<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K-A
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES AND EXCHANGE ACT of 1934
Date of Report (Date of Earliest Event Reported) May 8, 1996
INNKEEPERS USA TRUST
(Exact name of registrant as specified in its charter)
Maryland 0-24568 65-0503831
(State or other jurisdiction (Commission File No.) I.R.S. Employer
of incorporation) (Identification No.)
306 Royal Poinciana Way
Palm Beach, Florida 33480
(Address of principal executive offices)
(407) 835-1800
(Registrant's telephone number, including area code)
N/A
(former name or former address, if changed since last report)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Innkeepers USA Limited Partnership, a Virginia limited partnership (the
"Partnership"), of which Innkeepers Financial Corporation, a wholly owned
subsidiary of Innkeepers USA Trust (the "Registrant"), serves as sole general
partner, consummated the acquisition of a 96-room Residence Inn hotel in Cherry
Hill, New Jersey (the "Cherry Hill Hotel") and a 80-room Residence Inn hotel in
Harrisburg, Pennsylvania (the "Harrisburg Hotel") on May 8, 1996 for a cash
purchase price of $9,675,000 and $6,925,000, respectively. The Cherry Hill
Hotel was purchased from Amerimar Cherry Hill Associates Limited Partnership, a
New Jersey limited partnership, a party unrelated to the Registrant, in a
negotiated transaction. The Harrisburg Hotel was purchased from BA-Harrisburg
Associates, a Pennsylvania general partnership, a party unrelated to the
Registrant, in a negotiated transaction. The purchase price of the Cherry
Hill and Harrisburg Hotels was paid with the proceeds of an existing line of
credit from Nomura Asset Capital Corporation. The Cherry Hill and Harrisburg
Hotels will be leased by the Partnership to JF Hotel, Inc., a corporation
majority owned by Jeffrey H. Fisher, President and a trustee of the
Registrant. JF Hotel, Inc. leases each of the hotel properties owned by the
Partnership pursuant to percentage leases with the Partnership which provide
for rent equal to the greater of (i) fixed base rent or (ii) percentage rent
based on room revenues of the hotel. The percentage lease for the Cherry Hill
and Harrisburg Hotels has a term of ten years. The base rent for the
percentage lease on the Cherry Hill Hotel is $774,000. The percentage rent for
the Cherry Hill Hotel is 30% of room revenue up to $1,700,000, plus 68% of room
revenue in excess of $1,700,000. The base rent for the percentage lease on the
Harrisburg Hotel is $554,000. The percentage rent for the Harrisburg Hotel is
30% of room revenue up to $1,380,000, plus 68% of room revenue in excess of
$1,380,000. The Cherry Hill and Harrisburg Hotels will continue to be operated
as a hotel properties.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements of the Cherry Hill and Harrisburg Hotels
The audited balance sheet of Amerimar Cherry Hill Associates (Cherry
Hill Hotel) as of December 31, 1995 and the related statements of
income, changes in Partners' deficit, and cash flows for the year
ended is included as Exhibit 99.1 to this Form 8-K-A.
The audited balance sheet of BA-Harrisburg Associates (Harrisburg
Hotel) as of December 31, 1995 and the related statements of income,
changes in Partners' equity and cash flows for the year ended is
included as Exhibit 99.2 to this Form 8-K-A.
(b) Pro Forma Financial Information
Pro forma financial information (unaudited) as of March 31, 1996 and
for the three and twelve months ended March 31, 1996 reflecting all of
the acquisitions made by the registrant since its inception, including
the acquisitions of the Cherry Hill and Harrisburg Hotels, is included
as Exhibit 99.3 to this Form 8-K-A.
(c) Exhibits
10.1 Agreement of Purchase and Sale dated March 8, 1996 between
Amerimar Cherry Hill Associates Limited Partnership and
Innkeepers USA Limited Partnership (Cherry Hill Hotel).
10.2 Agreement of Purchase and Sale dated March 8, 1996 between
BA-Harrisburg Associates and Innkeepers USA Limited
Partnership (Harrisburg Hotel).
