UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A No. 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): November 20, 1998
WELLINGTON PROPERTIES TRUST
(Exact name of registrant as specified in its charter)
Maryland 0-25074 39-6594066
(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
18650 W. Corporate Drive, Suite 300, P.O. Box 0919, Brookfield, Wisconsin
53008-0919
(Address of principal executive offices)
(414) 792-8900
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements and Exhibits
In a Current Report on Form 8-K filed with the Securities and Exchange
Commission on December 4, 1998, Wellington Properties Trust (the "Company")
reported its acquisition of one light industrial property located in
Burnsville, MN ("Nicollet Business VI") and one office property located in
Minneapolis, MN ("Thresher Square East/West") (Nicollet Business VI and
Thresher Square East/West are collectively referred to herein as the
"Acquired Hoyt Properties - 1998") and its acquisition of one office property
located in St. Cloud, MN ("Cold Springs Office Center"). The Company is filing
this amendment to the Current Report on Form 8-K to include the financial
statements identified in this Item 7.
(a) Financial Statements of Businesses Acquired
The financial statements of the Acquired Hoyt Properties - 1998 and the
financial statements of the Cold Springs Office Center are included herein.
See pages F-10 through F-12 and pages F-13 through F-15, respectively.
(b) Pro Forma Financial Information
The pro forma condensed consolidated financial statements of the Company are
included herein. See pages F-1 through F-9.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
WELLINGTON PROPERTIES TRUST
A Maryland Real Estate Investment Trust
(Registrant)
Dated: February 2, 1999 By: /s/ Robert F. Rice
Name: Robert F. Rice
Title: President
<PAGE>
WELLINGTON PROPERTIES TRUST
INDEX TO FINANCIAL STATEMENTS
I. PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF THE COMPANY
Introduction to ProForma Condensed Consolidated Financial
Information F-2
ProForma Condensed Consolidated Balance Sheet as of
September 30, 1998 F-4
ProForma Condensed Consolidated Statement of Operations
for the Year Ended December 31, 1997 F-5
ProForma Condensed Consolidated Statement of Operations
for the Nine Month Period Ended September 30, 1998 F-6
Notes and Management's Assumptions to Pro Forma Condensed
Consolidated Financial Information F-7
II. ACQUIRED HOYT PROPERTIES - 1998
Report of Independent Certified Public Accountants F-10
Combined Statements of Revenue and Certain Expenses
for the Year Ended December 31, 1997, and the Nine
Months Ended September 30, 1998(unaudited) F-11
Note to Combined Statements of Revenue and Certain Expenses F-12
III. COLD SPRINGS OFFICE CENTER
Report of Independent Certified Public Accountants F-13
Statements of Revenue and Certain Expenses for the Year
ended December 31, 1997, and the Nine Months Ended
September 30, 1998 (unaudited) F-14
Note to Statements of Revenue and Certain Expenses F-15
F1
<PAGE>
WELLINGTON PROPERTIES TRUST
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following sets forth the unaudited pro forma condensed consolidated
balance sheet of Wellington Properties Trust (the "Company") and its
consolidated affiliates, including Wellington Properties Investments, L.P.
(the "Operating Partnership") as of September 30, 1998, and the unaudited pro
forma condensed consolidated statements of operations for the year ended
December 31, 1997 and the nine month period ended September 30, 1998 of the
Company.
The pro forma condensed consolidated financial information is presented as if
the following transactions had been consummated on September 30, 1998 for
balance sheet purposes, and at January 1, 1997 for purposes of the statements
of operations:
The Company became the sole general partner of and obtained its partnership
interest in the Operating Partnership. Through its general partnership
interest, the Company controls the Operating Partnership and will present
consolidated financial statements for the Company and its affiliates,
including the Operating Partnership.
