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 19, 2001
AmeriVest Properties Inc.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-14462 84-1240264
--------------------------- --------------- -----------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
1780 South Bellaire Street, Suite 515, Denver, Colorado 80222
-------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 297-1800
Item 7. Financial Statements And Exhibits.
(a) Financial Statements of Real Estate Property Acquired:
Report of Independent Public Accountants F-1
Statements of Revenue and Certain Expenses -
for the nine months ended September 30, 2001
(Unaudited) and for the year ended December 31, 2000 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, 2001 (Unaudited) F-6
Pro Forma Consolidated Statements of Operations
(Unaudited):
For the nine months ended September 30, 2001 F-7
For the year ended December 31, 2000 F-8
Notes to Pro Forma Consolidated Financial Statements
(Unaudited) F-9
(c) Statement of Estimated Taxable Operating Results and Cash
to be Made Available by Operations for the Year ended
December 31, 2000 (Unaudited) F-11
Note to Statement of Estimated Taxable Operating Results
and Cash to be Made Available by Operations F-12
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Management of
AmeriVest Properties Inc.:
We have audited the accompanying statement of revenue and certain expenses of
Arrowhead Fountains Office Building (see Note 1) for the year ended December 31,
2000. This financial statement is the responsibility of the Property's
management. Our responsibility is to express an opinion on this financial
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 financial statement is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statement. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
This statement of revenue and certain expenses has been prepared for the purpose
of complying with the rules and regulations of the Securities and Exchange
Commission and is not intended to be a complete presentation of the Property's
revenue and expenses and/or financial position.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenue and certain expenses of Arrowhead Fountains
Office Building for the year ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.
/s/ Arthur Andersen LLP
----------------------------------
Arthur Andersen LLP
Denver, Colorado
October 25, 2001
F-1
ARROWHEAD FOUNTAINS OFFICE BUILDING
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
For the Nine For the Year
Months Ended Ended
September 30, December 31,
2001 2000
---------- ----------
(Unaudited)
REVENUE:
Rental revenue $1,527,968 $1,526,604
Other revenue 66,837 34,868
---------- ----------
Total revenue 1,594,805 1,561,472
---------- ----------
CERTAIN EXPENSES:
Repairs and maintenance 45,350 55,663
Utilities 132,230 167,508
Property taxes 114,669 153,674
Property management fees 43,231 38,757
Operating services 115,549 154,869
---------- ----------
Total expenses 451,029 570,471
---------- ----------
EXCESS REVENUE OVER CERTAIN
EXPENSES $1,143,776 $ 991,001
========== ==========
The accompanying notes are an integral part of these financial statements.
F-2
ARROWHEAD FOUNTAINS OFFICE BUILDING
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 2000
NOTE 1 - BASIS OF PRESENTATION
The accompanying statement of revenue and certain expenses reflect the
operations of Arrowhead Fountains Office Building ("Arrowhead Fountains" or the
"Property"). The Property consists of one office building located in suburban
Phoenix, Arizona. The Property contains approximately 96,000 net rentable square
feet and is located on approximately 5 acres of land. As of December 31, 2000,
the Property had an occupancy percentage of approximately 90%.
The Property was acquired by AmeriVest Properties Inc. and subsidiaries
("AmeriVest") from an unrelated party on November 19, 2001 for $12,750,000,
which was paid by the assumption of the existing loan in the amount of
$9,300,000 and the balance from a portion of the proceeds of our late July 2001
public offering. In addition, AmeriVest incurred approximately $219,000 in
related acquisition fees and costs, of which, approximately $175,000 represents
the advisory fee due to Sheridan Realty Advisors, LLC in connection with the
acquisition per the Property Management and Advisory Agreement.
The accounting records of the Property are maintained on the accrual basis. The
accompanying statements of revenue and certain expenses are prepared pursuant to
the rules and regulations of the Securities and Exchange Commission, and exclude
certain expenses such as 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 requires management to make estimates
and assumption that affect the reported amounts of revenue and expenses during
the reporting period. The ultimate results could differ from those estimates.
Interim Information (Unaudited)
-------------------------------
In the opinion of management, the unaudited information as of September 30, 2001
included herein contains all the adjustments necessary, which are of a normal
recurring nature, to present fairly the revenue and certain expenses for the
nine months ended September 30, 2001. 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
ARROWHEAD FOUNTAINS OFFICE BUILDING
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
DECEMBER 31, 2000
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 rentals on these leases, excluding tenant reimbursements of
operating expenses, as of December 31, 2000, are as follows:
Year Ending December 31:
2001 $ 1,865,048
2002 1,844,715
2003 1,760,082
2004 1,492,072
2005 1,258,276
Thereafter 2,329,642
-----------
$10,549,835
===========
The following table exhibits those tenants who accounted for greater than 10% of
the revenues for the year ended December 31, 2000, and the corresponding
percentage of the future minimum rentals above:
Percentage of Percentage of Future
Tenant 2000 Revenues Minimum Rentals
------ ------------- ---------------
A 24.4% 18.4%
B 11.5% 13.9%
C 12.5% 5.6%
D 17.0% 33.3%
Tenant A is a real estate brokerage firm, tenants B and C are financial services
firms and tenant D is an insurance company.