2
<PAGE> 3
ITEM 7(c) Continued
99.1 The audited balance sheet of Amerimar Cherry Hill Associates
(Cherry Hill Hotel) as of December 31, 1995 and the related
statements of income, changes in Partners' deficit and cash
flows for the year ended.
99.2 The audited balance sheet of BA-Harrisburg Associates
(Harrisburg Hotel) as of December 31, 1995 and the related
statements of income, changes in Partners' equity and cash
flows for the year ended.
99.3 Pro forma financial information (unaudited) as of March 31,
1996 and for the three and twelve months ended March 31, 1996.
3
<PAGE> 4
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 hereunto duly authorized.
INNKEEPERS USA TRUST
July 17, 1996 /s/ David Bulger
- ------------- -------------------
Date David Bulger
Chief Financial Officer
(Principal Financial Officer)
4
<PAGE> 5
EXHIBIT INDEX
*10.1 Agreement of Purchase and Sale dated March 8, 1996 between Amerimar
Cherry Hill Associates Limited Partnership and Innkeepers USA Limited
Partnership (Cherry Hill Hotel).
*10.2 Agreement of Purchase and Sale dated March 8, 1996 between
BA-Harrisburg Associates and Innkeepers USA Limited Partnership
(Harrisburg Hotel).
99.1 The audited balance sheet of Amerimar Cherry Hill Associates (Cherry
Hill Hotel) as of December 31, 1995 and the related statements of
income, changes in Partners' deficit and cash flows for the year
ended.
99.2 The audited balance sheet of BA-Harrisburg Associates (Harrisburg
Hotel) as of December 31, 1995 and the related statements of income,
changes in Partners' equity and cash flows for the year ended.
99.3 Pro forma financial information (unaudited) as of March 31, 1996 and
for the three and twelve months ended March 31, 1996.
*Previously filed.
5
<PAGE> 1
EXHIBIT 99.1
AMERIMAR - CHERRY HILL ASSOCIATES
LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
<PAGE> 2
COOPERS COOPERS & LYBRAND L.L.P.
& LYBRAND
a professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
Amerimar Cherry Hill Associates
Limited Partnership:
We have audited the accompanying balance sheet of Amerimar Cherry Hill
Associates as of December 31, 1995, and the related statements of income,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements 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 financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Amerimar Cherry Hill
Associates Limited Partnership as of December 31, 1995, and the results of its
operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 19, 1996
<PAGE> 3
AMERIMAR CHERRY HILL ASSOCIATES
LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
BALANCE SHEET
AS OF DECEMBER 31, 1995
ASSETS
<TABLE>
<S> <C>
Investments in real estate, at cost:
Land $1,202,500
Buildings and improvements 3,593,070
Furniture, fixtures and equipment 1,104,205
----------
5,899,775
Less accumulated depreciation (1,510,788)
----------
Total real estate, net 4,388,987
Cash and cash equivalents 464,443
Accounts receivable 102,333
Prepaid and other assets 69,414
Deferred costs, net of accumulated amortization of $196,604 66,093
----------
Total assets $5,091,270
==========
LIABILITIES AND PARTNERS' DEFICIT
Liabilities:
Mortgage note payable $5,306,252
Accounts payable and accrued expenses 170,672
Due to affiliate 12,527
----------
Total liabilities 5,489,451
Partners' deficit (398,181)
----------
Total liabilities and partners' deficit $5,091,270
==========
</TABLE>
See accompanying notes to the financial statements.
