Form 8-K/A
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K/A

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): November 22, 2005
 
Hartman Commercial Properties REIT
(Exact Name of Registrant as Specified in Its Charter)
                   
Maryland
  
000-50256
  
76-0594970
(State or other jurisdiction of incorporation or
organization)
  
(Commission File Number)
  
(I.R.S. Employer
Identification No.)
         
                   
1450 West Sam Houston Parkway North, Suite 100
Houston, Texas 77043
(Address of principal executive offices)
(Zip Code)
 
(713) 467-2222
(Registrant’s telephone number, including area code)
 
(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing in intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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

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

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

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




Explanatory Note:

Hartman Commercial Properties REIT (the “Registrant”) hereby amends its Current Report on Form 8-K dated November 22, 2005 (the “Current Report”) to provide the required financial statements of the Registrant relating to the acquisition of an office building in Dallas, Texas, known as Uptown Tower (formerly known as Amberton Tower), as described in the Current Report. Registrant additionally provides required financial statements relating to the earlier acquisition of another office building in Dallas, Texas, known as 9101 LBJ Freeway, which are now required as a result of the acquisition of Uptown Tower.

Item 9.01.     Financial Statements and Exhibits.

(a)   Financial Statements of Businesses Acquired.

The following financial statements are submitted at the end of this Amendment to the Current Report and are filed herewith and incorporated by reference:

 
Page
   
9101 LBJ Freeway:
  
   
Report of Independent Registered Public Accounting Firm
F-1
   
Statements of Revenue and Certain Expenses
 
for the year ended December 31, 2004 and the
  
nine month period ended September 30, 2005 (unaudited)
F-2
   
Notes to Statements of Revenue and Certain Expenses
F-3
   
Uptown Tower:
  
   
Report of Independent Registered Public Accounting Firm
F-5
   
Statements of Revenue and Certain Expenses
 
for the year ended December 31, 2004 and the
  
nine month period ended September 30, 2005 (unaudited)
F-6
   
Notes to Statements of Revenue and Certain Expenses
F-7

2


(b)   Pro Forma Financial Information.

The following financial statements of the Registrant are submitted at the end of this Amendment to the Current Report and are filed herewith and incorporated by reference:

  
Page
   
Pro Forma Condensed Consolidated Balance Sheet
  
as of September 30, 2005 (unaudited)
F-10
   
Notes to Pro Forma Condensed Consolidated Balance Sheet
F-11
   
Pro Forma Consolidated Statement of Income
 
for the nine month period ended September 30, 2005 (unaudited)
F-13
   
Pro Forma Consolidated Statement of Income
  
for the year ended December 31, 2004 (unaudited)
F-14
   
Notes to Pro Forma Consolidated Statements of Income
F-15

(c)   Not Applicable.


(d)   Exhibits.

23.1   Consent of Independent Registered Public Accounting Firm





3

SIGNATURES

 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 

 
 
Hartman Commercial Properties REIT



By: /s/ Terry L. Henderson                                
Name: Terry L. Henderson
Title: Chief Financial Officer


Dated: February 1, 2006
 
 
 
 
 
 

4

EXHIBIT INDEX


Exhibit No
Description
23.1
Consent of Independent Registered Public Accounting Firm
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

5


Report of Independent Registered Public Accounting Firm


To the Board of Trustees and Shareholders of
     Hartman Commercial Properties REIT

We have audited the accompanying Statement of Revenue and Certain Expenses for 9101 LBJ Freeway (the “Property”) for the year ended December 31, 2004. This financial statement is the responsibility of the Property’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Statement of Revenue and Certain Expenses was prepared as described in Note 2, for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Current Report on Form 8-K/A of Hartman Commercial Properties REIT and is not intended to be a complete presentation of the Property’s revenue and expenses.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of 9101 LBJ Freeway for the year ended December 31, 2004 in conformity with U.S. generally accepted accounting principles.

/s/ PANNELL KERR FORSTER OF TEXAS, P.C.

