SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
May 28, 1998
HOME PROPERTIES OF NEW YORK, INC.
(Exact name of Registrant as specified in its Charter)
MARYLAND 1-13136 16-1455126
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization file number) Identification Number)
850 CLINTON SQUARE
ROCHESTER, NEW YORK 14604
(Address of principal executive offices)
Registrant's telephone number, including area code: (716) 546-4900
Not applicable
(Former name or former address, if changed since last report)
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
CURRENT REPORT
ON FORM 8-K
Item 5. Other Events.
On May 28, 1998, Home Properties of New York, L.P. (the "Operating
Partnership"), entered into an agreement to acquire 100% of the real estate
of Racquet Club East, a 467 unit apartment community located in
Philadelphia, Pennsylvania. The agreement provides for a total purchase
price of $24,550,000 to be paid by assumption of existing financing and
operating partnership units. The existing mortgage financing has a
principal balance of approximately $12.2 million. The acquisition was
completed on July 7, 1998.
Item 7. Financial Statements and Exhibits.
a. Financial Statements of the business acquired:
Audited statement of revenues and certain expenses of the Racquet
Club East Apartments for the year ended December 31, 1997.
b. Pro Forma Financial Information:
Pro forma condensed balance sheet of the Company as of March 31,
1998 and related notes (unaudited).
Pro forma condensed statement of operations of the Company for
the three months ended March 31,1998 and for the year ended
December 31, 1997 (unaudited).
c. Exhibits:
Exhibit 23.0 - Consent of PricewaterhouseCoopers LLP
<PAGE>
Report of Independent Accountants
To the Board of Directors and Stockholders of
Home Properties of New York, Inc.
We have audited the accompanying statement of revenues and certain expenses, as
defined in Note 1, of Racquet Club East for the year ended December 31, 1997.
The statement of revenues and certain expenses is the responsibility of Racquet
Club East's management. Our responsibility is to express an opinion on the
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 the audit to
obtain reasonable assurance about whether the statement of revenues and certain
expenses is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
revenues and certain expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the statement of revenues and certain
expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenues and certain expenses was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission, as described in Note 1, and is not intended to be a
complete presentation of Racquet Club East's revenues and expenses.
In our opinion, the statement of revenues and certain expenses referred to
above presents fairly, in all material respects, the revenues and certain
expenses, as defined in Note 1, of Racquet Club East for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Rochester, New York
June 10, 1998
<PAGE>
Racquet Club East
Statement of Revenues and Certain Expenses
Period January 1 Year Ended
through March 31, 1998 December 31, 1997
(unaudited)
--------------------- ------------------
Revenues:
Rental income $ 986,128 $ 3,752,062
Other income 20,038 71,589
--------- ----------
1,006,166 3,823,651
Certain expenses:
Property operating and maintenance 305,789 1,268,633
Real estate taxes 96,848 376,220
-------- ----------
402,637 1,644,853
Revenues in excess of certain expenses $ 603,529 $ 2,178,798
========= ==========
The accompanying note is an integral part of the financial statement.
<PAGE>
1. Basis of Presentation and Summary of Significant Accounting Policies
Business
The accompanying statement of revenues and certain expenses includes the
operations (see "Basis of Presentation" below) of Racquet Club East, a
residential property owned and managed by parties not related to Home
Properties of New York, Inc. (the "Company").
On May 26, 1998, the Company, through its subsidiary Home Properties of New
York, L.P., entered into an agreement to acquire 100% of the real estate of
Racquet Club East, 467 apartment units located in one community. The property
is located in a suburban market of Philadelphia, Pennsylvania.
Basis of Presentation
The accompanying financial statement is not representative of the actual
operations of the Racquet Club East for the period shown. As required by the
Securities and Exchange Commission Regulation S-X, Rule 3-14, certain expenses
have been excluded which may not be comparable to the proposed future
operations of Racquet Club East. Expenses excluded relate to property
management fees, interest expense, depreciation and amortization expense and
other expenses not directly related to the future operations of Racquet Club
East. The Company is not aware of any material factors relating to Racquet
Club East that would cause the reported financial information not to be
necessarily indicative of future operating results.
Revenue Recognition
Rental income attributable to residential leases is recorded when due from
residents. Leases are generally for terms of one year.