2
<PAGE> 4
AMERIMAR CHERRY HILL ASSOCIATES
LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Revenues:
Suite revenue $2,731,707
Other income 174,774
----------
Total revenues 2,906,481
----------
Expenses:
Operating expenses 1,478,550
Management fees 145,621
Interest expense 501,752
Depreciation 219,395
Amortization of deferred costs 46,421
Real estate taxes 160,295
----------
Total expenses 2,552,034
----------
Net income $ 354,447
==========
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE> 5
AMERIMAR CHERRY HILL ASSOCIATES
LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF CHANGES IN PARTNERS' DEFICIT -
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Limited
General Partners Partners Total
-------------------------------------------- ---------- -----------
Associates Investors Deal Partner Benco
---------- --------- ------------ -----
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1995 $ (256,579) $ - $ (119,734) $ (51,315) $ (427,628)
Contributions 5,044 (5,044) - - -
Distributions (190,740) (4,260) (91,000) (39,000) (325,000)
Net income 208,415 4,253 99,245 42,534 354,447
---------- -------- ---------- --------- ----------
Balance, December 31, 1995 $ (233,860) $ (5,051) $ (111,489) $ (47,781) $ (398,181)
========== ======== ========== ========= ==========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE> 6
AMERIMAR CHERRY HILL ASSOCIATES
LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 354,447
Adjustments to reconcile net income to
cash provided by operating activities:
Depreciation 219,395
Amortization 46,421
Changes in assets and liabilities:
Accounts receivable 21,429
Prepaid and other assets (21,215)
Accounts payable and accrued expenses 12,826
---------
Total cash provided by operating activities 633,303
---------
Cash flows from investing activities:
Additions to real estate (156,571)
---------
Total cash used in investing activities (156,571)
---------
Cash flows from financing activities:
Repayment of note payable (218,750)
Distributions to partners (325,000)
---------
Net cash used in financing activities (543,750)
---------
Increase (decrease) in cash (67,018)
Cash, beginning of year 531,461
---------
Cash, end of year $ 464,443
=========
Supplemental disclosure of cash flow
information:
Cash paid during the year for interest $ 501,788
=========
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE> 7
AMERIMAR CHERRY HILL ASSOCIATES
LIMITED PARTNERSHIP
(A DELAWARE LIMITED PARTNERSHIP)
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
Amerimar Cherry Hill Associates Limited Partnership (the Partnership) is a
Delaware Limited Partnership formed on July 25, 1988 to develop and
operate a Residence Inn Hotel in Cherry Hill, New Jersey.
The percentage interests of the general and limited partners at December
31, 1995 are as follows:
<TABLE>
<CAPTION>
Percentage
Interest
----------
<S> <C>
General partners:
Amerimar Associates Limited Partnership
("Associates") 22.0%
Amerimar Investors Limited Partnership
("Investors") .5
C. Ronald Bleznak ("Deal Partner") 10.0
Limited partner:
Beneficial Real Estate
Joint Venture, Inc. ("Benco") 67.5
-----
100.0%
=====
</TABLE>
The Partnership agreement was amended January 1, 1993. As a result, losses
were allocated first, in proportion to and to the extent of positive
capital account balances of those partners having positive capital account
balances; second, in proportion to and to the extent of profit previously
allocated to the partners, and then in proportion to the following
percentages: 60% to Associates, 20% to Deal Partner, 20% to Benco.
6
<PAGE> 8
1. ORGANIZATION, CONTINUED:
Generally, profits were allocated first, in proportion to and to the
extent of the losses previously allocated to the partners, and then in
proportion to the following percentages: 60% to Associates, 28% to Deal
Partner, 12% to Benco.
Cash distributions were made to the Partners, first in proportion to the
Partners' unrecovered capital until it is reduced to zero, and then in
proportion to the following percentages: Associates 60%, Deal Partner
28%, and Benco 12%.
The Partnership was amended, and the changes became effective in April
1995, at which time the Amerimar Associates Limited Partnership
("Associates") assigned .5% of their interest in the Partnership to
Amerimar Investors Limited Partnership ("Investors"). As a result, losses
will continue to be allocated first, in proportion to and to the extent of
positive capital account balances of those partners having positive
capital account balances; second, in proportion to and to the extend of
profit previously allocated to the partners, and then in proportion to the
following percentages: 58.8% to Associates, 1.2% to Investors, 20% to
Deal Partner, 20% to Benco.
Profits will continue to be allocated first, in proportion to and extent
of the losses previously allocated to the partners, and then in proportion
to the following percentages: 58.8% to Associates, 1.2% to Investor, 28.0%
to Deal Partner, 12.0% to Benco.
Cash distributions will also continue to be made to the Partners, first in
proportion to the Partners' unrecovered capital until it is reduced to
zero, and then in proportion to the following percentages: Associates
58.8%, Investor 1.2%, Deal Partner 28.0% and Benco 12.0%.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
INCOME TAXES:
The taxable income or loss of the Partnership is included in the income
tax returns of the partners and, accordingly, no provision for income tax
expense or benefit is reflected in the accompanying financial statements.
