SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 13, 1998
AmeriVest Properties Inc.
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(Exact name of registrant as specified in its charter)
Delaware 1-14462 84-1240264
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
7100 Grandview Avenue, Suite 1, Arvada, Colorado 80002
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 421-1224
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ITEM 7. FINANCIAL STATEMENT AND EXHIBITS.
Financial Statements of Real Estate Properties Acquired
Independent Auditor's Report F-1
Combined Statements of Real Estate Operating Revenues
and Expenses - year ended December 31, 1997
and six months ended June 30, 1998 (unaudited) F-2
Notes to Financial Statement F-3 -4
Unaudited Pro Forma Financial Information
Pro Forma Financial Information F-5
Unaudited Pro Forma Consolidated Balance Sheet
as of June 30, 1998 F-6
Unaudited Pro Forma Consolidated Statement of
Operations - six months ended June 30, 1998 F-7
Unaudited Pro Forma Consolidated Statement of
Operations - year ended December 31, 1997 F-8
Notes to Unaudited Pro Forma Consolidated
Financial Statements F-9-10
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To The Board of Directors and Stockholders
AMERIVEST PROPERTIES INC.
We have audited the accompanying combined statement of real estate operating
revenues and expenses for ten Texas real estate properties acquired by AmeriVest
Properties Texas Inc., a wholly owned subsidiary of AmeriVest Properties Inc.,
and for one Texas real estate property acquired by AmeriVest Properties Odessa
Inc., a wholly owned subsidiary of AmeriVest Properties Inc., for the year ended
December 31, 1997. This financial statement is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement 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 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 financial statement was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission and is
not intended to be a complete presentation of the real estate operating revenues
and expenses of the Texas real estate properties acquired by AmeriVest
Properties Texas Inc. and AmeriVest Properties Odessa Inc.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the real estate operating revenue and expenses of the
Texas real estate properties acquired by AmeriVest Properties Texas Inc. and
AmeriVest Properties Odessa Inc., for the year ended December 31, 1997 in
conformity with generally accepted accounting principles.
Wheeler Wasoff, P.C.
Denver, Colorado
August 26, 1998
F-1
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AMERIVEST PROPERTIES INC.
TEXAS REAL ESTATE PROPERTIES ACQUIRED
COMBINED STATEMENTS OF REAL ESTATE OPERATING REVENUES AND EXPENSES
YEAR ENDED DECEMBER 31, 1997 AND SIX MONTHS ENDED JUNE 30, 1998 (Unaudited)
Year Six Months
Ended Ended
December 31, June 30,
1997 1998
----------- -----------
(Unaudited)
REAL ESTATE OPERATING REVENUES $1,453,536 $ 734,576
---------- ----------
REAL ESTATE OPERATING EXPENSES
Property operating expenses
Operating expenses 476,058 249,689
Real estate taxes 157,053 78,528
Management fees 13,110 6,555
General and administrative 25,887 14,544
---------- ----------
672,108 349,316
---------- ----------
NET INCOME FROM REAL ESTATE OPERATIONS $ 781,428 $ 385,260
========== ==========
The accompanying notes are an integral part of the financial statement.
F-2
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AMERIVEST PROPERTIES INC.
TEXAS REAL ESTATE PROPERTIES ACQUIRED
NOTES TO FINANCIAL STATEMENT
DECEMBER 31, 1997 and JUNE 30, 1998 (Unaudited)
NOTE 1 - BASIS OF PRESENTATION
Pursuant to purchase and sale agreements entered into in November 1997,
AmeriVest Properties Inc. (AmeriVest), through its wholly owned
subsidiaries AmeriVest Properties Texas Inc. (AmeriVest Texas) and
AmeriVest Properties Odessa Inc. (AmeriVest Odessa) completed the
acquisition of 11 office buildings (the Acquired Buildings) in the State of
Texas. AmeriVest Odessa purchased one of the buildings on June 29, 1998 and
AmeriVest Texas acquired ten of the buildings on July 13, 1998. The
aggregate purchase price of the Acquired Buildings consisted of
approximately $6.1 million in cash, the assumption of $192,000 of debt and
the issuance of 207,200 shares of AmeriVest's common stock, valued at $5.00
per share.
The real estate operating revenues and expenses presented in the
accompanying financial statement relate only to the operations of the
Acquired Buildings and do not represent all of the operating costs and
expenses of the sellers. Operating expenses include the actual costs of
operating and maintaining the Acquired Buildings, but do not include
charges for interest, depreciation, federal or state income taxes or
general and administrative expenses not directly related to the Acquired
Buildings. The amounts of these omitted expenses are not known or
reasonably available. The real estate operating expenses for the periods
presented may not be indicative of future operation of the Acquired
Buildings.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Rental revenue from real estate operations is recognized as earned, on a
monthly basis.
