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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
AMENDMENT NO. 1 TO THE CURRENT REPORT ON FORM 8-K
REPORTING THE ACQUISITION OF THE
UMB COMMERCIAL OFFICE BUILDING ON DECEMBER 1, 1998
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Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 1, 1998
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TOWER PROPERTIES COMPANY
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(Exact name of Registrant as specified in its charter)
MISSOURI
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(State or other jurisdiction of incorporation)
0-18261 43-1529759
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(Commission File Number) (IRS Employer Identification Number)
911 Main Street, Suite 100, Commerce Tower, Kansas City, Missouri 64105
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(Address of principal executive offices) (zip code)
(816) 421-8255
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(Registrant's telephone number, including area code)
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Item 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements, pro forma financial information,
and exhibits are filed as a part of this report:
(a) Financial Statements
--------------------
Report of Independent Public Accountants
Statement of Revenues and Certain Expenses (as defined - Note 2) for
the year ended December 31, 1997
Notes to the Statement of Revenues and Certain Expenses (as
defined - Note 2)
(b) Pro Forma Financial Information
-------------------------------
Pro Forma Estimate of Funds Generated by Operations for the 12-Month
Period Ended November 30, 1998
Pro Forma Estimate of Federal Tax Income for the 12-Month Period Ended
November 30, 1998
Notes to Pro Forma Estimate of Funds Generated by Operations and Pro
Forma Estimate of Federal Tax Income for the 12-Month Period Ended
November 30, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the Amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
TOWER PROPERTIES COMPANY
Date: February 11, 1999 By: /s/ Robert C. Harvey, III
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Robert C. Harvey, III
CFO & Vice President
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TOWER PROPERTIES COMPANY
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
Tower Properties Company:
We have audited the accompanying statement of revenue and certain expenses
(as defined -- Note 2) of UMB Building (the Property), for the year ended
December 31, 1997. This statement is the responsibility of the management of
Tower Properties Company (the Property's Acquirer). Our responsibility is to
express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statement is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
The 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 Form 8-K of Tower Properties Company) as
described in Note 2 and is not intended to be a complete presentation of the
Property's revenues and expenses.
In our opinion, the statement referred to above presents fairly, in all
material respects, the revenue and certain operating expenses described in
Note 2 of the Property for the year ended December 31, 1997, in conformity
with generally accepted accounting principles.
Kansas City, Missouri,
February 12, 1999
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TOWER PROPERTIES COMPANY
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UMB BUILDING
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STATEMENT OF REVENUE AND CERTAIN EXPENSES (AS DEFINED -- NOTE 2)
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FOR THE YEAR ENDED DECEMBER 31, 1997
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<TABLE>
<S> <C>
REVENUE-
Rent $548,688
Other 51,111
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Total revenue 599,799
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OPERATING EXPENSES:
Salaries and employee benefits 6,471
Management fees 17,704
Maintenance and repairs 74,022
Real estate taxes 140,592
Utilities 64,394
Other 50,539
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Total operating expenses 353,722
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Operating income (as defined - Note 2) $246,077
========
The accompanying notes are an integral part of this financial statement.
</TABLE>
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STATEMENTS OF REVENUES AND CERTAIN EXPENSES
TOWER PROPERTIES COMPANY
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UMB BUILDING
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NOTES TO THE STATEMENT OF REVENUE AND
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CERTAIN EXPENSES (AS DEFINED -- NOTE 2)
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1. UMB BUILDING:
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The UMB Building (the Property) is a six-story, 59,982 square-foot commercial
office building located in Clayton, Missouri. The Property was purchased by
Tower Properties Company (TPC) for $9,400,000 on December 1, 1998, from
Blackwood Properties Corporation. TPC is a commercial real estate company
who will operate the property.
2. BASIS OF PRESENTATION:
----------------------
The statement of revenue and certain expenses excludes items not comparable
to the projected future operations of the Property. Excluded expenses
include mortgage interest, depreciation, amortization and federal, state and
local income taxes.
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TOWER PROPERTIES COMPANY
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PRO FORMA ESTIMATE OF FUNDS GENERATED BY OPERATIONS
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FOR THE TWELVE-MONTH PERIOD ENDED NOVEMBER 30, 1998
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(Unaudited)
The following unaudited pro forma estimate presents the funds generated by
the operations of TPC as if TPC had acquired the Property as of December 1,
1997. This estimate does not purport to represent operations of TPC or the
Property nor does it purport to represent actual or expected operating
results of TPC or the Property for any period in the future. This estimate
was prepared on the basis described in the accompanying notes, which should
be read in conjunction herewith:
<TABLE>
<CAPTION>
12 Months Ended
November 30, 1998
-----------------
<S> <C>
Property- Estimate of federal taxable income $ 383,000
Add estimated depreciation and amortization
(federal tax basis) (Note 3) 132,000
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Property- Pro forma property funds generated by 515,000
operations
TPC- Funds generated by operations 10,800,000
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Estimate of combined pro forma funds generated
by operations $11,315,000
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The accompanying notes are an integral part of this pro forma estimate.