The Partnership's tax returns and the amount of allocable profits or
losses are subject to examination by Federal and state taxing authorities.
The tax liability of the partners could be modified if such an examination
resulted in changes to Partnership profits and losses.
7
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include all cash balances and highly liquid
investments having maturities of three months or less.
PROPERTY AND EQUIPMENT:
Property and equipment are recorded at cost. Cost of major additions and
betterments are capitalized; maintenance and repairs, which do not improve
or extend the life of the respective assets, are charged to operations as
incurred. When property is retired or otherwise disposed of, the cost of
the property and the related accumulated depreciation are removed from the
accounts and any resultant gains or losses are reflected in income for the
period.
Depreciation of buildings and improvements is computed on the straight-line
basis over 31- 1/2 years to 39 years. Depreciation of equipment is
computed using the 200% declining balance method, over a 5-to-7 year
period.
DEFERRED COSTS:
Loan costs are amortized on a straight-line basis, which approximates the
interest rate method, over the term of the mortgage. Other deferred
charges, including organization costs and franchise fees, are being
amortized over a five-year period and ten-year period, respectively.
CREDIT RISK:
In the normal course of business the Partnership grants credit to hotel
customers who are primarily either tourists or corporate travelers. The
Partnership primarily invests its excess cash in interest-bearing
instruments with major commercial banks. Cash available in these accounts
may at times, exceed FDIC insurance limits.
USE OF ESTIMATES:
The presentation 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.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. MORTGAGE NOTE PAYABLE:
The Partnership has a mortgage note payable with a term of 5 years and two
one-year renewal options. The loan has a fixed rate component
($5,000,000) and a variable rate component ($306,250) at December 31,
1995. The fixed rate component interest rate is 9.21%. The variable rate
component interest rate is the 90-day LIBOR rate (5.63% at December 31,
1995) plus 2.25%. The carrying value of the financial instrument
indicated above approximates fair market value. Annual principal
repayments are required on the variable rate component as follows for
the years ended December 31:
<TABLE>
<S> <C>
1996 $243,750
1997 62,500
--------
$306,250
========
</TABLE>
The fixed rate component of $5,000,000 is due February 1997 or may be
renewed at the Partnership's option as noted above.
The note is collateralized by the Partnership's real property.
4. COMMITMENTS:
OPERATING LEASES:
The Partnership has leases related to various office equipment which have
been accounted for as operating leases. The Partnership recorded expenses
of approximately $27,000 related to these leases for the year ended
December 31, 1995.
At December 31, 1995, under minimum future lease payment, noncancelable
leases in excess of one year were as follows:
<TABLE>
<S> <C>
1997 $27,000
1998 27,000
1999 17,000
2000 6,000
-------
$77,000
=======
</TABLE>
OTHER AGREEMENTS:
Marriott Inc. (the "Franchisor") has the right to inspect the property and
request that capital or other improvements be made by the Partnership. No
estimates have been made in these financial statements for any costs to be
incurred related to such inspections.
9
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. COMMITMENTS, CONTINUED:
OTHER AGREEMENTS, CONTINUED:
The Partnership has entered into an agreement with a Company that provides
cable equipment and service. The agreement may be canceled by the
Partnership, subject to cancellation fees of approximately $18,000 at
December 31, 1995.
5. RELATED PARTIES:
The Partnership has engaged affiliates of the general partners to perform
property management, administrative and other services for the project.
These affiliates received $145,621 in management fees totaling 5% of gross
revenues received. Fees are included in operating expenses for the year
ended December 31, 1995. There were $12,404 in unpaid management fees at
December 31, 1995.
6. AGREEMENT OF SALE:
The Partnership entered into an agreement on March 8, 1996 with an
unrelated third party to sell the property, as defined in the agreement.
The agreement provides for the cancellation of the management and
franchise agreements on or before closing. In addition, the agreement
requires that there be a simultaneous closing under a separate Agreement
of Purchase and Sale between BA-Harrisburg Associates and the buyer and
that there not be a material default under such agreement prior to
closing.
7. LITIGATION:
In 1989, the Partnership terminated its construction contract with the
contractor of the hotel, by reason of certain defaults thereunder by the
contractor.
