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Taubman Realty Group Ltd Partnership – ‘8-K’ for 9/4/97

As of:  Thursday, 9/11/97   ·   For:  9/4/97   ·   Accession #:  917473-97-20   ·   File #:  33-73988

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  As Of                Filer                Filing    For·On·As Docs:Size

 9/11/97  Taubman Realty Group LP           8-K:2,7     9/04/97    4:158K

Current Report   —   Form 8-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Trg Current Report on Form 8-K                        16     43K 
 2: EX-2.A      Purchase and Sale Agreement                           49    204K 
 3: EX-2.B      Amndt. No. 1 to Purchase and Sale Agreement            4     17K 
 4: EX-23       Independent Auditors' Consent                          1      5K 


8-K   —   Trg Current Report on Form 8-K
Document Table of Contents

Page (sequential) | (alphabetic) Top
 
11st Page   -   Filing Submission
2Item 2. Acquisition
"Item 7. Financial Statements and Exhibits
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SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): September 4, 1997 THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP (Exact Name of Registrant as Specified in its Charter) DELAWARE (State or Other Jurisdiction of Incorporation) 33-73988 38-3097317 (Commission File Number) (I.R.S. Employer Identification Number) 200 East Long Lake Road, Suite 300, P.O. Box 200, Bloomfield Hills, Michigan 48303-0200 (Address of Principal Executive Offices) (Zip Code) (248) 258-6800 (Registrant's Telephone Number, Including Area Code) None (Former Name or Former Address, if Changed Since Last Report)
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Item 2. Acquisition. On September 4, 1997, The Taubman Realty Group Limited Partnership (TRG) completed the acquisition of Regency Square shopping center. Taubman Centers, Inc. (TCO) is the managing general partner of TRG. The Center was acquired from a subsidiary of The Prudential Insurance Company of America (the Seller) for approximately $123.9 million in cash. The Seller is unaffiliated with TRG and TCO and the transaction was negotiated at arm's length. In negotiating the purchase price, TRG considered, among other factors, the Center's historical and anticipated cash flows, the nature and terms of the leases, the physical condition of the property, expansion possibilities, and market conditions. TRG borrowed under its existing commercial paper facility and an existing revolving credit facility with Union Bank of Switzerland (New York Branch) to fund the purchase price. Regency Square is an 823 thousand square foot regional shopping center located in Richmond, Virginia. The Center is anchored by Hecht's, JCPenney, and Sears. The Center opened in 1975 and was renovated in 1987. Item 7. Financial Statements and Exhibits. The following financial statements and pro forma information are being supplied as supplementary information to this filing on Form 8-K. a-b Financial Statements and Pro Forma Information. Independent Auditors' Report. Regency Square, Historical Summary of Revenues and Direct Operating Expenses for the Year Ended December 31, 1996. The Taubman Realty Group Limited Partnership, Pro Forma Condensed Consolidated Balance Sheet, June 30, 1997 (unaudited). The Taubman Realty Group Limited Partnership, Pro Forma Condensed Consolidated Statement of Operations, Year Ended December 31, 1996 (unaudited). The Taubman Realty Group Limited Partnership, Pro Forma Condensed Consolidated Statement of Operations, Six Months Ended June 30, 1997 (unaudited). The Taubman Realty Group Limited Partnership, Statement of Estimated Taxable Operating Results of Regency Square and Estimated Cash to be Made Available by Operations of Regency Square for a Twelve Month Period Ended June 30, 1997 (unaudited). 2
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------------------------------------------------------------------------------ Regency Square Historical Summary of Revenues and Direct Operating Expenses for the Year Ended December 31, 1996, and Independent Auditors' Report 3
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INDEPENDENT AUDITORS' REPORT Partners The Taubman Realty Group Limited Partnership Bloomfield Hills, Michigan We have audited the accompanying Historical Summary of Revenues and Direct Operating Expenses of Regency Square (the "Historical Summary"), for the year ended December 31, 1996. This Historical Summary is the responsibility of Regency Square's management. Our responsibility is to express an opinion on the Historical Summary 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 Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion. The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission (for inclusion in a Form 8-K of The Taubman Realty Group Limited Partnership) as described in Note 1 to the Historical Summary and is not intended to be a complete presentation of Regency Square's revenues and expenses. In our opinion, such Historical Summary presents fairly, in all material respects, the revenues and direct operating expenses described in Note 1 to the Historical Summary of Regency Square for the year ended December 31, 1996 in conformity with generally accepted accounting principles. Deloitte & Touche LLP Detroit, Michigan July 31, 1997 4