Interim Unaudited Financial Statement
The accompanying interim unaudited statement of revenues and certain expenses
for the period from January 1 through March 31, 1998 has been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission
described above. The results of operations of such interim period are not
necessarily indicative of the results for the full year.
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited, In Thousands)
This unaudited pro forma Condensed Consolidated Balance Sheet is presented as
if the Company had purchased the Racquet Club East Apartments on March 31,
1998. This unaudited pro forma Condensed Consolidated Balance Sheet should be
read in conjunction with the Statement of Revenues and Certain Expenses of the
Racquet Club East Apartments and note thereto included elsewhere herein. In
management's opinion, all adjustments necessary to reflect the purchase of the
Racquet Club East Apartments have been made.
<TABLE>
<CAPTION>
Home
Properties of Racquet Club
New York, East Pro Forma Company
Inc. (A) Apartments (B) Adjustm. (C) Pro Forma
----------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Real estate, net $548,169 $2,459 $22,091(D) $572,719
Cash and cash equivalents 13,332 13,332
Other assets 56,589 56,589
-------- ------ ------- -------
Total assets $618,090 $2,459 $22,091 $642,640
======== ====== ======= ========
LIABILITIES
Mortgage notes payable $217,376 $ 12,216 $ $229,592
Line of credit 22,250 500 22,750
Other liabilities 15,936 15,936
------- ------- ------ -------
Total liabilities 255,562 12,216 500 268,278
------- ------- ------ -------
Minority interest 187,841 11,834(E) 199,675
------- ------- ------ -------
STOCKHOLDERS' EQUITY
Common stock 104 104
Additional paid-in capital 200,759 200,759
Accumulated deficit (21,302) (9,757) 9,757 (F) (21,302)
Treasury stock, at cost (426) (426)
Officer and director notes for
stock purchases (4,448) (4,448)
------- ------- ------ -------
Total stockholders' equity 174,687 (9,757) 9,757 174,687
------- ------- ------ -------
Total liabilities and
stockholders' equity $618,090 $2,459 $22,091 $642,640
======== ======= ======= ========
</TABLE>
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited, In Thousands)
(A) Reflects the Company's historical consolidated balance sheet as of March
31, 1998 as reported on form 10-Q.
(B) Reflects the Racquet Club East Apartments historical balance sheet as of
March 31, 1998 for the assets acquired by the Company.
(C) The pro forma adjustments reflect the purchase of the Racquet Club East
Apartments for $24,550. The purchase price will be allocated $1,868 to
land, $467 to appliances and equipment and $22,215 to building. The
appliances and equipment have an estimated useful life of ten years and
the building has an estimated useful life of thirty-five years.
(D) Reflects the adjustment to fair market value.
(E) Represents the issuance of 464,150 Operating Partnership Units valued at
$25.4961 per unit.
(F) Represents the elimination of seller's historical capital account.
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited, In Thousands, Except Share and Per Share Data)
The unaudited pro forma Consolidated Statement of Operations for the three
months ended March 31, 1998 and for the year ended December 31, 1997 is
presented as if the acquisition of the Racquet Club East Apartments had
occurred on January 1, 1997. The unaudited pro forma Consolidated Statement of
Operations should be read in conjunction with the Statements of Revenues and
Certain Expenses of the Racquet Club East Apartments and notes thereto included
elsewhere herein. In management's opinion, all adjustments necessary to
reflect the effects of the purchase of the Racquet Club East Apartments have
been made.