In 1990, a suit was filed against the Partnership and other defendants
alleging breach of the construction contract and breach of certain other
obligations, representations and warranties. Certain claims, aggregating
$6.1 million, which were asserted against the Partnership were dismissed
in 1993. The breach of contract claim for damages in the amount of
approximately $200,000 plus interest, costs and legal fees is pending and
is in the late discovery stage. The Partnership has denied all liability
for these claims and is vigorously defending such claims.
The Partnership is also aware of a threatened employee claim which is being
handled in the ordinary course of business.
The ultimate results of the matters described above cannot be determined;
however, if the Partnership does not prevail, the outcome could have a
material impact, either individually or in the aggregate, on the financial
position, future results of operations and cash flows of the Partnership.
10
<PAGE> 1
EXHIBIT 99.2
BA HARRISBURG ASSOCIATES
(A PENNSYLVANIA GENERAL PARTNERSHIP)
REPORT ON AUDIT OF
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
DECEMBER 31, 1995
<PAGE> 2
COOPERS Cooper & Lybrand L.L.P.
&LYBRAND
a professional services firm
REPORT OF INDEPENDENT ACCOUNTANTS
To the Partners of
BA Harrisburg Associates:
We have audited the accompanying balance sheet of BA Harrisburg Associates as of
December 31, 1995 and the related statements of income, changes in partners'
equity and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of BA Harrisburg Associates as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania
April 19, 1996
1
<PAGE> 3
BA HARRISBURG ASSOCIATES
BALANCE SHEET
AS OF DECEMBER 31, 1995
ASSETS
<TABLE>
<S> <C>
Investments in real estate, at cost:
Land $ 249,638
Building and improvements 3,140,307
Furniture, fixtures and equipment 439,677
----------
3,829,622
Less accumulated depreciation (627,650)
----------
Total real estate, net 3,201,972
Cash and cash equivalents 484,976
Accounts receivable 28,138
Prepaid expenses and other assets 57,855
Deferred costs, net of accumulated amortization of $37,236 34,260
----------
Total assets $3,807,201
==========
LIABILITIES AND PARTNERS' EQUITY
Liabilities:
Note payable $2,909,480
Accounts payable and accrued expenses 132,845
Due to affiliate 6,605
----------
Total liabilities 3,048,930
Partners' equity 758,271
----------
Total liabilities and
partners' equity $3,807,201
==========
</TABLE>
See accompanying notes to the financial statements.
2
<PAGE> 4
BA HARRISBURG ASSOCIATES
STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Revenues:
Suite revenue $1,992,536
Other income 114,158
----------
Total revenues 2,106,694
----------
Expenses:
Operating expenses 1,107,593
Management fees 106,958
Interest expense 325,552
Real estate taxes 60,720
Depreciation 151,592
Amortization of deferred costs 13,619
Disposal of fixed assets 6,911
----------
Total expenses 1,772,945
----------
Net income $ 333,749
==========
</TABLE>
See accompanying notes to the financial statements.
3
<PAGE> 5
BA HARRISBURG ASSOCIATES
STATEMENT OF CHANGES IN PARTNERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Swatara
Associates
ARC-Harrisburg Limited
Associates Partnership Total
-------------- ----------- ----------
<S> <C> <C> <C>
Balance, January 1, 1995 $ 699,745 $ 24,777 $ 724,522
Capital distributions (275,423) (24,577) (300,000)
Net income 207,259 126,490 333,749
--------- -------- ---------
Balance, December 31, 1995 $ 631,580 $126,691 $ 758,271
========= ======== =========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE> 6
BA HARRISBURG ASSOCIATES
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<S> <C>
Cash flows from operating activities:
Net income $ 333,749
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 151,592
Amortization 13,619
Write-off of fixed assets 6,911
Changes in assets and liabilities:
Accounts receivable 7,988
Prepaid expenses and other assets (3,172)
Accounts payable and accrued expenses 45,086
---------
Net cash provided by operating activities 555,773
Cash flows from investing activities:
Additions to real estate (68,269)
Increase in deferred cost -
---------
Net cash used in investing activities (68,269)
---------
Cash flows from financing activities:
Capital distributions to partners (300,000)
Repayment of note payable (87,608)
---------
Net cash used in financing activities (387,608)
---------
Increase in cash 99,896
Cash, beginning of year 385,080
---------
Cash, end of year $ 484,976
=========
Supplemental disclosure of cash flow
information:
Cash paid during the year for interest $ 325,552
=========
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE> 7
BA HARRISBURG ASSOCIATES
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION:
BA Harrisburg (the "Partnership") is a general partnership, which
operates the Residence Inn Hotel in Swatara Township, Pennsylvania.
