-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Osrd/tDZz+zuJQ5KzVtsUeIvFhFRNZKTxPHegk4nkOJFr1+znH6Gz3+Wa55LFSeg iKsfsAjFwx3+Q15CqC7UEw== 0000912057-00-014080.txt : 20000329 0000912057-00-014080.hdr.sgml : 20000329 ACCESSION NUMBER: 0000912057-00-014080 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991203 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP CENTRAL INDEX KEY: 0000746514 STANDARD INDUSTRIAL CLASSIFICATION: OPERATORS OF APARTMENT BUILDINGS [6513] IRS NUMBER: 042619298 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-12138 FILM NUMBER: 581390 BUSINESS ADDRESS: STREET 1: 39 BRIGHTON AVE CITY: ALLSTON STATE: MA ZIP: 02134 BUSINESS PHONE: 6177830039 MAIL ADDRESS: STREET 1: 39 BRIGHTON AVE CITY: ALLSTON STATE: MA ZIP: 02134 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------- AMENDMENT NO. 1 TO FORM 8-K CURRENT REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of reports (Date of earliest event reported) DECEMBER 3, 1999 AND DECEMBER 23, 1999 -------------------------------------- NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP - -------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Charter) MASSACHUSETTS 0-12138 04-2619298 - -------------------------------------------------------------------------------- (State or Other Jurisdiction (Commission (IRS Employer of Incorporation File Number) Identification No.) 39 BRIGHTON AVENUE, ALLSTON, MASSACHUSETTS 02134 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (617) 783-0039 ---------------------------- N/A - -------------------------------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. In two (2) previously filed current Reports on Forms 8-K, filed on December 22, 1999 and January 14, 2000, respectively, with the Securities and Exchange Commission, the Registrant reported the following acquisitions: 1. WEST COLONIAL ACQUISITION. On December 3, 1999, the Registrant acquired through a controlled affiliate, 180 residential units, known as "West Colonial," located at 18 Westland Ave, Brockton, Massachusetts for a purchase price of approximately $8.9 million. The seller, WCA Limited Partnership, has no relationship to the Registrant or its controlled affiliate, which was formed for the specific purpose of acquiring the property. The Registrant acquired the property through WCB Associates, LLC ("WCB"), a Massachusetts limited liability company, formed for the specific purpose of acquiring the property. WCB has two managers: WCB Associates, Inc., a Massachusetts corporation; and an individual, Mel Herman. The Registrant is the sole stockholder of WCB Associates, Inc. WCB Associates, Inc. is also a one percent member of WCB and the Registrant owns the remaining ninety-nine percent (99%) interest in WCB. Mr. Herman is defined in the WCB Operating Agreement as a "special manager." With respect to the activities of WCB, Mr. Herman's consent is only needed under limited circumstances. For example, WCB requires the consent of Mr. Herman (i) to change in the general character of the business of WCB; (ii) to make any loans to the manager or the members or their affiliates; (iii) to sell of all or substantially all of the assets of the WCB; (iv) to dissolve, wind up or liquidate WCB; (v) to merge, consolidate or acquire all or substantially all the assets of another person or entity; and (vi) to institute proceedings to be adjudicated bankrupt or insolvent, or to consent to such proceedings against WCB. Ronald Brown (the President of the Registrant's General Partner) is the President of WCB Associates, Inc. and Harold Brown (the Treasurer of the Registrant's General Partner) is Treasurer. Prior to the Registrant's acquisition of the West Colonial through WCB, the West Colonial had an existing first mortgage of $ 5.265 million, which at closing had amortized to $5,207,172.25. The net difference($3,692,827), before adjustments, was provided by use of the Registrant's cash reserves which had accumulated from operations and the refinancing of the Registrant's Westgate Woburn property earlier in March 1999. The 10 year loan assumed by the Registrant has a maturity date of Oct. 1, 2008 and is amortizing over 30 years with an interest rate of 6.52%. The property's net operating income budgeted for fiscal year 2000 is $872,000, with a debt service of $400,000, leaving a cash flow before capital expenditure of $472,000 for a 12.7% cash on cash return. The original conduit loan was made by Berkshire Mortgage Finance Corporation and is presently serviced by Berkshire Mortgage Finance Corporation. 