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As filed with the Securities and Exchange Commission on July 10, 1998
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UNITED STATES
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
JUNE 25, 1998
(Date of Report)
ERP OPERATING LIMITED PARTNERSHIP
(Exact Name of Registrant as Specified in its Charter)
0-24920
(Commission File No.)
ILLINOIS 36-3894853
(State or Other Jurisdiction of Incorporation) (I.R.S. Employer
Identification No.)
TWO NORTH RIVERSIDE PLAZA, CHICAGO, ILLINOIS 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 474-1300
(Registrant's Telephone Number, Including Area Code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Capitalized terms used but not defined in this Current Report on Form 8-K are
as defined in the Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997,as amended by Form 10-K/A, and the Operating
Partnership Quarterly's Report on Form 10-Q for the quarterly period ended
March 31, 1998.
ACQUISITIONS
ERP Operating Limited Partnership and its subsidiaries (the "Operating
Partnership") acquired 37 multifamily properties during the period from
January 1, 1998 to June 25, 1998 (the "Acquired Properties"). The Operating
Partnership has also entered into contracts to acquire an additional 42
multifamily properties. The cash portion of these transactions was or will
be primarily financed through the January 1998 Common Share Offering, the
February 1998 Common Share Offerings, the March 1998 Common Share Offering,
offerings completed in April 1998 and amounts available on the Operating
Partnership's line of credit. In April 1998, the Operating Partnership
issued 6.63% unsecured notes due April 13, 2015 (the "2015 Notes") in a
public debt offering. The Operating Partnership received net proceeds of
approximately $298.1 million in connection with this issuance. On April 29,
1998, the Company completed an offering of 946,565 publicly registered Common
Shares, which were sold at a price of $46.5459 per share (the "April Common
Share Offering"). The Company contributed to the Operating Partnership net
proceeds of approximately $44.1 million in connection therewith. The terms
of purchase and descriptions of the Acquired Properties follow. Expected
terms of purchase and descriptions of the additional 42 multifamily
properties (the "Probable Properties") are discussed in Item 5.
DESCRIPTIONS OF PROPERTIES
CITYSCAPE APARTMENTS, ST. LOUIS PARK, MINNESOTA
On January 7, 1998, the Operating Partnership acquired a multifamily property
located in St. Louis Park, Minnesota ("Cityscape"). Cityscape was
approximately 99% occupied as of June 22, 1998. The property consists of
156 units in a four-story residential building on approximately four acres.
Amenities include a community room with fireplace, kitchen and large screen
color TV, exercise room, outdoor swimming pool with sun deck plaza, gas grill
picnic area, bay windows in master bedrooms, balconies/patios, full size
washer/dryers, vaulted ceilings in select units, heated underground parking,
and sprinkler systems. The property was constructed in 1990.
TERMS OF PURCHASE
Cityscape was purchased from an unaffiliated third party for approximately $12.3
million.
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740 RIVER DRIVE APARTMENTS, ST. PAUL, MINNESOTA
On January 9, 1998, the Operating Partnership acquired a multifamily property
located in St. Paul, Minnesota ("740 River Drive"). 740 River Drive was
approximately 97% occupied as of June 22, 1998. The property consists of 162
units in a 23-story residential building on approximately two acres.
Amenities include a party room with kitchen, exercise facility, swimming pool
with sundeck, underground parking, furnished lobby, laundry room, and
stackable washers/dryers in select units. The property was constructed in
1962.
TERMS OF PURCHASE
740 River Drive was purchased from an unaffiliated third party for
approximately $12.8 million, which included the assumption of approximately
$7 million of mortgage indebtedness.
PROSPECT TOWERS APARTMENTS, HACKENSACK, NEW JERSEY
On January 13, 1998, the Operating Partnership acquired a multifamily
property located in Hackensack, New Jersey ("Prospect Towers"). Prospect
Towers was approximately 97% occupied as of June 22, 1998. The property
consists of 157 units in an 18-story residential building on approximately
two acres. Amenities include a health club, outdoor swimming pool with
sauna, clubhouse, underground parking, 24-hour fire alarm system, and
washers/dryers in each unit. The property was constructed in 1995.
TERMS OF PURCHASE
Prospect Towers was purchased from an unaffiliated third party for
approximately $36.3 million, which included the assumption of approximately
$14.9 million of mortgage indebtedness.
PARK PLACE APARTMENTS, HOUSTON, TEXAS
On January 16, 1998, the Operating Partnership acquired a multifamily
property located in Houston, Texas ("Park Place"). Park Place was
approximately 98% occupied as of June 22, 1998. The property consists of 229
units in 12 two and three-story residential buildings on approximately 12
acres. Amenities include a clubhouse, swimming pool with sundeck area,
fitness center, barbeque area, attached garages/carports, washer/dryers in
all units, fireplaces in select units, built in bookshelves and work areas,
and extra phone/fax/computer modem lines. The property was constructed in
1996.
TERMS OF PURCHASE
Park Place was purchased from an unaffiliated third party for approximately
$13.6 million, which included the assumption of approximately $10.2 million
of mortgage indebtedness.
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PARK WESTEND APARTMENTS, RICHMOND, VIRGINIA
On January 16, 1998, the Operating Partnership acquired a multifamily
property located in Richmond, Virginia ("Park Westend"). Park Westend was
approximately 96% occupied as of June 22, 1998. The property consists of 312
units in 24 two-story residential buildings on approximately 18 acres.
Amenities include a clubhouse, swimming pool, jacuzzi, two lighted tennis
courts, basketball court, two car wash areas, washer/dryer connections in
select units, fireplaces in select units, vaulted ceilings in select units,
and ceiling fans in select units. The property was constructed in 1985.
TERMS OF PURCHASE
Park Westend was purchased from an unaffiliated third party for $13.3
million, which included the assumption of approximately $7.2 million of
mortgage indebtedness.
EMERALD BAY AT WINTER PARK APARTMENTS, WINTER PARK, FLORIDA
On January 29, 1998, the Operating Partnership acquired a multifamily
property located in Winter Park, Florida ("Emerald Bay"). Emerald Bay was
approximately 96% occupied as of June 22, 1998. The property consists of 432
units in 28 two-story residential buildings on approximately 23 acres.
Amenities include a clubhouse, three swimming pools, fitness center, tennis
court, playground, supervised children's activity center, three laundry
centers, car wash area, sand volleyball court, and carports. The property
was constructed in 1972 and renovated in 1996.
TERMS OF PURCHASE
Emerald Bay was purchased from an unaffiliated third party for approximately
$15.7 million.
FARNHAM PARK APARTMENTS, HOUSTON, TEXAS
On February 5, 1998, the Operating Partnership acquired a multifamily
property located in Houston, Texas ("Farnham Park"). Farnham Park was
approximately 95% occupied as of June 22, 1998. The property consists of 216
units in 17 two-story residential buildings on approximately 13 acres.
Amenities include a clubhouse, fitness center, swimming pool with sundeck
area, barbeque area, attached garages, washers/dryers, fireplaces in select
units, built in bookshelves and work areas, and extra phone/fax computer
modem lines. The property was constructed in 1996.
TERMS OF PURCHASE
Farnham Park was purchased from an unaffiliated third party for approximately
$15.7 million, which included the assumption of approximately $11.5 million
of mortgage indebtedness.
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PLANTATION APARTMENTS, HOUSTON, TEXAS
On February 25, 1998, the Operating Partnership acquired a multifamily
property located in Houston, Texas ("Plantation"). Plantation was
approximately 87% occupied as of June 22, 1998. The property consists of 232
units in 36 two-story residential buildings on approximately seven acres.
Amenities include a clubhouse, three swimming pools, fitness center, laundry
care, lounge area with a sunroom, remote access gates, washer/dryer
connections, and cathedral ceilings in select units. The property was
constructed in 1969.
TERMS OF PURCHASE
Plantation was purchased from an unaffiliated third party for $10 million.
BALCONES CLUB APARTMENTS, AUSTIN, TEXAS
On February 27, 1998, the Operating Partnership acquired a multifamily
property located in Austin, Texas ("Balcones Club"). Balcones Club was
approximately 98% occupied as of June 22, 1998. The property consists of 312
units in 32 two and three-story residential buildings on approximately 14
acres. Amenities include a clubhouse, two swimming pools, washer/dryer
connections, fireplaces in select units, vaulted ceilings in upstairs units,
and select units with golf course views. The property was constructed in
1984.
TERMS OF PURCHASE
Balcones Club was purchased from an unaffiliated third party for $12.3
million.
COACH LANTERN APARTMENTS, SCARBOROUGH, MAINE
On March 2, 1998, the Operating Partnership acquired a multifamily property
located in Scarborough, Maine ("Coach Lantern"). Coach Lantern was
approximately 99% occupied as of June 22, 1998. The property consists of 90
units in 21 two and three-story residential buildings on approximately 46
acres. Amenities include a playground, washer/dryer connections, dishwashers,
and disposals. The property was constructed in 1971 and renovated in 1981.
TERMS OF PURCHASE
Coach Lantern was purchased from an unaffiliated third party for $4.7 million.
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FOXCROFT APARTMENTS, SCARBOROUGH, MAINE
On March 2, 1998, the Operating Partnership acquired a multifamily property
located in Scarborough, Maine ("Foxcroft"). Foxcroft was approximately 99%
occupied as of June 22, 1998. The property consists of 104 units in 15
two-story residential buildings on approximately 26 acres. Amenities include
a playground, washer/dryer connections, dishwashers, and disposals. The
property was constructed between 1977 and 1979.
TERMS OF PURCHASE
Foxcroft was purchased from an unaffiliated third party for $4.9 million.
YARMOUTH WOODS APARTMENTS, YARMOUTH, MAINE
On March 2, 1998, the Operating Partnership acquired a multifamily property
located in Yarmouth, Maine ("Yarmouth Woods"). Yarmouth Woods was
approximately 99% occupied as of June 22, 1998. The property consists of 138
units in 19 two-story residential buildings on approximately 31 acres.
Amenities include on site laundry facilities, washer/dryer connections,
playground, dishwashers, and garbage disposals. The property was constructed
in phases between 1972 and 1978.
TERMS OF PURCHASE
Yarmouth Woods was purchased from an unaffiliated third party for $6.6
million.
ROLIDO PARQUE APARTMENTS, HOUSTON, TEXAS
On March 20, 1998, the Operating Partnership acquired a multifamily property
located in Houston, Texas ("Rolido Parque"). Rolido Parque was approximately
99% occupied as of June 22, 1998. The property consists of 369 units in 17
two and three-story residential buildings on approximately nine acres.
Amenities include a clubhouse, two outdoor swimming pools, two jacuzzis,
fitness center, two tennis courts, lounge area with sunroom, remote access
gates, video library, washer/dryer connections, and cathedral ceilings in
select units. The property was constructed in 1978.
TERMS OF PURCHASE
Rolido Parque was purchased from an unaffiliated third party for
approximately $10.8 million, which included the assumption of approximately
$7.2 million of mortgage indebtedness.
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THE TRAILS OF VALLEY RANCH APARTMENTS, IRVING, TEXAS
On March 26, 1998, the Operating Partnership acquired a multifamily property
located in Irving, Texas ("Trails of Valley Ranch"). Trails of Valley Ranch
was approximately 92% occupied as of June 22, 1998. The property consists of
216 units in 29 two-story residential buildings on approximately 11 acres.
Amenities include a clubhouse, swimming pool, fitness center, sauna, jacuzzi,
wet bars and vaulted ceilings in select units, fireplaces, washer/dryers,
covered parking, and alarm systems. The property was constructed in 1986.
TERMS OF PURCHASE
Trails of Valley Ranch was purchased from an unaffiliated third party for
$10.7 million.
FAIRFIELD APARTMENTS, STAMFORD, CONNECTICUT
On March 26, 1998, the Operating Partnership acquired a multifamily property
located in Stamford, Connecticut ("Fairfield"). Fairfield was approximately
99% occupied as of June 22, 1998. The property consists of 263 units in two
four-story residential buildings on approximately five acres. Amenities
include a swimming pool, health club/fitness room, parking structure with
secured access, gourmet eat-in kitchen, washers/dryers, fireplaces in select
units, and vaulted ceilings in select units. The property was constructed in
1996.
TERMS OF PURCHASE
Fairfield was purchased from an unaffiliated third party for $45.5 million,
which included the assumption of approximately $35.6 million of mortgage
indebtedness.
HARBOR POINTE APARTMENTS, MILWAUKEE, WISCONSIN
On April 1, 1998, the Operating Partnership acquired a multifamily property
located in Milwaukee, Wisconsin ("Harbor Pointe"). Harbor Pointe was
approximately 94% occupied as of June 22, 1998. The property consists of 595
units in 41 three-story residential buildings on approximately 33 acres.
Amenities include a clubhouse, indoor swimming pool, jacuzzi, sauna, bar and
lounge, three party rooms, health club/fitness center, underground parking,
attached garages in select units, washers/dryers in select units, sand
volleyball court, two tennis courts, playground, gas fireplaces in select
units, and vaulted ceilings in select units. The property was constructed in
1970 and renovated in 1990.
TERMS OF PURCHASE
Harbor Pointe was purchased from an unaffiliated third party for
approximately $24 million, which included $12 million of mortgage
indebtedness and the issuance of 46,291 OP units having a value of
approximately $2.3 million.
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SONTERRA AT FOOTHILL RANCH APARTMENTS, FOOTHILL RANCH, CALIFORNIA
On April 1, 1998, the Operating Partnership acquired a multifamily property
located in Foothill Ranch, California ("Sonterra"). Sonterra was
approximately 97% occupied as of June 22, 1998. The property consists of 300
units in 13 three-story residential buildings on approximately 14 acres.
Amenities include a clubhouse, business resource center, swimming pool, spa,
fitness center, washer/dryer hook-ups, walk in closets, central laundry
facility, fireplaces in select units, security access gates, and extended
balconies. The property was constructed in 1997.
TERMS OF PURCHASE
Sonterra was purchased from an unaffiliated third party for $31.5 million.
VISTA POINTE AT THE VALLEY APARTMENTS, IRVING, TEXAS
On April 7, 1998, the Operating Partnership acquired a multifamily property
located in Irving, Texas ("Vista Pointe"). Vista Pointe was approximately
94% occupied as of June 22, 1998. The property consists of 231 units in 19
two-story residential buildings on approximately 14 acres. Amenities include
a clubhouse, two swimming pools, fitness center, sports court, sand
volleyball court, controlled access gate, attached direct-access garages in
select units, wood burning fireplaces, and washer/dryer connections. The
property was constructed during 1996.
TERMS OF PURCHASE
Vista Pointe was purchased from an unaffiliated third party for $18.6 million.
EMERSON PLACE APARTMENTS, BOSTON, MASSACHUSETTS
On April 23, 1998, the Operating Partnership acquired a multifamily property
located in Boston, Massachusetts ("Emerson Place"). Emerson Place was
approximately 98% occupied as of June 22, 1998. The property consists of 462
units in one 17-story, one 24-story and 2 two-story residential buildings on
approximately 48 acres. Amenities include a laundry facility, intercom
system, garage parking, and dishwashers. The property was constructed in 1962.
TERMS OF PURCHASE
Emerson Place was purchased from an unaffiliated third party for $72.5
million.