ARC-Harrisburg Associates ("ARC") and Swatara Associates Limited
Partnership ("Swatara") are partners with partnership interests of 62.1%
and 37.9%, respectively, at December 31, 1995.
Profits and losses are allocated in accordance with the partners'
percentage interests during the period in which the related profits or
losses were generated. Generally, cash distributions are allocated to
the partners, first in proportion to the partners' unreturned capital
contributions until they are reduced to zero and then in proportion to
their partnership interest.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include all cash balances and highly liquid
investments having maturities of three months or less.
PROPERTY AND EQUIPMENT:
Property and equipment are recorded at cost. Cost of major additions
and betterments are capitalized; maintenance and repairs, which do not
improve or extend the life of the respective assets, are charged to
operations as incurred. When property is retired or otherwise disposed
of, the cost of the property and the related accumulated depreciation
are removed from the accounts and any resultant gains or losses are
reflected in operations for the period.
6
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PROPERTY AND EQUIPMENT, CONTINUED:
Depreciation of buildings and improvements is computed on the
straight-line basis over 31-1/2 years. Depreciation of equipment is
computed using the 200% declining balance method, over a 5-to-7 year
period.
DEFERRED COSTS:
Deferred costs consist of loan costs and franchise fees. Loan costs are
amortized on a straight-line basis over the term of the related note,
which approximates the interest rate method. Franchise fees are amortized
on a straight-line basis over 81 months.
INCOME TAXES:
The taxable income or loss of the Partnership is includable in the income
tax returns of the partners and, accordingly, no provision for income tax
expense or benefit is reflected in the accompanying financial statements.
The Partnership's tax returns and the amount of allocable profits or
losses are subject to examination by federal and state taxing authorities.
The tax liability of the partners could be modified if such an examination
resulted in changes to Partnership profits or losses.
CREDIT RISK:
In the normal course of business, the Partnership grants credit to hotel
customers who are primarily either tourists or corporate travelers. The
Partnership primarily invests its excess cash in interest-bearing
instruments with commercial banks. Cash available in these accounts may,
at times, exceed FDIC insurance limits.
USE OF ESTIMATES:
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.
7
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. NOTE PAYABLE:
The Partnership has a $2,909,480 note with a financial company.
Effective April 1, 1994, the interest rate on the loan is the prime rate
plus 2%, but not lower than a rate of 8% (8.5% at December 31, 1995).
The carrying value of the debt approximates fair market value. A
balloon payment of approximately $2.6 million is due April 30, 1998.
Commencing April 1, 1994, monthly principal repayments based on a
15-year amortization schedule are required. Principal repayments for
the years indicated are as follows:
<TABLE>
<CAPTION> <S> <C>
1996 $ 100,595
1997 112,767
1998 2,696,118
----------
$2,909,480
==========
</TABLE>
The loan is collateralized by a first lien on the Partnership's property
and an assignment of the Partnership's leases and rents.
4. COMMITMENTS:
OPERATING LEASES:
The Partnership has leases related to equipment which have been
accounted for as operating leases. The Partnership recorded expenses of
approximately $14,000 related to these leases for the year ended
December 31, 1995.
At December 31, 1995, minimum future lease payments under noncancelable
leases in excess of one year approximates the following:
<TABLE>
<S> <C>
1997 $17,000
1998 14,000
1999 2,000
-------
$33,000
=======
</TABLE>
OTHER AGREEMENTS:
Marriott Corporation (the "Franchisor") has the right to inspect the
property and request that capital or other improvements be made by the
Partnership. No estimates have been made in these financial statements
for any costs to be incurred related to such inspections.
