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): December 21, 2001
AmeriVest Properties Inc.
-------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-14462 84-1240264
---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1780 South Bellaire Street, Suite 515, Denver, Colorado 80222
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(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
the Kellogg 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 the Kellogg Office
Building for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
/s/ Arthur Andersen LLP
Denver, Colorado
January 11, 2002
F-1
THE KELLOGG OFFICE BULDING
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 $1,655,705 $2,230,990
Other revenue 69,889 83,215
---------- ----------
Total revenue 1,725,594 2,314,205
---------- ----------
CERTAIN EXPENSES:
Repairs and maintenance 102,229 106,748
Utilities 99,340 155,316
Property taxes 141,071 188,094
Property management fees 45,539 57,977
Operating services 251,169 345,754
---------- ----------
Total expenses 639,348 853,889
---------- ----------
EXCESS OF REVENUE OVER CERTAIN
EXPENSES $1,086,246 $1,460,316
========== ==========
The accompanying notes are an integral part of these financial statements.
F-2
THE KELLOGG 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 the Kellogg Office Building (the "Kellogg Building" or the
"Property"). The Property consists of one office building located in Littleton,
Colorado. The Property contains approximately 113,000 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 94%.
The Property was acquired by AmeriVest Properties Inc. and subsidiaries
("AmeriVest") from an unrelated party on December 21, 2001 for $13,550,000,
which was paid with $9,500,000 from the proceeds of a loan from US Bank National
Association and the balance from a portion of the proceeds of the July 2001
public offering. In addition, AmeriVest incurred approximately $250,000 related
acquisition fees and costs, of which, $203,440 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 assumptions 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
THE KELLOGG 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 $ 1,873,826
2002 1,609,026
2003 1,165,870
2004 499,115
2005 150,767
Thereafter --
-----------
$ 5,298,604
===========
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 the Kellogg Building, 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
the Kellogg Building 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 the Kellogg Building. 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
Securities and Exchange Commission.
F-5
AMERIVEST PROPERTIES INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2001
(Unaudited)
Acquisition
of the
AmeriVest Kellogg Pro Forma
(Historical) Building Combined
------------ ------------ ------------
ASSETS
Investment in Real Estate
Land $ 9,960,376 $ 2,773,093 (b) $ 12,733,469
Building and improvements 50,417,352 11,092,372 (b) 61,509,724
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 13,865,465 73,384,131
Cash and cash equivalents 9,216,887 (3,929,975)(a) 5,286,912
Accounts receivable 156,853 -- 156,853
Deferred rent receivable 324,330 -- 324,330
Deferred financing costs, net 463,351 81,399 (c) 544,750
Prepaid expenses, escrows and other assets 1,346,069 -- 1,346,069
------------ ------------ ------------
Total Assets $ 71,026,156 $ 10,016,889 $ 81,043,045
============ ============ ============
LIABILITIES
Mortgage loans and notes payable $ 41,875,236 $ 9,500,000 (c) $ 51,375,236
Accounts payable and accrued expenses 1,662,097 203,440 (d) 1,865,537
Accrued real estate taxes 810,955 141,071 (b) 952,026
Prepaid rents and security deposits 990,573 110,353 (b) 1,100,926
Dividends payable 826,605 -- 826,605
------------ ------------ ------------
Total Liabilities 46,165,466 9,954,864 56,120,330
------------ ------------ ------------
OWNERS' EQUITY
Common stock 6,613 -- 6,613
Capital in excess of par value 30,709,501 62,025 (e) 30,771,526
Distributions in excess of accumulated
earnings (5,855,424) -- (5,855,424)
------------ ------------ ------------
Total Owners' Equity 24,860,690 62,025 24,922,715
------------ ------------ ------------
Total Liabilities and Owners' Equity $ 71,026,156 $ 10,016,889 $ 81,043,045
============ ============ ============
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
--------------------------
Kellogg Pro Forma Pro Forma
AmeriVest Building Adjustments Combined
----------- ----------- ----------- -----------
REAL ESTATE OPERATING REVENUE
Rental revenue $ 7,496,114 $ 1,725,594 $ -- $ 9,221,708
----------- ----------- ----------- -----------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 1,955,488 448,172 -- 2,403,660
Real estate taxes 594,282 141,071 -- 735,353
Management fees 380,653 45,539 40,242 (f) 466,434
General and administrative 521,266 4,566 -- 525,832