SIERRA CANYON APARTMENTS, CANYON COUNTRY, CALIFORNIA
On May 13, 1998, the Operating Partnership acquired a multifamily property
located in Canyon Country, California ("Sierra Canyon"). Sierra Canyon was
approximately 97% occupied as of June 22, 1998. The property consists of 232
units in 16 two-story residential buildings on approximately eight acres.
Amenities include a clubhouse with fireplace, heated swimming pool, spa,
fitness center, and two laundry facilities. The property was constructed in
1987.
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TERMS OF PURCHASE
Sierra Canyon was purchased from an unaffiliated third party for
approximately $15.9 million, which included the issuance of 90,445 OP units
having a value of approximately $4.5 million.
NORTHRIDGE APARTMENTS, PLEASANT HILL, CALIFORNIA
On May 14, 1998, the Operating Partnership acquired a multifamily property
located in Pleasant Hill, California ("Northridge"). Northridge was
approximately 98% occupied as of June 22, 1998. The property consists of 221
units in 15 two and three-story residential buildings on approximately 15
acres. Amenities include a clubhouse, two swimming pools, jacuzzi, two spas,
garages, fireplaces, and washers/dryers in select units. The property was
constructed in 1974.
TERMS OF PURCHASE
Northridge was purchased from an unaffiliated third party for $20 million.
THE ARBORETUM APARTMENTS, CANTON, MASSACHUSETTS
On May 22, 1998, the Operating Partnership acquired a multifamily property
located in Canton, Massachusetts ("Arboretum"). Arboretum was approximately
98% occupied as of June 22, 1998. The property consists of 156 units in six
residential buildings on approximately 40 acres. Amenities include a
clubhouse, swimming pool, washer/dryer connections, and laundry rooms. The
property was constructed in 1989.
TERMS OF PURCHASE
Arboretum was purchased from an unaffiliated third party for $15.2 million.
TOWNHOMES OF MEADOWBROOK APARTMENTS, AUBURN HILLS, MICHIGAN
On May 28, 1998, the Operating Partnership acquired a multifamily property
located in Auburn Hills, Michigan ("Townhomes of Meadowbrook"). Townhomes of
Meadowbrook was approximately 94% occupied as of June 22, 1998. The property
consists of 230 units in 23 two story residential buildings on approximately
eight acres. Amenities include a clubhouse, swimming pool with sundeck,
jogging trail, sand volleyball court, washers/dryers, vaulted ceilings,
fireplaces, and loft bedrooms in select units. The property was constructed
in 1988.
TERMS OF PURCHASE
Townhomes of Meadowbrook was purchased from an unaffiliated third party for
$13.7 million, which included the assumption of approximately $10.2 million of
mortgage indebtedness.
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WOODRIDGE APARTMENTS, EAGAN, MINNESOTA
On May 28, 1998, the Operating Partnership acquired a multifamily property
located in Eagan, Minnesota ("Woodridge"). Woodridge was approximately 100%
occupied as of June 21, 1998. The property consists of 200 units in two
three-story residential buildings on approximately 13 acres. Amenities
include a party room, exercise room, whirlpool and sauna in each building,
and heated underground parking. The property was constructed in 1986.
TERMS OF PURCHASE
Woodridge was purchased from an unaffiliated third party for approximately
$11.6 million, which included the assumption of $7.8 million of mortgage
indebtedness.
BROOKSIDE APARTMENTS, BOULDER, COLORADO
On June 1, 1998, the Operating Partnership acquired a multifamily property
located in Boulder, Colorado ("Brookside"). Brookside was approximately 97%
occupied as of June 20, 1998. The property consists of 144 units in six
residential buildings on approximately five acres. Amenities include a
swimming pool with sundeck, clubhouse, stackable washer/dryer units, and
fireplaces in most units. The property was constructed in 1993.
TERMS OF PURCHASE
Brookside was purchased from an unaffiliated third party for $13.8 million.
GREYSTONE APARTMENT HOMES, ATLANTA, GEORGIA
On June 10, 1998, the Operating Partnership acquired a multifamily property
located in Atlanta, Georgia ("Greystone"). Greystone was approximately 89%
occupied as of June 22, 1998. The property consists of 150 units in 25
residential buildings on approximately nine acres. Amenities include an
outdoor swimming pool, laundry room, playground, and enclosed patios. The
property was constructed in 1960 and renovated in 1997.
TERMS OF PURCHASE
Greystone was purchased from an unaffiliated third party for approximately
$7.4 million.
COCONUT PALM CLUB APARTMENT HOMES, COCONUT CREEK, FLORIDA
On June 11, 1998, the Operating Partnership acquired a multifamily property
located in Coconut Creek, Florida ("Coconut Palm Club"). Coconut Palm Club
was approximately 90% occupied as of June 21, 1998. The property consists of
300 units in 14 residential buildings on approximately 16 acres. Amenities
include a swimming pool, racquetball court, volleyball court, picnic area,
clubhouse and car wash area. The property was constructed in 1992.
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TERMS OF PURCHASE
Coconut Palm Club was purchased from an unaffiliated third party for
approximately $20.3 million.
PORTSIDE TOWERS APARTMENTS, JERSEY CITY, NEW JERSEY
On June 11, 1998, the Operating Partnership acquired a multifamily property
located in Jersey City, New Jersey ("Portside Towers"). Portside Towers was
approximately 99% occupied as of June 22, 1998. The property consists of 527
units in two high-rise residential buildings on approximately six acres.
Amenities include a fitness center, sauna, indoor playroom, outdoor tot lot,
two tennis courts, one sport court, washers/dryers, and laundry rooms. The
property was constructed in phases between 1992 and 1997.
TERMS OF PURCHASE
Portside Towers was purchased from an unaffiliated third party for
approximately $119 million, which included the assumption of mortgage
indebtedness of approximately $58.5 million.
DEFOOR VILLAGE APARTMENTS, ATLANTA, GEORGIA
On June 16, 1998, the Operating Partnership acquired a multifamily property
located in Atlanta, Georgia ("Defoor Village"). Defoor Village was
approximately 100% occupied as of June 29, 1998. The property consists of
156 units in four residential buildings on approximately five acres.
Amenities include a clubhouse, fitness center, central laundry room, and a
resident business center. The property was constructed in 1997.
TERMS OF PURCHASE
Defoor Village was purchased from an unaffiliated third party for $13.5
million, which included the issuance of 14,588 OP Units with a value of
approximately $0.7 million.
PLANTATION RIDGE APARTMENTS, MARIETTA, GEORGIA
On June 16, 1998, the Operating Partnership acquired a multifamily property
located in Marietta, Georgia ("Plantation Ridge"). Plantation Ridge was
approximately 95% occupied as of June 29, 1998. The property consists of 454
units in 46 residential buildings on approximately 33 acres. Amenities
include a clubhouse, car wash, six lighted tennis courts, picnic area, boat
storage, bi-level waterfall swimming pool, and laundry facilities. The
property was constructed in 1975.
TERMS OF PURCHASE
Plantation Ridge was purchased from an unaffiliated third party for $23.2
million, which included the issuance of 43,798 OP Units in the amount of
approximately $2.1 million.
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WYNBROOK APARTMENTS, NORCROSS, GEORGIA
On June 18, 1998 the Operating partnership acquired a multifamily property
located in Norcross, Georgia ("Wynbrook"). Wynbrook was approximately 93%
occupied as of June 29, 1998. The property consists of 318 units in 30
residential buildings on approximately 25 acres. Amenities include two
swimming pools, playground, two laundry facilities, car wash, and picnic
area. The property was constructed in phases between 1972 and 1976.
TERMS OF PURCHASE
Wynbrook was purchased from an unaffiliated third party for $13.5 million,
which included the issuance of 4,700 OP Units with a value of approximately
$0.2 million.
THE TCRS PORTFOLIO TRANSACTION
This acquisition consisted of the following five properties.
DESCRIPTION OF PROPERTIES
THE GATES AT CARLSON CENTER APARTMENTS, MINNETONKA, MINNESOTA
On April 1, 1998, the Operating Partnership acquired a multifamily property
located in Minnetonka, Minnesota ("Gates at Carlson"). Gates at Carlson was
approximately 100% occupied as of June 22, 1998. The property consists of
435 units in six three-story residential buildings on approximately 32 acres.
Amenities include a clubhouse with exercise room, swimming pool, spa,
washers/dryers, tennis court, elevators, fireplaces and vaulted ceilings in
select units, and sub-surface parking. The property was constructed in 1989.
GLENGARRY CLUB APARTMENTS, BLOOMINGTON, ILLINOIS
On April 1, 1998, the Operating Partnership acquired a multifamily property
located in Bloomington, Illinois ("GlenGarry Club"). GlenGarry Club was
approximately 97% occupied as of June 22, 1998. The property consists of 250
units in nine two and three-story residential buildings on approximately 15
acres. Amenities include a clubhouse with exercise room, swimming pool, two
tennis courts, basketball court, volleyball court, garages, and fireplaces in
select units. The property was constructed in 1989.
PLUM TREE I, II, AND III APARTMENTS, HALES CORNERS, WISCONSIN
On April 1, 1998, the Operating Partnership acquired a multifamily property
located in Hales Corners, Wisconsin ("Plum Tree"). Plum Tree was
approximately 97% occupied as of June 23, 1998. The property consists of 332
units in 36 two-story residential buildings on approximately 17 acres.
Amenities include a clubhouse with exercise room, swimming pool, spa,
washer/dryers, wood-burning fireplaces in select units, and garages. The
property was constructed in 1989.
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RAVINIA APARTMENTS, GREENFIELD, WISCONSIN
On April 1, 1998, the Operating Partnership acquired a multifamily property
located in Greenfield, Wisconsin ("Ravinia"). Ravinia was approximately 97%
occupied as of June 22, 1998. The property consists of 206 units in 12
two-story residential buildings on approximately 18 acres. Amenities include
a clubhouse with exercise room, swimming pool, garages, washer/dryers, and
wood burning fireplaces in select units. The property was constructed in
1991.
THE WOODLANDS OF BROOKFIELD APARTMENTS, BROOKFIELD, WISCONSIN
On April 1, 1998, the Operating Partnership acquired a multifamily property
located in Brookfield, Wisconsin ("Woodlands"). Woodlands was approximately
98% occupied as of June 23, 1998. The property consists of 148 units in 34
two-story residential buildings on approximately 35 acres. Amenities include
a clubhouse with exercise room, swimming pool, attached garages,
washers/dryers, and wood burning fireplaces. The property was constructed in
1990.
TERMS OF PURCHASE
The aggregate purchase price of the TCRS Portfolio was approximately $95.7
million, which included $50 million of mortgage indebtedness and the issuance
of 124,398 OP Units with a value of approximately $6.3 million.
CROSS CREEK APARTMENTS, MATTHEWS, NORTH CAROLINA
On June 24, 1998, the Operating Partnership acquired a multifamily property
located in Matthews, North Carolina ("Cross Creek"). Cross Creek was
approximately 91% occupied as of June 26, 1998. The property consists of 420
units in 20 two and three-story residential buildings on approximately 35
acres. Amenities include a clubhouse, two swimming pools, two tennis courts,
fitness center, sand volleyball court, fireplaces in select units, and a
playground. The property was constructed in 1989.
TERMS OF PURCHASE
Cross Creek was purchased from an unaffiliated third party for $23.4 million.
The Operating Partnership is currently providing management services for the
Acquired Properties.
ITEM 5. OTHER EVENTS
The Operating Partnership entered into various contracts with unaffiliated
third parties to acquire 42 multifamily properties. Below are the expected
terms and the descriptions of the properties which the Operating Partnership
deems to be probable acquisitions (the "Probable Properties").
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LEXINGTON VILLAGE APARTMENTS, ALPHARETTA, GEORGIA
Lexington Village ("Lexington Village") is a 352-unit multifamily property
located in Alpharetta, Georgia. The property consists of 24 residential
buildings on approximately 36 acres. Amenities include a clubhouse, activity
center, car wash, swimming pool, tennis courts, volleyball court, fitness
center, laundry facility, and a resident business center. The property was
constructed in 1995.
EXPECTED TERMS OF PURCHASE
Lexington Village is expected to be purchased from an unaffiliated third
party for approximately $24.5 million, which will include the assumption of
approximately $18.8 million of mortgage indebtedness and the issuance of
approximately 25,000 OP Units with a value of approximately $1.3 million.
MARTINS LANDING APARTMENTS, ATLANTA, GEORGIA
Martins Landing ("Martins Landing") is a 300-unit multifamily property
located in Roswell, Georgia. The property consists of 24 three-story
residential buildings on approximately 20 acres. Amenities include a
swimming pool, fitness center, tennis court, clubhouse, playground, jogging
trails, and a basketball court. The property was constructed in 1972 and
renovated in 1992.
EXPECTED TERMS OF PURCHASE
Martins Landing is expected to be purchased from an unaffiliated third party
for approximately $18.1 million, which will include the assumption of
approximately $13 million of mortgage indebtedness.
THE LAKES AT VININGS APARTMENTS, ATLANTA, GEORGIA
Lakes at Vinings ("Lakes at Vinings") is a 464-unit multifamily property
located in Atlanta, Georgia. The property consists of 31 two and three-story
residential buildings on approximately 38 acres. Amenities include a
swimming pool, fitness center, tennis court, clubhouse, volleyball court,
jogging trails, and picnic areas. The property was constructed in phases
between 1972 and 1975, and renovated in 1994.
EXPECTED TERMS OF PURCHASE
Lakes at Vinings is expected to be purchased from an unaffiliated third party
for approximately $27.9 million, which will include the assumption of
approximately $22.5 million of mortgage indebtedness.
THE LINCOLN PROPERTY TRANSACTION
This probable acquisition includes the following 25 properties.
DESCRIPTIONS OF PROPERTIES
ALDERWOOD PARK APARTMENTS, LYNWOOD, WASHINGTON
Alderwood Park Apartments ("Alderwood Park") is a 188-unit multifamily
property located in Lynwood, Washington. The property consists of 14
two-story residential buildings on
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approximately 10 acres. Amenities include a swimming pool, spa, clubhouse
with lounge, modern exercise facility, suntan salon, sport court, playground,
private patios/decks, fireplaces, and washer/dryers in select units. The
property was constructed in 1982.
BELLEVUE MEADOWS APARTMENTS, BELLEVUE, WASHINGTON
Bellevue Meadows Apartments ("Bellevue Meadows") is a 180-unit multifamily
property located in Bellevue, Washington. The property consists of 15
two-story residential buildings on approximately nine acres. Amenities
include a heated swimming pool, exercise/weight room, tanning room, tennis
court, clubhouse, game room, indoor spa, volleyball court, washers/dryers,
private patios/decks, wood-burning brick fireplaces, cable TV, dishwashers,
and covered parking. The property was constructed in 1983.
BRAMBLEWOOD APARTMENTS, SAN JOSE, CALIFORNIA
Bramblewood Apartments ("Bramblewood") is a 108-unit multifamily property
located in San Jose, California. The property consists of 10 two and
three-story residential buildings on approximately five acres. Amenities
include a swimming pool, spa, covered parking, barbecue area,
patios/balconies, and washer-dryer hook-ups. The property was constructed in
1986.
BRIARWOOD APARTMENTS, SUNNYVALE, CALIFORNIA
Briarwood Apartments ("Briarwood") is a 192-unit multifamily property located
in Sunnyvale, California. The property consists of nine residential
buildings on approximately eight acres. Amenities include a clubhouse,
swimming pool, spa, playground, basketball court, barbecue area, covered
parking, private patios/balconies, washer/dryer connections, air
conditioning, and dishwashers. The property was constructed in 1985.