8
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. RELATED PARTIES:
The Partnership has engaged affiliates of the general partners to
perform property management, administrative and other services for the
project. These affiliates receive management fees totaling 5% of gross
revenues received. Fees of $106,958 were expensed for the year ended
December 31, 1995. As of December 31, 1995 there were $6,605 in unpaid
management fees.
6. AGREEMENT OF SALE:
The Partnership entered into an agreement on March 8, 1996 with an
unrelated third party to sell the property, as defined in the agreement.
The agreement provides for the cancellation of the management and
franchise agreements on or before closing. In addition, the agreement
requires that there be a simultaneous closing under a separate Agreement
of Purchase and Sale between Amerimar Cherry Hill Associates Limited
Partnership (Cherry Hill) and the buyer and that there not be a material
default under such agreement prior to closing.
9
<PAGE> 1
Exhibit 99.3
INNKEEPERS USA TRUST
PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 1996
The following unaudited Pro forma Consolidated Balance Sheet of
Innkeepers USA Trust is presented as if the acquisition of the Cherry Hill and
Harrisburg Hotels had occurred on March 31, 1996. Such pro forma information
is based in part upon the consolidated balance sheets of the Company. In
management's opinion, all adjustments necessary to reflect the effects of these
transactions have been made.
The following unaudited Pro forma Consolidated Balance Sheet is not
necessarily indicative of what the actual financial position of the Company
would have been assuming such transactions had been completed as of March 31,
1996, nor does it purport to represent the future financial position of the
Company.
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
---------- ----------- ---------
(Unaudited, Amounts in Thousands)
<S> <C> <C> <C>
ASSETS
Investment in hotel properties, at cost . . . . . . . . . $158,024 $16,600 $174,624
Accumulated depreciation . . . . . . . . . . . . . . . . (11,591) (11,591)
------- -------- -------
Investment in hotel properties, net . . . . . . . . . . . 146,433 16,600(A) 163,033
Cash and cash equivalents . . . . . . . . . . . . . . . . 6,774 6,774
Due from Lessee . . . . . . . . . . . . . . . . . . . . . 3,015 3,015
Deferred expenses, net . . . . . . . . . . . . . . . . . 2,248 83(B) 2,331
Other assets . . . . . . . . . . . . . . . . . . . . . . 275 275
------- ------ -------
Total assets . . . . . . . . . . . . . . . . . . . . . $158,745 $16,683 $175,428
======= ====== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Long-term debt . . . . . . . . . . . . . . . . . . . . . $61,834 $16,683(A,B) $78,517
Accounts payable and accrued expenses . . . . . . . . . . 277 277
Accrued expenses -- public offering . . . . . . . . . . . 0 0
Distributions payable . . . . . . . . . . . . . . . . . . 2,603 2,603
Minority interest in partnership . . . . . . . . . . . . 6,112 6,112
------ ------ ------
Total liabilities . . . . . . . . . . . . . . . . . . . $70,826 $16,683 $87,509
------ ------ ------
Shareholders' Equity:
Common shares . . . . . . . . . . . . . . . . . . . . . 108 108
Additional paid in capital . . . . . . . . . . . . . . 90,650 90,650
Unearned Trustees' compensation . . . . . . . . . . . . (173) (173)
Distributions in excess of net earnings . . . . . . . . (2,666) (2,666)
------ -------
Total shareholders' equity . . . . . . . . . . . . . 87,919 87,919
------ -------
Total liabilities and shareholders' equity . . . . . $158,745 $16,683 $175,428
======= ====== =======
</TABLE>
See Notes to the Pro Forma Consolidated Balance Sheet.
8
<PAGE> 2
(A) Increase reflects the purchase price of the Cherry Hill and Harrisburg
Hotels which was financed by proceeds from the Company's Line of
Credit.
(B) Increase reflects the capitalization of line of credit commitments
fees.
