UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 25, 2002
AmeriVest Properties Inc.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Maryland 1-14462 84-1240264
------------------------------ ------------------- -----------------
(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
1780 South Bellaire Street Suite 515, Denver, Colorado 80222
--------------------------------------
(Address of principal executive offices)
(303) 297-1800
-----------------------------
(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets
Purchase of Dallas Office Building. On November 25, 2002, we completed the
acquisition of the Chateau Plaza office building (the "Property"). The Property
is located in Dallas, Texas, contains approximately 171,000 rentable square feet
and is located on approximately one acre of land. The aggregate purchase price
for the Property was $22,000,000, which was paid with $15,400,000 from the
proceeds of a loan from Fleet National Bank (the "Fleet Loan") and the balance
paid in cash from a portion of the proceeds of our May 2002 public offering.
The Property was purchased from WXI/CHA Real Estate L.P. (the "Seller"), an
unrelated party. The purchase price of the Property was determined through
negotiations between the Seller and us.
The Fleet Loan represents the second draw on a $30,000,000 revolving credit
facility from Fleet National Bank. The original draw was used to purchase the
Centerra office building located in Denver, Colorado and the facility is cross
collateralized by mortgages on both properties. The Fleet Loan bears interest at
LIBOR plus 275 basis points, due in monthly installments of interest only, with
the principal balance and accrued interest due on November 12, 2005. This loan
may be prepaid at any time without penalty.
For a more complete description of this transaction, please see the Agreement of
Purchase and Sale between us and the Seller dated September 24, 2002 (the
"Purchase Agreement"), a copy of which is attached hereto as Exhibit 2.1, and
our press release dated November 26, 2002, a copy of which is attached to this
Form 8-K as Exhibit 99.1.
The schedules and exhibits to the Purchase Agreement, a listing of which are
included therein, have not been filed herewith. The schedules and exhibits will
be furnished supplementally to the Securities and Exchange Commission upon
request.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Real Estate Property Acquired:
Independent Auditors' Report F-1
Statements of Revenue and Certain Expenses for the
nine months ended September 30, 2002 (unaudited) and
for the year ended December 31, 2001 F-2
Notes to Statements of Revenue and Certain Expenses F-3
(b) Unaudited Pro Forma Financial Information:
Pro Forma Financial Information (unaudited) F-5
Pro Forma Consolidated Balance Sheet as of
September 30, 2002 (unaudited) F-6
Pro Forma Consolidated Statements of Operations (unaudited):
For the nine months ended September 30, 2002 F-7
For the year ended December 31, 2001 F-8
Notes to Pro Forma Consolidated Financial Statements (unaudited) F-9
Statement of Estimated Taxable Operating Results and Cash
to be Made Available by Operations based upon the Year ended
December 31, 2001 (unaudited) F-11
Note to Statement of Estimated Taxable Operating Results
and Cash to be Made Available by Operations (unaudited) F-12
(c) Exhibits:
Exhibit Number Exhibit Title
-------------- -------------
2.1 Agreement of Purchase and Sale between AmeriVest Properties
Inc. and WXI/CHA Real Estate L.P. dated September 24, 2002
(Chateau Plaza)*
99.1 Press Release dated November 26, 2002*
* Previously filed.
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.
AMERIVEST PROPERTIES INC.
