UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K/A
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): February 18, 2010 (December 3,
2009)
BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
(Exact
Name of Registrant as Specified in Its Charter)
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Maryland
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333-153135
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26-3136483
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(State
or other jurisdiction of
incorporation
or organization)
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(Commission
File Number)
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IRS
Employer
Identification
No.
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680
Fifth Avenue, 16th
Floor
New
York, NY 10019
(Address
of principal executive offices)
Registrant’s
telephone number, including area code: (212)
843-1601
Not
Applicable
(Former
name or former address, if changed since last report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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¨
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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¨
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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¨
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
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¨
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
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ITEM 2.01
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COMPLETION
OF ACQUISITION OR DISPOSITION OF
ASSETS
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On
December 9, 2009, Bluerock Enhanced Multifamily Trust, Inc. (which may be
referred to as the “Company,” “we,” “our,” or “us”) filed a Form 8-K dated
December 3, 2009 with regard to an investment in a joint venture
which acquired a 432-unit garden-style multifamily community known as
Springhouse at Newport News. We hereby amend the Form 8-K dated
December 3, 2009 to provide the required financial information related to our
investment.
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ITEM 9.01
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FINANCIAL
STATEMENTS AND EXHIBITS
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(a)
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Financial
Statements of Real Estate
Acquired
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Springhouse
at Newport News
Page
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Independent
Auditors’ Report
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3
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Statements
of Revenues and Certain Operating Expenses for the nine months ended
September 30, 2009 (unaudited) and for the year ended December 31,
2008
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4
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Notes
to the Statements of Revenues and Certain Operating Expenses for the nine
months ended September 30, 2009 (unaudited) and for the year ended
December 31, 2008
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5
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(b)
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Pro
Forma Financial Information.
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Bluerock
Enhanced Multifamily Trust, Inc.
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Summary
of Unaudited Pro Forma Consolidated Financial Information
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6
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Unaudited
Pro Forma Consolidated Balance Sheet as of September 30,
2009
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7
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Notes
to Unaudited Pro Forma Consolidated Balance Sheet as of September 30,
2009
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8
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Unaudited
Pro Forma Consolidated Statement of Operations for the nine months ended
September 30, 2009
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9
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Notes
to Unaudited Pro Forma Consolidated Statement of Operations for the nine
months ended September 30, 2009
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10
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Unaudited
Pro Forma Consolidated Statement of Operations for the year ended December
31, 2008
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11
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Notes
to Unaudited Pro Forma Consolidated Statement of Operations for the year
ended December 31, 2008
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12
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2
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FREEDMAN
& GOLDBERG
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CERTIFIED
PUBLIC ACCOUNTANTS
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A PROFESSIONAL
CORPORATION
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ERIC W.
FREEDMAN
MICHAEL
GOLDBERG
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GLORIA K.
MOORE
BETTY J.
POWELL
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JULIE A.
CHEEK
KAREN E.
LONG
MICHAEL
GOULD
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31150
NORTHWESTERN HIGHWAY, SUITE 200 FARMINGTON HILLS, MICHIGAN
48334
(248) 626-2400
FAX: (248)
626-4298
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JUDITH A.
COOPER
SALLY
LISCOMB
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REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and Stockholders
Bluerock Enhanced
Multifamily Trust, Inc.
We have audited
the accompanying statement of revenues and certain operating expenses
of Springhouse at Newport News for the year ended December 31, 2008. This
statement is the responsibility of the Company’s management. Our responsibility
is to express an opinion on our audit.
We conducted our
audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the statement of
revenues and certain operating expenses is free of material misstatement.
Springhouse at Newport News is not required to have, nor were we engaged to
perform, an audit of its internal control over financial reporting. Our audit
included consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of Springhouse
at Newport News’ internal control over financial reporting. Accordingly, we
express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of revenues and
certain operating expenses, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
presentation of the statement of revenues and certain operating expenses. We
believe that our audit provides a reasonable basis for our opinion.
The accompanying
statement of revenues and certain operating expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission, as described in Note 2, and is not intended to be a
complete presentation of Springhouse at Newport News’ revenues and
expenses.