2. OAK APARTMENTS ACQUISITION. On December 23, 1999, the Registrant acquired through a controlled affiliate, 268 residential units from Oak Apartments, LLC for a purchase price of $14.5 million. The property is located in Brockton, Massachusetts. The Registrant financed the purchase price in part through the use of the Registrant's operating cash and cash reserves. In addition, the Registrant obtained a loan in the amount of $750,000 from Harold Brown, the Treasurer of the General Partner of the Registrant. Mr. Brown's loan bears interest at a rate of 10% per annum and matures in two (2) years. The balance of the purchase price was financed through a first mortgage loan from Arbor National Commercial Mortgage, LLC ("Arbor"), in an amount of $11.6 million. The first mortgage loan from Arbor bears interest at a rate of 7.84% per annum and is amortized over a 30 year period, with a maturity in 10 years. The seller, Oaks Apartments, LLC, has no relationship to the Registrant or its controlled affiliate, which was formed for the specific purpose of acquiring the property. The Registrant acquired the property through Hamilton Oaks Associates, LLC ("Hamilton Oaks"), a Delaware limited liability company, which was formed for the specific purpose of acquiring the property. New Real, Inc., a Massachusetts corporation, and the Registrant's General Partner, is the sole manager of Hamilton Oaks, and the Registrant is its sole member. At the time of the filing of the Current Reports on Forms 8-K, filed December 22, 1999 and January 14, 2000, respectively, with respect to the acquisitions referred to in paragraphs numbered 1 and 2 above, the financial statements relating to foregoing matters were not available. Since the filing of such Reports, the Registrant's accountants have reviewed and prepared the following pro forma financial statements which include the financial information relating to the acquired properties. The Registrant has filed this Amendment which is intended to amend the two current Form 8-Ks previously filed and referred to above. 2 Item 7. FINANCIAL STATEMENTS AND EXHIBITS. (a) AUDITED FINANCIAL STATEMENTS OF PROPERTIES ACQUIRED STAPLES PLAZA, FRAMINGHAM, MA Statement of Revenue and Certain Expenses: Report of Independent Auditors Statement of Revenue and Certain Expenses for the year ended December 31, 1998 Notes to Statement of Revenue and Certain Expenses WCA LIMITED PARTNERSHIP (Westside Colonial Apartments), BROCKTON, MA Statement of Revenue and Certain Expenses: Report of Independent Auditors Statement of Revenue and Certain Expenses for the year ended December 31, 1998 Notes to Statement of Revenue and Certain Expenses OAKS APARTMENTS LLC (Oaks Apartments), BROCKTON, MA Statement of Revenue and Certain Expenses: Report of Independent Auditors Statement of Revenue and Certain Expenses for the year ended December 31, 1998 Notes to Statement of Revenue and Certain Expenses (b) UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS Pro Forma Consolidated Balance Sheet as of September 30, 1999 Pro Forma Consolidated Income Statement for the Nine Months Ended September 30, 1999 Pro Forma Consolidated Income Statement for the Year Ended December 31, 1998 Pro Forma Consolidated Estimated Taxable Operating Results for the Twelve Months Ended September 30, 1999 Pro Forma Consolidated Estimated Cash Made Available by Operations for the Twelve Months ended September 30, 1999 Notes to Pro Forma Consolidated Financial Statements (c) EXHIBITS Consent of Miller Wachman LLP Consent of Ziner Kennedy and Lehan LLP 3 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 hereunto duly authorized. NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP ------------------------------ (Registrant) Date: March 28, 2000 By: NEWREAL, INC., ITS GENERAL PARTNER ---------------------------------------- (functional equivalent of Chief Executive Officer and Principal Financial Officer) By: /S/ RONALD BROWN, PRESIDENT 4 Report of Independent Auditors To the Partners New England Realty Associates Limited Partnership We have audited the accompanying statement of revenues and certain expenses of Staples Plaza, Framingham, MA (Staples Plaza or the Property) for the year ended December 31, 1998. This statement of revenue and certain expenses is the responsibility of the management of the Property. 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 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 of the historical summary. 