On November 20, 1998 the Operating Partnership acquired, from certain
persons and entities, pursuant to the Master Contribution Agreement with
American Real Estate Equities, LLC ("AREE"), interests in one light
industrial property ("Nicollet Business VI") and one office property
("Thresher Square East/West") (Nicollet Business VI and Thresher Square
East/West are collectively referred to herein as the "Acquired Hoyt Properties
- - 1998") for: (a) issuance by the Operating Partnership of 1,006,374 limited
partnership units ("Units") (convertible, under certain circumstances, on a
one-for-one basis such that one Unit is convertible into one Common Share, as
defined below); and (b) the assumption of debt aggregating $9,562,000.
On November 20, 1998 the Operating Partnership acquired, from certain
persons and entities, pursuant to the Master Contribution Agreement with
American Real Estate Equities, LLC ("AREE"), interests in one office property
("Cold Springs Office Center") (Cold Springs Office Center and Acquired Hoyt
Acquisition Properties-1998 are collectively referred to herein as the
"Transaction" or the "Acquired Properties") for: (a) issuance by the
Operating Partnership of 609,020 Units; and (b) the assumption of debt
aggregating $7,504,000.
In connection with the Transaction, the Company issued 105,263 common
shares of beneficial interest (the "Common Shares") to AREE, or representatives
thereof, in exchange for $1,000,000 in cash.
In connection with the Transaction, the Company issued warrants (the
"Warrants") for 500,000 Common Shares each (i) to AREE, and representatives
thereof, and (ii) to Wellington Management Corporation ("WMC").
Simultaneous with the Transaction, WMC received a termination fee and the
advisory agreement between the Company and WMC was terminated.
The Company received 105,263 Units from the Operating Partnership in
exchange for contributing $1,000,000 in cash.
This pro forma condensed consolidated financial information should be read in
conjunction with the historical financial statements of the Company and those
of the Acquired Hoyt Properties - 1998 and Cold Spring Office Center. In
management's opinion, all adjustments necessary to reflect the effects of the
F2
<PAGE>
consummated transactions have been made. This pro forma condensed consolidated
financial information is unaudited and is not necessarily indicative of what
the actual financial position would have been at September 30, 1998, nor does
it purport to represent the future financial position and the results of
operations of the Company.
F3
<PAGE>
<TABLE>
Wellington Properties Trust
Pro Forma Condensed Consolidated Balance Sheet
As of September 30, 1998
(Unaudited)
(Dollars in thousands, except per share data)
<CAPTION>
Historical Acquired Hoyt Cold Springs Issuance
Consolidated Properties-1998 Office Center of Warrants
(A) (B) (C) (D)
<S> <C> <C> <C> <C>
Assets
Net investments 18,858 18,253 12,777 133
in real estate
Cash and cash equivalents 30 (440) (145) 0
Deferred costs, net 617 222 0 1,377
Other assets 346 0 0 0
Total Assets 19,851 18,035 12,632 1,510
Liabilities and shareholders' equity
Liabilities
Mortgage loans payable 15,807 9,562 7,504 0
Other liabilities 863 0 0 0
Total liabilities 16,670 9,562 7,504 0
Minority interests 0 8,473 5,128 0
Shareholders' equity
Common shares of 7 0 0 0
beneficial interest
Additional paid in capital 6,422 0 0 0
Share Warrants 0 0 0 1,510
Accumulated deficit (3,268) 0 0 0
Total Shareholder's 3,181 0 0 1,510
equity
Total liabilites and
shareholder's equity 19,851 18,035 12,632 1,510
Issuance of Adjustments to
Common Shares Minority Interests ProForma