Houston, Texas
January 6, 2006



F-1

9101 LBJ Freeway

Statements of Revenue and Certain Expenses


   
 
Year Ended
December 31,
  
Nine Month
Period Ended
September 30,
  
   
2004
  
2005
  
           
       
(Unaudited)
  
           
Revenue
              
Rent
  
$
1,160,007
  
$
970,683
  
Tenant reimbursements
    
4,075
    
27,291
  
Other
    
10,352
    
50,336
  
               
Total revenue
    
1,174,434
    
1,048,310
  
               
Certain expenses
              
Real estate taxes
    
135,325
    
118,080
  
Insurance
    
13,913
    
12,745
  
Electricity, water and gas utilities
    
204,527
    
135,953
  
Management fees
    
41,451
    
36,129
  
General and administrative
    
129,903
    
84,249
  
Operation and maintenance
    
355,333
    
215,200
  
Bad debt expense
    
14,498
    
8,075
  
               
     
894,950
    
610,431
  
               
Revenue in excess of certain expenses
  
$
279,484
  
$
437,879
  
               
 

See accompanying notes to Statements of Revenue and Certain Expenses

 
F-2

9101 LBJ Freeway

Notes to Statements of Revenue and Certain Expenses



Note 1 - Organization and Operation of Properties

Effective August 10, 2005, Hartman REIT Operating Partnership, L.P. (“HROP”), operating through its wholly-owned subsidiary, Hartman REIT Operating Partnership III, LP, acquired 9101 LBJ Freeway office building (the “Property”). HROP is a Delaware limited partnership formed to acquire, own, lease, operate, and manage real properties on behalf of Hartman Commercial Properties REIT (“HCP”), a Maryland real estate investment trust. As the sole general partner of HROP, HCP possesses full legal control and authority over the operations of HROP.

The Property is a multi-tenant office building located in Dallas, Texas comprising approximately 125,874 square feet of gross leaseable area (“GLA”). The Property is leased to multiple tenants (see Note 3).

Note 2 - Summary of Significant Accounting Policies

The accompanying statements of revenue and certain expenses are presented in conformity with U.S. generally accepted accounting principles and in accordance with the applicable rules and regulations of the Securities and Exchange Commission, including Rule 3-14 of Regulation S-X, for real estate properties acquired. Accordingly, these statements exclude certain historical expenses that are not comparable to the proposed future operations of the Property such as depreciation and amortization. Therefore, these statements are not comparable to the statement of operations of the Property after its acquisition by HROP.

Rental income is recognized on a straight-line basis over the terms of the respective leases. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenue in the period the corresponding costs are incurred.

Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.





F-3

9101 LBJ Freeway

Notes to Statements of Revenue and Certain Expenses



Note 3 - Future Minimum Rental Commitments

As of December 31, 2004, the Property had approximately 12 tenants with remaining lease terms ranging from one month to seven years. Four of these tenants account for approximately 60% of the rental income for 2004. Future minimum rental commitments (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancelable operating leases in existence at December 31, 2004 are as follows:
 
Year Ending
December 31,
        
         
2005
  
$
1,145,473
  
2006
    
1,336,428
  
2007
    
1,226,617
  
2008
    
1,144,615
  
2009
    
867,940
  
Thereafter
    
711,804
  
         
Total
  
$
6,432,877
  
 

Note 4 - Interim Unaudited Financial Statement

The accompanying interim statement of revenue and certain expenses for the nine month period ended September 30, 2005 is unaudited and has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission described above and on the same basis as the statement of revenue and certain expenses for the year ended December 31, 2004. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation of the information for this interim period have been made. The revenue in excess of certain expenses for such interim period is not necessarily indicative of the results for the full year.

F-4

Report of Independent Registered Public Accounting Firm


To the Board of Trustees and Shareholders of
     Hartman Commercial Properties REIT

We have audited the accompanying Statement of Revenue and Certain Expenses for Uptown Tower (the “Property”) for the year ended December 31, 2004. This financial statement is the responsibility of the Property’s management. Our responsibility is to express an opinion on this financial statement based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The accompanying Statement of Revenue and Certain Expenses was prepared as described in Note 2, for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in a Current Report on Form 8-K/A of Hartman Commercial Properties REIT and is not intended to be a complete presentation of the Property’s revenue and expenses.