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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
F-3
<PAGE>
NOTE 3 - LEASE AGREEMENTS
The following table summarizes future minimum base rent to be received from
noncancelable tenant leases for the Acquired Buildings that expire each
year as of December 31:
1998 $ 1,465,211
1999 1,466,893
2000 1,446,108
2001 1,277,094
2002 1,041,968
Thereafter 1,960,941
------------------
$ 8,658,215
==================
NOTE 4 - CONCENTRATIONS
Substantially all rentable space of the Acquired Buildings is leased under
long-term lease agreements with governmental agencies of the State of
Texas. The lease agreements have a provision for early termination at the
option of the lessee, based on funding limitations established by the State
legislature.
NOTE 5 - UNAUDITED FINANCIAL STATEMENT
The financial statement for the six months ended June 30, 1998 is
unaudited; however, in the opinion of management, all adjustments
(consisting solely of normal recurring adjustments) necessary to a fair
presentation of the financial statement for that interim period have been
made. The results of the interim period are not necessarily indicative of
the results to be obtained for a full fiscal year.
F-4
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AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
The accompanying pro forma consolidated balance sheet presents the historical
financial information of AmeriVest as of June 30, 1998, as adjusted for the
acquisition of the Acquired Buildings by AmeriVest Texas on July 13, 1998 as if
the acquisition had occurred on June 30, 1998.
The accompanying pro forma consolidated statement of operations for the six
months ended June 30, 1998 and year ended December 31, 1997 combine the
historical financial information of AmeriVest with the historical real estate
operating revenues and expenses of the eleven Acquired Buildings as if the
acquisitions had occurred at the beginning of each of the periods presented.
The pro forma consolidated financial statements have been prepared by AmeriVest
management based upon the historical financial statements of AmeriVest and the
Acquired Buildings. These pro forma statements may not be indicative of the
results that actually would have occurred if the combination had been in effect
on the dates indicated or which may be obtained in the future. The pro forma
financial statements should be read in conjunction with the historical financial
statements and notes thereto of the Acquired Buildings contained elsewhere in
this document and the historical financial statements of AmeriVest for the
periods ended June 30, 1998 and December 31, 1997 included in AmeriVest's Form
10-QSB and Form 10-KSB filed for each of those periods, respectively.
F-5
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<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
AmeriVest Pro Forma Pro Forma
(Historical) Adjustments Combined
------------ ----------- --------
ASSETS
<S> <C> <C> <C>
Investment in Real Estate
Land $ 2,726,698 $ 962,420 (a) $ 3,689,118
Building and improvements 13,192,757 6,281,880 (a) 19,454,637
Furniture, Fixtures and Equipment 249,675 249,675
Tenant Improvements 539,490 539,490
Less Accumulated depreciation and amortization (5,399,504) (5,399,504)
------------ ------------ ------------
Net Investment in Real Estate 11,309,116 7,224,300 18,533,416
Cash and cash equivalents 209,874 209,874
Tenant accounts receivable 33,811 33,811
Deferred Financing Costs, Net 101,347 75,547 (d) 176,894
Prepaid Expenses and Other Assets 617,150 212,465 (d) 829,615
------------ ------------ ------------
Total Assets $ 12,271,298 $ 7,512,312 $ 19,783,610
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage loans and notes payable $ 8,393,704 $ 6,439,930 (b) $ 14,833,634
Accounts payable and accrued expenses 74,473 74,473
Accrued interest 56,219 56,219
Accrued real estate taxes 188,099 72,882 (d) 260,981
Prepaid rents and security deposits 89,913 89,913
Dividends payable 161,783 161,783
------------ ------------ ------------
Total Liabilities 8,964,191 6,512,812 15,477,003
------------ ------------ ------------
STOCKHOLDERS' EQUITY
Common stock 1,445 200 (c) 1,645
Capital in excess of par value 4,540,938 999,300 (c) 5,540,238
Distributions in excess of accumulated earnings (1,235,276) (1,235,276)
------------ ------------
Total Stockholders' Equity 3,307,107 999,500 4,306,607
------------ ------------ ------------
Total Liabilities and Stockholders' Equity $ 12,271,298 $ 7,512,312 $ 19,783,610
============ ============ ============
See notes to the pro forma consolidated financial statements.
F-6
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATONS
SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
Historical Pro Forma Pro Forma
AmeriVest Acquired Bldgs. Adjustments Combined
--------- --------------- ----------- --------
<S> <C> <C> <C> <C>
REAL ESTATE OPERATING REVENUE
Rental revenue
Commercial properties $ 661,001 $ 734,576 $ 1,395,577
Storage properties 721,138 721,138
--------------- ------------------ ---------------
1,382,139 734,576 2,116,715
--------------- ------------------ ---------------- ---------------
REAL ESTATE OPERATING EXPENSES
Property operating expenses
Operating expenses 302,091 249,689 551,780
Real estate taxes 149,603 78,528 228,131
Management fees 75,491 6,555 30,173 (f) 112,219
General and administrative 197,309 14,544 211,853
Interest 356,527 227,000 (g) 583,527
Depreciation and amortization 294,755 119,357 (e) 414,112
--------------- ------------------ ---------------- ---------------
1,375,776 349,316 376,530 2,101,622
--------------- ------------------ ---------------- ---------------
OTHER INCOME
Interest Income 1,742 1,742
--------------- ------------------ ---------------- ---------------
NET INCOME $ 8,105 385,260 $ (376,530) $ 16,835
=============== ================== ================ ===============
NET INCOME PER COMMON SHARE $ 0.01
===============
NET INCOME PER COMMON SHARE
ASSUMING DILUTION $ 0.01
===============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 1,645,270
===============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING ASSUMING DILUTION 1,650,270
===============
See notes to the pro forma consolidated financial statements.
