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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 1-12252
EQUITY RESIDENTIAL PROPERTIES TRUST
(Exact Name of Registrant as Specified in Its Charter)
MARYLAND 36-3877868
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Two North Riverside Plaza, Chicago, Illinois 60606
(Address of Principal Executive Offices) (Zip Code)
(312) 474-1300
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:
Common Shares of Beneficial Interest, New York Stock Exchange
$0.01 Par Value (Name of Each Exchange
(Title of Class) on Which Registered)
Preferred Shares of Beneficial Interest, New York Stock Exchange
$0.01 Par Value (Name of Each Exchange
(Title of Class) on Which Registered)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No _____
-----
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting shares held by non-affiliates was
approximately $2.4 billion based upon the closing price on March 19, 1997 of
$47.50 using beneficial ownership of shares rules adopted pursuant to Section 13
of the Securities Exchange Act of 1934 to exclude voting shares owned by
Trustees and Officers, some of whom may not be held to be affiliates upon
judicial determination.
At March 20, 1997 51,769,001 of the Registrant's Common Shares of Beneficial
Interest were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Part II incorporates by reference the Registrant's Current Report on Form 8-K
dated March 1, 1996 and filed on March 7, 1996.
Part IV incorporates by reference the following exhibits as filed with the
Company's Form S-11 on May 21, 1993 (Registration No. 33-63158) and as amended
thereafter: Exhibit 2.1, 2.2, 3.1, 3.2, 10.1, 10.1A, 10.2, 10.4, 10.5, 10.6,
10.7, 10.8, 10.9, 10.11, 10.12, 10.14 and 10.15.
Part IV incorporates by reference the following exhibits as filed with the
Company's Form S-11 on November 23, 1993 (Registration No. 33-72080) and as
amended thereafter: Exhibit 10.16, 10.16A, 10.17, and 10.17A.
Part IV incorporates by reference the following exhibits as filed with the
Company's Form S-11 on June 17, 1994 (Registration No. 33-80420) and as amended
thereafter: Exhibit 10.10 and 10.14A.
Part IV incorporates by reference the following exhibits as filed with the
Operating Partnership's Form 10 on October 7, 1994 (Registration No. 0-24920)
and as amended thereafter: Exhibit 4.1, 4.2, 10.1B, 10.13, 10.18 and 10.19.
Part IV incorporates by reference the following exhibit as filed with the
Operating Partnership's Form 10-Q for the quarter ended September 30, 1995 on
November 9, 1995 and as amended thereafter: Exhibit 10.1C.
Part IV incorporates by reference the following exhibits as filed with the
Operating Partnership's Form 10-k on March 16, 1995 and as amended thereafter:
Exhibit 3.1A and 10.3.
Part IV incorporates by reference the following exhibit as filed with the
Company's Form 10-K for the year ended December 31, 1995 on March 18, 1996 and
as amended thereafter: Exhibit 4.3.
2
PART I
EQUITY RESIDENTIAL PROPERTIES TRUST
TABLE OF CONTENTS
PAGE
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PART I.
Item 1. Business 4
Item 2. Properties 11
Item 3. Legal Proceedings 27
Item 4. Submission of Matters to a Vote of Security Holders 27
PART II.
Item 5. Market for Registrant's Common Equity and Related
Shareholder Matters 28
Item 6. Selected Financial Data 28
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 31
Item 8. Financial Statements and Supplementary Data 40
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 40
PART III.
Item 10. Trustees and Executive Officers of the Registrant 41
Item 11. Executive Compensation 45
Item 12. Security Ownership of Certain Beneficial Owners and Management 52
Item 13. Certain Relationships and Related Transactions 56
PART IV.
Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K 60
3
PART I
Item 1. Business
General
Equity Residential Properties Trust (the "Company") is a self-administered
and self-managed equity real estate investment trust ("REIT"). The Company was
organized in March 1993 and commenced operations on August 18, 1993 upon
completion of its initial public offering (the "IPO") of 13,225,000 common
shares of beneficial interest, $0.01 par value per share ("Common Shares"). The
Company was formed to continue the multifamily property business objectives and
acquisition strategies of certain affiliated entities controlled by Mr. Samuel
Zell, Chairman of the Board of Trustees of the Company. These entities had been
engaged in the acquisition, ownership and operation of multifamily residential
properties since 1969.
The Company, through its subsidiaries, which include ERP Operating Limited
Partnership (the "Operating Partnership"), Equity Residential Properties
Management Limited Partnership and Equity Residential Properties Management
Limited Partnership II (collectively, the "Management Partnerships"), a series
of partnerships (the "Financing Partnerships") and limited liability companies
("LLCs") which beneficially own certain properties encumbered by mortgage
indebtedness, is the successor to the multifamily property business of Equity
Properties Management Corp. ("EPMC"), an entity controlled by Mr. Zell, and a
series of other entities which owned 69 of the multifamily properties
contributed at the time of the Company's IPO (the "Initial Properties").
As of December 31, 1996, the Company owned or had interests in 239
multifamily properties of which it controlled a portfolio of 218 multifamily
properties (individually, a "Property" and collectively, the "Properties")
containing 67,705 units, including 61 of the Initial Properties. The remaining
21 properties represent an investment in partnership interests and subordinated
mortgages collateralized by 21 properties (the "Additional Properties")
containing 3,896 units, which units are property managed by a third party
unaffiliated entity. The Company's Properties and the Additional Properties are
located throughout the United States in the following states: Arizona,
Arkansas, California, Colorado, Florida, Georgia, Idaho, Illinois, Indiana,
Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Missouri, New
Hampshire, New Jersey, New Mexico, Nevada, North Carolina, Ohio, Oklahoma,
Oregon, South Carolina, Tennessee, Texas, Virginia and Washington. In addition,
Equity Residential Properties Management Corp. ("Management Corp.") and Equity
Residential Properties Management Corp. II ("Management Corp. II") also provide
residential property and asset management services to 40 properties containing
13,054 units owned by affiliated entities. The Company is, together with the
Operating Partnership, one of the largest publicly traded REITs based on the
aggregate market value of its outstanding Common Shares) and is the largest
publicly traded REIT owner of multifamily properties (based on the number of
apartment units owned and total revenues earned.).
Since the Company's IPO and through December 31, 1996, the Company, through
the Operating Partnership, has acquired direct or indirect interests in 160
properties (which included the debt collateralized by six Properties) containing
49,679 units in the aggregate for a total purchase price of approximately $2.4
billion, including the assumption of approximately $554.2 million of
4
PART I
mortgage indebtedness. The Company also made an $89 million investment in
partnership interests and subordinated mortgages collateralized by the
Additional Properties. Since the IPO, the Company has disposed of 11 of its
properties containing 3,699 units for a total sales price of approximately $93.3
million and the release of mortgage indebtedness in the amount of $20.5 million.
The Company's corporate headquarters and executive offices are located in
Chicago, Illinois. In addition, the Company has regional operations centers in
Chicago, Illinois; Dallas, Texas; Denver, Colorado; Seattle, Washington; Tampa,
Florida and Bethesda, Maryland and area offices in Atlanta, Georgia; Las Vegas,
Nevada; Phoenix, Arizona; Portland, Oregon; San Antonio and Houston, Texas;
Ypsilanti, Michigan; Raleigh, North Carolina; Ft. Lauderdale, Florida and
Irvine, California. The Company has 2,189 full-time employees (1,944 of which
are on site at the Properties). Each of the Company's Properties is directed by
an on-site manager, who supervises the on-site employees and is responsible for
the day-to-day operations of the Property. The manager is generally assisted by
a leasing administrator and/or property administrator. In addition, a
maintenance director at each Property supervises a maintenance staff whose
responsibilities include a variety of tasks, including responding to service
requests, preparing vacant apartments for the next resident and performing
preventive maintenance procedures year-round.
Business Objectives and Operating Strategies
The Company seeks to maximize both current income and long-term growth in
income, thereby increasing: (i) the value of the Properties; (ii) distributions
on a per Common Share basis; and (iii) shareholders' value.
The Company's strategies for accomplishing these objectives are:
. maintaining and increasing Property occupancy while increasing rental
rates;
. controlling expenses, providing regular preventive maintenance, making
periodic renovations and enhancing amenities;
. maintaining a ratio of consolidated debt-to-total market capitalization of
less than 50%; and
. pursuing acquisitions that: (i) are available at prices below estimated
replacement costs; (ii) have potential for rental rate and/or occupancy
increases; (iii) have attractive locations in their respective markets; and
(iv) provide anticipated total returns that will increase the Company's
distributions per Common Share and the Company's overall market value.
The Company is committed to tenant satisfaction by striving to anticipate
industry trends and implementing strategies and policies consistent with
providing quality tenant services. In addition, the Company continuously
surveys rental rates of competing properties and conducts satisfaction surveys
of residents to determine the factors they consider most important in choosing a
particular apartment unit.
5
PART I
Acquisition Strategies
The Company anticipates that future property acquisitions will be located
in the continental United States. Management will continue to use market
information to evaluate acquisition opportunities. The Company's market data
base allows it to review the primary economic indicators of the markets where
the Company currently manages Properties and where it expects to expand its
operations. Acquisitions may be financed from various sources of capital, which
may include undistributed funds from operations ("FFO"), issuance of additional
equity securities, sales of Properties and collateralized and uncollateralized
borrowings. In addition, the Company may acquire additional multifamily
properties in transactions that include the issuance of limited partnership
interests in the Operating Partnership ("OP Units") as consideration for the
acquired properties. Such transactions may, in certain circumstances, partially
defer the sellers' tax consequences.
When evaluating potential acquisitions, the Company will consider: (i) the
geographic area and type of community; (ii) the location, construction quality,
condition and design of the property; (iii) the current and projected cash flow
of the property and the ability to increase cash flow; (iv) the potential for
capital appreciation of the property; (v) the terms of resident leases,
including the potential for rent increases; (vi) the potential for economic
growth and the tax and regulatory environment of the community in which the
property is located; (vii) the occupancy and demand by residents for properties
of a similar type in the vicinity (the overall market and submarket); (viii) the
prospects for liquidity through sale, financing or refinancing of the property;
and (ix) competition from existing multifamily properties and the potential for
the construction of new multifamily properties in the area. The Company expects
to purchase multifamily properties with physical and market characteristics
similar to the Properties.
Disposition Strategies
Management will use market information to evaluate dispositions. Factors
the Company considers in deciding whether to dispose of its Properties include
the following: (i) the amount of increases in new construction; (ii) areas
where the economy is expected to decline substantially; and (iii) markets where
the Company does not intend to establish long-term concentrations. The Company
will reinvest the proceeds received from property dispositions to fund property
acquisitions. In addition, when feasible the Company will structure these
transactions as tax deferred exchanges.
Financing Strategies
The Company intends to maintain a ratio of consolidated debt-to-total
market capitalization of 50% or less. At December 31, 1996, the Company had a
ratio of approximately 31% based on the closing price of the Company's Common
Shares on the New York Stock Exchange and assuming conversion of all OP Units
plus the liquidation preference of non-voting preferred shares of beneficial
interest, $0.01 par value per share ("Preferred Shares").
6
PART I
Equity Offerings
- - ----------------
In January 1994, the Company completed a public offering of 5,750,000
Common Shares (the "Second Public Offering") at $29.00 per share and received
net proceeds of approximately $157.4 million in connection therewith.
In June 1994, the Company concluded a private placement of 1,569,270 Common
Shares to six accredited institutional investors (the "Private Equity Offering")
and received net proceeds of approximately $47 million in connection therewith.
The prices at which the Common Shares were sold ranged from $29.43 to $32.87.
In July 1994, the Company completed a public offering of 9,200,000 Common
Shares (the "Third Public Offering") at $31.25 per share and received net
proceeds of approximately $271.7 million in connection therewith.
In September 1994, the Company registered 5,000,000 Common Shares pursuant
to an equity shelf registration statement (the "Equity Shelf Registration") of
which 2,735,320 registered Common Shares were sold in separate transactions
completed in October 1994 (collectively, the "Shelf Offering"). The Company
received net proceeds of approximately $81 million in connection therewith. The
prices at which the Common Shares were sold ranged from $29.34 to $30.17.
In June 1995, the Company sold 6,120,000 of its 9 3/8% Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share
(liquidation preference $25 per share) (the "Series A Preferred Shares"),
pursuant to a $250 million shelf registration (the "Preferred Shelf
Registration"), at $25 per share. The Company raised gross proceeds of $153
million from this offering (the "Series A Preferred Share Offering").
On September 11, 1995, the Company filed with the Securities and Exchange
Commission (the "SEC") a Form S-3 Registration Statement to register up to $500
million of Preferred Shares, Common Shares and depositary shares, pursuant to a
shelf offering (the "Second Shelf Registration").
In November 1995, the Company sold 5,000,000 depositary shares (the "Series
B Depositary Shares") pursuant to the Second Shelf Registration. Each Series B
Depositary Share represents a 1/10 fractional interest in a 9 1/8% Series B
Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par value
per share (the "Series B Preferred Shares"). The liquidation preference of each
of the Series B Preferred Shares is $250.00 (equivalent to $25 per Series B
Depositary Share). The Company raised gross proceeds of approximately $125
million from the sale of the Series B Depositary Shares.
In January 1996, the Company completed an offering of 1,725,000 registered
Common Shares, which were sold at a net price of $29.375 per share (the "January
1996 Common Share Offering") and received net proceeds of approximately $50.7
million in connection therewith. In February 1996, the Company completed an
offering of 2,300,000 registered Common Shares, which were sold at a net price
of $29.50 per share (the "February 1996 Common Share Offering") and received net
proceeds of approximately $67.8 million in connection therewith.
7
PART I
On May 21, 1996, the Company completed an offering of 2,300,000 publicly
registered Common Shares, which were sold at a net price of $30.50 per share.
On May 28, 1996 the Company completed the sale of 73,287 publicly registered
Common Shares to employees of the Company and to employees of Equity Group
Investments, Inc. ("EGI") and certain of their respective affiliates and
consultants at a net price equal to $30.50 per share. On May 30, 1996, the
Company completed an offering of 1,264,400 publicly registered Common Shares,
which were sold at a net price of $30.75 per share. The Company received net
proceeds of approximately $111.3 million in connection with the sale of the
3,637,687 Common Shares mentioned above (collectively, the "May 1996 Common
Share Offerings").
In September 1996, the Company sold 4,600,000 depositary shares (the
"Series C Depositary Shares") pursuant to the Second Shelf Registration. Each
Series C Depositary Share represents a 1/10 fractional interest in a 9 1/8%
Series C Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par
value per share (the "Series C Preferred Shares"). The liquidation preference
of each of the Series C Preferred Shares is $250.00 (equivalent to $25 per
Series C Depositary Share). The Company raised gross proceeds of $115 million
from this offering (the "Series C Preferred Share Offering").
On September 18, 1996, the Company filed with the SEC a Form S-3
Registration Statement to register $500 million of equity securities (the "1996
Equity Shelf Registration").
Also in September 1996, the Company completed the sale of 2,272,728
publicly registered Common Shares which were sold at net price of $33 per share.
The Company received net proceeds of approximately $75 million in connection
with this offering (the "September 1996 Common Share Offering").
In November 1996, the Company issued 39,458 Common Shares pursuant to the
1996 Nonqualified Employee Share Purchase Plan at a net price of $30.44 and
received net proceeds of approximately $1.2 million.
In December 1996, the Company completed offerings of 4,440,000 publicly
registered Common Shares, which were sold to the public at a price of $41.25 per
share (the "December 1996 Common Share Offerings"). The Company received net
proceeds of approximately $177.4 million.
Debt Offerings
- - --------------
In May 1994, the Operating Partnership issued $125 million of 8 1/2%
unsecured notes due May 15, 1999 (the "1999 Notes") guaranteed by the Company in
a private placement (the "Debt Offering") to qualified institutional buyers as
defined in Rule 144A of the Securities Act of 1933, as amended (the "Securities
Act"). The Operating Partnership received net proceeds of $122.9 million in
connection with the Debt Offering.
8
PART I
In December 1994, the Operating Partnership registered $500 million in debt
securities pursuant to a debt shelf registration statement (the "Debt Shelf
Registration") of which $100 million of floating rate notes due December 22,
1997 (the "Floating Rate Notes") were issued by the Operating Partnership on
December 21, 1994 (the "Public Debt Offering"). The Operating Partnership
received net proceeds of $98.6 million in connection with the Public Debt
Offering. The Floating Rate Notes bear interest at three month London Interbank
Offered Rate ("LIBOR") plus 0.75%.
In April 1995, the Operating Partnership issued $125 million of 7.95%
unsecured fixed rate notes (the "2002 Notes") pursuant to the Debt Shelf
Registration in a public debt offering (the "Second Public Debt Offering"). The
Operating Partnership received net proceeds of approximately $123.1 million in
connection with the Second Public Debt Offering.
In August 1996, the Operating Partnership issued $150 million of 7.57%
unsecured fixed rate notes (the "2026 Notes") in connection with the Debt Shelf
Registration in a public debt offering (the "Third Public Debt Offering"). The
Operating Partnership received net proceeds of approximately $149 million in
connection with this issuance.
On September 18, 1996, the Operating Partnership filed with the SEC a Form
S-3 Registration Statement to register $500 million of debt securities (the
"1996 Debt Shelf Registration").
Credit Facility
The Company, through the Operating Partnership, had a $250 million
unsecured line of credit with Wells Fargo Realty Advisors Funding Incorporated,
as agent, through November 14, 1996. On November 15, 1996, the Company
completed an agreement with Morgan Guaranty Trust Company of New York ("Morgan
Guaranty") and Bank of America Illinois ("Bank of America") to provide the
Company a $250 million unsecured line of credit. This new line of credit
matures in November 1999 and borrowings generally will bear interest at a per
annum rate of one, two, three or six month LIBOR, plus 0.75%, and is subject to
an annual facility fee of $500,000. As of December 31, 1996, there were no
amounts outstanding on this line of credit.
Recent Developments
In January 1997, the Company acquired three properties from unaffiliated
third parties for a total purchase price of approximately $44.6 million, which
included the assumption of mortgage indebtedness of approximately $20.2 million.
These properties were Town Center, a 258-unit property located in Kingwood,
Texas; Harborview, a 160-unit property located in San Pedro, California and The
Cardinal, a 256-unit property located in Greensboro, North Carolina.
On January 16, 1997 the Company entered into an Agreement and Plan of
Merger regarding the planned acquisition of the multifamily property business of
Wellsford Residential Property Trust ("Wellsford"), a Maryland real estate
investment trust, through the tax free merger of the Company and Wellsford (the
"Merger"). The transaction is valued at approximately $1 billion and
9
PART I
includes 75 multifamily properties containing 19,004 units. In the Merger, each
outstanding common share of beneficial interest of Wellsford will be converted
into .625 of a Common Share of the Company, assuming the market price of a
Common Share remains in excess of $40. The Merger plans call for the issuance of
approximately 10.7 million new common shares valued at approximately $464
million based on the Company's January 16, 1997 closing price of $43.375 and
requires the assumption of all Wellsford outstanding debt of approximately $332
million and of approximately $158 million in preferred shares.
In February 1997, the Company acquired four properties from unaffiliated
third parties for a total purchase price of approximately $90.5 million, which
included the assumption of mortgage indebtedness of approximately $30.6 million.
These properties were Trails at Dominion, a 843-unit multifamily property
located in Houston, Texas; Dartmouth Woods, a 201-unit property located in
Denver, Colorado; Rincon Apartments, a 288-unit property located in Houston,
Texas; and Waterford at the Lakes, a 344-unit property located in Kent,
Washington.
In March 1997, the Company acquired one property from an unaffiliated third
party for a total purchase price of approximately $9.15 million. This property
was Junipers at Yarmouth, a 225-unit property located in Yarmouth, Maine.
As of March 20, 1997, the Company completed offerings of 938,800 publicly
registered Common Shares, which were sold at a net price of $46 per share. The
Company received net proceeds of approximately $43.2 million in connection with
these offerings (the "March 1997 Common Share Offerings").
Competition
All of the Properties are located in developed areas that include other
multifamily properties. The number of competitive multifamily properties in a
particular area could have a material effect on the Company's ability to lease
units at the Properties or at any newly acquired properties and on the rents
charged. The Company may be competing with other entities that have greater
resources than the Company and whose managers have more experience than the
Company's officers and trustees. In addition, other forms of multifamily
properties, including multifamily properties and manufactured housing controlled
by Mr. Zell, and single-family housing, provide housing alternatives to
potential residents of multifamily properties.
Tax Status
The Company has elected to be taxed as a REIT under Section 856(c) of the
Internal Revenue Code of 1986, as amended (the "Code"), commencing with its
taxable year ending December 31, 1993. As a result, the Company generally will
not be subject to Federal income tax to the extent it distributes 95% of its
taxable income to its shareholders. REITs are subject to a number of
organizational and operational requirements. If the Company fails to qualify as
a REIT in any year, its taxable income may be subject to income tax at regular
corporate rates (including any applicable alternative minimum tax). Even if the
Company qualifies for taxation as a REIT, the Company may be subject to certain
state and local taxes on its income and excise taxes on its undistributed
income.
10
PART I
Item 2. The Properties
As of December 31, 1996, the Company controlled a portfolio of 218
multifamily properties located in 30 states consisting of 5,198 buildings
containing 67,705 apartment units. The average number of units per Property was
approximately 311. The units are typically contained in a series of two-story
buildings. The Properties contain an aggregate of 59.5 million rentable square
feet, with an average unit size of 878 square feet. The average rent per unit
was $673 and the average rent per square foot was $0.77.
As of December 31, 1996, the Properties had an average occupancy rate of
95%. Tenant leases are generally year-to-year and require security deposits.
The Properties typically provide residents with attractive amenities, which may
include a clubhouse, swimming pool, laundry facilities and cable television
access. Certain Properties offer additional amenities such as saunas,
whirlpools, spas, sports courts and exercise rooms.
The Company believes that the Properties provide amenities and common
facilities that create an attractive residence for tenants. It is management's
role to monitor compliance with Property policies and to provide preventive
maintenance of the Properties including common areas, facilities and amenities.
The Company holds periodic meetings of its Property management personnel for
training and implementation of the Company's strategies. The Company believes
that, due in part to this strategy, the Properties historically have had high
occupancy rates.
The distribution of the Properties throughout the United States reflects
the Company's belief that geographic diversification helps insulate the
portfolio from regional and economic influences. At the same time, the Company
has sought to create clusters of Properties within each of its primary markets
in order to achieve economies of scale in management and operation; however, the
Company may acquire additional multifamily properties located anywhere in the
United States.
The Company beneficially owns fee simple title to 211 of the Properties and
holds a 73-year leasehold interest with respect to one Property (Mallgate).
Direct fee simple title for certain of the Properties is owned by single-purpose
nominee corporations or land trusts that engage in no business other than
holding title to the Property for the benefit of the Company. Holding title in
such a manner is expected to make it less costly to transfer such Property in
the future in the event of a sale and should facilitate financing, since lenders
often require title to a Property to be held in a single purpose entity in order
to isolate that Property from potential liabilities of other Properties. Direct
fee simple title for certain other Properties is owned by an LLC. In addition,
with respect to two Properties, the Company owns the debt collateralized by such
Properties and with respect to four Properties, the Company owns an interest in
the debt collateralized by the Properties.
As of December 31, 1996, the Company had an investment in partnership
interests and subordinated mortgages collateralized by the Additional
Properties. The Additional Properties consisted of 578 buildings containing
3,896 units, located in four states.
The following two tables set forth certain information relating to the
Properties and the Additional Properties:
11
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
ARIZONA
Bay Club, Phoenix (1) 1976 22 13 420 257,790 614 96% $493 $0.80
Camellero, Scottsdale (1) 1979 33 15 344 311,526 906 94% $722 $0.80
Canyon Creek, Tuscan 1986 15 10 242 169,946 702 97% $473 $0.67
Canyon Sands, Phoenix (1) 1983 38 20 412 353,592 858 91% $560 $0.65
Chandler Court, Chandler 1987 33 20 311 263,338 847 95% $613 $0.72
Crystal Creek, Phoenix 1985 24 10 273 190,140 696 97% $559 $0.80
Del Coronado, Mesa (1) 1985 43 19 419 394,062 940 95% $609 $0.65
Desert Sands, Phoenix (1) 1982 39 20 412 353,592 858 91% $560 $0.65
Flying Sun, Phoenix (1) 1983 10 4 108 93,708 868 97% $553 $0.64
Fountain Creek, Phoenix 1984 20 9 186 144,374 776 94% $600 $0.77
Indian Bend, Scottsdale 1973 8 14 275 226,444 823 97% $675 $0.82
Southbank, Mesa 1985 13 5 113 99,448 880 98% $552 $0.63
Southcreek, Mesa (1) 1986-89 66 23 528 472,152 894 95% $650 $0.73
Via Ventura, Scottsdale 1980 22 19 320 279,187 872 71% $712 $0.82
Villa Madeira, Scottsdale 1971 39 17 332 291,280 877 95% $692 $0.79
Villa Manana, Phoenix 1971-85 13 8 260 212,150 816 96% $587 $0.72
ARKANSAS
Fox Run, Little Rock (1) 1974 27 14 337 303,230 900 97% $536 $0.60
12
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
ARKANSAS, continued
Greenwood Forest, Little Rock (1) 1975 23 10 239 191,062 799 98% $ 501 $0.63
Walnut Ridge, Little Rock (1) 1975 18 10 252 210,776 836 95% $ 477 $0.57
Williamsburg, Little Rock (1) 1974 21 10 211 184,348 874 99% $ 552 $0.63
CALIFORNIA
Carmel Terrace, San Diego 1988-89 27 20 384 298,588 778 98% $ 771 $0.99
Casa Capricorn, San Diego 1981 24 10 192 178,320 929 96% $ 742 $0.80
Creekside Oaks, Walnut Creek (1) 1974 5 7 316 237,952 753 97% $ 724 $0.96
Deerwood, San Diego 1990 37 29 315 333,079 1,057 93% $ 987 $0.93
Eagle Canyon, Chino Hills 1985 34 32 252 252,493 1,002 95% $ 907 $0.90
Emerald Place, Bermuda Dunes 1988 27 17 240 214,072 892 98% $ 619 $0.69
Hathaway, Long Beach 1987 41 17 385 266,805 693 95% $ 843 $1.22
Lakeville Resort, Petaluma (1) 1984 84 45 492 461,798 939 99% $ 729 $0.78
Lands End, Pacifica 1974 11 7 260 161,121 620 98% $ 927 $1.50
Merrimac Woods, Costa Mesa 1970 19 39 123 88,160 717 97% $ 744 $1.04
Mountain Terrace, Stevenson Ranch 1992 19 39 510 425,612 835 77% $ 852 $1.02
Oak Park North, Agoura (1) 1990 31 12 220 180,600 821 94% $1,023 $1.25
Oak Park South, Agoura (1) 1989 31 12 224 188,000 839 93% $1,006 $1.20
Park West, Los Angeles 1990 1 4 444 315,588 711 95% $ 962 $1.35
13
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - -----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA, CONTINUED
Promenade Terrace, Corona Hills (1) 1990 38 27 330 360,838 1,093 96% $851 $0.78
Regency Palms, Huntington Beach 1969 39 14 310 261,634 844 97% $806 $0.95
Summer Ridge, Riverside 1985 9 6 136 104,832 771 98% $660 $0.86
Summerset Village, Chatsworth 1985 29 29 280 286,752 1,024 98% $1,067 $1.04
Villa Solana, Laguna Hills 1984 17 13 272 245,104 901 97% $827 $0.92
Vista Del Lago, Mission Viejo (1) 1986-88 51 29 608 512,200 842 98% $864 $1.03
Windridge, Laguna Niguel (1) 1989 22 19 344 375,312 1,091 92% $948 $0.87
COLORADO
Cheyenne Crest, Colorado Springs (1) 1984 13 9 208 175,424 843 94% $640 $0.76
Glenridge, Colorado Springs (1) 1985 12 8 220 176,792 804 96% $641 $0.80
Indian Tree, Arvada (1) 1983 7 8 168 140,000 833 99% $641 $0.77
Trails, Aurora (1) 1986 17 11 351 286,964 818 95% $614 $0.75
Willow Glen, Aurora 1983 22 20 384 302,944 789 90% $597 $0.76
Windmill, Colorado Springs (1) 1985 15 11 304 180,640 594 97% $503 $0.85
Yuma Court, Colorado Springs 1985 10 5 40 37,400 935 95% $597 $0.64
FLORIDA
Brierwood, Jacksonville 1974 22 17 196 263,052 1,342 97% $620 $0.46
Casa Cordoba, Tallahassee 1972-73 32 12 168 164,336 978 99% $615 $0.63
Casa Cortez, Tallahassee 1970 13 4 66 74,916 1,135 97% $613 $0.54
14
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
FLORIDA, CONTINUED
Chaparral, Largo (1) 1976 52 23 444 451,420 1,017 95% $582 $0.57
Gatehouse on the Green, Pambroke Pines 1990 12 21 312 310,140 994 98% $908 $0.91
Gatehouse at Pine Lake, Plantation 1990 11 25 296 293,792 993 92% $908 $0.92
Habitat, Orlando 1974 26 17 344 334,352 972 95% $556 $0.57
Hammock's Place, Miami (1) 1986 11 15 296 307,900 1,040 97% $739 $0.71
Heron Cove, Coral Springs 1987 13 12 198 189,932 959 96% $754 $0.79
Heron Landing, Lauderhill 1988 13 11 144 151,684 1,053 92% $769 $0.73
Heron Run, Plantation 1987 13 13 198 185,504 937 96% $793 $0.85
La Costa Brava, Orlando 1967 17 10 194 190,780 983 96% $615 $0.63
La Costa Brava, Jacksonville (1)(2) 1970-73 46 30 464 441,268 951 95% $530 $0.56
Marbrisa, Tampa 1984 16 37 224 188,544 842 98% $565 $0.67
Oaks of Lakebridge, Ormond Beach 1984 13 12 170 120,792 711 97% $578 $0.81
Paradise Point, Dania 1987-90 13 13 260 226,980 873 96% $810 $0.93
Pine Harbour, Orlando 1991 18 20 366 344,204 940 93% $654 $0.70
Pines of Springdale, W. Palm Beach 1986 3 5 151 126,975 841 95% $616 $0.73
The Place, Fort Meyers 1986 15 9 230 183,588 798 94% $544 $0.68
Port Royale, Fort Lauderdale 1988 10 17 252 182,380 724 98% $855 $1.18
Port Royale II, Fort Lauderdale 1991 3 5 161 115,025 714 99% $883 $1.24
15
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
FLORIDA, CONTINUED
River Bend, Tampa 1971 32 15 296 333,580 1,127 95% $558 $0.50
Sabal Pointe, Coral Springs 1995 11 14 275 355,575 1,293 97% $895 $0.69
Sawgrass Cove, Bradenton 1991 21 28 336 342,880 1,020 93% $664 $0.65
Springs Colony, Altamonte Springs 1986 9 10 188 161,168 857 98% $573 $0.67
Stonelake Club, Ocala (1) 1986 31 15 240 194,320 810 95% $501 $0.62
Woodlake at Killearn, Tallahassee 1986-90 18 25 352 305,480 868 91% $615 $0.71
GEORGIA
Frey, Atlanta (1) 1985 29 44 489 453,760 928 95% $697 $0.75
Governor's Place, Augusta 1972 20 9 190 191,580 1,008 94% $448 $0.44
Greengate, Marietta 1971 11 11 152 157,808 1,038 92% $621 $0.60
Holcomb Bridge, Atlanta (1) 1985 34 36 437 419,150 959 95% $695 $0.72
Ivy Place, Atlanta 1978 17 15 122 180,830 1,482 94% $918 $0.62
Longwood, Decatur 1992 9 9 268 216,970 810 96% $747 $0.92
Maxwell House, Augusta 1951 1 1 216 97,173 450 94% $370 $0.82
Park Knoll, Marietta 1983 51 41 484 587,250 1,213 95% $828 $0.68
Preston Lake, Tucker 1984-86 9 32 320 338,130 1,057 93% $708 $0.67
Roswell, Atlanta (1) 1985 23 30 236 225,598 956 93% $720 $0.75
Terraces at Peachtree, Atlanta 1987 1 1 96 86,800 904 93% $928 $1.03
16
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
GEORGIA, CONTINUED
Woodland Hills, Decatur 1985 25 19 228 266,304 1,168 91% $790 $0.68
IDAHO
The Seasons, Boise 1990 10 6 120 108,460 904 94% $623 $0.69
ILLINOIS
Bourbon Square, Palatine (1) 1984-87 102 47 612 875,160 1,430 90% $1,018 $0.71
Four Lakes III-IV, Lisle (1) 1968 31 92 942 798,245 847 92% $828 $0.98
Four Lakes V, Lisle (1) 1988 2 15 478 310,208 649 90% $735 $1.13
Spice Run, Naperville 1988 20 32 400 396,320 991 88% $872 $0.88
INDIANA
Diplomat South, Beech Grove (1) 1970 16 15 272 254,528 936 93% $502 $0.54
IOWA
3000 Grand, Des Moines 1970 1 6 186 199,530 1,073 84% $876 $0.82
KANSAS
Cedar Crest, Overland Park 1986 38 30 466 430,034 923 96% $610 $0.66
Essex Place, Overland Park (1) 1970-84 32 34 352 429,048 1,219 94% $767 $0.63
Rosehill Pointe, Lenexa 1984 32 35 498 459,318 922 88% $590 $0.64
Silverwood, Mission (1) 1986 20 15 280 234,876 839 98% $603 $0.72
Sunnyoak Village, Overland Park 1984 55 46 548 492,700 899 93% $578 $0.64
KENTUCKY
Cloisters on the Green, Lexington (1) 1974 6 12 228 196,560 862 97% $551 $0.64
Doral, Louisville (1) 1972 19 10 228 293,106 1,286 94% $600 $0.47
17
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
KENTUCKY, CONTINUED
Mallgate, Louisville 1969 46 24 540 535,444 992 92% $534 $0.54
Sonnet Cove I-II, Lexington (1) 1972-1974 11 14 331 346,675 1,047 97% $611 $0.58
LOUISIANA
Plantation, Monroe 1972 6 10 200 180,416 902 92% $437 $0.48
MARYLAND
Canterbury, Germantown (1) 1986 37 23 544 481,083 884 92% $710 $0.80
Country Club I & II, Silver Spring (1) 1980-1982 24 20 376 371,296 987 94% $779 $0.79
Georgian Woods II, Wheaton (1) 1967 21 17 371 305,693 824 95% $766 $0.93
Greenwich Woods, Silver Spring (1) 1967 47 12 564 514,318 912 96% $792 $0.87
Marymont, Laurel 1987-88 12 10 308 251,264 816 94% $759 $0.93
Northhampton I & II, Largo (1) 1977-1988 47 58 620 564,399 910 96% $792 $0.87
Oak Mill II, Germantown (1) 1985 16 8 192 165,611 863 92% $712 $0.83
Town Centre III & IV, Laurel (1) 1968-1969 49 30 562 553,083 984 96% $731 $0.74