CEDAR POINTE APARTMENTS, SAN RAMON, CALIFORNIA
Cedar Pointe Apartments ("Cedar Pointe") is a 248-unit multifamily property
located in San Ramon, California. The property consists of 16 two-story
residential buildings on approximately 12 acres. Amenities include a
swimming pool, spa, fitness center, two playground areas, covered parking,
private patios/decks, ceiling fans, washer/dryer connections, air
conditioning, and dishwashers. The property was constructed in 1984.
CHELSEA SQUARE APARTMENTS, REDMOND, WASHINGTON
Chelsea Square Apartments ("Chelsea Square") is a 113-unit multifamily
property located in Redmond, Washington. The property consists of six 2 and
one half-story residential buildings on approximately four acres. Amenities
include a swimming pool, exercise room, suntan room, hot tub spa, fireplaces,
breakfast bars, washers/dryers, volume ceilings, and a clubhouse with wet
bar, TV and meeting lounge. The property was constructed in 1991.
CREEKSIDE APARTMENTS, SAN MATEO, CALIFORNIA
Creekside Apartments ("Creekside") is a 192-unit multifamily property located
in San Mateo, California. The property consists of 13 two-story residential
buildings on approximately seven
15
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acres. Amenities include a clubhouse, barbecue area, swimming pool, spa,
tanning salon, security parking, covered and garage parking, playground,
balconies/patios, and washer/dryer hook-ups. The property was constructed in
1985.
GRANDVIEW APARTMENTS, LAS VEGAS, NEVADA
Grandview Apartments ("Grandview") is a 456-unit multifamily property
located in Las Vegas, Nevada. The property consists of 26 two-story
residential buildings on approximately 19 acres. Amenities include a
swimming pool, volleyball court, spa, clubhouse, two laundry facilities,
playground, tennis court, ceiling fans, private patio/balconies, and covered
parking. The property was constructed in 1980.
GREENHAVEN APARTMENTS, UNION CITY, CALIFORNIA
Greenhaven Apartments ("Greenhaven") is a 250-unit multifamily property
located in Union City, California. The property consists of 16 one, two, and
three-story residential buildings on approximately ten acres. Amenities
include a solar heated pool, therapy spa, covered parking, exercise studio,
three laundry rooms, and private patios/balconies. The property was
constructed in 1983.
LINCOLN GREEN I AND II APARTMENTS, SUNNYVALE ,CALIFORNIA
Lincoln Green I and II Apartments ("Lincoln Green I and II") is a 174-unit
multifamily property located in Sunnyvale, California. The property consists
of nine two-story residential buildings on approximately seven acres.
Amenities include a swimming pool, spa, exercise/weight room, covered
parking, and private patios/decks. The property was constructed in two
phases in 1979.
LINCOLN VILLAGE I AND II APARTMENTS, LARKSPUR, CALIFORNIA
Lincoln Village I and II Apartments ("Lincoln Village I and II")is a 342-unit
multifamily property located in Larkspur, California. The property consists
of 16 two and three-story residential buildings on approximately 17 acres.
Amenities include two solar heated pools, clubhouse, tennis court, jacuzzi
spa, fitness center, dry saunas, covered parking, corporate/furnished suites,
24 hour emergency service, vaulted ceilings, and private balconies/patios.
The property was constructed in 1980.
MOUNTAIN SHADOWS APARTMENTS, LAS VEGAS, NEVADA
Mountain Shadows Apartments ("Mountain Shadows") is a 300-unit multifamily
property located in Las Vegas, Nevada. The property consists of 19 two-story
residential buildings on approximately 12 acres. Amenities include a
clubhouse, swimming pool, playground, tennis court, basketball court,
barbecue area, laundry room, ceiling fans in select units, and
patios/balconies. The property was constructed in 1979.
NORTH CREEK APARTMENTS, EVERETT, WASHINGTON
North Creek Apartments ("North Creek") is a 264-unit multifamily property
located in Everett, Washington. The property consists of 26 two-story
residential buildings on approximately 17
16
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acres. Amenities include a heated pool, jacuzzi, clubhouse, covered parking,
basketball court, washers/dryers in select units, wood burning fireplaces,
and private patios/balconies. The property was constructed during 1986.
OLDE REDMOND PLACE APARTMENTS, REDMOND, WASHINGTON
Olde Redmond Place Apartments ("Olde Redmond Place") is a 192-unit
multifamily property located in Redmond, Washington. The property consists of
16 three-story residential buildings on approximately 14 acres. Amenities
include a heated swimming pool, indoor spa, tanning salon, cabana,
exercise/weight room, tennis court, playground, brick fireplaces,
washers/dryers, cathedral ceilings, private patios/decks, and covered
parking. The property was constructed in 1986.
PARKSIDE APARTMENTS, UNION CITY, CALIFORNIA
Parkside Apartments ("Parkside") is a 208-unit multifamily property located
in Union City, California. The property consists of 16 two-story residential
buildings on approximately seven acres. Amenities include a swimming pool,
sauna, covered parking, fully equipped laundry rooms, and private
patios/balconies. The property was constructed in 1979.
SKYLARK APARTMENTS, UNION CITY, CALIFORNIA
Skylark Apartments ("Skylark") is a 174-unit multifamily property located in
Union City, California. The property consists of nine one, two, and
three-story residential buildings on approximately seven acres. Amenities
include a free-form pool and spa, recreation center, covered and underground
parking, exercise room, and on-site ice machines. The property was
constructed in 1986.
SOUTHWOOD APARTMENTS, PALO ALTO, CALIFORNIA
Southwood Apartments ("Southwood") is a 99-unit multifamily property located
in Palo Alto, California. The property consists of in five two and
three-story residential buildings on approximately four acres. Amenities
include units with double master suites, washer/dryer connections, and
private patios/balconies. The property was constructed in 1985.
SUMMERWOOD APARTMENTS, HAYWARD, CALIFORNIA
Summerwood Apartments ("Summerwood") is a 162-unit multifamily property
located in Hayward, California. The property consists of 12 two-story
residential buildings on approximately six acres. Amenities include a
solar-heated pool, sauna, fitness center, covered parking, laundry
facilities, private balconies/ patios, and outdoor storage closets. The
property was constructed in 1982.
SURREY DOWNS APARTMENTS, BELLEVUE, WASHINGTON
Surrey Downs Apartments ("Surrey Downs") is a 122-unit multifamily property
located in Bellevue, Washington. The property consists of 13 two and
three-story residential buildings on approximately seven acres. Amenities
include a heated swimming pool, spa, sports court,
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clubhouse, exercise room, indoor sauna, brick fireplaces, private
patios/decks with storage closets, washers/dryers, private pond, and a
courtyard fountain. The property was constructed in 1986.
TIMBERWOOD APARTMENTS, AURORA, COLORADO
Timberwood Apartments ("Timberwood") is a 336-unit multifamily property
located in Aurora, Colorado. The property consists of 22 two-story
residential buildings on approximately 15 acres. Amenities include free
covered parking, two heated swimming pools, two tennis courts, indoor
jacuzzi, volleyball court, clubhouse, playgrounds, four laundry rooms,
washer/dryer hook ups, private patios, and brick fireplaces. The property
was constructed in 1983.
TURF CLUB APARTMENTS, LITTLETON, COLORADO
Turf Club Apartments ("Turf Club") is a 324-unit multifamily property
located in Littleton, Colorado. The property consists of 15 three-story
residential buildings on approximately 12 acres. Amenities include an
exercise room, indoor spa, swimming pool, fireplace, washer/dryer hookups,
private balconies/patios and a business center equipped with internet
accessing computer, fax machine and copy machine. The property was
constructed in 1986.
WILLOWICK APARTMENTS, AURORA, COLORADO
Willowick Apartments ("Willowick") is a 100-unit multifamily property located
in Aurora, Colorado. The property consists of seven two-story residential
building on approximately five acres. Amenities include covered parking,
heated swimming pool, clubhouse/activity center, play area for children,
laundry facilities, fireplaces, and private patios. The property was
constructed in 1980.
WOODLAKE APARTMENTS, KIRKLAND, WASHINGTON
Woodlake Apartments ("Woodlake") is a 288-unit multifamily property located
in in Kirkland, Washington. The property consists of 18 two-story residential
buildings on approximately 24 acres. Amenities include a clubhouse, heated
swimming pool, poolside cabana, spa, exercise room, tanning room, sauna,
tennis court, sport/basketball court, playground, covered parking,
dishwashers, disposals, and vaulted ceilings in select units. The property
was constructed in 1984.
WOODLEAF APARTMENTS, CAMPBELL, CALIFORNIA
Woodleaf Apartments ("Woodleaf") is a 178-unit multifamily property located
in Campbell, California. The property consists of nine two and three-story
residential buildings on approximately seven acres. Amenities include a
swimming pool, jacuzzi, fitness center, tanning salon, billiards table, media
center, and private patios/balconies. The property was constructed in 1984.
WOODRIDGE APARTMENTS, AURORA, COLORADO
Woodridge Apartments ("Woodridge") is a 584-unit multifamily property located
in Aurora,
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Colorado. The property consists of 42 two-story residential buildings on
approximately 29 acres. Amenities include five heated swimming pools,
basketball and tennis courts, children's play areas, picnic and barbecue
areas, fireplaces, and private patios/balconies. The property was constructed
in three phases between 1980 and 1982.
EXPECTED TERMS OF PURCHASE
The aggregate purchase price of the 25 properties included in the Lincoln
Property Transaction ("Lincoln Probable Properties") is approximately $465.3
million, which includes the assumption of mortgage indebtedness of
approximately $60.7 million and the issuance of 2.2 million OP Units having a
value of approximately $109.7 million.
THE MAGNUM TRANSACTION
This probable acquisition consists of the following ten properties.
DESCRIPTIONS OF PROPERTIES
THE BROADWAY APARTMENTS, GARLAND, TEXAS
The Broadway Apartments ("Broadway") is a 288-unit multifamily property
located in Garland, Texas. The property consists of 20 two-story residential
buildings on approximately 12 acres. Amenities include a clubhouse, two
swimming pools, laundry facility, ceiling fans, balconies/patios,
washer/dryer connections, and fireplaces in select units. The property was
constructed in 1983.
CEDAR RIDGE APARTMENTS, ARLINGTON, TEXAS
Cedar Ridge Apartments ("Cedar Ridge") is a 121-unit multifamily property
located in Arlington, Texas. The property consists of 50 two-story
residential buildings on approximately 12 acres. Amenities include two
swimming pools, ceiling fans, washer/dryer connections, fireplaces in select
units, security patrol, and garage parking. The property was constructed in
1980.
FIELDER CROSSING APARTMENTS, ARLINGTON, TEXAS
Fielder Crossing Apartments ("Fielder Crossing") is a 119-unit multifamily
property located in Arlington, Texas. The property consists of 14 two-story
residential buildings on approximately three acres. Amenities include a
clubhouse, jacuzzi, private alarms, and balconies/ patios in each unit. The
property was constructed in 1980.
LAKESHORE AT PRESTON APARTMENTS, PLANO, TEXAS
Lakeshore at Preston Apartments ("Lakeshore at Preston") is a 302-unit
multifamily property located in Plano, Texas. The property consists of 14 two
and three-story residential buildings on approximately 19 acres. Amenities
include a clubhouse, two swimming pools, jacuzzi, fitness center, sand
volleyball court, jogging trail, fountained lake, outdoor grills, access
gates, private
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alarms, and balconies/patios in each unit. The property was constructed in
1992.
LAKEWOOD GREENS APARTMENTS, DALLAS, TEXAS
Lakewood Greens Apartments ("Lakewood Greens") is a 252-unit multifamily
property located in Dallas, Texas. The property consists of 23 two and
three-story residential buildings on approximately 10 acres. Amenities
include a clubhouse, swimming pool, jacuzzi, fitness center, access gates,
two laundry rooms, security patrols, and balconies/patios in each unit. The
property was constructed in 1986.
PLEASANT RIDGE APARTMENTS, ARLINGTON, TEXAS
Pleasant Ridge Apartments ("Pleasant Ridge") is a 63-unit multifamily
property located in Arlington, Texas. The property consists of 16 one-story
residential buildings on approximately four acres. Amenities include a
swimming pool, jacuzzi, ceiling fans, balconies/patios, washer/dryer
connections, and fireplaces. The property was constructed in 1982.
RIVER PARK APARTMENTS, FORT WORTH, TEXAS
River Park Apartments ("River Park") is a 280-unit multifamily property
located in Fort Worth, Texas. The property consists of 29 two and three-story
residential buildings on approximately 10 acres. Amenities include a
clubhouse, swimming pool, jacuzzi, two laundry facilities, private alarms,
balconies/patios, washer/dryer connections, and fireplaces in select units.
The property was constructed in 1984.
SANDSTONE AT BEAR CREEK APARTMENTS, EULESS, TEXAS
Sandstone at Bear Creek Apartments ("Sandstone") is a 40-unit multifamily
property located in Euless, Texas. The property consists of eight one-story
residential buildings on approximately five acres. Amenities include a
swimming pool, monitored alarm system, fireplaces, balconies or patios,
washer/dryer connections, and volume/cathedral ceilings in select units. The
property was constructed in 1988.
VILLAS OF JOSEY RANCH APARTMENTS, CARROLLTON, TEXAS
Villas of Josey Ranch Apartments ("Villas of Josey Ranch") is a 198-unit
multifamily property located in Carrollton, Texas. The property consists of
22 two-story residential buildings on approximately 12 acres. Amenities
include a clubhouse, two swimming pools, two laundry facilities, private
alarms, washer /dryer connections, and balconies/patios in each unit. The
property was constructed in 1986.
WIMBLEDON OAKS APARTMENTS, ARLINGTON, TEXAS
Wimbledon Oaks Apartments ("Wimbledon Oaks") is a 248-unit multifamily
property located in Arlington, Texas. The property consists of 14 two and
three-story residential buildings on approximately nine acres. Amenities
include a clubhouse, swimming pool with fountain, exercise room, jacuzzi,
sauna, access gate, picnic area with grills, balconies or patios,
washer/dryer connections, and fireplaces in select units. The property was
constructed in 1985.
20
<PAGE>
EXPECTED TERMS OF PURCHASE
The aggregate purchase price of the 10 properties included in the Magnum
Transaction ("Magnum Probable Properties") is approximately $82.4 million
which includes the assumption of approximately $59.5 million of mortgage
indebtedness.
THE FREDERICK TRANSACTION
This probable acquisition includes the following four properties.
DESCRIPTIONS OF PROPERTIES
OVERLOOK MANOR I & II APARTMENTS, FREDERICK, MARYLAND
Overlook Manor I & II Apartments ("Overlook Manor I & II") is a 290-unit
multifamily property located in Frederick, Maryland. The property consists
of 23 three-story residential buildings on approximately 17 acres. Amenities
include two swimming pools, two playgrounds, two tennis courts, and laundry
facilities. The property was constructed in phases between 1980 and 1985.
TILLMAN PLACE APARTMENTS, FREDERICK, MARYLAND
Tillman Place Apartments ("Tillman Place") is a 64-unit multifamily property
located in Frederick, Maryland. The property consists of nine two-story
residential buildings on approximately two acres. Amenities include a
swimming pool, tennis court, and day care. The property was constructed in
1986.