December 30, 2002
By: /s/ D. Scott Ikenberry
--------------------------------
D. Scott Ikenberry
Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
The Board of Directors of
AmeriVest Properties Inc.:
We have audited the accompanying statement of revenue and certain expenses of
the Chateau Plaza Office Building in Dallas, Texas (the "Property") for the year
ended December 31, 2001. This financial statement is the responsibility of the
Property's management. Our responsibility is to express an opinion on the
financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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
presentation of the financial statement. 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 and for inclusion in the Form 8-K of AmeriVest Properties Inc., as
described in Note 1. The presentation is not intended to be a complete
presentation of the Property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of the Chateau Plaza
Office Building for the year ended December 31, 2001, in conformity with
accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
---------------------------------
KPMG LLP
Denver, Colorado
December 13, 2002
F-1
CHATEAU PLAZA OFFICE BUILDING
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
For the Nine For the Year
Months Ended Ended
September 30, December 31,
2002 2001
---------- ----------
(unaudited)
REVENUE:
Rental revenue $2,558,078 $3,430,192
Other revenue 244,792 272,789
---------- ----------
Total revenue 2,802,870 3,702,981
---------- ----------
CERTAIN EXPENSES:
Operating expenses 429,798 630,642
Repairs and maintenance 137,727 147,748
Utilities 199,879 336,279
Real estate taxes 452,056 597,849
Management fees 54,519 70,421
---------- ----------
Total expenses 1,273,979 1,782,939
---------- ----------
EXCESS OF REVENUE OVER CERTAIN
EXPENSES $1,528,891 $1,920,042
========== ==========
The accompanying notes are an integral
part of these financial statements.
F-2
CHATEAU PLAZA OFFICE BUILDING
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 2001
NOTE 1 - BASIS OF PRESENTATION
The accompanying statement of revenue and certain expenses reflects the
operations of the Chateau Plaza Office Building ("Chateau Plaza" or the
"Property"). The Property consists of one office building located in Dallas,
Texas. The Property contains approximately 171,000 rentable square feet and is
located on approximately one acre of land. As of September 30, 2002 and December
31, 2001, the Property had an occupancy percentage of 98% and 89%, respectively.
The Property was acquired by AmeriVest Properties Inc. and subsidiaries
("AmeriVest") from an unrelated party on November 25, 2002 for $22,000,000,
which was paid with $15,400,000 from the proceeds of a loan from Fleet National
Bank and the balance paid in cash from a portion of the proceeds of the May 2002
public offering. In addition, AmeriVest incurred approximately $414,000 in
related acquisition fees and costs, of which $334,000 represents the advisory
fee earned by Sheridan Realty Advisors, LLC, a related party, in connection with
the acquisition in accordance with the Property Management and Advisory
Agreement. The advisory fee is expensed immediately upon the closing of the
acquisition while the remaining acquisition costs, which are paid to unrelated
third parties, are capitalized as a cost of acquiring the property.
The accounting records of the Property are maintained on the accrual basis. The
accompanying statement of revenue and certain expenses was prepared pursuant to
the rules and regulations of the Securities and Exchange Commission, and exclude
certain expenses such as mortgage interest, depreciation and amortization,
professional fees and other costs not directly related to future operations of
the Property.
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Interim Information (unaudited)
-------------------------------
In the opinion of the management of AmeriVest, the unaudited interim information
as of September 30, 2002 included herein contains all adjustments necessary,
which are of a normal recurring nature, to present fairly the revenue and
certain expenses for the nine months ended September 30, 2002. Results of
interim periods are not necessarily indicative of results to be expected for the
year. Management is not aware of any material factors that would cause the
information included herein to not be indicative of future operating results.
F-3
NOTE 2 - OPERATING LEASES
The Property's revenue is obtained from tenant rental payments as provided for
under non-cancelable operating leases, many of which are renewable.
Future minimum lease payments due under these leases, excluding tenant
reimbursements of operating expenses, as of December 31, 2001, are as follows:
Year Ending December 31:
2002 $ 3,123,224
2003 2,675,945
2004 2,485,810
2005 2,448,854
2006 206,660
Thereafter 160,940
-----------
$11,101,433
===========
Tenant reimbursements of operating expenses are included in other revenue on the
accompanying statements of revenue and certain expenses.
The following table exhibits those tenants who accounted for greater than 10% of
the revenues for the year ended December 31, 2001, and the corresponding
percentage of the future minimum revenues above:
Percentage of Percentage of Future
Tenant 2001 Revenues Minimum Revenues
------ ------------- ----------------
A 41.4% 61.9%
Tenant A is the corporate headquarters for a specialty foods processor and
distributor. Tenant A's lease is scheduled to expire on December 31, 2005,
however has the option to terminate the lease early on December 31, 2003.
