Winthrop Financial Associates to acquire 8,175 units in 35 apartment
communities for an aggregate price of approximately $253.5 million and
additional transaction costs of approximately $8 million. AIMCO will pay
$253.2 million in cash and will assume $8.3 million in mortgage indebtedness
to complete the purchase. AIMCO has also budgeted an additional $16 million in
initial capital expenditures which will be incurred subsequent to the
acquisition of the apartment communities, resulting in a total cost of $277.5
million or approximately $34,000 per apartment unit. The closing, which is
subject to customary closing conditions, is expected to be completed within
30 days.
The 35 garden-style apartment communities are located in seven states and
have an average age of 17 years. Fifteen of the apartment communities are
located in Arizona, with 2,602 units in Phoenix and 816 units in Tucson; eleven
apartment communities with 2,075 units are located throughout Texas; two
apartment communities with 1,223 units are located in Florida, two apartment
communities with 494 units are located in Michigan, three apartment
communities with 536 units are located in Georgia, one apartment community
with 293 units is located in Illinois and one apartment community with 136
units is located in North Carolina. At October 13, 1997, the apartment
communities had a weighted average physical occupancy of 93.5%. During
September 1997, the weighted average monthly rent per occupied unit was $569.
AIMCO is a real estate investment trust with headquarters in Denver,
Colorado and 13 regional hubs, which holds a geographically diversified
portfolio of apartment communities, primarily serving the middle market. As
of September 30, 1997, AIMCO, through its subsidiaries, owned or controlled
28,773 units in 109 apartment communities and had an equity interest in
87,182 units in 526 apartment communities. In addition, AIMCO managed 71,038
units in 394 apartment communities for third parties and affiliates, bringing
the total owned and managed portfolio to 186,993 units in 1,029 apartment
communities. AIMCO's properties are located in 42 states, the District of
Columbia and Puerto Rico.
SOURCE Apartment Investment and Management Company
-0- 10/17/97
/CONTACT: Peter Kompaniez, President, 909-336-4821 or Leeann Morein,
Senior Vice President, 303-757-8101, both of Apartment Investment and
Management Company, [email protected]/
(AIV)
-0-
