SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 2003
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 100, Denver, Colorado 80222
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(Address of principal executive offices)
(303) 297-1800
--------------
(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets
Purchase of Phoenix Office Building. On February 6, 2003, we acquired the
Southwest Gas Building (the "Property"). The Property is located in Phoenix,
Arizona and contains 147,660 rentable square feet on 7.38 acres of land. The
purchase price for the Property was $17,000,000, which was paid with $11,900,000
from our revolving credit facility from Fleet National Bank (the "Fleet
Facility") and $5,100,000 from a term loan also from Fleet National Bank (the
"Fleet Term Loan").
The Property was purchased from LAFP Phoenix, Inc. (the "Seller"), an
unaffiliated party. The purchase price of the Property was determined through
negotiations between the Seller and us.
The draw on the Fleet Facility, which occurred on February 6, 2003,
represents the third draw on a $42,000,000 revolving credit facility from Fleet
National Bank. The Fleet Facility was increased from $30,000,000 to $42,000,000
prior to the acquisition of the Property. The first draw was used to purchase
the Centerra building located in Denver, Colorado; the second draw was used to
purchase the Chateau Plaza building located in Dallas, Texas; and the Fleet
Facility is cross-collateralized by mortgages on all three properties. The
outstanding balance on the Fleet Facility as of April 22, 2003 is $40,357,660.
The Fleet Facility 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.
The Fleet Term Loan represents a short-term loan from Fleet National Bank.
The Fleet Term Loan bears interest at LIBOR plus 500 basis points, due in
monthly installments of interest only, with the principal balance and accrued
interest due on August 6, 2003.
For a more complete description of this transaction, please see the
Agreement of Purchase and Sale between us and the Seller dated November 18, 2002
(the "Purchase Agreement"), a copy of which is attached hereto as Exhibit 2.1,
and our press release dated February 7, 2003, a copy of which is attached hereto
as Exhibit 99.1.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Real Estate Property Acquired:
Independent Auditors' Report F-1
Statement of Revenue and Certain Expenses for the year ended
December 31, 2002 F-2
Notes to Statement 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 December 31, 2002
(unaudited) F-6
Pro Forma Consolidated Statement of Operations for the year
ended December 31, 2002 (unaudited) F-7
Notes to Pro Forma Consolidated Financial Statements (unaudited) F-8
Statement of Estimated Taxable Operating Results and Cash to be
Made Available by Operations for the year ended December 31,
2002 (unaudited) F-10
Note to Statement of Estimated Taxable Operating Results and Cash
to be Made Available by Operations (unaudited) F-11
(c) Exhibits:
Exhibit Number Exhibit Title
-------------- -------------
2.1 Agreement of Purchase and Sale between AmeriVest Properties
Inc. and LAFP Phoenix, Inc. dated November 18, 2002
(Southwest Gas Building)*
10.1 First Amendment to Revolving Credit Agreement between
AmeriVest Properties Inc. and Fleet National Bank, as
administrative agent, and the lenders party thereto, dated
February 6, 2003*
10.2 Revolving Credit Note by AmeriVest Properties Inc. to Fleet
National Bank, as agent, dated February 6, 2003*
10.3 Term Loan Agreement between AmeriVest Properties Inc. and
Fleet National Bank, as administrative agent, and the
lenders party thereto, dated February 6, 2003*
10.4 Term Note by AmeriVest Properties Inc. to Fleet National
Bank, as agent, dated February 6, 2003*
99.1 Press Release dated February 7, 2003*
* Previously filed as an exhibit to AmeriVest's Form 8-K filed with the
Securities and Exchange Commission on February 21, 2003.
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.
April 22, 2003
By: /s/ D. Scott Ikenberry
----------------------------------
D. Scott Ikenberry
Chief Financial Officer
INDEPENDENT AUDITORS' REPORT
The Board of Directors
AmeriVest Properties Inc.:
We have audited the accompanying statement of revenue and certain expenses of
the Southwest Gas Office Building in Phoenix, Arizona (the "Property") for the
year ended December 31, 2002. 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 Southwest Gas
Office Building for the year ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of America.
/s/ KPMG LLP
------------
KPMG LLP
Denver, Colorado
April 11, 2003
F-1
SOUTHWEST GAS OFFICE BUILDING
STATEMENT OF REVENUE AND CERTAIN EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 2002
REVENUE:
Rental revenue $3,087,240
Other revenue 104,930
----------
Total revenue 3,192,170
----------
CERTAIN EXPENSES:
Operating expenses 399,628
Repairs and maintenance 247,835
Utilities 290,850
Real estate taxes 385,198
Management fees 89,126
----------
Total expenses 1,412,637
----------
EXCESS OF REVENUE OVER CERTAIN
EXPENSES $1,779,533
==========
See accompanying notes to financial statement.
F-2
SOUTHWEST GAS OFFICE BUILDING
NOTES TO STATEMENT OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 2002
NOTE 1 - BASIS OF PRESENTATION
The accompanying statement of revenue and certain expenses reflects the
operations of the Southwest Gas Office Building (the "Property"). The Property
consists of a single office building located in Phoenix, Arizona and contains
147,660 rentable square feet on 7.38 acres of land. As of December 31, 2002, the
Property had an occupancy rate of 92%.