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, 2001 as
adjusted for the acquisition of Arrowhead Fountains, as if the transaction had
occurred on September 30, 2001.
The accompanying unaudited pro forma consolidated statements of operations for
the nine months ended September 30, 2001 and the year ended December 31, 2000
combine the historical operations of AmeriVest with the historical operations of
Arrowhead Fountains as if the transaction had occurred on January 1, 2000.
The unaudited pro forma consolidated financial statements have been prepared by
AmeriVest management based upon the historical financial statements of AmeriVest
and Arrowhead Fountains. 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 should be read in conjunction with the historical financial
statements included in AmeriVest's previous filings with the SEC.
F-5
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
(Unaudited)
Acquisition
of
AmeriVest Arrowhead Pro Forma
(Historical) Fountains Combined
------------ ------------ ------------
ASSETS
Investment in Real Estate
Land $ 9,960,376 $ 2,605,671 (b) $ 12,566,047
Building and improvements 50,417,352 10,422,683 (b) 60,840,035
Furniture, fixtures and equipment 155,808 -- 155,808
Tenant improvements 1,431,132 -- 1,431,132
Tenant leasing commissions 271,632 -- 271,632
Less: accumulated depreciation and
amortization (2,717,634) -- (2,717,634)
------------ ------------ ------------
Net Investment in Real Estate 59,518,666 13,028,354 72,547,020
Cash and cash equivalents 9,216,887 (3,494,202)(a) 5,722,685
Accounts receivable 156,853 -- 156,853
Deferred rent receivable 324,330 -- 324,330
Deferred financing costs, net 463,351 93,000 (c) 556,351
Prepaid expenses, escrows and other assets 1,346,069 -- 1,346,069
------------ ------------ ------------
Total Assets $ 71,026,156 $ 9,627,152 $ 80,653,308
============ ============ ============
LIABILITIES
Mortgage loans and notes payable $ 41,875,236 $ 9,300,000 (c) $ 51,175,236
Accounts payable and accrued expenses 1,662,097 201,996 (d) 1,864,093
Accrued real estate taxes 810,955 38,223 (b) 849,178
Prepaid rents and security deposits 990,573 33,579 (b) 1,024,152
Dividends payable 826,605 -- 826,605
------------ ------------ ------------
Total Liabilities 46,165,466 9,573,798 55,739,264
------------ ------------ ------------
OWNERS' EQUITY
Common stock 6,613 -- 6,613
Capital in excess of par value 30,709,501 53,354 (e) 30,762,855
Distributions in excess of accumulated
earnings (5,855,424) -- (5,855,424)
------------ ------------ ------------
Total Owners' Equity 24,860,690 53,354 24,914,044
------------ ------------ ------------
Total Liabilities and Owners' Equity $ 71,026,156 $ 9,627,152 $ 80,653,308
============ ============ ============
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, 2001
(Unaudited)
Historical
--------------------------
Arrowhead Pro Forma Pro Forma
AmeriVest Fountains Adjustments Combined
----------- ----------- ----------- -----------
REAL ESTATE OPERATING REVENUE
Rental revenue $ 7,496,114 $ 1,594,805 $ -- $ 9,090,919
----------- ----------- ----------- -----------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 1,955,488 290,749 -- 2,246,237
Real estate taxes 594,282 114,669 -- 708,951
Management fees 380,653 43,231 33,833(f) 457,717
General and administrative 521,266 2,380 -- 523,646
Impairment of deferred rents receivable 326,113 -- -- 326,113
Interest 2,336,038 -- 451,521(g) 2,787,559
Depreciation and amortization 1,667,362 -- 195,425(h) 1,862,787
----------- ----------- ----------- -----------
7,781,202 451,029 680,779 8,913,010
----------- ----------- ----------- -----------
OTHER INCOME
Interest income 92,366 -- -- 92,366
Equity in loss of unconsolidated affiliate (10,843) -- -- (10,843)
----------- ----------- ----------- -----------
81,523 -- -- 81,523
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE GAIN ON SALE
OF REAL ESTATE (203,565) 1,143,776 (680,779) 259,432
GAIN ON SALE OF REAL ESTATE 1,143,698 -- -- 1,143,698
=========== =========== =========== ===========
NET INCOME (LOSS) $ 940,133 $ 1,143,776 $ (680,779) $ 1,403,130
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic $ 0.23 $ 0.35
=========== ===========
Diluted $ 0.23 $ 0.34
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 4,020,898 4,020,898
=========== ===========
Diluted 4,143,767 4,143,767
=========== ===========
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, 2000
(Unaudited)
Historical
--------------------------
Arrowhead Pro Forma Pro Forma
AmeriVest Fountains Adjustments Combined
----------- ----------- ----------- -----------
REAL ESTATE OPERATING REVENUE
Rental revenue $ 7,222,437 $ 1,561,472 $ -- $ 8,783,909
----------- ----------- ----------- -----------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 1,946,633 375,660 -- 2,322,293
Real estate taxes 668,224 153,674 -- 821,898
Management fees 344,636 38,757 36,215(f) 419,608
General and administrative 517,019 2,380 -- 519,399
Severance expense 255,442 -- -- 255,442
Interest 2,167,869 -- 812,341(g) 2,980,210
Depreciation and amortization 1,205,795 -- 260,567(h) 1,466,362
----------- ----------- ----------- -----------
7,105,618 570,471 1,109,123 8,785,212
----------- ----------- ----------- -----------
OTHER INCOME
Interest income 55,874 -- -- 55,874
Equity in loss of unconsolidated affiliate (52,808) -- -- (52,808)
----------- ----------- ----------- -----------
3,066 -- -- 3,066
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE GAIN ON SALE
OF REAL ESTATE 119,885 991,001 (1,109,123) 1,763
GAIN ON SALE OF REAL ESTATE 2,556,839 -- -- 2,556,839
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 2,676,724 $ 991,001 $(1,109,123) $ 2,558,602
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic and diluted $ 1.07 $ 1.03
=========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
Basic 2,492,584 2,492,584
=========== ===========
Diluted 2,495,919 2,495,919
=========== ===========
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 Arrowhead Fountains by AmeriVest.