The unaudited pro forma Consolidated Statement of Operations is not necessarily
indicative of what the actual results of operations would have been assuming
the transactions had occurred as of the beginning of the period presented, nor
does it purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1998
--------------------------------------------------------
Home Properties
of New York, Inc. Racquet Club Pro forma Company
Historical (A) East Apts.(B) Adjustments Pro Forma
---------------- ------------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES
Rental income $25,094 $986 $ $26,080
Property other income 502 20 522
Other income 1,177 1,177
------ ----- ------ ------
Total revenues 26,773 1,006 27,779
------ ----- ------ ------
Expenses:
Operating and maintenance 12,140 403 12,543
General and administrative 1,209 30(C) 1,239
Interest 4,398 241(D) 4,639
Depreciation & amortization 4,079 170(E) 4,249
------ ----- ------ ------
Total expenses 21,826 403 441 22,670
------ ----- ------ ------
Income before minority interest $4,947 $603 ($441) 5,109
====== ===== ======
Minority interest of Unit holders 2,319
------
Net income $2,790
======
Net income per share - Basic $0.29
======
- Diluted $0.28
======
Weighted average number of shares
outstanding:
- Basic 9,702,975
=========
- Diluted 9,900,451
=========
</TABLE>
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited, In Thousands, Except Share and Per Share Data)
<TABLE>
<CAPTION>
Home Properties of NEW Racquet Club Pro Forma Company
York, Inc. (A) East Apts. (B) Adjustments Pro Forma
----------------------- -------------- ------------ ---------
<S> <C> <C> <C> <C>
Revenues:
Rental income $64,002 $3,752 $67,754
Property other income 2,222 72 2,294
Other income 3,473 3,473
------ ----- ------- ------
Total revenues 69,697 3,824 73,521
------ ----- ------- ------
Expenses:
Operating and maintenance 31,317 1,645 32,962
General and administrative 2,255 114 (C) 2,369
Interest 11,967 965 (D) 12,932
Depreciation & amortization 11,200 681 (E) 11,881
------ ----- ------- ------
Total expenses 56,739 1,645 1,760 60,144
------ ----- ------- ------
Income before loss on disposition of
property, minority interest and
extraordinary item 12,958 2,179 (1,760) 13,377
Loss on disposition of property 1,283 1,283
------ ------ ------- ------
Net income before minority interest and
extraordinary item $11,675 $2,179 ($1,760) 12,094
======= ====== =======
Minority interest 4,518
------
Income before extraordinary item 7,576
Extraordinary item ( 1,112)
------
Net income $6,464
======
Basic earnings per share data:
Income before extraordinary item $1.02
Extraordinary item ($0.15)
------
Net income $0.87
Diluted earnings per share data: ======
Income before extraordinary item $1.00
Extraordinary item ($0.15)
------
Net income $0.85
Weighted average number of shares ======
outstanding:
- Basic 7,415,888
=========
- Diluted 7,558,167
=========
</TABLE>
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND
FOR THE YEAR ENDED DECEMBER 31, 1997
(Unaudited, In Thousands)
(A) Reflects the historical consolidated statement of operations for the
Company for the three months ended March 31, 1998 and the historical
consolidated statement of operations for the Company for the year ended
December 31, 1997.
(B) Reflects the historical revenues and certain expenses of the Racquet Club
East Apartments which was not owned by the Company for the three months
ended March 31, 1998 and for the year ended December 31, 1997.
(C) Reflects additional general and administrative expenses.
(D) Reflects the increase related to debt assumed to finance the acquisition.
The interest is calculated as follows:
Interest
--------
Principal
Balance 3 Months 12 Months
--------- -------- ---------
Amortizing Mortgage:
Assumed mortgage at $12,216 $233 $ 931
7.625%
Line of credit at 6.75% 500 8 34
------ ----- ------
$12,716 $241 $ 965
======= ===== ======
(E) Reflects depreciation and amortization related to the acquisition.
See Note C on page 7 for further information on useful lives of these
assets.
<PAGE>
SIGNATURES
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.
HOME PROPERTIES OF NEW YORK, INC.
(Registrant)
Date: August 6, 1998
By: /S/ DAVID P. GARDNER
---------------------
David P. Gardner
Vice President
Chief Financial Officer and
Treasurer
Date: August 6, 1998
By: /S/ DAVID P. GARDNER
---------------------
David P. Gardner
Vice President
Chief Financial Officer and
Treasurer
<PAGE>
HOME PROPERTIES OF NEW YORK, INC.
EXHIBIT INDEX
EXHIBIT 23.0
Consent of PricewaterhouseCoopers LLP
<PAGE>
Exhibit 23.0
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statements
on Forms S-3 (Nos. 333-37437, 333-37229, 333-30835, 333-13723, 333-433303,
333-46243, 333-2672, 333-2674, 333-52601 and 333-58799) and on Forms S-8
(Nos. 333-05705, 333-12551 and 333-60731) filed by Home Properties of New
York, Inc. of our report dated June 10, 1998, on our audit of Racquet Club
East, for the year ended December 31, 1997, which report is included in the
accompanying Form 8-K. We also consent to the reference to our firm under
the caption "Experts".
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Rochester, New York
August 6, 1998