F-4
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA FINANCIAL INFORMATION
(unaudited)
The accompanying unaudited pro forma consolidated balance sheet presents the
historical financial information of AmeriVest as of September 30, 2002 as
adjusted for the acquisition of Chateau Plaza, as if the transaction had
occurred on September 30, 2002.
The accompanying unaudited pro forma consolidated statements of operations for
the nine months ended September 30, 2002 and the year ended December 31, 2001
combine the historical operations of AmeriVest with the historical operations of
Chateau Plaza as if the transaction had occurred on January 1, 2001.
The unaudited pro forma consolidated financial statements have been prepared by
AmeriVest management based upon the historical financial statements of AmeriVest
and Chateau Plaza. These pro forma statements may not be indicative of the
results that actually would have occurred if the combination had been in effect
on the dates indicated or which may be obtained in the future. The pro forma
financial statements and notes thereto should be read in conjunction with the
historical financial statements included in AmeriVest's previous filings with
the Securities and Exchange Commission.
F-5
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2002
(unaudited)
Acquisition
AmeriVest of Chateau Pro Forma
(Historical) Plaza Combined
------------- ------------- -------------
ASSETS
Investment in Real Estate
Land $ 18,434,269 $ 1,520,330 (b) $ 19,954,599
Building and improvements 87,806,952 20,559,670 (b) 108,366,622
Furniture, fixtures and equipment 328,747 -- 328,747
Tenant improvements 2,561,879 -- 2,561,879
Tenant leasing commissions 421,677 -- 421,677
Less: accumulated depreciation and
amortization (5,203,317) -- (5,203,317)
------------- ------------- -------------
Net Investment in Real Estate 104,350,207 22,080,000 126,430,207
Cash and cash equivalents 14,383,104 (6,580,973)(a) 7,802,131
Escrow deposits 1,755,049 -- 1,755,049
Investment in unconsolidated affiliate 1,263,275 -- 1,263,275
Due from related party 2,724,293 -- 2,724,293
Due from unconsolidated affiliate 782,397 -- 782,397
Accounts receivable 191,111 -- 191,111
Deferred rent receivable 571,390 -- 571,390
Deferred financing costs, net 541,695 415,000 (c) 956,695
Prepaid expenses, escrows and other assets 1,442,034 -- 1,442,034
------------- ------------- -------------
Total Assets $ 128,004,555 $ 15,914,027 $ 143,918,582
============= ============= =============
LIABILITIES
Mortgage loans and notes payable $ 76,452,290 $ 15,400,000 (c) $ 91,852,290
Accounts payable and accrued expenses 1,253,611 -- 1,253,611
Due to related party 105,926 334,000 (d) 439,926
Accrued real estate taxes 1,453,284 452,056 (b) 1,905,340
Prepaid rents and security deposits 1,308,617 61,971 (b) 1,370,588
Dividends payable 1,426,964 -- 1,426,964
------------- ------------- -------------
Total Liabilities 82,000,692 16,248,027 98,248,719
------------- ------------- -------------
STOCKHOLDERS' EQUITY
Common stock 10,977 -- 10,977
Capital in excess of par value 54,833,805 -- 54,833,805
Distributions in excess of accumulated
earnings (8,840,919) (334,000)(d) (9,174,919)
------------- ------------- -------------
Total Stockholders' Equity 46,003,863 (334,000) 45,669,863
------------- ------------- -------------
Total Liabilities and Stockholders' Equity $ 128,004,555 $ 15,914,027 $ 143,918,582
============= ============= =============
See notes to the pro forma consolidated financial statements.