Yorktowne at Olde Mill, Millersville 1974 18 21 216 195,100 903 96% $681 $0.75
MICHIGAN
Country Ridge, Farmington Hills 1986 26 18 252 278,060 1,103 94% $850 $0.77
Hidden Valley, Ann Arbor 1973 6 28 324 237,348 733 97% $695 $0.95
Lake in the Woods, Ypsilanti 1969 40 175 1,028 971,873 945 89% $728 $0.77
Pines of Cloverlane, Pittsfield Township 1975-79 59 63 582 471,966 811 94% $633 $0.78
18
Item 2. PROPERTIES
PROPERTIES-CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - -----------------------------------------------------------------------------------------------------------------------------------
MICHIGAN, CONTINUED
Walden Wood, Southfield(1) 1972 23 20 210 295,080 1,405 98% $847 $0.60
MINNESOTA
Park Place I & II, Plymouth(1) 1986 4 60 500 569,768 1,140 98% $768 $0.67
MISSOURI
Hunters Glen, Chesterfield 1985 8 19 192 156,489 815 97% $626 $0.77
Sleepy Hollow, Kansas City(1) 1987 26 33 388 325,486 839 98% $546 $0.65
NEVADA
Catalina Shores, Las Vegas 1989 15 13 240 211,200 880 92% $709 $0.81
Cypress Point, Las Vegas(1) 1989 19 9 212 179,800 848 88% $675 $0.80
Desert Park, Las Vegas 1987 23 15 368 172,513 469 92% $508 $1.08
Fountains at Flamingo,
Las Vegas 1989-91 34 30 521 417,870 802 96% $679 $0.85
Newport Cove, Henderson 1983 35 10 140 152,600 1,090 94% $771 $0.71
Silver Shadow, Las Vegas 1992 13 9 200 194,656 973 93% $723 $0.74
Sunrise Springs, Las Vegas 1989 18 10 192 164,424 856 94% $678 $0.79
Trails, Las Vegas 1988 38 28 440 453,656 1,031 93% $755 $0.73
NEW HAMPSHIRE
Wellington Hill, Manchester(1) 1987 55 40 390 394,627 1,012 94% $729 $0.72
NEW JERSEY
Raven's Crest, Plainsboro(1) 1984 37 19 704 583,176 828 96% $822 $0.99
NEW MEXICO
Pueblo Villas, Albuquerque 1975 17 12 232 173,118 746 92% $559 $0.75
19
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
NORTH CAROLINA
Bainbridge, Durham 1984 15 24 216 191,240 885 90% $692 $0.78
Bridgeport, Raleigh 1990 13 17 276 252,190 914 92% $714 $0.78
Deerwood Meadows, Greensboro (1) 1986 49 44 297 217,757 733 93% $572 $0.78
East Pointe, Charlotte (1) 1987 22 29 310 301,560 973 95% $629 $0.65
Laurel Ridge, Chapel Hill 1975 28 13 160 158,964 994 99% $719 $0.72
McAlpine Ridge, Charlotte 1989-90 16 15 320 238,125 744 93% $582 $0.78
Pine Meadow, Greensboro (1) 1974 29 14 204 226,600 1,111 92% $593 $0.53
Rock Creek, Corrboro 1986 20 16 188 153,548 817 89% $673 $0.82
Winterwood, Charlotte (1) 1986 22 23 384 369,260 962 91% $658 $0.68
Woodbridge, Cary (1) 1993-95 16 28 344 315,624 918 92% $719 $0.78
Woodscape, Raleigh 1979 21 25 240 186,192 776 95% $570 $0.73
Woods of North Bend, Raleigh 1983 22 30 235 243,975 1,038 98% $673 $0.65
OHIO
Olentangy Commons, Columbus (1) 1972 95 76 827 981,190 1,186 93% $747 $0.63
Reserve Square, Cleveland 1973 1 4 765 631,803 826 78% $853 $1.03
University Park, Toledo 1965 1 2 99 49,950 505 99% $433 $0.86
Village of Hampshire Heights, Toledo 1950 92 10 392 241,920 617 99% $416 $0.67
OKLAHOMA
Brittany Square, Tulsa 1982 13 8 212 170,516 804 96% $508 $0.63
20
Item 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - -----------------------------------------------------------------------------------------------------------------------------------
OKLAHOMA, CONTINUED
Quail Run, Oklahoma City 1978-83 13 9 208 149,408 718 99% $385 $0.54
Stonebrook, Oklahoma City 1983 21 8 360 247,088 686 93% $408 $0.59
The Lodge, Tulsa 1979 13 11 208 152,240 732 99% $413 $0.56
OREGON
Bridgecreek, Wilsonville 1987 26 22 315 274,236 871 95% $647 $0.74
Kempton Downs, Gresham 1990 17 12 278 277,536 998 95% $679 $0.68
Meadowcreek, Tigard (1) 1985 19 15 304 247,690 815 97% $628 $0.77
Tanasbourne Terrace, Hillsboro 1986-89 29 18 373 363,758 975 95% $734 $0.75
Tanglewood, Lake Oswego 1976 35 8 158 200,660 1,270 97% $798 $0.63
Woodcreek, Beaverton (1) 1982-84 28 22 440 335,120 762 96% $584 $0.77
SOUTH CAROLINA
Mallard Cove, Greenville 1983 3 14 211 264,187 1,252 88% $602 $0.48
TENNESSEE
Arbors of Hickory Hollow,
Nashville (1) 1986 17 31 336 337,260 1,004 96% $634 $0.63
Arbors of Brentwood,
Nashville (1) 1986-87 20 41 346 320,993 928 94% $691 $0.74
Brixworth, Nashville 1985 5 6 216 144,912 671 92% $728 $1.09
Canterchase, Nashville (1) 1985 12 22 235 170,140 724 97% $567 $0.78
TEXAS
7979 Westheimer, Houston 1973 30 15 459 401,571 875 95% $625 $0.71
Altamonte, San Antonio (1) 1985 29 17 432 322,928 748 93% $536 $0.72
21
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
TEXAS, CONTINUED
Arbors of Las Colinas, Irving 1985 21 15 408 334,556 820 96% $676 $0.82
Breton Mill, Houston (1) 1986 21 14 392 294,152 750 98% $533 $0.71
Celebration at Westchase, Houston (1) 1979 27 13 367 305,609 833 96% $545 $0.65
Champion Oaks, Houston (1) 1984 20 10 252 190,628 756 97% $531 $0.70
Dawntree, Carrollton 1982 53 23 400 370,152 925 96% $577 $0.62
Forest Ridge, Arlington 1984-85 34 29 660 555,364 841 93% $600 $0.71
Fountainhead I-III, San Antonio (1) 1985-87 55 23 688 457,616 665 92% $520 $0.78
Harbour Landing, Corpus Christi 1985 22 11 284 193,288 681 96% $525 $0.77
Hampton Green, San Antonio (1) 1979 32 11 293 222,341 759 94% $486 $0.64
Hearthstone, San Antonio (1) 1982 17 11 252 167,464 665 96% $440 $0.66
Hunter's Green, Fort Worth (1) 1981 17 10 248 188,720 761 92% $486 $0.64
Keystone, Austin (1) 1981 13 6 166 111,440 671 92% $573 $0.85
Kingswood Manor, San Antonio (1) 1983 12 6 129 109,996 853 98% $507 $0.59
Lakewood Oaks, Dallas 1987 26 12 352 257,606 732 98% $647 $0.88
Lincoln Green I-III, San Antonio 1984-86 54 24 680 465,664 685 96% $478 $0.70
Marina Club, Ft. Worth 1987 19 14 387 265,475 686 94% $478 $0.70
Northgate Village, San Antonio (1) 1984 23 10 264 214,928 814 94% $523 $0.64
Parkwest, Austin (1) 1985 50 15 196 179,046 914 90% $759 $0.83
22
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
TEXAS, CONTINUED
Preston in Willow Bend, Plano 1985 23 13 229 233,893 1,021 97% $740 $0.72
Ridgetree, Dallas 1983 38 17 798 597,642 749 95% $502 $0.67
Saddle Creek, Carrollton 1980 18 16 238 244,488 1,027 95% $681 $0.66
Songbird, San Antonio (1) 1981 29 15 262 277,720 1,060 93% $643 $0.61
Sutton Place, Dallas 1985 16 10 456 301,440 661 94% $568 $0.86
The Lodge, San Antonio 1979 20 10 384 259,512 676 93% $494 $0.73
The Trails, Arlington 1984 10 9 208 141,696 681 99% $518 $0.76
Village Oaks, Austin (1) 1984 25 13 280 199,152 711 97% $660 $0.93
Woodmoor, Austin 1981 16 9 208 151,348 728 90% $592 $0.81
VIRGINIA
Amberton, Manassas (1) 1986 16 7 190 143,402 755 100% $682 $0.90
Kingsport, Alexandria 1985 73 13 416 285,793 687 97% $687 $1.00
Saddle Ridge, Ashburn 1989 25 14 216 194,142 899 94% $837 $0.93
Sheffield Court, Arlington 1986 36 14 597 356,822 598 97% $793 $1.33
Tanglewood, Manassas (1) 1987 36 29 432 388,704 900 99% $697 $0.77
Wilde Lake, Richmond (1) 1989 8 18 189 172,980 915 91% $672 $0.73
Woodside, Lorton 1987 21 13 252 231,781 920 96% $757 $0.82
WASHINGTON
2900 on First, Seattle 1989-91 1 1 135 87,320 647 99% $837 $1.29
23
ITEM 2. PROPERTIES
PROPERTIES- CONTINUED
Occupancy December, 1996
Acreage Average As of Avg. Monthly
Year(s) (approx- Square Square Footage December Rental Rate Per
Property Constructed Buildings imate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - ------------------------------------------------------------------------------------------------------------------------------------
WASHINGTON, CONTINUED
Brentwood, Vancouver 1990 28 14 296 286,132 967 95% $640 $0.66
Chandler's Bay I, Kent 1989 27 36 293 278,874 952 98% $680 $0.71
Charter Club, Everett 1991 17 12 201 172,773 860 99% $681 $0.79
Creekside, Mountlake Terrace (1) 1987 24 43 512 407,296 796 99% $656 $0.83
Eagle Rim, Redmond 1986-88 39 20 156 137,920 884 96% $743 $0.84
Edgewood, Woodinville (1) 1986 15 10 203 166,299 819 98% $693 $0.85
Fox Run, Federal Way 1988 9 5 143 127,960 895 100% $626 $0.70
Huntington Park, Everett 1991 27 14 381 307,793 808 100% $653 $0.81
Newport Heights, Seattle (1) 1985 12 5 80 59,056 738 99% $674 $0.91
Orchard Ridge, Lynnwood 1988 9 6 104 86,548 832 99% $649 $0.78
Pointe East, Redmond 1988 19 6 76 83,280 1,096 96% $944 $0.86
Village of Newport, Federal Way (1) 1987 7 4 100 76,890 769 98% $582 $0.76
Waterstone Place, Federal Way 1990 72 37 750 616,436 822 92% $571 $0.69
Wellington, Silverdale (1) 1990 17 11 240 214,024 892 80% $641 $0.72
------------------------------------------------------------------------------------
TOTAL PROPERTIES: 5,198 4,055 67,705 59,472,576
------------------------------------------------------------------------------------
AVERAGE: 24 19 311 272,810 878 95% $673 $0.77
====================================================================================
(1) Encumbered by a third party mortgage.
(2) Includes La Costa Brava (JAX) and Cedar Cove.
24
ITEM 2. PROPERTIES (CONTINUED)
ADDITIONAL PROPERTIES
Occupancy December, 1996
Average As of Avg. Monthly
Years(s) Acreage Square Square Footage December Rental Rate Per
Property Constructed Buildings (approximate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - -----------------------------------------------------------------------------------------------------------------------------------
CALIFORNIA
Brookside Place,
Stockton 1981 28 10 90 96,664 1,074 96% $740 $0.69
Canyon Creek,
San Ramon 1984 27 13 268 257,676 961 94% $1,055 $1.10
Cobblestone Village,
Fresno 1983 33 15 162 153,118 945 94% $563 $0.60
Country Oaks,
Agoura 1985 38 15 256 258,558 1,010 93% $1,184 $1.17
Edgewater, Bakersfield 1984 35 15 258 240,322 931 93% $638 $0.68
Feather River,
Stockton 1981 16 8 128 97,328 760 95% $547 $0.72
Hidden Lake,
Sacramento 1985 27 17 272 261,808 963 93% $677 $0.70
Lakeview, Lodi 1983 25 9 138 136,972 993 95% $682 $0.69
Lantern Cove,
Foster City 1985 29 17 232 228,432 985 94% $1,524 $1.55
Schooner Bay I,
Foster City 1985 21 12.5 168 167,345 996 95% $1,583 $1.59
Schooner Bay II,
Foster City 1985 18 12.5 144 143,442 996 97% $1,570 $1.58
South Shore,
Stockton 1979 24 8 129 141,055 1,093 93% $749 $0.69
Waterfield Square I,
Stockton 1984 22 10 170 160,100 942 95% $580 $0.62
Waterfield Square II,
Stockton 1984 24 9 158 151,488 959 96% $597 $0.62
Willow Brook,
Pleasant Hill 1985 38 12 228 234,840 1,030 95% $1,209 $1.17
Willow Creek,
Fresno 1984 15 7 116 118,422 1,021 91% $668 $0.65
COLORADO
25
ITEM 2. PROPERTIES (CONTINUED)
ADDITIONAL PROPERTIES
Occupancy December, 1996
Average As of Avg. Monthly
Years(s) Acreage Square Square Footage December Rental Rate Per
Property Constructed Buildings (approximate) Units Footage Per Unit 31, 1996 Unit Square Foot
- - -----------------------------------------------------------------------------------------------------------------------------------
Deerfield, Denver 1983 22 9 158 146,380 926 94% $705 $0.76
COLORADO, continued
Foxridge, Englewood 1984 27 15 300 292,992 977 92% $764 $0.78
NEW MEXICO
Mesa Del Oso,
Albuquerque 1983 69 25 221 252,169 1,141 99% $893 $0.78
Tierra Antigua,
Albuquerque 1985 19 9 148 152,241 1,029 93% $796 $0.77
OKLAHOMA
Lakewood, Tulsa 1985 21 9 152 157,372 1,035 95% $670 $0.65
-----------------------------------------------------------------------------------------------
TOTAL ADDITIONAL
PROPERTIES: 578 257 3,896 3,848,724
-----------------------------------------------------------------------------------------------
AVERAGE: 28 12 186 183,273 988 94% $899 $0.91
===============================================================================================
Note: All of these Additional Properties are encumbered by mortages, of which
the Company has an investment in the second and third mortgages (which
are subordinate to first mortgages owned by third party unaffiliated
entities).
26
PART I
Item 3. Legal Proceedings
Richard M. Perlman, a former employee of companies controlled by Mr. Zell,
filed a legal proceeding against Mr. Zell and various partnerships and
corporations controlled by Mr. Zell claiming, inter alia, that he had an
----------
interest in 20 of 46 of the Initial Properties (the "Zell Properties") and that
he suffered damages when those Properties were transferred into the REIT. The
proceeding was filed on July 21, 1995 (Richard M. Perlman et al. v. Samuel Zell,
----------------------------------------
et al.) (United States District Court for the Northern District of Illinois-
- - ------
Eastern Division, Case No. 95 C 4242). Mr. Perlman voluntarily dismissed the
action that he previously filed in the Circuit Court of Cook County, Illinois,
which was known as Richard M. Perlman v. Samuel Zell, et al, Case No. 92 CH
----------------------------------------
19915. Mr. Zell believes such claims lack merit and is vigorously contesting
the claims. The Company is not currently a party to this lawsuit. Discovery is
currently proceeding and trial is currently anticipated to commence in June,
1997. Because Mr. Perlman's entire claimed interest in these Properties, based
on Mr. Perlman's pleadings, does not exceed 1% of the value of these Properties,
the Company has title insurance coverage, and the Company has been indemnified
by Mr. Zell and certain of his affiliates for any actual losses incurred in
connection with such matters, the Company believes no material loss to the
Company could occur.
On March 20, 1996, a legal proceeding (Nick J. Miletich, Administrator of
the Estates of Dorothy Miletich and Madelyne Miletich, deceased, v. Equity
Residential Properties Trust, Equity Residential Properties Management
Corporation, Curt Vajgrt, Raymond Countryman and Darla Countryman) (Iowa
District Court, Polk County, Iowa, Law Case No. CL 68908) was filed against the
Company. This legal proceeding arises out of the Company's ownership and
management of the apartment building known as 3000 Grand Ave. in Des Moines,
Iowa and alleges that Raymond and Darla Countryman murdered Dorothy Miletich and
Madelyne Miletich, who were residents of the apartment complex, on June 15,
1995. Raymond Countryman is a former employee of the Company. The plaintiff
alleges, inter alia, that had the Company learned of the background of Mr.
----------
Countryman prior to his employment, the Company would not have hired him and the
deaths of the Miletichs would have been avoided. The Company is vigorously
contesting these claims and believes it has strong defenses to these claims,
nevertheless, there is no assurance that the Company will not be held liable for
said deaths and there is no assurance that its insurance coverage will cover all
damages that may be awarded against it.
In addition, only ordinary routine litigation incidental to the business
which is not deemed material was initiated during the year ended December 31,
1996. The Company does not believe there is any other litigation, except as
mentioned in the previous paragraph, threatened against the Company other than
routine litigation arising out of the ordinary course of business, some of which
is expected to be covered by liability insurance, none of which is expected to
have a material adverse effect on the consolidated financial statements of the
Company.
Item 4. Submission of Matters to a Vote of Security Holders
None.
27
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholders Matters
The following table sets forth for the periods indicated, the high and low
sales prices for and the distributions paid on the Company's Common Shares which
trade on the New York Stock Exchange under the trading symbol EQR.
Sales Price
-----------------
High Low Distributions
------- ------- -------------
Fiscal Year 1996
Fourth Quarter Ended December 31, 1996 $43 1/2 $35 5/8 $0.625
Third Quarter Ended September 30, 1996 $36 1/8 $32 7/8 $ 0.59
Second Quarter Ended June 30, 1996 $33 1/2 $30 7/8 $ 0.59
First Quarter Ended March 31, 1996 $33 3/4 $28 1/4 $ 0.59
Sales Price
-----------------
High Low Distributions
------- ------- -------------
Fiscal Year 1995
Fourth Quarter Ended December 31, 1995 $31 7/8 $27 3/4 $ 0.59
Third Quarter Ended September 30, 1995 $31 1/4 $27 3/4 $ 0.53
Second Quarter Ended June 30, 1995 $29 3/4 $24 7/8 $ 0.53
First Quarter Ended March 31, 1995 $29 1/8 $25 5/8 $ 0.53
In addition, on February 25, 1997, the Company declared a $0.625
distribution per Common Share payable on April 11, 1997 to shareholders of
record on March 28, 1997.
The number of beneficial holders of Common Shares at December 31, 1996 was
approximately 18,400. The number of outstanding Common Shares as of December
31, 1996 was 51,154,836.
Item 6. Selected Financial Data
The following table sets forth selected financial and operating information
on a historical basis for the Company and the Predecessor Business. The
following information should be read in conjunction with all of the financial
statements and notes thereto included elsewhere in this Form 10-K. The
historical operating data for the years ended December 31, 1995, 1994, 1993, and
1992 have been derived from the historical Financial Statements of the Company
and the Predecessor Business audited by Grant Thornton L.L.P., independent
accountants. The historical operating data for the year ended December 31, 1996
has been derived from the historical Financial Statements of the Company audited
by Ernst & Young LLP, independent auditors. Certain capitalized terms as used
herein, are defined in the Notes to the Consolidated Financial Statements as
included elsewhere in this Form 10-K.
28
EQUITY RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED AND COMBINED HISTORICAL, INCLUDING PREDECESSOR BUSINESS
(AMOUNTS IN THOUSANDS EXCEPT FOR PER SHARE AND PROPERTY DATA)
YEAR ENDED DECEMBER 31, (1)
-------------------------------------------------------------
1996 1995 1994 1993 1992
----------- ---------- ---------- ----------- ----------
OPERATING DATA:
Total revenues $ 478,385 $ 390,384 $ 231,034 $ 112,070 $ 92,973
========= ========= ========= ========= =========
Income (loss) before gain on
disposition of properties, extraordinary items and
allocation to Minority Interests/Predecessor Business $ 97,033 $ 59,738 $ 45,988 $ 8,137 $ (3,281)
========= ========= ========= ========= =========
Net income $ 101,624 $ 67,719 $ 34,418 $ 6,095 $ -
========= ========= ========= ========= =========
Net income available to Common Shares $ 72,609 $ 57,610 $ 34,418 $ 6,095 $ -
========= ========= ========= ========= =========
Net income per weighted average Common Share outstanding $ 1.70 $ 1.68 $ 1.34 $ 0.42 $ -
========= ========= ========= ========= =========
Weighted average Common Shares outstanding 42,586 34,358 25,621 14,601 $ -
========= ========= ========= ========= =========
Distributions declared per Common Share outstanding $ 2.40 $ 2.18 $ 2.01 $ 0.68 $ -
========= ========= ========= ========= =========
BALANCE SHEET DATA (at end of period):
Real estate, before accumulated depreciation $2,983,510 $2,188,939 $ 1,963,476 $ 634,577 $ 358,212
Real estate, after accumulated depreciation $2,681,998 $1,970,600 $ 1,770,735 $ 478,210 $ 218,825
Total assets $2,986,127 $2,141,260 $ 1,847,685 $ 535,914 $ 238,878
Total debt $1,254,274 $1,002,219 $ 994,746 $ 278,642 $ 343,282
Minority Interests $ 150,637 $ 168,963 $ 177,438 $ 83,159 $ -
Shareholders' equity $1,458,830 $ 884,517 $ 609,936 $ 146,485 $ -
OTHER DATA:
Total properties (at end of period) (2) 218 174 163 79 46
Total apartment units (at end of period) (2) 67,705 53,294 50,704 24,419 15,732
Funds from operations available to Common Shares (unaudited)(3) $ 160,267 $ 120,965 $ 83,886 $ 30,127 $ 11,975
Cash flow provided by (used for):
Operating activities $ 210,930 $ 141,534 $ 93,997 $ 25,582 $ 10,871
Investing activities $ (635,655) $ (324,018) $ (896,515) $(106,543) $ (5,917)
Financing activities $ 558,568 $ 175,874 $ 808,495 $ 94,802 $ (4,945)
29
PART II
ITEM 6. SELECTED FINANCIAL AND OPERATING INFORMATION (COMBINED HISTORICAL
(CONTINUED))
(1) Historical results for the year ended December 31, 1992 represented the
combined results of the Predecessor Business. Historical results for the year
ended December 31, 1993 included combined results of the Predecessor Business
for the period January 1, 1993 through August 17, 1993.
(2) In August 1995 the Company also made an $89 million investment in
partnership interests and subordinated mortgages collateralized by the
Additional Properties. The Additional Properties consist of 3,896 units.
(3) The Company generally considers FFO to be one measure of the performance of
real estate companies, including an equity REIT. The new definition of FFO
adopted in March 1995 by the Board of Governors of the National Association of
Real Estate Investment Trusts ("NAREIT") defines FFO as net income (loss)
(computed in accordance with generally accepted accounting principles ("GAAP"),
excluding gains (or losses) from debt restructuring and sales of property, plus
depreciation on real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures. Adjustments for unconsolidated partnerships
and joint ventures are calculated to reflect FFO on the same basis. The Company
believes that FFO is helpful to investors as a measure of the performance of an
equity REIT because, along with cash flows from operating activities, financing
activities and investing activities, it provides investors an understanding of
the ability of the Company to incur and service debt and to make capital
expenditures. FFO does not represent cash generated from operating activities
in accordance with GAAP and therefore should not be considered an alternative to
net income as an indication of the Company's performance or to net cash flows
from operating activities as determined by GAAP as a measure of liquidity and is
not necessarily indicative of cash available to fund cash needs. The Company's
calculation of FFO represents net income available to Common Shares, excluding
gains on dispositions of properties, gains on early extinguishment of debt, and
write-off of unamortized costs on refinanced debt, plus depreciation on real
estate assets, income allocated to Minority Interests and amortization of
deferred financing costs related to the Predecessor Business. The Company's
calculation of FFO may differ from the methodology for calculating FFO utilized
by other REITs and, accordingly, may not be comparable to such other REITs. The
Company's calculation of FFO for 1995 and 1994 has been restated to reflect the
effects of the new definition as mentioned above. FFO for the year ended
December 31, 1994 includes the effect of a one-time charge of approximately
$879,000 for the relocation of the property management headquarters to Chicago.
In addition, FFO for the year ended December 31, 1993 excludes the effect of
refinancing costs of approximately $3.3 million which represented costs
associated with the prepayment of certain mortgage loans.
30
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 7. OVERVIEW
The following discussion and analysis of the results of operations and
financial condition of the Company should be read in conjunction with "Selected
Financial Data" and the historical Consolidated Financial Statements thereto
appearing elsewhere in this Form 10-K. Due to the Company's ability to control
the Operating Partnership, the Management Partnerships, the Financing
Partnerships and the LLCs, each entity has been consolidated with the Company
for financial reporting purposes.
RESULTS OF OPERATIONS
Since the Company's IPO, the Company has acquired direct or indirect
interests in 160 properties (the "Acquired Properties"), containing 49,679 units
in the aggregate for a total purchase price of approximately $2.4 billion,
including the assumption of approximately $554.2 million of mortgage
indebtedness. The Company's interest in six of the Acquired Properties at the
time of acquisition thereof consisted solely of ownership of the debt
collateralized by such Acquired Properties. The Company purchased ten of such
Acquired Properties or 2,694 units between the IPO and December 31, 1993 (the
"1993 Acquired Properties"); 84 of such Acquired Properties or 26,285 units in
1994 (the "1994 Acquired Properties"); 17 of such Acquired Properties or 5,035
units in 1995 (the "1995 Acquired Properties") and 49 of such Acquired
Properties consisting of 15,665 units in 1996 (the "1996 Acquired Properties").
In addition, in August 1995, the Company made an investment in partnership
interests and subordinated mortgages collateralized by the 21 Additional
Properties. The Acquired Properties were presented in the Consolidated and
Combined Financial Statements of the Company from the date of each acquisition.
During 1995, the Company also disposed of six properties containing
2,445 units (the "1995 Disposed Properties") for a total sales price of
approximately $52 million and the release of mortgage indebtedness of $20.5
million. During 1996, the Company disposed of five properties containing 1,254
units (the "1996 Disposed Properties ") for a total sales price of approximately
$41.3 million.
The Company's overall results of operations for the three years ended
December 31, 1996 have been significantly impacted by the Company's acquisition
activity. The significant changes in rental revenues, property and maintenance
expenses, real estate taxes and insurance, depreciation expense, property
management and interest expense can all primarily be attributed to the
acquisition of the Acquired Properties. The impact of the Acquired Properties
is discussed in greater detail in the following paragraphs.
Properties that the Company owned for all of both 1996 and 1995 (the
"1996 Same Store Properties") and Properties that the Company owned for all of
both 1995 and 1994 (the "1995 Same Store Properties") also impacted the
Company's results of operations and are discussed as well in the following
paragraphs.
31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1996 TO THE YEAR ENDED DECEMBER 31,
1995
For the year ended December 31, 1996, income before gain on disposition of
properties, extraordinary items and allocation to Minority Interests increased
by $37.3 million when compared to the year ended December 31, 1995. This
increase was primarily due to increases in rental revenues net of increases in
property and maintenance expenses, real estate taxes and insurance, property
management expenses, depreciation, interest expense and general and
administrative expenses. All of the increases in the various line item accounts
mentioned above can be primarily attributed to the 1996 Acquired Properties and
1995 Acquired Properties. These increases were partially offset by the 1996
Disposed Properties and the 1995 Disposed Properties. Interest income earned on
the Company's mortgage note investment increased by approximately $8 million and
was an additional factor that impacted the year to year changes.
In regard to the 1996 Same Store Properties, rental revenues increased by
approximately $15.9 million or 4.8 % primarily as a result of higher rental
rates charged to new tenants and tenant renewals and higher average occupancy
levels. Overall property operating expenses which include property and
maintenance, real estate taxes and insurance and an allocation of property
management expenses increased approximately $1.7 million or 1.2%. This
increase was primarily the result of higher payroll expenses and utilities
costs. For 1996 the Company also increased its per unit charge for property
level insurance which increased insurance expense by approximately $0.7 million.
In addition, real estate taxes increased due to reassessments on certain of the
1996 Same Store Properties.
Property management represents expenses associated with the management of the
Company's Properties. These expenses increased by approximately $2.3 million
primarily as a result of the expansion of the Company's property management
business with the addition of a regional operations center ("ROC") in Seattle,
Washington and during the third quarter of 1996 the addition of two new area
offices located in Raleigh, North Carolina and Ft. Lauderdale, Florida. Other
factors that impacted this increase were higher payroll and travel costs and
legal and professional fees.
Fee and asset management revenues and fee and asset management expenses are
associated with the management of properties not owned by the Company that are
managed for affiliates. These revenues decreased by $0.3 million primarily due
to the disposition of certain of these properties.
Interest expense, including amortization of deferred financing costs,
increased by approximately $3.8 million. This increase was primarily the result
of an increase in the Company's average indebtedness outstanding which increased
by $75.8 million. However, the Company's effective interest cost decreased from
8.09% in 1995 to 7.87% in 1996.
32
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
General and administrative expenses, which include corporate operating
expenses, increased approximately $1.7 million between the years under
comparison. This increase was primarily due to adding corporate personnel,
higher salary costs and shareholder reporting costs as well as an increase in
professional fees. General and administrative expenses as a percentage of total
revenues were 2.06% for the year ended December 31, 1996, which was a slight
decrease from 2.08% in 1995.
COMPARISON OF THE YEAR ENDED DECEMBER 31, 1995 TO THE YEAR ENDED DECEMBER 31,
1994
For the year ended December 31, 1995, income before gain from disposition of
properties, extraordinary items and allocation to Minority Interest increased by
$13.8 million when compared to the year ended December 31, 1994. This increase
was primarily due to increases in rental revenues net of increases in interest
expense, property and maintenance expenses, real estate taxes and insurance,
property management expenses, depreciation expense and general and
administrative expenses. All of the increases in the various line item accounts
mentioned above can be primarily attributed to the 1995 Acquired Properties and
1994 Acquired Properties which was partially offset by the 1995 Disposed
Properties. Increases in fee and asset management revenues, net of fee and
asset management expenses as well as interest income of approximately $4.9
million earned on the Company's mortgage note investment were additional factors
that impacted the change from 1994 to 1995.
In regard to the 1995 Same Store Properties, rental revenues increased by
approximately $5.5 million or 4% as a result of higher rental rates charged to
new tenants and tenant renewals. Overall property operating expenses which
include property and maintenance, real estate taxes and insurance and an
allocation of property management expenses increased approximately $0.9 million
or 1.5%. This increase was the result of higher leasing and advertising costs,
repair and maintenance and real estate taxes for certain of the 1995 Same Store
Properties located in Texas.
Property management represents expenses associated with the management of
the Company's Properties. These expenses increased by approximately $5 million
primarily as a result of the expansion of the Company's property management with
the addition of ROCs in Bethesda, Maryland, Denver, Colorado and Seattle,
Washington. These new ROCs were the result of acquiring Artery Property
Management, Inc. ("Artery") in December 1994 and assuming property management
for 31 Properties in January and February, 1995.
Fee and asset management revenues and fee and asset management expenses are
associated with the management of properties not owned by the Company that are
managed for affiliates. These revenues increased by $2.3 million and expenses
increased by $1.8 million, primarily due to the management of an additional
6,213 units for certain properties owned by various Artery entities.
33
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Interest expense, including amortization of deferred financing costs,
increased by approximately $42.8 million. Of this increase, $18.1 million was
due to the interest associated with the debt assumed on the 1994 Acquired
Properties and 1995 Acquired Properties, $4.1 million was due to the 1999 Notes,
$7.3 million was due to the Floating Rate Notes, $8 million was due to the
Company's line of credit and $7.3 million was due to the 2002 Notes. This
increase was partially offset by a decrease of approximately $2 million in
interest expense due to repayment of mortgage indebtedness in the amount of
$45.5 million on seven of the Company's Properties at various times in 1995.
General and administrative expenses, which include corporate operating
expenses, increased by approximately $2.1 million, primarily due to an increase
in state and local income and franchise taxes as well as adding corporate
personnel and incurring higher administrative costs associated with increasing
the size of the Company. However, general and administrative expenses as a
percentage of total revenues decreased from 2.6% in 1994 to 2.1% in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of January 1, 1996, the Company had approximately $13.4 million of cash and
cash equivalents and $158 million available on its line of credit. After taking
into effect the various transactions discussed in the following paragraphs, cash
and cash equivalents at December 31, 1996 was approximately $147.3 million and
the amounts available on the Company's line of credit were $250 million. In
addition, the Company had $3.6 million of proceeds from a property sale included
in deposits-restricted. The following discussion also explains the changes in
net cash provided by operating activities, net cash (used for) investing
activities and net cash provided by financing activities, all of which are
presented in the Company's Consolidated Statements of Cash Flows.
Part of the Company's strategy in funding the purchase of multifamily
properties is to utilize its line of credit and to subsequently repay the line
of credit from the issuance of additional equity or debt securities. Continuing
to employ this strategy, during 1996 the Company and/or the Operating
Partnership: (i) issued a total of approximately 14.4 million Common Shares
through various offerings and received total net proceeds of $483 million, (ii)
completed the offering of the Series C Preferred Shares and received net
proceeds of $111.4 million, (iii) issued the 2026 Notes and received net
proceeds of $149 million and (iv) refinanced certain of its tax-exempt bonds in
two separate transactions for a total of $112.2 million of net proceeds. All of
these proceeds have been or will be utilized to purchase additional properties
and/or repay the line of credit and mortgage indebtedness on certain properties.
With respect to Property acquisitions during the year, the Company purchased
49 Properties containing 15,665 units for a total acquisition cost of $778.2
million, which included the assumption of $142.2 million of mortgage
indebtedness, the forgiveness of debt of $2.7 million and the issuance of OP
Units having a value of approximately $0.4 million. These
34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
acquisitions were primarily funded from amounts drawn on the Company's line of
credit and a portion of the proceeds received in connection with the
transactions mentioned in the previous paragraph.
During the year ended December 31, 1996, the Company also disposed of five
properties which generated net proceeds of approximately $40 million. Proceeds
from four of the dispositions were ultimately applied to purchase additional
Properties and the remaining proceeds have been set aside for future property
acquisitions.
As of December 31, 1996, the Company had total indebtedness of approximately
$1.3 billion, which included mortgage indebtedness of $755.4 million, of which
$274 million represented tax exempt bond indebtedness, and unsecured debt of
$498.8 million (net of a $1.2 million discount). During the year, the Company
repaid an aggregate of $57 million of mortgage indebtedness on eight of its
Properties. These repayments were funded from the Company's line of credit or
from proceeds received from the various capital transactions mentioned in
previous paragraphs. The Company has, from time to time, entered into interest
rate protection agreements, financial instruments, to reduce the potential
impact of increases in interest rates but has limited exposure to the extent of
non-performance by the counterparties of each protection agreement since each
counterparty is a major U.S. financial institution, and the Company does not
anticipate their non-performance. No such financial instrument has been used for
trading purposes. On February 12, 1996, the Company entered into two interest
rate protection agreements that will hedge the Company's interest rate risk at
maturity of $175 million of indebtedness. The first agreement hedged the
interest rate risk of $50 million of mortgage loans scheduled to mature in
September 1997 by locking the five year Treasury Rate, commencing October 1,
1997. The second agreement hedged the interest rate risk of the Operating
Partnership's 1999 Notes by locking the effective four year Treasury Rate
commencing May 15, 1999. There was no current cost to the Company for entering
into these agreements.