THE WILLOWS APARTMENTS, FREDERICK, MARYLAND
The Willows Apartments ("The Willows") is a 204-unit multifamily property
located in Frederick, Maryland. The property consists of 13 four-story
residential buildings on approximately 11 acres. Amenities include a
clubhouse, swimming pool, car wash facility, and three playgrounds. The
property was constructed in 1979.
EXPECTED TERMS OF PURCHASE
The aggregate purchase price of the four properties included in the Frederick
Transaction ("Frederick Probable Properties") is approximately $26.9 million,
which includes the assumption of approximately $5.9 million of mortgage
indebtedness.
The Operating Partnership expects to provide property management services for
the Probable Properties subsequent to the date of acquisition by the
Operating Partnership.
The closings of the Probable Properties are subject to certain contingencies
and conditions, therefore, there can be no assurance that any or all of these
transactions will be consummated, or that the final terms thereof will not
differ in material respects from those summarized above.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
C. EXHIBITS
23 CONSENT OF ERNST & YOUNG LLP
99 FORM OF GENERAL PARTNER RECOURSE LIABILITY RISK SHARING
AGREEMENT TO BE ENTERED INTO IN CONNECTION WITH THE LINCOLN
PROPERTY TRANSACTION
No information is required under Items 1, 3, 4, and 6, and these
items have therefore been omitted.
22
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS
REQUIRED UNDER ITEM 7(b) OF FORM 8-K
23
<PAGE>
ERP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Capitalized terms used but not defined in this Current Report on Form 8-K are
as defined in the Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 1997, as amended by Form 10-K/A, and the Operating
Partnership's Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998.
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of
March 31, 1998 and Statements of Operations for the three months ended March
31, 1998 and for the year ended December 31, 1997 have been presented as if
the January 1998 Common Share Offering, the February 1998 Common Share
Offerings, the March 1998 Common Share Offering, the issuance of $300,000,000
of 6.63% unsecured notes due April 13, 2015 (the "2015 Notes"), the sale of
946,565 Common Shares at $46.5459 (the "April Common Share Offering") and the
acquisition or expected acquisition of 79 multifamily properties, including
the related assumption of $412.6 million of mortgage indebtedness, had
occurred on March 31, 1998 with respect to the March 31, 1998 balance sheet,
January 1, 1998 with respect to the statement of operations for the three
months ended March 31, 1998 and January 1, 1997 with respect to the statement
of operations for the year ended December 31, 1997. Fifteen of the Acquired
Properties are included in the Operating Partnership's Historical Balance
Sheet as of March 31, 1998 and all of the remaining properties
are included on a pro forma basis as described in Note A and Note B of the
Pro Forma Condensed Consolidated Balance Sheet as of March 31, 1998.
The unaudited Pro Forma Condensed Consolidated Financial Statements are not
necessarily indicative of the results of future operations, nor the results
of historical operations, had all the transactions occurred as described
above on either January 1, 1997 or January 1, 1998.
The Pro Forma Condensed Consolidated Financial Statements should be read in
conjunction with the accompanying Notes to the Pro Forma Condensed
Consolidated Financial Statements, the Operating Partnership's Annual Report
on Form 10-K for the year ended December 31, 1997, as amended by Form 10-K/A,
the Operating Partnership's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998 and the Statements of Revenue and Certain
Expenses for certain of the acquired and probable properties (included
elsewhere herein).
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<PAGE>
<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS)
1998
MOST RECENT 1998
ACQUIRED PROBABLE PRO
HISTORICAL PROPERTIES(A) PROPERTIES(B) OFFERINGS(C) FORMA
------------ -------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Rental property, net $ 6,854,535 $ 553,288 $ 645,684 $ -- $ 8,053,507
Investment in mortgage notes, net 175,532 (88,184) -- -- 87,348
Cash and cash equivalents 77,575 (310,318) (111,275) 350,258 6,240
Rents receivable 3,798 -- -- -- 3,798
Deposits-restricted 39,645 -- -- -- 39,645
Escrows deposits-mortgage 45,314 -- -- -- 45,314
Deferred financing costs, net 23,283 -- -- -- 23,283
Other assets 109,660 -- -- -- 109,660
------------ -------------- ------------- ------------ ------------
Total assets $ 7,329,342 $ 154,786 $ 534,409 $ 350,258 $ 8,368,795
------------ -------------- ------------- ------------ ------------
------------ -------------- ------------- ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 1,655,635 $ 138,566 $ 180,450 $ -- $ 1,974,651
Line of credit -- -- 243,000 -- 243,000
Notes, net 1,130,461 -- -- 306,200 1,436,661
Accounts payable and accrued expenses 66,787 -- -- -- 66,787
Accrued interest payable 35,514 -- -- -- 35,514
Rents received in advance and other liabilities 41,417 -- -- -- 41,417
Security deposits 29,711 -- -- -- 29,711
Distributions payable 89,015 -- -- -- 89,015
------------ -------------- ------------- ------------ ------------
Total liabilities 3,048,540 138,566 423,450 306,200 3,916,756
------------ -------------- ------------- ------------ ------------
Commitments and contingencies
9 3/8% Series A Cumulative Redeemable
Preference Units 153,000 -- -- -- 153,000
------------ -------------- ------------- ------------ ------------
9 1/8% Series B Cumulative Redeemable
Preference Units 125,000 -- -- -- 125,000
------------ -------------- ------------- ------------ ------------
9 1/8% Series C Cumulative Redeemable
Preference Units 115,000 -- -- -- 115,000
------------ -------------- ------------- ------------ ------------
8.60 % Series D Cumulative Redeemable
Preference Units 175,000 -- -- -- 175,000
------------ -------------- ------------- ------------ ------------
Series E Cumulative Convertible
Preference Units 99,950 -- -- -- 99,950
------------ -------------- ------------- ------------ ------------
9.65 % Series F Cumulative Redeemable
Preference Units 57,500 -- -- -- 57,500
------------ -------------- ------------- ------------ ------------
7 1/4 % Series G Convertible Cumulative
Preference Units 316,250 -- -- -- 316,250
------------ -------------- ------------- ------------ ------------
Partners' Capital
General Partner 2,956,862 -- 40,102 44,058 3,041,022
Limited Partners 282,240 16,220 70,857 -- 369,317
------------ -------------- ------------- ------------ ------------
Total partners' capital 3,239,102 16,220 110,959 44,058 3,410,339
------------ -------------- ------------- ------------ ------------
Total liabilities and partners' capital $ 7,329,342 $ 154,786 $ 534,409 $ 350,258 $ 8,368,795
------------ -------------- ------------- ------------ ------------
------------ -------------- ------------- ------------ ------------
(A) Reflects the most recent multifamily property acquisitions, which include The Gates at Carlson Center, Glengarry Club,
Ravinia, Plum Tree, The Woodlands, Harbor Pointe, Sonterra at Foothill Ranch, Vista Pointe at the Valley, Emerson Place,
Sierra Canyon, Northridge, The Arboretum, Townhomes of Meadowbrook, Woodridge, Brookside, Greystone, Coconut Palm Club,
Portside Towers, Defoor Village, Plantation Ridge, Wynbrook and Cross Creek (collectively the "1998 Most Recent Acquired
Properties"). In connection with such : (i) the amounts presented include the initial purchase price as well as
subsequent closing costs anticipated to be incurred; (ii) the assumption of approximately $138.6 million of mortgage
indebtedness; (iii) the issuance of approximately 324,000 OP Units with a value of approximately $16.2 million and (iv)
the elimination of the investment in mortgage loans collateralized by five of the 1998 Most Recent Acquired Properties due
to the acquisition of such properties.
(B) Reflects the probable acquisitions of Lakes at Vinings, Martins Landing, Lexington Village, Alderwood Park, Bellevue
Meadows, Bramblewood, Briarwood, Cedar Pointe, Chelsea Square, Creekside, Grandview I & II, Greenhaven, Lincoln Green I &
II, Lincoln Village I & II, Mountain Shadows, North Creek, Olde Redmond Place, Parkside, Skylark, Southwood, Summerwood,
Surrey Downs, Timberwood, Turf Club, Willowick, Woodlake, Woodleaf, Woodridge I, II, III, Broadway, Cedar Ridge, Fielder
Crossing, Lakeshore at Preston, Lakewood Greens, Pleasant Ridge, River Park, Sandstone, Villas at Josey Ranch, Wimbledon
Oaks, Overlook Manor I, Overlook Manor II, Tilman Place and Willows (collectively the "1998 Probable Properties"). In
connection with such probable acquisitions: (i) the amounts presented include the initial purchase price as well as
subsequent closing costs anticipated to be incurred; (ii) the expected assumption of approximately $180.5 million of
mortgage indebtedness and the expected draw of approximately $243 million on the line of credit and (iii) the expected
issuance of approximately 2.3 million OP Units with a value of approximately $111 million.
(C) Reflects the additional issuance of 946,565 Common Shares at a price of $46.5459 per share (the "April 1998 Common Share
Offering"). Also included are the net proceeds of approximately $298.1 raised through the issuance of the 2015 Notes and
approximately $8.1 million from the sale of an option to remarket the 2015 notes in April 2005.
</TABLE>
25
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<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR OP UNIT DATA)
1998 1998
PREVIOUSLY MOST RECENT 1998
ACQUIRED ACQUIRED PROBABLE PRO
HISTORICAL PROPERTIES(A) PROPERTIES(B) PROPERTIES(C) ADJUSTMENTS(D) FORMA
----------- ------------- ------------- ------------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Rental income $ 277,226 $ 4,051 $ 17,825 $ 20,852 $ -- $ 319,954
Fee and asset management 1,360 -- -- -- -- 1,360
Interest income - investment in mortgage notes 4,931 -- -- -- (1,873) 3,058
Interest and other income 2,824 -- -- -- (791) 2,033
----------- ------------- ------------- ------------- -------------- ----------
Total revenues 286,341 4,051 17,825 20,852 (2,664) 326,405
----------- ------------- ------------- ------------- -------------- ----------
EXPENSES
Property and maintenance 66,713 970 4,696 5,940 (2,006) 76,313
Real estate taxes and insurance 27,443 350 2,299 1,834 -- 31,926
Property management 11,579 -- -- -- 1,014 12,593
Fee and asset management 1,052 -- -- -- -- 1,052
Depreciation 64,390 -- -- -- 9,783 74,173
Interest:
Expense incurred 50,254 -- -- -- 13,382 63,636
Amortization of deferred financing costs 624 -- -- -- -- 624
General and administrative 4,880 -- -- -- -- 4,880
----------- ------------- ------------- ------------- -------------- ----------
Total expenses 226,935 1,320 6,995 7,774 22,173 265,197
----------- ------------- ------------- ------------- -------------- ----------
Income before gain on disposition of properties 59,406 $ 2,731 $ 10,830 $ 13,078 $ (24,837) 61,208
------------- ------------- ------------- --------------
------------- ------------- ------------- --------------
Gain on disposition of properties 1,869 --
----------- ----------
Net income $ 61,275 $ 61,208
----------- ----------
----------- ----------
ALLOCATION OF NET INCOME:
9 3/8% Series A Cumulative Redeemable
Preference Units $ 3,586 $ 3,586
----------- ----------
----------- ----------
9 1/8% Series B Cumulative Redeemable
Preference Units $ 2,852 $ 2,852
----------- ----------
----------- ----------
9 1/8% Series C Cumulative Redeemable
Preference Units $ 2,623 $ 2,623
----------- ----------
----------- ----------
8.60 % Series D Cumulative Redeemable
Preference Units $ 3,763 $ 3,763
----------- ----------
----------- ----------
Series E Cumulative Convertible
Preference Units $ 1,749 $ 1,749
----------- ----------
----------- ----------
9.65 % Series F Cumulative Redeemable
Preference Units $ 1,387 $ 1,387
----------- ----------
----------- ----------
7 1/4% Series G Convertible Cumulative
Preference Units $ 5,732 $ 5,732
----------- ----------
----------- ----------
General Partner 35,895 35,110
Limited Partners 3,688 4,406
----------- ----------
Net income available to OP Unit holders $ 39,583 $ 39,516
----------- ----------
----------- ----------
Net income per weighted average OP
Unit outstanding $ 0.38 $ 0.36
----------- ----------
----------- ----------
Weighted average OP Units outstanding 102,948 (E) 109,240
----------- ----------
----------- ----------
Net income per weighted average OP
Unit outstanding - assuming dilution $ 0.38 $ 0.36
----------- ----------
----------- ----------
(A) Reflects the results of operations for Cityscape, 740 River Drive, Prospect Towers, Park Place (TX), Park Westend, Emerald
Bay, Farnham Park, Plantation (TX), Balcones Club, Coach Lantern, Foxcroft, Yarmouth Woods, Rolido Parque, Trails at Valley
Ranch, The Fairfield (acquired from January through March 1998) (collectively, the "1998 Previously Acquired Properties").
The amounts presented represent the historical amounts for certain revenues and expenses for the period from January 1,
1998 through the respective acquisition dates for each property.
(B) Reflects the results of operations for the 1998 Most Recent Acquired Properties. The amounts presented for rental
revenues, property and maintenance and real estate taxes and insurance are based on the revenues and certain expenses of
the 1998 Most Recent Acquired Properties for the three months ended March 31, 1998.
(C) Reflects the results of operations for the 1998 Probable Properties. The amounts presented for rental revenues, property
and Maintenance and real estate taxes and insurance are based on the revenues and certain expenses of the 1998 Probable
Properties for the three months ended March 31, 1998.
(D) Reflects the following adjustments to the Previously Acquired, Most Recent Acquired and Probable Properties' results of
operations as follows:
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Interest income - investment in mortgage notes:
Reduction of interest income on investment in mortgage
loans collateralized by five of the Most Recent Acquired
Properties to the extent amounts are already included in
the Operating Partnership's historical financial results. $ (1,873)
---------
---------
Interest and other income:
Reduction of interest income due to the use of working
capital for property acquisitions. $ (791)
---------
---------
Property and maintenance:
The elimination of third-party management fees where
the Operating Partnership is providing onsite property
management services. $ (2,006)
---------
---------
Property management:
Incremental cost associated with self management of the
Previously Acquired, Most Recent Acquired and Probable
Properties for the three months ended March 31, 1998. $ 1,014
---------
---------
Depreciation:
Reflects depreciation based on the expected total
investment of approximately $1.4 billion for the
Previously Acquired, Most Recent Acquired and Probable
Properties less 10% allocated to land and depreciated
over a 30-year life for real property. Depreciation for
the 1998 Previously Acquired Properties reflect amounts
from January 1, 1998 through the respective acquisition
date for each property. $ 9,783
---------
---------
Interest:
Expense incurred:
Interest on mortgage indebtedness for the Previously
Acquired, Most Recent Acquired and Probable Properties (F). $ 5,414
Interest on $50 million of mortgage indebtedness for
five of the Most Recent Acquired Properties. 849
Interest and fees on a $243 million draw on the line
of credit at a LIBOR rate of 5.71875% plus 45 basis points. 2,289
Interest associated with the issuance of the 2015 Notes. 4,830
---------
$ 13,382
---------
---------
</TABLE>
(E) Pro Forma weighted average OP Units outstanding for the three months ended
March 31, 1998 was 109,240 million, which assumes the OP Units issued to
the Company in connection with the January 1998 Common Share Offering,
February 1998 Common Share Offerings and March Common Share Offering were
outstanding as of January 1, 1998 and includes approximately 0.9 million
OP Units issued to the Company in connection with the April 1998 Common
Share Offering and approximately 2.6 million OP Units issued in connection
with the acquisition of properties. The OP Units outstanding does not
include any OP Units issued in a private or public offering that have not
been used or are not intended to be used for acquisitions or repayment of
debt directly incurred in an acquisition.