F-6
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2002
(unaudited)
Historical
----------------------------
Chateau Pro Forma Pro Forma
AmeriVest Plaza Adjustments Combined
------------ ------------ ------------ ------------
REAL ESTATE OPERATING REVENUE
Rental revenue $ 10,937,842 $ 2,802,870 $ -- $ 13,740,712
------------ ------------ ------------ ------------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 2,725,931 766,583 -- 3,492,514
Real estate taxes 1,006,350 452,056 -- 1,458,406
Management fees 96,944 54,519 (54,519)(e) 96,944
General and administrative expenses 1,070,091 821 -- 1,070,912
Advisory fee 251,910 -- -- 251,910
Interest expense 2,774,083 -- 637,117 (f) 3,411,200
Depreciation and amortization expense 2,161,580 -- 385,494 (g) 2,547,074
------------ ------------ ------------ ------------
10,086,889 1,273,979 968,092 12,328,960
------------ ------------ ------------ ------------
OTHER INCOME/LOSS
Interest income 135,961 -- -- 135,961
Equity in loss of unconsolidated affiliate (60,197) -- -- (60,197)
------------ ------------ ------------ ------------
75,764 -- -- 75,764
------------ ------------ ------------ ------------
NET INCOME $ 926,717 $ 1,528,891 $ (968,092) $ 1,487,516
============ ============ ============ ============
NET INCOME PER COMMON SHARE
Basic $ 0.11 $ 0.17
============ ============
Diluted $ 0.10 $ 0.17
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 8,785,796 8,785,796
============ ============
Diluted 8,960,471 8,960,471
============ ============
See notes to the pro forma consolidated financial statements.
F-7
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2001
(unaudited)
Historical
----------------------------
Chateau Pro Forma Pro Forma
AmeriVest Plaza Adjustments Combined
------------ ------------ ------------ ------------
REAL ESTATE OPERATING REVENUE
Rental revenue $ 10,944,383 $ 3,702,981 $ -- $ 14,647,364
------------ ------------ ------------ ------------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 2,643,448 1,108,492 -- 3,751,940
Real estate taxes 1,132,819 597,849 -- 1,730,668
Management fees 523,687 70,421 107,435 (e) 701,543
General and administrative expenses 677,845 6,177 -- 684,022
Advisory fee -- -- 334,000 (d) 334,000
Impairment of deferred rents receivable 326,113 -- -- 326,113
Interest expense 3,181,697 -- 1,119,671 (f) 4,301,368
Depreciation and amortization expense 2,244,435 -- 513,992 (g) 2,758,427
------------ ------------ ------------ ------------
10,730,044 1,782,939 2,075,098 14,588,081
------------ ------------ ------------ ------------
OTHER INCOME/LOSS
Interest income 135,075 -- -- 135,075
Equity in loss of unconsolidated affiliates (17,366) -- -- (17,366)
------------ ------------ ------------ ------------
117,709 -- -- 117,709
------------ ------------ ------------ ------------
INCOME BEFORE GAIN ON SALE
OF REAL ESTATE 332,048 1,920,042 (2,075,098) 176,992
GAIN ON SALE OF REAL ESTATE 1,156,445 -- -- 1,156,445
------------ ------------ ------------ ------------
NET INCOME $ 1,488,493 $ 1,920,042 $ (2,075,098) $ 1,333,437
============ ============ ============ ============
NET INCOME PER COMMON SHARE
Basic $ 0.32 $ 0.28
============ ============
Diluted $ 0.31 $ 0.28
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 4,680,719 4,680,719
============ ============
Diluted 4,801,307 4,801,307
============ ============
See notes to the pro forma consolidated financial statements.
F-8
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited pro forma consolidated financial statements are
presented to reflect the acquisition of Chateau Plaza by AmeriVest.
The accompanying unaudited pro forma consolidated balance sheet presents the
historical financial information of AmeriVest as of September 30, 2002 as
adjusted for the acquisition of Chateau Plaza as if the transaction had occurred
on September 30, 2002.
The accompanying unaudited pro forma consolidated statements of operations for
the nine months ended September 30, 2002 and the year ended December 31, 2001
combine the historical operations of AmeriVest with the historical operations of
Chateau Plaza as if the transaction had occurred on January 1, 2001.
These pro forma statements may not be indicative of the results that actually
would have occurred if the combination had been in effect on the dates indicated
or which may be obtained in the future.
NOTE 2 - PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated financial statements reflect the following
pro forma adjustments:
(a) The net cash paid for Chateau Plaza consists of the following:
Purchase price $ 22,000,000
Estimated acquisition costs 80,000
Loan origination fees 415,000
Less: mortgage loan (15,400,000)
Less: credit for accrued real estate taxes (452,056)
Less: credit for security deposits (61,971)
------------
Cash paid $ 6,580,973
============
(b) The purchase price of Chateau Plaza was allocated to the assets and
liabilities based on estimated fair values.