The Company has a policy of capitalizing expenditures made for new assets,
including newly acquired properties and the costs associated with placing these
assets into service. Expenditures for improvements and renovations that
significantly enhance the value of existing assets or substantially extend the
useful life of an asset are also capitalized. Capital spent for replacement-
type items such as appliances, draperies, carpeting and floor coverings,
mechanical equipment and certain furniture and fixtures is also capitalized.
Expenditures for ordinary maintenance and repairs are expensed to operations as
incurred. With respect to acquired properties, the Company has determined that
it generally spends $1,000 per unit during its first three years of ownership to
fully improve and enhance these properties to meet the Company's standards. In
regard to replacement-type items described above, the Company generally expects
to spend $300 per unit on an annual recurring basis.
During the year ended December 31, 1996, total capital expenditures for the
Company approximated $45.9 million. Of this amount, approximately $10.6 million
related to capital
35
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
improvements and major repairs for certain of the 1994, 1995 and 1996 Acquired
Properties. Capital improvements and major repairs for all of the Company's pre-
IPO properties and certain Acquired Properties approximated $13.8 million, or
$232 per unit. Capital spent for replacement-type items approximated $16.3
million, or $276 per unit, which is in line with the Company's expected annual
recurring per unit cost. In regard to capital spent for upgrades at certain
properties and tenant improvements with respect to the retail and commercial
office space at one Property, the amount was approximately $2.9 million. Also
included in total capital expenditures was approximately $2.3 million expended
for non-real estate additions such as computer software, computer equipment,
furniture and fixtures and leasehold improvements for the Company's ROCs and its
corporate headquarters. Such capital expenditures were primarily funded from
working capital reserves and from net cash provided by operating activities.
Total capital expenditures for 1997 are budgeted to be approximately $48
million.
Minority Interests as of December 31, 1996 decreased by $18.3 million when
compared to December 31, 1995. The primary factors that impacted this account
during the year were distributions declared to Minority Interests, which
amounted to $20.5 million for the year, the allocation of its income from
operations in the amount of $14.3 million, the conversion of OP Units into
Common Shares and issuances of Common Shares during the year.
Total distributions paid in 1996 amounted to $142.3 million, which included
the distribution declared in the fourth quarter of 1995. The fourth quarter of
1996 distributions were paid on January 10, 1997 and approximated $45.9 million.
On February 25, 1997, the Company declared a $0.625 distribution per Common
Share, $0.585938 per Series A Preferred Share, $0.570313 per Series B Depositary
Share and $0.570313 per Series C Depositary Share payable to shareholders of
record on March 28, 1997. The Common Share distributions will be paid on April
11, 1997 and the Preferred and Depositary Share distributions will be paid on
April 15, 1997.
In January 1997 the Company announced its planned Merger with Wellsford and,
upon shareholder approval by both companies, anticipates the consummation of
such Merger on or around June 1, 1997. In connection with the Merger, the
Company may have to fund up to $67 million to cover certain transaction and
termination costs, repay Wellsford's line of credit balance and fund an
investment in a company to be spun off from Wellsford.
Subsequent to December 31, 1996, the Company acquired eight additional
properties representing 2,575 units for a total purchase price of approximately
$144.2 million, including the assumption of approximately $50.8 million of
mortgage indebtedness. These acquisitions were funded from proceeds of the
December 1996 Common Share Offering. The Company is actively seeking to acquire
additional multifamily properties with physical and market characteristics
similar to the Properties. During the remainder of 1997, the Company expects to
acquire between 10,000 to 15,000 multifamily units, in addition to the Merger
mentioned above. However, there is no assurance that this level of property
acquisitions can be achieved since the
36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
Company is dependent on the capital markets in order to issue additional equity
and debt securities to permanently finance such acquisitions.
In March 1997, the Company received proceeds of $43.2 million from the March
1997 Common Share Offerings. These proceeds will be utilized to purchase
additional properties and/or repay mortgage indebtedness on certain properties.
The Company anticipates that it may sell certain Properties in the portfolio
and may sell up to 2,500 multifamily units during 1997. However, there is no
assurance that this level of property dispositions may be achieved.
The Company expects to meet its short-term liquidity requirements generally
through its working capital and net cash provided by operating activities. The
Company considers its cash provided by operating activities to be adequate to
meet operating requirements and payments of distributions. The Company also
expects to meet its long-term liquidity requirements, such as scheduled mortgage
debt maturities, reduction of outstanding amounts under its line of credit,
property acquisitions and capital improvements through the issuance of unsecured
notes and equity securities including additional OP Units as well as from
undistributed FFO and proceeds received from the disposition of certain
Properties. In addition, the Company has certain uncollateralized Properties
available for additional mortgage borrowings in the event that the public
capital markets are unavailable to the Company or the cost of alternative
sources of capital to the Company is too high.
In November 1996, the Company reached an agreement with Morgan Guaranty and
Bank of America to provide the Company with a new credit facility with potential
borrowings of up to $250 million. This new line of credit matures in November
1999 and will continue to be used for property acquisitions and for any working
capital needs. As of March 20, 1997, no amounts were outstanding under this
facility.
As of January 1, 1995, the Company had approximately $20 million of cash and
cash equivalents and $88 million available on its line of credit. After taking
into effect the various transactions discussed in the following paragraphs, the
Company's cash and cash equivalents balance at December 31, 1995 was
approximately $13.4 million and the amounts available on the Company's line of
credit were $158 million. In addition, the Company had $15 million of proceeds
from various property sales included in deposits-restricted. The following
discussion also explains the changes in net cash provided by operating
activities, net cash (used for) investing activities and net cash provided by
financing activities, all of which are presented in the Company's Statements of
Cash Flows.
The Company completed its Second Public Debt Offering in April 1995 and
received net proceeds of approximately $123.1 million, substantially all of
which were applied to repay a portion of the outstanding balance on the
Company's line of credit. In May 1995, the Company completed its offering of the
Series A Preferred Shares and received net proceeds of approximately $148.2
million. Of these proceeds, $95 million were applied to repay the remaining
outstanding balance on the Company's line of credit. The remaining proceeds were
subsequently used to purchase additional Properties and pay off scheduled debt
maturities. In
37
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
November 1995, the Company completed its offering of the Series B Depositary
Shares and received net proceeds of approximately $121.1 million, all of which
were once again applied to repay a portion of the outstanding balance on the
Company's line of credit.
With respect to property acquisitions during 1995, the Company purchased 17
Properties containing 5,035 units for a total of $263.8 million, which included
the assumption of $23.6 million of mortgage indebtedness and the issuance of OP
Units having a value of approximately $17.8 million. The Company also made an
$89 million investment in partnership interests and subordinated mortgages
collateralized by 21 properties containing 3,896 units. These acquisitions were
primarily funded from amounts drawn on the Company's line of credit and a
portion of the proceeds received in connection with the Series A Preferred
Shares as mentioned in the previous paragraph.
During 1995, the Company disposed of six properties which generated net
proceeds of $46.4 million and reduced mortgage indebtedness by $20.5 million. As
of December 31, 1995, approximately $15 million of such proceeds were included
in the Company's balance sheet in its deposits-restricted account.
As of December 31, 1995, the Company had total indebtedness of approximately
$1 billion, which included conventional mortgages of $399.2 million, unsecured
debt of $348.5 million (net of a $1.5 million discount), tax exempt bond
indebtedness of $162.5 million and $92 million outstanding on the Company's line
of credit. During the year, the Company repaid mortgage indebtedness on seven of
its Properties, which aggregated $45.5 million. These repayments were funded
from the Company's line of credit or from proceeds received from the various
capital transactions mentioned in previous paragraphs.
During the year ended December 31, 1995, total capital expenditures for the
Company approximated $49.8 million. Of this amount, approximately $14.2
million, or $256 per unit, related to capital improvements and major repairs for
the Acquired Properties. Capital improvements and major repairs for all of the
Company's pre-IPO Properties approximated $13.7 million, or $247 per unit.
Capital spent for replacement-type items approximated $16.4 million, or $296 per
unit, which is in line with the Company's expected annual recurring per unit
cost. In regard to capital spent for upgrades at certain properties and tenant
improvements with respect to the retail and commercial office space at one
Property, the amount was approximately $5.5 million. Also included in total
capital expenditures was approximately $3.7 million expended for non-real estate
additions such as computer software, computer equipment and furniture and
fixtures for the Company's regional operation centers and its corporate
headquarters. Such capital expenditures were primarily funded from working
capital reserves and from net cash provided by operating activities.
Minority Interests as of December 31, 1995 decreased by $8.5 million when
compared to December 31, 1994. The primary factors that impacted this account
during the year were
38
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
distributions declared to Minority Interests, which amounted to $18.8 million
for the year, the allocation of its income from operations in the amount of
$15.6 million and the conversion of OP Units into Common Shares.
FUNDS FROM OPERATIONS
Commencing in 1996, the Company implemented the new definition of FFO adopted
by the Board of Governors of NAREIT in March 1995. The new definition primarily
eliminates the amortization of deferring financing costs and depreciation of
non-real estate assets as items added back to net income when calculating FFO.
The Company generally considers FFO to be one measure of the performance of
real estate companies including an equity REIT. The resolution adopted by the
Board of Governors of NAREIT defines FFO as net income (loss) (computed in
accordance with GAAP), excluding gains (or losses) from debt restructuring and
sales of property, plus depreciation on real estate assets, and after
adjustments for unconsolidated partnerships and joint ventures. Adjustments for
unconsolidated partnerships and joint ventures are calculated to reflect FFO on
the same basis. The Company believes that FFO is helpful to investors as a
measure of the performance of an equity REIT because, along with cash flows from
operating activities, financing activities and investing activities it provides
investors an understanding of the ability of the Company to incur and service
debt and to make capital expenditures. FFO in and of itself does not represent
cash generated from operating activities in accordance with GAAP and therefore
should not be considered an alternative to net income as an indication of the
Company's performance or to net cash flows from operating activities as
determined by GAAP as a measure of liquidity and is not necessarily indicative
of cash available to fund cash needs. The Company's calculation of FFO
represents net income available to Common Shares, excluding gains on
dispositions of properties, gains on early extinguishment of debt, and write-off
of unamortized costs on refinanced debt, plus depreciation on real estate
assets, income allocated to Minority Interests and amortization of deferred
financing costs related to the Predecessor Business. The Company's calculation
of FFO may differ from the methodology for calculating FFO utilized by other
REITs and, accordingly, may not be comparable to such other REITs.
For the year ended December 31, 1996, FFO increased $39.3 million representing a
32.5% increase when compared to the year ended December 31, 1995. For the year
ended December 31, 1995, FFO, based on the Company's calculation of FFO,
increased by $37.1 million representing a 44.2% increase when compared to the
year ended December 31, 1994.
39
PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Index to Consolidated Financial Statements on page F-1 of this
Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On March 7, 1996, the Company filed a Current Report on Form 8-K, as amended,
reporting the dismissal of Grant Thornton L.L.P. as its independent public
accountants that is incorporated herein by reference.
40
PART III
ITEM 10. TRUSTEES AND EXECUTIVE OFFICERS OF THE REGISTRANT
(a,b,c,d,e & f) TRUSTEES AND EXECUTIVE OFFICERS
-------------------------------
The following table sets forth certain information with respect to the
trustees and executive officers of the Company as of March 1, 1997:
NAME AGE POSITIONS AND OFFICES HELD
- - ------------------------------------------------- --- ---------------------------------------------------------------
Samuel Zell 55 Chairman of the Board of Trustees (term expires in 1999)
Douglas Crocker II 56 President, Chief Executive Officer and Trustee (term expires in
1998)
David J. Neithercut 41 Executive Vice President and Chief Financial Officer
Bruce C. Strohm 42 Executive Vice President, General Counsel and Secretary
Gregory H. Smith 46 Executive Vice President--Asset Management
Gerald A. Spector 50 Executive Vice President, Chief Operating Officer and Trustee
(term expires in 1997)
Frederick C. Tuomi 42 Executive Vice President--Property Management
Michael J. McHugh 41 Senior Vice President, Chief Accounting Officer and Treasurer
Alan W. George 39 Executive Vice President--Acquisitions
John W. Alexander 50 Trustee (term expires in 1999)
Henry H. Goldberg 58 Trustee (term expires in 1999)
Errol R. Halperin 56 Trustee (term expires in 1999)
James D. Harper, Jr. 63 Trustee (term expires in 1998)
Sheli Z. Rosenberg 55 Trustee (term expires in 1998)
Barry S. Sternlicht 36 Trustee (term expires in 1997)
B. Joseph White 49 Trustee (term expires in 1997)
Samuel Zell. Mr. Zell has been Chairman of the Board of Trustees of the
Company since March 1993. Mr. Zell is chairman of the board of directors of
Equity Group Investments, Inc., an owner, manager and financier of real estate
and corporations ("EGI"), American Classic Voyages Co., an owner and operator of
cruise lines ("American Classic"), and Anixter International Inc., a provider of
integrated network and cabling systems ("Anixter"). Mr. Zell is chairman of the
board and chief executive officer of both Capsure Holdings Corp., a holding
company whose principal subsidiaries are specialty property and casualty
insurers ("Capsure") and Manufactured Home Communities, Inc., a REIT
specializing in ownership and management of manufactured home communities
("MHC"). He is co-chairman of the board of directors of Revco D.S., Inc., a
drugstore chain ("Revco"), and is a director of Quality Food Centers, Inc., an
owner and operator of supermarkets, Sealy Corporation, a bedding manufacturer
("Sealy"), Ramco Energy PLC, an independent oil company based in the United
Kingdom, and TeleTech Holdings, Inc., a provider of telephone and computer based
customer care solutions.
Douglas Crocker II. Mr. Crocker has been President, Chief Executive Officer
and Trustee of the Company since March 1993. Mr. Crocker is a director of
Horizon Group, Inc., an owner, developer and operator of outlet retail
properties. Mr. Crocker has been president and chief
41
PART III
executive officer of First Capital Financial Corporation, a sponsor of public
limited real estate partnerships ("First Capital"), since December 1992 and a
director since January 1993. He has been an executive vice president of Equity
Financial and Management Company ("EF & M"), a subsidiary of EGI, providing
strategic direction and services for EGI's real estate and corporate activities
since November 1992. From September 1992 until November 1992, Mr. Crocker was a
managing director of investment banking with Prudential Securities, an
investment banking firm. He was a director and president of Republic Savings
Bank, a national chartered savings and loan association ("Republic"), from
December 1988 to June 1992, at which time the Resolution Trust Corporation took
control of Republic.
David J. Neithercut. Mr. Neithercut has been Executive Vice President and
Chief Financial Officer of the Company since February 1995. Mr. Neithercut had
been Vice President-Financing of the Company from September 1993 until February
1995. Mr. Neithercut was senior vice president-finance of EGI from January 1995
until February 1995. He was vice president-finance of Equity Assets Management,
Inc., a subsidiary of EGI providing real estate ownership services ("EAM"), from
October 1990 until December 1994.
Bruce C. Strohm. Mr. Strohm has been Executive Vice President and General
Counsel of the Company since March 1995 and Secretary since November 1995. Mr.
Strohm was an Assistant Secretary since March 1995 and Vice President of the
Company since its formation. From January 1988 until March 1995, Mr. Strohm
was a vice president of Rosenberg & Liebentritt, a law firm ("R & L"), most
recently serving as a member of the firm's management committee.
Gregory H. Smith. Mr. Smith has been Executive Vice President-Asset
Management of the Company since December 1994. Mr. Smith was a senior vice
president of Strategic Realty Advisors, Inc., a real estate and advisory
company, from January 1994 until December 1994. Mr. Smith had been employed at
VMS Realty Partners, a sponsor of public and private real estate limited
partnerships from June 1989 until December 1993, most recently serving as first
vice president.
Gerald A. Spector. Mr. Spector has been the Executive Vice President and
Trustee of the Company since March 1993 and Chief Operating Officer of the
Company since February 1995. Mr. Spector was the Treasurer of the Company from
March 1993 through February 1995. Mr. Spector had been an officer of EF&M since
January 1973, most recently serving as vice president from November 1994 through
January 1996. Mr. Spector was executive vice president and chief operating
officer of EF&M from September 1990 through November 1994. Mr. Spector had been
an officer of EGI since January 1988, most recently serving as vice president
from November 1994 through January 1996. Mr. Spector was executive vice
president chief operating officer of EGI from January 1991 through January 1994.
Frederick C. Tuomi. Mr. Tuomi has been Executive Vice President--Property
Management of the Company since January 1994. Mr. Tuomi had been president of
RAM Partners, Inc., a subsidiary of Post Properties, Inc., a REIT, from March
1991 until January 1994. Mr. Tuomi was
42
PART III
president of Pilot Property Company, a property management company, from July
1988 until March 1991.
Michael J. McHugh. Mr. McHugh has been Senior Vice President of the Company
since November 1994 and Chief Accounting Officer and Treasurer of the Company
since February 1995. From May 1990 to January 1995, Mr. McHugh was senior vice
president and chief financial officer of First Capital.
Alan W. George Mr. George has been Executive Vice President-Acquisitions of
the Company since February 1997, Senior Vice President - Acquisitions of the
Company from December 1995 until February 1997 and Vice President-Acquisitions
and asset manager of the Company from December 1993 to December 1995. Mr.
George was vice president-asset management of EAM from June 1992 until December
1993. He was vice president-asset management for American Real Estate Group, a
real estate investment company, from 1990 to 1992.
John W. Alexander. Mr. Alexander became a Trustee of the Company in May
1993. He has been the president of Mallard Creek Capital Partners, Inc.,
primarily an investment company with interests in real estate and development
entities, since February 1994. He has been a partner of Meringoff Equities, a
real estate investment company and is a director of Jacor Communications, Inc.,
an owner and operator of radio stations ("Jacor").
Henry H. Goldberg. Mr. Goldberg has been a Trustee of the Company since
January 1995. Mr. Goldberg is chairman of the board, chief executive officer
and founder of Artery Properties, Inc. Founded in 1959, Artery Properties, Inc.
is a diversified real estate company. Mr. Goldberg was the direct or indirect
general partner (or an executive thereof) of seven partnerships owning
residential apartment communities and one commercial office building, each of
which filed petitions under Federal bankruptcy laws during 1992 through 1993.
Each of the partnerships is now out of bankruptcy through a reorganization plan
agreed to by the project lender.
Errol R. Halperin. Mr. Halperin became a Trustee of the Company in May 1993.
Mr. Halperin has been an attorney at Rudnick and Wolfe, a law firm, since 1979,
serving as a senior partner and a member of such firm's policy committee since
1981, specializing in Federal income tax counseling and real estate and
corporate transactions.
James D. Harper, Jr. Mr. Harper became a Trustee of the Company in May 1993.
Since 1982, Mr. Harper has been president of JDH Realty Co., a real estate
development and investment company. Since 1988 he has been a co-managing
partner in AH Development, S.E. and AH HA Investments, S.E., special limited
partnerships formed to develop over 400 acres of land in Puerto Rico.
Sheli Z. Rosenberg. Ms. Rosenberg has been a Trustee of the Company since
March 1993. She is a principal of the law firm of R&L. Ms. Rosenberg is chief
executive officer, president and a director of EGI. Ms. Rosenberg has been a
director of Jacor since 1994 and has been chairman of its board of directors
since February 1996. Ms. Rosenberg is a director of Capsure, Falcon
43
PART III
Building Products, Inc., a manufacturer and supplier of building products
("Falcon"), American Classic, MHC, Anixter, Revco and Sealy.
Barry S. Sternlicht. Mr. Sternlicht became a Trustee of the Company in May
1993. Mr. Sternlicht has been chief executive officer and president of Starwood
Capital Group, L.P. since 1993 and president of Starwood Capital Partners, L.P.,
a privately owned real estate investment firm, since its formation in 1991. Mr.
Sternlicht is chairman of the board and chief executive officer of Starwood
Lodging Trust, a REIT specializing in the ownership of hotels and co-chairman of
the board of Westin Hotels and Resorts Company, an owner and operator of hotels.
Mr. Sternlicht is a trustee of Angeles Participating Mortgage Trust, a mortgage
REIT, U.S. Franchise Systems, a hotel franchise company and Starwood Lodging
Corporation, which manages hotels owned by Starwood Lodging Trust.
B. Joseph White. Mr. White became a Trustee of the Company in May 1993. He has
been a professor at the University of Michigan Business School since 1987 and
has served as Dean since 1991. Mr. White is a director of Falcon, Union Pump
Company, a manufacturer of pumps, and Kelly Services, Inc., an employment
agency.
Pursuant to the Company's declaration of trust, the trustees are divided into
three classes as nearly equal in number as possible, with each class having a
term of three years.
Business Meetings and Committees of the Board of Trustees
Meetings: During the year ended December 31, 1996, the Board held twenty-one
meetings. Each of the present trustees attended over 75% of the total number of
meetings of the Board and of its committees which they were eligible to attend
except for Mr. Sternlicht who attended approximately 50% of the meetings. There
are three standing committees of the Board: the Executive Committee, the
Compensation Committee and the Audit Committee, which are described below.
Executive Committee: The Executive Committee of the Board is comprised of
Messrs. Alexander, Crocker and Zell. The Executive Committee has the authority
within certain parameters to acquire, dispose of and finance investments for the
Company (including the issuance of OP Units in the Operating Partnership) and
execute contracts and agreements, including those related to the borrowing of
money by the Company, and generally exercise all other powers of the Board,
except as prohibited by law. The Executive Committee held one meeting in 1996.
Compensation Committee: The Compensation Committee of the Board is composed of
Messrs. Halperin and Harper and Ms. Rosenberg. Mr. Harper is the chairman. The
Compensation Committee reviews and makes recommendations concerning proposals by
management with respect to compensation, bonuses, employment agreements and
other benefits and policies respecting such matters for the executive officers
of the Trust. The Compensation Committee held five meetings in 1996.
Audit Committee: The Audit Committee of the Board is comprised of Messrs.
White, Alexander, Halperin, Sternlicht and Goldberg. Mr. White is the chairman.
The Audit Committee makes recommendations concerning the engagement of
independent public accountants, reviews the plans and results of the audit
engagement with the independent public accountants, approves professional
services provided by the independent public accountants, reviews the
independence of the independent public accountants, considers the range of audit
and non-audit fees and reviews the adequacy of the Company's internal accounting
controls. The Audit Committee held four meetings in 1996.
Compensation of Trustees
Trustees who are not employees of the Company received an annual fee in 1996
of $20,000 for serving as trustees. Effective January 1, 1997, this annual fee
was increased to $40,000.
In addition, trustees who serve on the Audit Committee, the Executive
Committee or the Compensation Committee receive an additional $1,000 per annum
for each committee on which they serve. Committee chairs receive an additional
$500 per annum. The Company also reimburses the trustees of each committee for
travel expenses incurred in connection with their activities on behalf of the
Company. Each trustee is also granted options to purchase 5,000 Common Shares at
the fair market value of the Company's Common Shares at the close of business on
the date of the first trustees' meeting following each annual meeting of
shareholders.
The Company has adopted an optional deferred compensation plan for its non-
employee trustees, pursuant to which the trustees may take any percentage of
their annual trustees' compensation they desire in the form of cash, which is
placed in a Supplemental Retirement Savings Plan on a tax deferred basis and
used to purchase Common Shares under the Company's 1996 Non-Qualified Employee
Share Purchase Plan. Any distributions paid on the Common Shares are
automatically reinvested in additional Common Shares. Each trustee would be
immediately 100% vested in his/her Common Shares and would be allowed to
commence withdrawals over a 1-10 year period following termination of his/her
trusteeship. Each trustee has elected to join the deferred compensation plan in
order to take all of the trustee's fees they otherwise would have received in
cash to purchase Common Shares under the Supplemental Retirement Savings Plan.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company to report, based on its review of reports
to the SEC about transactions in its Common Shares furnished to the Company and
written representations of its trustees, executive officers and 10% Common
Shareholders, that for 1996:
Mr. Alexander filed a Form 4 late to report the sale of 2,000 Common Shares;
Mr. Goldberg filed a Form 4 late to report the redemption of 300 Preference
Units of the Operating Partnership; Mr. Halperin filed a Form 4 late to report
the acquisition of 300 Common Shares; Mr. Sternlicht filed a Form 4 late to
report the exchange of 325,000 OP Units for 325,000 Common Shares and the
distribution of such Common Shares to the beneficial owners thereof; Mr. McHugh
filed a Form 4 late to report the acquisition of 200 Common Shares and Mr.
Zell filed a Form 4 late to report the acquisition of 30,000 Common Shares by
the Samuel Zell Foundation.
44
PART III
ITEM 11. EXECUTIVE COMPENSATION
The following tables show information with respect to the annual compensation
(including option grants) for services rendered to the Company for the fiscal
years ended December 31, 1994, December 31, 1995 and December 31, 1996 by the
chief executive officer and those persons who were, at December 31, 1996, the
other four most highly compensated executive officers of the Company.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
------------------- -------------------------------------
Awards Payouts
------------------------ ----------
Other Restricted Securities Long-Term
Annual Share Underlying Incentive All Other
Name and Salary Bonus Compens. Award(s) Options Payouts Compensation
Principal Position Year ($)(1) ($)(2) ($) ($)(4) Granted ($) ($)(6)
- - ----------------------------- ---- ------- ------- --------- ---------- ----------- ---------- ------------
Douglas Crocker II, 1996 500,000 325,013 4,050 324,987 105,000 0 9,000
President and Chief 1995 401,346 200,020 0 199,980 30,000 0 8,955
Executive Officer 1994 298,654 100,015 0 99,985 30,000 0 8,040
Gerald A. Spector, Executive 1996 360,000 200,011 1,786 199,989 80,000 0 9,000
Vice President and Chief 1995 300,000 100,010 0 99,990 55,000 0 6,528
Operating Officer 1994 200,000 0 0 0 8,500 0 0
Frederick C. Tuomi, 1996 235,000 62,501 377 62,499 40,000 0 9,000
Executive Vice President- 1995 225,000 40,016 0 39,984 25,000 0 8,192
Property Management 1994 170,269 38,012 62,000(3) 37,988 25,000 0 0
David J. Neithercut, 1996 225,000 69,969 357 69,969 50,000 0 9,000
Executive Vice President and 1995 161,539(7) 45,018 0 44,982 40,000 0 8,955
Chief Financial Officer 1994 0 0 0 0 30,000 0 0
Gregory H. Smith, Executive 1996 225,000 62,501 609 62,499 40,000 0 9,000
Vice President--Asset 1995 196,827 31,000 0 31,000 15,000 0 0
Management 1994 9,250 0 0 0 10,000 0 0
- - -----------------------
(1) Amounts shown include cash compensation earned and received by executive
officers as well as amounts earned but deferred at the election of these
officers.
(2) Cash bonuses are reported in the year earned, even if paid in a subsequent
year.
(3) Includes $24,083 amounts paid for relocation.
(4) The named executives received restricted Common Shares as one-half of their
annual bonuses, which Common Shares vest upon completion of two years of
continuous employment following the date of grant. The dollar amount shown
equals the number of restricted Common Shares granted multiplied by the fair
market value of the Common Shares on the grant date (i.e., 1996-$41.50;
1995-$29.75 and 1994-$30.12). This valuation does not take into account the
diminution in value attributable to the restrictions applicable to the
Common Shares. Distributions are paid on all restricted Common Shares at the
same rate as on unrestricted Common Shares. The total number of restricted
Common Shares awarded each named executed officer in January 1997 based on
their
45
PART III
performance for the 1996 year is as follows: Douglas Crocker-7,831; Gerald
A. Spector-4,819; Frederick C. Tuomi-1,506; David J. Neithercut-1,686; and
Gregory H. Smith-1,506. The total number of restricted Common Shares awarded
each named executed officer in January 1996 based on their performance for
the 1995 year is as follows: Douglas Crocker-6,722; Gerald A. Spector-3,361;
Frederick C. Tuomi-1,344; David J. Neithercut 1,512; and Gregory H. Smith-
1,042. The total value of the restricted Common Shares as of December 31,
1996 is $277,282.50, $138,641.25, $55,440.00, $62,370.00 and $42,982.50,
respectively. Messrs. Crocker and Tuomi received 3,319 and 1,261 restricted
Common Shares in December 1994 for services rendered during the 1994
calendar year. In December 1996, the restrictions on these Common Shares
lapsed.
(5) Securities underlying options are reported in the year granted.
(6) Includes employer matching and profit-sharing contributions to the Company's
401(k) Advantage Retirement Savings Plan.
(7) As Mr. Neithercut became employed by the Company on February 28, 1995, the
salary shown for 1995 reflects the salary paid to him between February 28,
1995 and December 31, 1995. Mr. Neithercut's annualized salary in 1995 was
$200,000.
OPTIONS GRANTED IN LAST FISCAL YEAR
Potential Realizable Value
at Assumed Annual Rates of Share
Price Appreciation
Individual Grants for Option Term(1)
------------------------------------------------------------ --------------------------------
Number of Percent of
Securities Total Options
underlying Granted to Exercise or
Options Employees in Base Price Expiration
Name Granted (#)(2) Fiscal Year ($/Sh) Date 5%($)(3) 10%($)(4)
---- -------------- ------------- ----------- ---------- ------------ -------------
Douglas Crocker II 100,000 10.30 29.75 01/18/06 1,870,961 4,741,383
5,000 .5 32.75 05/10/06 102,981 260,975
Gerald A. Spector 75,000 7.7 30.375 02/26/06 1,432,700 3,630,744
5,000 .5 32.75 05/10/06 102,981 260,975
Frederick C. Tuomi 40,000 4.1 30.375 02/26/06 764,106 1,936,397
David J. Neithercut 50,000 5.1 30.375 02/26/06 955,133 2,420,496
Gregory H. Smith 40,000 4.1 30.375 02/26/06 764,106 1,936,397
- - ------------------------------------------------------------------
(1) The dollar amounts under these columns are the result of calculations
projected as of the year 2006, assuming the 5% and 10% rates of compounded
annual appreciation set by SEC, and are not intended to forecast possible
future appreciation, if any, of the Company's Common Share price. No gain
to the optionee is possible without an increase in Common Share price,
which would benefit all shareholders commensurately.
(2) All options are granted at the fair market value of the Common Shares at
the date of grant. Options granted are for a term of not more than ten
years from the date of grant and vest in equal amounts over three years,
with the exception of the 5,000 options granted annually to each trustee,
which vest 1,667 shares six months after the grant date, 1,667 shares one
year after the grant date and 1,666 shares two years after the grant date.
(3) A 5% per year compounded appreciation in Common Share price from $29.75 per
share
46
PART III
yields $48.46 per Common Share, from $32.75 per Common Share yields
$53.35 per Common Share, and from $30.375 per Common Share yields $49.48
per Common Share.
(4) A 10% per year compounded appreciation in Common Share price from $29.75
per Common Share yields $77.16 per Common Share, from $32.75 per Common
Share yields $84.95 per Common Share, and from $30.375 per Common Share
yields $78.78 per Common Share.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Value of
Securities Underlying Unexercised
Unexercised In-the-Money
Options at Options at
Shares Fiscal Year-End(#) Fiscal Year-End($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized($) Unexercisable Unexercisable(1)
- - -------------- ------------ ----------- ---------------------- -------------------
Douglas Crocker II 0 0 141,666/88,334 1,871,035/1,067,089
Gerald A. Spector 0 0 45,166/113,334 606,679/1,368,132
Frederick C. Tuomi 0 0 33,333/56,667 429,161/687,088
David J. Neithercut 0 0 26,333/76,667 388,286/947,088
Gregory H. Smith 0 0 11,666/53,334 163,949/630,425
- - --------------------------
(1) Represents the market value of one Common Share at December 31, 1996
($41.25) less the exercise price of in-the-money options.
LONG-TERM INCENTIVE PLANS - AWARDS
IN LAST FISCAL YEAR
- - --------------------------------------------------------------------------------
Number of Performance Or
Shares, Units Or Other Period
Other Rights Until Maturation
Name (#) Or Payout
- - --------------------------------------------------------------------------------
Douglas Crocker 14,000 1/28/00
- - --------------------------------------------------------------------------------
Gerald A. Spector 8,500 1/28/00
- - --------------------------------------------------------------------------------
Frederick C. Tuomi 5,700 1/28/00
- - --------------------------------------------------------------------------------
David J. Neithercut 5,100 1/28/00
- - --------------------------------------------------------------------------------
Gregory H. Smith 5,700 1/28/00
- - --------------------------------------------------------------------------------
47
PART III
The named executives received restricted Common Shares in 1997 as part of the
Company's performance-based restricted share plan (the "Performance-Based
Plan"), for services rendered during the 1996 fiscal year. Fifty percent of the
Common Shares to which an executive under the Performance Based Plan may be
entitled will vest on the third anniversary of the award; twenty-five percent of
the Common Shares will vest on the fourth anniversary and the remaining twenty-
five percent will vest on the fifth anniversary. However, the executive's rights
under the Common Shares will fully vest upon the employee's death, disability or
upon the change of control of the Company. Distributions will be paid on all
restricted Common Shares at the same rate as on unrestricted Common Shares
commencing on the third anniversary of the award date.
The number of Common Shares the employee receives on the third anniversary
will be calculated based upon the following schedule:
If the Company's Average Return for the
period from the date of the award to
the third anniversary is: 0-9% 9% 10% 11% 12% 13% 14% 15%
The executive will receive Common
Shares equal to the target number of
Common Shares times the following
payment percentage: 0% 50% 100% 115% 135% 165% 190% 225%
The Company's Average Return will be expressed as a percentage determined by
dividing (a) an amount equal to the sum of (i) the increase in the price of the
Common Shares from the date the award is made to the executive to the third
anniversary of the award, divided by three, plus (ii) the amount of the
distributions paid during such three year period divided by three, by (b) the
price of the Common Shares on the date of the award.
Notwithstanding anything to the contrary set forth in any of the Company's
filings under the Securities Act of 1933, as amended, or the Exchange Act, that
might incorporate future filings, including this Annual Report on Form 10-K, in
whole or in part, the Compensation Committee Report on Executive Compensation
presented below and the Performance Graph following such report shall not be
incorporated by reference into any such future filings.
COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board consists of the independent trustees
of the Company listed below. The Compensation Committee's functions include the
review and approval of the Company's executive compensation structure and
overall benefits program. The purpose of the Company's executive compensation
program is to establish and maintain a performance and achievement oriented
environment throughout the Company. The program emphasizes the development of
the Company so as to achieve and sustain above average growth in earnings with
excellence in management. With this emphasis in mind, the program is designed so
that executives may earn higher than average total compensation (base salary
plus bonus) for an above-average job performance. At the end of 1996, the
Company engaged the services of two independent compensation consulting firms,
Ferguson FLT and Hay Associates, to advise the Company as to the appropriate
methods and amounts of compensation for its executive officers. There are three
major components of executive compensation: base salary, bonuses and performance
based shares and share option awards granted under the Company's Second Amended
and Restated 1993 Share Option and Share Award Plan (the "Award Plan"). Each of
these components is further discussed below.