F-7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1997
(Unaudited)
Historical Pro Forma Pro Forma
AmeriVest Acquired Bldgs. Adjustments Combined
--------- --------------- ----------- --------
<S> <C> <C> <C> <C>
REAL ESTATE OPERATING REVENUE
Rental revenue
Commercial properties $ 1,132,849 $ 1,453,536 $ $ 2,586,385
Storage properties 1,349,333 1,349,333
--------------- --------------- ------------------ ---------------
2,482,182 1,453,536 3,935,718
--------------- --------------- ------------------ ---------------
REAL ESTATE OPERATING EXPENSES
Property operating expenses
Operating expenses 559,304 476,058 1,035,362
Real estate taxes 282,860 157,053 439,913
Management fees 141,136 13,110 59,567 (f) 213,813
General and administrative 400,376 25,887 426,263
Interest 685,429 457,700 (g) 1,143,129
Depreciation and amortization 570,307 238,714 (e) 809,021
--------------- --------------- ---------------- ---------------
2,639,412 672,108 755,981 4,067,501
--------------- --------------- ---------------- ---------------
OTHER INCOME
Interest Income 36,778 36,778
--------------- --------------- ---------------- ---------------
NET (LOSS) INCOME $ (120,452) $ 781,428 $ (755,981) $ (95,005)
=============== =============== ================ ===============
NET (LOSS) PER COMMON SHARE $ (.06)
================
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 1,604,470
================
See notes to the pro forma consolidated financial statements.
F-8
</TABLE>
<PAGE>
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF TRANSACTION AND BASIS OF PRESENTATION
The accompanying unaudited pro forma financial statements are presented to
reflect the acquisition of the eleven Acquired Buildings by AmeriVest's
wholly owned subsidiaries, AmeriVest Odessa and AmeriVest Texas. The
acquisition of one building by AmeriVest Odessa was completed on June 29,
1998 and the acquisition of ten buildings by AmeriVest Texas was completed
on July 13, 1998.
The accompanying consolidated pro forma balance sheet of June 30, 1998 has
been prepared to give effect to the acquisition of ten buildings by
AmeriVest Texas as if the acquisition occurred on June 30, 1998. The
historical balance sheet of AmeriVest as of June 30, 1998 includes the
acquisition of the one building by AmeriVest Odessa. The accompanying
unaudited pro forma statements of operations combine AmeriVest for the year
ended December 31, 1997 and the six months ended June 30, 1998 with the
real estate operating revenues and expenses of the eleven Acquired
Buildings for each of those periods, respectively, and are presented as if
the acquisition had occurred at the beginning of each of the periods
presented.
NOTE 2 - PRO FORMA ADJUSTMENTS
The unaudited pro forma financial statements reflect the following pro
forma adjustments:
(a) Purchase price of the ten Acquired Buildings by AmeriVest Texas.
(b) Increase in mortgage loans and notes payable related to the Acquired
Buildings by AmeriVest Texas consisting of a $6.0 million mortgage loan on
the Acquired Buildings (interest at 7.66%), assumption of a $192,000 note
(interest at 8.5%), and an addition of $247,930 to AmeriVest's existing
credit agreement with a commercial bank, floating interest rate (8.5% at
June 30, 1998).
(c) Issuance of 199,900 shares of AmeriVest common stock in conjunction
with the acquisition of the ten Acquired Buildings by AmeriVest Texas
valued at $5.00 per share (an aggregate of $999,500).
(d) Prepaid escrow deposits, loan fees and accrued real estate taxes in
conjunction with the acquisition and financing arrangements of the ten
Acquired Buildings by AmeriVest Texas.
(e) Additional depreciation expense on the eleven Acquired Buildings.
(f) Additional management fees to 5% of gross revenues on the eleven
Acquired Buildings.
F-9
<PAGE>
(g) Additional interest expense related to the financing of the ten
Acquired Buildings by AmeriVest Texas.
NOTES 3 - INCOME (LOSS) PER SHARE
Pro forma income (loss) per common share for the six months ended June 30,
1998 and for the year ended December 31, 1997 is computed based on the
weighted average number of common shares outstanding during the periods,
assuming that the 207,200 shares issued in conjunction with the acquisition
of the eleven Acquired Buildings were issued at the beginning of the
periods.
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.
Date: September 28, 1998 AMERIVEST PROPERTIES INC.
By: /s/ James F. Etter
--------------------------
James F. Etter
President
F-10
