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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): November 25, 2003

UNITED DOMINION REALTY TRUST, INC.


(Exact Name of Registrant as Specified in Charter)
         
Maryland   1-10524   54-0857512

 
 
(State or Other
Jurisdiction of
Incorporation)
  (Commission File
Number)
  (IRS Employer
Identification No.)

1745 Shea Center Drive, Suite 200, Highlands Ranch, Colorado 80129
(Address of Principal Executive Offices)        (Zip Code)

Registrant’s telephone number, including area code    (720) 283-6120

 


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Item 5. Other Events.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
SIGNATURES
Report of Independent Auditors
Combined Statements of Revenue and Certain Expenses
Notes to Combined Statements of Revenue and Certain Expenses
Statements of Revenue and Certain Expenses
Notes to Statements of Revenue and Certain Expenses
EX-23.1 Consent of Ernst & Young LLP


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Item 5. Other Events.

     On November 25, 2003, United Dominion Realty Trust, Inc. (the “Company”), through its subsidiary, United Dominion Realty, L.P., a Virginia limited partnership, completed a transaction to acquire Carriage Homes at Wyndam, an apartment community in Glen Allen, Virginia, for a total purchase price of $31.6 million. Individually, this transaction was not a significant acquisition at the time of the transaction or at the date of this filing under the rules governing the reporting of transactions on Form 8-K. However, during the 2003 fiscal year, the Company acquired properties in a series of separate, unrelated transactions, including the transaction described above, which transactions in the aggregate were significant pursuant to Rule 3-14 of Regulation S-X. Accordingly, the Company is hereby filing certain financial information indicated under Rule 3-14 and Article 11 of Regulation S-X relating to these transactions and certain individually insignificant properties acquired during 2003.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits

(a)   Financial Statements of Real Estate Operations Acquired.

    Harbor Greens Apartments, Pinebrook Village Apartments, Huntington Vista Apartments, Windjammer Apartments:

    Report of Independent Auditors

    Combined Statements of Revenue and Certain Expenses for the year ended December 31, 2002 (audited) and for the three months ended March 31, 2003 (unaudited)

    Inlet Bay at Gateway Apartments:

    Report of Independent Auditors

    Combined Statements of Revenue and Certain Expenses for the year ended December 31, 2002 (audited) and for the six months ended June 30, 2003 (unaudited)

(b)   Pro Forma Financial Information.

    Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2003 (unaudited)

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    Pro Forma Condensed Consolidated Statements of Operations for the nine months ended September 30, 2003 (unaudited) and for the year ended December 31, 2002 (unaudited)

(c)   Exhibits.
     
Exhibit No.   Description

 
23.1   Consent of Ernst & Young LLP

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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.

         
    UNITED DOMINION REALTY TRUST, INC
         
    By:   /s/ Christopher D. Genry
       
        Christopher D. Genry
Executive Vice President and Chief
Financial Officer

Date: January 9, 2004

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Report of Independent Auditors

The Board of Directors
United Dominion Realty Trust, Inc.

We have audited the accompanying combined statement of revenue and certain expenses of the Harbor Greens Apartments, Pinebrook Village Apartments, Huntington Vista Apartments, and Windjammer Apartments (the Communities) for the year ended December 31, 2002. This combined statement is the responsibility of the management of the Communities. Our responsibility is to express an opinion on this combined statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the combined statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall combined statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying combined statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Current Report on Form 8-K of United Dominion Realty Trust, Inc., as described in Note 1, and is not intended to be a complete presentation of the Communities' revenue and expenses.