The accompanying unaudited pro forma consolidated balance sheet presents the
historical financial information of AmeriVest as of September 30, 2001 as
adjusted for the acquisition of Arrowhead Fountains, as if the transaction had
occurred on September 30, 2001.
The accompanying unaudited pro forma consolidated statements of operations for
the nine months ended September 30, 2001 and the year ended December 31, 2000
combine the historical operations of AmeriVest with the historical operations of
Arrowhead Fountains as if the transaction had occurred on January 1, 2000.
NOTE 2 - PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated financial statements reflect the following
pro forma adjustments:
(a) The net cash paid for Arrowhead Fountains consists of the following:
Purchase price $ 12,750,000
Estimated acquisition costs 50,000
Advisory fee per Sheridan Realty Advisors, LLC
agreement 175,000
Loan origination fee 93,000
Less: loan balance assumed (9,300,000)
Less: accrued advisory fee (175,000)
Less: credit for accrued real estate taxes (38,223)
Less: credit for security deposits (33,579)
Less: credit for accrued interest (26,996)
------------
Cash paid $ 3,494,202
(b) The purchase price of Arrowhead Fountains was allocated to the assets and
liabilities based on estimated fair values.
(c) The loan in the amount of $9.3 million, which was assumed from the previous
owner, bears interest at 1-month LIBOR plus 190 basis points and matures on
December 5, 2003. AmeriVest paid a 1% loan origination fee, which has been
capitalized and is being amortized over the remaining life of the loan.
F-9
(d) Consists of the advisory fee of $175,000 due to Sheridan Realty Advisors,
LLC in connection with the acquisition of Arrowhead Fountains per the Property
Management and Advisory Agreement and $26,996 in accrued interest on the assumed
loan.
(e) Fair value of 73,500 incentive warrants granted to Sheridan Realty Advisors,
LLC in connection with the acquisition of Arrowhead Fountains per the Property
Management and Advisory Agreement.
(f) Adjustment to management fees pursuant to the Property Management and
Advisory Agreement:
Nine Months
Ended Year Ended
September 30, December 31,
2001 2000
-------------- --------------
Elimination of historical
management fees $ (43,231) $ (38,757)
Management fees per Sheridan Realty
Advisors, LLC agreement 77,064 74,972
-------------- --------------
Pro forma adjustment $ 33,833 $ 36,215
============== ==============
(g) Interest expense to be recognized related to the mortgage loan assumed upon
the acquisition of Arrowhead Fountains. Includes loan interest calculated at
1-month LIBOR (used 4.32% and 6.58% for the nine months ended September 30, 2001
and the year ended December 31, 2000, respectively, based on an average of
1-month LIBOR during the respective periods) plus 190 basis points and the
amortization of the loan origination fee.
(h) 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, 2001
and the year ended December 31, 2000 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
FOR THE YEAR ENDED DECEMBER 31, 2000
(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 Arrowhead Fountains) based upon the pro forma
consolidated statement of operations for the year ended December 31, 2000. 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 $8,777,744
----------
Expenses:
Operating expenses 2,322,293
Real estate taxes 821,898
Management fees 419,608
General and administrative 519,399
Severance expense 255,442
Interest 2,980,210
Depreciation and amortization 1,003,864
----------
Total expenses 8,322,714
----------
Estimated Taxable Operating Income 455,030
Add back depreciation and amortization 1,003,864
----------
Estimated Cash to be Made Available by Operations $1,458,894
==========
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 Arrowhead Fountains to land (20%) and building (80%) 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
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.
January 23, 2002
By: /s/ D. Scott Ikenberry
--------------------------------
D. Scott Ikenberry
Chief Financial Officer
F-13