(F) Detail of interest expense on mortgage indebtedness for the Previously
Acquired, Most Recent Acquired and Probable Properties:
<TABLE>
<CAPTION>
Mortgage Interest Interest
Property Indebtedness Rate Expense
--------------------------------- ------------ -------- --------
<S> <C> <C> <C>
740 River Drive (1) $ 6,967 7.75% $ 12
Alderwood Park 4,379 7.75% 85
Briarwood 12,800 4.00% 128
Briarwood 2nd 1,513 7.73% 29
Broadway 6,298 8.35% 131
Cedar Pointe 10,931 7.00% 191
Cedar Ridge 3,750 8.13% 76
Farnham Park (1) 11,546 8.00% 86
Fielder Crossing 2,218 10.79% 60
Greenhaven 10,966 4.00% 110
Harbor Pointe 12,000 6.56% 197
Lakes at Vinings 22,531 7.00% 394
Lakeshore at Preston 13,300 7.60% 253
Lakewood Greens 8,480 7.61% 161
Lexington Village 18,750 8.25% 387
Martins Landing 12,982 7.00% 227
North Creek 8,347 7.79% 163
Overlook Manor II 5,930 7.00% 104
Park Place (TX) (1) 10,177 7.46% 32
Park West End (1) 7,168 7.79% 25
Pleasant Ridge 1,692 8.29% 35
Portside Towers 58,500 8.00% 1,170
Prospect Towers (1) 14,913 7.74% 38
River Park 7,888 7.86% 155
Rolido Parque (1) 7,246 7.96% 96
Sandstone 1,400 7.47% 26
Skylark 11,790 4.00% 118
The Fairfield (1) 35,600 3.65% 301
Townhomes of Meadowbrook 10,242 8.54% 219
Villas at Josey Ranch 6,880 7.81% 134
Wimbledon Oaks 7,625 7.80% 149
Woodridge 7,824 6.29% 122
-------- ------
Totals $362,633 $5,414
-------- ------
-------- ------
</TABLE>
(1) The amounts presented for these properties represent historical amounts
for the periods from January 1, 1998 through the respective acquisition
dates for each property.
27
<PAGE>
<TABLE>
<CAPTION>
ERP OPERATING LIMITED PARTNERSHIP
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT FOR OP UNIT DATA)
1998 1998
ACQUIRED PROBABLE PRO
HISTORICAL PROPERTIES (A) PROPERTIES (B) ADJUSTMENTS (C) FORMA
REVENUES ---------- -------------- -------------- --------------- ---------
<S> <C> <C> <C> <C> <C>
Rental income $ 707,733 $ 92,203 $ 80,649 $ -- $ 880,585
Fee and asset management 5,697 -- -- -- 5,697
Interest income - investment in
mortgage notes 20,366 -- -- (4,907) 15,459
Interest and other income 13,525 -- -- (6,666) 6,859
--------- --------- --------- --------- ---------
Total revenues 747,321 92,203 80,649 (11,573) 908,600
--------- --------- --------- --------- ---------
EXPENSES
Property and maintenance 176,075 28,436 24,358 (7,803) 221,066
Real estate taxes and insurance 69,520 11,424 7,228 -- 88,172
Property management 26,793 -- -- 4,321 31,114
Fee and asset management 3,364 -- -- -- 3,364
Depreciation 156,644 -- -- 42,598 199,242
Interest:
Expense incurred 121,324 -- -- 61,199 182,523
Amortization of deferred
financing costs 2,523 -- -- -- 2,523
General and administrative 15,064 -- -- -- 15,064
--------- --------- --------- --------- ---------
Total expenses 571,307 39,860 31,586 100,315 743,068
--------- --------- --------- --------- ---------
Income before gain on disposition
of properties 176,014 $ 52,343 $ 49,063 $(111,888) 165,532
--------- --------- ---------
--------- --------- ---------
Gain on disposition of properties 13,838 --
--------- ---------
Net Income $ 189,852 $ 165,532
--------- ---------
--------- ---------
ALLOCATION OF NET INCOME:
9 3/8% Series A Cumulative Redeemable
Preference Units $ 14,344 $ 14,344
--------- ---------
--------- ---------
9 1/8% Series B Cumulative Redeemable
Preference Units $ 11,406 $ 11,406
--------- ---------
--------- ---------
9 1/8% Series C Cumulative Redeemable
Preference Units $ 10,494 $ 10,494
--------- ---------
--------- ---------
8.60 % Series D Cumulative Redeemable
Preference Units $ 9,238 $ 9,238
--------- ---------
--------- ---------
Series E Cumulative Convertible
Preference Units $ 4,143 $ 4,143
--------- ---------
--------- ---------
9.65 % Series F Cumulative Redeemable
Preference Units $ 3,284 $ 3,284
--------- ---------
--------- ---------
Series G Convertible Cumulative
Preference Units $ 6,103 $ 6,103
--------- ---------
--------- ---------
General Partner 117,580 93,663
Limited Partners 13,260 12,857
--------- ---------
$ 130,840 $ 106,520
--------- ---------
--------- ---------
Net income per weighted average OP
Unit outstanding $ 1.79 $ 1.28
--------- ---------
--------- ---------
Weighted average OP Units outstanding 73,182 (D) 83,201
--------- ---------
--------- ---------
Net income per weighted average OP
Unit outstanding - assuming
dilution $ 1.76 $ 1.26
--------- ---------
--------- ---------
(A) Reflects the results of operations of the 1998 Previously Acquired Properties and the 1998 Most Recent Acquired Properties
(collectively the "1998 Acquired Properties"). The amounts presented represent the historical amounts for certain
revenues and expenses for the year ended December 31, 1997
(B) Reflects the results of operations of the 1998 Probable Properties. The amounts presented represent the historical amounts
for certain revenues and expenses for the year ended December 31, 1997.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(C) Reflects the following adjustments to the Acquired and Probable
Properties' results of operations as follows:
Interest income - investment in mortgage notes:
Reduction of interest income on investment in mortgage
loans collateralized by five of the Acquired Properties
to the extent amounts are already included in the Operating
Partnership's historical financial results. $ (4,907)
---------
---------
Interest and other income:
Reduction of interest income due to the use of working
capital for property acquisitions. $ (6,666)
---------
---------
Property and maintenance:
The elimination of third-party management fees where
the Operating Partnership is providing onsite property
management services. $ (7,803)
---------
---------
Property management:
Incremental cost associated with self management of the
Acquired and Probable Properties for the year ended
December 31, 1997. $ 4,321
---------
---------
Depreciation:
Reflects depreciation based on the expected total
investment of approximately $1.4 billion for the
Acquired and Probable Properties less amounts allocated
to land, generally 10%, and depreciated over a 30-year
life for real property. $ 42,598
---------
---------
Interest:
Expense incurred:
Interest on mortgage indebtedness for certain of the
Acquired and Probable Properties (E). $ 25,111
Interest on $50 million of mortgage indebtedness for
five of the Acquired Properties. 3,395
Interest and fees on a $243 million draw on the line
of credit at a LIBOR rate of 5.5% plus 45 basis points. 13,373
Interest associated with the issuance of the 2015 Notes. 19,320
---------
$ 61,199
---------
---------
</TABLE>
(D) Pro Forma weighted average OP Units outstanding for the year ended
December 31, 1997 was 83.2 million, which includes 73.2 million weighted
average OP Units outstanding as of December 31, 1997 plus the issuance of
4 million OP Units issued to the Company in connection with the January
1998 Common Share Offering, the issuance of approximately 2 million OP
Units issued to the Company in connection with the February 1998 Common
Share Offerings, the issuance of approximately 0.5 million OP Units issued
to the Company in connection with the March 1998 Common Share Offering,
the issuance of approximately 0.9 million OP Units issued to the Company
in connection with the April 1998 Common Share Offering and
approximately 2.6 million OP Units issued in connection with the
acquisition of properties. The OP Units outstanding does not include
any shares issued in a private or public offering that have not been
used or are not intended to be used for acquisitions or repayment of
debt directly incurred in an acquisition.
(E) Detail of interest expense on mortgage indebtedness for the Acquired and
Probable Properties:
<TABLE>
<CAPTION>
Mortgage Interest Interest
Property Indebtedness Rate Expense
------------------------------------- ------------ -------- --------
<S> <C> <C> <C>
740 River Drive $ 6,967 7.75% $ 540
Alderwood Park 4,379 7.75% 339
Briarwood 12,800 4.00% 512
Briarwood 2nd 1,513 7.73% 117
Broadway 6,298 8.35% 526
Cedar Pointe 10,931 7.00% 765
Cedar Ridge 3,750 8.13% 305
Farnham Park 11,546 8.00% 924
Fielder Crossing 2,218 10.79% 239
Greenhaven 10,966 4.00% 439
Harbor Pointe 12,000 6.56% 787
Lakes at Vinings 22,531 7.00% 1,577
Lakeshore at Preston 13,300 7.60% 1,011
Lakewood Greens 8,480 7.61% 645
Lexington Village 18,750 8.25% 1,547
Martins Landing 12,982 7.00% 909
North Creek 8,347 7.79% 650
Overlook Manor II 5,930 7.00% 415
Park Place (TX) 10,177 7.46% 759
Park West End 7,168 7.79% 558
Pleasant Ridge 1,692 8.29% 140
Portside Towers 58,500 8.00% 4,680
Prospect Towers 14,913 7.74% 1,154
River Park 7,888 7.86% 620
Rolido Parque 7,246 7.96% 577
Sandstone 1,400 7.47% 105
Skylark 11,790 4.00% 472
The Fairfield 35,600 3.65% 1,299
Townhomes of Meadowbrook 10,242 8.54% 875
Villas at Josey Ranch 6,880 7.81% 537
Wimbledon Oaks 7,625 7.80% 595
Woodridge 7,824 6.29% 493
---------- ---------
Totals $ 362,633 $ 25,111
---------- ---------
---------- ---------
</TABLE>
29
<PAGE>
STATEMENTS OF REVENUE
AND CERTAIN EXPENSES
REQUIRED UNDER ITEM 7(a) OF FORM 8-K
30
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying Statement of Revenue and Certain Expenses of
the Coconut Palm Club Apartments (the Property) for the year ended December
31, 1997. The Statement of Revenue and Certain Expenses is the
responsibility of the Property's management. Our responsibility is to
express an opinion on the 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in ERP Operating Limited Partnership's
Current Report on Form 8-K as described in Note 1, and is not intended to be
a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 11, 1998
31
<PAGE>
COCONUT PALM CLUB APARTMENTS
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental Income $ 714 $ 2,812
CERTAIN EXPENSES
Property operating and maintenance 165 779
Real estate taxes and insurance 114 433
Management fees 29 113
-----------------------------
308 1,325
Revenue in excess of certain expenses $ 406 $ 1,487
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
32
<PAGE>
COCONUT PALM CLUB APARTMENTS
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1997 and the three months ended March 31, 1998 (unaudited)
were prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission, for inclusion in the Current Report
on Form 8-K of ERP Operating Limited Partnership (the "Operating
Partnership"). The accompanying financial statements are not representative
of the actual operations of Coconut Palm Club Apartments for the periods
presented as certain expenses, which may not be comparable to the expenses to
be incurred by the Operating Partnership in the proposed future operations of
the Coconut Palm Club Apartments, have been excluded. Expenses excluded
consist of interest, depreciation and amortization, professional fees and
other costs not directly related to the future operations of Coconut Palm
Club Apartments
In the preparation of the statements of revenue and certain expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
Coconut Palm Club Apartments had a management agreement with a management
company unaffiliated with the property owner through the acquisition date.
Management fees were based on 4% of total income. Upon acquisition of Coconut
Palm Club Apartments by the Operating Partnership, such management contract
was canceled at which time the Operating Partnership will begin to manage
Coconut Palm Club Apartments.
33
<PAGE>
COCONUT PALM CLUB APARTMENTS
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES (CONTINUED)
NOTE 2. DESCRIPTION OF PROPERTY
The following is a description of the multifamily property:
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Coconut Palm Club Coconut Creek, FL 6/11/98 300 $20,415,000
Apartments
</TABLE>
Note:
(A) Includes initial purchase price and closing costs.
34
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying Statement of Revenue and Certain Expenses of
the Emerson Place Apartments (the Property) for the year ended December 31,
1997. The Statement of Revenue and Certain Expenses is the responsibility of
the Property's management. Our responsibility is to express an opinion on
the 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 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 basis of accounting 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 was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in ERP Operating Limited Partnership's
Current Report on Form 8-K as described in Note 1, and is not intended to be
a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 1, 1998
35
<PAGE>
EMERSON PLACE APARTMENTS
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental income $ 1,912 $ 7,357
CERTAIN EXPENSES
Property operating and maintenance 602 2,344
Real estate taxes and insurance 177 709
Management fees 107 552
-----------------------------
886 3,605
-----------------------------
Revenue in excess of certain expenses $ 1,026 $ 3,752
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
36
<PAGE>
EMERSON PLACE APARTMENTS
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1997 and the three months ended March 31, 1998 (unaudited)
were prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission, for inclusion in the Current Report
on Form 8-K of ERP Operating Limited Partnership (the "Operating
Partnership"). The accompanying financial statements are not representative
of the actual operations of Emerson Place Apartments for the periods
presented as certain expenses, which may not be comparable to the expenses to
be incurred by the Operating Partnership in the proposed future operations of
the Emerson Place Apartments, have been excluded. Expenses excluded consist
of interest, depreciation and amortization, professional fees and other costs
not directly related to the future operations of the Emerson Place Apartments.
In the preparation of the statements of revenue and certain expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential and commercial leases is recorded
when due from tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
Emerson Place Apartments had an oral management agreement with a management
company affiliated with the property owner through the acquisition date. In
1997, $551,736 of management fees were paid to an affiliate of the property
owner. Upon acquisition of Emerson Place Apartments by the Operating
Partnership, such management contract was canceled at which time the
Operating Partnership began to manage Emerson Place Apartments.
In 1997, rental income includes rents of $218,112 from affiliated entities
for commercial office space and a parking facility. These affiliated entities
lease the office and parking spaces to unrelated third parties.
37
<PAGE>
EMERSON PLACE APARTMENTS
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(CONTINUED)
2. DESCRIPTION OF PROPERTIES
The following is a description of the multifamily property:
<TABLE>
<CAPTION>
TOTAL
DATE NUMBER OF INVESTMENT
PROPERTY NAME LOCATION ACQUIRED UNITS (A)
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Emerson Place Apartments Boston, MA 4/23/98 462 $72,515,000
</TABLE>
NOTES
(A) Includes initial purchase price and closing costs.