In our opinion, the combined statement referred to above presents fairly, in all material respects, the revenue and certain expenses of the Harbor Greens Apartments, Pinebrook Village Apartments, Huntington Vista Apartments, and Windjammer Apartments for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

   
  Ernst & Young LLP

Richmond, Virginia
May 21, 2003

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Harbor Greens Apartments, Pinebrook Village Apartments, Huntington
Vista Apartments, and Windjammer Apartments

Combined Statements of Revenue and Certain Expenses

                   
              Three-month  
      Year ended     period ended  
      December 31,     March 31,  
      2002     2003  
     
   
 
              (Unaudited)  
               
Rental and other property income
  $ 14,127,050     $ 3,544,433  
Rental expenses:
               
 
Personnel
    989,126       260,161  
 
Utilities
    724,283       209,803  
 
Repairs and maintenance
    924,873       245,352  
 
Administrative and marketing
    388,234       81,307  
 
Property management (Note 3)
    546,945       176,926  
 
Real estate taxes and insurance
    970,047       259,442  
 
Other expenses (Note 3)
    441,576       240,273  
 
 
   
 
Total rental expenses
    4,985,084       1,473,264  
 
 
   
 
Revenue in excess of certain expenses
  $ 9,141,966     $ 2,071,169  
 
 
   
 

See accompanying notes.

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Harbor Greens Apartments, Pinebrook Village Apartments, Huntington
Vista Apartments, and Windjammer Apartments

Notes to Combined Statements of Revenue and Certain Expenses

1. Basis of Presentation

On May 2, 2003, a wholly-owned subsidiary of United Dominion Realty Trust, Inc. entered into an agreement with Midlands Company to acquire all of the assets and assumed all of the liabilities of Midlands Company, including acquiring the Harbor Greens Apartments and the Huntington Vista Apartments. Also on May 2, 2003, United Dominion Realty Limited Partnership entered into a series of agreements with the owners of Pinebrook Village Apartments and Windjammer Apartments to issue preferred limited partnership units in exchange for the contribution of the Pinebrook Village Apartments and the Windjammer Apartments. The foregoing properties are referred to collectively as the “Communities.”

The combined statements of revenue and certain expenses relate to the operations of the Communities and were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, including Rule 3-14 of Regulation S-X. Accordingly, the accompanying combined statements of revenue and certain expenses have been prepared using the accrual method of accounting, and certain expenses such as depreciation, amortization, income taxes, mortgage interest expense and entity expenses are not reflected in the combined statements of revenue and certain expenses, as required by Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Consequently, the combined statements of revenue and certain expenses for the periods presented are not representative of the actual operations for the periods presented, as certain revenues and expenses which may not be in the proposed future operations of the Communities have been excluded in accordance with Rule 3-14 of Regulation S-X.

The accompanying interim unaudited combined statement of revenue and certain expenses has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and was prepared on the same basis as the combined statement of revenue and certain expenses for the year ended December 31, 2002. In the opinion of management of the Communities, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for this interim period have been made. The revenue in excess of certain expenses for such interim period is not necessarily indicative of the excess of revenue over certain expenses for the full year.

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1. Basis of Presentation (continued)

The Communities consist of the following properties:

                 
    Number of        
Property Name   Units     Location

 
   
Harbor Greens   384     Costa Mesa, CA
Pinebrook Village   200     Costa Mesa, CA
Huntington Vista   220     Huntington Beach, CA
Windjammer   264     Huntington Beach, CA

2. Summary of Significant Accounting Policies

Revenue Recognition

The apartment homes are leased under operating leases with terms of generally one year or less. Rental income is recognized as it is earned, which is not materially different than on a straight-line basis.

Repairs and Maintenance

Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized.

Estimates

The preparation of combined statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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3. Related Party Transactions

An affiliate of Beauchamp Realty performed the property management function for the Communities and charged a management fee of 3% and 5% of rental income for this service for 2002 and the three-month period ended March 31, 2003, respectively. Management fees in the amount of $546,945 and $176,926 were charged to the Communities during 2002 and the three-month period ended March 31, 2003, respectively. The beneficial owners of Beauchamp Realty, Inc. are also the beneficial owners of the Communities.

Effective January 8, 2003, the real property underlying the Pinebrook Village Apartments and the related ground lease were purchased from a third party by an entity owned by parties affiliated with the Communities. Following the acquisition of the real property, the annual ground lease expense increased by approximately $400,000.