Base Salary. The Company's overall salary structure is reviewed annually,
using outside executive compensation surveys of the (i) real estate industry in
general and (ii) REITs in particular, to ensure that it remains competitive.
Positions are classified within the salary structure on the basis of assigned
responsibilities and on an evaluation of the latest survey information
available, as to appropriate compensation levels. Where salary information is
unavailable for a particular position, salary grade assigned is based on other
positions having similar responsibilities within the Company and in companies
with comparable revenues. Individual base salaries are reviewed at least
annually. Decisions relating to salary increases are based upon guidelines
furnished by senior management. Salary increases are granted based on each
executive's performance as well as such executive's position in the applicable
salary range.
Bonus. The objectives underlying the Company's bonus program are to: (i) more
closely link bonus awards to value added for the Company's Shareholders, and
(ii) promote a culture of performance and ownership among the Company's
managers. During 1996, the target bonuses were 100% for Messrs. Crocker and
Spector and 50% for all other Executive Vice Presidents. A bonus is typically
paid in excess of target levels only when Company performance for the year is at
the upper level within its peer group. Executive officers' mid-term incentives
are accomplished by tying the executive officers' performance to the continued
performance of the Company. The Company accomplishes this by awarding the Chief
Executive Officer and each other executive officer some or all of his or her
bonus, as determined by the Compensation Committee, in restricted Common Shares
or Common Share equivalents, which shares vest two years from the date of grant.
The Compensation Committee believes that having its executive officers "invest"
a portion of their bonuses in Common Shares or Common Share equivalents
facilitates better alignment of the executive officer's compensation with the
performance of the Company's Common Shares.
The long-term incentives for executive officers are in the form of
performance-based restricted shares and share option grants.
Performance Based Restricted Share Plan. The Performance Based Plan is
designed to focus the Company's key employees eligible under this plan on
achieving a high level of total return (i.e., share appreciation and
distributions) to the Company's shareholders, and to encourage such key
employees to continue their employment with the Company. Under this plan, awards
will be made to the President and Chief Executive Officer and to all Executive
Vice Presidents on an annual basis by setting a target number of Common Shares
for each executive. The employee will be eligible to receive from fifty percent
(50%) to two-hundred twenty-five percent (225%) of the target number of Common
Shares, or not receive any Common Shares at all, based on the Company's Average
Return (as heretofore described), received by shareholders during the 3 year
period following the award. The number of Common Shares an executive will
receive will be fixed and determined and then issued (subject to the vesting
formula previously discussed) to the executive beginning on the third
anniversary of the grant of award. It is anticipated that awards will be made on
an annual basis so that by the fifth year of an award, each executive will have
vested and unvested rights in each of the previous five awards.
Share Options. The Compensation Committee recognizes that while the bonus
program provides rewards for positive short-term and mid-term performance, the
interests of shareholders are best served by giving key employees the
opportunity to participate in the appreciation of the Company's Common Shares
through the granting of share options. The Compensation Committee believes that,
over an extended period of time, share performance will, to a meaningful extent,
reflect executive performance and that such arrangements further reinforce
management goals and incentives to achieve shareholder objectives. The Share
Options vest over a period of three years at a rate of 33 1/3% of such grant
each year, thereby encouraging the retention of key employees who receive
awards. The amount of Share Options awarded each executive was determined
utilizing the aforementioned executive compensation surveys and an assessment of
the executive officer's achieved performance goals and objectives.
Deferred Compensation Agreements. To encourage Mr. Crocker and Mr. Spector to
remain in the employ of the Company, the Board has entered into Deferred
Compensation Agreements with Mr. Crocker and Mr. Spector. Mr. Crocker's Deferred
Compensation Agreement, entered into in 1996, provides Mr. Crocker with a salary
benefit after his termination of employment with the Company. If Mr. Crocker's
employment is terminated without cause, he would be entitled to annual deferred
compensation for a 10-year period commencing on the termination date in an
amount equal to his average annual base compensation (before bonus) for the
prior five calendar years, multiplied by a percentage equal to 10% per each year
since December 31, 1995. In the event Mr. Crocker's employment is terminated as
a result of his death, permanent disability or incapacity, he would be entitled
to a similar amount except that the annual percentage would be 15% and the
maximum amount paid per year would not exceed 100% of his average base salary.
Should Mr. Crocker be terminated for cause or should he choose to leave
voluntarily without good reason, he would not be entitled to any deferred
compensation.
Mr. Spector's Deferred Compensation Agreement, entered into in 1997, provides
Mr. Spector with a salary benefit after his termination of employment with the
Company. If Mr. Spector's employment is terminated without cause, he would be
entitled to annual deferred compensation for a 15-year period commencing on the
termination date in an amount equal to 75% of his average annual base
compensation (before bonus) for the prior five calendar years, multiplied by a
percentage equal to 6.67% per each year since December 31, 1996. In the event
Mr. Spector's employment is terminated as a result of his death, permanent
disability or incapacity, he would be entitled to a similar amount except that
the annual percentage would be 10% and the maximum amount paid per year would
not exceed 75% of his average base salary. Should Mr. Spector be terminated for
cause or should he choose to leave voluntarily without good reason, he would not
be entitled to any deferred compensation.
In January 1996, Mr. Crocker was issued options to purchase 100,000 Common
Shares, which options vest over a 3-year period and are effective for 10 years.
The Board also approved a Share Distributions Agreement with respect to such
options for Mr. Crocker in 1996. Pursuant to the terms of the Share Distribution
Agreement, upon the exercise of any of these options, Mr. Crocker would be
entitled to in a cash payment in an amount equal to the total amount of Common
Share distributions that would have been paid on said Common Shares being
exercised had he owned said Common Shares for the period from January 18, 1996
until the date of the exercise of the options in question. This agreement is not
affected by Mr. Crocker's death or termination of employment with the Company.
Based on the executive compensation surveys and the Company's financial
performance in 1996, the Compensation Committee believes that the salary, bonus,
performance shares and option grants of Mr. Crocker, the Chief Executive Officer
and President of the Company, are fair and competitive and that the Company's
overall executive compensation ranks in the upper quartile among the general
real estate industry and among REITs. This ranking correlates with the excellent
financial performance of the Company in 1996 when compared against that of other
REITs. The Company accomplished its main goals in 1996 by increasing its net
income and funds from operations per Common Share, strengthening its balance
sheet and diversifying its portfolio across the United States, which provides
stability in cash flows and insulation against regional economic downturns.
During Mr. Crocker's tenure as Chief Executive Officer and President, the
Company has become the largest REIT owner and operator of apartment properties
and has the largest market capitalization of all multifamily REITs and second
largest market capitalization among all REITs. The key performance measure the
Compensation Committee used to determine Mr. Crocker's 1996 compensation was
that the Company's financial performance in 1996 was in the top quartile in
almost every financial category as compared to other REITs, due in large part to
Mr. Crocker's leadership, foresight and experience. The Compensation Committee
noted the following factors in support of its conclusion:
. A 13% increase in funds from operations per Common Share over 1995;
. Excellent "same store" operating results with a 7.5% increase in net
operating income;
. Distributions per Common Share of $2.40, a 9.9% increase over 1995;
. Continued superior return to the Company's shareholders as the price of the
Company's Common Shares appreciated 35% during 1996;
. Successful equity and debt offerings in 1996 of $754 million;
. Total market capitalization of $4.2 billion, an increase of 51% over 1995;
and
. Acquisition of 48 properties in 1996, consisting of 15,297 units representing
a $754 million investment.
Based on the Company's excellent corporate performance in 1996, the
Compensation Committee believes that the compensation program properly rewards
its executive officers for achieving improvements in the Company's performance
and serving the interest of its shareholders.
Section 162(m) of the Internal Revenue Code of 1986, as amended ("Code"),
generally disallows a Federal income tax deduction for compensation in excess of
$1 million paid in any year to any of the Company's executive officers listed in
the Summary Compensation Table who are employed by the Company on the last day
of a taxable year. Section 162(m), however, does allow a deduction for payments
of "performance based" compensation, the material terms of which have been
approved by shareholders. Awards under the Company's Award Plan may, but need
not, satisfy the requirements of Section 162(m). The Company believes that
because it qualifies as a REIT under the Code and therefore is not subject to
Federal income taxes, the payment of compensation that does not satisfy the
requirements of Section 162(m) will not affect the Company's taxable income,
although to the extent that compensation does not qualify for deduction under
Section 162(m), a larger portion of shareholder distributions may be subject to
Federal income taxation as dividend income rather than return of capital. The
Company does not believe that Section 162(m) will materially affect the
taxability of shareholder distributions, although no assurance can be given in
this regard due to the variety of factors that affect the tax portion of
individual shareholders.
PERFORMANCE GRAPH
The following Common Share price performance graph compares shareholders'
return on the Company's Common Shares since August 11, 1993, the date of
commencement of the Company's initial public offering, with the Standard and
Poors ("S&P") 500 Stock Index and the index of equity REITs prepared by the
NAREIT. The Common Share price performance graph assumes an investment of $100
in each of the Company and the two indexes on August 11, 1993 and the
reinvestment of all dividends. Equity REITs are defined as those trusts which
derive more than 75% of their income from equity investments in real estate
assets. The NAREIT equity index includes all tax qualified REITs listed on the
New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market.
Common Share price performance presented for the period from August 11, 1993
through December 31, 1996 is not necessarily indicative of future results.
August 1993 Dec. 1993 Dec. 1994 Dec. 1995 Dec. 1996
COMPANY 100.00 125.24 125.84 138.54 199.73
S&P 500 Stock Index 100.00 105.39 106.78 146.91 180.64
NAREIT Equity Index 100.00 97.14 100.23 129.69 156.26
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth, as of March 1, 1997, information regarding
the beneficial ownership of the Company's Common Shares by each trustee of the
Company, the Company's five most highly compensated executive officers at year
end, and the trustees and named executive officers as a group.
Shares Upon
Number of Exercise of Percent of
Name Common Shares/(1)/ Options/(2)/ Total/(1)/ Class/(1)/
- - ---- ------------------ ------------ -------------- ----------
John W. Alexander 154 15,001 15,555 *
Douglas Crocker II 204,344/(3)/ 183,333 387,677 *
Henry H. Goldberg 396,087/(4)/ 5,001 401,088 *
Errol R. Halperin 2,334/(5)/ 15,001 17,335 *
James D. Harper, Jr. 2,150 15,001 17,151 *
Sheli Z. Rosenberg 15,488/(6)/ 62,001 77,489 *
Gerald A. Spector 52,803/(7)/ 86,834 139,637 *
Barry S. Sternlicht 1,900,143/(8)/ 15,001 1,915,144 3.29%
B. Joseph White 3,439 15,001 18,440 *
Samuel Zell 4,679,645/(9)/ 148,334 4,827,979 8.29%
Frederick C. Tuomi 13,457 54,999 68,456 *
David J. Neithercut 14,289/(10)/ 56,332 70,621 *
Gregory Smith 4,475 29,999 34,474 *
All trustees and executive officers
as a group including the above-named
persons (16 persons) 7,306,814 814,335 8,121,149 13.96%
*Less than 1%.
(1) The amount of Common Shares beneficially owned is reported on the basis of
regulations of the SEC governing the determination of beneficial ownership
of securities. The percentage of Common Shares beneficially owned by a
person assumes that all OP Units held by the person are exchanged for
Common Shares, that none of the OP Units held by other persons are so
exchanged, that all options exercisable within sixty days of March 1, 1997
to acquire Common Shares held by the person are exercised and that no
options to acquire Common Shares held by other persons are exercised.
(2) The amounts shown in this column reflect Common Shares subject to options
granted under the Award Plan which are currently exercisable or exercisable
within 60 days of the date of this table.
(3) Includes 8,200 Common Shares beneficially owned by Mr. Crocker's spouse.
Mr. Crocker disclaims beneficial ownership of the 8,200 Common Shares. Also
includes 175,000 Common Shares beneficially owned by MWC Partners, L.P., an
Illinois limited partnership ("MWC"). Mr. Crocker is sole general partner
of MWC. The sole limited partner is a trust created for the benefit of Mr.
Crocker's wife and Mr. Crocker's children.
(4) Includes 263,347 OP Units held by Mr. Goldberg, which are exchangeable on a
one-for-one basis into 263,347 Common Shares; 48,078 OP Units held by Mr.
Goldberg's spouse, which are exchangeable on a one-for-one basis into
48,078 Common Shares; and 75,714 OP Units held by GGL Investment Partners
#1 ("GGL"), a Maryland general partnership, which are exchangeable on a
one-for-one basis into 75,714 Common Shares,. Mr. Goldberg is a general
partner of GGL with a 66.67% percentage interest. Mr. Goldberg disclaims
beneficial ownership of the interests held by his spouse and 33.33% of the
interests held by GGL.
(5) Includes 1,000 Common Shares beneficially owned by Mr. Halperin's spouse.
Mr. Halperin disclaims beneficial ownership of the 1,000 shares.
(6) Includes 1,528 OP Units which are exchangeable on a one-for-one basis into
1,528 Common Shares. Ms. Rosenberg may be deemed to control or share
control of the power to invest such Common Shares (assuming exchange into
Common Shares). Ms. Rosenberg is a trustee or co-trustee of certain trusts
created for the benefit of Mr. Zell and his family and trusts created for
the benefit of the family of Mr. Robert Lurie, a deceased partner of Mr.
Zell. Such trusts are indirect owners of certain partnerships which own
Common Shares and indirect partners of the Operating Partnership. Ms.
Rosenberg disclaims beneficial ownership of all such Common Shares and OP
Units.
(7) Includes 33,500 Common Shares beneficially owned by Mr. Spector's spouse.
Also includes 2,200 Common Shares beneficially owned by Mr. Spector, as
custodian for his minor children and 1,150 Common Shares beneficially owned
by Mr. Spector as trustee of his daughter's trust. Mr. Spector disclaims
beneficial ownership of the 36,850 Common Shares. Also includes 1,683 OP
Units which are exchangeable on a one-for-one basis into 1,683 Common
Shares.
(8) Includes 1,899,996 OP Units which are exchangeable on a one-for-one basis
into 1,899,996 Common Shares. Mr. Sternlicht may be deemed to be the
beneficial owner of the 1,899,996 Common Shares (assuming exchange of
1,899,996 OP Units) because Mr. Sternlicht controls or shares control of
the power to vote and invest such Common Shares. Mr. Sternlicht disclaims
beneficial ownership of 1,601,665 Common Shares (assuming the exchange of
1,601,665 OP Units) because the economic benefits with respect to such
Common Shares are attributable to other persons.
(9) Includes 3,436,060 Common Shares (assuming exchange of 3,436,060 OP Units).
Mr. Zell may be deemed to be the beneficial owner of these 3,436,060 Common
Shares (assuming the exchange of 3,436,060 OP Units) because Mr. Zell
controls or shares control of the power to vote and invest such Common
Shares, either directly, or as the general partner of partners of the
Operating Partnership or as a Shareholder of a corporate general partner
which owns Common Shares. Mr. Zell disclaims beneficial ownership of
2,191,045 Common Shares (assuming the exchange of 1,557,561 OP Units)
because the economic benefits with respect to such Common Shares are
attributable to other persons.
(10) Includes 2,000 Common Shares beneficially owned by Mr. Neithercut, as
custodian for his minor children. Mr. Neithercut disclaims beneficial
ownership of the 2,000 Common Shares.
SECURITY OWNERSHIP OF PRINCIPAL SHAREHOLDERS
The following table sets forth information as of March 1, 1997 (except as
otherwise noted), with respect to persons who are known by the Company to be the
beneficial owner of more than 5% of the Company's outstanding Common Shares.
Amount and Nature
of Beneficial
Name and Address of Beneficial Owner Ownership/(1)/ Percent of Class/(1)/
- - ----------------------------------------------------------------------------------
FMR Corp./(2)/
82 Devonshire Street
Boston, MA 02109-3614 6,551,185 11.26%
Samuel Zell and entities controlled by
Samuel Zell and Ann Lurie/(3)/
Two North Riverside Plaza 4,827,979 8.30%
Chicago, IL 60606
The Prudential Insurance Company of
America/(4)/
Prudential Plaza
751 Broad Street
Newark, NJ 07102-3777 3,816,500 6.56%
Merrill Lynch & Co., Inc./ (5)/
800 Scudders Mill Road
Plainsboro, NY 08536 3,220,425 5.54%
- - ------------------------
(1) The amount of Common Shares beneficially owned is reported on the basis of
regulations of the SEC governing the determination of beneficial ownership
of securities. The percentage of Common Shares beneficially owned by a
person assumes that all OP Units held by the person are exchanged for Common
Shares, that none of the OP Units held by other persons are so exchanged,
that all options exercisable within sixty days of March 1, 1997 to acquire
Common Shares held by the person are exercised and that no options to
acquire Common Shares held by other persons are exercised.
(2) Pursuant to a Schedule 13G filed with the SEC, as of December 31, 1996, FMR
Corp. ("FMR") may have direct or indirect voting and/or investment
discretion over these Common Shares which are held for the benefit of its
clients by its separate accounts, externally managed accounts, registered
investment companies, subsidiaries and/or other affiliates. FMR is
reporting the combined holdings of the entities for the purpose of
administrative convenience.
(3) Includes 3,436,060 OP Units which are exchangeable on a one-for-one basis
into 3,436,060 Common Shares. Also included are options to purchase 148,334
Common Shares which are currently exercisable or exercisable within sixty
days and beneficially owned by Mr. Zell. Also includes 30,000 Common Shares
beneficially owned by the Samuel Zell Foundation. Mr. Zell disclaims
beneficial ownership of 2,191,045 Common Shares (assuming the exchange of
1,557,561 Units) because the economic benefits with respect to such Common
Shares are attributable to other persons. Ms. Lurie disclaims beneficial
ownership of 2,518,600 Common Shares (assuming the exchange of 1,878,499 OP
Units).
(4) Pursuant to a Schedule 13G filed with the SEC, as of December 31, 1996, The
Prudential Insurance Company of America ("Prudential") may have direct or
indirect voting and/or investment discretion over these Common Shares which
are held for the benefit of its clients by its separate accounts, externally
managed accounts, registered investment companies, subsidiaries and/or other
affiliates. Prudential is reporting the combined holdings of the entities
for the purpose of administrative convenience.
(5) Pursuant to a Schedule 13G filed with the SEC for February 14, 1997, Merrill
Lynch and Co., Inc. ("Merrill Lynch") may have direct or indirect voting
and/or investment discretion over these Common Shares which are held for the
benefit of its clients by its separate accounts, externally managed
accounts, registered investment companies, subsidiaries and/or other
affiliates. Merrill Lynch is reporting the combined holdings of the
entities for the purpose of administrative convenience.
Item 13. Certain Relationships and Related Transactions
(a) Pursuant to the terms of the partnership agreement for the Operating
Partnership, the Operating Partnership is required to reimburse the Company for
all expenses incurred by the Company in excess of income earned by the Company
through its indirect 1% ownership of various Financing Partnerships. Amounts
paid on behalf of the Company are reflected in the Consolidated Statement of
Operations as general and administrative expenses.
During 1996, certain related entities provided services to the Operating
Partnership and the Company. These included, but were not limited to, Rosenberg
& Liebentritt, P.C., which provided legal services; Greenberg & Pociask, Ltd.,
which provided tax and accounting services; and First Capital Financial
Corporation, which provided accounting services. Fees paid to Rosenberg &
Liebentritt, P.C., of which Ms. Rosenberg has been chairman of the board since
March 1995 and was president from 1980 until March 1995, amounted to
approximately $0.7 million for the year ended December 31, 1996. Fees paid to
the other affiliates mentioned above amounted in the aggregate to approximately
$4,400 for the year ended December 31, 1996. In addition, The Riverside Agency,
Inc., which provided insurance brokerage services, was paid fees and reimbursed
premiums and loss claims in the amount of $4.1 million for the year ended
December 31, 1996. As of December 31, 1996, no amounts were owed to The
Riverside Agency, Inc. As of December 31, 1996, $315,700 was owed to Rosenberg &
Liebentritt, P.C. for legal fees incurred in connection with property
acquisitions and securities matters.
Equity Group Investments, Inc. ("EGI") and certain of its subsidiaries,
including EAM, Eagle Flight Services, Equity Properties & Development, L.P. and
EPMC have provided certain services to the Operating Partnership and the Company
which include, but are not limited to, investor relations, corporate
secretarial, computer and support services, real estate tax evaluation services,
financial services, telecommunication services, information systems services and
property development services. Fees paid to EGI for these services amounted to
$1.3 million for the year ended December 31, 1996. Amounts due to EGI were
approximately $0.3 million as of December 31, 1996.
Artery Property Management, Inc. ("Artery") provided consulting services
with regard to property acquisitions and additional business opportunities and
was paid approximately $0.2 million for the year ended December 31, 1996.
During 1995, the Operating Partnership engaged Rudnick & Wolfe, a law firm
in which Mr. Halperin is a partner, to perform legal services. Fees paid to this
firm amounted to approximately $4,300 for the year ended December 31, 1996.
Management Corp. has lease agreements with affiliated parties covering
office space occupied by regional operation centers located in Chicago, Illinois
("Midwest ROC") and Tampa, Florida ("Southeast ROC") and the corporate
headquarters located in Chicago, Illinois. In connection with these affiliated
lease agreements, Management Corp. paid Equity Office Holdings, L.L.C. ("EOH")
$118,919 in connection with the Midwest ROC, $137,638 in connection with the
Southeast ROC and $409,392 in connection with the space occupied by the
corporate headquarters for the year ended December 31, 1996. As of December 31,
1996, $46,435 was owed to EOH.
In addition, the Operating Partnership and the Company have provided
acquisitions, asset and property management services to certain related entities
for properties not owned by the Company. Fees received for providing such
services were approximately $6.7 million for the year ended December 31, 1996.
Mr. Goldberg is a two-thirds owner and chairman of the board of directors of
Artery Property Management, Inc. ("APMI"), a real estate property management
company. In connection with the acquisition of certain properties from Mr.
Goldberg and his affiliates during 1995, the Operating Partnership made a loan
of $15,212,000 evidenced by two notes and secured by 465,545 OP Units. Mr.
Goldberg estimates that his interest in this transaction equaled $26,000,000.
The largest aggregate amount of indebtedness outstanding under the loan at any
time during 1996 and the amount outstanding as of December 31, 1996 was
$15,212,000. The first note issued in the amount of $1,056,000 accrues interest
at the prime rate plus 3-1/2% per annum. The second note issued in the amount of
$14,156,000 bears interest equal to approximately $300,000 per year plus the
amount of distributions payable on 433,230 of the OP Units pledged as collateral
for this loan.
Mr. Tuomi borrowed $100,000 from the Company in 1994 related to his purchase
of a home in the Chicago area. The loan bears interest at 30-day LIBOR plus 2%
with interest due quarterly. The largest principal amount owed in 1996 was
$90,000 and the principal balance at December 31, 1996 was $72,000. The loan is
payable in equal principal installments of $18,000 over five years.
Mr. Tuomi borrowed $40,000 from the Company in 1996 related to the payment
of a tax liability incurred when the restrictions relating to 1,261 Common
Shares lapsed on December 16, 1996. The loan carried interest at the rate of 8-
1/2% with the outstanding principal balance, together with any accrued and
unpaid interest due on the earlier of March 31, 1997 or the sale of Mr. Tuomi's
1,261 Common Shares. The largest principal amount owed in 1996 was $40,000 and
the principal balance at December 31, 1996 was $40,000. Payment was secured by a
pledge of Mr. Tuomi's 1,261 Common Shares. The loan was paid in full on March 5,
1997.
Mr. Crocker borrowed $78,000 from the Company in December 1995. The loan
bears interest at 30 day LIBOR plus 2%. The largest principal amount owed in
1996 was $78,000 and the principal balance at December 31, 1996 was $78,000.
Interest is due monthly with the outstanding balance due on March 31, 1997.
Payment was secured by a pledge of Mr. Crocker's restricted share awards issued
in January 1996. The loan was paid in full on March 3, 1997.
Mr. Crocker borrowed $140,000 from the Company in April 1996 related to the
payment of a tax liability incurred. The loan bears interest at 30-day LIBOR
plus 2%. The largest principal amount owed in 1996 was $140,000 and the
principal balance at December 31, 1996 was $140,000. Interest is due monthly
with the outstanding balance due on March 1, 1998. Payment was secured by a
pledge of Mr. Crocker's restricted share awards issued in January 1996.
Mr. Crocker borrowed $564,000 from the Company during 1996. The loan bears
interest at monthly LIBOR plus 2% with interest due quarterly. The largest
principal amount owed in 1996 was $564,000 and the principal balance at December
31, 1996 was $564,000. Payment is secured by a pledge of Mr. Crocker's Common
Shares. Payments of principal shall be payable annually in the amount of $80,580
on March 15, 1997 and in the amounts $80,570 on March 15th of each of the next
six succeeding years. A payment in the amount of $80,580 was received in
February 1997 and the principal balance now is $483,420.
The executive officers listed below are indebted to the Company as a result
of purchasing Common Shares from the Company in June 1994. The loans accrue
interest, payable quarterly in arrears, at the applicable federal rate, as
defined in the Internal Revenue Code of 1986, as amended, in effect at the date
of each loan. The loans are due and payable on the first to occur of the date in
which the individual leaves the Company, other than by reason of death or
disability, or the respective loan's due date. The loans are with recourse to
the respective individuals and are collateralized by a pledge of the Common
Shares purchased. All dividends paid on pledged Common Shares in excess of the
then marginal tax rate on the taxable portion of such dividends are used to pay
interest and principal on the loans.
Largest Principal Principal
Amount Owed Balance at Interest
Name in 1996 December 31, 1996 Rate
- - --------------------------------------------------------------------
Douglas Crocker II $ 878,776 $ 850,318 6.21%
Douglas Crocker II 983,171 960,748 6.15%
Douglas Crocker II 944,584 944,584 7.26%
Douglas Crocker II 1,901,807 1,901,807 7.93%
Frederick C. Tuomi 314,861 314,861 7.26%
Alan George 79,063 79,063 7.26%
Rosenberg and Liebentritt, P.C. provides legal services to the Operating
Partnership and the Company. Sheli Z., Rosenberg, a Trustee of the Company, is a
principal of this firm. The Operating Partnership has also engaged Seyfarth,
Shaw, Fairweather & Geraldson, a law firm in which Ms. Rosenberg's husband is a
partner, to provide legal services from time to time relating to employee
benefit issues.
48
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a)
(1 & 2) See Index to Financial Statements and Schedules on page F-1 of this
Form 10-K.
(3) Exhibits:
2.1* Property Contribution Agreement (Zell Properties and EPMC)
2.2* Property Contribution Agreement (Starwood Properties)
3.1* Amended and Restated Declaration of Trust of Equity Residential
Properties Trust, dated August 10, 1993
3.1A+ Amended and Restated Declaration of Trust of Equity Residential
Properties Trust dated February 3, 1995
3.2* Bylaws of Equity Residential Properties Trust
4.1**** Indenture, dated as of May 16, 1994, by and among the Operating
Partnership, as obligor, the Company, as guarantor and The First
National Bank of Chicago, as trustee in connection with 81/2%
senior notes due May 15, 199 9
4.2**** Indenture, dated October 1, 1994, between the Operating
Partnership, as obligor and The First National Bank of Chicago, as
trustee in connection with up to $500 million of debt securities
4.3 ++ Registration Rights and Lock-Up Agreement Beauchamp
10.1* Agreement of Limited Partnership of ERP Operating Limited
Partnership
10.1A* Second Amended and Restated Agreement of Limited Partnership of ERP
Operating Limited Partnership
10.1B**** Third Amended and Restated Agreement of Limited Partnership of ERP
Operating Limited Partnership
10.1C***** Fourth Amended and Restated Agreement of Limited Partnership of ERP
Operating Limited Partnership
10.2* Agreement of Limited Partnership of Equity Residential Properties
Management Limited Partnership
10.3+ Agreement of Limited Partnership of Equity Residential Properties
Management Limited Partnership II
10.4* Noncompetition Agreement (Zell)
10.5* Noncompetition Agreement (Crocker)
10.6* Noncompetition Agreement (Spector)
10.7* Form of Noncompetition Agreement (other officers)
10.8* Registration Rights and Lock-Up Agreement with the Company (Zell)
10.9* Registration Rights and Lock-Up Agreement with the Company
(Starwood)
10.10*** Form of Registration Rights Agreement with purchasers in the
Private Equity Offering
10.11* Services Agreement between Equity Residential Properties Trust and
Equity Group Investments, Inc.
10.12* Form of Property Management Agreement (REIT properties)
10.13**** Form of Property Management Agreement (Non-REIT properties)
10.14* 1993 Share Option Plan
10.14A*** Amended and Restated 1993 Share Option and Share Award Plan
53
PART IV
10.15* Form of Contribution Agreement dated as of August 11, 1993
10.16** Revolving Credit Agreement by and among the Operating Partnership,
the Company, NationsBank of Texas, N.A. and Wells Fargo Realty
Advisors Funding, Incorporated
10.16A** First Amendment to Revolving Credit Agreement by and among the
Operating Partnership, the Company, Nations Bank of Texas, N.A. and
Wells Fargo Realty Advisors Funding, Incorporated
10.17** Revolving Credit Agreement by and among the Operating Partnership,
the Company, The First National Bank of Chicago and First National
Bank Association, and First Amendment to Revolving Credit Agreement
10.17A** Second Amendment to Revolving Credit Agreement by and among the
Operating Partnership, the Company, The First National Bank of
Chicago, First National Bank Association and the First National
Bank of Boston
10.18**** Credit Agreement by and among the Operating Partnership, as
borrower, the Company, Wells Fargo Realty Advisors Funding,
Incorporated, as lender, Wells Fargo Realty Advisors Funding,
Incorporated, as agent, and The First National Bank of Chicago and
Nations Bank of Texas, N.A., as co-agents, dated November 14, 1994
10.19**** Purchase and Sale Agreement by and among Real Estate Equities Joint
Venture as Sellers and EQR-EXL Vistas, Inc. and Executive Life
Insurance Company in Rehabilitation/Liquidation, date August 17,
1994.
10.20 Revolving Credit Agreement, dated as of November 15, 1996 among the
Operating Partnership and Morgan Guaranty Trust Company of New
York, as lead agent and Bank of America Illinois, as co-lead agent
10.21 Amended and Restated Master Reimbursement Agreement, dated as of
November 1, 1996 by and between Federal National Mortgage
Association and EQR-Bond Partnership
12 Computation of Ratio of Earnings to Fixed Charges
21 List of Subsidiaries of Equity Residential
Properties Trust
23.1 Consent of Grant Thornton L.L.P.
23.2 Consent of Ernst & Young LLP.
24.1 Power of Attorney for John Alexander dated February 24, 1997
24.2 Power of Attorney for James D. Harper, Jr. dated February 24, 1997
24.3 Power of Attorney for Errol R. Halperin dated February 24, 1997
24.4 Power of Attorney for B. Joseph White dated February 24, 1997
24.5 Power of Attorney for Barry S. Sternlicht dated February 24, 1997
24.6 Power of Attorney for Henry H. Goldberg dated February 24, 1997
- - -----------------------------------------
* Included as an exhibit to the Company's Form S-11 Registration Statement,
File No. 33-63158, and incorporated herein by reference.
Included as an exhibit to the Company's Form S-11 Registration Statement,
File No. 33-72080, and incorporated herein by reference .
*** Included as an exhibit to the Company's Form S-11 Registration Statement,
File No. 33-80420, and incorporated herein by reference.
**** Included as an exhibit to the Operating Partnership's Form 10/A, dated
December 12, 1994, File No. 0-24920, and incorporated herein by
reference.
54
PART IV
***** Included as an exhibit to the Operating Partnership's Form 10-Q for the
quarter ended September 30, 1995, dated November 7, 1995, and
incorporated herein by reference.
+ Included as an exhibit to the Company's Form 10-K for the year ended
December 31, 1994.
++ Included as an exhibit to the Company's Form 10-K for the year ended
December 31, 1995.
55
PART IV
(b) Reports on Form 8-K:
A Report on Form 8-K dated November 15, 1996, reporting information for property
acquisitions.
A Report on Form 8-K dated December 5, 1996 reporting information in connection
with the December 1996 Common Share Offerings.
A Report on Form 8-K dated December 13, 1996 reporting information in connection
with the December 1996 Common Share Offerings.
(c) Exhibits:
See Item 14(a)(3) above.
(d) Financial Statement Schedules:
See Index to Financial Statements attached hereto on page F-1 of this Form
10-K.
56
PART IV
SIGNATURES
----------
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
behalf by the undersigned thereunto duly authorized.
EQUITY RESIDENTIAL PROPERTIES TRUST
Date: March 20, 1997 By: /s/ Douglas Crocker II
-------------- ------------------------------------------
Douglas Crocker II
President, Chief Executive Officer,
Trustee and *Attorney-in-Fact
Date: March 20, 1997 By: /s/ David J. Neithercut
-------------- ------------------------------------------
David J. Neithercut
Executive Vice-President and
Chief Financial Officer
Date: March 20, 1997 By: /s/ Michael J. McHugh
-------------- ------------------------------------------
Michael J. McHugh
Senior Vice-President, Chief Accounting
Officer, Treasurer and *Attorney-in-fact
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: March 20, 1997 By: /s/ Samuel Zell
-------------- ------------------------------------------
Samuel Zell
Chairman of the Board of Trustees
Date: March 20, 1997 By: /s/ Gerald A. Spector
-------------- ------------------------------------------
Gerald A. Spector
Executive Vice-President, Chief
Operating Officer and Trustee
Date: March 20, 1997 By: /s/ Sheli Z. Rosenberg
-------------- ------------------------------------------
Sheli Z. Rosenberg
Trustee
57
PART IV
SIGNATURES-CONTINUED
--------------------
Date: March 20, 1997 By: /s/ James D. Harper
-------------- -------------------------------------------
James D. Harper
Trustee
Date: March 20, 1997 By: /s/ Errol R. Halperin
-------------- -------------------------------------------
Errol R. Halperin
Trustee
Date: March 20, 1997 By: /s/ Barry S. Sternlicht
-------------- -------------------------------------------
Barry S. Sternlicht
Trustee
Date: March 20, 1997 By: /s/ John W. Alexander
-------------- -------------------------------------------
John W. Alexander
Trustee
Date: March 20, 1997 By: /s/ B. Joseph White
-------------- -------------------------------------------
B. Joseph White
Trustee
Date: March 20, 1997 By: /s/ Henry H. Goldberg
-------------- -------------------------------------------
Henry H. Goldberg
Trustee
58
INDEX TO FINANCIAL STATEMENTS AND SCHEDULE
EQUITY RESIDENTIAL PROPERTIES TRUST
PAGE
----
FINANCIAL STATEMENTS FILED AS PART OF THIS REPORT
Report of Independent Auditors............................ F-2
Report of Independent Accountants......................... F-3
Consolidated Balance Sheets as of
December 31, 1996 and 1995............................. F-4
Consolidated Statements of Operations for
the years ended December 31, 1996, 1995 and 1994....... F-5
Consolidated Statements of Cash Flows for
the years ended December 31, 1996, 1995 and 1994....... F-6 to F-7
Consolidated Statements of Changes in Shareholders'
Equity for the years ended
December 31, 1996, 1995 and 1994....................... F-8
Notes to Consolidated Financial Statements................ F-9 to F-37
SCHEDULE FILED AS PART OF THIS REPORT
Report of Independent Accountants......................... S-1
Schedule III - Real Estate and Accumulated Depreciation... S-2 to S-9
F-1
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees and Shareholders
Equity Residential Properties Trust
We have audited the accompanying consolidated balance sheet of Equity
Residential Properties Trust (the "Company") as of December 31, 1996 and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for the year then ended. Our audit also included the financial
statement schedule listed in the Index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Equity
Residential Properties Trust at December 31, 1996, and the consolidated results
of its operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
ERNST & YOUNG LLP
Chicago, Illinois
February 12, 1997
except for Note 19, as to which the date is
March 20, 1997
F-2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees
Equity Residential Properties Trust
We have audited the accompanying consolidated balance sheet of Equity
Residential Properties Trust (the "Company") as of December 31, 1995 and the
related consolidated statements of operations, changes in shareholders' equity
and cash flows for each of the two years in the period ended December 31, 1995.