(E) (F) Consolidated
0 0 50,021
992 0 437
0 0 2,216
0 0 346
992 0 53,020
0 0 32,873
0 0 863
0 0 33,736
0 1,520 15,121
1 0 8
991 (1,520) 5,913
0 0 1,510
0 0 (3,268)
992 (1,520) 4,163
992 0 53,020
</TABLE>
See accompanying notes to pro forma financial statements
F4
<PAGE>
<TABLE>
<CAPTION>
Historical Acquired Hoyt Cold Springs ProForma ProForma
Consolidated Properties-1988 Office Cntr Adjst Consolidatd
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
Revenue:
Rental Revenue 2,981 2,013 1,559 0 6,553
Other 199 82 0 0 281
Total revenue 3,180 2,095 1,559 0 6,834
Expenses:
Property operating 1,155 1,082 621 0 2,858
General and
administrative
Interest expense 1,398 0 0 1,422(E) 2,820
Depreciation and
amortization 606 0 0 639(F) 1,245
Total expenses 3,456 1,082 621 2,161 7,320
Income (loss)
before minority
interests (276) 1,013 938 (2,161) (486)
Minority interests
in (income) loss 0 0 0 323(G) 323
Net income (loss) (276) 1,013 938 (1,838) (163)
Net income (loss)
per share:
Basic and diluted (0.39) (0.20)
Weighted average
number of shares:
Basic and diluted 713,091 818,354
</TABLE>
See accompanying notes to pro forma financial statements
F5
<PAGE>
<TABLE>
Wellington Properties Trust
Pro Forma Condensed Consolidated Statement of Operations
For the Nine Month Period Ended September 30, 1998
(Unaudited)
(Dollars in thousands, except per share data)
<CAPTION>
Historical Acquired Hoyt Cold Springs ProForma ProForma
Consolidated Props-1988 Office Cntr Adjstmnts Consolidatd
(A) (B) (C)
<S> <C> <C> <C> <C> <C>
Revenue:
Rental Revenue 2,296 1,665 1,149 - 5,110
other - 48 - - 48
Total revenue 2,296 1,713 1,149 - 5,158
Expenses:
Property
operating 882 718 467 - 2,067
General and
administrative 247 - - 75(D) 322
Interest expense 953 - - 1,110(E) 2,063
Depreciation and
amortization 442 - - 479(F) 921
Total expenses 2,524 718 467 1,664 5,373
Income (loss)
before minority
interests (228) 995 682 (1,664) (215)
Minority interests
in (income) loss - - - 142(G) 142
Net income (loss) (228) 995 682 (1,522) (73)
Net income (loss)
per share:
Basic and diluted (0.31) (0.09)
Weighted average
no. of shares: Basic
and diluted 726,403 831,666
</TABLE>
See accompanying notes to pro forma financial statements
F6
<PAGE>
WELLINGTON PROPERTIES TRUST
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL INFORMATION
(Dollars in thousands, except share and per share amounts)
1. Basis of Presentation:
Wellington Properties Trust (the "Company") is a self-administered Maryland
real estate investment trust. As of September 30, 1998, the Company's
portfolio included 376 apartment units in two residential properties leased
for residential purposes. In connection with the Transaction, the Company
became the sole general partner of and holds an approximately 6.1% interest
in the Operating Partnership formed to acquire and hold the Acquired
Properties. The Operating Partnership issued 1,720,657 Units of which
105,263 were issued to the Company. Because the Company controls the Operating
Partnership, the Company consolidates the assets of the Operating Partnership
with the Company.
These pro forma condensed consolidated financial statements should be read
in conjunction with the historical financial statements and notes thereto of
the Company, the Acquired Hoyt Properties - 1998 and Cold Springs Office
Center. In management's opinion, all adjustments necessary to reflect the
effects the acquisitions of the Acquired Hoyt Properties - 1998 and Cold
Springs Office Center have been made.
2. Adjustments to Pro Forma Condensed Consolidated Balance Sheet:
(A)
Reflects the historical consolidated balance sheet of the Company as of
September 30, 1998.