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. Certain expenses (described in Note 1) that would not be comparable to those resulting from the proposed future operations of Staples Plaza are excluded and the statement is not intended to be a complete presentation of the revenue and expenses of Staples Plaza. In our opinion, the statement of revenue and certain expenses presents fairly, in all material respects, the revenues and certain expenses, as defined above, of Staples Plaza for the year ended December 31, 1998, in conformity with generally accepted accounting principles. /s/ Miller Wachman LLP Boston, Massachusetts February 15, 2000 5 Staples Plaza, Framingham, MA Statement of Revenue and Certain Expenses Year Ended December 31, 1998 Revenue: Rental Income $ 871,752 Tenant Recoveries $ 224,760 ---------- Total Revenue $1,096,512 ---------- Certain Expenses: Utilities and Operating $ 20,175 Repairs and Maintenance $ 18,724 Taxes and insurance $ 185,564 ---------- Total of certain expenses $ 224,463 ---------- Excess of Revenue Over Certain Expenses: $ 872,049 ========== See Notes to the statement of Revenue and Certain Expenses 6 Staples Plaza, Framingham, MA Notes to Statement of Revenues and Certain Expenses Year ended December 31, 1998 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION On May 27, 1999, New England Realty Associates Limited Partnership (NERA) purchased from Beckenstein Enterprises, a non affiliated third party, a commercial property (Staples Plaza), located at 659 Worcester Rd., Framingham, MA., consisting of a shopping plaza with five tenants. BASIS OF PRESENTATOIN The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a filing of Form 8-K by NERA). It excludes certain material expenses including interest expense, management fees, depreciation and amortization, and non-operating items that would not be comparable to those resulting from the proposed future operations of the property and is not intended to be a complete presentation of Staples Plaza's historical revenues and expenses. REVENUE RECOGNITION Rental revenue for long-term commercial leases is recognized on a straight-line basis over the terms of the related lease. RISKS AND UNCERTAINTIES The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 2. RENTAL INCOME Future minimum annual rental income from commercial leases to be received under non-cancelable operating leases as of December 31, 1998, is as follows: Year: 1999 $ 781,752 2000 $ 781,752 2001 $ 777,592 2002 $ 751,975 2003 $ 753,600 Thereafter $ 8,781,549 ====================== Total: $12,628,220 ====================== The above future minimum lease payments do not include specified payments for tenant recoveries of operating expenses. 7 Report of Independent Auditors To the Partners New England Realty Associates Limited Partnership We have audited the accompanying statement of revenues and certain expenses of Westside Colonial Apartments, Brockton, MA (Westside Apartment or the Property) for the year ended December 31, 1998. This statement of revenue and certain expenses is the responsibility of the management of the Property. 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 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 of the historical summary. 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. Certain expenses (described in Note 1) that would not be comparable to those resulting from the proposed future operations of Westside Apartments are excluded and the statement is not intended to be a complete presentation of the revenue and expenses of Westside Apartments. In our opinion, the statement of revenue and certain expenses presents fairly, in all material respects, the revenues and certain expenses, as defined above, of Westside Apartments for the year ended December 31, 1998, in conformity with generally accepted accounting principles. /s/ Miller Wachman LLP Boston, Massachusetts February 15, 2000 8 Westside Colonial Apartments, Brockton, MA Statement of Revenue and Certain Expenses Year Ended December 31, 1998 Revenue: Rental Income $1,466,977 Other revenue $ 22,350 ---------- Total Revenue $1,489,327 ---------- Certain Expenses: Administration $ 19,233 Operating and Utilities $ 264,504 Renting $ 39,819 Repairs and Maintenance $ 178,579 Taxes and Insurance $ 134,213 ---------- Total of certain expenses $ 636,348 ---------- Excess of Revenue Over Certain Expenses: $ 852,979 ========== See Notes to Statement of Revenue and Certain Expenses 9 Westside Colonial Apartments, Brockton, MA Notes to Statement of Revenues and Certain Expenses Year ended December 31, 1998 1. ORGANIZATIONAL SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION On December 3, 1999, New England Realty Associates Limited Partnership (NERA) through a controlled affiliate purchased from WCA Limited Partnership, a non affiliated third party, a residential property (Westside Apartments), located in Brockton, MA, consisting of 180 residential units. BASIS OF PRESENTATION The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a filing of Form 8-K by NERA). It excludes certain material expenses including interest expense, management fees, depreciation and amortization, and non-operating items that would