38
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying Statement of Revenue and Certain Expenses of
The Fairfield (the Property) for the year ended December 31, 1997. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in ERP Operating Limited Partnership's
Current Report on Form 8-K as described in Note 1, and is not intended to be
a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 4, 1998
39
<PAGE>
THE FAIRFIELD
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
JANUARY 1, 1998 FOR THE
THROUGH MARCH YEAR ENDED
25, 1998 DECEMBER 31,
(UNAUDITED) 1997
-------------------------------
<S> <C> <C>
REVENUE
Rental Income $ 1,181 $ 4,489
CERTAIN EXPENSES
Property operating and maintenance 179 811
Real estate taxes and insurance 129 378
Management fees 37 136
-------------------------------
345 1,325
Revenue in excess of certain expenses $ 836 $ 3,164
-------------------------------
-------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
40
<PAGE>
THE FAIRFIELD
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1997 and the period from January 1, 1998 through March 25,
1998 (unaudited) were prepared for the purpose of complying with the rules
and regulations of the Securities and Exchange Commission, for inclusion in
the Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying financial statements are not
representative of the actual operations of The Fairfield for the periods
presented as certain expenses, which may not be comparable to the expenses to
be incurred by the Operating Partnership in the proposed future operations of
The Fairfield, have been excluded. Expenses excluded consist of interest,
depreciation and amortization, professional fees and other costs not directly
related to the future operations of The Fairfield.
In the preparation of the statements of revenue and certain expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
The Fairfield was managed by an affiliated management company through the
acquisition date. Management fees were based on 3% of total income. The
management fees paid in 1997 to the affiliate of the property owner amounted
to $135,735. Upon acquisition of The Fairfield by the Operating Partnership,
such management contract was canceled at which time the Operating Partnership
began to manage The Fairfield.
NOTE 2. DESCRIPTION OF PROPERTY
The following is a description of the multifamily property:
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Fairfield Stamford, CT 3/26/98 263 $45,550,000
</TABLE>
Note:
(A) Includes initial purchase price and closing costs.
41
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Focus Group Probable Properties (the Probable Properties)
described in Note 2 for the year ended December 31, 1997. The combined
Statement of Revenue and Certain Expenses is the responsibility of the
Probable Properties' management. Our responsibility is to express an opinion
on the combined 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 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 basis of accounting 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 was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in ERP Operating Limited
Partnership's Current Report on Form 8-K as described in Note 1, and is not
intended to be a complete presentation of the Probable Properties' combined
revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 18, 1998
42
<PAGE>
FOCUS GROUP PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-------------------------------
<S> <C> <C>
REVENUE
Rental income $2,646 $9,080
CERTAIN EXPENSES
Property operating and maintenance 723 3,121
Real estate taxes and insurance 263 541
Management fees 114 368
-------------------------------
1,100 4,030
-------------------------------
Revenue in excess of certain expenses $1,546 $5,050
-------------------------------
-------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
43
<PAGE>
FOCUS GROUP PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined statements of revenue and certain expenses for the
year ended December 31, 1997 and the three months ended March 31, 1998
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, for inclusion in the
Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying combined financial statements
consist of three multifamily properties that the Operating Partnership has
acquired and one property that the Operating Partnership has reached an
agreement, in principle, to acquire and is in the final stages of documenting
the acquisition (the "Focus Group Properties"). The closing of the pending
transaction is subject to certain contingencies and conditions; therefore,
there can be no assurance that this transaction will be consummated.
The accompanying combined financial statements are not representative of the
actual operations of the Focus Group Properties for the periods presented as
certain expenses, which may not be comparable to the expenses to be incurred
by the Operating Partnership in the proposed future operations of the Focus
Group Properties, have been excluded. Expenses excluded consist of interest,
depreciation and amortization, professional fees and other costs not directly
related to the future operations of the Focus Group Properties.
In the preparation of the combined statements of revenue and certain expenses
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
The Focus Group Properties were or are expected to be managed by an
affiliated management company through the acquisition date. Management fees
of the properties were based upon 4% of total income. Upon acquisition of the
properties by the Operating Partnership, such management contracts were or
will be canceled at which time the Operating Partnership began or will begin
to manage the properties.
44
<PAGE>
FOCUS GROUP PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(CONTINUED)
2. DESCRIPTION OF PROPERTIES
The following multifamily properties are included in the combined statements
of revenue and certain expenses:
<TABLE>
<CAPTION>
DATE NUMBER OF TOTAL
PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT(B)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Defoor Village (D) Atlanta, GA (A) 6/16/98 156 $13,515,000
Lexington Village Alpharetta, GA (A) (C) 352 24,515,000
Plantation Ridge Marietta, GA (A) 6/16/98 454 23,215,000
Wynbrook Norcross, GA (A) 6/18/98 318 13,515,000
----------------------------------------
1,280 $74,760,000
----------------------------------------
----------------------------------------
</TABLE>
NOTES
(A) The Focus Group Properties have been presented on a combined basis because
all of the properties were or are commonly managed by Focus Management,
Inc.
(B) Includes initial purchase price and closing costs.
(c) The Operating Partnership has made a commitment to acquire this property or
has reached an agreement in principle and is in the final stages of
documenting the acquisition of this property.
(D) Operations for this property began in June 1997 upon substantial completion
of construction.
45
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Frederick Probable Properties (the Probable Properties)
described in Note 2 for the year ended December 31, 1997. The combined
Statement of Revenue and Certain Expenses is the responsibility of the
Probable Properties' management. Our responsibility is to express an opinion
on the 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in ERP Operating Limited
Partnership's Current Report on Form 8-K as described in Note 1, and is not
intended to be a complete presentation of the Probable Properties' combined
revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 29, 1998
46
<PAGE>
FREDERICK PROBABLE PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental Income $975 $3,712
CERTAIN EXPENSES
Property operating and maintenance 234 1,030
Real estate taxes and insurance 112 428
Management fees 44 167
-----------------------------
390 1,625
Revenue in excess of certain expenses $585 $2,087
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
47
<PAGE>
FREDERICK PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined statements of revenue and certain expenses for the
year ended December 31, 1997 and for the three months ended March, 31 1998
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, for inclusion in the
Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying combined financial statements
consist of three multifamily properties for which the Operating Partnership
made a commitment to acquire or has reached an agreement, in principle, to
acquire these properties and the Operating Partnership is in the final stages
of documenting the acquisition of these properties (the "Frederick Probable
Properties" or the "Probable Properties"). The closings of these pending
transactions are subject to certain contingencies and conditions; therefore,
there can be no assurance that these transactions will be consummated.
The accompanying combined financial statements are not representative of the
actual operations of the Frederick Probable Properties for the periods
presented as certain expenses, which may not be comparable to the expenses to
be incurred by the Operating Partnership in the proposed future operations of
the Probable Properties, have been excluded. Expenses excluded consist of
interest, depreciation and amortization, professional fees and other costs
not directly related to the future operations of the Probable Properties.
In the preparation of the combined statements of revenue and certain expenses
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
The Frederick Probable Properties are expected to be managed by an affiliated
management company through the acquisition date. Management fees are based
upon a percentage ranging from 4% to 5% of gross revenues. The management
fees paid in 1997 to the affiliate of the property owner amounted to
$167,362. Upon acquisition of the Probable Properties by the Operating
Partnership, such management contracts will be canceled at which time the
Operating Partnership will begin to manage the properties.
48
<PAGE>
FREDERICK PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(CONTINUED)
NOTE 2. DESCRIPTION OF PROPERTY
The following multifamily properties are included in the combined statements of
revenue and certain expenses:
<TABLE>
<CAPTION>
DATE NUMBER OF TOTAL
PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT (B)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Overlook Manor I & II Frederick, MD (A) (C) 290 $13,403,000
Tillman Place Frederick, MD (A) (C) 64 3,858,000
The Willows Frederick, MD (A) (C) 204 9,649,000
-------------------------------------
558 $26,910,000
-------------------------------------
-------------------------------------
</TABLE>
NOTE:
(A) The Frederick Probable Properties have been presented on a combined
basis because all of the Probable Properties are commonly owned by
Frederick.
(B) Includes initial purchase price and closing costs.
(C) The Operating Partnership has made a commitment to acquire this
property or has reached an agreement in principle and is in the
final stages of documenting the acquisition of this property.
49
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying Statement of Revenue and Certain Expenses of
Harbor Pointe (the Property) for the year ended December 31, 1997. The
Statement of Revenue and Certain Expenses is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in ERP Operating Limited Partnership's
Current Report on Form 8-K as described in Note 1, and is not intended to be
a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 2, 1998
50
<PAGE>
HARBOR POINTE
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental Income $1,117 $ 4,511
CERTAIN EXPENSES
Property operating and maintenance 356 1,541
Real estate taxes and insurance 167 647
Management fees 45 180
-----------------------------
568 2,368
Revenue in excess of certain expenses $ 549 $ 2,143
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
51
<PAGE>
HARBOR POINTE
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1997 and the three months ended March 31, 1998 (unaudited)
were prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission, for inclusion in the Current Report
on Form 8-K of ERP Operating Limited Partnership (the "Operating
Partnership"). The accompanying financial statements are not representative
of the actual operations of Harbor Pointe for the periods presented as
certain expenses, which may not be comparable to the expenses to be incurred
by the Operating Partnership in the proposed future operations of Harbor
Pointe, have been excluded. Expenses excluded consist of interest,
depreciation and amortization, professional fees and other costs not directly
related to the future operations of Harbor Pointe.
In the preparation of the statements of revenue and certain expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
Harbor Pointe was managed by an affiliated management company through the
acquisition date. Management fees were based on 4% of total income. The
management fees paid in 1997 to the affiliate of the property were $180,348.
Upon acquisition of Harbor Pointe by the Operating Partnership, such
management contract was canceled at which time the Operating Partnership
began to manage Harbor Pointe.
NOTE 2. DESCRIPTION OF PROPERTY
The following is a description of the multifamily property purchased by the
Operating Partnership:
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Harbor Pointe Milwaukee, WI 4/1/98 595 $23,965,000
</TABLE>
Note:
(A) Includes initial purchase price and closing costs.
52
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of The Lakes at Vinings Apartments and Martins Landing Apartments
Probable Properties (the Probable Properties) described in Note 2 for the
year ended December 31, 1997. The combined Statement of Revenue and Certain
Expenses is the responsibility of the Probable Properties' management. Our
responsibility is to express an opinion on the combined 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in ERP Operating Limited
Partnership's Current Report on Form 8-K as described in Note 1, and is not
intended to be a complete presentation of the Probable Properties' combined
revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 4, 1998
53
<PAGE>
THE LAKES AT VININGS APARTMENTS AND MARTINS LANDING PROBABLE PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
---------------------------
<S> <C> <C>
REVENUE
Rental income $1,698 $6,529
CERTAIN EXPENSES
Property operating and maintenance 414 1,875
Real estate taxes and insurance 116 503
Management fees 67 257
---------------------------
597 2,635
---------------------------
Revenue in excess of certain expenses $1,101 $3,894
---------------------------
---------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
54
<PAGE>
THE LAKES AT VININGS APARTMENTS AND MARTINS LANDING PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined statements of revenue and certain expenses for the
year ended December 31, 1997 and for the three months ended March, 31 1998
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, for inclusion in the
Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying combined financial statements
consist of two multifamily properties for which the Operating Partnership
made a commitment to acquire or has reached an agreement, in principle, to
acquire and the Operating Partnership is in the final stages of documenting
the acquisition of these properties ("The Lakes at Vinings Apartments and
Martins Landing Apartments Probable Properties" or the "Probable
Properties"). The closing of these pending transactions are subject to
certain contingencies and conditions; therefore, there can be no assurance
that these transactions will be consummated.
The accompanying combined financial statements are not representative of the
actual operations of the Probable Properties for the periods presented as
certain expenses, which may not be comparable to the expenses to be incurred
by the Operating Partnership in the proposed future operations of the
Probable Properties, have been excluded. Expenses excluded consist of
interest, depreciation and amortization, professional fees and other costs
not directly related to the future operations of the Probable Properties.
In the preparation of the combined statements of revenue and certain expenses
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
The Probable Properties are expected to be managed by an affiliated
management company through the acquisition date. Management fees were
based on 4% of gross revenues. In 1997, $257,431 of management fees were
paid to an affiliate of the property owner. Upon acquisition of the Probable
Properties by the Operating Partnership, such management contracts will be
canceled at which time the Operating Partnership will begin to manage the
Probable Properties.
55
<PAGE>
THE LAKES AT VININGS APARTMENTS AND MARTINS LANDING PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS
OF REVENUE AND CERTAIN EXPENSES (CONTINUED)
NOTE 2. DESCRIPTION OF PROPERTIES
The following multifamily properties are included in the combined statements of
revenue and certain expenses:
<TABLE>
<CAPTION>
DATE NUMBER OF TOTAL
PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT (B)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Martins Landing Atlanta, GA (A) (C) 300 $18,093,000
The Lakes at Vinings Atlanta, GA (A) (C) 464 27,931,000
--------------------------------------
764 $46,024,000
--------------------------------------
--------------------------------------
</TABLE>
NOTE:
(A) The Probable Properties have been presented on a combined basis because all
of the Probable Properties are commonly owned.
(B) Includes initial purchase price and closing costs.
(C) The Operating Partnership has made a commitment to acquire this property
or has reached an agreement in principle and is in the final stages of
documenting the acquisition of this property.
56
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Lincoln Property Company Probable Properties (the Probable
Properties) described in Note 2 for the year ended December 31, 1997. The
combined Statement of Revenue and Certain Expenses is the responsibility of
the Probable Properties' management. Our responsibility is to express an
opinion on the combined 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 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 basis of accounting 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 was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in ERP Operating Limited
Partnership's Current Report on Form 8-K as described in Note 1, and is not
intended to be a complete presentation of the Probable Properties' combined
revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 30, 1998
57
<PAGE>
LINCOLN PROPERTY COMPANY PROBABLE PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental income $13,999 $54,255
CERTAIN EXPENSES
Property operating and maintenance 3,300 13,337
Real estate taxes and insurance 1,029 4,327
Management fees 673 2,638
-----------------------------
5,002 20,302
-----------------------------
Revenue in excess of certain expenses $ 8,997 $33,953
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
58
<PAGE>
LINCOLN PROPERTY COMPANY PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined statements of revenue and certain expenses for the
year ended December 31, 1997 and the three months ended March 31, 1998
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, for inclusion in the
Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying combined financial statements
consist of 25 multifamily properties for which the Operating Partnership
made a commitment to acquire or has reached an agreement, in principle, to
acquire these properties and the Operating Partnership is in the final stages
of documenting the acquisition of these properties, (the "Lincoln Probable
Properties" or the "Probable Properties"). The closings of these pending
transactions are subject to certain contingencies and conditions; therefore,
there can be no assurance that these transactions will be consummated.
The accompanying combined financial statements are not representative of the
actual operations of the Lincoln Probable Properties for the periods
presented as certain expenses, which may not be comparable to the expenses to
be incurred by the Operating Partnership in the proposed future operations of
the Lincoln Probable Properties, have been excluded. Expenses excluded
consist of interest, depreciation and amortization, professional fees and
other costs not directly related to the future operations of the Lincoln
Probable Properties.
In the preparation of the combined statements of revenue and certain expenses
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
The Lincoln Probable Properties have been presented on a combined basis
because all of the properties were either commonly owned or managed by
Lincoln Property Company, the seller of the Probable Properties.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
The Lincoln Probable Properties are expected to be managed by an affiliated
management company through the acquisition date. Management fees are based
upon a percentage ranging from 3.75% to 5% of total income. Upon acquisition
of the Probable Properties by the Operating Partnership, such management
contracts will be canceled at which time the Operating Partnership will begin
to manage the properties.
59
<PAGE>
LINCOLN PROPERTY COMPANY PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS
OF REVENUE AND CERTAIN EXPENSES (CONTINUED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Lincoln Residential Services of Colorado, Inc. and Southwest Landscape by
Design perform landscaping services at certain of the Probable Properties.