In our opinion, the
statement of revenues and certain operating expenses referred to above presents
fairly, in all material respects, the revenues and certain operating expenses,
as described in Note 2 of Springhouse at Newport News for the year ended
December 31, 2008, in conformity with accounting principles generally accepted
in the United States of America.
/s/ Freedman &
Goldberg
Certified Public
Accountants
Farmington Hills,
MI
February 18,
2010
Represented
worldwide as a member firm of the International Association of Local Public
Accountants
3
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SPRINGHOUSE
AT NEWPORT NEWS
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STATEMENTS
OF REVENUES AND CERTAIN OPERATING EXPENSES
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For
the Nine Months Ended September 30, 2009
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For
the Year Ended December 31, 2008
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(unaudited)
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Revenues
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Rental
revenue
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$ | 2,996,223 | $ | 3,879,368 | ||||
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Tenant
reimbursements and other income
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277,537 | 361,773 | ||||||
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Total
revenues
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3,273,760 | 4,241,141 | ||||||
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Certain
Operating Expenses
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||||||||
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Property
Operating Expenses
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873,828 | 1,149,646 | ||||||
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Property
taxes and insurance
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440,065 | 523,652 | ||||||
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Management
Fees
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153,202 | 191,642 | ||||||
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General
and administrative
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7,960 | 289,275 | ||||||
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Total
Certain operating expenses
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1,475,055 | 2,154,215 | ||||||
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Revenues
in excess of certain operating expenses
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$ | 1,798,705 | $ | 2,086,926 | ||||
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See
accompanying notes
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||||||||
4
SPRINGHOUSE
AT NEWPORT NEWS
NOTES
TO STATEMENTS OF REVENUES AND CERTAIN OPERATING EXPENSES
For
the Nine Months Ended September 30, 2009 (unaudited) and the Year Ended December
31, 2008
1. DESCRIPTION
OF REAL ESTATE PROPERTY
On December 3, 2009, through a wholly
owned subsidiary, Bluerock Enhanced Multifamily Trust, Inc. (the “Company”)
completed an investment in a joint venture along with Bluerock Special
Opportunity + Income Fund (“BEMT Co-Investor”), an affiliate of the Company’s
sponsor, and Hawthorne Springhouse, LLC (“Hawthorne”), an unaffiliated entity,
to acquire a 432-unit garden-style multifamily community known as Springhouse at
Newport News (the “Springhouse property”), located in Newport News, Virginia,
from Newport-Oxford Associates Limited Partnership, an unaffiliated
entity.
The
Springhouse property is comprised of 432 units, featuring one- and two-bedroom
layouts in 24, 2-story garden-style apartment buildings surrounding a
centralized lake. The property contains approximately 314,572 rentable square
feet and the average unit size is 728 square feet. Newport
News, VA is part of the Virginia Beach-Norfolk-Newport News, VA-NC
MSA. The community features include clubhouse, fitness center,
swimming pool, tennis court, volleyball court, picnic area and private lake with
gazebo.
The
aggregate purchase price for the Springhouse property was approximately $29.25
million, plus closing costs.
2. BASIS OF
PRESENTATION
The statements of revenues and certain
operating expenses (the “Historical Summaries”) have been prepared for the
purpose of complying with the provisions of Article 3-14 of Regulation S-X
promulgated by the Securities and Exchange Commission (the “SEC”), which
requires certain information with respect to real estate operations to be
included with certain filings with the SEC. The Historical Summaries
include the historical revenue and certain operating expenses of the Springhouse
property, exclusive of interest income, asset management fees, interest expenses
and depreciation and amortization, which may not be comparable to the proposed
future operations of the Springhouse property.
The statement of revenues and certain
operating expenses and notes thereto for the nine months ended September 30,
2009, included in this report, are unaudited. In the opinion of the
Company’s management, all adjustments necessary for a fair presentation of such
statement of revenues and certain operating expenses have been
included. Such adjustments consist of normal recurring
items. Interim results are not necessarily indicative of results for
a full year.
3. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Revenue Recognition
The Springhouse property operations
consist of rental income earned from its tenants under lease agreements with
terms of one year or less. Rental income is recognized when
earned. This policy effectively results in income recognition on the
straight-line method over the related terms of the leases.