These financial statements are the responsibility of management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Equity Residential
Properties Trust as of December 31, 1995, and the consolidated results of its
operations and its cash flows for each of the two years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.
/s/ GRANT THORNTON LLP
GRANT THORNTON LLP
Chicago, Illinois
February 14, 1996
F-3
EQUITY RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except for share amounts)
DECEMBER 31, DECEMBER 31,
1996 1995
----------- ------------
ASSETS
Investment in rental property
Land $ 284,879 $ 210,439
Depreciable property 2,698,631 1,978,500
---------- ----------
2,983,510 2,188,939
Accumulated depreciation (301,512) (218,339)
---------- ----------
Investment in rental property, net of
accumulated depreciation 2,681,998 1,970,600
Cash and cash equivalents 147,271 13,428
Investment in mortgage notes, net 86,596 87,154
Rents receivable 1,450 1,073
Deposits - restricted 20,637 18,272
Escrow deposits - mortgage 15,434 16,745
Deferred financing costs, net 14,555 12,653
Other assets 18,186 21,335
---------- ----------
TOTAL ASSETS $2,986,127 $2,141,260
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Mortgage notes payable $ 755,434 $ 561,695
Notes, net 498,840 348,524
Line of credit - 92,000
Accounts payable and accrued expenses 33,117 23,544
Accrued interest payable 12,737 8,354
Due to affiliates 628 1,568
Rents received in advance and other liabilities 15,838 11,138
Security deposits 14,128 10,131
Distributions payable 45,938 30,826
---------- ----------
TOTAL LIABILITIES 1,376,660 1,087,780
---------- ----------
Commitments and contingencies
Minority Interests 150,637 168,963
---------- ----------
Shareholders' equity:
Preferred Shares of beneficial interest,
$.01 par value; 10,000,000 shares authorized:
9 3/8% Series A Cumulative Redeemable Preferred
Shares of Beneficial Interest, liquidation
preference $25 per share, 6,120,000 shares
issued and outstanding 153,000 153,000
9 1/8% Series B Cumulative Redeemable Preferred
Shares of Beneficial Interest, liquidation
preference $250 per share, 500,000 shares
issued and outstanding 125,000 125,000
9 1/8% Series C Cumulative Redeemable Preferred
Shares of Beneficial Interest, liquidation
preference $250 per share, 460,000 shares
issued and outstanding 115,000 -
Common Shares of beneficial interest,
$.01 par value, 100,000,000 shares authorized,
51,154,836 shares issued and outstanding as of
December 31, 1996 and 35,011,715 shares issued
and outstanding as of December 31, 1995 512 350
Paid in capital 1,147,214 652,829
Employee notes (5,255) (5,331)
Distributions in excess of accumulated earnings (76,641) (41,331)
---------- ----------
Total shareholders' equity 1,458,830 884,517
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,986,127 $2,141,260
========== ==========
See accompanying notes.
F-4
EQUITY RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands except for per share data)
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
--------------------------------------
REVENUES
Rental income $ 454,412 $ 373,919 $ 220,727
Fee and asset management 6,749 7,030 4,739
Interest income - investment in mortgage notes 12,819 4,862 -
Interest and other income 4,405 4,573 5,568
---------- ---------- ----------
Total revenues 478,385 390,384 231,034
---------- ---------- ----------
EXPENSES
Property and maintenance 127,172 112,186 66,534
Real estate taxes and insurance 44,128 37,002 23,028
Property management 17,512 15,213 10,249
Property management - non-recurring - - 879
Fee and asset management 3,837 3,887 2,056
Depreciation 93,253 72,410 37,273
Interest:
Expense incurred 81,351 78,375 37,044
Amortization of deferred financing costs 4,242 3,444 1,930
General and administrative 9,857 8,129 6,053
---------- ---------- ----------
Total expenses 381,352 330,646 185,046
---------- ---------- ----------
Income before gain on disposition of properties,
extraordinary items and allocation to Minority
Interests 97,033 59,738 45,988
Gain on disposition of properties 22,402 21,617 -
---------- ---------- ----------
Income before extraordinary items and allocation to
Minority Interests 119,435 81,355 45,988
Extraordinary items:
Write-off of unamortized costs on refinanced debt (3,512) - -
Gain on early extinguishment of debt - 2,000 -
---------- ---------- ----------
Income before allocation to Minority Interests 115,923 83,355 45,988
Income allocated to Minority Interests (14,299) (15,636) (11,570)
---------- ---------- ----------
Net income 101,624 67,719 34,418
Preferred distributions (29,015) (10,109) -
---------- ---------- ----------
Net income available to Common Shares $ 72,609 $ 57,610 $ 34,418
========== ========== ==========
Net income per weighted average Common Share outstanding $ 1.70 $ 1.68 $ 1.34
========== ========== ==========
Weighted average Common Shares outstanding 42,586 34,358 25,621
========== ========== ==========
Distributions declared per Common Share outstanding $ 2.40 $ 2.18 $ 2.01
========== ========== ==========
Tax treatment of distributions (unaudited)
Ordinary income $ 1.88 $ 1.70 $ 1.66
========== ========== ==========
Return of Capital $ 0.43 $ 0.48 $ 0.35
========== ========== ==========
Long-Term Capital Gain $ 0.09 $ - $ -
========== ========== ==========
See accompanying notes.
F-5
EQUITY RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
--------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 101,624 $ 67,719 $ 34,418
Adjustments to reconcile net income to
net cash provided by operating activities:
Income allocated to Minority Interests 14,299 15,636 11,570
Depreciation 93,253 72,410 37,273
Amortization of deferred financing costs
(including discount on 1999 and 2002 Notes) 4,558 3,717 2,039
Amortization of discount on investment in
mortgage notes (613) - -
Gain on disposition of properties (22,402) (21,617) -
Write-off of unamortized costs on refinanced debt 3,512 - -
Gain on early extinguishment of debt - (2,000) -
Changes in assets and liabilities:
(Increase) in rents receivable (409) (259) (641)
(Increase) in deposits - restricted (556) (218) (1,849)
Decrease (increase) in other assets 158 1,913 (7,906)
(Decrease) increase in due to affiliates (857) (2,305) 1,261
Increase in accounts payable and accrued expenses 9,901 3,765 9,286
Increase in accrued interest payable 4,383 2,616 4,483
Increase in rents received in advance and
other liabilities 4,079 157 4,063
---------- ---------- ----------
Net cash provided by operating activities 210,930 141,534 93,997
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in rental properties, net (641,015) (239,964) (855,156)
Improvements to rental property (33,001) (32,800) (16,721)
Additions to non-rental property (2,347) (3,669) (2,417)
Proceeds from disposition of rental property, net 40,093 46,426 -
Purchase of contract rights - - (5,836)
Decrease (increase) in mortgage deposits 1,311 (1,299) (3,541)
Deposits (made) on rental property acquisitions (16,916) (15,107) (5,200)
Deposits applied on rental property acquisitions 15,107 5,200 -
Decrease (increase) in investment in mortgage notes 1,171 (87,154) -
Other investing activities (58) 4,349 (7,644)
---------- ---------- ----------
Net cash (used for) investing activities (635,655) (324,018) (896,515)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of Common Shares 489,139 - 583,829
Proceeds from sale of Preferred Shares 115,000 278,000 -
Proceeds from exercise of options 4,028 2,664 251
Proceeds from sale of 1999 Notes, net of discount - - 124,131
Proceeds from sale of Floating Rate Notes - - 100,000
Proceeds from sale of 2002 Notes, net of discount - 124,011 -
Proceeds from sale of 2026 Notes 150,000 - -
Redemption of Preference Units (1,083) (1,352) -
Payment of offering costs (10,415) (10,353) (26,738)
Distributions to Common Share and Preferred Share owners (121,860) (77,081) (43,432)
Distributions to Minority Interests (20,444) (18,794) (16,348)
Principal receipts on employee notes 76 143 29
Loan to seller - - (15,212)
Proceeds from refinancing of tax-exempt bonds, net 112,209 - -
Proceeds from line of credit 250,000 317,000 376,800
Repayments on line of credit (342,000) (387,000) (247,400)
Principal payments on mortgage notes payable (60,706) (47,787) (25,872)
Loan and bond acquisition costs (9,111) (4,558) (7,026)
Increase in security deposits 3,735 948 5,125
Other financing activities - 33 358
---------- ---------- ----------
Net cash provided by financing activities 558,568 175,874 808,495
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 133,843 (6,610) 5,977
Cash and cash equivalents, beginning of year 13,428 20,038 14,061
---------- ---------- ----------
Cash and cash equivalents, end of year $ 147,271 $ 13,428 $ 20,038
========== ========== ==========
See accompanying notes.
F-6
EQUITY RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(AMOUNTS IN THOUSANDS)
YEAR ENDED DECEMBER 31,
--------------------------------------
1996 1995 1994
--------------------------------------
Supplemental information:
Cash paid during the period for interest $ 76,968 $ 75,759 $ 32,561
========== ========== ==========
Mortgage loans assumed through acquisitions
of rental properties $ 142,237 $ 23,554 $ 388,357
========== ========== ==========
Rental property assumed through foreclosure $ 10,854 $ - $ -
========== ========== ==========
Net rental properties contributed in
exchange for OP units $ 440 $ 18,811 $ -
========== ========== ==========
Rental property conveyed in exchange for release
of mortgage indebtedness $ - $ 20,500 $ -
========== ========== ==========
Stated value of Preference Units issued for
rental properties $ - $ - $ 41,213
========== ========== ==========
Conversion of mortgage note receivable $ - $ - $ 25,000
========== ========== ==========
See accompanying notes.
F-7
EQUITY RESIDENTIAL PROPERTIES TRUST
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDER'S EQUITY
(Amounts in thousands)
YEAR ENDED DECEMBER 31,
1996 1995 1994
--------------------------------------
PREFERRED SHARES
Balance, beginning of year $ 278,000 $ - $ -
9 3/8% Series A Cumulative Redeemable - 153,000 -
9 1/8% Series B Cumulative Redeemable - 125,000 -
9 1/8% Series C Cumulative Redeemable 115,000 -
---------- ---------- ----------
Balance, end of year $ 393,000 $ 278,000 $ -
========== ========== ==========
COMMON SHARES, $.01 PAR VALUE
Balance, beginning of year $ 350 $ 340 $ 146
Issuance through proceeds from offerings 144 - 193
Conversion of OP Units into Common Shares 16 9 -
Issuance through exercise of options and
restricted share grants 2 1 1
---------- ---------- ----------
Balance, end of year $ 512 $ 350 $ 340
========== ========== ==========
PAID IN CAPITAL
Balance, beginning of year $ 652,829 $ 636,751 $ 151,082
Sale of Common Shares, net 482,591 - 556,142
Issuance of Common Shares through conversion of
OP Units into Common Shares 27,651 15,664 -
Issuance of Common Shares for employee notes - 1,959 2,635
Issuance of Common Shares through exercise of options
and restricted share grants 4,353 2,881 609
Offering costs associated with Preferred Shares (4,011) (9,422) -
Adjustments for Minority Interests ownership
in Operating Partnership (16,199) 4,996 (73,717)
---------- ---------- ----------
Balance, end of year $1,147,214 $ 652,829 $ 636,751
========== ========== ==========
EMPLOYEE NOTES
Balance, beginning of year $ (5,331) $ (3,515) $ (909)
Notes received for issuance of Common Shares - (1,959) (2,635)
Principal receipts 76 143 29
---------- ---------- ----------
Balance, end of year $ (5,255) $ (5,331) $ (3,515)
========== ========== ==========
DISTRIBUTION IN EXCESS OF ACCUMULATED EARNINGS
Balance, beginning of year $ (41,331) $ (23,640) $ (3,834)
Net income 72,609 57,610 34,418
Distributions on Common Shares (107,919) (75,301) (54,224)
========== ========== ==========
Balance, end of year $ (76,641) $ (41,331) $ (23,640)
========== ========== ==========
See accompanying notes
F-8
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization and Formation of the Company
Equity Residential Properties Trust, formed in March 1993, and its
subsidiaries (collectively, the "Company"), is a self-administered and self-
managed equity real estate investment trust ("REIT"). The Company has elected
to be taxed as a REIT under Section 856(c) of the Internal Revenue Code 1986, as
amended (the "Code"), commencing with its taxable year ending December 31, 1993.
As a result, the Company generally will not be subject to Federal income tax to
the extent it distributes 95% of its taxable income to its shareholders. REITs
are subject to a number of organizational and operational requirements. If the
Company fails to qualify as a REIT in any year, its taxable income may be
subject to income tax at regular corporate rates (including any applicable
alternative minimum tax). Even if the Company qualifies for taxation as a REIT,
the Company may be subject to certain state and local taxes on its income and
excise taxes on its undistributed income.
The Company is the successor to the multifamily property business of Equity
Properties Management Corp. ("EPMC"), an entity controlled by Mr. Samuel Zell,
Chairman of the Board of Trustees of the Company, and a series of other entities
which owned 69 of the multifamily properties contributed to the Company at the
time of the Company's initial public offering (the "Initial Properties"). Forty-
six of the Initial Properties (the "Zell Properties") were contributed or sold
by entities substantially controlled by Mr. Zell and primarily owned by Mr. Zell
and trusts for the benefit of Mr. Robert Lurie, a deceased partner of Mr. Zell.
The remaining 23 of the Initial Properties (the "Starwood Properties") were
acquired from entities controlled by Starwood Capital Partners, L.P.
("Starwood") and its affiliates ("Starwood Original Owners"). Prior to the
completion of the Company's initial public offering (the "IPO") of 13,225,000
common shares of beneficial interest, $.01 par value per share ("Common
Shares"), EPMC provided multifamily residential management services (the
"Management Business") to the Zell Properties.
The Company is engaged in the acquisition, disposition, ownership, management
and operation of multifamily properties. As of December 31, 1996, the Company
controlled a portfolio of 218 multifamily properties (individually a "Property"
and collectively the "Properties") containing 67,705 apartment units. The
Company's interest in six of these Properties at the time of acquisition thereof
consisted solely of ownership of debt collateralized by such Properties. The
Company also has an investment in partnership interests and subordinated
mortgages collateralized by 21 properties (the "Additional Properties"). The
Properties and Additional Properties are located throughout the United States in
the following 30 states: Arizona, Arkansas, California, Colorado, Florida,
Georgia, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland,
Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New Mexico, Nevada,
North Carolina, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas,
Virginia and Washington.
F-9
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In exchange for contributing 33 of the Zell Properties and the Management
Business and the Starwood Properties, the 33 existing entities (the "Zell
Original Owners"), and entities controlled by Starwood and EPMC received a total
of 8,433,238 partnership interests ("OP Units") (including an additional 93,639
OP Units issued in August 1994 and 1,835 OP Units issued in September 1995) in
ERP Operating Limited Partnership (the "Operating Partnership"). The OP Units
are exchangeable on a one-for-one basis into Common Shares. The other 13 Zell
Properties were acquired from 13 existing partnerships (the "Zell Sellers") for
$43.5 million in cash. The Management Business, the Zell Original Owners and
the Zell Sellers are collectively the "Predecessor Business".
The Company has formed a series of partnerships (the "Financing
Partnerships") which beneficially own certain Properties encumbered by mortgage
indebtedness. The Operating Partnership owns a 1% limited partner interest and
a 98% general partner interest in each Financing Partnership. The remaining 1%
general partner interest in each Financing Partnership is owned by various
qualified REIT subsidiaries wholly owned by the Company (each a "QRS
Corporation"). Rental income from the Properties that are beneficially owned by
a Financing Partnership is used first to service the applicable mortgage debt
and pay other operating expenses and any excess is then distributed 1% to the
applicable QRS Corporation, as the general partner of such Financing
Partnership, and 99% to the Operating Partnership, as the sole 1% limited
partner and as the 98% general partner. The Company has also formed a series of
limited liability companies (the "LLCs") which own certain Properties and one
such LLC which has an investment in partnership interests and subordinated
mortgages collateralized by the Additional Properties. The Operating
Partnership is a 99% managing member of each LLC and a QRS Corporation is a 1%
member of each LLC.
As of December 31, 1996, all of the Properties were managed by either Equity
Residential Properties Management Limited Partnership, the successor to the
Management Business contributed by EPMC contemporaneously with the IPO or Equity
Residential Properties Management Limited Partnership II (collectively, the
"Management Partnerships"). The Management Partnerships collect a property
management fee consistent with a reasonable arms-length charge for the
performance of such services. The sole general partner of the Management
Partnerships with a 1% interest is the Operating Partnership. The sole limited
partners of the Management Partnerships are Equity Residential Properties
Management Corp. ("Management Corp.") and Equity Residential Properties
Management Corp. II ("Management Corp. II"), respectively, and each have a 99%
interest in the respective partnership.
F-10
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Basis of Presentation
The balance sheets as of December 31, 1996 and 1995 and the statements of
operations, cash flows and changes in shareholders' equity for the years ended
December 31, 1996, 1995 and 1994 represented the consolidated financial
information of the Company and its subsidiaries.
Due to the Company's ability as general partner to control either through
ownership or by contract the Operating Partnership, the Management Partnerships
and the Financing Partnerships and the LLCs, each such entity has been
consolidated with the Company for financial reporting purposes. In regard to
Management Corp. and Management Corp. II, the Company does not have legal
control; however, these entities are consolidated for financial reporting
purposes, the effects of which are immaterial. Certain reclassifications have
been made to the prior year's financial statements in order to conform with the
current year presentation.
3. SHAREHOLDERS' EQUITY AND MINORITY INTERESTS
On January 26, 1994, the Company completed a second public offering of
5,750,000 additional Common Shares (the "Second Public Offering"). The Second
Public Offering price was $29 per Common Share resulting in gross proceeds of
$166.8 million. Proceeds to the Company, net of underwriters' discount and
estimated offering expenses, were approximately $157.4 million.
Between April 1994 and June 1994, the Company sold 1,569,270 unregistered
Common Shares to six accredited institutional investors (the "Private Equity
Offering") and received net proceeds of approximately $47 million.
On July 27, 1994, the Company completed a third public offering of 9,200,000
additional Common Shares (the "Third Public Offering"). The Third Public
Offering price was $31.25 per Common Share resulting in net proceeds of $271.7
million.
In September 1994, the Company registered 5,000,000 Common Shares pursuant
to an equity shelf registration statement (the "Equity Shelf Registration") of
which 2,735,320 registered Common Shares were sold in separate transactions
completed in October 1994 (collectively, the "Shelf Offering"). The Company
received net proceeds of approximately $81 million in connection therewith. The
prices at which the Common Shares were sold ranged from $29.34 to $30.17.
On September 11, 1995, the Company filed with the Securities and Exchange
Commission (the "SEC") a Form S-3 Registration Statement to register up to $500
million of its non-voting preferred shares of beneficial interest, $0.01 par
value per share ("Preferred Shares"), Common Shares and depositary shares,
pursuant to a shelf offering (the "Second Shelf Registration").
In January 1996, the Company completed an offering of 1,725,000 registered
Common Shares, which were sold at a net price of $29.375 per share (the "January
1996 Common Share Offering") and received net proceeds of approximately $50.7
million in connection therewith.
F-11
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Also in January 1996, the Company filed with the SEC a Form S-3 Registration
Statement to register 1,676,423 Common Shares which may be sold by the holders
thereof or by holders of OP Units upon the issuance of Common Shares in exchange
for such OP Units.
In February 1996, the Company completed an offering of 2,300,000 registered
Common Shares, which were sold at a net price of $29.50 per share (the "February
1996 Common Share Offering") and received net proceeds of approximately $67.8
million in connection therewith.
On May 21, 1996, the Company completed an offering of 2,300,000 publicly
registered Common Shares, which were sold at a net price of $30.50 per share.
On May 28, 1996, the Company completed the sale of 73,287 publicly registered
Common Shares to employees of the Company and to employees of Equity Group
Investments, Inc. and certain of its subsidiaries ("EGI") and certain of their
respective affiliates and consultants at a net price equal to $30.50 per share.
On May 30, 1996, the Company completed an offering of 1,264,400 publicly
registered Common Shares, which were sold at a net price of $30.75 per share.
The Company received net proceeds of approximately $111.3 million in connection
with the sale of the 3,637,687 Common Shares mentioned above (collectively, the
"May 1996 Common Share Offerings") .
On June 26, 1996, the Company filed with the SEC a Form S-3 Registration
Statement to register 608,665 Common Shares which may be issued by the Company
to holders of 608,665 OP Units. The SEC declared this Registration effective on
September 6, 1996.
On September 18, 1996, the Company filed with the SEC a Form S-3
Registration Statement to register $500 million of equity securities (the "1996
Equity Shelf Registration"). The SEC declared this Registration effective on
September 23, 1996.
In September 1996, the Company completed the sale of 2,272,728 publicly
registered Common Shares which were sold at a net price of $33 per share. The
Company received net proceeds of approximately $75 million in connection with
this offering (the "September 1996 Common Share Offering").
On September 27, 1996, the Company filed with the SEC a Form S-3
Registration Statement to register 1,182,835 Common Shares which may be issued
by the Company to holders of 1,182,835 OP Units. The SEC declared this
Registration effective on October 3, 1996.
In November 1996, the Company issued 39,458 Common Shares pursuant to the
1996 Non-qualified Employee Share Purchase Plan (the "Employee Share Purchase
Plan") at a net price of $30.44 per share and received net proceeds of
approximately $1.2 million.
In December 1996, the Company completed offerings of 4,440,000 publicly
registered Common Shares, which were sold to the public at a price of $41.25 per
share (the "December 1996 Common Share Offerings"). The Company received net
proceeds of approximately $177.4 million
F-12
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
in connection therewith.
The following table presents the changes in the Company's issued and
outstanding Common Shares for the years ended December 31, 1996, 1995 and 1994
(excluding OP Units of 7,858,228, 8,208,882, and 8,431,403 outstanding at
December 31, 1996, 1995 and 1994, respectively):
1996 1995 1994
----------- ----------- ----------
Common Shares outstanding at January 1, 35,011,715 33,963,655 14,601,000
Common Shares issued through January 1996
Common Share Offering 1,725,000
Common Shares issued through February 1996
Common Share Offering 2,300,000
Common Shares issued through May 1996
Common Share Offerings 3,637,687
Common Shares issued through September 1996
Common Share Offering 2,272,728
Common Shares issued through December 1996
Common Share Offerings 4,440,000
Common Shares issued through Employee Share
Purchase Plan 39,458
Common Shares issued through Second
Public Offering - - - - 5,750,000
Common Shares issued through Third
Public Offering - - - - 9,200,000
Common Shares issued through Private
Equity Offering - - - - 1,569,270
Common Shares issued through Shelf
Offering - - - - 2,735,320
Common Shares issued for employee notes - - 75,000 86,500
Common Shares issued through exercise
of options 150,840 100,966 9,664
Common Shares issued through restricted
share grants 21,879 - - 11,901
Common Shares issued through
conversion of OP units 1,545,866 865,174 - -
Common Shares issued for profit-sharing
contribution 10,001 7,997 - -
Common Shares held in treasury (338) (1,077) - -
---------- ---------- ----------
Common Shares outstanding at December 31, 51,154,836 35,011,715 33,963,655
========== ========== ==========
The declaration of trust of the Company provides that the Company may issue
up to 10,000 Preferred Shares with specific rights, preferences and other
attributes as the Board of Trustees may determine, which may include
preferences, powers and rights that are senior to the rights of holders
F-13
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
of the Company's Common Shares. Under certain circumstances, the issuance of
Preferred Shares may require shareholder approval pursuant to the rules and the
regulations of the New York Stock Exchange.
In June 1995, the Company sold 6,120,000 of its 9 3/8% Series A Cumulative
Redeemable Preferred Shares of Beneficial Interest, $0.01 par value per share
(liquidation preference $25 per share) (the "Series A Preferred Shares"),
pursuant to a $250 million shelf registration (the "Preferred Shelf
Registration"), at $25 per share. The Company raised gross proceeds of $153
million from this offering (the "Series A Preferred Share Offering"). The net
proceeds of approximately $148.2 million from the Series A Preferred Share
Offering were contributed by the Company to the Operating Partnership in
exchange for 6,120,000 of the Operating Partnership's 9 3/8% Series A cumulative
redeemable preference units. The Series A Preferred Shares are cumulative from
the date of original issue and are payable quarterly on or about the fifteenth
day of January, April, July and October of each year, at the annual rate of
9 3/8% of the liquidation preference of $25 per share. The Series A Preferred
Shares are not redeemable prior to June 1, 2000. On or after June 1, 2000, the
Preferred Shares may be redeemed for cash at the option of the Company in whole
or in part, at a redemption price of $25 per share, plus accrued and unpaid
distributions, if any, thereon.
In November 1995, the Company sold 5,000,000 depositary shares (the "Series
B Depositary Shares") pursuant to the Preferred Shelf Registration and the
Second Shelf Registration. Each Series B Depositary Share represents a 1/10
fractional interest in a 9 1/8% Series B Cumulative Redeemable Preferred Share
of Beneficial Interest, $0.01 par value per share (the "Series B Preferred
Shares"). The liquidation preference of each of the Series B Preferred Shares is
$250.00 (equivalent to $25 per Series B Depositary Share). The Company raised
gross proceeds of $125 million from this offering (the "Series B Preferred Share
Offering"). The net proceeds of approximately $121 million from the Series B
Preferred Share Offering were contributed by the Company to the Operating
Partnership in exchange for 500,000 of the Operating Partnership's 9 1/8% Series
B cumulative redeemable preference units. The Series B Preferred Shares are
cumulative from the date of original issue and are payable quarterly on or about
the fifteenth day of January, April, July and October of each year, commencing
on January 15, 1996, at the annual rate of 9 1/8% of the liquidation preference
of $25 per Depositary Share. The Series B Preferred Shares are not redeemable
prior to October 15, 2005. On and after October 15, 2005, the Series B Preferred
Shares may be redeemed for cash at the option of the Company, in whole or in
part, at a redemption price of $250 per share (equivalent to $25 per Series B
Depositary Share), plus accrued and unpaid distributions, if any, thereon.
In September 1996 the Company sold 4,600,000 depositary shares (the
"Series C Depositary Shares") pursuant to the Second Shelf Registration. Each
Series C Depositary Share represents a 1/10 fractional interest in a 9 1/8%
Series C Cumulative Redeemable Preferred Share of Beneficial Interest, $0.01 par
value per share (the "Series C Preferred Shares"). The liquidation preference of
each of the Series C Preferred Shares is $250.00 (equivalent to $25 per Series C
Depositary Share). The Company raised gross proceeds of $115 million from this
offering (the "Series C Preferred
F-14
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Share Offering"). The net proceeds of approximately $111.4 million from the
Series C Preferred Share Offering were contributed by the Company to the
Operating Partnership in exchange for 460,000 of the Operating Partnership's 9
1/8% Series C cumulative redeemable preference units. The Series C Preferred
Shares are cumulative from the date of original issue and are payable quarterly
on or about the fifteenth day of January, April, July and October of each year,
commencing on October 15, 1996, at the annual rate of 9 1/8% of the liquidation
preference of $25 per 1996 Depositary Share. The Series C Preferred Shares are
not redeemable prior to September 9, 2006. On and after September 9, 2006, the
Series C Preferred Shares may be redeemed for cash at the option of the Company,
in whole or in part, at a redemption price of $250 per share (equivalent to
$25 per Series C Depositary Share), plus accrued and unpaid distributions, if
any, thereon.
In connection with the acquisition of seven of the Properties, which closed
in December, 1994, the Company, through the Operating Partnership, issued 41,213
preferred interests ("Preference Units") to certain sellers of these Properties.
The Preference Units had a stated value of $1,000 and entitled the holders
thereof to preferential distributions from the Operating Partnership (other than
liquidating distributions) before distributions to the holders of the OP Units
and the Company (provided that the Company shall be entitled to receive
distributions necessary to maintain its REIT status under U.S. tax laws). On
March 1, 1996, the Operating Partnership exercised its option to convert all of
the remaining Preference Units into OP Units. This conversion resulted in
1,182,835 OP Units being issued. The Operating Partnership also made loans to
certain of these sellers in the aggregate amount of $15.2 million, which loans
are fully collateralized by 465,545 OP Units.
Net proceeds from the Company's Common Share offerings are contributed by the
Company to the Operating Partnership in return for an increased ownership
percentage and are treated as capital transactions in the Company's Consolidated
Financial Statements. As a result, the net offering proceeds are allocated
between shareholders' equity and the equity position of various limited partners
of the Operating Partnership (collectively, the "Minority Interests") (to the
extent represented by OP Units), to account for the change in their respective
percentage ownership of the underlying equity of the Operating Partnership.
Assuming conversion of all OP Units, total Common Shares outstanding at
December 31, 1996 would have been 59,013,064. As of December 31, 1996, the
Minority Interests held 7,858,228 OP Units which represented a 13.32% interest
in the Operating Partnership.
The Company paid a $0.59, $0.59, $0.59 and $0.625 per Common Share
distribution on April 12, July 12, and October 11, 1996 and January 10, 1997,
respectively, for the quarters ended March 31, June 30, September 30 and
December 31, 1996, to Common Share holders of record on March 29, June 28,
September 27 and December 27, 1996, respectively.
F-15
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Company also paid a $0.5859, $0.5859, $0.5859 and $0.58605 per share
distribution on April 15, July 15, October 15, 1996 and January 15, 1997,
respectively for the quarters ended March 31, June 30, September 30 and December
31, 1996 to Series A Preferred Share holders of record on March 29, June 28,
September 27 and December 27, 1996, respectively. In addition, the Company paid
a $0.5703, $0.5703, $0.5703 and $0.57035 per share distribution on April 15,
July 15, October 15, 1996 and January 15, 1997, respectively for the quarters
ended March 31, June 30, September 30 and December 31, 1996 to Series B
Depositary Share holders of record on March 29, June 28, September 27 and
December 27, 1996, respectively. In addition, the Company paid $0.1394, covering
the period September 9 through September 30, 1996 and $0.5703 per share
distribution on October 15, 1996 and January 15, 1997, respectively, for the
quarters ended September 30 and December 31, 1996 to Series C Depositary Share
holders of record on September 27 and December 27, 1996, respectively.
F-16
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. Summary of Significant Accounting Policies
(a) Rental Property
Rental property is recorded at cost less accumulated depreciation less an
adjustment, if any, for impairment. Rental properties intended to be held and
operated by the Company over their remaining useful life are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the particular rental property may not be recoverable. If
these events or changes in circumstances are present, the Company estimates the
sum of the expected future cash flows (undiscounted) to result from the
operations and eventual disposition of the particular rental property, and if
less than the carrying amount of the rental property, the Company will recognize
an impairment loss. Upon recognition of any impairment loss the Company
measures that loss based on the amount by which the carrying amount of the
rental property exceeds the estimated fair value of the rental property.
For rental properties to be disposed of, an impairment loss is recognized
when the fair value of the rental property, less the estimated cost to sell, is
less than the carrying amount of the rental property measured at the time the
Company has a commitment to sell the property and/or is actively marketing the
property for sale. Rental property to be disposed of is reported at the lower
of its carrying amount or its estimated fair value, less its cost to sell.
Depreciation is not recorded during the period in which assets are held for
disposal. There were no Properties held for sale as of December 31, 1996.
Depreciation is computed on a straight-line basis over the estimated useful
lives of the assets. The Company uses a 30-year estimated life for buildings, a
10-year estimated life for land improvements and up to a seven-year estimated
life for furniture, fixtures and equipment. Expenditures for ordinary
maintenance and repairs are expensed to operations as incurred and significant
renovations and improvements that improve and/or extend the useful life of the
asset are capitalized over their estimated useful life. Initial direct leasing
costs are expensed as incurred and such expense approximates the deferral and
amortization of initial direct leasing costs over the lease terms. Property
sales or dispositions are recorded when title transfers and sufficient
consideration has been received by the Company. Upon disposition, the related
costs and accumulated deprecation are removed from the respective accounts. Any
gain or loss on sale or disposition is recognized in accordance with generally
accepted accounting principles.
(b) Cash and Cash Equivalents
The Company considers all demand deposits, money market accounts and
investments in certificates of deposit and repurchase agreements purchased with
a maturity of four months or less, at the date of purchase, to be cash
equivalents. The Company maintains its cash and cash equivalents at financial
institutions. The combined account balances at each institution periodically
exceed the Federal Depository Insurance Corporation ("FDIC") insurance coverage,
and, as a result, there is a concentration of credit risk related to amounts on
deposit in excess of FDIC insurance
F-17
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
coverage. The Company believes that the risk is not significant as the Company
does not anticipate their non-performance.
(c) Deferred Financing Costs
Deferred financing costs include fees and costs incurred to obtain the
Company's lines of credit, long-term financing and costs for certain interest
rate protection agreements. These costs are amortized over the terms of the
related debt. Unamortized financing costs are written-off when debt is retired
before the maturity date. As of December 31, 1996 and 1995, the accumulated
amortization of such deferred financing costs was $3.8 million and $6.4
million, respectively.
(d) Interest Rate Protection Agreements
The Company from time to time enters into interest rate protection
agreements to effectively convert floating rate debt to a fixed rate basis, as
well as to hedge anticipated financing transactions. Net amounts paid or
received under these agreements are recognized as an adjustment to interest
expense when such amounts are incurred or earned. Settlement amounts paid or
received in connection with terminated interest rate protection agreements are
deferred and amortized over the remaining term of the related financing
transaction on the straight-line method. The Company believes it has limited
exposure to the extent of non-performance by the counterparties of each
protection agreement since each counterparty is a major U.S. financial
institution, and the Company does not anticipate their non-performance.
(e) Fair Value of Financial Instruments
The fair values of the Company's financial instruments, including cash and
cash equivalents, and mortgage notes payable, other notes payable, lines of
credit and other financial instruments, approximate their carrying or contract
values. With respect to the Company's investment in mortgage notes, the fair
value as of December 31, 1996 was estimated to be approximately $100 million
compared to the Company's carrying value of $86.6 million. The estimated fair
value of the Company's investment in mortgage notes represents the estimated net
present value based on the expected future property level cash flows and an
estimated current market discount rate.