(c) The loan in the amount of $15,400,000 represents the second draw on a
$30,000,000 revolving credit facility from Fleet National Bank. The original
draw was used to purchase the Centerra office building located in Denver,
Colorado. The loan bears interest at LIBOR plus 275 basis points, due in monthly
installments of interest only, with the principal and accrued interest due on
November 12, 2005. This loan may be prepaid at any time without penalty.
AmeriVest paid a 1.25% loan origination fee for the aggregate credit facility,
plus additional loan costs, which have been capitalized and are being amortized
over the life of the loan.
F-9
(d) Advisory fee of $334,000 earned by Sheridan Realty Advisors, LLC in
connection with the acquisition of Chateau Plaza in accordance with the Property
Management and Advisory Agreement. This fee was capitalized on acquisitions
completed prior to January 1, 2002. However, due to the amendment of the
Property Management and Advisory Agreement effective January 1, 2002 , the
advisory fee is being expensed beginning in 2002.
(e) Pursuant to the Property Management and Advisory Agreement, Sheridan Realty
Advisors, LLC would have earned a 5% management fee through December 31, 2001
and there would be no management fee expense, with respect to Chateau Plaza,
beginning January 1, 2002 due to the Company being internally managed.
Adjustments to management fees are as follows:
Nine Months
Ended Year Ended
September 30, December 31,
2002 2001
--------- ---------
Management fees in accordance with the
property management agreement $ -- $ 177,856
Less: historical management fees (54,519) (70,421)
--------- ---------
Pro forma adjustment $ (54,519) $ 107,435
========= =========
(f) Interest expense to be recognized related to the mortgage loan. Includes
loan interest (assumed interest rates of 4.62% and 6.37% for the nine months
ended September 30, 2002 and the year ended December 31, 2001, respectively) and
the amortization of the loan origination fee.
(g) Depreciation expense calculated assuming a 40-year useful life.
NOTE 3 - INCOME PER SHARE
Pro forma income per common share for the nine months ended September 30, 2002
and the year ended December 31, 2001 is computed based on the weighted average
number of common shares outstanding during the periods presented.
F-10
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
AND CASH TO BE MADE AVAILABLE BY OPERATIONS
BASED UPON THE YEAR ENDED DECEMBER 31, 2001
(unaudited)
The following represents an estimate of the taxable operating results and cash
to be made available by operations expected to be generated by AmeriVest
(including the operations of Chateau Plaza) based upon the pro forma
consolidated statement of operations for the year ended December 31, 2001. These
estimated results do not purport to represent results of operations for these
properties in the future and were prepared on the basis described in the
accompanying notes, which should be read in conjunction herewith.
Revenue $ 14,407,669
------------
Expenses
Operating expenses 3,751,940
Real estate taxes 1,730,668
Management fees 701,543
General and administrative expenses 684,022
Interest expense 4,301,368
Depreciation and amortization expense 1,673,554
------------
Total expenses 12,843,095
------------
Estimated Taxable Operating Income 1,564,574
Add: Depreciation and amortization expense 1,673,554
Less: Advisory fee (334,000)
------------
Estimated Cash to be Made Available by Operations $ 2,904,128
============
F-11
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
NOTE TO STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
AND CASH TO BE MADE AVAILABLE BY OPERATIONS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
Depreciation has been estimated based upon an allocation of the purchase price
of Chateau Plaza to land (7%) and building (93%) and assuming (for tax purposes)
a 39-year useful life applied on a straight-line method.
No income taxes have been provided because the Company is organized and operates
in such a manner so as to qualify as a Real Estate Investment Trust ("REIT")
under the provisions of the Internal Revenue Code (the "Code"). Accordingly, the
Company generally will not pay Federal income taxes provided that distributions
to its stockholders equal at least the amount of its REIT taxable income as
defined under the Code.
F-12