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Report of Independent Auditors

The Board of Directors
United Dominion Realty Trust, Inc.

We have audited the accompanying statements of revenue and certain expenses of the Inlet Bay at Gateway Apartments (the Community) for the year ended December 31, 2002. This statement is the responsibility of the management of the Community. Our responsibility is to express an opinion on this statement based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall statement presentation. We believe that our audit provides a reasonable basis for our opinion.

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 Current Report on Form 8-K of United Dominion Realty Trust, Inc., as described in Note 1, and is not intended to be a complete presentation of the Community’s revenue and expenses.

In our opinion, the statement referred to above presents fairly, in all material respects, the revenue and certain expenses of the Inlet Bay at Gateway Apartments for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States.

   
  Ernst & Young LLP

Richmond, Virginia
November 14, 2003

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Inlet Bay at Gateway Apartments

Statements of Revenue and Certain Expenses

                   
      Year ended     Six-month  
      December 31,     period ended  
      2002     June 30, 2003  
     
   
 
          (Unaudited)  
 
Rental and other property income
  $ 3,770,781     $ 1,947,970  
Rental expenses:
               
 
Personnel
    470,532       246,412  
 
Utilities
    134,660       76,038  
 
Repairs and maintenance
    387,601       227,282  
 
Administrative and marketing
    156,068       83,608  
 
Property management
    113,220       58,439  
 
Real estate taxes and insurance
    605,286       349,785  
 
 
   
 
Total rental expenses
    1,867,367       1,041.564  
 
 
   
 
Revenue in excess of certain expenses
  $ 1,903,414     $ 906,406  
 
 
   
 

See accompanying notes.

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Inlet Bay at Gateway Apartments

Notes to Statements of Revenue and Certain Expenses

1. Basis of Presentation

On June 30, 2003, United Dominion Realty Trust, Inc. entered into an agreement to purchase the Inlet Bay at Gateway Apartments (the Community) from Lend Lease Real Estate Investment, Inc.

The statements of revenue and certain expenses relate to the operations of the Community and were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission, including Rule 3-14 of Regulation S-X. Accordingly, the accompanying statements of revenue and certain expenses have been prepared using the accrual method of accounting, and certain expenses such as depreciation, amortization, income taxes, mortgage interest expense and entity expenses are not reflected in the statements of revenue and certain expenses, as required by Rule 3-14 of Regulation S-X of the Securities and Exchange Commission. Consequently, the statements of revenue and certain expenses for the periods presented are not representative of the actual operations for the periods presented, as certain revenues and expenses which may not be in the proposed future operations of the Community have been excluded in accordance with Rule
3-14 of Regulation S-X.

The accompanying interim unaudited statement of revenue and certain expenses has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission and was prepared on the same basis as the statement of revenue and certain expenses for the year ended December 31, 2002. In the opinion of management of the Community, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information for this interim period have been made. The revenue in excess of certain expenses for such interim period is not necessarily indicative of the excess of revenue over certain expenses for the full year.

The Community consists of the following:

                 
    Number of        
Property Name   Units     Location

 
   
Inlet Bay at Gateway   464     Saint Petersburg, FL

2. Summary of Significant Accounting Policies

Revenue Recognition

The apartment homes are leased under operating leases with terms of generally one year or less. Rental income is recognized as it is earned, which is not materially different than on a straight-line basis.

Repairs and Maintenance

Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized.

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Inlet Bay at Gateway Apartments

Notes to Statement of Revenue and Certain Expenses
(continued)

2. Summary of Significant Accounting Policies (continued)

Estimates

The preparation of the statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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Pro Forma Condensed Consolidated Balance Sheet

     There are no adjustments to the following historical consolidated balance sheet as the acquisitions of Harbor Greens Apartments, Pinebrook Village Apartments, Huntington Vista Apartments, Windjammer Apartments and the Inlet Bay at Gateway Apartments were made prior to September 30, 2003 and are included in their historical amounts. The historical condensed consolidated balance sheet following reflects all assets acquired and debt and equity issued in conjunction with the transactions.