(f) Revenue Recognition
Rental income attributable to leases is recorded when due from tenants and
is recognized monthly as it is earned, which is not materially different than on
a straight-line basis. Interest income is recorded on an accrual basis.
F-18
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
(g) Lease Agreements
A substantial portion of the leases entered into between the tenant and a
multifamily property for the rental of an apartment unit is month-to-month or
year-to-year, renewable upon consent of both parties.
(h) Income Taxes
Due to the structure of the Company as a REIT and the nature of the
operations of the Properties and Management Business, the results of operations
contain no provision for Federal income taxes. However, the Company is subject
to certain state and local income, excise or franchise taxes. The Company paid
no Federal income taxes during the year ended December 31, 1996. The aggregate
cost of land and depreciable property for Federal income tax purposes as of
December 31, 1996 was approximately $2.8 billion.
(i) Income per Common Share
Income per Common Share was based on the weighted average number of Common
Shares outstanding during each of the three years ended December 31, 1996. The
conversion of an OP Unit to a Common Share will have no effect on income per
Common Share since the allocation of earnings to an OP Unit is equivalent to a
Common Share.
(j) Minority Interests
Net income is allocated to the Minority Interests based on their respective
ownership percentage of the Operating Partnership. Ownership percentage is
represented by dividing the number of OP Units held by the Minority Interests by
the OP Units held by Minority Interests and Common Shares outstanding. Issuance
of additional Common Shares or OP Units changes the ownership of both the
Minority Interests and the Company. Such transactions and the proceeds
therefrom are treated as capital transactions and result in an allocation
between shareholders' equity and Minority Interests to account for the change in
the respective percentage ownership of the underlying equity of the Operating
Partnership.
(k) Use of Estimates
In preparation of the Company's financial statements in conformity with
generally accepted accounting principles, management makes estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements as well as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.
F-19
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. Rental Property
The following summarizes the carrying amounts for the rental property as
of December 31, 1996 and 1995:
1996 1995
---------- ----------
(Amounts in thousands)
Land $ 284,879 $ 210,439
Buildings and Improvements 2,566,568 1,884,510
Furniture, Fixtures and Equipment 132,063 93,990
---------- ----------
Rental Property 2,983,510 2,188,939
Accumulated Depreciation (301,512) (218,339)
---------- ----------
Rental Property, net $2,681,998 $1,970,600
========== ==========
During 1996, the Company acquired the Properties listed below. Each
Property was purchased from an unaffiliated third party. The cash portions of
the acquisitions were funded from either proceeds raised through the various
offerings, amounts drawn on the Company's line of credit or working capital. In
connection with certain of the acquisitions listed below, the Company assumed
mortgage indebtedness of $134.1 million and issued OP Units having a value of
$440,000.
Total
Date Number Acquisition Cost
Acquired Property Location of Units (in thousands)
- - -------- ---------------------------------------- -------------------- -------- ----------------
02/08/96 7979 Westheimer Houston, TX 459 $ 14,618
02/27/96 Sabal Pointe (formerly The Vinings at Coral Springs, FL 275 19,606
Coral Springs)
03/01/96 Woodbridge (formerly The Plantations) Cary, NC 344 19,938
03/05/96 Heron Landing (formerly Oxford & Sussex) Lauderhill, FL 144 7,239
03/12/96 The Pines at Cloverlane Ypsilanti, MI 582 20,982
03/14/96 Regency Palms Huntington Beach, CA 310 18,710
03/21/96 Port Royale II Ft Lauderdale, FL 161 10,468
04/16/96 2900 on First Seattle, WA 135 11,861
05/22/96 Woodland Hills Decatur, GA 228 12,420
05/31/96 Ivy Place (formerly Post Place) Atlanta, GA 122 8,079
06/03/96 Ridgetree Dallas, TX 798 21,347
F-20
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
06/05/96 Country Ridge Farmington Hills, MI 252 16,388
06/07/96 Rosehill Pointe Lenexa, KS 498 21,236
06/07/96 Forest Ridge Arlington, TX 660 23,670
06/12/96 Canyon Sands Phoenix, AZ 412 14,905
06/12/96 Desert Sands Phoenix, AZ 412 14,893
06/25/96 Chandler Court Chandler, AZ 311 13,633
06/28/96 Lands End Pacifica, CA 260 18,326
07/01/96 Sunny Oak Village Overland Park, KS 548 22,523
07/01/96 Mallard Cove Greenville, SC 211 8,171
07/16/96 Pine Meadow Greensboro, NC 204 7,262
07/19/96 Summer Ridge Riverside, CA 136 6,031
07/19/96 Promenade Terrace Corona, CA 330 22,853
07/19/96 South Creek Phoenix, AZ 528 26,773
08/01/96 Pueblo Villas Albuquerque, NM 232 8,581
08/28/96 Brixworth Nashville, TN 216 11,766
08/30/96 Brierwood Jacksonville, FL 196 5,528
08/30/96 Woodscape Raleigh, NC 240 9,595
09/03/96 Park Place Plymouth, MN 500 24,472
09/19/96 Eagle Canyon Chino Hills, CA 252 18,095
09/19/96 Summerset Village Chatsworth, CA 280 26,317
09/19/96 Canterchase Nashville, TN 235 8,655
09/20/96 Songbird San Antonio, TX 262 10,854
09/20/96 Willowglen Aurora, CO 384 17,173
09/26/96 Merrimac Woods Costa Mesa, CA 123 6,765
09/27/96 Casa Capricorn San Diego, CA 192 12,631
09/30/96 Hunter's Glen Chesterfield, MO 192 9,166
10/11/96 Marbrisa Tampa, FL 224 8,140
10/31/96 Lakeville Resort Petaluma, CA 492 27,348
11/01/96 Cedar Crest Overland Park, KS 466 21,614
12/12/96 Rock Creek Carrboro, NC 188 8,952
12/13/96 Village Oaks Austin, TX 280 11,849
12/16/96 Creekside Oaks Walnut Creek, CA 316 21,680
12/19/96 Gatehouse on the Green Plantation, FL 312 22,268
12/19/96 Gatehouse at Pine Lake Pembroke Pines, FL 296 18,962
12/20/96 Wilde Lake Richmond, VA 189 9,452
12/20/96 Spice Run Naperville, IL 400 25,793
12/31/96 Mountain Terrace Stevenson Ranch, CA 510 39,772
------ --------
15,297 $767,360
====== ========
In addition to the Properties mentioned above, on February 1, 1996,
Management Corp. II transferred to the Company its interest in Desert Park, a
368-unit Property located in Las Vegas, Nevada, subject to $8.1 million of
indebtedness, in exchange for the forgiveness of a $2.7 million note payable to
the Company.
F-21
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
During 1996, the Company disposed of the properties listed below. Each
property was sold to an unaffiliated third party.
Number of Disposition
Date Disposed Property Location Units Price
- - ---------------- ------------------ -------------- --------- -----------
01/31/96 Sanddollar Tulsa, OK 328 $ 6,200
06/25/96 Deer Run Charleston, SC 152 3,950
11/22/96 Valley Park South Bethlehem, PA 384 18,500
12/09/96 Colonial Glen Harrisburg, PA 174 6,005
12/20/96 Continental Villas Lithonia, GA 216 6,600
----- -------
1,254 $41,255
===== =======
The Company recognized a total gain of approximately $22.4 million on the
disposition of these five Properties.
During the year ended December 31, 1995, the Company recorded a $1 million
loss which represented the estimated impairment in connection with the potential
sale of University Park located in Toledo, Ohio. This Property had a net
carrying amount as of December 31, 1995 of approximately $1.1 million after the
impairment loss. The impairment loss on real estate to be disposed of is
included in gain on disposition of properties on the statement of operations for
the year ended December 31, 1995.
6. INVESTMENT IN MORTGAGE NOTES AND PARTNERSHIP INTERESTS
In 1995, the Company made an $89 million investment in partnership
interests and subordinated mortgages collateralized by the Additional
Properties. These Additional Properties consist of 3,896 units, located in
California, Colorado, New Mexico and Oklahoma. This included a $87.1 million
investment in second and third mortgages (net of an original discount of
approximately $12.7 million to their face value), $1.6 million represents a one
time payment for an interest rate protection agreement and $0.3 million
represents an investment for primarily a 49.5% limited partnership interest in
the title-holding entities. As the Company does not control the general
partners of the title-holding entities and substantially all of the Company's
investment is in second and third mortgages (which are subordinate to first
mortgages owned by third party unaffiliated entities), the $87.1 million
investment is accounted for as an investment in mortgage notes. The $1.6
million payment made for the interest rate protection agreement is included in
deferred financing costs and is being amortized over the term of the related
debt. The investment in limited partnership interests is accounted for under
the equity method and is included in other assets on the balance sheet.
As of December 31, 1996 the second mortgage notes had a combined principal
balance of approximately $27.8 million, accrue interest at a rate of 9.45% per
annum, receive principal amortization from excess cash flow and have a stated
maturity date of December 31, 2019. The
F-22
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
third mortgage notes had a combined principal balance of approximately $71.1
million, accrue interest at a rate of 6.15% per annum, plus up to an additional
3% per annum to the extent of available cash flow. Contingent interest on the
third mortgage notes is recognized to the extent it is determined to be
received. The third mortgage notes have a stated maturity of December 31, 2024.
Receipt of principal and interest on the second and third mortgage notes is
subordinated to the receipt of all interest on the first mortgage notes. With
respect to the discount on these notes, the unamortized balance at December 31,
1996 was $12.1 million. During 1996, the Company amortized $0.6 million, which
is included in interest income-investment in mortgage notes in the consolidated
statement of operations. This discount is being amortized utilizing the
effective yield method.
7. MORTGAGE NOTES PAYABLE
As of December 31, 1996, the Company had outstanding mortgage indebtedness
of approximately $755.4 million encumbering 88 of the Properties. The carrying
value of such Properties (net of accumulated depreciation of $141.2 million) was
approximately $1.1 billion. The mortgage notes payable are generally due in
monthly installments of interest only. In connection with the Properties
acquired during the year ended December 31, 1996, the Company assumed the
outstanding mortgage balances on 14 Properties in the aggregate amount of $142.2
million. In addition, during 1996, in two separate transactions, certain
indebtedness evidenced by tax-exempt bonds encumbering certain Properties was
refinanced resulting in an increase in mortgage indebtedness affecting these
Properties of approximately $112 million. As a result of the most recent
transaction, the Company recorded an extraordinary loss in the amount of
approximately $3.5 million, which represented the write-off of unamortized
deferred financing costs from the early retirement of debt. Concurrent with the
most recent refinanced tax-exempt bonds and as a requirement of the credit
provider of the bonds, the Financing Partnership, which owns certain of the
Properties entered into interest rate protection agreements to fix the interest
rate on the bonds, which protection agreements were assigned to the credit
provider as additional security. The Company simultaneously entered into
substantially identical reverse protection agreements in order to convert the
interest rate on the tax-exempt bonds back to a floating interest rate. As of
December 31, 1996, the notional amount of these agreements was approximately
$166.8 million. The Company believes that it has limited exposure to the extent
of non-performance by the counterparties of the agreements since each
counterparty is a major U.S. financial institution, and the Company does not
anticipate their non-performance.
Scheduled maturities for the Company's outstanding mortgage indebtedness
are at various dates through August 1, 2030. During the year ended December 31,
1996, effective interest cost on certain of these mortgage notes was 7.87%.
During the year ended December 31, 1996, the Company repaid the outstanding
mortgage balances on eight Properties in the aggregate amount of $57 million.
Subsequent to December 31, 1996, the Company repaid the outstanding mortgage
balance on three Properties in the amount of approximately $19.6 million. In
February 1996, the Company entered into an interest rate protection agreement
which hedged the interest rate risk of $50 million of mortgage loans scheduled
to mature in September 1997 by locking the five year
F-23
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Treasury Rate, commencing October 1, 1997.
As of December 31, 1995, the Company had outstanding mortgage indebtedness
of approximately $561.7 million encumbering 73 of the Properties. The carrying
value of such Properties (net of accumulated depreciation of $103.4 million) was
$770.3 million. The mortgage notes payable are generally due in monthly
installments of interest only. Scheduled maturities are at various dates through
April 1, 2027. As of December 31, 1995, fixed interest rates on certain of the
mortgage notes ranged from 4.00% to 10.27% and variable interest rates on
certain of the mortgage notes ranged from 4.05% to 7.63%. During the year ended
December 31, 1995, the Company repaid the outstanding mortgage balance on seven
Properties in the aggregate amount of approximately $45.5 million.
During 1996 the Company terminated two interest rate protection agreements
that were initially entered into in connection with two mortgage loans with
notional amounts totaling $64.2 million. These two agreements effectively
converted these two mortgage loans to fixed rate instruments based on the London
Interbank Offered Rate ("LIBOR"). Upon the termination of these agreements the
Company received, or is entitled to receive, settlement payments of
approximately $230,000.
Aggregate payments of principal on mortgage notes payable for each of the
next five years and thereafter are as follows:
YEAR TOTAL
---- -----
(in thousands)
1997 $ 28,223
1998 89,497
1999 20,641
2000 13,369
2001 34,639
Thereafter 569,065
--------
Total $755,434
========
8. LINES OF CREDIT
The Company, through the Operating Partnership, had a $250 million
unsecured line of credit with Wells Fargo Realty Advisors Funding Incorporated,
as agent, through November 14, 1996. On November 15, 1996, the Company
completed an agreement with Morgan Guaranty Trust Company of New York and Bank
of America of Illinois to provide the Company, through the Operating
Partnership, a $250 million unsecured line of credit. This new line of credit
matures in November 1999 and borrowings generally will bear interest at a per
annum rate of one, two, three or six month LIBOR, plus 0.75%, and is subject to
an annual facility fee of $500,000. As of
F-24
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
December 31, 1996, there were no amounts outstanding on this line of credit.
9. NOTES
On May 16, 1994, the Operating Partnership issued $125 million of unsecured
senior notes (the "1999 Notes") in a private placement (the "Debt Offering") to
qualified institutional buyers. The 1999 Notes were issued at a discount, which
is being amortized over the life of the 1999 Notes on a straight-line basis. As
of December 31, 1996 the unamortized discount balance was approximately $0.4
million. The 1999 Notes are due May 15, 1999 and bear interest at a rate of
8.5%, which is payable semiannually in arrears on May 15 and November 15. The
Operating Partnership received net proceeds of $122.9 million in connection with
the Debt Offering. In February 1996 the Company entered into an interest rate
protection agreement that hedged the interest rate risk of the 1999 Notes by
locking the effective four year Treasury Rate commencing May 15, 1999. There
was no current cost to the Company for entering into this agreement.
In December 1994, the Operating Partnership registered $500 million in debt
securities pursuant to a debt shelf registration statement (the "Debt Shelf
Registration") of which $100 million of unsecured floating rate notes (the
"Floating Rate Notes") were issued by the Operating Partnership on December 22,
1994 (the "Public Debt Offering"). The Floating Rate Notes are due on December
22, 1997 and bear interest at three month LIBOR plus 0.75%, which is payable
quarterly in arrears on the third Wednesday of each February, May, August and
November of each year. The Operating Partnership received net proceeds of $98.6
million in connection with the Public Debt Offering. In connection with the
Floating Rate Notes, the Operating Partnership has entered into interest rate
protection agreements which fix the interest rate at an effective rate of 7.075%
through the term of the Floating Rate Notes.
In April 1995, the Operating Partnership issued $125 million of unsecured
fixed rate notes (the "2002 Notes") in connection with the Debt Shelf
Registration in a public debt offering (the "Second Public Debt Offering"). The
2002 Notes were issued at a discount, which is being amortized over the life of
the 2002 Notes on a straight-line basis. As of December 31, 1996 the
unamortized discount balance was approximately $0.8 million. The 2002 Notes are
due on April 15, 2002 and bear interest at 7.95%, which is payable semi-annually
on each October 15 and April 15. The Operating Partnership received net
proceeds of $123.1 million in connection with the Second Public Debt Offering.
Prior to the issuance of the 2002 Notes, the Operating Partnership entered into
an interest rate protection agreement to effectively fix the interest rate cost
of such issuance. The Operating Partnership made a one time settlement payment
of this protection transaction, which was approximately $0.8 million and is
being amortized over the term of the 2002 Notes. As of December 31, 1996 the
unamortized balance of this cost was approximately $0.6 million.
F-25
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
In August 1996, the Operating Partnership issued $150 million of unsecured
fixed rate notes (the "2026 Notes") in connection with the Debt Shelf
Registration in a public debt offering (the "Third Public Debt Offering"). The
2026 Notes are due on August 15, 2026 and bear interest at 7.57%, which is
payable semi-annually in arrears on February 15 and August 15, commencing
February 15, 1997. The 2026 Notes are redeemable at any time after August 15,
2006 by the Operating Partnership pursuant to the terms thereof. The Operating
Partnership received net proceeds of approximately $149 million in connection
with this issuance. Prior to the issuance of the 2026 Notes, the Company
entered into an interest rate protection agreement to effectively fix the
interest rate cost of this issuance to 7.5%. The Operating Partnership received
a one time settlement payment of this transaction, which was approximately $0.6
million, which amount is being amortized over the term of the 2026 Notes. As of
December 31, 1996, the unamortized balance was approximately $0.6 million.
On September 18, 1996, the Operating Partnership filed with the SEC a Form
S-3 Registration Statement to register $500 million of debt securities (the
"1996 Debt Shelf Registration"). The SEC declared this Registration effective on
September 23, 1996.
In regard to all of the interest rate protection agreements mentioned in
the previous paragraphs, the Company believes that it has limited exposure to
the extent of non-performance by the counterparties of each agreement since each
counterparty is a major U.S. financial institution, and the Company does not
anticipate their non-performance.
10. EMPLOYEE TRANSACTIONS
As of December 31, 1996, the outstanding principal balance on the employee
notes issued in connection with Common Shares purchased was, in the aggregate,
approximately $5.26 million. Douglas Crocker II, President and Chief Executive
Officer of the Company and four other officers had purchased an aggregate of
194,000 Common Shares at prices which range from $26 to $31.625 per Common
Share. These purchases were financed by loans made by the Company in the
aggregate amount of approximately $5.4 million. The employee notes accrue
interest, payable in arrears, at rates that range from 6.15% per annum to 7.93%
per annum. Scheduled maturities are at various dates through March 2005. The
employee notes are recourse to Mr. Crocker and the four other officers and are
collateralized by pledges of the 194,000 Common Shares purchased.
In addition, as of December 31, 1996, the outstanding principal balance on
additional notes issued to Mr. Crocker was approximately $0.8 million. These
notes accrue interest, payable in arrears, at one month LIBOR plus 2% per annum.
Scheduled maturities are at various dates through March 2003. The notes are
recourse to Mr. Crocker and are collateralized by pledges of options, share
awards and Common Shares purchased.
During 1996 the Board of Trustees approved a deferred compensation
agreement (the "Agreement") for Mr. Crocker. This Agreement would provide Mr.
Crocker with a salary benefit after his termination of employment with the
Company.
F-26
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
If Mr. Crocker's employment is terminated without cause, he would be entitled to
annual deferred compensation for a 10-year period commencing on the termination
date in an amount equal to his average annual base compensation (before bonus)
for the prior five calendar years, multiplied by a percentage equal to 10% per
year since December 31, 1995. In the event Mr. Crocker's employment is
terminated as a result of his death, permanent disability or incapacity, he
would be entitled to a similar amount except the annual percentage would be 15%
and the maximum paid per year would not exceed 100% of his average base salary.
Should Mr. Crocker be terminated for cause or should he choose to leave
voluntarily without good reason, he would not be entitled to any deferred
compensation.
The Board of Trustees also approved a deferred compensation (share
distributions) agreement ("Deferred Compensation Agreement") for Mr. Crocker. On
January 18, 1996, Mr. Crocker was issued options to purchase 100,000 Common
Shares, which vest over a 3-year period and are effective for 10 years. Pursuant
to the terms of the Deferred Compensation Agreement, upon the exercise of any
options, Mr. Crocker would be entitled to an amount equal to the amount of
Common Share distributions that would have been paid on said shares being
exercised had he owned said shares for the period from January 18, 1996 until
the date of the exercise of the options in question. This agreement is not
affected by Mr. Crocker's death or termination of employment with the Company.
11. DEPOSITS-RESTRICTED
Deposits-restricted, as of December 31, 1996, primarily included deposits
in the amount of approximately $16.4 million held in third party escrow accounts
which were made in connection with a January 1997 acquisition and the expected
acquisition of an additional property. In addition, approximately $3.7 million
was for tenant security and utility deposits for certain of the Company's
Properties.
Deposits-restricted as of December 31, 1995 primarily included deposits
held in third party escrow accounts made in connection with certain of the
Company's dispositions. Approximately $15 million was held in these accounts
and were utilized for the purchase of additional properties. In addition,
approximately $3.2 million was for tenant security and utility deposits for
certain of the Company's Properties.
12. GAIN ON EARLY EXTINGUISHMENT OF DEBT
In June 1995, the Company paid approximately $12.6 million in full
satisfaction of a $14.6 million mortgage note obligation related to one of its
Properties. As a result, the Company recognized a gain of $2 million on the
extinguishment of this indebtedness.
F-27
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
13. SUMMARIZED PRO FORMA CONDENSED STATEMENT OF OPERATIONS (Unaudited)
The following Summarized Pro Forma Condensed Statement of Operations has
been prepared as if the January 1996 Common Share Offering, the February 1996
Common Share Offering, the May 1996 Common Share Offerings, the Third Public
Debt Offering, the Series C Preferred Share Offering, the September 1996 Common
Share Offering, the December 1996 Common Share Offerings, the acquisition of 49
Properties, the assumption of $142.2 million of mortgage indebtedness, the
repayment of $57 million of mortgage indebtedness and the disposition of five
Properties (as described in Note 5, Note 7 and Note 9 of Notes to Consolidated
Financial Statements) had occurred on January 1, 1996. This would result in
51,154,836 Common Shares outstanding. In management's opinion, the Summarized
Pro Forma Condensed Statement of Operations does not purport to present what
actual results would have been had the above transactions occurred on January 1,
1996, or to project results for any future period. The amounts presented in
the following statement are in thousands except for share amounts:
F-28
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Summarized Pro Forma
Condensed Statement
of Operations
For the Year Ended
December 31, 1996
(Amounts in thousands
except per share amounts)
-------------------------
Total Revenues $541,118
--------
Total Expenses 424,541
--------
Pro Forma income before allocation to Minority Interests 116,577
--------
Pro Forma net income 105,876
Preferred distributions 36,244
--------
Pro Forma net income available for Common Shares $ 69,632
========
Pro Forma net income per Common Share $ 1.36
========
14. SHARE OPTION PLAN
The Company adopted, effective May 21, 1993, its 1993 Share Option Plan
(the "1993 Share Option Plan"). Pursuant to the 1993 Share Option Plan, certain
officers, trustees, key employees and consultants of the Company were offered
the opportunity to acquire Common Shares through the grant of share options
("Options"), including non-qualified share options ("NQSOs") and, for key
employees, incentive share options ("ISOs"). The Compensation Committee
determines the vesting schedule, if any, of each Option and the term, which term
shall not exceed ten years from the date of grant. As to the Options that have
been granted through December 31, 1996, generally, one-third are exercisable one
year after the initial grant, one-third are exercisable two years following the
date such Options were granted and the remaining one-third are exercisable three
years following the date such Options were granted. In addition, the 1993 Share
Option Plan provided for the granting of share appreciation rights ("SARs").
Options and SARs are sometimes referred to herein as "Awards". The Common Shares
subject to Awards under the 1993 Share Option Plan were limited to 1,000,000.
On February 28, 1995, the Board of Trustees approved the Amended and
Restated 1993 Share Option and Share Award Plan (the "Option and Award Plan")
and on May 10, 1995, the shareholders approved the Option and Award Plan.
Pursuant to the Option and Award Plan, officers, directors, key employees and
consultants of the Company may be offered the opportunity to acquire Common
Shares through the grant of NQSOs, ISOs and SARs or may be granted restricted or
non-restricted shares. Additionally, under the Option and Award Plan, certain
officers of the Company may be awarded Common Shares, subject to conditions and
restrictions as described in the Option and Award Plan. Options and Awards for
up to 1,600,000 Common Shares may be issued under the Option and Award Plan
(including those Options granted under the 1993 Option Plan).
F-29
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The Second Amended and Restated Share Option and Share Award Plan ("Second
Amended Option and Award Plan") was approved by the Board of Trustees on
February 26, 1996 and approved by the shareholders on May 10, 1996. The Second
Amended Option and Award Plan increased the number of Options and Awards which
can be issued by the Company to 3,600,000 Common Shares.
The number of Common Shares to which the SARs relate shall not exceed
3,600,000 less the number of Common Shares relating to outstanding Options. The
exercise price for all Options under the Option and Award Plan shall not be less
than the fair market value of the underlying Common Shares at the time the
Option is granted. The Option and Award Plan will terminate at such time as no
further Common Shares are available for issuance upon the exercise of Options
and all outstanding Options have expired or been exercised. The Board of
Trustees may at any time amend or terminate the Option and Award Plan, but
termination will not affect Awards previously granted. Any Options which had
vested prior to such a termination would remain exercisable by the holder
thereof.
The Option and Award Plan is administered by the Compensation Committee
which is appointed by the Board of Trustees. The Compensation Committee
determines those officers, key employees and consultants to whom, and the time
or times at which, grants of Awards will be made. The Compensation Committee
interprets the Option and Award Plan, adopts rules relating thereto and
determines the terms and provisions of Awards.
The Company has elected to apply the provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," (APB No. 25)
in the computation of compensation expense. Under APB No. 25's intrinsic value
method, compensation expense is determined by computing the excess of the market
price of the shares over the exercise price on the measurement date. For the
Company's share options, the intrinsic value on the measurement date (or grant
date) is zero, and no compensation expense is recognized. Financial Accounting
Standards Board No. 123 (FASB No. 123) requires the Company to disclose pro
forma net income and income per share as if a fair value based accounting method
had been used in the computation of compensation expense. The fair value of the
options computed under FASB No. 123 would be recognized over the vesting period
of the options. The fair value for the Company's options granted subsequent to
December 31, 1994 was estimated at the time the options were granted using the
Black Scholes option pricing model with the following weighted-average
assumptions for 1995 and 1996, respectively: risk-free interest rates of 6.51%
and 6.35%; dividend yields of 7.64% and 6.98%; volatility factors of the
expected market price of the Company's Common Shares of 0.226 and 0.226; and a
weighted-average expected life of the option of seven years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's Options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its Options.
For purposes of pro forma disclosures, the estimated fair value of the
Options is amortized to expense over the Options' vesting period. The following
is the pro forma information for the years ended December 31, 1996 and 1995:
1996 1995
---- ----
Pro forma net income available to
Common Shares $70,905 $57,171
Pro forma income per weighted
average Common Share outstanding $ 1.66 $ 1.66
F-30
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
The table below summarizes the Option activity of the Option and Award Plan
for the three years ended December 31, 1996:
Weighted Average
Shares Subject to Exercise Price
Option or Awards Per Share
------------------ --------------
Balance at January 1, 1994 688,000 $ 26.00
Options granted 279,200 $30.4705
Options cancelled (8,503) $27.9581
Options exercised (9,664) $30.2650
---------- --------
Balance at December 31, 1994 949,033 $27.3086
Options granted 602,900 $26.4058
Options cancelled (91,319) $27.5005
Options exercised (100,966) $29.5585
---------- --------
Balance at December 31, 1995 1,359,648 $26.9677
Options granted 1,215,429 $29.9682
Options cancelled (70,229) $28.9124
Options exercised (172,719) $28.6491
---------- --------
Balance at December 31, 1996 2,332,129 $28.7510
========== ========
As of December 31, 1996, 1995 and 1994, 898,075 shares, 743,368 shares and
551,172 shares were exercisable, respectively. Exercise prices for Options
outstanding as of December 31, 1996 ranged from $26 to $35.375. Expiration dates
ranged from August 11, 2003 to September 17, 2006. The remaining weighted-
average contractual life of those Options was 8.25 years. The weighted-average
grant-date fair value of Options granted during 1996 was 3.81.
15. EMPLOYEE SHARE PURCHASE PLAN
The Company adopted, effective July 1, 1996, its Employee Share Purchase
Plan. Pursuant to the Employee Share Purchase Plan, certain eligible officers,
trustees and employees of the Company may annually acquire up to $100,000 of
Common Shares of the Company. The aggregate number of Common Shares available
under the Employee Share Purchase Plan shall not exceed 1,000,000, subject to
adjustment by the Board of Trustees. The Common Shares may be purchased
quarterly at a price equal to 85% of the lesser of: (a) the closing price for a
share on the last day of such quarter; and (b) the greater of: (i) the closing
price for a share on the first day of such quarter, and (ii) the average closing
price for a share for all the business days in the quarter. During 1996, the
Company issued 39,458 Common Shares at a net price of $30.44 per share.
16. COMMITMENTS AND CONTINGENCIES
The Company, as an owner of real estate, is subject to various
environmental laws of Federal and local governments. Compliance by the Company
with existing laws has not had a material adverse effect on the Company's
financial condition and results of operations. However, the Company cannot
predict the impact of new or changed laws or regulations on its current
Properties or on properties that it may acquire in the future.
On March 20, 1996, a legal proceeding (Nick J. Miletich, Administrator of
the Estates of Dorothy Miletich and Madelyne Miletich, deceased, v. Equity
Residential Properties Trust, Equity Residential Properties Management
Corporation, Curt Vajgrt, Raymond Countryman and Darla Countryman) (Iowa
District Court, Polk County, Iowa, Law Case No. CL 68908) was filed against the
Company. This legal proceeding arises out of the Company's ownership and
management of
F-31
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
the apartment building known as 3000 Grand Ave. in Des Moines, Iowa and alleges
that Raymond and Darla Countryman murdered Dorothy Miletich and Madelyne
Miletich, who were residents of the apartment complex, on June 15, 1995. Raymond
Countryman is a former employee of the Company. The plaintiff alleges, inter
-----
alia, that had the Company learned of the background of Mr. Countryman prior to
- - ----
his employment, the Company would not have hired him and the deaths of the
Miletichs would have been avoided. While the Company is vigorously contesting
these claims, there is no assurance that the Company will not be held liable for
said deaths and there is no assurance that its insurance coverage will cover all
damages that may be awarded against it. At this time, an estimate of the
possible loss or range of loss that the Company may incur cannot be determined.
The Company does not believe there is any other litigation, except as
mentioned in the previous paragraph, threatened against the Company other than
routine litigation arising out of the ordinary course of business, some of which
is expected to be covered by liability insurance, none of which is expected to
have a material adverse effect on the consolidated financial statements of the
Company.
The Company has lease agreements with an affiliated party covering office
space occupied by regional operations centers located in Tampa, Florida
("Southeast ROC") and Chicago, Illinois ("Midwest ROC"). The Southeast ROC
agreement expires on October 31, 2001 and the Midwest ROC agreement expires on
September 30, 2000.
The Company also has four additional lease agreements with unaffiliated
parties covering space occupied by regional operations centers located in
Dallas, Texas (the "Southwest ROC"); Bethesda, Maryland (the "Atlantic ROC");
Denver, Colorado (the "Western ROC") and Seattle, Washington (the "Pacific
Northwest ROC"). The lease agreement for the Southwest ROC expires on March 31,
1999, the lease agreement for the Atlantic ROC expires on November 30, 1998, the
lease agreement for the Western ROC expires on November 30, 1999 and the lease
agreement for the Pacific Northwest ROC expires on November 30, 2000.
The Company also has a lease agreement with an affiliated party covering
office space occupied by the corporate headquarters located in Chicago,
Illinois. This agreement, as amended, expires on July 31, 2001. In addition,
commencing September 1, 1996, the Company increased the office space occupied by
its corporate personnel. The lease agreement covering the additional space
expires on April 29, 1998.
During the years ended December 31, 1996, 1995 and 1994, total rentals,
including a portion of real estate taxes, insurance, repairs and utilities,
aggregated $1,020,311, $1,049,731 and $403,346, respectively.
The minimum basic aggregate rental commitment under the above described
leases in years succeeding December 31, 1996 is as follows:
Year Amount
---- ------
1997 $1,144,500
1998 1,046,800
1999 821,700
F-32
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2000 684,600
2001 390,600
----------
Total $4,088,200
==========
F-33
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
17. TRANSACTIONS WITH RELATED PARTIES
Certain related entities provided services to the Company. These included,
but were not limited to, Rosenberg & Liebentritt, P.C., which provided legal
services; Greenberg & Pociask, Ltd., which provided tax and accounting services;
First Capital Financial Corporation, which provided accounting services; and
Computech Systems, Inc., which provided computer services. Fees paid to these
related entities in the aggregate amounted to approximately $0.7 million, $2.5
million and $3 million for the years ended December 31, 1996, 1995 and 1994,
respectively. In addition, The Riverside Agency, Inc., which provided insurance
brokerage services, was paid fees and reimbursed premiums and loss claims in
the amount of $4.1 million, $2.6 million and $2.3 million for the years ended
December 31, 1996, 1995 and 1994, respectively. As of December 31, 1996 and
1995, $315,700 and $366,300, respectively, was owed to Rosenberg & Liebentritt,
P.C. for legal fees incurred in connection with securities offerings, litigation
matters, property acquisitions and other general corporate matters.
Equity Group Investments, Inc. and certain of its subsidiaries, including
Equity Assets Management, Inc., Eagle Flight Services, Equity Properties &
Development, L.P. and EPMC ("EGI"), have provided certain services to the
Company which include, but are not limited to, financial and accounting
services, investor relations, corporate secretarial, computer and support
services, real estate tax evaluation services, market consulting and research
services, financing services, information systems services and property
development services. Fees paid to EGI for these services amounted to $1.3
million, $3.4 million and $1.1 million for the years ended December 31, 1996,
1995 and 1994, respectively. Amounts due to EGI were approximately $0.3 million
and $1.1 million as of December 31, 1996 and 1995, respectively.
In connection with the affiliated lease agreements discussed in Note 16,
the Company paid Equity Office Holdings, L.L.C. ("EOH") $118,919, $104,421 and
$118,518 in connection with the Midwest ROC, $137,638, $9,783 and $85,466 in
connection with the Southeast ROC and $409,392, $632,725 and $19,070 in
connection with the space occupied by the corporate headquarters for the years
ended December 31, 1996, 1995 and 1994, respectively. As of December 31, 1996,
approximately $46,435 was owed to EOH and as of December 31, 1995, no amounts
were owed to EOH.
In connection with the Private Equity Offering and the Shelf Offering, the
Company paid Equity Institutional Investors, Inc. ("EII") consulting fees in the
amount of $200,000 and $680,000 for the years ended December 31, 1995 and 1994,
respectively. As of December 31, 1996 and 1995, no amounts were owed to EII for
consulting services.
Artery Property Management, Inc. ("Artery") provided the Company consulting
services with regard to property acquisitions and additional business
opportunities. Fees paid for those services and reimbursed expenses amounted to
approximately $0.2 million and $0.7 million for the years ended December 31,
1996 and 1995.
