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EX-23.1 - EX-23.1 - Landmark Apartment Trust, Inc.d655617dex231.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 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): October 30, 2013

 

 

Landmark Apartment Trust of America, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Maryland   000-52612   20-3975609

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(I.R.S. Employer

Identification No.)

 

4901 Dickens Road, Suite 101

Richmond, Virginia

  23230
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (804) 237-1335

Former name or former address, if changed since last report: Not Applicable

 

 

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:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Explanatory Note

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Landmark Apartment Trust of America, Inc. (the “Company”) hereby amends the Current Report on Form 8-K/A filed with the Securities and Exchange Commission on November 5, 2013 to provide the required financial information relating to the acquisition of the following two multifamily apartment communities: the Courtyard Villas property and the Sutherland Park property (previously known as the Park Green property). While the acquisition of any one of these two properties was individually insignificant for purposes of the reporting requirements of Form 8-K and Rule 3-14, and the acquisition of one property was not conditioned upon the acquisition of the other property, these properties, along with the properties described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 29, 2013, the Company’s Current Report on Form 8K/A filed with the Securities and Exchange Commission on September 13, 2013, the Company’s Current Report on Form 8K/A filed with the Securities and Exchange Commission on September 27, 2013, and the Company’s Current Report on Form 8K/A filed with the Securities and Exchange Commission on November 5, 2013, are related properties, which are significant in the aggregate.

A description of the properties is set forth below (dollars in thousands):

 

Property Description

   Date Acquired      Purchase Price      Gross Leasable Area(1)      Year Built  

Courtyard Villas

     October 30, 2013       $ 21,400         223,400         1991   

Sutherland Park

     October 30, 2013       $ 33,370         408,300         1981   

 

(1) Gross Leasable Area represents total rentable square feet.

After a reasonable inquiry, the Company is not aware of any other material factors relating to these properties that would cause the reported financial information not to be necessarily indicative of future operating results. The Company and its operations are, however, subject to a number of risks and uncertainties. For a discussion of such risks, see the risks identified in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012 under Item 1A Risk Factors and in the other reports filed by the Company with the Securities and Exchange Commission.

Item 9.01 Financial Statements and Exhibits

 

          Page  

(a)

   Financial Statements of Properties Acquired      2   
   Independent Auditor’s Report   
   Combined Statements of Revenues and Certain Operating Expenses for the Six Months Ended June 30, 2013 (unaudited) and the Year Ended December 31, 2012 (audited)      3   
   Notes to Combined Statements of Revenues and Certain Operating Expenses for the Six Months Ended June 30, 2013 (unaudited) and the Year Ended December 31, 2012 (audited)      4   

(b)

   Pro Forma Financial Information      6   
   Pro Forma Consolidated Balance Sheet for the Six Months Ended June 30, 2013 (unaudited)      6   
   Pro Forma Consolidated Statements of Operations for the Six Months Ended June 30, 2013 (unaudited)      7   
   Pro Forma Consolidated Statements of Operations for the Year Ended December 31, 2012 (unaudited)      9   

(c)

   Shell Company Transactions   
   None.   

(d)

   Exhibits   

 

Exhibit

Number

  

Name

23.1    Consent of Joel Sanders & Company, PA, Independent Registered Public Accounting Firm

 

1


JOEL SANDERS & COMPANY, P.A.

CERTIFIED PUBLIC ACCOUNTANTS

1301 SHOTGUN ROAD

WESTON, FLORIDA 33326

 

 

 

MEMBER: AMERICAN INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTANTS

 

TEL: (954) 916-2000

FACSIMILE: (954) 916-2012

EMAIL: jscpal@msn.com

 

MEMBER: FLORIDA INSTITUTE OF

CERTIFIED PUBLIC ACCOUNTANTS

INDEPENDENT AUDITOR’S REPORT

To the Board of Directors and Stockholders of Landmark Apartment Trust of America, Inc.

We have audited the accompanying combined statements of revenues and certain expenses of Mission Courtyard Villas, DST and Mission Park Green, DST (the “Properties”) for the year ended December 31, 2012.