(B)
Reflects the acquisition of the Acquired Hoyt Properties - 1998 from certain
persons and entities, pursuant to the Master Contribution Agreement with AREE
in exchange for: (i) issuance by the Operating Partnership of 1,006,374
Units at a value of $8.50 per Unit ($8,554) (based on the range of trading
prices of $8.50 to $8.875 per Common Share for ten days prior to announcement
on June 11, 1998),net of associated costs of $81; (ii) the assumption of debt
aggregating $9,562; and (iii) utilization of cash of $440, including payment
of costs associated with the acquistion and debt assumption of $137 and $222,
respectively. The Acquired Hoyt Properties-1988 are recorded at purchase price
plus direct costs of acquisition using purchase accounting principles.
(C)
Reflects the acquisition of the Cold Springs Office Center from certain persons
and entities, pursuant to the Master Contribution Agreement with AREE in
exchange for: (a) issuance by the Operating Partnership of 609,020 Units at
a value of $8.50 per Unit ($5,177) (based on the range of trading prices of
$8.50 to $8.875 per Common Share for ten days prior to announcement on June 11,
1998), net of associated costs of $49; (ii) the assumption of debt aggregating
$7,504; and (iii) utilization of cash of $145, including payment of costs
associated with the acquisition of $96. The Cold Springs Office Center is
recorded at purchase price plus direct costs of acquistion using purchase
accounting principles.
F7
<PAGE>
(D)
Reflects the issuance of ten year Warrants to purchase 500,000 Common Shares
each (i) to AREE, and representatives thereof, and (ii) to WMC, at exercise
prices between $8.50 and $14.75 per share based on an average of $1.51 per
warrant value (based on a modified Black Scholes calculation).
(E)
Reflects the issuance of 105,263 Common Shares, $0.01 par value, in exchange
for $1,000 in cash, net of associated costs of $8.
(F)
Reflects the adjustment to minority interests as a result of the transactions
in connection with the Acquired Hoyt Properties - 1998 and Cold Springs Office
Center. After the closings, the Company holds 105,263 Units or a 6.1%
interest in the Operating Partnership. The calculation of minority interests
is as follows:
<TABLE>
<CAPTION>
Company Transaction (1) Consolidated
<S> <C> <C> <C>
Minority interests
Common Units - 15,121 93.9% 15,121
Shareholders' equity
Common Shares 3,181 982 6.1% 4,163
Total 3,181 16,103 100.0% 19,284
</TABLE>
(1) Reflects the impact of all effects of the Transaction to minority interests
and total shareholders' equity.
3. Adjustments to Pro Forma Condensed Consolidated Statements of Operations:
(A) Reflects the historical consolidated operations of the Company.
(B) Reflects the historical combined operations of the Acquired Hoyt Properties
- - 1998.
(C) Reflects the historical operations of Cold Springs Office Center.
(D) Reflects additional pro forma general and administrative costs expected
to be incurred as a result of the Transaction. Such costs are expected to
have a continuing impact on the Company.