</TABLE>
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TOWER PROPERTIES COMPANY
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PRO FORMA ESTIMATE OF FEDERAL TAX INCOME
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FOR THE TWELVE-MONTH PERIOD ENDED NOVEMBER 30, 1998
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(Unaudited)
The following unaudited pro forma estimate presents the federal taxable
income of TPC as if TPC had acquired the Property as of December 1, 1997.
This estimate does not purport to represent operations of TPC or the Property
nor does it purport to represent actual or expected operating results of TPC
or the Property for any period in the future. This estimate was prepared on
the basis described in the accompanying notes, which should be read in
conjunction herewith:
<TABLE>
<CAPTION>
12 Months Ended
November 30, 1998
-----------------
<S> <C>
Property estimated federal taxable income-
Operating income (Note 2) $ 993,000
Pro forma adjustments-
Estimated depreciation and amortization
(federal tax basis) (Note 3) (132,000)
Estimated interest cost (Note 4) (478,000)
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Property- Pro forma property federal taxable income 383,000
TPC- Federal taxable income 859,000
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Combined pro forma estimate of federal taxable income $1,242,000
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The accompanying notes are an integral part of this pro forma estimate.
</TABLE>
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TOWER PROPERTIES COMPANY
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NOTES TO PRO FORMA ESTIMATE OF FUNDS GENERATED BY OPERATIONS
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AND PRO FORMA ESTIMATE OF FEDERAL TAX INCOME
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FOR THE TWELVE-MONTH PERIOD ENDED NOVEMBER 30, 1998
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1. UMB BUILDING:
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Tower Properties Company (TPC) acquired the UMB Building (the Property) for
$9,400,000 on December 1, 1998. The Property consists of 59,982 rentable
square feet.
2. OPERATING INCOME (AS DEFINED):
------------------------------
Operating income is based on the provisions of signed lease agreements with
the current tenants.
3. ESTIMATED DEPRECIATION:
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TPC is in the process of obtaining an appraisal for the purpose of allocating
the specific components of cost. The current components of cost represent
estimates made by TPC's management and are not expected to be materially
different from the appraised values. Depreciation has been calculated
primarily using the modified accelerated cost recovery system (MACRS). The
components of cost, together with their depreciable lives, are as follows:
<TABLE>
<CAPTION>
Depreciable
Lives
Cost (Years)
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<S> <C> <C>
Land $1,111,000 -
Building 8,289,000 39
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$9,400,000
==========
</TABLE>
4. DEBT SERVICE:
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TPC financed the property acquisition by utilizing the Registrant's
$20,500,000 line of credit from Commerce Bank of Kansas City, N.A., and
approximately $4,000,000 of tax-free exchange proceeds from recently
completed land sales. The loan bears interest at a rate equal to the bid
Federal Funds Rate plus 1 percent, as adjusted from time-to-time, and is
secured by a mortgage on the Commerce Tower and shares of Commerce Bank stock
which are owned by the Registrant. The Registrant is negotiating nonrecourse
long-term financing of 75 percent of the purchase price with various lenders.
At this time the Registrant is expecting the financing to carry a rate of
approximately 7 percent.
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TOWER PROPERTIES COMPANY
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF UMB BUILDING
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On December 1, 1998, TPC acquired the Property for $9,400,000. The Property
has 59,982 rentable square feet. The transaction was accounted for as a
purchase of assets, with the following allocation of acquisition costs based
on TPC management's estimates of those costs. An independent appraisal is to
be obtained.
<TABLE>
<CAPTION>
<S> <C>
Land $1,111,000
Building 8,289,000
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$9,400,000
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</TABLE>
Revenues
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Rental rates for the UMB Building are comparable with rates in the
surrounding market. As of the date of purchase, the building was 100 percent
occupied by four tenants with lease expiration dates at the earliest of 2002.
Renewal options exist on two of four tenants to extend terms of lease beyond
2002.
Expenses
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The more significant operating expenses of the Property are utilities,
repairs and maintenance, and real estate taxes.
TPC management is unaware of any significant deferred expenses and management
anticipates no significant capital improvements. Based on the results of an
independent environmental assessment of the Property, TPC management is
unaware of any environmental condition that requires remediation.
Materiality
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TPC management is not aware of any material factors relating to the Property
that would cause the reported financial information not to be necessarily
indicative of future results.