Impairment of deferred rents receivable 326,113 -- -- 326,113
Interest 2,336,038 -- 447,850 (g) 2,783,888
Depreciation and amortization 1,667,362 -- 207,982 (h) 1,875,344
----------- ----------- ----------- -----------
7,781,202 639,348 696,074 9,116,624
----------- ----------- ----------- -----------
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) 1,086,246 (696,074) 186,607
GAIN ON SALE OF REAL ESTATE 1,143,698 -- -- 1,143,698
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 940,133 $ 1,086,246 $ (696,074) $ 1,330,305
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic $ 0.23 $ 0.33
=========== ===========
Diluted $ 0.23 $ 0.32
=========== ===========
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
--------------------------
Kellogg Pro Forma Pro Forma
AmeriVest Building Adjustments Combined
----------- ----------- ----------- -----------
REAL ESTATE OPERATING REVENUE
Rental revenue $ 7,222,437 $ 2,314,205 $ -- $ 9,536,642
----------- ----------- ----------- -----------
REAL ESTATE OPERATING EXPENSES
Property Operating Expenses
Operating expenses 1,946,633 600,950 -- 2,547,583
Real estate taxes 668,224 188,094 -- 856,318
Management fees 344,636 57,977 55,737 (f) 458,350
General and administrative 517,019 6,868 -- 523,887
Severance expense 255,442 -- -- 255,442
Interest 2,167,869 -- 787,133 (g) 2,955,002
Depreciation and amortization 1,205,795 -- 277,309 (h) 1,483,104
----------- ----------- ----------- -----------
7,105,618 853,889 1,120,179 9,079,686
----------- ----------- ----------- -----------
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 1,460,316 (1,120,179) 460,022
GAIN ON SALE OF REAL ESTATE 2,556,839 -- -- 2,556,839
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 2,676,724 $ 1,460,316 $(1,120,179) $ 3,016,861
=========== =========== =========== ===========
NET INCOME PER COMMON SHARE
Basic and diluted $ 1.07 $ 1.21
=========== ===========
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 the Kellogg Building 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 the Kellogg Building, 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
the Kellogg Building 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 the Kellogg Building consists of the following:
Purchase price $ 13,550,000
Estimated acquisition costs 50,000
Advisory fee per Sheridan Realty Advisors, LLC
agreement 203,440
Loan origination fees 81,399
Less: mortgage loan (9,500,000)
Less: accrued advisory fee (203,440)
Less: credit for accrued real estate taxes (141,071)
Less: credit for security deposits (110,353)
------------
Cash paid $ 3,929,975
============
(b) The purchase price of the Kellogg Building was allocated to the assets and
liabilities based on estimated fair values.
(c) The loan in the amount of $9.5 million from US Bank bears interest at 4.77%
for the initial 12 months and matures on December 21, 2004. After the initial 12
months, the rate floats on one of three indices elected by AmeriVest, provided
by US Bank, plus 250 basis points. AmeriVest paid a 0.75% loan origination fee
plus additional loan costs, which have been capitalized and are being amortized
over the life of the loan.
F-9
(d) Advisory fee of $203,440 due to Sheridan Realty Advisors, LLC in connection
with the acquisition of the Kellogg Building per the Property Management and
Advisory Agreement.
(e) Fair value of 85,445 incentive warrants granted to Sheridan Realty Advisors,
LLC in connection with the acquisition of the Kellogg Building 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
--------- ---------
Management fees per Sheridan Realty
Advisors, LLC agreement $ 85,781 $ 113,714
Less: historical management fees (45,539) (57,977)
--------- ---------
Pro forma adjustment $ 40,242 $ 55,737
========= =========
(g) Interest expense to be recognized related to the mortgage loan. Includes
loan interest (assumed interest rates of 6% and 8% for the nine months ended
September 30, 2001 and the year ended December 31, 2000, respectively) 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 the Kellogg Building) 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 $9,552,600
----------
Expenses:
Operating expenses 2,547,583
Real estate taxes 856,318
Management fees 458,350
General and administrative 523,887
Severance expense 255,442
Interest 2,955,002
Depreciation and amortization 1,021,036
----------
Total expenses 8,617,618
----------
Estimated Taxable Operating Income 934,982
Add back depreciation and amortization 1,021,036
----------
Estimated Cash to be Made Available by Operations $1,956,018
==========
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 the Kellogg Building 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.
February 28, 2002
By: /s/ D. Scott Ikenberry
------------------------------------
D. Scott Ikenberry
Chief Financial Officer
F-13