Rudnick & Wolfe, a law firm in which Mr. Errol Halperin, a trustee of the
Company, is a partner, provided legal services to the Company. Fees paid to
this firm amounted to approximately
F-34
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
$4,300, $41,300 and $10,000 for the years ended December 31, 1996, 1995 and
1994.
Genesis Merchant Group Securities ("Genesis") provided the Company
brokerage services and was paid $18,970 during the year ended December 31, 1994.
SZRL Investments, an Illinois general partnership of which one of its partners
is a trust created for the benefit of Mr. Zell, is a limited partner of Genesis
Merchant Group, the sole general partner of Genesis.
In addition, the Company has provided acquisitions, asset and property
management services to certain related entities for properties not owned by the
Company. Fees received for providing such services were approximately $6.7
million, $7 million and $4.7 million for the years ended December 31, 1996, 1995
and 1994, respectively.
18. QUARTERLY FINANCIAL DATA (Unaudited):
The following unaudited quarterly data has been prepared on the basis of a
December 31 year end: (Amounts in thousands, except for per share amounts)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
1995 3/31 6/30 9/30 12/31
- - -------- -------- -------- -------- --------
Total revenues $91,882 $93,294 $99,594 $105,614
======= ======= ======= ========
Income before
allocation to Minority
Interests $13,220 $15,544 $17,570 $ 37,021
======= ======= ======= ========
Net income $10,345 $12,482 $14,504 $ 30,388
======= ======= ======= ========
Net income available
to Common Shares $10,345 $11,287 $10,918 $ 25,060
======= ======= ======= ========
Weighted average
Common Shares
outstanding 34,097 34,328 34,401 34,599
======= ======= ======= ========
Net income per Weighted
Average Common
Share outstanding $ 0.30 $ 0.33 $ 0.32 $ 0.72
======= ======= ======= ========
F-35
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
1996 3/31 6/30 9/30 12/31
- - -------- -------- -------- -------- --------
Total revenues $106,321 $113,267 $124,459 $134,338
======== ======== ======== ========
Income before allocation
to Minority Interests $ 21,295 $ 23,310 $ 22,111 $ 49,207
======== ======== ======== ========
Net income $ 18,394 $ 20,288 $ 19,608 $ 43,334
======== ======== ======== ========
Net income available
for Common Shares $ 11,957 $ 13,851 $ 12,529 $ 34,272
======== ======== ======== ========
Weighted average
Common Shares
outstanding 37,877 41,114 43,781 47,505
======== ======== ======== ========
Net income per Weighted
Average Common
Shares outstanding $ 0.32 $ 0.34 $ 0.29 $ 0.72
======== ======== ======== ========
19. SUBSEQUENT EVENTS
On January 2, 1997, the Company acquired Town Center Apartments, a 258-unit
multifamily property located in Kingwood, Texas, from an unaffiliated third
party for a purchase price of $12.8 million.
On January 16, 1997 the Company entered into an Agreement and Plan of
Merger regarding the planned acquisition of the multifamily property business of
Wellsford Residential Property Trust ("Wellsford"), a Maryland real estate
investment trust, by the Company through the tax free merger of the Company and
Wellsford. This transaction is valued at approximately $1 billion and includes
75 multifamily residential properties containing 19,004 units.
On January 21, 1997, the Company acquired Harborview Apartments, a 160-unit
multifamily property located in San Pedro, California, from an unaffiliated
third party for a purchase price of $19 million, which included the assumption
of mortgage indebtedness of approximately $12.69 million.
On January 31, 1997, the Company acquired The Cardinal Apartments, a 256-
unit multifamily property located in Greensboro, North Carolina, from an
unaffiliated third party for a purchase price of $12.77 million, including the
assumption of mortgage indebtedness in the amount of approximately $7.53
million.
F-36
EQUITY RESIDENTIAL PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
On February 12, 1997, the Company acquired Trails at Dominion, a 843-unit
multifamily property located in Houston, Texas from an unaffiliated third party
for a purchase price of $38.3 million, which included the assumption of mortgage
indebtedness of approximately $26.19 million.
On February 25, 1997, the Company declared a $0.625 distribution per Common
Share, $0.585938 per Series A Preferred Share, $0.570313 per Series B Depositary
Share and $0.570313 per Series C Depositary Share for the quarter ended March
31, 1997 to shareholders of record on March 28, 1997.
On February 25, 1997, the Company acquired Dartmouth Woods Apartments, a
201-unit multifamily property located in Lakewood, Colorado, from an
unaffiliated third party for a purchase price of $12.4 million, including the
assumption of mortgage indebtedness in the amount of approximately $4.44
million.
On February 28, 1997, the Company acquired Rincon Apartments, a 288-unit
multifamily property located in Houston, Texas, from an unaffiliated third party
for a purchase price of $20.87 million.
On February 28, 1997, the Company acquired Waterford at the Lakes
Apartments, a 344-unit multifamily property located in Kent, Washington, from an
unaffiliated third party for a purchase price of $18.9 million.
On March 17, 1997, the Company acquired Junipers at Yarmouth Apartments, a
225-unit multifamily property located in Yarmouth, Maine, from an unaffiliated
third party for a purchase price of $9.15 million.
As of March 20, 1997, the Company completed offerings of 938,800 publicly
registered Common Shares, which were sold at a net price of $46 per share. The
Company received net proceeds of approximately $43.2 million in connection
therewith.
F-37
REPORT OF INDEPENDENT ACCOUNTANTS ON SCHEDULE
To the Board of Trustees
Equity Residential Properties Trust
In connection with our audit of the consolidated financial statements of Equity
Residential Properties Trust referred to in our report dated February 14, 1996,
which financial statements are included in this Form 10-K, we have also audited
the 1995 and 1994 information in the financial statement schedule listed in the
Index to the Financial Statements and Schedule. In our opinion, this financial
statement schedule presents fairly, in all material respects, the 1995 and 1994
information required to be set forth therein.
/s/ Grant Thornton LLP
----------------------
GRANT THORNTON LLP
Chicago, Illinois
February 14, 1996
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
COST CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO ACQUISITION
DESCRIPTION COMPANY (IMPROVEMENTS, NET) (1)
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & BUILDING &
APARTMENT NAME LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES
- - ------------------------------------------------------------------------------------------------------------------------------------
2900 on First...............Seattle, WA 0 1,176,400 10,588,096 1,200 95,180
3000 Grand..................Des Moines, IA 0 858,305 7,827,336 0 1,191,980
7979 Westheimer.............Houston, TX 0 1,388,400 12,495,280 1,400 733,108
Altamonte...................San Antonio, TX 14,600,000 1,663,100 14,968,079 1,970 540,718
Amberton....................Manassas, VA 6,595,519 888,800 8,352,507 11,800 745,330
Arbors of Hickory Hollow....Nashville, TN (D) 202,285 6,594,754 700 1,071,223
Arbors of Brentwood.........Nashville, TN (D) 404,570 13,189,508 100 749,501
Arbors of Las Colinas.......Irving, TX 0 1,662,300 14,960,709 1,600 1,012,376
Bainbridge..................Durham, NC 0 1,042,900 9,385,579 33,400 837,173
Bay Club....................Phoenix, AZ (E) 828,100 5,821,759 100 1,077,580
Bourbon Square..............Palatine, IL 28,150,000 3,982,600 35,843,025 2,700 2,024,772
Brentwood...................Vancouver, WA 0 1,318,200 11,863,517 39,021 824,156
Breton Mill.................Houston, TX (F) 212,720 8,154,404 100 613,371
Bridgecreek.................Wilsonville, OR 0 1,294,600 11,651,108 5,290 536,972
Bridgeport..................Raleigh, NC 0 1,296,200 11,665,351 500 208,931
Brierwood...................Jacksonville, FL 0 546,100 4,914,681 4,300 62,886
Brittany Square.............Tulsa, OK 0 625,000 4,220,662 0 352,527
Brixworth...................Nashville, TN 0 1,172,100 10,549,371 1,600 42,780
Camellero...................Scottsdale, AZ 11,949,595 1,923,600 17,312,869 1,300 274,238
Canterbury..................Germantown, MD 19,032,948 2,781,300 26,656,574 0 2,044,601
Canterchase.................Nashville, TN 5,824,040 862,200 7,759,711 1,100 32,267
Canyon Creek................Tucson, AZ (E) 834,313 5,840,188 100 358,628
Canyon Sands................Phoenix, AZ 8,849,680 1,475,900 13,282,737 14,550 131,988
Carmel Terrace..............San Diego, CA 0 2,288,300 20,632,540 0 99,768
Casa Capricorn..............San Diego, CA 0 1,260,100 11,341,085 2,400 27,534
Casa Cordoba................Tallahassee, FL 0 307,055 2,732,177 0 787,356
Casa Cortez.................Tallahassee, FL 0 120,590 1,196,857 0 467,869
Catalina Shores.............Las Vegas, NV 0 1,222,200 10,999,974 4,800 413,277
Cedar Crest.................Overland Park, KS 0 2,159,800 19,438,107 500 15,521
Celebration at Westchase....Houston, TX (E) 2,204,590 6,312,399 100 708,272
Champion Oaks...............Houston, TX 7,298,817 931,900 8,519,479 0 146,787
Chandler Court..............Chandler, AZ 0 1,352,600 12,172,974 500 107,033
Chandler's Bay I............Kent, WA 0 1,503,400 13,530,223 3,500 497,871
Chaparral...................Largo, FL 6,891,428 303,100 6,169,465 0 2,608,105
Charter Club................Everett, WA 0 998,700 8,988,560 2,400 224,471
Cheyenne Crest..............Colorado Springs, CO (E) 73,950 3,936,559 100 643,159
Cloisters on the Green......Lexington, KY 2,827,810 187,074 2,193,726 0 1,370,338
Country Club I..............Silver Spring, MD 7,077,694 1,119,500 10,815,232 1,457 465,095
Country Club II.............Silver Spring, MD 5,966,153 850,000 8,255,502 2,294 23,886
GROSS AMOUNT CARRIED
AT CLOSE OF
DESCRIPTION PERIOD 12/31/96
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & ACCUMULATED
APARTMENT NAME LOCATION LAND FIXTURES (A) TOTAL(B) DEPRECIATION
- - ------------------------------------------------------------------------------------------------------------------------------------
2900 on First...............Seattle, WA 1,177,600 10,683,276 11,860,876 266,733
3000 Grand..................Des Moines, IA 858,305 9,019,316 9,877,621 4,136,718
7979 Westheimer.............Houston, TX 1,389,800 13,228,388 14,618,188 481,175
Altamonte...................San Antonio, TX 1,665,070 15,508,797 17,173,867 1,259,430
Amberton....................Manassas, VA 900,600 9,097,837 9,998,437 679,673
Arbors of Hickory Hollow....Nashville, TN 202,985 7,665,977 7,868,962 960,405
Arbors of Brentwood.........Nashville, TN 404,670 13,939,009 14,343,679 1,657,104
Arbors of Las Colinas.......Irving, TX 1,663,900 15,973,085 17,636,985 1,740,888
Bainbridge..................Durham, NC 1,076,300 10,222,752 11,299,052 1,010,232
Bay Club....................Phoenix, AZ 828,200 6,899,339 7,727,539 906,957
Bourbon Square..............Palatine, IL 3,985,300 37,867,797 41,853,097 3,931,913
Brentwood...................Vancouver, WA 1,357,221 12,687,673 14,044,894 673,352
Breton Mill.................Houston, TX 212,820 8,767,775 8,980,595 1,003,745
Bridgecreek.................Wilsonville, OR 1,299,890 12,188,080 13,487,970 1,161,921
Bridgeport..................Raleigh, NC 1,296,700 11,874,282 13,170,982 1,331,562
Brierwood...................Jacksonville, FL 550,400 4,977,567 5,527,967 66,571
Brittany Square.............Tulsa, OK 625,000 4,573,189 5,198,189 2,041,207
Brixworth...................Nashville, TN 1,173,700 10,592,150 11,765,850 133,056
Camellero...................Scottsdale, AZ 1,924,900 17,587,107 19,512,007 920,338
Canterbury..................Germantown, MD 2,781,300 28,701,175 31,482,475 2,155,479
Canterchase.................Nashville, TN 863,300 7,791,978 8,655,278 84,269
Canyon Creek................Tucson, AZ 834,413 6,198,816 7,033,229 790,012
Canyon Sands................Phoenix, AZ 1,490,450 13,414,725 14,905,175 283,324
Carmel Terrace..............San Diego, CA 2,288,300 20,732,308 23,020,608 1,575,010
Casa Capricorn..............San Diego, CA 1,262,500 11,368,619 12,631,119 107,033
Casa Cordoba................Tallahassee, FL 307,055 3,519,533 3,826,588 2,322,089
Casa Cortez.................Tallahassee, FL 120,590 1,664,726 1,785,316 1,039,578
Catalina Shores.............Las Vegas, NV 1,227,000 11,413,251 12,640,251 994,406
Cedar Crest.................Overland Park, KS 2,160,300 19,453,627 21,613,927 121,265
Celebration at Westchase....Houston, TX 2,204,690 7,020,671 9,225,361 1,056,903
Champion Oaks...............Houston, TX 931,900 8,666,266 9,598,166 712,007
Chandler Court..............Chandler, AZ 1,353,100 12,280,007 13,633,107 237,596
Chandler's Bay I............Kent, WA 1,506,900 14,028,094 15,534,994 1,106,336
Chaparral...................Largo, FL 303,100 8,777,570 9,080,670 5,077,932
Charter Club................Everett, WA 1,001,100 9,213,031 10,214,131 970,112
Cheyenne Crest..............Colorado Springs, CO 74,050 4,579,718 4,653,768 663,938
Cloisters on the Green......Lexington, KY 187,074 3,564,064 3,751,138 2,349,167
Country Club I..............Silver Spring, MD 1,120,957 11,280,327 12,401,284 804,078
Country Club II.............Silver Spring, MD 852,294 8,279,388 9,131,682 555,368
LIFE USED TO
DESCRIPTION COMPUTE
- - ------------------------------------------------------------------------- DEPRECIATION IN
DATE OF LATEST INCOME
APARTMENT NAME LOCATION CONSTRUCTION STATEMENT (C)
- - -------------------------------------------------------------------------------------------------
2900 on First...............Seattle, WA 1989-91 30 Years
3000 Grand..................Des Moines, IA 1970 30 Years
7979 Westheimer.............Houston, TX 1973 30 Years
Altamonte...................San Antonio, TX 1985 30 Years
Amberton....................Manassas, VA 1986 30 Years
Arbors of Hickory Hollow....Nashville, TN 1986 30 Years
Arbors of Brentwood.........Nashville, TN 1986 30 Years
Arbors of Las Colinas.......Irving, TX 1984/85 30 Years
Bainbridge..................Durham, NC 1984 30 Years
Bay Club....................Phoenix, AZ 1976 30 Years
Bourbon Square..............Palatine, IL 1984-87 30 Years
Brentwood...................Vancouver, WA 1990 30 Years
Breton Mill.................Houston, TX 1986 30 Years
Bridgecreek.................Wilsonville, OR 1987 30 Years
Bridgeport..................Raleigh, NC 1990 30 Years
Brierwood...................Jacksonville, FL 1974 30 Years
Brittany Square.............Tulsa, OK 1982 30 Years
Brixworth...................Nashville, TN 1985 30 Years
Camellero...................Scottsdale, AZ 1979 30 Years
Canterbury..................Germantown, MD 1986 30 Years
Canterchase.................Nashville, TN 1985 30 Years
Canyon Creek................Tucson, AZ 1986 30 Years
Canyon Sands................Phoenix, AZ 1983 30 Years
Carmel Terrace..............San Diego, CA 1988-89 30 Years
Casa Capricorn..............San Diego, CA 1981 30 Years
Casa Cordoba................Tallahassee, FL 1972/1973 30 Years
Casa Cortez.................Tallahassee, FL 1970 30 Years
Catalina Shores.............Las Vegas, NV 1989 30 Years
Cedar Crest.................Overland Park, KS 1986 30 Years
Celebration at Westchase....Houston, TX 1979 30 Years
Champion Oaks...............Houston, TX 1984 30 Years
Chandler Court..............Chandler, AZ 1987 30 Years
Chandler's Bay I............Kent, WA 1989 30 Years
Chaparral...................Largo, FL 1976 30 Years
Charter Club................Everett, WA 1991 30 Years
Cheyenne Crest..............Colorado Springs, CO 1984 30 Years
Cloisters on the Green......Lexington, KY 1974 30 Years
Country Club I..............Silver Spring, MD 1980 30 Years
Country Club II.............Silver Spring, MD 1982 30 Years
S-2
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
COST CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO ACQUISITION
DESCRIPTION COMPANY (IMPROVEMENTS, NET) (I)
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & BUILDING &
APARTMENT NAME LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES
- - ------------------------------------------------------------------------------------------------------------------------------------
Country Ridge...............Farmington Hills, MI 0 1,605,800 14,452,066 14,750 315,877
Creekside...................Mountlake Terrace, WA 15,883,770 2,802,900 25,226,096 4,400 509,926
Creekside Oaks..............Walnut Creek, CA 11,566,208 2,167,300 19,505,628 700 6,495
Crystal Creek...............Phoenix, AZ 0 952,900 8,576,084 600 162,583
Cypress Point...............Las Vegas, NV 5,560,452 953,800 8,583,719 5,890 461,972
Dawntree....................Carrollton, TX 0 1,204,600 10,841,783 900 501,107
Deerwood....................San Diego, CA 0 2,075,700 18,680,801 6,395 2,734,498
Deerwood Meadows............Greensboro, NC (E) 986,643 6,906,503 100 582,195
Del Coronado................Mesa, AZ (O) 1,963,200 17,669,207 1,200 158,272
Desert Park.................Las Vegas, NV 0 1,085,400 9,401,015 0 501,594
Desert Sands................Phoenix, AZ 8,844,182 1,464,200 13,177,336 14,550 237,114
Diplomat South..............Beech Grove, IN 2,634,919 472,414 2,267,310 0 2,138,355
Doral.......................Louisville, KY 4,110,646 96,607 1,526,628 0 2,550,299
Eagle Canyon................Chino Hills, CA 0 1,806,800 16,261,336 1,400 25,406
Eagle Rim...................Redmond, WA 0 976,200 8,785,605 1,600 292,191
East Pointe.................Charlotte, NC 9,740,000 1,364,100 12,276,563 1,800 760,279
Edgewood....................Woodinville, WA 6,177,002 1,068,200 9,613,388 1,900 314,708
Emerald Place...............Bermuda Dunes, CA 0 954,400 8,589,110 2,100 442,566
Essex Place.................Overland Park, KS 11,161,045 1,831,900 16,486,600 3,500 1,251,417
Flying Sun..................Phoenix, AZ (E) 87,120 2,035,537 100 137,450
Forest Ridge................Arlington, TX 0 2,339,300 21,053,447 21,600 255,713
Fountain Creek..............Phoenix, AZ 0 686,000 6,173,818 500 107,826
Fountainhead Combined.......San Antonio, TX 23,275,000 3,617,449 13,446,560 0 1,197,985
Fountains at Flamingo.......Las Vegas, NV 0 3,180,900 28,628,533 2,200 405,159
Four Lakes..................Lisle, IL 10,344,569 2,465,000 13,178,449 0 5,443,148
Four Lakes Lisle............Lisle, IL 39,680,000 600,000 16,530,115 0 3,012,666
Fox Run.....................Little Rock, AR 5,481,038 422,014 4,053,552 0 4,563,021
Fox Run.....................Federal Way, WA 0 638,500 5,746,956 1,200 313,307
Frey........................Atlanta, GA 19,700,000 2,464,900 22,183,783 2,300 652,772
Gatehouse on the Green......Pambroke Pines, FL 0 2,216,800 19,951,085 9,900 90,552
Gatehouse at Pine Lake......Plantation, FL 0 1,886,200 16,975,382 9,900 90,508
Georgian Woods II...........Wheaton, MD 10,618,991 2,049,000 19,287,578 4,400 1,556,763
Glenridge...................Colorado Springs, CO (F) 884,688 4,466,900 100 372,410
Governor's Place............Augusta, GA 0 347,355 2,518,146 0 765,732
Greengate...................Marietta, GA 0 132,979 1,476,005 0 1,119,555
Greenwich Woods.............Silver Spring, MD 17,940,321 3,095,700 29,073,395 5,300 1,340,526
Greenwood Forest............Little Rock, AR 3,562,675 559,038 1,736,549 0 2,664,879
Habitat.....................Orlando, FL 0 600,000 494,032 0 5,636,708
Hammock's Place.............Miami, FL (F) 319,080 12,216,608 100 608,118
GROSS AMOUNT CARRIED
AT CLOSE OF
DESCRIPTION PERIOD 12/31/96
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & ACCUMULATED
APARTMENT NAME LOCATION LAND FIXTURES (A) TOTAL(B) DEPRECIATION
- - ------------------------------------------------------------------------------------------------------------------------------------
Country Ridge...............Farmington Hills, MI 1,620,550 14,767,943 16,388,493 300,193
Creekside...................Mountlake Terrace, WA 2,807,300 25,736,022 28,543,322 1,983,579
Creekside Oaks..............Walnut Creek, CA 2,168,000 19,512,122 21,680,122 30,810
Crystal Creek...............Phoenix, AZ 953,500 8,738,667 9,692,167 484,560
Cypress Point...............Las Vegas, NV 959,690 9,045,691 10,005,381 771,850
Dawntree....................Carrollton, TX 1,205,500 11,342,890 12,548,390 912,733
Deerwood....................San Diego, CA 2,082,095 21,415,299 23,497,394 1,936,782
Deerwood Meadows............Greensboro, NC 986,743 7,488,698 8,475,441 960,160
Del Coronado................Mesa, AZ 1,964,400 17,827,479 19,791,879 945,455
Desert Park.................Las Vegas, NV 1,085,400 9,902,609 10,988,009 361,874
Desert Sands................Phoenix, AZ 1,478,750 13,414,450 14,893,200 283,007
Diplomat South..............Beech Grove, IN 472,414 4,405,665 4,878,079 2,482,055
Doral.......................Louisville, KY 96,607 4,076,927 4,173,534 1,684,821
Eagle Canyon................Chino Hills, CA 1,808,200 16,286,742 18,094,942 165,212
Eagle Rim...................Redmond, WA 977,800 9,077,796 10,055,596 708,488
East Pointe.................Charlotte, NC 1,365,900 13,036,842 14,402,742 1,403,023
Edgewood....................Woodinville, WA 1,070,100 9,928,096 10,998,196 791,151
Emerald Place...............Bermuda Dunes, CA 956,500 9,031,676 9,988,176 979,033
Essex Place.................Overland Park, KS 1,835,400 17,738,017 19,573,417 1,697,366
Flying Sun..................Phoenix, AZ 87,220 2,172,987 2,260,207 331,352
Forest Ridge................Arlington, TX 2,360,900 21,309,160 23,670,060 473,229
Fountain Creek..............Phoenix, AZ 686,500 6,281,644 6,968,144 345,109
Fountainhead Combined.......San Antonio, TX 3,617,449 14,644,545 18,261,994 4,992,983
Fountains at Flamingo.......Las Vegas, NV 3,183,100 29,033,692 32,216,792 2,214,423
Four Lakes..................Lisle, IL 2,465,000 18,621,597 21,086,597 7,916,639
Four Lakes Lisle............Lisle, IL 600,000 19,542,781 20,142,781 5,648,085
Fox Run.....................Little Rock, AR 422,014 8,616,573 9,038,587 4,506,821
Fox Run.....................Federal Way, WA 639,700 6,060,263 6,699,963 500,256
Frey........................Atlanta, GA 2,467,200 22,836,555 25,303,755 1,909,476
Gatehouse on the Green......Pambroke Pines, FL 2,226,700 20,041,637 22,268,337 25,538
Gatehouse at Pine Lake......Plantation, FL 1,896,100 17,065,890 18,961,990 21,910
Georgian Woods II...........Wheaton, MD 2,053,400 20,844,341 22,897,741 1,458,067
Glenridge...................Colorado Springs, CO 884,788 4,839,310 5,724,098 658,422
Governor's Place............Augusta, GA 347,355 3,283,878 3,631,233 1,967,054
Greengate...................Marietta, GA 132,979 2,595,560 2,728,539 1,215,888
Greenwich Woods.............Silver Spring, MD 3,101,000 30,413,921 33,514,921 2,216,764
Greenwood Forest............Little Rock, AR 559,038 4,401,428 4,960,466 2,269,057
Habitat.....................Orlando, FL 600,000 6,130,740 6,730,740 3,511,792
Hammock's Place.............Miami, FL 319,180 12,824,726 13,143,906 1,474,391
LIFE USED TO
DESCRIPTION COMPUTE
- - ------------------------------------------------------------------------- DEPRECIATION IN
DATE OF LATEST INCOME
APARTMENT NAME LOCATION CONSTRUCTION STATEMENT (C)
- - -------------------------------------------------------------------------------------------------
Country Ridge...............Farmington Hills, MI 1986 30 Years
Creekside...................Mountlake Terrace, WA 1987 30 Years
Creekside Oaks..............Walnut Creek, CA 1974 30 Years
Crystal Creek...............Phoenix, AZ 1985 30 Years
Cypress Point...............Las Vegas, NV 1989 30 Years
Dawntree....................Carrollton, TX 1982 30 Years
Deerwood....................San Diego, CA 1990 30 Years
Deerwood Meadows............Greensboro, NC 1986 30 Years
Del Coronado................Mesa, AZ 1985 30 Years
Desert Park.................Las Vegas, NV 1987 30 Years
Desert Sands................Phoenix, AZ 1982 30 Years
Diplomat South..............Beech Grove, IN 1970 30 Years
Doral.......................Louisville, KY 1972 30 Years
Eagle Canyon................Chino Hills, CA 1985 30 Years
Eagle Rim...................Redmond, WA 1986-88 30 Years
East Pointe.................Charlotte, NC 1987 30 Years
Edgewood....................Woodinville, WA 1986 30 Years
Emerald Place...............Bermuda Dunes, CA 1988 30 Years
Essex Place.................Overland Park, KS 1970-84 30 Years
Flying Sun..................Phoenix, AZ 1983 30 Years
Forest Ridge................Arlington, TX 1984/85 30 Years
Fountain Creek..............Phoenix, AZ 1984 30 Years
Fountainhead Combined.......San Antonio, TX 1985/1987 30 Years
Fountains at Flamingo.......Las Vegas, NV 1989-91 30 Years
Four Lakes..................Lisle, IL 1968/1988* 30 Years
Four Lakes Lisle............Lisle, IL 1968/1988* 30 Years
Fox Run.....................Little Rock, AR 1974 30 Years
Fox Run.....................Federal Way, WA 1988 30 Years
Frey........................Atlanta, GA 1985 30 Years
Gatehouse on the Green......Pambroke Pines, FL 1990 30 Years
Gatehouse at Pine Lake......Plantation, FL 1990 30 Years
Georgian Woods II...........Wheaton, MD 1967 30 Years
Glenridge...................Colorado Springs, CO 1985 30 Years
Governor's Place............Augusta, GA 1972 30 Years
Greengate...................Marietta, GA 1971 30 Years
Greenwich Woods.............Silver Spring, MD 1967 30 Years
Greenwood Forest............Little Rock, AR 1975 30 Years
Habitat.....................Orlando, FL 1974 30 Years
Hammock's Place.............Miami, FL 1986 30 Years
S-3
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
COST CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO ACQUISITION
DESCRIPTION COMPANY (IMPROVEMENTS, NET) (I)
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & BUILDING &
APARTMENT NAME LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES
- - ------------------------------------------------------------------------------------------------------------------------------------
Hampton Green...............San Antonio, TX (E) 1,561,830 2,962,670 0 1,894,677
Harbour Landing.............Corpus Christi, TX 0 761,600 6,854,524 3,400 758,682
Hathaway....................Long Beach, CA 0 2,512,200 22,609,720 300 146,216
Hearthstone ...............San Antonio, TX (E) 1,035,700 3,375,132 100 283,285
Heron Cove..................Coral Springs, FL 0 823,000 7,997,360 0 458,184
Heron Landing (K)...........Lauderhill, FL 0 707,100 6,363,784 5,400 163,137
Heron Run...................Plantation, FL 0 917,800 8,854,001 0 564,445
Hidden Valley...............Ann Arbor, MI 0 915,000 7,583,653 0 723,276
Holcomb Bridge..............Atlanta, GA 9,545,000 2,142,400 19,281,704 900 752,903
Hunter's Glen...............Chesterfield, MO 0 913,500 8,221,026 1,600 29,842
Hunter's Green..............Fort Worth, TX (F) 524,200 3,404,622 100 619,907
Huntington Park.............Everett, WA 0 1,594,500 14,350,001 3,000 461,869
Indian Bend.................Phoenix, AZ 0 1,072,500 9,652,385 3,200 373,611
Indian Tree.................Arvada, CO (E) 881,125 4,868,332 100 352,319
Ivy Place (L)...............Atlanta, GA 0 793,200 7,139,200 8,450 138,033
Kempton Downs...............Gresham, OR 0 1,182,200 10,639,993 35,149 756,737
Keystone....................Austin, TX 2,959,560 498,000 4,482,306 500 313,558
Kingsport...................Alexandria, VA 0 1,262,250 11,454,606 0 1,454,504
Kingswood Manor.............San Antonio, TX (E) 293,900 2,061,996 100 325,573
La Costa Brava (J)..........Jacksonville, FL 4,741,003 835,757 4,964,681 (1) 5,751,810
La Costa Brava..............Orlando, FL 0 206,626 1,380,505 0 5,174,152
Lake in the Woods...........Ypsilanti, MI 0 1,859,625 16,314,064 0 5,349,035
Lakeville Resort............Petaluma, CA 20,776,563 2,734,100 24,773,523 0 (159,496)
Lakewood Oaks...............Dallas, TX 0 1,630,200 14,671,813 1,200 526,491
Lands End...................Pacifica, CA 0 1,824,500 16,423,435 0 77,817
Laurel Ridge................Chapel Hill, NC 0 160,000 1,752,118 0 2,779,323
Lincoln Green I.............San Antonio, TX 0 947,366 2,133,002 0 3,609,969
Lincoln Green II............San Antonio, TX 0 1,052,340 6,045,696 0 (249,429)
Lincoln Green III...........San Antonio, TX 0 536,010 2,121,295 0 (66,297)
Lodge-Oklahoma..............Tulsa, OK 0 313,571 2,677,951 0 789,532
Lodge-Texas.................San Antonio, TX 0 1,363,636 5,496,784 0 3,427,219
Longwood....................Decatur, GA 0 1,452,000 13,067,523 2,048 192,005
Mallard Cove................Greenville, SC 0 803,700 7,233,160 8,350 125,996
Mallgate....................Louisville, KY 0 0 6,162,515 0 3,399,784
Marbrisa....................Tampa, FL 0 811,500 7,303,334 1,500 23,966
Marina Club.................Forth Worth, TX 0 781,000 7,028,588 3,269 1,381,884
Marymont....................Laurel, MD 0 1,901,800 17,116,593 2,000 462,012
Maxwell Apartments..........Augusta, GA 0 216,000 1,846,772 0 681,209
McAlpine Ridge..............Charlotte, NC 0 1,283,400 11,550,225 600 300,938
GROSS AMOUNT CARRIED
AT CLOSE OF
DESCRIPTION PERIOD 12/31/96
- - ----------------------------------------------------------------------------------------------------------------------------------
BUILDING & ACCUMULATED
APARTMENT NAME LOCATION LAND FIXTURES (A) TOTAL(B) DEPRECIATION
- - ----------------------------------------------------------------------------------------------------------------------------------
Hampton Green...............San Antonio, TX 1,561,830 4,857,347 6,419,177 676,323
Harbour Landing.............Corpus Christi, TX 765,000 7,613,206 8,378,206 807,403
Hathaway....................Long Beach, CA 2,512,500 22,755,936 25,268,436 1,060,589
Hearthstone ...............San Antonio, TX 1,035,800 3,658,417 4,694,217 527,069
Heron Cove..................Coral Springs, FL 823,000 8,455,544 9,278,544 661,829
Heron Landing (K)...........Lauderhill, FL 712,500 6,526,921 7,239,421 199,030
Heron Run...................Plantation, FL 917,800 9,418,446 10,336,246 706,775
Hidden Valley...............Ann Arbor, MI 915,000 8,306,929 9,221,929 4,101,426
Holcomb Bridge..............Atlanta, GA 2,143,300 20,034,607 22,177,907 1,684,661
Hunter's Glen...............Chesterfield, MO 915,100 8,250,868 9,165,968 77,392
Hunter's Green..............Fort Worth, TX 524,300 4,024,529 4,548,829 519,924
Huntington Park.............Everett, WA 1,597,500 14,811,870 16,409,370 1,533,292
Indian Bend.................Phoenix, AZ 1,075,700 10,025,996 11,101,696 941,553
Indian Tree.................Arvada, CO 881,225 5,220,651 6,101,876 803,866
Ivy Place (L)...............Atlanta, GA 801,650 7,277,233 8,078,883 152,322
Kempton Downs...............Gresham, OR 1,217,349 11,396,730 12,614,079 610,026
Keystone....................Austin, TX 498,500 4,795,864 5,294,364 281,085
Kingsport...................Alexandria, VA 1,262,250 12,909,110 14,171,360 942,883
Kingswood Manor.............San Antonio, TX 294,000 2,387,569 2,681,569 317,155
La Costa Brava (J)..........Jacksonville, FL 835,756 10,716,491 11,552,247 5,378,546
La Costa Brava..............Orlando, FL 206,626 6,554,657 6,761,283 3,259,968
Lake in the Woods...........Ypsilanti, MI 1,859,625 21,663,099 23,522,724 10,105,716
Lakeville Resort............Petaluma, CA 2,734,100 24,614,027 27,348,127 153,152
Lakewood Oaks...............Dallas, TX 1,631,400 15,198,304 16,829,704 1,247,503
Lands End...................Pacifica, CA 1,824,500 16,501,252 18,325,752 301,140
Laurel Ridge................Chapel Hill, NC 160,000 4,531,441 4,691,441 1,876,897
Lincoln Green I.............San Antonio, TX 947,366 5,742,971 6,690,337 2,342,894
Lincoln Green II............San Antonio, TX 1,052,340 5,796,267 6,848,607 1,863,118
Lincoln Green III...........San Antonio, TX 536,010 2,054,998 2,591,008 682,835
Lodge-Oklahoma..............Tulsa, OK 313,571 3,467,483 3,781,054 1,768,970
Lodge-Texas.................San Antonio, TX 1,363,636 8,924,003 10,287,639 2,752,127
Longwood....................Decatur, GA 1,454,048 13,259,528 14,713,576 1,339,222
Mallard Cove................Greenville, SC 812,050 7,359,156 8,171,206 139,976