In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of Uptown Tower for the year ended December 31, 2004 in conformity with U.S. generally accepted accounting principles.

/s/ PANNELL KERR FORSTER OF TEXAS, P.C.

Houston, Texas
January 6, 2006


F-5

Uptown Tower

Statements of Revenue and Certain Expenses


   
 
Year Ended
December 31,
  
Nine Month
Period Ended
September 30,
  
   
2004
  
2005
  
           
       
(Unaudited)
  
           
Revenue
              
Rent
  
$
2,763,870
  
$
2,170,160
  
Tenant reimbursements
    
40,022
    
10,714
  
Other
    
38,362
    
14,183
  
               
Total revenue
    
2,842,254
    
2,195,057
  
               
Certain expenses
              
Real estate taxes
    
385,587
    
297,900
  
Insurance
    
68,552
    
45,118
  
Electricity, water and gas utilities
    
291,608
    
220,779
  
Management fees
    
68,797
    
59,629
  
General and administrative
    
104,955
    
70,216
  
Operation and maintenance
    
786,696
    
519,345
  
Bad debt expense
    
1,061
    
3,106
  
               
     
1,707,256
    
1,216,093
  
               
Revenue in excess of certain expenses
  
$
1,134,998
  
$
978,964
  
               

 See accompanying notes to Statements of Revenue and Certain Expenses

F-6

Uptown Tower

Notes to Statements of Revenue and Certain Expenses



Note 1 - Organization and Operation of Properties

Effective November 22, 2005, Hartman REIT Operating Partnership, L.P. (“HROP”), operating through its wholly-owned subsidiary, Hartman REIT Operating Partnership III, LP, acquired Uptown Tower (the “Property”). HROP is a Delaware limited partnership formed to acquire, own, lease, operate, and manage real properties on behalf of Hartman Commercial Properties REIT (“HCP”), a Maryland real estate investment trust. As the sole general partner of HROP, HCP possesses full legal control and authority over the operations of HROP.

The Property is a multi-tenant office building located in Dallas, Texas comprising approximately 253,981 square feet of gross leaseable area (“GLA”). The Property is leased to multiple tenants (see Note 3).

Note 2 - Summary of Significant Accounting Policies

The accompanying statements of revenue and certain expenses are presented in conformity with U.S. generally accepted accounting principles and in accordance with the applicable rules and regulations of the Securities and Exchange Commission, including Rule 3-14 of Regulation S-X, for real estate properties acquired. Accordingly, these statements exclude certain historical expenses that are not comparable to the proposed future operations of the Property such as depreciation and amortization. Therefore, these statements are not comparable to the statement of operations of the Property after its acquisition by HROP.

Rental income is recognized on a straight-line basis over the terms of the respective leases. Recoveries from tenants for taxes, insurance, and other operating expenses are recognized as revenue in the period the corresponding costs are incurred.

Repairs and maintenance costs are expensed as incurred, while significant improvements, renovations and replacements are capitalized.

The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

F-7

Uptown Tower

Notes to Statements of Revenue and Certain Expenses



Note 3 - Future Minimum Rental Commitments

As of December 31, 2004, the Property had approximately 38 tenants with remaining lease terms ranging from 18 months to 11 years. Two of these tenants account for approximately 30% of the rental income for 2004. Future minimum rental commitments (exclusive of renewals, tenant reimbursements, and contingent rentals) under noncancelable operating leases in existence at December 31, 2004 are as follows:
 
Year Ending
December 31,
      
       
2005
  
$
2,942,324
  
2006
    
3,092,785
  
2007
    
2,750,513
  
2008
    
2,421,752
  
2009
    
1,935,952
  
Thereafter
    
3,076,538
  
         
Total
  
$
16,219,864
  

 
Note 4 - Interim Unaudited Financial Statement
 
The accompanying interim statement of revenue and certain expenses for the nine month period ended September 30, 2005 is unaudited and has been prepared pursuant to the rules and regulations of the Securities and Exchange Commission described above and on the same basis as the statement of revenue and certain expenses for the year ended December 31, 2004. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation of the information for this interim period have been made. The revenue in excess of certain expenses for such interim period is not necessarily indicative of the results for the full year.