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UNITED DOMINION REALTY TRUST, INC.

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

SEPTEMBER 30, 2003

(UNAUDITED AND IN THOUSANDS)

         
    HISTORICAL
    AMOUNTS (A)
   
Assets
       
Real estate investments, net
  $ 3,317,641  
Cash and cash equivalents
    19,946  
Deferred financing costs, net
    21,370  
Other assets
    54,739  
 
   
 
Total assets
  $ 3,413,696  
 
   
 
Liabilities and Shareholders’ Equity
       
Secured debt
  $ 1,041,476  
Unsecured debt
    967,251  
Accrued expenses and other liabilities
    108,320  
Distributions payable
    39,950  
 
   
 
Total liabilities
    2,156,997  
Minority interests
    88,215  
Preferred stock — Series B Cumulative Redeemable
    135,400  
Preferred stock — Series D Cumulative Convertible Redeemable
    143,350  
Preferred stock — Series E Cumulative Convertible Redeemable
    56,893  
Common Stock
    120,163  
Other equity
    712,678  
 
   
 
Total shareholders’ equity
    1,256,699  
 
   
 
Total liabilities and shareholders’ equity
  $ 3,413,696  
 
   
 

See accompanying notes.

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Notes to Pro Forma Condensed Consolidated Balance Sheet

(A)   Represents the condensed consolidated balance sheet of the Company as of September 30, 2003, as contained in the historical consolidated financial statements and notes thereto filed on Form 10-Q.

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Pro Forma Condensed Consolidated Statement of Operations

The accompanying unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine month period ended September 30, 2003 and for the year ended December 31, 2002 of the Company is presented as if Harbor Greens Apartments, Pinebrook Village Apartments, Huntington Vista Apartments, Windjammer Apartments and the Inlet Bay at Gateway Apartments (the Properties) had been acquired on January 1, 2002.

These Pro Forma Condensed Consolidated Statements of Operations should be read in conjunction with the historical consolidated financial statements included in the Company’s previous filings with the Securities and Exchange Commission.

The unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what the actual results of operations would have been for the nine month period ended September 30, 2003 or for the year ended December 31, 2002 assuming the above transactions had been consummated on January 1, 2002, nor do they purport to represent the future results of operations of the Company.

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UNITED DOMINION REALTY TRUST, INC.

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2003

(UNAUDITED AND IN THOUSANDS, EXCEPT PER-SHARE DATA)

                           
      HISTORICAL   PRO FORMA   PRO FORMA
      AMOUNTS (A)   ADJUSTMENTS (B)   AMOUNTS
     
 
 
Revenues
                       
 
Rental income
  $ 450,395     $ 8,423     $ 458,818  
 
Non-property income
    703             703  
 
   
     
     
 
 
Total revenues
    451,098       8,423       459,521  
Expenses
                     
 
Real estate taxes and insurance
    51,388       794       52,182  
 
Personnel
    46,155       700       46,855  
 
Utilities
    27,567       408       27,975  
 
Repairs and maintenance
    28,556       651       29,207  
 
Administrative and marketing
    16,772       262       17,034  
 
Property management
    12,631       309       12,940  
 
Other operating expenses
    912       202       1,114  
 
Depreciation
    118,900       3,178       122,078  
 
Interest
    88,923       1,001       89,924  
 
General and administrative
    16,133             16,133  
 
Other expenses
    3,548             3,548  
 
   
     
     
 
 
Total expenses
    411,485       7,505       418,990  
 
 
   
     
     
 
Income before allocation to minority interests and discontinued operations
    39,613       918       40,531  
Minority interests of outside partnerships
    (614 )           (614 )
Minority interests of unitholders in operating partnerships
    (724 )     (267 )     (991 )
 
   
     
     
 