9
<PAGE> 3
INNKEEPERS USA TRUST
PRO FORMA CONSOLIDATED STATEMENTS OF INCOME
For the Three and Twelve Months Ended March 31, 1996
(Unaudited, amounts in thousands except per share data)
The following unaudited Pro forma Consolidated Statements of Income of
Innkeepers USA Trust (Company) is presented as if the acquisition of the Hotels
had occurred at the beginning of the periods presented and all of the Hotels
had been leased to the Lessee pursuant to the percentage leases throughout the
periods presented. Such pro forma information is based in part upon the
consolidated statements of income of the Company. In management's opinion, all
adjustments necessary to reflect the effects of these transactions have been
made.
The following unaudited Pro forma Consolidated Statements of Income
for the periods presented are not necessarily indicative of what actual results
of operations of the Company that would have been assuming such transactions
had been completed as of the beginning of the periods presented, nor does it
purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
For the Three For the Twelve
Months Ended Months Ended
March 31, 1996 March 31, 1996
-------------- --------------
<S> <C> <C>
Operating Data:
Percentage lease revenue . . . . . . . . . . . . $ 6,226 $ 23,503
Other revenue . . . . . . . . . . . . . . . . . . 168 676
----- ------
Total Revenue . . . . . . . . . . . . . . . 6,394 24,179
----- ------
Depreciation and amortization . . . . . . . . . . 1,729 6,910
Ground rent . . . . . . . . . . . . . . . . . . . 84 336
Interest expense . . . . . . . . . . . . . . . . 1,502 6,009
Amortization of origination fees . . . . . . . . 240 960
Real estate and personal property taxes . . . . .
and property insurance . . . . . . . . . . . 597 2,388
General and administrative . . . . . . . . . . . 250 1,000
Amortization of unearned Trustees' . . . . . . .
compensation . . . . . . . . . . . . . . . . 12 48
----- ------
Total expenses . . . . . . . . . . . . . . . 4,414 17,651
Income before minority interest . . . . . . . . . 1,980 6,528
Minority interest in income . . . . . . . . . . . (129) (424)
----- -----
Net income . . . . . . . . . . . . . . . . . $ 1,851 $ 6,104
===== =====
Net income per common share . . . . . . . . . . . $ .17 $ .56
=== ===
Weighted average number of common
shares and common share equivalents
outstanding . . . . . . . . . . . . . . . . 11,568,591 11,568,591
========== ==========
</TABLE>
10
<PAGE> 4
JF HOTEL, INC. AND JF HOTEL II, INC.
PRO FORMA COMBINED STATEMENTS OF INCOME
FOR THE THREE AND TWELVE MONTHS ENDED MARCH 31, 1996
(Unaudited, Amounts in Thousands)
The following unaudited Pro Forma Combined Statements of Income of JF
HOTEL, INC. and JF HOTEL, II, INC. (Lessee) is presented as if the acquisition
of the Hotels had occurred at the beginning of the periods presented. Such pro
forma information is based in part upon the combined statements of income of
the Lessee. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made.
The following unaudited Pro Forma Combined Statements of Income for
the periods presented are not necessarily indicative of the actual results of
operations of the Lessee that would have been assuming such transactions had
been completed as of the beginning of the periods presented, nor does it
purport to represent the results of operations for future periods.
<TABLE>
<CAPTION>
For the Three For the Twelve
Months Ended Months Ended
March 31, 1996 March 31, 1996
-------------- --------------
<S> <C> <C>
Revenues:
Room revenue . . . . . . . . . . . . . . . . . . $13,283 $51,128
Other revenue . . . . . . . . . . . . . . . . . . 987 3,708
------ -------
Total revenue . . . . . . . . . . . . . . . 14,270 54,836
------ ------
Expenses:
Property operating costs and expenses . . . . . . 3,140 12,705
General and administrative . . . . . . . . . . . 881 4,122
Franchise fees . . . . . . . . . . . . . . . . . 961 3,829
Advertising and promotions . . . . . . . . . . . 555 1,748
Utilities . . . . . . . . . . . . . . . . . . . . 898 3,130
Repairs and maintenance . . . . . . . . . . . . . 673 2,615
Insurance . . . . . . . . . . . . . . . . . . . . 104 653
Lessee overhead . . . . . . . . . . . . . . . . . 360 1,407
Percentage Lease payments . . . . . . . . . . . . 6,226 23,503
----- ------
Net Income . . . . . . . . . . . . . . . . . $ 472 $ 1,124
=== =====
</TABLE>
11