Use of Estimates
The
preparation of the financial statements in conformity with U.S. generally
accepted accounting principles (“GAAP”) requires management to make estimates
and assumptions that affect the reported amounts of revenue and certain expenses
during the reporting period. Actual results could differ from those
estimates.
4. SUBSEQUENT EVENTS
The Company has evaluated
subsequent events for recognition or disclosure through February 18, 2010, which
is the date the financial statements were issued.
5
BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
Summary
of Unaudited Pro Forma Consolidated Financial Information
The following pro forma information
should be read in conjunction with the consolidated balance sheet of Bluerock
Enhanced Multifamily Trust, Inc. (“the Company”) as of September 30, 2009, which
has been filed with the SEC in the Company’s quarterly report on Form 10-Q for
the quarterly period ended September 30, 2009. In addition, this pro
forma information should be read in conjunction with the statements of revenues
and certain operating expenses and the notes thereto of Springhouse at Newport
News (the “Springhouse property”).
The
following unaudited pro forma consolidated balance sheet as of September 30,
2009 has been prepared as if we had acquired the 37.5% interest in the
Springhouse property on September 30, 2009 and the Company qualified as a REIT,
distributed 90% of its taxable income and, therefore, incurred no income tax
benefit or expense during the period.
The
following unaudited pro forma consolidated statements of operations for the
year ended December 31, 2008 and the nine months ended September 30, 2009 have
been prepared as if we had acquired the 37.5% interest in the Springhouse
property on January 1, 2008.
The pro
forma unaudited consolidated financial statements are not necessarily indicative
of what the actual financial position or results of operations would have been
had we completed the transaction as of the beginning of the periods presented,
nor is it necessarily indicative of future results. In addition, the
pro forma balance sheet includes pro forma allocation of the purchase price
based upon preliminary estimates of the fair value of the assets
acquired. These allocations may be adjusted in the future upon
finalization of these preliminary estimates.
6
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BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
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PROFORMA
CONSOLIDATED BALANCE SHEET
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|||||||||||
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As
of September 30, 2009
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|||||||||||
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Pro
Forma Adjustments
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||||||||||
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Bluerock
Enhanced Multifamily Trust, Inc. Historical (a)
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Springhouse
at Newport News
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Pro
Forma Total
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Assets
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Real
Estate:
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Land
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$ | - | $ | 2,925,000 |
(b)
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$ | 2,925,000 | ||||
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Buildings
and Improvements
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26,325,000 |
(b)
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26,325,000 | ||||||||
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Total
real estate, cost
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- | 29,250,000 | 29,250,000 | ||||||||
| Less accumulated depreciation and amortization | |||||||||||
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Total
real estate, net
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- | 29,250,000 | 29,250,000 | ||||||||
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Cash
and cash equivalents
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201,001 | 201,001 | |||||||||
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Deferred
financing
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175,530 |
(b)
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175,530 | ||||||||
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Other
assets
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1,221,029 |
(b)
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1,221,029 | ||||||||
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Total
assets
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$ | 201,001 | $ | 30,646,559 | $ | 30,847,560 | |||||
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Liabilities
and shareholders' equity
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Mortgage
payable
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$ | 23,400,000 |
(b)
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$ | 23,400,000 | ||||||
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Notes
payable
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- | 2,754,520 |
(b)
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2,754,520 | |||||||
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Total
liabilities
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- | 26,154,520 | 26,154,520 | ||||||||
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Minority
interest
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4,492,039 |
(b)
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4,492,039 | ||||||||
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Shareholders'
equity
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|||||||||||
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Preferred stock, $0.01 par value, 50,000,000 shares
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authorized; none issued and outstanding
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- | ||||||||||
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Common stock, $0.01 par value, 249,999,000 shares
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|||||||||||
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authorized;
22,200 shares issued and outstanding
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222 | 222 | |||||||||
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Nonvoting convertible stock, $0.01 par value per share;
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1,000 shares authorized, none issued and outstanding
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- | ||||||||||
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Additional
paid-in-capital
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200,779 | 200,779 | |||||||||
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Total
shareholder's equity
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201,001 | 4,492,039 | 4,693,040 | ||||||||
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Total
liabilities and shareholders' equity
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$ | 201,001 | $ | 30,646,559 | $ | 30,847,560 | |||||
See
accompanying notes
7
BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
Notes
to Unaudited Pro Forma Consolidated Balance Sheet
As
of September 30, 2009
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(a)
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Reflects
the historical balance sheet of the Company as reported in the quarterly
report on Form 10-Q as of September 30,
2009.