Income from continuing operations
    38,275       651       38,926  
Distributions to preferred shareholders
    (20,580 )     (2,049 )     (22,629 )
Premium on preferred share repurchase
    (18,350 )           (18,350 )
 
   
     
     
 
Loss from continuing operations available to common shareholders
  $ (655 )   $ (1,398 )   $ (2,053 )
 
 
   
     
     
 
Loss per common shares - basic and diluted:
             
Loss from continuing operations available to common shareholders
  $ (0.01 )   $ (0.01 )   $ (0.02 )
 
 
   
     
     
 
Weighted average number of common shares outstanding-basic and diluted
  112,252     112,252   112,252  

See accompanying notes.

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UNITED DOMINION REALTY TRUST

PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

TWELVE MONTHS ENDED DECEMBER 31, 2002

(UNAUDITED AND IN THOUSANDS, EXCEPT PER-SHARE DATA)

                           
      HISTORICAL   PRO FORMA   PRO FORMA
      AMOUNTS (A)   ADJUSTMENTS (C)   AMOUNTS
     
 
 
Revenues
                       
 
Rental income
  $ 594,314     $ 17,898     $ 612,212  
 
Non-property income
    1,806             1,806  
 
 
   
     
     
 
 
Total revenues
    596,120       17,898       614,018  
Expenses
                       
 
Real estate taxes and insurance
    64,495       1,575       66,070  
 
Personnel
    60,580       1,460       62,040  
 
Utilities
    34,529       859       35,388  
 
Repairs and maintenance
    37,909       1,312       39,221  
 
Administrative and marketing
    21,876       544       22,420  
 
Property management
    17,240       660       17,900  
 
Other operating expenses
    1,203       442       1,645  
 
Depreciation
    152,169       6,800       158,969  
 
Interest
    166,946       2,133       169,079  
 
General and administrative
    19,343             19,343  
 
Other expenses
    4,096             4,096  
 
 
   
     
     
 
 
Total expenses
    580,386       15,785       596,171  
 
 
   
     
     
 
Income before allocation to minority interests, discontinued operations and gains on sales of land and depreciable property
    15,734       2,113       17,847  
Gains on sales of land and depreciable property
    1,248             1,248  
 
 
   
     
     
 
Income before minority interests and discontinued operations
    16,982       2,113       19,095  
Minority interests of outside partnerships
    (1,414 )           (1,414 )
Minority interests of unitholders in operating partnerships
    724     (365     359
 
 
   
     
     
 
Income from continuing operations, net of minority interests
    16,292       1,748       18,040  
Distributions to preferred shareholders
    (27,424 )     (4,551     (31,975 )
 
 
   
     
     
 
Loss from continuing operations available to common shareholders
  $ (11,132 )   $ (2,803 )   $ (13,935 )
 
 
   
     
     
 
Loss per common shares - basic and diluted:
             
Loss from continuing operations available to common shareholders
  $ (0.10 )   $ (0.03 )   $ (0.13 )
 
 
   
     
     
 
Weighted average number of common shares outstanding-basic and diluted
  106,078     106,078   106,078  

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(A)   Represents the historical consolidated statement of operations of the Company as contained in the historical consolidated financial statements included in previous filings with the Securities and Exchange Commission.

(B)   Represents the pro forma revenue and expenses for the nine months ended September 30, 2003 attributable to the Properties as if the acquisitions had occurred on January 1, 2002. Interest expense of $1.0 million includes pro forma interest of $0.3 million attributable to new mortgage loans payable and $0.7 million attributable to draws under the line of credit to fund these acquisitions.

(C)   Represents the pro forma revenue and expenses for the year ended December 31, 2002 attributable to the Properties as if the acquisitions had occurred on January 1, 2002. Interest expense of $2.1 million includes pro forma interest of $0.7 million attributable to new mortgage loans payable and $1.4 million attributable to draws under the line of credit to fund these acquisitions.

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EXHIBIT INDEX

     
Exhibit No.   Description

 
23.1   Consent of Ernst & Young LLP

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