F-8

Pro Forma Condensed Consolidated Balance Sheet

 
 
The accompanying unaudited Pro Forma Condensed Consolidated Balance Sheet of Hartman Commercial Properties REIT and Subsidiary (the “Company”) is presented as if 9101 LBJ Freeway and Uptown Tower had been acquired on September 30, 2005. This Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction with the Pro Forma Condensed Consolidated Statements of Income for the nine month period ended September 30, 2005 and for the year ended December 31, 2004 and the historical consolidated financial statements and notes thereto of the Company reported on Form 10-Q for the nine month period ended September 30, 2005 and for the year ended December 31, 2004 included in the Company’s Annual Report on Form 10-K. In management’s opinion, all adjustments necessary to reflect the acquisition of 9101 LBJ Freeway and Uptown Tower have been made. The following Pro Forma Condensed Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been assuming the above transaction had been consummated at September 30, 2005, nor does it purport to represent the future financial position of the Company.
  
 
 



F-9

Hartman Commercial Properties REIT and Subsidiary

Pro Forma Condensed Consolidated Balance Sheet

September 30, 2005

(Unaudited)


   
 
Historical
Amounts (A)
  
Pro Forma
Adjustments
9101 LBJ
Freeway (B)
  
Pro Forma
Adjustments
Uptown
Tower(C)
  
 
Pro Forma
Amounts
  
                   
Assets
                          
Real estate investments, net
  
$
137,379,365
  
$
-
  
$
16,950,000
  
$
154,329,365
  
Cash and cash equivalents
    
1,566,355
    
-
    
(409,155
)
  
1,157,200
  
Escrows and acquisition deposits
    
4,612,768
    
-
    
-
    
4,612,768
  
Note receivable
    
639,104
    
-
    
-
    
639,104
  
Receivables, net
    
6,826,267
    
-
    
-
    
6,826,267
  
Deferred costs, net
    
3,796,493
    
-
    
-
    
3,796,493
  
Prepaids and other assets
    
272,851
    
-
    
-
    
272,851
  
                           
Total assets
  
$
155,093,203
  
$
-
  
$
16,540,845
  
$
171,634,048
  
                           
Liabilities and Shareholders’ Equity
                          
Notes payable
  
$
63,520,797
  
$
-
  
$
15,950,000
  
$
79,470,797
  
Accounts payable and accrued expenses
    
2,996,142
    
-
    
423,061
    
3,419,203
  
Due to affiliates
    
168,692
    
-
    
-
    
168,692
  
Tenants’ security deposits
    
1,278,777
    
-
    
167,784
    
1,446,561
  
Prepaid rent
    
373,844
    
-
    
-
    
373,844
  
Offering proceeds escrowed
    
1,485,192
    
-
    
-
    
1,485,192
  
Dividends payable
    
1,412,087
    
-
    
-
    
1,412,087
  
Other liabilities
    
1,026,914
    
-
    
-
    
1,026,914
  
                           
Total liabilities
    
72,262,445
    
-
    
16,540,845
    
88,803,290
  
                           
Minority interests
    
35,077,864
    
-
    
-
    
35,077,864
  
                           
Common stock
    
8,138
    
-
    
-
    
8,138
  
Additional paid-in capital
    
55,415,884
    
-
    
-
    
55,415,884
  
Accumulated deficit
    
(7,671,128
)
  
-
    
-
    
(7,671,128
)
                           
Total shareholders’ equity
    
47,752,894
    
-
    
-
    
47,752,894
  
                           
Total liabilities and shareholders’ equity
  
$
155,093,203
  
$
-
  
$
16,540,845
  
$
171,634,048
  
                           
 

See accompanying notes to Pro Forma Condensed Consolidated Balance Sheet.