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(b)
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Represents
the acquisition of the 37.5% interest in the Springhouse
property. The aggregate purchase price for the Springhouse
property was approximately $29.25 million, plus closing costs and, through
a consolidated joint venture, was funded by a combination of debt and a
loan from an affiliate of the Company’s advisor. The Company
accounted for the acquisition in accordance with the provisions of the
Consolidation Topic of the Financial Accounting Standards Board Accounting
Standards Codification (“FASB ASC”.) The Company consolidates
the joint venture because we have a controlling financial interest in the
joint venture. The purchase price allocation is preliminary and
subject to change.
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8
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BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
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|||||||||||||
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UNAUDITED
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
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|||||||||||||
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For
the Nine Months Ended September 30, 2009
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|||||||||||||
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Bluerock
Enhanced Multifamily Trust, Inc. Historical (a)
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Springhouse
at Newport News
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Pro
Forma Total
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||||||||||
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Revenues
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|||||||||||||
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Rental
revenue
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$ | - | $ | 2,996,223 |
(b)
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$ | 2,996,223 | ||||||
| Tenant reimbursements and other income | 277,537 | (c) | 277,537 | ||||||||||
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Total
revenues
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- | 3,273,760 | 3,273,760 | ||||||||||
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Certain
Operating Expenses
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|||||||||||||
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Property
Operating Expenses
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873,828 |
(d)
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873,828 | ||||||||||
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Property
taxes and insurance
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440,065 |
(e)
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440,065 | ||||||||||
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Management
Fees
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306,031 |
(f)
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306,031 | ||||||||||
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Depreciation
and amortization
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506,250 |
(g)
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506,250 | ||||||||||
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Interest
expense
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993,330 |
(h)
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993,330 | ||||||||||
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Total
expenses
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- | 3,119,504 | 3,119,504 | ||||||||||
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Income
before income allocated to minority interests
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154,256 | 154,256 | |||||||||||
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Income
allocated to minority interests
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(96,410 | ) | (96,410 | ) | |||||||||
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Net
Income
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$ | - | $ | 57,846 | $ | 57,846 | |||||||
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See
accompanying notes
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|||||||||||||
9
BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
Notes
to Unaudited Pro Forma Consolidated Statement of Operations
For
the Nine Months Ended September 30, 2009
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(a)
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As
of the Company’s Quarterly Report on Form 10-Q for the nine months ended
September 30, 2009 it had not yet commenced active
operations.
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(b)
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Represents
base rental income for the nine months ended September 30, 2009. Base
rent is recognized on a straight-line basis beginning on the pro forma
acquisition date of
January 1, 2008.
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(c)
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Represents
operating cost reimbursements from tenants for the nine months ended
September 30, 2009, based on historical operations of the previous
owner.
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(d)
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Represents
property operating expenses for the nine months ended September
30, 2009, based on historical operations of the previous
owner.
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(e)
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Represents
real estate taxes and insurance expense incurred by the property for the
nine months ended September 30, 2009, based on historical operations
of the previous owner.
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(f)
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Represents
asset management and property management fees for the nine months ended
September 30, 2009 that would be due to an affiliate had the
assets been acquired on January 1, 2008. With respect to
investments in real property, the asset management fee is a monthly fee
equal to one-twelfth of 1.0% of the cost of the asset where the cost
equals the amount actually paid, excluding acquisition fees and expenses,
including any debt attributable to the
asset.
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(g)
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Represents
depreciation expense for the nine months ended September 30, 2009.
Depreciation expense on the purchase price of the building is recognized
using the straight-line method and a 39-year life. Depreciation expense on
the purchase price of the tenant improvements is recognized using the
straight-line method over the life of the lease. Amortization expense on
lease intangible costs is recognized using the straight-line method over
the life of the lease.
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(h)
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Represents
interest expense for the nine months ended September 30, 2009 on the $23.4
million senior mortgage loan made to fund the acquisition. The
effective interest rate of the loan is
5.66%.