(E) Reflects increased pro forma interest expense resulting from:
<TABLE>
<CAPTION>
For the Year For the Nine
Ended Month Period
December 31, 1997 September 30, 1998
<S> <C> <C>
* The debt assumed in connection
with the Acquired Hoyt Properties
- - 1998 which debt bears interest
at an average rate of 7.23% per annum 691 508
* The debt assumed in connection
with the Cold Springs Office Center
which debt bears interest at an
average rate of 9.75% per annum 731 602
1,422 1,110
</TABLE>
F8
<PAGE>
(F) Reflects increased pro forma depreciation and amortization expense resulting
from:
<TABLE>
<CAPTION>
For the Year For the Nine
Ended Month Period
December 31, 1997 September 30, 1998
<S> <C> <C>
* Depreciation of buildings
acquired over a 40-year
useful life (allocating 20%
to land and 80% to
depreciable basis) 623 467
* Amortization of deferred
financing fees related to
debt assumed in connection
with the Acquired Hoyt
Properties - 1998 16 12
Total 639 479
</TABLE>
(G) Minority interest in income (loss) has been reflected, on a pro forma
basis, in accordance with the Operating Partnership Agreement. Consolidated
income or loss is allocated between the Company and the remaining partners
pari passu based upon total weighted average Common Shares and Units. The
adjustments to record the income (loss) effect of the minority interest share
of income (loss) in the pro forma statements of operations were computed as
follows:
<TABLE>
<CAPTION>
For the Year For the Nine
Ended Month Period
December 31, 1997 September 30, 1998
<S> <C> <C>
Loss before minority interests (486) (215)
Pro forma minority share
1,615,394 Units for the year ended
December 31, 1997 and the nine month
period ended September 30, 1998 (323) (142)
Net loss allocated to Common Shareholders
818,354 Common Shares for the year ended
December 31, 1997 and 831,666 Common
Shares for the nine months ended
September 30, 1998 (163) (73)
(H) Simultaneously with the Transaction, WMC, an affiliate of the Company,
received a termination fee and the advisory agreement between the Company
and WMC was terminated. The fee is calculated as: (i) 1% of the aggregate
value of the Acquired Properties up to $150,000 plus (ii) 0.25% of the
aggregate value of the Acquired Properties in excess of $150,000. Based upon
the aggregate value of the Acquired Properties through February 2, 1999, the
Company has recorded the effect of this fee upon closing as a nonrecurring
charge of approximately $308. Such adjustment has been omitted from the pro
forma condensed consolidated statement of operations for the year ended
December 31, 1997 as the events are not expected to have a continuing impact
on the Company.
F9
<PAGE>
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Trustees
Wellington Properties Trust
We have audited the accompanying combined statement of revenue and certain
expenses of the properties ("Acquired Hoyt Properties - 1998"), acquired by
Wellington Properties Trust ("Trust"), for the year ended December 31, 1997.
This statement of revenue and certain expenses is the responsibility of its
management. Our responsibility is to express an opinion on this statement
of revenue 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 revenue 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 revenue
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 revenue and certain
expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying combined statement of revenue and certain expenses of the
Acquired Hoyt Properties - 1998 was prepared for the purposes of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion in the Form 8-K/A of Wellington Properties Trust and excludes
material amounts, described in note A to the combined statement of revenue
and certain expenses, that would not be comparable to those resulting from
the proposed future operations of the property.
In our opinion, the statement of revenue and certain expenses referred to
above presents fairly, in all material respects, the combined revenue and
certain expenses of the Acquired Hoyt Properties - 1998 for the year ended
December 31, 1997, in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Fond du Lac, Wisconsin
July 24, 1998
F10
Acquired Hoyt Properties - 1998
</TABLE>
<TABLE>
COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
<CAPTION>
For the year ended For the nine-month
December 31, 1997 period ended
(Audited) September 30, 1998
(Unaudited)
<S> <C> <C>
Revenue
Rental 2,013,152 1,665,469
Interest 78,263 43,501
Other 3,254 4,360
Total 2,094,669 1,713,330
Certain Expenses
Property operating
and maintenance 459,029 222,610
Real estate taxes and insurance 335,396 283,447
Utilities 186,712 128,784
Management fees 100,802 83,130
Total 1,081,939 717,971
REVENUE IN EXCESS OF CERTAIN
EXPENSES 1,012,730 995,359
</TABLE>
The accompanying note is an integral part of this statement.
F11
<PAGE>
Acquired Hoyt Properties - 1998
NOTE TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
The Acquired Hoyt Properties - 1998 include the following:
<TABLE>
<CAPTION>
Name of Property Type of Rental Location Square Footage
<S> <C> <C> <C>
Nicollet Business Campus 6 Commercial Minneapolis, MN 50,291
Thresher Square West Commercial Minneapolis, MN 55,824
Thresher Square East Commercial Minneapolis, MN 63,448
</TABLE>
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that
affect the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
1. Basis of Presentation
The accompanying combined statement of revenue and certain expenses is not
representative of the actual operations for the year presented as certain
expenses have been excluded because they may not be comparable to the expenses
expected to be incurred in the proposed future operations of the Acquired Hoyt
Properties - 1998. Expenses excluded consist of depreciation and amortization,
interest, professional fees and other administrative costs not directly
related to the future operations of the Acquired Hoyt Properties - 1998. After
reasonable inquiry, the Trust is not aware of any material factors that would
cause reported financial information not to be necessarily indicative of future
operating results.