F-10

Notes to Pro Forma Condensed Consolidated Balance Sheet


(A)  
Represents the condensed consolidated balance sheet of the Company as of September 30, 2005, as contained in the historical consolidated financial statements and notes thereto filed on Form 10-Q.

(B)  
9101 LBJ Freeway was purchased on August 10, 2005. All assets and liabilities of 9101 LBJ Freeway are contained in the historical consolidated financial statements as of September 30, 2005 as filed on Form 10-Q. As such, no pro-forma adjustments are required.

(C)  
Represents the completed acquisition of Uptown Tower on November 22, 2005. This property was purchased during the quarter ending December 31, 2005 for a total purchase price of $16.95 million. The acquisition of this property was funded through a draw under the Company’s line of credit facility.
 
 
 
 
 
 
 
 
 
 

 
F-11

Pro Forma Consolidated Statements of Income

 
 
The accompanying unaudited Pro Forma Consolidated Statements of Income for the nine month period ended September 30, 2005 and for the year ended December 31, 2004 of the Company are presented as if 9101 LBJ Freeway and Uptown Tower (the “Properties”) had been acquired on January 1, 2004.
 
These Pro Forma Consolidated Statements of Income should be read in conjunction with the historical consolidated financial statements included in the Company’s previous filings with the Securities and Exchange Commission.
 
The unaudited Pro Forma Consolidated Statements of Income are not necessarily indicative of what the actual results of operations would have been for the nine month period ended September 30, 2005 or for the year ended December 31, 2004 assuming the above transactions had been consummated on January 1, 2004, nor do they purport to represent the future results of operations of the Company.
  


 
 
 
 
 
 
 
 
 
 

 


F-12

Hartman Commercial Properties REIT and Subsidiary

Pro Forma Consolidated Statement of Income

Nine Month Period Ended September 30, 2005

(Unaudited)


   
 
Historical
Amounts (A)
  
Pro Forma
Adjustments
9101 LBJ
Freeway (B)
  
ProForma
Adjustments
Uptown
Tower (B)
  
 
Pro Forma
Amounts
  
                   
Revenues
                          
Rental income
  
$
14,785,885
  
$
778,266
  
$
2,170,160
  
$
17,734,311
  
Tenant reimbursements
   
3,603,535
    
25,812
    
10,714
    
3,640,061
  
Interest and other income
    
398,258
    
50,336
    
14,183
    
462,777
  
                           
Total revenues
    
18,787,678
    
854,414
    
2,195,057
    
21,837,149
  
                           
Expenses
                          
Operation and maintenance
    
2,491,107
    
212,876
    
519,345
    
3,223,328
  
Interest expense
    
2,651,906
    
257,994
    
671,121
    
3,581,021
  
Real estate taxes
    
2,391,661
    
95,464
    
297,900
    
2,785,025
  
Insurance
    
331,973
    
12,745
    
45,118
    
389,836
  
Electricity, water and gas utilities
    
724,574
    
131,945
    
220,779
    
1,077,298
  
Management and partnership management
                          
fees to an affiliate
    
1,052,679
    
25,632
    
64,496
    
1,142,807
  
General and administrative
    
955,665
    
81,550
    
70,216
    
1,107,431
  
Depreciation
    
3,186,910
    
81,919
    
294,990
    
3,563,819
  
Amortization
    
1,089,696
    
71,919
    
-
    
1,161,615
  
Bad debt expense
    
155,785
    
-
    
3,106
    
158,891
  
                           
Total operating expenses
    
15,031,956
    
972,044
    
2,187,071
    
18,191,071
  
                           
Income (loss) before minority interests
    
3,755,722
    
(117,630
)
  
7,986
    
3,646,078
  
                           
Minority interests in operating partnership
    
(1,669,492
)
  
52,288
    
(3,550
)
  
(1,620,754
)
                           
Net income (loss)
  
$
2,086,230
  
$
(65,342
)
$
4,436
  
$
2,025,324
  
                           
Net income (loss) per common share -
                         
basic and diluted
  
$
0.273
  
$
(0.009
)
$
0.001
  
$
0.265
  
                           
Weighted - average shares outstanding -
                          
basic and diluted
    
7,645,483
    
7,645,483
    
7,645,483
    
7,645,483
  

 