The Property was acquired by AmeriVest Properties Inc. and subsidiaries
("AmeriVest") from an unrelated party on February 6, 2003 for $17,000,000, which
was paid with $11,900,000 from a revolving credit facility with Fleet National
Bank and $5,100,000 from a term loan also from Fleet National Bank. In addition,
AmeriVest incurred approximately $60,000 in related acquisition fees and costs,
which 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.
NOTE 2 - OPERATING LEASES
The Property's revenue is obtained from tenant rental payments as provided
for under non-cancelable operating leases.
Future minimum rental payments due under these leases, excluding tenant
reimbursements of operating expenses, as of December 31, 2002, are as follows:
Year Ending December 31:
2003 $ 2,836,430
2004 2,195,680
2005 2,095,922
2006 1,559,657
2007 1,501,150
Thereafter 2,501,917
-----------
$12,690,756
===========
Tenant reimbursements of operating expenses are included in other revenue
on the accompanying statement of revenue and certain expenses.
F-3
One tenant, a regional utility company, accounted for 46.1% of the rental
revenues for the year ended December 31, 2002 and accounts for 75.5% of the
future minimum rental payments described above. This tenant leases 60,046 square
feet through a direct lease which expires on August 31, 2009.
A second tenant, a vocational training school operator, accounted for 15.1%
of the rental revenues for the year ended December 31, 2002 and accounts for
3.1% of the future minimum rental payments described above. This tenant leases
27,752 square feet through a direct lease which expires on October 31, 2003.
F-4
AMERIVEST PROPERTIES INC.
PRO FORMA FINANCIAL INFORMATION
(unaudited)
The accompanying unaudited pro forma consolidated financial statements are
presented to reflect the acquisition of the Property by AmeriVest.
The unaudited pro forma consolidated financial statements have been
prepared by AmeriVest management based upon the historical financial statements
of AmeriVest and the Property. 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.
PRO FORMA CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002
(unaudited)
Acquisition
AmeriVest of Southwest Pro Forma
(Historical) Gas Building Combined
------------- ------------- -------------
ASSETS
Investment in real estate-
Land $ 20,730,999 $ 2,350,000 (b) $ 23,080,999
Building and improvements 124,861,852 14,314,586 (b) 139,176,438
Furniture, fixtures and equipment 467,188 -- 467,188
Tenant improvements 2,969,044 -- 2,969,044
Tenant leasing commissions 2,339,876 395,414 (b) 2,735,290
Less: accumulated depreciation and amortization (6,383,631) -- (6,383,631)
------------- ------------- -------------
Net investment in real estate 144,985,328 17,060,000 162,045,328
------------- ------------- -------------
Cash and cash equivalents 2,318,566 (120,559)(a) 2,198,007
Escrow deposits 2,335,519 -- 2,335,519
Investment in unconsolidated affiliate 1,390,560 -- 1,390,560
Due from related party 3,257,826 -- 3,257,826
Due from unconsolidated affiliate 217,578 -- 217,578
Accounts receivable 286,691 -- 286,691
Deferred rent receivable 671,737 -- 671,737
Deferred financing costs, net 1,243,907 331,841 (c) 1,575,748
Prepaid expenses, escrows and other assets 475,875 -- 475,875
------------- ------------- -------------
Total Assets $ 157,183,587 $ 17,271,282 $ 174,454,869
============= ============= =============
LIABILITIES
Mortgage loans and notes payable $ 106,094,232 $ 17,000,000 (c) $ 123,094,232
Accounts payable and accrued expenses 1,333,230 -- 1,333,230
Due to related party 1,051,390 -- 1,051,390
Accrued real estate taxes 1,714,594 190,942 (b) 1,905,536
Prepaid rents, deferred revenue and security deposits 1,656,507 80,340 (b) 1,736,847
Dividends payable 1,437,834 -- 1,437,834
------------- ------------- -------------
Total Liabilities 113,287,787 17,271,282 130,559,069
------------- ------------- -------------
STOCKHOLDERS' EQUITY
Common stock 11,060 -- 11,060
Capital in excess of par value 55,247,483 -- 55,247,483
Distributions in excess of accumulated earnings (11,362,743) -- (11,362,743)
------------- ------------- -------------
Total Stockholders' Equity 43,895,800 -- 43,895,800
------------- ------------- -------------
Total Liabilities and Stockholders' Equity $ 157,183,587 $ 17,271,282 $ 174,454,869
============= ============= =============
See accompanying notes to financial statements.