Management’s Responsibility for the Statements of Revenue and Certain Expenses

Management is responsible for the preparation and fair presentation of the combined statements of revenue and certain expenses in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the combined statements of revenue and certain expenses that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on the combined statements of revenue and certain expenses based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the combined statements of revenue and certain expenses are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the combined statements of revenue and certain expenses. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the combined statements of revenue and certain expenses, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Properties’ preparation and fair presentation of the combined statements of revenue and certain expenses in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Properties’ internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the combined statements of revenue and certain expenses. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the combined statements of revenue and certain expenses referred to above present fairly, in all material respects, the revenue and certain expenses described in Note 1 of the Properties for the year ended December 31, 2012, in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matter

As discussed in Note 1, the accompanying combined statements of revenue and certain expenses were prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in the Form 8-K/A of Landmark Apartment Trust of America, Inc.) and are not intended to be a complete presentation of the Properties’ revenue and expenses. Our opinion is not modified with respect to this matter.

CERTIFIED PUBLIC ACCOUNTANTS

January 10, 2013

Weston, Florida

 

2


ACQUIRED PROPERTIES

COMBINED STATEMENTS OF REVENUES AND CERTAIN OPERATING EXPENSES

FOR THE SIX MONTHS ENDED JUNE 30, 2013 AND FOR THE YEAR ENDED

DECEMBER 31, 2012

(In thousands)

 

     Six Months
Ended
June 30,
2013
(Unaudited)
     Year Ended
December 31,
2012
 

Revenues:

     

Rental income

   $ 3,058       $ 5,978   

Other property income

     485         954   
  

 

 

    

 

 

 

Total revenues

     3,543         6,932   

Certain expenses:

     

Administrative and marketing

     203         412   

Insurance

     109         314   

Personnel

     360         750   

Real estate taxes

     402         794   

Repairs and maintenance

     242         436   

Utilities

     394         757   
  

 

 

    

 

 

 

Total expenses

     1,710         3,463   
  

 

 

    

 

 

 

Revenues in excess of certain expenses

   $ 1,833       $ 3,469   
  

 

 

    

 

 

 

The accompanying notes are an integral part of these

combined statements of revenues and certain expenses.

 

3


ACQUIRED PROPERTIES

NOTES TO THE COMBINED STATEMENTS OF REVENUES AND CERTAIN EXPENSES

NOTE 1 – Basis of Presentation

Presented herein are the combined statements of revenues and certain expenses related to the operations of Mission Courtyard Villas, DST, a 256-unit apartment community located in Mesquite, Texas, and Mission Park Green, DST, a 480-unit apartment community located in Plano, Texas.

The accompanying combined statements of revenues and certain expenses relate to the Properties and have been prepared for the purpose of complying with Rule 3-14 of Regulation S-X promulgated under the Securities Act of 1933, as amended, and accordingly, are not representative of the actual operations of the Properties for the six months ended June 30, 2013 and for the year ended December 31, 2012, due to the exclusion of the following: depreciation and amortization, amortization of tangible assets and liabilities not directly related to the future operations.

The accompanying interim combined statement of revenues and certain expenses for the six months ended June 30, 2013 is unaudited. In the opinion of management, the Statement reflects all adjustments necessary for a fair presentation of the results of the interim period. All such adjustments are of a normal recurring nature.

NOTE 2 – Summary of Significant Accounting Policies

Basis of Accounting

The combined statements of revenues and certain expenses are prepared on the accrual basis of accounting.

Use of Estimates

The preparation of the combined statements of revenues and certain expenses 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.

Revenue Recognition

The Company’s rental revenue is obtained from tenants through rental payments as provided for under noncancelable apartment rental contracts. Rental revenues attributable to leases is recorded when due from residents and is recognized monthly as it is earned, which approximates the straight-line basis. Leases entered into between a resident and the Company for the rental of an apartment unit are generally year to year, renewable upon consent of both parties on an annual or monthly basis.