not be comparable to those resulting from the proposed future operations of Westside and is not intended to be a complete presentation of Westside Apartment's historical revenues and expenses. REVENUE RECOGNITION Rental income is from residential apartments with leases of one year or less. RISKS AND UNCERTAINTIES The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 10 Report of Independent Auditors To the Partners New England Realty Associates Limited Partnership We have audited the accompanying statement of revenues and certain expenses of Oaks Apartments LLC (Oaks Apartments or the Property) for the year ended December 31, 1998. This statement of revenue and certain expenses is the responsibility of the management of the Property. 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 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 of the historical summary. 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. Certain expenses (described in Note 1) that would not be comparable to those resulting from the proposed future operations of Oaks Apartments are excluded and the statement is not intended to be a complete presentation of the revenue and expenses of Oaks Apartments. In our opinion, the statement of revenue and certain expenses presents fairly, in all material respects, the revenues and certain expenses, as defined above, of Oaks Apartments for the year ended December 31, 1998, in conformity with generally accepted accounting principles. /s/ Ziner Kennedy & Lehan LLP Boston, Massachusetts January 26, 1999 except for note 1 As to which the date is February 2, 2000 11 Oaks Apartments LLC, Brockton, MA Statement of Revenue and Certain Expenses Year Ended December 31, 1998 Revenue: Rental Income $2,139,389 Laundry and Sundry $ 40,046 ---------- Total Revenue $2,179,435 ---------- Certain Expenses: Administrative $ 166,581 Utilities and Operating $ 445,707 Renting $ 52,512 Repairs and Maintenance $ 300,931 Taxes and insurance $ 172,873 ---------- Total of certain expenses $1,138,604 ---------- Excess of Revenue Over Certain Expenses: $1,040,831 ========== See Notes to Statement of Revenue and Certain Expenses 12 Oaks Street Apartments, Brockton, MA Notes to Statement of Revenues and Certain Expenses For the year ended December 31, 1998 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION On December 23, 1999, New England Realty Associates Limited Partnership (NERA) through a controlled affiliate purchased from Oaks Apartments LLC, a non affiliated entity, a property (Oaks), consisting of 268 residential units and a 6,075 square foot commercial space being rented by a daycare facility. BASIS OF PRESENTATOIN The accompanying statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a filing of Form 8-K by NERA). It excludes certain material expenses including interest expense, management fees, depreciation and amortization, and non-operating items that would not be comparable to those resulting from the proposed future operations of the property and is not intended to be a complete presentation of the property's historical revenues and expenses. REVENUE RECOGNITION Rental income of the property is primarily from residential apartments with leases of one year or less. There is also rental revenue from a long-term commercial lease that is recognized on a straight-line basis. RISKS AND UNCERTAINTIES The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosures of contingent assets and liabilities, at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. 2. RENTAL INCOME Rental income of the property is primarily from residential apartments with leases of one year or less and one commercial lease expiring in February 2000. Future minimum annual rents from the commercial lease are as follows: 1999 $48,600 2000 $ 9,100 ------- $57,700 ======= The lease also contains escalation charges for real estate taxes. 13 NEW ENGLAND REALTY ASSOCIATES LIMITED PARTNERSHIP UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma consolidated balance sheet as of September 30, 1999 gives effect to the New England Realty Associates Limited Partnership (NERA) acquisition and financing described in note A, as if such transactions had been completed at September 30, 1999. The following unaudited pro forma consolidated statements of income for the nine months ended September 30, 1999 and for the twelve months ended December 31, 1998 are presented as if the 1999 acquisitions and financings were effective January 1, 1998. The pro forma information is based on the historical financial statements of NERA and gives effect to the transactions under the purchase method of accounting and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma consolidated financial statements. Since the Staples Plaza