The Probable Properties paid approximately $210,000 to these affiliated
companies during 1997 for the landscaping services rendered.
Lincoln Check is a related party of the Probable Properties that performs
credit verification services for certain of the Probable Properties. The
Probable Properties paid Lincoln Check approximately $51,200 during 1997 for
credit check services.
The Probable Properties paid the affiliated management company approximately
$4,400 during 1997 for cash management services.
2. DESCRIPTION OF PROPERTIES
The 25 Probable Properties are multifamily properties and contain a total of
5,774 units. The properties range in size from 99 to 584 units. The
Probable Properties are located in California, Colorado, Nevada and
Washington.
The Operating Partnership's total investment for the Probable Properties,
including initial purchase price and closing costs is expected to be
approximately $465,695,000.
60
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of the Magnum Probable Properties (the Probable Properties)
described in Note 2 for the year ended December 31, 1997. The combined
Statement of Revenue and Certain Expenses is the responsibility of the
Probable Properties' management. Our responsibility is to express an opinion
on the Combined 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in ERP Operating Limited
Partnership's Current Report on Form 8-K as described in Note 1, and is not
intended to be a complete presentation of the Probable Properties' combined
revenue and expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
May 1, 1998
61
<PAGE>
MAGNUM PROBABLE PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental Income $3,390 $13,309
CERTAIN EXPENSES
Property operating and maintenance 835 3,586
Real estate taxes and insurance 478 1,867
Management fees 136 537
-----------------------------
1,449 5,990
-----------------------------
Revenue in excess of certain expenses $1,941 $ 7,319
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
62
<PAGE>
MAGNUM PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined statements of revenue and certain expenses for the
year ended December 31, 1997 and for the three months ended March, 31 1998
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, for inclusion in the
Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying combined financial statements
consist of 10 multifamily properties for which the Operating Partnership made
a commitment to acquire or has reached an agreement, in principle, to acquire
these properties and the Operating Partnership is in the final stages of
documenting the acquisition of these properties (the "Magnum Probable
Properties" or the "Probable Properties"). The closings of these pending
transactions are subject to certain contingencies and conditions; therefore,
there can be no assurance that these transactions will be consummated.
The accompanying combined financial statements are not representative of the
actual operations of the Magnum Probable Properties for the periods presented
as certain expenses, which may not be comparable to the expenses to be
incurred by the Operating Partnership in the proposed future operations of
the Magnum Probable Properties, have been excluded. Expenses excluded
consist of interest, depreciation and amortization, professional fees and
other costs not directly related to the future operations of the Magnum
Probable Properties.
In the preparation of the combined statements of revenue and certain expenses
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
The Magnum Probable Properties had a management agreement with a management
company affiliated with the property owner through the acquisition date.
Management fees were based on 4% of gross revenues. In 1997, $536,512 of
management fees were paid to an affiliate of the property owner. Upon
acquisition of the Magnum Probable Properties by the Operating Partnership,
such management contracts will be canceled at which time the Operating
Partnership will begin to manage the properties.
63
<PAGE>
MAGNUM PROBABLE PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(CONTINUED)
NOTE 2. DESCRIPTION OF PROPERTIES
The following multifamily properties are included in the combined statements
of revenue and certain expenses:
<TABLE>
<CAPTION>
DATE NUMBER OF TOTAL
PROPERTY NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT (B)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cedar Ridge Arlington, TX (A) (C) 121 $ 4,815,000
Lakewood Greens Dallas, TX (A) (C) 252 11,015,000
Pleasant Ridge Arlington, TX (A) (C) 63 2,415,000
Sandstone Euless, TX (A) (C) 40 1,815,000
Villas at Josey Ranch Carrollton, TX (A) (C) 198 8,815,000
Wimbledon Oaks Arlington, TX (A) (C) 248 10,315,000
The Broadway Garland, TX (A) (C) 288 9,215,000
Fielder Crossing Arlington, TX (A) (C) 119 4,615,000
River Park Fort Worth, TX (A) (C) 280 11,015,000
Lakeshore at Preston Plano, TX (A) (C) 302 18,505,000
----------------------------------------
1,911 $82,540,000
----------------------------------------
----------------------------------------
</TABLE>
NOTE:
(A) The Magnum Probable Properties have been presented on a combined basis
because all of the properties were either commonly owned and managed by
Magnum, the seller of the Probable Properties.
(B) Includes initial purchase price and closing costs.
(C) The Operating Partnership has made a commitment to acquire this property
or has reached an agreement in principle and is in the final stages of
documenting the acquisition of this property.
64
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying combined Statement of Revenue and Certain
Expenses of TCRS Properties (the Properties) described in Note 2 for the year
ended December 31, 1997. The combined Statement of Revenue and Certain
Expenses is the responsibility of the Properties' management. Our
responsibility is to express an opinion on the combined 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission for inclusion in ERP Operating Limited
Partnership's Current Report on Form 8-K as described in Note 1, and is not
intended to be a complete presentation of the Properties' revenue and
expenses.
In our opinion, the combined Statement of Revenue and Certain Expenses
referred to above presents fairly, in all material respects, the revenue and
certain expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 10, 1998
65
<PAGE>
TCRS PROPERTIES
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental Income $ 3,548 $ 13,867
CERTAIN EXPENSES
Property operating and maintenance 742 2,955
Real estate taxes and insurance 565 2,136
Management fees 160 630
-----------------------------
1,467 5,721
Revenue in excess of certain expenses $ 2,081 $ 8,146
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
66
<PAGE>
TCRS PROPERTIES
NOTES TO COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying combined statements of revenue and certain expenses for the
year ended December 31, 1997 and the three months ended March 31, 1998
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, for inclusion in the
Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying combined financial statements
consist of five multifamily properties which the Operating Partnership has
purchased.
The accompanying combined financial statements are not representative of the
actual operations of the TCRS Properties (the "Properties") for the periods
presented as certain expenses, which may not be comparable to the expenses to
be incurred by the Operating Partnership in the proposed future operations of
the Properties, have been excluded. Expenses excluded consist of interest,
depreciation and amortization, professional fees and other costs not directly
related to the future operations of the TCRS Properties.
In the preparation of the combined statements of revenue and certain expenses
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
The TCRS Properties were managed by two affiliated management companies
through the acquisition date. Management fees were based on 4.5% of total
income. The management fees paid in 1997 to the affiliates of the property
owner amounted to $629,727. Upon acquisition of the Properties by the
Operating Partnership, such management contracts were canceled at which time
the Operating Partnership began to manage the Properties.
TCR Risk Management, an affiliate of the Properties, provided insurance
services to all five of the Properties through the acquisition date. The
Properties paid TCR Risk Management approximately $91,000 during 1997 related
to such services.
67
<PAGE>
TCRS PROPERTIES
NOTES TO COMBINED STATEMENTS
OF REVENUE AND CERTAIN EXPENSES (CONTINUED)
2. DESCRIPTION OF PROPERTIES
The following multifamily properties are included in the combined statements
of revenue and certain expenses:
<TABLE>
<CAPTION>
PROPERTY DATE NUMBER OF TOTAL
NAME LOCATION SELLER ACQUIRED UNITS INVESTMENT (B)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gates at Carlson Minnetonka, MN (A) 4/1/98 435 $27,640,000
GlenGarry Club Bloomington, IL (A) 4/1/98 250 18,448,000
Woodlands Brookfield, WI (A) 4/1/98 148 15,034,000
Ravinia Greenfield, WI (A) 4/1/98 206 12,840,000
Plumtree I, II, and III Hales Corners, WI (A) 4/1/98 332 21,813,000
-------------------------------------
1,371 $95,775,000
-------------------------------------
-------------------------------------
</TABLE>
Notes
(A) The TCRS Properties have been presented on a combined basis
because all of the Properties are commonly owned and managed.
(B) Includes initial purchase price and closing costs.
68
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying Statement of Revenue and Certain Expenses of
the Northridge Apartments (the Property) for the year ended December 31,
1997. The Statement of Revenue and Certain Expenses is the responsibility of
the Property's management. Our responsibility is to express an opinion on
the 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in ERP Operating Limited Partnership's
Current Report on Form 8-K as described in Note 1, and is not intended to be
a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 9, 1998
69
<PAGE>
NORTHRIDGE APARTMENTS
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE
MONTHS ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
-----------------------------
<S> <C> <C>
REVENUE
Rental Income $ 641 $ 2,359
CERTAIN EXPENSES
Property operating and maintenance 154 658
Real estate taxes and insurance 51 211
Management fees 23 83
-----------------------------
228 952
Revenue in excess of certain expenses $ 413 $ 1,407
-----------------------------
-----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
70
<PAGE>
NORTHRIDGE APARTMENTS
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1997 and the three months ended March 31, 1998 (unaudited)
were prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission, for inclusion in the Current Report
on Form 8-K of ERP Operating Limited Partnership (the "Operating
Partnership"). The accompanying financial statements are not representative
of the actual operations of Northridge Apartments for the periods presented
as certain expenses, which may not be comparable to the expenses to be
incurred by the Operating Partnership in the proposed future operations of
Northridge Apartments, have been excluded. Expenses excluded consist of
interest, depreciation and amortization, professional fees and other costs
not directly related to the future operations of Northridge Apartments.
In the preparation of the statements of revenue and certain expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
Northridge Apartments had a management agreement with a management company
affiliated with the property owner through the acquisition date. Management
fees were based on 3.5% of total income. In 1997, $82,882 of management fees
were paid to an affiliate of the property owner. Upon acquisition of
Northridge Apartments by the Operating Partnership, such management contract
was canceled at which time the Operating Partnership began to manage
Northridge Apartments.
NOTE 2. DESCRIPTION OF PROPERTY
The following is a description of the multifamily property:
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A)
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Northridge Apartments Pleasant Hill, CA 5/14/98 221 $20,015,000
</TABLE>
Note:
(A) Includes initial purchase price and closing costs.
71
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying Statement of Revenue and Certain Expenses of
the Portside Towers Apartments (the Property) for the year ended December 31,
1997. The Statement of Revenue and Certain Expenses is the responsibility of
the Property's management. Our responsibility is to express an opinion on
the 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in ERP Operating Limited Partnership's
Current Report on Form 8-K as described in Note 1, and is not intended to be
a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
June 11, 1998
72
<PAGE>
PORTSIDE TOWERS APARTMENTS
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS FOR THE
ENDED YEAR ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
------------------------------
<S> <C> <C>
REVENUE
Rental Income $3,039 $7,228
CERTAIN EXPENSES
Property operating and maintenance 415 1,345
Real estate taxes and insurance 477 1,150
Management fees 94 300
------------------------------
986 2,795
Revenue in excess of certain expenses $2,053 $4,433
------------------------------
------------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
73
<PAGE>
PORTSIDE TOWERS APARTMENTS
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1997 and the three months ended March 31, 1998 (unaudited)
were prepared for the purpose of complying with the rules and regulations of
the Securities and Exchange Commission, for inclusion in the Current Report
on Form 8-K of ERP Operating Limited Partnership (the "Operating
Partnership"). The accompanying financial statements are not representative
of the actual operations of Portside Towers Apartments for the periods
presented as certain expenses, which may not be comparable to the expenses to
be incurred by the Operating Partnership in the proposed future operations of
Portside Towers Apartments, have been excluded. Expenses excluded consist of
interest, depreciation and amortization, professional fees and other costs
not directly related to the future operations of the Portside Towers
Apartments.
In the preparation of the statements of revenue and certain expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential and commercial leases is recorded
when due from tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
Portside Towers Apartments had a management agreement with a management
company affiliated with the property owner through the acquisition date.
Management fees were based on 4% of total income. Upon acquisition of
Portside Towers Apartments by the Operating Partnership, such management
contract was canceled at which time the Operating Partnership began to manage
Portside Towers Apartments.
The Property had a security agreement with an affiliated company. Security
services incurred during 1997 were $86,714.
74
<PAGE>
PORTSIDE TOWERS APARTMENTS
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES (CONTINUED)
NOTE 2. DESCRIPTION OF PROPERTY
The following is a description of the multifamily property:
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS (B) TOTAL INVESTMENT (A)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Portside Towers Jersey City, NJ 6/11/98 527 $119,095,000
</TABLE>
Note:
(A) Includes initial purchase price and closing costs.
(B) In addition to the residential units, the property includes ground floor
commercial space.
75
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Partners of
ERP Operating Limited Partnership
We have audited the accompanying Statement of Revenue and Certain Expenses of
Sonterra at Foothill Ranch (the Property) for the year ended December 31,
1997. The Statement of Revenue and Certain Expenses is the responsibility of
the Property's management. Our responsibility is to express an opinion on
the 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
made in the Statement of Revenue and Certain Expenses. An audit also
includes assessing the basis of accounting 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 was prepared for
the purpose of complying with the rules and regulations of the Securities and
Exchange Commission for inclusion in ERP Operating Limited Partnership's
Current Report on Form 8-K as described in Note 1, and is not intended to be
a complete presentation of the Property's revenue and expenses.
In our opinion, the Statement of Revenue and Certain Expenses referred to
above presents fairly, in all material respects, the revenue and certain
expenses described in Note 1 for the year ended December 31, 1997, in
conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Chicago, Illinois
April 30, 1998
76
<PAGE>
SONTERRA AT FOOTHILL RANCH
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE YEAR
MONTHS ENDED ENDED
MARCH 31, 1998 DECEMBER 31,
(UNAUDITED) 1997
----------------------------
<S> <C> <C>
REVENUE
Rental Income $ 840 $ 2,287
CERTAIN EXPENSES
Property operating and maintenance 154 532
Real estate taxes and insurance 148 286
Management fees 34 132
----------------------------
336 950
Revenue in excess of certain expenses $ 504 $ 1,337
----------------------------
----------------------------
</TABLE>
SEE ACCOMPANYING NOTES.
77
<PAGE>
SONTERRA AT FOOTHILL RANCH
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying statements of revenue and certain expenses for the year
ended December 31, 1997 and for the three months ended March, 31 1998
(unaudited) were prepared for the purpose of complying with the rules and
regulations of the Securities and Exchange Commission, for inclusion in the
Current Report on Form 8-K of ERP Operating Limited Partnership (the
"Operating Partnership"). The accompanying financial statements are not
representative of the actual operations of Sonterra at Foothill Ranch for the
periods presented as certain expenses, which may not be comparable to the
expenses to be incurred by the Operating Partnership in the proposed future
operations of Sonterra at Foothill Ranch, have been excluded. Expenses
excluded consist of interest, depreciation and amortization, professional
fees and other costs not directly related to the future operations of
Sonterra at Foothill Ranch.
In the preparation of the statements of revenue and certain expenses in
conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from these
estimates.
Rental income attributable to residential leases is recorded when due from
tenants, generally on a straight line basis.
In the opinion of management, the interim financial statement of revenue and
certain expenses for the quarter ended March 31, 1998, reflects all
adjustments necessary for a fair presentation of the results of the interim
period. All such adjustments are of a normal, recurring nature.
Sonterra at Foothill Ranch had a management agreement with a management
company affiliated with the property owner through the acquisition date to
maintain and manage the operations of the apartment complex. Management fees
were based on 4% of gross revenues. Of the management fees paid in 1997,
$132,397 were paid to an affiliate of the property owner. Upon acquisition
of Sonterra at Foothill Ranch by the Operating Partnership, such management
contract was canceled at which time the Operating Partnership began to manage
Sonterra at Foothill Ranch.