Repairs and Maintenance

Significant improvements, renovations or betterments that extend the economic useful life of the assets are capitalized. Expenditures for repairs and maintenance are expensed as incurred.

NOTE 3 – Mortgage Notes Payable

Mortgage notes payable consisted of the following as of December 31, 2012 (in thousands):

 

5.4% mortgage note payable to bank, monthly payments of principal and interest, maturing April 2016

   $ 14,185   

5.82% mortgage note payable to bank, monthly payments of interest only until January 2013, then monthly payments of principal and interest, maturing January 2018

   $ 22,000   
  

 

 

 

Total mortgage notes payable

   $ 36,185   
  

 

 

 

 

 

 

4


NOTE 4 – Subsequent Events

Management has evaluated all events and transactions that occurred after December 31, 2012 through January 10, 2014, the date on which the statements were available and issued, and noted no items requiring adjustments of the statements or additional disclosures.

 

5


LANDMARK APARTMENT TRUST OF AMERICA, INC.

PRO FORMA CONSOLIDATED BALANCE SHEET

For the Six Months Ended June 30, 2013

(In thousands, except for share and per share data)

 

     Historical     Pro Forma
Adjustments
(Unaudited)
    Pro Forma
(Unaudited)
 
     Landmark
Apartment
Trust of
America, Inc.
     

Assets:

      

Real estate investments:

      

Operating properties, net

   $ 915,877      $ 51,181 (a)    $ 967,058   

Cash and cash equivalents

     3,885          3,885   

Accounts receivable

     1,401          1,401   

Other receivables due from affiliates

     5,537          5,537   

Restricted cash

     13,792        4,106 (b)(c)      17,898   

Goodwill

     7,430          7,430   

Real estate and escrow deposits

     11,705          11,705   

Identified intangible assets, net

     28,678        4,562 (a)      33,240   

Other assets, net

     15,485        531 (c)(d)      16,016   
  

 

 

   

 

 

   

 

 

 

Total assets

     1,003,790        60,380        1,064,170   

Liabilities and equity:

      

Liabilities:

      

Mortgage loan payables, net

   $ 516,619      $ 36,617 (a)(e)    $ 553,236   

Unsecured notes payable to affiliate

     10,270          10,270   

Unsecured notes payable

     500          500   

Credit facility

     114,262          114,262   

Series D cumulative non-convertible redeemable preferred stock with derivative

     98,583        23,150 (f)      121,733   

Accounts payable and accrued liabilities

     18,871        782 (c)      19,653   

Other payables due to affiliates

     6,349          6,349   

Acquisition contingent consideration

     5,807          5,807   

Security deposits, prepaid rent and other liabilities

     6,840        243 (a)(c)      7,083   
  

 

 

   

 

 

   

 

 

 

Total liabilities

     778,101        60,792        838,893   

Equity:

      

Stockholders’ equity:

      

Common stock, $0.01 par value; 300,000,000 shares authorized; 21,786,558 and 20,655,646 shares issued and outstanding as of June 30, 2013 and December 31, 2012, respectively

     218          218   

Additional paid-in capital

     195,895          195,895   

Accumulated deficit

     (137,899     (412 )(g)      (138,311
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     58,214        (412     57,802   

Redeemable non-controlling interests in operating partnership

     167,475          167,475   
  

 

 

   

 

 

   

 

 

 

Total equity

     225,689        (412     225,277   
  

 

 

   

 

 

   

 

 

 

Total liabilities and equity

   $ 1,003,790      $ 60,380      $ 1,064,170   
  

 

 

   

 

 

   

 

 

 

Unaudited Pro Forma Consolidated Balance Sheet Adjustments

 

(a) Reflects the total purchase price of the properties. The total purchase price is allocated in accordance with ASC 805.
(b) Reflects cash received to be used for renovations of the acquired properties.
(c) Reflects pro-rations assumed as part of the acquisition of the properties.
(d) Reflects the deferred financing costs associated with obtaining the new debt and assumed debt of the acquired properties.
(e) Reflects the new debt and assumed debt obtained as a portion of the consideration for the acquisition of the properties.
(f) Reflects the additional shares of Series D Preferred Stock issued, the proceeds from which were used for the acquisition of the properties.
(g) Reflects acquisition-related expenses and pro-rated income and expenses incurred as part of the acquisition of the properties.