acquisition and Westgate Apartment's refinancing occurred before the historic balance sheet date of September 30, 1999, the transactions are included in NERA's historic balance sheet, as of September 30, 1999. Similarly, the sale of Willard Apartment Limited Partnership to a non related entity, on April 30, 1999 for $850,000 has been reflected on NERA's historic balance sheet as of September 30, 1999. The pro forma statements are not necessarily indicative of the results that actually would have been achieved if the acquisitions and refinancing had occurred as assumed. They should be read in conjunction with the historical financial statements of NERA, included in its Form 10-K for the year ended December 31, 1998, its Form 10-Q for the nine months ended September 30, 1999, and the historical operating summary of the three previously stated properties elsewhere herein. New England Realty Associates Limited Partnership Unaudited Pro Forma Consolidated Balance Sheet As of September 30, 1999
Pro Forma Historical -------------------------------------------- NERA Adjustments* Consolidated -------------- ------------------------------ ------------- Westside Apartments Oaks Apartments ASSETS Rental Properties $80,034,034 $ 8,900,000 $ 14,500,000 $103,434,034 Less Accumulated Depreciation $21,933,643 $ -- $ -- $ 21,933,643 ----------- ----------- ------------ ------------ Net Rental Properties $58,100,391 $ 8,900,000 $ 14,500,000 $ 81,500,391 Cash and Cash Equivalents $ 439,459 $ (250,000) $ (189,459) $ -- Short-term Investments $ 5,153,303 $(3,425,733) $ (1,727,570) $ -- Rents Receivable $ 552,783 $ 8,227 $ (110,195) $ 450,815 Real Estate Tax Escrows $ 513,004 $ 33,684 $ 39,138 $ 585,826 Prepaid Expenses and Other Assets $ 2,579,686 $ 86,916 $ 85,894 $ 2,752,496 Investment in Joint Venture $ 38,083 $ -- $ -- $ 38,083 Mortgage Notes Receivable $ 480,872 $ -- $ -- $ 480,872 Financing and Leasing Fees $ 1,041,887 $ 41,228 $ 64,199 $ 1,147,314 ----------- ----------- ------------ ------------ Total Assets $68,899,468 $ 5,394,322 $ 12,662,007 $ 86,955,797 =========== =========== ============ ============ LIABILITIES AND PARTNERS' CAPITAL Mortages Payable $60,976,398 $ 5,207,172 $ 11,600,000 $ 77,783,570 Note Payable $ -- $ -- $ 750,000 $ 750,000 Accounts Payable and Accrued Expenses $ 942,941 $ -- $ -- $ 942,941 Advance Rental Payments and Security Deposits $ 2,203,628 $ 187,150 $ 312,007 $ 2,702,785 ----------- ----------- ------------ ------------ Total Liabilities $64,122,967 $ 5,394,322 $ 12,662,007 $ 82,179,296 Partners' Capital: 173,252 units outstanding $ 4,776,501 $ -- $ -- $ 4,776,501 ----------- ----------- ------------ ------------ Total liabilities and partners' capital $68,899,468 $ 5,394,322 $ 12,662,007 $ 86,955,797 =========== =========== ============ ============
*See Note A to Unaudited Pro Forma Consolidated Financial Statements 15 New England Realty Associates Limited Partnership Unaudited Pro Forma Consolidated Income Statement For the Nine Months Ended September 30, 1999 Pro Forma Historical -------------------------- NERA Adjustments* Consolidated ------------ ----------- ------------- REVENUES: Rental Income $ 14,681,709 $ 3,161,655 $ 17,843,364 Laundry & Sundry $ 131,465 $ 46,798 $ 178,263 ------------ ----------- ------------ Total Revenues: $ 14,813,174 $ 3,208,453 $ 18,021,627 ------------ ----------- ------------ EXPENSES: Administrative $ 782,867 $ 139,361 $ 922,228 Depreciation and amortization $ 2,634,460 $ 900,057 $ 3,534,517 Interest $ 3,623,619 $ 1,168,934 $ 4,792,553 Management Fees $ 613,967 $ 124,966 $ 738,933 Operating $ 1,399,765 $ 541,064 $ 1,940,829 Renting $ 235,808 $ 69,248 $ 305,056 Repairs and Maintenance $ 1,974,780 $ 367,434 $ 2,342,214 Taxes and Insurance $ 1,505,323 $ 307,633 $ 1,812,956 ------------ ----------- ------------ Total Operating Expenses: $ 12,770,589 $ 3,618,697 $ 16,389,286 ------------ ----------- ------------ Income from Operations: $ 2,042,585 $ (410,244) $ 1,632,341 ------------ ----------- ------------ Other Income (Loss): Interest Income $ 276,490 $ -- $ 276,490 Income from investment in partnership and joint venture $ 21,740 $ -- $ 21,740 Gain on sale of real estate $ 800,232 $ -- $ 800,232 Unrealized depreciation in investment $ (353,196) $ -- $ (353,196) ------------ ----------- ------------ $ 745,266 $ -- $ 745,266 ------------ ----------- ------------ NET INCOME: $ 2,787,851 $ (410,244) $ 2,377,607 ============ =========== ============ Weighted Average Number of Units Outstanding: 173,252 173,252 173,252 NET INCOME PER UNIT: $ 16.09 $ (2.37) $ 13.72 *See Note B to Unaudited Pro Forma Consolidated Financial Statements. 16 New England Realty Associates Limited Partnership Unaudited Pro Forma Consolidated Income Statement For the Year ended December 1998