NOTE 2. DESCRIPTION OF PROPERTY
The following is a description of the residential rental property:
<TABLE>
<CAPTION>
PROPERTY NAME LOCATION DATE ACQUIRED NUMBER OF UNITS TOTAL INVESTMENT (A)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sonterra at Foothill Ranch (B) Foothill Ranch, CA 4/1/98 300 $ 31,515,000
</TABLE>
Note:
(A) Includes initial purchase price and closing costs.
(B) Operations for this property began in January 1997 and the property was
substantially completed in May 1997.
78
<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.
ERP OPERATING LIMITED PARTNERSHIP
BY: EQUITY RESIDENTIAL PROPERTIES TRUST,
ITS GENERAL PARTNER
July 9, 1998 By: /s/ Michael J. McHugh
- -------------- -----------------------------------
(Date) Michael J. McHugh
Executive Vice President, Chief Accounting Officer
and Treasurer
79
<PAGE>
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-3 No. 333-45557) of ERP Operating Limited Partnership and in the related
Prospectus of our reports indicated below with respect to the financial
statements indicated below included in this Current Report of ERP Operating
Limited Partnership on Form 8-K.
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS DATE OF AUDITORS' REPORT
- --------------------------------------------------------------------------------
<S> <C>
Statement of Revenue and Certain Expenses of April 30, 1998
Sonterra at Foothill Ranch for the year
ended December 31, 1997
Combined Statement of Revenue and Certain April 30, 1998
Expenses of the Lincoln Property Company
Probable Properties for the year ended
December 31, 1997
Statement of Revenue and Certain Expenses of May 1, 1998
The Emerson Place Apartments for the year
ended December 31, 1997
Combined Statement of Revenue and Certain May 1, 1998
Expenses of The Magnum Probable Properties
for the year ended December 31, 1997
Combined Statement of Revenue and Certain May 29, 1998
Expenses of the Frederick Probable Properties
for the year ended December 31, 1997
Statement of Revenue and Certain Expenses of June 2, 1998
Harbor Pointe for the year ended December 31,
1997
Statement of Revenue and Certain Expenses of June 4, 1998
The Fairfield for the year ended December 31,
1997
Combined Statement of Revenue and Certain June 4, 1998
Expenses of the Lakes at Vinings Apartments
and Martins Landing Apartments Probable
Properties for the year ended December 31, 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS DATE OF AUDITORS' REPORT
- --------------------------------------------------------------------------------
<S> <C>
Statement of Revenue and Certain Expenses of June 9, 1998
the Northridge Apartments for the year ended
December 31, 1997
Combined Statement of Revenue and Certain June 10, 1998
Expenses of TCRS Properties for the year
ended December 31, 1997
Statement of Revenue and Certain Expenses of June 11, 1998
the Portside Towers Apartments for the year
ended December 31, 1997
Statement of Revenue and Certain Expenses of June 11, 1998
The Coconut Palm Club Apartments for the year
ended December 31, 1997
Combined Statement of Revenue and Certain June 18, 1998
Expenses of The Focus Group Properties for
the year ended December 31, 1997
</TABLE>
ERNST & YOUNG LLP
Chicago, Illinois
July 9, 1998
<PAGE>
EXHIBIT 6.2(c)
Omnibus Contribution Agreement
GENERAL PARTNER RECOURSE LIABILITY RISK SHARING AGREEMENT
This General Partner Recourse Liability Risk Sharing Agreement (the
"Agreement") is made as of _____________, 1998 by the undersigned (the
"Indemnitors") to Equity Residential Properties Trust, a Maryland real estate
investment trust (the "General Partner") and the general partner of ERP
Operating Limited Partnership, an Illinois limited partnership (the
"Partnership").
RECITALS
The Indemnitors are proposing to become limited partners of the
Partnership (each a "Limited Partner" and together with the other
Indemnitors, the "Limited Partners"). Prior to the admission of the
Indemnitors as Limited Partners of the Partnership, the Partnership has
incurred certain indebtedness in order to finance the Partnership's business
and expects in the future to refinance such indebtedness and to incur
additional indebtedness. The General Partner may, under certain
circumstances, be liable to the holders of such indebtedness to repay the
amounts due thereunder in the event that the Partnership is unable to satisfy
such indebtedness. Because the indebtedness that has been incurred or may in
the future be incurred by the Partnership benefits the partners of the
Partnership, including the Indemnitors, the General Partner is requiring
that, as a condition to the admission of the Indemnitors as Limited Partners
of the Partnership, the Indemnitors execute and deliver this Agreement which,
subject to the terms and conditions set forth herein, will obligate the
Indemnitors to indemnify the General Partner against losses incurred in
satisfying certain indebtedness of the Partnership.
In consideration of the foregoing, and in order to induce the
General Partner to admit the Indemnitors as Limited Partners of the
Partnership, the Indemnitors agree with the General Partner as follows:
Section 1. DEFINITIONS. As used in this Agreement, the following
terms have the meanings set forth below:
"CONTRIBUTION OBLIGATION" means an amount that the General Partner
is obligated to pay to the Partnership or to any other person to whom any
Recourse Liabilities are owed in order to discharge or satisfy such Recourse
Liabilities under circumstances where the Partnership is unable to do so
after exhaustion of all remedies against the Partnership.
"DEBT SERVICE" means for any period the sum of interest expense
and regularly scheduled principal amortization for the most recently
available trailing twelve month period.
"EBITDA" means, for any period, the earnings of the Partnership for
such period from continuing operations, minus associated costs generally
excluding interest expense, income taxes, unallocated depreciation and
amortization), for the most recently available trailing twelve
<PAGE>
month period.
"INDEMNITOR MAXIMUM INDEMNIFICATION AMOUNT" means the amount shown
for each Indemnitor on Exhibit A hereto. Exhibit A shall not be amended to
add additional Indemnitors other than as specified pursuant to this
Agreement. Upon the liquidation of any entity Indemnitor listed on Exhibit
A, the Indemnitor Maximum Indemnification Amount of the Indemnitors who have
assumed such entity's Indemnitor Maximum Indemnification Amount shall,
pursuant to Exhibit A, be correspondingly increased, the Indemnitor Maximum
Indemnification Amount of the entity shall be eliminated, and Exhibit A shall
be appropriately amended.
"LIMITED PARTNER MAXIMUM INDEMNIFICATION AMOUNT" means the
aggregate maximum amount as of the date in question that the Limited Partners
listed as Indemnitors on Exhibit A, are obligated to indemnify the General
Partner for payments that the General Partner is obligated to pay in order to
discharge or satisfy Recourse Liabilities of the Partnership under
circumstances where the Partnership is unable to do so after exhaustion of
all remedies against the Partnership.
"MARKET VALUE OF TOTAL EQUITY" means the total value of all
outstanding OP Units, with each OP Unit valued at the current market value of
a Common Share.
"NONRECOURSE LIABILITY" means a liability as defined in Treasury
Regulation Section 1.704-2(b)(3).
"PARTNER NONRECOURSE LIABILITY" means a liability as defined in
Treasury Regulation Section 1.704-2(b)(4).
"PARTNERSHIP AGREEMENT" means the Fourth Amended and Restated ERP
Operating Limited Partnership Agreement of Limited Partnership dated as of
September 30, 1995, as further amended and/or restated from time to time
after the date hereof.
"PROPORTIONATE SHARE" means with respect to each Indemnitor a
percentage determined by dividing the Indemnitor Maximum Indemnification
Amount by the Limited Partner Maximum Indemnification Amount.
"RECOURSE LIABILITIES" means the amount of indebtedness owed by the
Partnership other than Nonrecourse Liabilities and Partner Nonrecourse
Liabilities.
"THRESHOLD AMOUNT" means an amount equal to all Recourse
Liabilities of the Partnership outstanding immediately prior to a
Contribution Obligation reduced by the Limited Partner Maximum
Indemnification Amount set forth on Exhibit A hereto.
"TOTAL LIABILITIES" means, as of the date of determination, all
liabilities of the Partnership.
2
<PAGE>
Section 2. INDEMNIFICATION.
(a) Each Indemnitor shall indemnify the General Partner and its
successor or assigns for the Indemnitor's Proportionate Share of any
Contribution Obligation of the General Partner in excess of the Threshold
Amount. The indemnification obligation of each Indemnitor under this
Agreement shall be several and not joint and shall be payable by such
Indemnitor upon receipt of written notice from the General Partner of the
Contribution Obligation of the General Partner giving rise to the
Indemnitor's indemnification obligation hereunder. In the event that an
entity Indemnitor listed on Exhibit A fails to satisfy its Proportionate
Share of any Contribution Obligation after a demand for payment by the
General Partner, or is liquidated or dissolved prior to such demand for
payment, such entity's Indemnitor Maximum Indemnification Amount is hereby
assumed by the specified Indemnitors in the amounts and as set forth in
Section 2 of Exhibit A hereto. Upon the liquidation of any entity Indemnitor
listed on Exhibit A, the Indemnitor Maximum Indemnification Amount of the
Indemnitors who have assumed such entity's Indemnitor Maximum Indemnification
Amount shall be correspondingly increased, the Indemnitor Maximum
Indemnification Amount of the entity shall be eliminated, and Exhibit A shall
be appropriately amended.
(b) Each Indemnitor agrees that the indemnity referred to in
Section 2 (a) above shall be satisfied strictly in accordance with the terms
of this Agreement regardless of any law, regulation, or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of the General Partner.
(c) The Indemnitors hereby authorize the General Partner to notify
recourse creditors of the existence of this Agreement, and the Indemnitors
and the General Partner jointly agree that this Agreement shall within 15
days of execution, be filed as an Exhibit to a periodic or quarterly report
filed by the General Partner and/or the Partnership under the Securities and
Exchange Act of 1934, as amended.
Section 3. REPRESENTATIONS AND WARRANTIES. Each Indemnitor
represents and warrants to the General Partner as follows:
(a) This Agreement constitutes an actual and binding obligation of
each Indemnitor enforceable against each Indemnitor in accordance with its
terms, except as such enforceability may be qualified by equitable principles
or by bankruptcy, insolvency and similar laws.
(b) No authorization or approval or other action by, and no notice
to, or filing with, any governmental authority is required for due execution,
delivery, and performance by any Indemnitor of this Agreement.
Section 4. MISCELLANEOUS.
(a) No amendment of this Agreement shall be effective unless the
same shall be in writing and signed by the parties hereto and any waiver or
consent shall be effective only in
3
<PAGE>
the specific instance and for the specific purpose for which it is given.
(b) No failure on the part of the parties hereto to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
(d) Each Indemnitor hereby waives, irrevocably and
unconditionally, all rights of contribution, if any, and any other right of
indemnity, subrogation or any other right it may have to claim or recover in
any legal action or proceeding any amount, if any, against the Partnership,
all partners of the Partnership, or any other party against whom such
Indemnitor may have any such rights.
(e) This Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of Illinois.
(f) Subject to Section 2(a) hereof, with respect to the assumption
by an individual Indemnitor of the Indemnitor Maximum Indemnification Amount
of an entity Indemnitor as listed in Exhibit A, the obligations of an
Indemnitor hereunder shall terminate upon the earlier of (i) the Indemnitor
agreeing to become an Obligated Partner with a Restoration Amount equal to
its Indemnitor Maximum Indemnification Amount pursuant to an execution by the
General Partner and such Indemnitor of the proposed amendment to the Fourth
Amended and Restated ERP Operating Limited Partnership Agreement of Limited
Partnership attached hereto as Exhibit B, (ii) the death or dissolution of
such Indemnitor, or (iii) the date 6 months after the Indemnitor ceases to be
a Limited Partner of the Partnership, unless at such time, or during the 6
month period following such time, there has been:
i. An entry of a decree or order for relief in respect of
the Partnership by a court having jurisdiction over a
substantial part of the Partnership's assets, or the
appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar
official) of the Partnership or of any substantial part
of its property, or ordering the winding up or
liquidation of the Partnership's affairs, in an
involuntary case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar
law; or
ii. The commencement against the Partnership of an
involuntary case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable
federal or state bankruptcy, insolvency or other similar
law; or
iii. The commencement by the Partnership of a voluntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any
4
<PAGE>
other applicable federal or state bankruptcy, insolvency
or other similar law, or the consent by it to the entry
of an order for relief in an involuntary case under any
such law or the consent by it to the appointment of or
taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar
official) of the Partnership or of any substantial part
of its property, or the making by it of a general
assignment for the benefit of creditors, or the failure
of the Partnership generally to pay its debts as such
debts become due or the taking of any action in
furtherance of any of the foregoing; or
iv. A failure by the Partnership to maintain a ratio of Total
Liabilities to Market Value of Total Equity of less than
400%; or
v. A failure by the Partnership to maintain a ratio of
EBITDA to Debt Service of greater than 110%.
; PROVIDED, THAT, after the passage of such six (6) months, the obligations
of such Indemnitor shall terminate at the first time, if any, that all of the
conditions set forth (i) through (v) above are no longer in existence.
The Indemnitors have caused this Agreement to be duly executed as
of the date first above written.
Equity Residential Properties Trust INDEMNITORS:
------------------------------------ ----------------------------
by: Douglas Crocker II Preston Butcher
President, Chief Executive Officer
and Trustee
----------------------------
W. Dean Henry
------------------------------------
by: Bruce C. Strohm
Executive Vice President, General Counsel
and Secretary
----------------------------
Denny McLarry
------------------------------------
by: Michael J. McHugh
Executive Vice President, Chief Accounting
Officer and Treasurer
----------------------------
Edward O'Brien
5
<PAGE>
----------------------------
Jim Woodson
----------------------------
M. Zoellner
----------------------------
Blake Pogue
----------------------------
Brent Pogue
----------------------------
Blair Pogue
----------------------------
John Igoe
----------------------------
Richard Fore
----------------------------
Esther Dunton
----------------------------
Stuart L. Leeder
----------------------------
Gary J. Rossi
----------------------------
Jane Hiber
----------------------------
Roy L. Titchworth
6
<PAGE>
----------------------------
Edward T. Hewitt
----------------------------
Richard H. Semple Jr.
----------------------------
Guy Hays
----------------------------
Jeffrey Byrd
Mack Pogue, Inc.
by:
----------------------------
[Mack Pogue, President]
LPC# 232, a California Limited Partnership
by:
----------------------------
Preston Butcher, General Partner
LPC# 265, a California Limited Partnership
by:
----------------------------
Gary J. Rossi, General Partner
7
<PAGE>
LPC# 1213, a California Limited Partnership
by:
----------------------------
Stuart L. Leeder, General Partner
LPC# 619, a California Limited Partnership
by:
----------------------------
Gary J. Rossi, General Partner
LPC# 234, a California Limited Partnership
by:
----------------------------
Preston Butcher, General Partner
LPC# 276, a California Limited Partnership
by:
----------------------------
Stuart L. Leeder, General Partner
LPC# 292, a California Limited Partnership
by:
----------------------------
Stuart L. Leeder, General Partner
LPC# 2232, a California Limited Partnership
by:
----------------------------
Preston Butcher, General Partner
LPC# 2236, a California Limited Partnership
by:
----------------------------
Preston Butcher, General Partner
LPC# 2252, a California Limited Partnership
by:
----------------------------
Gary J. Rossi, General Partner
8
<PAGE>
LPC# 1389, a California Limited Partnership
by:
----------------------------
Gary J. Rossi, General Partner
9