 

6


LANDMARK APARTMENT TRUST OF AMERICA, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Six Months Ended June 30, 2013

(In thousands, except for share and per share data)

 

     Historical      Pro Forma
Adjustments
(Unaudited)
    Pro Forma
(Unaudited)
 
     Landmark
Apartment
Trust of
America, Inc.
    Acquired
Properties
      

Revenues:

         

Rental income

   $ 49,135      $ 3,058         (70 )(a)(b)    $ 52,123   

Other property revenues

     6,564        485           7,049   

Management fee income

     1,593             1,593   

Reimbursed income

     4,677             4,677   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

     61,969        3,543         (70     65,442   

Expenses:

         

Rental expenses

     25,356        1,710         (106 )(c)      26,960   

Property lease expense

     1,553             1,553   

Reimbursed expense

     4,677             4,677   

General, administrative and other expense

     6,522             6,522   

Acquisition-related expenses

     2,640           371 (d)      3,011   

Depreciation and amortization

     23,758           5,365 (e)      29,123   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total expenses

     64,506        1,710         5,630        71,846   

Other income/(expense):

         

Interest expense, net

     (16,210        (1,124 )(b)(f)      (17,334

Disposition right income

     1,231             1,231   

Loss on debt and preferred stock extinguishment

     (10,220          (10,220
  

 

 

   

 

 

    

 

 

   

 

 

 

Loss from continuing operations before income tax

     (27,736     1,833         (6,824     (32,727

Income tax benefit

     3,207             3,207   
  

 

 

   

 

 

    

 

 

   

 

 

 

Loss from continuing operations

     (24,529     1,833         (6,824     (29,520

Less: Net loss from continuing operations attributable to redeemable non-controlling interests in operating partnership

     12,148             14,620   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net loss from continuing operations attributable to common stockholders

   $ (12,381   $ 1,833       $ (6,824   $ (14,900
  

 

 

   

 

 

    

 

 

   

 

 

 

Other comprehensive income/(loss):

         

Change in cash flow hedges attributable to redeemable non-controlling interest in operating partnership

     (50          (50

Change in cash flow hedges

     310             310   
  

 

 

        

 

 

 

Comprehensive loss attributable to common stockholders

   $ (12,121        $ (14,640
  

 

 

        

 

 

 

Net loss from continuing operations per share attributable to common stockholders – basic and diluted

   $ (0.58        $ (0.70
  

 

 

        

 

 

 

Weighted average number of common shares outstanding – basic and diluted

     21,397,257             21,397,257   

Weighted average number of common units held by non-controlling interests – basic and diluted

     20,278,027             20,278,027   

Unaudited Pro Forma Consolidated Statement of Operations Adjustments

 

(a) Reflects the estimated rental income that would have been recorded due to amortizing the fair market adjustment to above market leases with an estimated useful life of approximately six months.
(b) Reflects the pro-rated income and expense items of the acquired properties upon acquisition.

 

7


(c) Reflects the property management fee expense that would not have been recognized if the Company had acquired the properties as of January 1, 2013, due to the Company’s internal management of the properties.
(d) Reflects acquisition-related expenses incurred as part of the acquisition of the properties.
(e) Reflects the estimated depreciation and amortization that would have been recorded by the Company based on the depreciable basis of the acquired properties, assuming asset lives ranging from five to forty years, as well as the amortization of the identified intangible values recorded with an estimated useful life of approximately six months.
(f) Reflects estimated interest expense that would have been recorded to the deferred financing costs, new debt and assumed debt, including the impact of amortizing the fair market adjustment on fixed rate debt over the term of the related debt instrument.

 

8


LANDMARK APARTMENT TRUST OF AMERICA, INC.