Pro Forma Historical ------------------------------- NERA Adjustments* Consolidated ----------------- ----------------- ----------------- REVENUES: Rental Income $ 18,271,479 $ 4,702,878 $ 22,974,357 Laundry & Sundry $ 175,971 $ 62,396 $ 238,367 ----------------- ----------------- ----------------- Total Revenues: $ 18,447,450 $ 4,765,274 $ 23,212,724 ----------------- ----------------- ----------------- EXPENSES: Administrative $ 1,053,426 $ 185,814 $ 1,239,240 Depreciation and amortization $ 3,338,924 $ 1,272,671 $ 4,611,595 Interest $ 4,607,860 $ 1,838,486 $ 6,446,346 Management Fees $ 773,204 $ 184,515 $ 957,719 Utilities & Operating $ 1,900,211 $ 730,386 $ 2,630,597 Renting $ 297,875 $ 92,331 $ 390,206 Repairs and Maintenance $ 2,607,103 $ 498,234 $ 3,105,337 Taxes and Insurance $ 1,883,120 $ 492,650 $ 2,375,770 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- Total Operating Expenses: $ 16,461,723 $ 5,295,087 $21,756,810 ----------------- ----------------- ----------------- Income (Loss) from Operations: $ 1,985,727 $ (529,813) $ 1,455,914 ----------------- ----------------- ----------------- Other Income (Loss): Interest Income $ 171,435 $ - $ 171,435 Income from investment in partnership and joint venture $ 16,714 $ - $ 16,714 Unrealized appreciation in investment $ 51,143 $ - $ 51,143 ----------------- ----------------- ----------------- ----------------- ----------------- ----------------- $ 239,292 $ - $ 239,292 ----------------- ----------------- ----------------- $ - NET INCOME: $ 2,225,019 $ (529,813) $ 1,695,206 ================= ================= ================= Weighted Average Number of Units Outstanding: 173,252 173,252 173,252 NET INCOME PER UNIT: $ 12.84 $ (3.06) $ 9.78
*See Note C to Unaudited Pro Forma Consolidated Financial Statements 17 New England Realty Associates Limited Partnership Unaudited Pro Forma Consolidated Estimated Taxable Operating Results For the Twelve Months Ended September 30, 1999
Pro Forma Pro Forma ------------------------------------- Consolidated Consolidated Income Statement Adjustments* Taxable Income - ----------------------------------------------------------------------------------- -------------------- REVENUES: Rental Income $ 23,586,953 $ 23,586,953 Laundry & Sundry $ 237,855 $ 237,855 ---------------------- ---------------------- --------------------- Total Revenues: $ 23,824,808 $ - $ 23,824,808 ---------------------- ---------------------- --------------------- EXPENSES: Administrative $ 1,232,038 $ 1,232,038 Depreciation and amortization $ 4,687,416 $ (617,517) $ 4,069,899 Interest $ 6,404,140 $ 6,404,140 Management Fees $ 978,363 $ 978,363 Operating $ 2,598,478 $ 2,598,478 Renting $ 402,608 $ 402,608 Repairs and Maintenance $ 3,118,548 $ 3,118,548 Taxes and Insurance $ 2,406,899 $ 2,406,899 ---------------------- ---------------------- --------------------- Total Operating Expenses: $ 21,828,490 $ (617,517) $ 21,210,973 ---------------------- ---------------------- --------------------- Income from Operations: $ 1,996,318 $ 617,517 $ 2,613,835 ---------------------- ---------------------- --------------------- Other Income (Loss): Interest Income $ 319,349 $ 319,349 Income from investment in partnership and joint venture $ 25,919 $ 25,919 Gain on sale of real estate $ 800,232 $ 800,232 Unrealized depreciation in investment $ (340,410) $ 340,410 $ - ---------------------- ---------------------- --------------------- $ 805,090 $ 340,410 $ 1,145,500 ---------------------- ---------------------- --------------------- TAXABLE OPERATING INCOME: $ 2,801,408 $ 957,927 $ 3,759,335 ---------------------- ---------------------- ---------------------
*See Note D to Unaudited Pro Forma Consolidated Financial Statements 18 New England Realty Associates Limited Partnership Unaudited Pro Forma Consolidated Estimated Cash Made Available by Operations For the Twelve Months Ended September 30, 1999
Pro Forma Pro Forma ------------------------------------ Consolidated Consolidated Income Statement Adjustments* Operating Cash Flow - ----------------------------------------------------------------------------------- -------------------- REVENUES: Rental Income $ 23,586,953 $ 23,586,953 Laundry & Sundry $ 237,855 $ 237,855 ---------------------- --------------------- --------------------- Total Revenues: $ 23,824,808 $ - $ 23,824,808 ---------------------- --------------------- --------------------- EXPENSES: Administrative $ 1,232,038 $ 1,232,038 Depreciation and amortization $ 4,687,416 $ (4,687,416) $ - Interest $ 6,404,140 $ 6,404,140 Management Fees $ 978,363 $ 978,363 Operating $ 2,598,478 $ 2,598,478 Renting $ 402,608 $ 402,608 Repairs and Maintenance $ 3,118,548 $ 3,118,548 Taxes and Insurance $ 2,406,899 $ 2,406,899 ---------------------- --------------------- --------------------- Total Operating Expenses: $ 21,828,490 $ (4,687,416) $ 17,141,074 ---------------------- --------------------- --------------------- Income from Operations: $ 1,996,318 $ 4,687,416 $ 6,683,734 ---------------------- --------------------- --------------------- Other Income (Loss): Interest Income $ 319,349 $ 319,349 Income from investment in partnership and joint venture $ 25,919 $ 33,371 $ 59,290 Gain on sale of real estate $ 800,232 $ (480,872) $ 319,360 Unrealized depreciation in investment $ (340,410) $ (340,410) ---------------------- --------------------- --------------------- $ 805,090 $ (447,501) $ 357,589 ---------------------- --------------------- --------------------- CASH MADE AVAILABLE FROM OPERATIONS: $ 2,801,408 $ 4,239,915 $ 7,041,323 ---------------------- --------------------- ---------------------
*See Note E to Unaudited Pro Forma Consolidated Financial Statements. 19 New England Realty Associates Limited Partnership Notes to Unaudited Pro Forma Consolidated Financial Statements A. ADJUSTMENTS TO PRO FORMA SEPTEMBER 30, 1999 BALANCE SHEET The following summarizes the fourth quarter 1999 transactions to be included in the September 30, 1999 pro forma balance sheet which are more fully described in forms 8-K previously filed by NERA. Westside Colonial Oak Apartments Apartments ---------------------------------------------- Date of Acquisition December 3, 1999 December 23, 1999 Purchase Price $ 8,900,000 $ 14,500,000 Mortgage at Acquisition $ 5,207,172 $ 11,600,000 Note Payable $ - $ 750,000 The pro forma cash balance at September 30, 1999 has been adjusted to - 0 - by reducing rents receivable in the amount of $110,195. B. ADJUSTMENTS MADE TO PRO FORMA INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999.
Staples Westside Oaks Additional Nine Months Ended September 30, 1999 Plaza Apartments Apartments Borrowings Total - ------------------------------------------------------------------------------------------------------------------------------- Revenues: Rental income $ 456,880 $ 1,100,233 $ 1,604,542 $ - $ 3,161,655 Laundry and sundry income $ - $ 16,763 $ 30,035 $ - $ 46,798 - ------------------------------------------------------------------------------------------------------------------------------- $ 456,880 $ 1,116,996 $ 1,634,577 $ - $ 3,208,453 - ------------------------------------------------------------------------------------------------------------------------------- Expenses: Administrative $ - $ 14,425 $ 124,936 $ - $ 139,361 Depreciation and amortization $ 69,129 $ 317,803 $ 502,196 $ 10,929 $ 900,057 Interest $ 173,352 $ 256,160 $ 679,422 $ 60,000 $ 1,168,934 Management fee @ 4% $ 16,775 $ 44,009 $ 64,182 $ - $ 124,966 Utilities and operating $ 8,406 $ 198,378 $ 334,280 $ - $ 541,064 Renting $ - $ 29,864 $ 39,384 $ - $ 69,248 Repairs and maintenance $ 7,802 $ 133,934 $ 225,698 $ - $ 367,434 Taxes and insurance $ 77,318 $ 100,660 $ 129,655 $ - $ 307,633 - ------------------------------------------------------------------------------------------------------------------------------- $ 352,782 $ 1,095,233 $ 2,099,753 $ 70,929 $ 3,618,697 - ------------------------------------------------------------------------------------------------------------------------------- Income from Operations $ 104,098 $ 21,763 $ (465,176) $(70,929) $ (410,244) - ------------------------------------------------------------------------------------------------------------------------------- Other Income: Interest income $ - $ - $ - $ - $ - Income (Loss) from joint venture $ - $ - $ - $ - $ - Other $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------- $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------- Net Income $ 104,098 $ 21,763 $ (465,176) $(70,929) $ (410,244) - -------------------------------------------------------------------------------------------------------------------------------
20 (1) The above table includes the adjustments needed to pro forma the 1999 transactions as though they were completed as of January 1, 1998. No adjustments are required for the transactions that are included in the historical nine months statements. (2) Rental income is computed from the 1998 pro forma income statement. Depreciation and amortization is computed on historical cost assuming purchase at January 1, 1998. Interest is computed on mortgages and notes payable to adjust interest expense as though the debt was incurred at January 1, 1998. Management fees are computed at 4% of rental income. Other operating expenses are based upon the 1998 historical financial statements. C. ADJUSTMENTS MADE TO THE PRO FORMA INCOME STATEMENT FOR THE YEAR ENDED DECEMBER 31, 1998.