The Acquired Hoyt Properties - 1998 have various management agreements with
an affiliated management company to maintain the properties and otherwise
manage the operations of the commercial properties. Management fees are based
on 5% of gross receipts.
2. Revenue Recognition
Rental revenue attributable to leases is recorded when due from tenants.
3. The properties were acquired by the operating partnership of Wellington
Properties Trust on November 20, 1998 for approximately $18,100,000 plus
closing costs.
F12
<PAGE>
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Trustees
Wellington Properties Trust
We have audited the accompanying statement of revenue and certain expenses of
Cold Springs Office Center, acquired by Wellington Properties Trust ("Trust"),
for the year ended December 31, 1997. This statement of revenue and certain
expenses is the responsibility of its management. Our responsibility is to
express an opinion on this statement of revenue 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 revenue 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 revenue
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 revenue and certain
expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying statement of revenue and certain expenses of Cold Springs
Office Center was prepared for the purposes of complying with the rules and
regulations of the Securities and Exchange Commission for inclusion in the
Form 8-K/A of Wellington Properties Trust and excludes material amounts,
described in note A to the statement of revenue and certain expenses, that
would not be comparable to those resulting from the proposed future operations
of the property.
In our opinion, the statement of revenue and certain expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses of Cold Springs Office Center for the year ended December 31, 1997,
in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Fond du Lac, Wisconsin
August 20, 1998
F13
<PAGE>
<TABLE>
Cold Springs Office Center
STATEMENT OF REVENUE AND CERTAIN EXPENSES
<CAPTION>
For the For the nine-month
year ended period ended
December 31, 1997 September 30, 1998
(Audited) (Unaudited)
<S> <C> <C>
Revenue
Rental 1,558,851 1,148,901
Other 37 156
Total 1,558,888 1,149,057
Certain Expenses
Property operating and maintenance 217,957 154,937
Real estate taxes and insurance 245,260 189,328
Utilities 80,363 64,542
Management fees 77,438 58,238
Total 621,018 467,045
REVENUE IN EXCESS OF
CERTAIN EXPENSES 937,870 682,012
</TABLE>
The accompanying note is an integral part of this statement.
F14
<PAGE>
Cold Springs Office Center
NOTE TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
<TABLE>
<CAPTION>
Name of Property Type of Rental Location Square Footage
<S> <C> <C> <C>
Cold Springs Office Center Commercial St. Cloud, MN 77,533
</TABLE>
In preparing financial statements in conformity with generally accepted
accounting principles, management makes estimates and assumptions that affect
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
1. Basis of Presentation
The accompanying statement of revenue and certain expenses is not representative
of the actual operations for the year presented as certain expenses have been
excluded because they may not be comparable to the expenses expected to be
incurred in the proposed future operations of Cold Springs Office Center.
Expenses excluded consist of depreciation and amortization, interest,
professional fees and other administrative costs not directly related to the
future operations of Cold Springs Office Center. After reasonable inquiry, the
Trust is not aware of any material factors that would cause reported financial
information not to be necessarily indicative of future operating results.
The Cold Springs Office Center has a management agreement with an affiliated
management company to maintain the property and otherwise manage the operations
of the commercial property. Management fees are based on 5% of gross receipts.
2. Revenue Recognition
Rental revenue attributable to leases is recorded when due from tenants.
3. The property was acquired by the operating partnership of Wellington
Properties Trust on November 20, 1998 for approximately $12,700,000 plus
closing costs.
F-15