Mallgate....................Louisville, KY 0 9,562,299 9,562,299 5,471,136
Marbrisa....................Tampa, FL 813,000 7,327,300 8,140,300 63,078
Marina Club.................Forth Worth, TX 784,269 8,410,472 9,194,741 867,288
Marymount...................Laurel, MD 1,903,800 17,578,605 19,482,405 1,343,520
Maxwell Apartments..........Augusta, GA 216,000 2,527,981 2,743,981 955,986
McAlpine Ridge..............Charlotte, NC 1,284,000 11,851,163 13,135,163 896,373
LIFE USED TO
DESCRIPTION COMPUTE
- - ----------------------------------------------------------------------- DEPRECIATION IN
DATE OF LATEST INCOME
APARTMENT NAME LOCATION CONSTRUCTION STATEMENT (C)
- - ------------------------------------------------------------------------------------------
Hampton Green...............San Antonio, TX 1979 30 Years
Harbour Landing.............Corpus Christi, TX 1985 30 Years
Hathaway....................Long Beach, CA 1987 30 Years
Hearthstone ...............San Antonio, TX 1982 30 Years
Heron Cove..................Coral Springs, FL 1987 30 Years
Heron Landing (K)...........Lauderhill, FL 1988 30 Years
Heron Run...................Plantation, FL 1987 30 Years
Hidden Valley...............Ann Arbor, MI 1973 30 Years
Holcomb Bridge..............Atlanta, GA 1985 30 Years
Hunter's Glen...............Chesterfield, MO 1985 30 Years
Hunter's Green..............Fort Worth, TX 1981 30 Years
Huntington Park.............Everett, WA 1991 30 Years
Indian Bend.................Phoenix, AZ 1973 30 Years
Indian Tree.................Arvada, CO 1983 30 Years
Ivy Place (L)...............Atlanta, GA 1978 30 Years
Kempton Downs...............Gresham, OR 1990 30 Years
Keystone....................Austin, TX 1981 30 Years
Kingsport...................Alexandria, VA 1986 30 Years
Kingswood Manor.............San Antonio, TX 1983 30 Years
La Costa Brava (J)..........Jacksonville, FL 1970/1973 30 Years
La Costa Brava..............Orlando, FL 1967 30 Years
Lake in the Woods...........Ypsilanti, MI 1969 30 Years
Lakeville Resort............Petaluma, CA 1984 30 Years
Lakewood Oaks...............Dallas, TX 1987 30 Years
Lands End...................Pacifica, CA 1974 30 Years
Laurel Ridge................Chapel Hill, NC 1975 30 Years
Lincoln Green I.............San Antonio, TX 1984/1986 30 Years
Lincoln Green II............San Antonio, TX 1984/1986 30 Years
Lincoln Green III...........San Antonio, TX 1984/1986 30 Years
Lodge-Oklahoma..............Tulsa, OK 1979 30 Years
Lodge-Texas.................San Antonio, TX 1979(#) 30 Years
Longwood....................Decatur, GA 1992 30 Years
Mallard Cove................Greenville, SC 1983 30 Years
Mallgate....................Louisville, KY 1969 30 Years
Marbrisa....................Tampa, FL 1984 30 Years
Marina Club.................Forth Worth, TX 1987 30 Years
Marymount...................Laurel, MD 1987-88 30 Years
Maxwell Apartments..........Augusta, GA 1951 30 Years
McAlpine Ridge..............Charlotte, NC 1989-90 30 Years
S-4
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
COST CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO ACQUISITION
DESCRIPTION COMPANY (IMPROVEMENTS, NET) (I)
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & BUILDING &
APARTMENT NAME LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES
- - ------------------------------------------------------------------------------------------------------------------------------------
Meadowcreek.................Tigard, OR 8,788,473 1,298,100 11,682,684 1,000 497,605
Merrimac Woods..............Costa Mesa, CA 0 673,300 6,059,722 1,600 29,948
Mountain Terrace............Stevenson Ranch, CA 0 3,977,200 35,794,729 0 (0)
Newport Cove................Henderson, NV 0 698,700 6,288,245 1,600 765,432
Newport Heights.............Seattle, WA 2,655,505 390,700 3,516,229 500 208,031
Northhampton I..............Largo, MD 13,333,122 1,843,200 17,318,363 0 1,720,009
Northhampton II.............Largo, MD 0 1,494,100 14,279,723 19,400 186,486
Northgate Village...........San Antonio, TX (E) 660,000 5,753,724 100 350,807
Oak Mill II.................Germantown, MD 6,475,057 854,000 8,187,169 133 689,508
Oak Park North..............Agoura Hills, CA (O) 1,706,500 15,358,942 400 44,593
Oak Park South..............Agoura Hills, CA (O) 1,683,400 15,150,835 400 82,585
Oaks of Lakebridge..........Ormond Beach, FL 0 413,700 3,742,503 2,100 270,178
Olentangy...................Columbus, OH 28,425,106 3,032,336 20,862,191 0 7,394,749
Orchard Ridge...............Seattle, WA 0 482,600 4,343,826 3,000 157,534
Paradise Point..............Dania, FL 0 1,494,700 13,452,161 855,955 1,237,844
Park Knoll..................Atlanta, GA 0 2,904,500 26,140,219 4,300 1,252,945
Park Place I & II...........Plymouth, MN 17,951,182 2,428,200 21,853,006 5,700 185,384
Park West...................Los Angeles, CA 0 3,033,300 27,299,323 100 236,356
Parkwest....................Austin, TX (E) 648,605 4,541,683 100 419,923
Pine Harbour................Orlando, FL 0 1,661,000 14,948,625 3,300 749,584
Pine Meadow.................Greensboro, NC 4,921,530 719,300 6,474,036 1,250 67,385
Pines at Cloverlane.........Pittsfield Township, MI 0 1,906,600 17,159,269 2,400 1,913,775
Pines of Springdale.........West Palm Beach, FL 0 471,200 4,240,800 2,667 385,267
Plantation..................Monroe, LA 0 210,000 3,370,715 0 (399,716)
Pointe East.................Redmond, WA 0 601,800 5,416,489 800 108,328
Port Royale.................Ft. Lauderdale, FL 0 1,752,100 15,769,281 2,100 406,225
Port Royale II..............Ft. Lauderdale, FL 0 1,015,700 9,141,355 6,300 304,166
Preston in Willowbend.......Plano, TX 0 872,500 7,852,675 3,000 1,261,802
Preston Lake................Atlanta, GA 0 1,430,900 12,877,986 34,993 934,101
Promenade Terrace...........Corona Hills, CA 16,490,541 2,281,000 20,529,476 1,700 40,643
Pueblo Villas...............Albuquerque, NM 0 854,300 7,688,783 1,200 36,858
Quail Run...................Oklahoma City, OK 0 1,000,000 4,136,059 0 551,288
Ravens Crest................Plainsboro, NJ (O) 4,673,000 42,057,149 2,850 1,065,442
Regency Palms...............Huntington Beach, CA 0 1,856,500 16,708,950 800 143,839
Reserve Square..............Cleveland, OH 0 2,618,352 23,565,022 500 7,965,098
Ridgetree I & II............Dallas, TX 0 2,094,600 18,851,177 19,000 382,141
River Bend..................Tampa, FL 0 602,945 2,161,915 0 1,994,175
Rock Creek..................Corrboro, NC 0 895,100 8,056,360 0 148
Rosehill Pointe.............Lenexa, KS 0 2,073,400 18,660,475 18,300 483,594
GROSS AMOUNT CARRIED
AT CLOSE OF
DESCRIPTION PERIOD 12/31/96
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & ACCUMULATED
APARTMENT NAME LOCATION LAND FIXTURES (A) TOTAL(B) DEPRECIATION
- - ------------------------------------------------------------------------------------------------------------------------------------
Meadowcreek.................Tigard, OR 1,299,100 12,180,289 13,479,389 972,673
Merrimac Woods..............Costa Mesa, CA 674,900 6,089,669 6,764,569 58,694
Mountain Terrace............Stevenson Ranch, CA 3,977,200 35,794,729 39,771,929 3,502
Newport Cove................Henderson, NV 700,300 7,053,677 7,753,977 844,928
Newport Heights.............Seattle, WA 391,200 3,724,260 4,115,460 300,036
Northhampton I..............Largo, MD 1,843,200 19,038,372 20,881,572 1,440,396
Northhampton II.............Largo, MD 1,513,500 14,466,209 15,979,709 1,026,005
Northgate Village...........San Antonio, TX 660,100 6,104,531 6,764,631 918,384
Oak Mill II.................Germantown, MD 854,133 8,876,677 9,730,810 616,158
Oak Park North..............Agoura Hills, CA 1,706,900 15,403,535 17,110,435 660,163
Oak Park South..............Agoura Hills, CA 1,683,800 15,233,420 16,917,220 703,216
Oaks of Lakebridge..........Ormond Beach, FL 415,800 4,012,681 4,428,481 505,544
Olentangy...................Columbus, OH 3,032,336 28,256,940 31,289,276 14,672,182
Orchard Ridge...............Seattle, WA 485,600 4,501,360 4,986,960 411,431
Paradise Point..............Dania, FL 2,350,655 14,690,005 17,040,660 1,199,383
Park Knoll..................Atlanta, GA 2,908,800 27,393,164 30,301,964 2,838,509
Park Place I & II...........Plymouth, MN 2,433,900 22,038,390 24,472,290 265,497
Park West...................Los Angeles, CA 3,033,400 27,535,679 30,569,079 1,281,092
Parkwest....................Austin, TX 648,705 4,961,606 5,610,311 607,764
Pine Harbour................Orlando, FL 1,664,300 15,698,209 17,362,509 1,558,426
Pine Meadow.................Greensboro, NC 720,550 6,541,421 7,261,971 115,437
Pines at Cloverlane.........Pittsfield Township, MI 1,909,000 19,073,044 20,982,044 583,144
Pines of Springdale.........West Palm Beach, FL 473,867 4,626,067 5,099,934 485,180
Plantation..................Monroe, LA 210,000 2,970,999 3,180,999 1,930,187
Pointe East.................Redmond, WA 602,600 5,524,817 6,127,417 421,303
Port Royale.................Ft. Lauderdale, FL 1,754,200 16,175,506 17,929,706 1,236,499
Port Royale II..............Ft. Lauderdale, FL 1,022,000 9,445,521 10,467,521 264,972
Preston in Willowbend.......Plano, TX 875,500 9,114,477 9,989,977 980,635
Preston Lake................Atlanta, GA 1,465,893 13,812,087 15,277,980 1,394,584
Promenade Terrace...........Corona Hills, CA 2,282,700 20,570,119 22,852,819 332,826
Pueblo Villas...............Albuquerque, NM 855,500 7,725,641 8,581,141 122,902
Quail Run...................Oklahoma City, OK 1,000,000 4,687,347 5,687,347 1,911,096
Raven's Crest...............Plainsboro, NJ 4,675,850 43,122,591 47,798,441 3,741,881
Regency Palms...............Huntington Beach, CA 1,857,300 16,852,789 18,710,089 493,126
Reserve Square..............Cleveland, OH 2,618,852 31,530,120 34,148,972 2,619,824
Ridgetree I & II............Dallas, TX 2,113,600 19,233,318 21,346,918 405,273
River Bend..................Tampa, FL 602,945 4,156,090 4,759,035 2,714,440
Rock Creek..................Corrboro, NC 895,100 8,056,508 8,951,608 16,432
Rosehill Pointe.............Lenexa, KS 2,091,700 19,144,069 21,235,769 404,389
LIFE USED TO
DESCRIPTION COMPUTE
- - ------------------------------------------------------------------------- DEPRECIATION IN
DATE OF LATEST INCOME
APARTMENT NAME LOCATION CONSTRUCTION STATEMENT (C)
- - -------------------------------------------------------------------------------------------------
Meadowcreek.................Tigard, OR 1985 30 Years
Merrimac Woods..............Costa Mesa, CA 1970 30 Years
Mountain Terrace............Stevenson Ranch, CA 1992 30 Years
Newport Cove................Henderson, NV 1983 30 Years
Newport Heights.............Seattle, WA 1985 30 Years
Northhampton I..............Largo, MD 1977 30 Years
Northhampton II.............Largo, MD 1988 30 Years
Northgate Village...........San Antonio, TX 1984 30 Years
Oak Mill II.................Germantown, MD 1985 30 Years
Oak Park North..............Agoura Hills, CA 1990 30 Years
Oak Park South..............Agoura Hills, CA 1989 30 Years
Oaks of Lakebridge..........Ormond Beach, FL 1984 30 Years
Olentangy...................Columbus, OH 1972 30 Years
Orchard Ridge...............Seattle, WA 1988 30 Years
Paradise Point..............Dania, FL 1987-90 30 Years
Park Knoll..................Atlanta, GA 1983 30 Years
Park Place I & II...........Plymouth, MN 1986 30 Years
Park West...................Los Angeles, CA 1987/90 30 Years
Parkwest....................Austin, TX 1985 30 Years
Pine Harbour................Orlando, FL 1991 30 Years
Pine Meadow.................Greensboro, NC 1974 30 Years
Pines at Cloverlane.........Pittsfield Township, MI 1975-79 30 Years
Pines of Springdale.........West Palm Beach, FL 1985/87(x) 30 Years
Plantation..................Monroe, LA 1972 30 Years
Pointe East.................Redmond, WA 1988 30 Years
Port Royale.................Ft. Lauderdale, FL 1988 30 Years
Port Royale II..............Ft. Lauderdale, FL 1991 30 Years
Preston in Willowbend.......Plano, TX 1985 30 Years
Preston Lake................Atlanta, GA 1984-86 30 Years
Promenade Terrace...........Corona Hills, CA 1990 30 Years
Pueblo Villas...............Albuquerque, NM 1975 30 Years
Quail Run...................Oklahoma City, OK 1978/1983 30 Years
Raven's Crest...............Plainsboro, NJ 1984 30 Years
Regency Palms...............Huntington Beach, CA 1969 30 Years
Reserve Square..............Cleveland, OH 1973 30 Years
Ridgetree I & II............Dallas, TX 1983 30 Years
River Bend..................Tampa, FL 1971 30 Years
Rock Creek..................Corrboro, NC 1986 30 Years
Rosehill Pointe.............Lenexa, KS 1984 30 Years
S-5
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
COST CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO ACQUISITION
DESCRIPTION COMPANY (IMPROVEMENTS, NET) (I)
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & BUILDING &
APARTMENT NAME LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES
- - ------------------------------------------------------------------------------------------------------------------------------------
Roswell.....................Atlanta, GA 8,100,000 1,217,500 10,957,845 2,500 442,046
Sabal Pointe(M).............Coral Springs, FL 0 1,941,900 17,477,592 9,500 177,360
Saddle Creek................Carrollton, TX 0 703,300 6,329,899 4,800 2,939,209
Saddle Ridge................Loudoun County, VA 0 1,351,800 12,165,984 13,000 191,045
Sawgrass Cove...............Bradenton, FL 0 1,671,200 15,041,179 2,950 718,569
Sheffield Court.............Arlington, VA 0 3,349,350 30,246,228 0 1,991,716
Silver Shadow...............Las Vegas, NV 0 952,100 8,568,921 1,340 254,165
Silverwood..................Mission, KS 11,000,000 1,244,000 11,196,244 1,700 496,371
Sleepy Hollow...............Kansas City, MO 12,500,000 2,193,546 13,689,443 1 1,224,190
Songbird....................San Antonio, TX 6,984,854 1,080,500 9,724,928 1,900 46,272
Sonnet Cove I...............Lexington, KY 0 183,407 2,422,860 0 1,553,169
Sonnet Cove II..............Lexington, KY 1,495,882 100,000 1,108,405 0 821,113
Southbank...................Mesa, AZ 0 319,600 2,876,874 10,900 304,656
South Creek.................Mesa, AZ 16,541,027 2,669,300 24,023,758 1,900 78,353
Spice Run...................Naperville, IL 0 2,578,900 23,210,030 400 3,874
Springs Colony..............Orlando, FL 0 631,900 5,687,010 8,500 657,299
Stonebrook..................Oklahoma City, OK 0 1,418,887 7,528,238 0 180,721
Stonelake Club..............Ocala, FL (E) 250,000 2,024,968 100 319,301
Summer Ridge................Riverside, CA 0 600,500 5,404,571 1,800 23,710
Summerset Village...........Chatsworth, CA 0 2,628,500 23,656,668 1,900 30,377
Sunny Oak Village...........Overland Park, KS 0 2,222,600 20,003,050 20,950 276,118
Sunrise Springs.............Las Vegas, NV 0 972,600 8,753,491 2,700 144,038
Sutton Place................Dallas, TX 0 1,316,500 11,848,717 41,900 2,241,843
Tanasbourne Terrace.........Hillsboro, OR 0 1,873,000 16,857,220 3,700 695,796
Tanglewood..................Manassas, VA 15,795,420 2,103,400 19,559,772 4,895 1,576,348
Tanglewood..................Portland, OR 0 760,000 6,839,589 3,000 800,883
Terraces at Peachtree.......Atlanta, GA 0 582,800 5,245,560 700 284,134
The Place...................Fort Myers, FL 0 722,900 6,506,350 3,340 350,239
The Seasons.................Boise, ID 0 604,400 5,439,624 3,600 200,077
Towne Centre III............Laurel, MD 6,022,120 982,300 9,301,830 0 929,712
Towne Centre IV.............Laurel, MD 9,781,127 1,564,200 14,787,362 4,700 44,169
Trails......................Arlington, TX 0 616,700 5,550,590 21,300 531,223
Trails......................Las Vegas, NV 0 3,076,200 27,685,764 3,000 713,626
Trails......................Aurora, CO (E) 1,217,800 8,525,346 100 1,142,930
University Park.............Toledo, OH 0 70,000 834,378 0 1,415,627
Via Ventura.................Phoenix, AZ 0 1,476,500 13,288,894 7,100 2,735,078
Village Oaks................Austin, TX 5,506,970 1,184,400 10,659,432 500 4,761
Villa Madeira...............Phoenix, AZ 0 1,580,000 14,219,907 2,100 403,579
Villa Manana................Phoenix, AZ 0 951,400 8,562,443 3,900 484,091
GROSS AMOUNT CARRIED
AT CLOSE OF
DESCRIPTION PERIOD 12/31/96
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & ACCUMULATED
APARTMENT NAME LOCATION LAND FIXTURES(A) TOTAL(B) DEPRECIATION
- - ------------------------------------------------------------------------------------------------------------------------------------
Roswell.....................Atlanta, GA 1,220,000 11,399,891 12,619,891 965,464
Sabal Pointe(M).............Coral Springs, FL 1,951,400 17,654,952 19,606,352 531,729
Saddle Creek................Carrollton, TX 708,100 9,269,108 9,977,208 1,175,684
Saddle Ridge................Loudoun County, VA 1,364,800 12,357,029 13,721,829 506,256
Sawgrass Cove...............Bradenton, FL 1,674,150 15,759,748 17,433,898 1,471,148
Sheffield Court.............Arlington, VA 3,349,350 32,237,944 35,587,294 2,072,699
Silver Shadow...............Las Vegas, NV 953,440 8,823,086 9,776,526 941,078
Silverwood..................Mission, KS 1,245,700 11,692,615 12,938,315 956,744
Sleepy Hollow...............Kansas City, MO 2,193,547 14,913,633 17,107,180 4,287,699
Songbird....................San Antonio, TX 1,082,400 9,771,200 10,853,600 103,123
Sonnet Cove I...............Lexington, KY 183,407 3,976,029 4,159,436 2,577,503
Sonnet Cove II..............Lexington, KY 100,000 1,929,518 2,029,518 1,208,653
Southbank...................Mesa, AZ 330,500 3,181,530 3,512,030 347,843
South Creek.................Mesa, AZ 2,671,200 24,102,111 26,773,311 400,568
Spice Run...................Naperville, IL 2,579,300 23,213,904 25,793,204 27,627
Springs Colony..............Orlando, FL 640,400 6,344,309 6,984,709 587,311
Stonebrook..................Oklahoma City, OK 1,418,887 7,708,959 9,127,846 3,310,433
Stonelake Club..............Ocala, FL 250,100 2,344,269 2,594,369 344,464
Summer Ridge................Riverside, CA 602,300 5,428,281 6,030,581 91,415
Summerset Village...........Chatsworth, CA 2,630,400 23,687,044 26,317,444 236,265
Sunny Oak Village...........Overland Park, KS 2,243,550 20,279,168 22,522,718 380,603
Sunrise Springs.............Las Vegas, NV 975,300 8,897,529 9,872,829 735,256
Sutton Place................Dallas, TX 1,358,400 14,090,560 15,448,960 1,558,058
Tanasbourne Terrace.........Hillsboro, OR 1,876,700 17,553,016 19,429,716 1,491,360
Tanglewood..................Manassas, VA 2,108,295 21,136,120 23,244,415 1,634,125
Tanglewood..................Portland, OR 763,000 7,640,472 8,403,472 716,175
Terraces at Peachtree.......Atlanta, GA 583,500 5,529,694 6,113,194 227,212
The Place...................Fort Myers, FL 726,240 6,856,589 7,582,829 608,174
The Seasons.................Boise, ID 608,000 5,639,701 6,247,701 510,392
Towne Centre III............Laurel, MD 982,300 10.231,542 11,213,842 789,981
Towne Centre IV.............Laurel, MD 1,568,900 14,831,531 16,400,431 1,020,310
Trails......................Arlington, TX 638,000 6,081,813 6,719,813 623,069
Trails......................Las Vegas, NV 3,079,200 28,399,390 31,478,590 2,184,035
Trails......................Aurora, Co 1,217,900 9,668,276 10,886,176 1,306,466
University Park.............Toledo, OH 70,000 2,250,005 2,320,005 1,235,516
Via Ventura.................Phoenix, AZ 1,483,600 16,023,972 17,507,572 1,331,620
Village Oaks................Austin, TX 1,184,900 10,664,193 11,849,093 20,925
Villa Madeira...............Phoenix, AZ 1,582,100 14,623,486 16,205,586 1,324,635
Villa Manana................Phoenix, AZ 955,300 9,046,534 10,001,834 839,816
LIFE USED TO
DESCRIPTION COMPUTE
- - ------------------------------------------------------------------------- DEPRECIATION IN
DATE OF LATEST INCOME
APARTMENT NAME LOCATION CONSTRUCTION STATEMENT(C)
- - -------------------------------------------------------------------------------------------------
Roswell.....................Atlanta, GA 1985 30 Years
Sabal Pointe(M).............Coral Springs, FL 1995 30 Years
Saddle Creek................Carrollton, TX 1980 30 Years
Saddle Ridge................Loudoun County, VA 1989 30 Years
Sawgrass Cove...............Bradenton, FL 1991 30 Years
Sheffield Court.............Arlington, VA 1986 30 Years
Silver Shadow...............Las Vegas, NV 1992 30 Years
Silverwood..................Mission, KS 1986 30 Years
Sleepy Hollow...............Kansas City, MO 1987 30 Years
Songbird....................San Antonio, TX 1981 30 Years
Sonnet Cove I...............Lexington, KY 1972 30 Years
Sonnet Cove II..............Lexington, KY 1974 30 Years
Southbank...................Mesa, AZ 1985 30 Years
South Creek.................Mesa, AZ 1986-89 30 Years
Spice Run...................Naperville, IL 1988 30 Years
Springs Colony..............Orlando, FL 1986 30 Years
Stonebrook..................Oklahoma City, OK 1983 30 Years
Stonelake Club..............Ocala, FL 1986 30 Years
Summer Ridge................Riverside, CA 1985 30 Years
Summerset Village...........Chatsworth, CA 1985 30 Years
Sunny Oak Village...........Overland Park, KS 1984 30 Years
Sunrise Springs.............Las Vegas, NV 1989 30 Years
Sutton Place................Dallas, TX 1985 30 Years
Tanasbourne Terrace.........Hillsboro, OR 1986-89 30 Years
Tanglewood..................Manassas, VA 1987 30 Years
Tanglewood..................Portland, OR 1976 30 Years
Terraces at Peachtree.......Atlanta, GA 1987 30 Years
The Place...................Fort Myers, FL 1986 30 Years
The Seasons.................Boise, ID 1990 30 Years
Towne Centre III............Laurel, MD 1969 30 Years
Towne Centre IV.............Laurel, MD 1968 30 Years
Trails......................Arlington, TX 1984 30 Years
Trails......................Las Vegas, NV 1988 30 Years
Trails......................Aurora, CO 1986 30 Years
University Park.............Toledo OH 1965 30 Years
Via Ventura.................Phoenix, AZ 1980 30 Years
Village Oaks................Austin, TX 1984 30 Years
Villa Madeira...............Phoenix, AZ 1971 30 Years
Villa Manana................Phoenix, AZ 1971-85 30 Years
S-6
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION
DECEMBER 31, 1996
COST CAPITALIZED
SUBSEQUENT TO
INITIAL COST TO ACQUISITION
DESCRIPTION COMPANY (IMPROVEMENTS, NET) (I)
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & BUILDING &
APARTMENT NAME LOCATION ENCUMBRANCES LAND FIXTURES LAND FIXTURES
- - ------------------------------------------------------------------------------------------------------------------------------------
Villa Solana................ Laguna Hills, CA 0 1,663,500 14,971,366 1,600 796,923
Village of Hampshire........ Toledo, OH 0 195,886 1,320,453 0 9,366,924
Village of Newport.......... Federal Way, WA 3,272,574 414,900 3,733,899 1,400 248,689
Vista Del Lago.............. Mission Viejo, CA 32,350,000 4,524,400 41,357,681 1,400 966,539
Walden Wood................. Southfield, MI 5,960,000 833,300 7,499,662 1,400 818,712
Walnut Ridge................ Little Rock, AR 3,654,026 196,079 2,424,631 0 2,997,627
Waterstone Place............ Seattle, WA 0 2,950,900 26,558,353 13,100 2,237,608
Wellington.................. Silverdale, WA 8,349,435 1,097,300 9,876,034 2,000 382,036
Wellington Hill............. Manchester, NH 28,625,000 1,872,500 16,852,955 29,700 1,407,693
Wilde Lake.................. Richmond, VA 4,440,000 934,600 8,411,613 10,600 95,472
Williamsburg Square......... Little Rock, AR 3,288,623 315,000 1,745,958 0 3,305,267
Willowglen.................. Aurora, CO 0 1,708,000 15,371,641 1,100 92,270
Windmill.................... Colorado Springs, CO (E) 395,544 4,953,156 100 488,925
Windridge................... Laguna Niguel, CA (O) 2,660,800 23,947,096 2,100 293,993
Winterwood.................. Charlotte, NC 12,260,000 1,720,100 15,481,455 1,700 898,560
Woodbridge (N).............. Cary, NC 4,820,441 1,981,900 17,839,380 0 116,484
Woodcreek................... Beaverton, OR 11,600,802 1,753,700 15,783,764 1,400 1,102,966
Woodlake at Killearn........ Tallahassee, FL 0 1,404,300 12,638,426 3,855 846,099
Woodland Hills.............. Decatur, GA 0 1,223,900 11,017,542 0 178,798
Woodmoor.................... Austin, TX 0 649,300 5,843,200 4,500 830,321
Woods at North Bend......... Raleigh, NC 0 1,039,000 9,350,616 500 267,612
Woodscape................... Raleigh, NC 0 956,000 8,603,550 1,200 34,519
Woodside.................... Lorton, VA 0 1,308,100 12,503,220 17,900 209,155
Yorktowne................... Millersville, MD 0 216,000 1,330,710 0 4,508,939
Yuma Court.................. Colorado Springs, CO 0 113,163 836,429 100 104,328
Operating Partnership....... Chicago, IL 0 0 88,566 0 0
Management Business......... Chicago, IL 0 0 3,442,962 1,000 5,589,868
--------------------------------- ---------------------------------------------
TOTAL $680,755,447 $283,252,575 $2,486,293,619 $1,626,411 $212,337,130
================================= =============================================
GROSS AMOUNT CARRIED
AT CLOSE OF
DESCRIPTION PERIOD 12/31/96
- - ------------------------------------------------------------------------------------------------------------------------------------
BUILDING & ACCUMULATED
APARTMENT NAME LOCATION LAND FIXTURES (A) TOTAL (B) DEPRECIATION
- - ------------------------------------------------------------------------------------------------------------------------------------
Villa Solana................ Laguna Hills, CA 1,665,100 15,768,289 17,433,389 1,579,997
Village of Hampshire........ Toledo, OH 195,886 10,687,377 10,883,263 3,281,711
Village of Newport.......... Federal Way, WA 416,300 3,982,588 4,398,888 326,790
Vista Del Lago.............. Mission Viejo, CA 4,525,800 42,324,220 46,850,020 4,318,438
Walden Wood................. Southfield, MI 834,700 8,318,374 9,153,074 899,416
Walnut Ridge................ Little Rock, AR 196,079 5,422,258 5,618,337 2,659,332
Waterstone Place............ Seattle, WA 2,964,000 28,795,961 31,759,961 3,101,327
Wellington.................. Silverdale, WA 1,099,300 10,258,070 11,357,370 554,721
Wellington Hill............. Manchester, NH 1,902,200 18,260,648 20,162,848 1,750,000
Wilde Lake.................. Richmond, VA 945,200 8,507,085 9,452,285 10,254
Williamsburg Square......... Little Rock, AR 315,000 5,051,225 5,366,225 2,325,587
Willowglen.................. Aurora, CO 1,709,100 15,463,911 17,173,011 161,468
Windmill.................... Colorado Springs, CO 395,644 5,442,081 5,837,725 856,207
Windridge................... Laguna Niguel, CA 2,662,900 24,241,089 26,903,989 1,825,518
Winterwood.................. Charlotte, NC 1,721,800 16,380,015 18,101,815 1,748,890
Woodbridge (N).............. Cary, NC 1,981,900 17,955,864 19,937,764 549,380
Woodcreek................... Beaverton, OR 1,755,100 16,886,730 18,641,830 1,396,188
Woodlake at Killearn........ Tallahassee, FL 1,408,155 13,484,525 14,892,680 1,404,945
Woodland Hills.............. Decatur, GA 1,223,900 11,196,340 12,420,240 250,737
Woodmoor.................... Austin, TX 653,800 6,673,521 7,327,321 694,877
Woods at North Bend......... Raleigh, NC 1,039,500 9,618,228 10,657,728 399,780
Woodscape................... Raleigh, NC 957,200 8,638,069 9,595,269 104,374
Woodside.................... Lorton, VA 1,326,000 12,712,375 14,038,375 937,395
Yorktowne................... Millersville, MD 216,000 5,839,649 6,055,649 3,740,770
Yuma Court.................. Colorado Springs, CO 113,263 940,757 1,054,020 128,338
Operating Partnership....... Chicago, IL 0 88,566 88,566 30,113 (H)
Management Business......... Chicago, IL 1,000 9,032,830 9,033,830 5,413,107 (G)
--------------------------------- ------------------------------
TOTAL $284,878,986 $2,698,630,748 $2,983,509,734 $301,511,545
============= ============== ============== ==============
LIFE USED TO
DESCRIPTION COMPUTE
- - ------------------------------------------------------------------------- DEPRECIATION IN
DATE OF LATEST INCOME
APARTMENT NAME LOCATION CONSTRUCTION STATEMENT (C)
- - -------------------------------------------------------------------------------------------------
Villa Solana................ Laguna Hills, CA 1984 30 Years
Village of Hampshire........ Toledo, OH 1950 30 Years
Village of Newport.......... Federal Way, WA 1987 30 Years
Vista Del Lago.............. Mission Viejo, CA 1986-88 30 Years
Walden Wood................. Southfield, MI 1972 30 Years
Walnut Ridge................ Little Rock, AR 1975 30 Years
Waterstone Place............ Seattle, WA 1990 30 Years
Wellington.................. Silverdale, WA 1990 30 Years
Wellington Hill............. Manchester, NH 1987 30 Years
Wilde Lake.................. Richmond, VA 1989 30 Years
Williamsburg Square......... Little Rock, AR 1974 30 Years
Willowglen.................. Aurora, CO 1983 30 Years
Windmill.................... Colorado Springs, CO 1985 30 Years
Windridge................... Laguna Niguel, CA 1989 30 Years
Winterwood.................. Charlotte, NC 1986 30 Years
Woodbridge (N).............. Cary, NC 1993-95 30 Years
Woodcreek................... Beaverton, OR 1982-84 30 Years
Woodlake at Killearn........ Tallahassee, FL 1986 30 Years
Woodland Hills.............. Decatur, GA 1985 30 Years
Woodmoor.................... Austin, TX 1981 30 Years
Woods at North Bend......... Raleigh, NC 1983 30 Years
Woodscape................... Raleigh, NC 1979 30 Years
Woodside.................... Lorton, VA 1987 30 Years
Yorktowne................... Millersville, MD 1974 30 Years
Yuma Court.................. Colorado Springs, CO 1985 30 Years
Operating Partnership....... Chicago, IL
Management Business......... Chicago, IL
S-7
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
Real Estate and Accumulated Depreciation
December 31, 1996
NOTES:
(A) The balance of furniture & fixtures included in the total amount was
$132,062,754 as of December 31, 1996.
(B) The aggregate cost for Federal Income Tax purposes as of December 31, 1996
was approximately $2.8 billion.
(C) The life to compute depreciation for furniture & fixtures is 5 years.
(D) These two properties are encumbered by $15,178,699 in bonds.
(E) These 15 properties are encumbered by a $44,000,000 note payable.
(F) These four properties are encumbered by $15,500,000 in bonds.
(G) This asset consists of various acquisition dates and represents furniture,
fixtures and equipment owned by the Management Business.
(H) This asset consists of various acquisition dates and represents furniture,
fixtures and equipment owned by the Operating Partnership.
(I) Improvements are net of write-off of fully depreciated assets which are no
longer in service.
(J) Combined with Cedar Cove
(K) Formerly Oxford & Sussex
(L) Formerly Post Place
(M) Formerly The Vinings at Coral Springs
(N) Formerly The Plantations (NC)
(O) These properties are pledged as additional collateral in connection with
the tax-exempt bond refinancing.
* Four Lakes was constructed in phases between 1968 & 1988.
(#) The Lodge-Texas was struck by a tornado that destroyed most of the property.
The property was reconstructed during 1989 & 1990.
(x) Pines of Springdale was constructed in phases between 1985 & 1987.
S-8
SCHEDULE III
EQUITY RESIDENTIAL PROPERTIES TRUST
REAL ESTATE AND ACCUMULATED DEPRECIATION (CONTINUED)
(AMOUNTS IN THOUSANDS)
The changes in total real estate for the years ended December 31, 1996, 1995,
and 1994 are as follows:
1996 1995 1994
------------ ------------ ------------
Balance, beginning of year $2,188,939 $1,963,476 $634,577
Acquisitions 789,056 288,277 1,313,077
Improvements 33,001 32,800 16,721
Write-off of fully depreciated assets
which are no longer in service (20) (34,320)
Dispositions and other (27,466) (61,294) (899)
============ ============ ============
Balance, end of year $2,983,510 $2,188,939 $1,963,476
============ ============ ============
The changes in accumulated depreciation for the years ended December 31, 1996,
1995 and 1994 are as follows:
1996 1995 1994
------------ ------------ ------------
Balance, beginning of year $218,339 $192,741 $156,367
Depreciation 93,253 72,410 37,273
Write-off of fully depreciated assets
which are no longer in service (20) (34,320)
Dispositions and other (10,060) (12,492) (899)
============ ============ ============
Balance, end of year $301,512 $218,339 $192,741
============ ============ ============
S-9