See accompanying notes to Pro Forma Consolidated Statement of Income.
F-13

Hartman Commercial Properties REIT and Subsidiary

Pro Forma Consolidated Statement of Income

Year Ended December 31, 2004

(Unaudited)


   
 
Historical
Amounts (A)
  
Pro Forma
Adjustments
9101 LBJ
Freeway (C)
  
Pro Forma
Adjustments
Uptown
Tower (C)
  
 
Pro Forma
Amounts
  
                   
Revenues
                          
Rental income
  
$
18,426,558
  
$
1,160,007
  
$
2,763,870
  
$
22,350,435
  
Tenant reimbursements
   
4,612,408
    
4,075
    
40,022
    
4,656,505
  
Interest and other income
    
444,691
    
10,352
    
38,362
    
493,405
  
                           
Total revenues
    
23,483,657
    
1,174,434
    
2,842,254
    
27,500,345
  
                           
Expenses
                          
Operation and maintenance
    
2,838,618
    
355,333
    
786,696
    
3,980,647
  
Interest expense
    
2,664,135
    
312,212
    
657,460
    
3,633,807
  
Real estate taxes
    
2,595,346
    
135,325
    
385,587
    
3,116,258
  
Insurance
    
459,801
    
13,913
    
68,552
    
542,266
  
Electricity, water and gas utilities
    
817,484
    
204,527
    
291,608
    
1,313,619
  
Management and partnership management
                          
fees to an affiliate
    
1,339,822
    
35,233
    
83,910
    
1,458,965
  
General and administrative
    
1,139,060
    
129,903
    
104,955
    
1,373,918
  
Depreciation
    
3,986,136
    
163,836
    
393,319
    
4,543,291
  
Amortization
    
1,237,286
    
95,892
    
-
    
1,333,178
  
Bad debt expense
    
(8,060
)
  
14,498
    
1,061
    
7,499
  
                           
Total operating expenses
    
17,069,628
    
1,460,672
    
2,773,148
    
21,303,448
  
                           
Income (loss) before minority interests
    
6,414,029
    
(286,238
)
  
69,106
    
6,196,897
  
                           
Minority interests in operating partnership
    
(2,990,410
)
  
133,446
    
(32,218
)
  
(2,889,182
)
                           
Net income (loss)
  
$
3,423,619
  
$
(152,792
)
$
36,888
  
$
3,307,715
  
                           
Net income (loss) per common share -
                         
basic and diluted
  
$
0.488
  
$
(0.022
)
$
0.005
  
$
0.471
  
                           
Weighted - average shares outstanding -
                          
basic and diluted
    
7,010,146
    
7,010,146
    
7,010,146
    
7,010,146
  

 

See accompanying notes to Pro Forma Consolidated Statement of Income.
F-14

Notes to Pro Forma Consolidated Statements of Income

(A)  
Represents the historical consolidated statement of income of the Company as contained in the historical consolidated financial statements included in previous filings with the Securities and Exchange Commission.

(B)  
Represents the pro forma revenue and expenses for the nine months ended September 30, 2005 attributable to the Properties as if the acquisitions had occurred on January 1, 2004.  Interest expense of $929,000 includes pro forma interest drawn under a line of credit to fund these acquisitions. Management and partnership management fees to an affiliate includes pro forma fees that would have been paid by the Company under its management agreement. Depreciation is computed using the straight-line method over the Properties’ estimated useful lives.

(C)  
Represents the pro forma revenue and expenses for the year ended December 31, 2004 attributable to the Property as if the acquisition had occurred on January 1, 2004. Interest expense of $970,000 includes pro forma interest drawn under a line of credit to fund this acquisition. Management and partnership management fees to an affiliate represents pro forma fees that would have been paid by the Company under its operating agreement. Depreciation is computed using the straight-line method over the Properties’ estimated useful lives.






 
 
 
F-15