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10
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BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
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|||||||||||||
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UNAUDITED
PROFORMA CONSOLIDATED STATEMENT OF OPERATIONS
|
|||||||||||||
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For
the Year Ended December 31, 2008
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|||||||||||||
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Bluerock
Enhanced Multifamily Trust, Inc. Historical (a)
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Springhouse
at Newport News
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Pro
Forma Total
|
|||||||||||
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Revenues
|
|||||||||||||
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Rental
revenue
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$ | - | $ | 3,879,368 |
(b)
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$ | 3,879,368 | ||||||
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Tenant
reimbursements and other income
|
361,773 |
(c)
|
361,773 | ||||||||||
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Total
revenues
|
- | 4,241,141 | 4,241,141 | ||||||||||
|
Certain
Operating Expenses
|
|||||||||||||
|
Property
Operating Expenses
|
1,149,646 |
(d)
|
1,149,646 | ||||||||||
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Property
taxes and insurance
|
523,652 |
(e)
|
523,652 | ||||||||||
|
Management
Fees
|
446,735 |
(f)
|
446,735 | ||||||||||
|
Depreciation
and amortization
|
675,000 |
(g)
|
675,000 | ||||||||||
|
Interest
expense
|
1,436,440 |
(h)(i)
|
1,436,440 | ||||||||||
|
Total
expenses
|
- | 4,231,473 | 4,231,473 | ||||||||||
|
Income
before income allocated to minority interests
|
9,668 | 9,668 | |||||||||||
|
Income
allocated to minority interests
|
(6,043 | ) | (6,043 | ) | |||||||||
|
Net
Income
|
$ | - | $ | 3,626 | $ | 3,626 | |||||||
|
See
accompanying notes
|
|||||||||||||
11
BLUEROCK
ENHANCED MULTIFAMILY TRUST, INC.
Notes
to Unaudited Pro Forma Consolidated Statement of Operations
For
the Year Ended December 31, 2008
|
(a)
|
As
of December 31, 2008 the Company had not yet commenced active
operations.
|
|
(b)
|
Represents
base rental income for the year ended December 31, 2008. Base rent is
recognized on a straight-line basis beginning on the pro forma acquisition
date of January 1, 2008.
|
|
(c)
|
Represents
operating cost reimbursements from tenants for the year
ended December 31, 2008, based on historical operations of the
previous owner.
|
|
(d)
|
Represents
property operating expenses for the year ended December 31, 2008,
based on historical operations of the previous
owner.
|
|
(e)
|
Represents
real estate taxes and insurance expense incurred by the property for the
year ended December 31, 2008, based on historical
operations of the previous owner.
|
|
(f)
|
Represents
asset management and property management fees for the year ended December
31, 2008 that would be due to an affiliate had the assets been acquired on
January 1, 2008. With respect to investments in real property,
the asset management fee is a monthly fee equal to one-twelfth of 1.0% of
the cost of the asset where the cost equals the amount actually paid,
excluding acquisition fees and expenses, including any debt attributable
to the asset.
|
|
(g)
|
Represents
depreciation expense for the year ended December 31,
2008. Depreciation expense on the purchase price of the
building is recognized using the straight-line method and a 39-year life.
Depreciation expense on the purchase price of the tenant improvements is
recognized using the straight-line method over the life of the lease.
Amortization expense on lease intangible costs is recognized using the
straight-line method over the life of the
lease.
|
|
(h)
|
Represents
interest expense for the year ended December 31, 2008 on the $23.4 million
senior mortgage loan made to fund the acquisition. The
effective interest rate of the loan is
5.66%.
|
|
(i)
|
Represents
interest expense for the year ended December 31, 2008 on the $3.2 million
loan made to the Company by an affiliate of the advisor used for the
acquisition of the Springhouse property. The loan has a
six-month term and bears interest at a rate of 30-day LIBOR + 5% subject
to a minimum rate of 7%, which is the rate assumed for this pro forma.
|
12
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized.
BLUEROCK ENHANCED MULTIFAMILY TRUST,
INC.
DATE:
February 18,
2010 /s/ R. Ramin
Kamfar
Chief
Executive Officer and Chairman of the Board
(Principal
Executive Officer)
13