Staples Westside Oaks Additional Year Ended December 31, 1998 Plaza Apartments Apartments Borrowings Total - ------------------------------------------------------------------------------------------------------------------------------- Revenues: Rental income $ 1,096,512 $ 1,466,977 $ 2,139,389 $ - $ 4,702,878 Laundry and sundry income $ - $ 22,350 $ 40,046 $ - $ 62,396 - ------------------------------------------------------------------------------------------------------------------------------- $ 1,096,512 $ 1,489,327 $ 2,179,435 $ - $ 4,765,274 - ------------------------------------------------------------------------------------------------------------------------------- Expenses: Administrative $ - $ 19,233 $ 166,581 $ - $ 185,814 Depreciation and amortization $ 164,765 $ 423,738 $ 669,595 $ 14,573 $ 1,272,671 Interest $ 416,044 $ 341,546 $ 905,896 $ 175,000 $ 1,838,486 Management fee @ 4% $ 40,260 $ 58,679 $ 85,576 $ - $ 184,515 Utilities and operating $ 20,175 $ 264,504 $ 445,707 $ - $ 730,386 Renting $ - $ 39,819 $ 52,512 $ - $ 92,331 Repairs and maintenance $ 18,724 $ 178,579 $ 300,931 $ - $ 498,234 Taxes and insurance $ 185,564 $ 134,213 $ 172,873 $ - $ 492,650 - ------------------------------------------------------------------------------------------------------------------------------- $ 845,532 $ 1,460,311 $ 2,799,671 $ 189,573 $ 5,295,087 - ------------------------------------------------------------------------------------------------------------------------------- Income from Operations $ 250,980 $ 29,016 $ (620,236) $ (189,573) $ (529,813) - ------------------------------------------------------------------------------------------------------------------------------- Other Income: Interest income $ - $ - $ - $ - $ - Income (Loss) from joint venture $ - $ - $ - $ - $ - Other $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------- $ - $ - $ - $ - $ - - ------------------------------------------------------------------------------------------------------------------------------- Net Income $ 250,980 $ 29,016 $ (620,236) $ (189,573) $ (529,813) - -------------------------------------------------------------------------------------------------------------------------------
(1) The above table includes the adjustment needed to pro forma the 1999 transactions as though they were completed as of January 1, 1998. (2) Rental income is computed on the historical 1998 financial statement. Depreciation and amortization is computed on historical cost assuming purchase at January 1, 1998. Interest is computed on mortgages and notes payable to adjust interest expense as though the debt was incurred at January 1, 1998. Management fees are computed at 4% of rental income. 21 Other operating expenses are based upon the 1998 historical financial statements. (3) The operations of Willard Apartments, which was sold in April, 1999, has not been excluded from the above pro forma statement as it represented less than 1% of NERA's revenue and net income. D. ADJUSTMENTS MADE TO THE PRO FORMA CONSOLIDATED TAXABLE OPERATING RESULTS Depreciation has been adjusted to tax depreciation. Unrealized investment losses at September 30, 1999 have been eliminated. This loss was substantially realized at December 31, 1999. E. ADJUSTMENTS MADE TO THE PRO FORMA CONSOLIDATED ESTIMATED CASH MADE AVAILABLE BY OPERATIONS. Depreciation and amortization have been eliminated. Income from joint venture has been adjusted to reflect cash received. A gain on the sale of real estate has been reduced to reflect a mortgage note received by NERA as part of proceeds. CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Current Report of New England Realty Associates LLP on Form 8-K of our report dated February 15, 2000 on our audits of certain revenues and expenses of Staples and Westside as of December 31, 1998. /s/ Miller Wachman LLP Boston, Massachusetts February 15, 2000 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Current Report of New England Realty Associates LLP on Form 8-K of our report dated January 26, 1999 on our audits of certain revenues and expenses of Oaks Apartments LLC as of December 31, 1998. /s/ Ziner, Kennedy & Lehan LLP Quincy, Massachusetts February 2, 2000 -----END PRIVACY-ENHANCED MESSAGE-----