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

For the Year Ended December 31, 2012

(In thousands, except for share and per share data)

 

     Historical (Audited)      Pro Forma
Adjustments
(Unaudited)
    Pro Forma
(Unaudited)
 
     Landmark
Apartment
Trust of
America, Inc.
    Acquired
Properties
      

Revenues:

         

Rental income

   $ 57,196      $ 5,978         (70 )(a)(b)    $ 63,104   

Other property revenues

     7,521        954           8,475   

Management fee income

     2,645           (207 )(c)      2,438   

Reimbursed income

     10,407             10,407   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total revenues

     77,769        6,932         (277     84,424   

Expenses:

         

Rental expenses

     28,854        3,463         (207 )(c)      32,110   

Property lease expense

     4,208             4,208   

Reimbursed expense

     10,407             10,407   

General, administrative and other expense

     13,029             13,029   

Acquisition-related expenses

     19,894           371 (d)      20,265   

Depreciation and amortization

     20,056           6,168 (e)      26,224   

Impairment loss

     5,397             5,397   
  

 

 

   

 

 

    

 

 

   

 

 

 

Total expenses

     101,845        3,463         6,332        111,640   
  

 

 

   

 

 

    

 

 

   

 

 

 

Loss from operations

     (24,076     3,469         (6,609     (27,216

Other expense:

         

Interest expense, net

     (17,519        (2,234 )(b)(f)      (19,753
  

 

 

   

 

 

    

 

 

   

 

 

 

Net loss

     (41,595     3,469         (8,843     (46,969
  

 

 

   

 

 

    

 

 

   

 

 

 

Less: Net loss attributable to redeemable non-controlling interests in operating partnership

     6,735             7,605   
  

 

 

   

 

 

    

 

 

   

 

 

 

Net loss attributable to common stockholders

   $ (34,860   $ 3,469       $ (8,843   $ (39,364
  

 

 

   

 

 

    

 

 

   

 

 

 

Other comprehensive income/(loss):

         

Change in cash flow hedges attributable to redeemable non-controlling interest in operating partnership

     50             50   

Change in cash flow hedges

     (310          (310
  

 

 

        

 

 

 

Comprehensive loss attributable to common stockholders

   $ (35,120        $ (39,624
  

 

 

        

 

 

 

Net income loss per share attributable to common stockholders – basic and diluted

   $ (1.72        $ (1.94
  

 

 

        

 

 

 

Weighted average number of common shares outstanding – basic and diluted

     20,244,130             20,244,130   

Weighted average number of common units held by non-controlling interests – basic and diluted

     3,911,026             3,911,026   

Unaudited Pro Forma Consolidated Statement of Operations Adjustments

 

(a) Reflects the estimated rental income that would have been recorded due to amortizing the fair market adjustment to above market leases with an estimated useful life of approximately six months.
(b) Reflects the pro-rated income and expense items of the acquired properties upon acquisition.
(c) Reflects the property management fee income from the acquired properties and property management fee expense of the acquired properties that would not have been recognized if the Company had acquired the properties as of January 1, 2012, due to its internal management of the properties.
(d) Reflects acquisition-related expenses incurred as part of the acquisition of the properties.
(e) Reflects the estimated depreciation and amortization that would have been recorded by the Company based on the depreciable basis of the acquired properties, assuming asset lives ranging from five to forty years, as well as the amortization of the identified intangible values recorded with an estimated useful life of approximately six months.
(f) Reflects estimated interest expense that would have been recorded to the deferred financing costs, new debt and assumed debt, including the impact of amortizing the fair market adjustment on fixed rate debt over the term of the related debt instrument.

 

9


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.

 

January 10, 2014     Landmark Apartment Trust of America, Inc.
    By:   /s/ B. Mechelle Lafon
    Name:   B. Mechelle Lafon
    Title:   Assistant Chief Financial Officer, Treasurer and Secretary


Exhibit Index

 

Exhibit

Number

  

Name

23.1    Consent of Joel Sanders & Company, PA, Independent Registered Public Accounting Firm