F-6
AMERIVEST PROPERTIES INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2002
(unaudited)
Historical
----------------------------
Southwest Pro Forma Pro Forma
AmeriVest Gas Building Adjustments Combined
------------ ------------ ------------ ------------
REAL ESTATE OPERATING REVENUE
Rental revenue $ 16,385,965 $ 3,192,170 $ -- $ 19,578,135
------------ ------------ ------------ ------------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 3,935,774 938,313 -- 4,874,087
Real estate taxes 1,628,455 385,198 -- 2,013,653
Management fees 173,011 89,126 (89,126)(d) 173,011
General and administrative expenses 1,755,104 -- -- 1,755,104
Advisory and capital project fees 1,367,380 -- -- 1,367,380
Impairment of investment in real estate 275,000 -- -- 275,000
Interest expense 4,144,231 -- 1,064,532 (e) 5,208,763
Depreciation and amortization expense 3,362,508 -- 458,821 (f) 3,821,329
------------ ------------ ------------ ------------
16,641,463 1,412,637 1,434,227 19,488,327
------------ ------------ ------------ ------------
OTHER INCOME/(LOSS)
Interest income 164,519 -- -- 164,519
Equity in loss of unconsolidated affiliates (66,295) -- -- (66,295)
------------ ------------ ------------ ------------
98,224 -- -- 98,224
------------ ------------ ------------ ------------
NET (LOSS) INCOME $ (157,274) $ 1,779,533 $ (1,434,227) $ 188,032
============ ============ ============ ============
NET (LOSS) INCOME PER COMMON
SHARE
Basic $ (0.02) $ 0.02
============ ============
Diluted $ (0.02) $ 0.02
============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 9,341,608 9,341,608
============ ============
Diluted 9,501,117 9,501,117
============ ============
See accompanying notes to financial statements.
F-7
AMERIVEST PROPERTIES INC.
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 the Property by AmeriVest.
The accompanying unaudited pro forma consolidated balance sheet presents
the historical financial information of AmeriVest as of December 31, 2002 as
adjusted for the acquisition of the Property as if the transaction had occurred
on December 31, 2002.
The accompanying unaudited pro forma consolidated statement of operations
for the year ended December 31, 2002 combines the historical operations of
AmeriVest with the historical operations of the Property as if the transaction
had occurred on January 1, 2002.
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 the Property consists of the following:
Purchase price $ 17,000,000
Estimated acquisition costs 60,000
Loan origination fees 331,841
Less: mortgage loan (11,900,000)
Less: term loan (5,100,000)
Less: credit for accrued real estate taxes (190,942)
Less: credit for security deposits (80,340)
------------
Cash paid $ 120,559
============
(b) The purchase price of the Property was allocated to the assets and
liabilities based on estimated fair values.
(c) Of the $17,000,000 in debt used to acquire the Property, $11,900,000
represents the third draw on a $42,000,000 revolving credit facility from Fleet
National Bank (the "Fleet Facility") and $5,100,000 represents a short-term loan
also from Fleet National Bank (the "Fleet Term Loan"). The Fleet Facility 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. The Fleet Term Loan, a
six-month loan, bears interest at LIBOR plus 500 basis points, due in monthly
installments of interest only, with the principal and accrued interest due on
August 6, 2003. For purposes of these pro forma consolidated financial
F-8
statements, it was assumed that the term on the Fleet Term Loan was extended
after the expiration of its initial six-month term. AmeriVest paid a 1.50% loan
restructuring fee on the increase in the Fleet Facility from $30,000,000 to
$42,000,000, a 2% loan origination fee on the Fleet Term Loan and additional
loan costs, which have been capitalized and are being amortized over the life of
the loans.
(d) Due to AmeriVest being internally managed beginning January 1, 2002, there
would be no management fee expense with respect to the Property. Adjustment to
management fees is as follows:
Year Ended
December 31, 2002
-----------------
Management fees paid to third parties $ --
Less: historical management fees (89,126)
--------
Pro forma adjustment $(89,126)
========
(e) Interest expense to be recognized related to the Fleet Facility and Fleet
Term Loan. Includes loan interest (assumed interest rates of 4.54% and 6.79% for
the Fleet Facility and Fleet Term Loan, respectively) and the amortization of
the loan restructuring and origination fees.
(f) Depreciation and amortization expense calculated assuming a 40-year useful
life for the building and 4-year useful life for tenant leasing commissions.
NOTE 3 - EARNINGS PER SHARE
Pro forma earnings per common share for the year ended December 31, 2002 is
computed based on the weighted average number of common shares outstanding
during the periods presented.
F-9
AMERIVEST PROPERTIES INC.
STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS
AND CASH TO BE MADE AVAILABLE BY OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(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 the Property) based upon the pro forma consolidated
statement of operations for the year ended December 31, 2002. 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 note,
which should be read in conjunction herewith.
Revenue $ 19,299,845
------------
Expenses
Operating expenses 4,874,087
Real estate taxes 2,013,653
Management fees 173,011
General and administrative expenses 1,755,104
Interest expense 5,208,763
Depreciation and amortization expense 2,478,434
------------
Total expenses 16,503,052
------------
Estimated Taxable Operating Income 2,796,793
Add: Depreciation and amortization expense 2,478,434
Less: Advisory and capital project fees (1,367,380)
------------
Estimated Cash to be Made Available by Operations $ 3,907,847
============
F-10
AMERIVEST PROPERTIES INC.
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 the Property to land (14%) and building (86%) and assuming (for tax
purposes) a 39-year useful life for the building 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-11