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REGENCY SQUARE HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996 -------------------------------------------------------------------------------- REVENUES: Minimum rents $ 6,883,568 Percentage rents 1,352,919 Recoveries from tenants 4,485,625 Other 496,983 ----------- $13,219,095 DIRECT OPERATING EXPENSES: Recoverable from tenants $ 3,841,585 Other 326,559 ----------- $ 4,168,144 ----------- EXCESS OF REVENUES OVER DIRECT OPERATING EXPENSES $ 9,050,951 =========== See notes to historical summary. 5
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REGENCY SQUARE NOTES TO HISTORICAL SUMMARY OF REVENUES AND DIRECT OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996 ------------------------------------------------------------ 1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General - Regency Square is a regional shopping center located in Richmond, Virginia, which was owned by a subsidiary of The Prudential Insurance Company of America. Shopping center space is generally leased to specialty retail tenants under short and intermediate term leases which are accounted for as operating leases. Leases typically provide for guaranteed minimum rent, percentage rent, and other charges to cover certain operating costs. Basis of presentation - The accompanying historical summary of revenues and direct operating expenses has been prepared 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 of The Taubman Realty Group Limited Partnership (TRG). The accompanying historical summary is not representative of the actual operations of the shopping center for the period presented since material expenses which may not be comparable to the proposed future operation of Regency Square by TRG have been excluded. Expenses excluded consist of interest and depreciation and amortization. Revenue recognition - Minimum rents are recognized on an accrual basis as earned, which does not materially differ from a straight-line method. Percentage rents are recognized on an accrual basis as earned. Expense recoveries, which include an administrative fee, are recognized as revenue in the period applicable costs are chargeable to tenants. 6
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THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET June 30, 1997 (unaudited) (in thousands) This unaudited Pro Forma Condensed Consolidated Balance Sheet is presented as if TRG's acquisition of the Regency Square shopping center (Regency) had occurred on June 30, 1997. In management's opinion, all adjustments necessary to reflect the effect of this transaction have been made. This unaudited Pro Forma Condensed Consolidated Balance Sheet is not necessarily indicative of what the actual financial position would have been at June 30, 1997, nor does it purport to represent the future financial position of TRG. Adjustments for Acquisition Pro Historical of Regency(A) Forma ---------- -------------- ---------- Assets: Properties, net $ 932,218 $ 124,580 $1,056,798 Other assets 66,008 66,008 ---------- --------- ---------- $ 998,226 $ 124,580 $1,122,806 ========== ========= ========== Liabilities: Debt $1,050,507 $ 123,880 $1,174,387 Capital lease obligation 49,642 49,642 Accounts payable and other liabilities 85,227 700 85,927 Distributions in excess of net income of unconsolidated Joint Ventures 123,097 123,097 ---------- --------- ---------- $1,308,473 $ 124,580 $1,433,053 Accumulated deficiency in assets (310,247) (310,247) ---------- --------- ---------- $ 998,226 $ 124,580 $1,122,806 ========== ========= ========== Allocation of accumulated deficiency in assets: General Partners $ (240,274) $ (240,274) Limited Partners (69,973) (69,973) ---------- ---------- $ (310,247) $ (310,247) ========== ========== (A) Represents TRG's acquisition of Regency for approximately $123.9 million. Transaction costs were approximately $0.7 million. The purchase price was allocated primarily to land, buildings and site improvements. TRG borrowed under its existing commercial paper facility and an existing revolving credit facility to fund the acquisition. 7
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THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, 1996 (unaudited) (in thousands, except unit data) This unaudited Pro Forma Condensed Statement of Operations is presented as if (i) TRG's acquisition of the Regency Square shopping center, (ii) TRG's acquisition of interests in Paseo Nuevo, Fairlane Town Center and La Cumbre shopping centers, and (iii) TRG's issuances of units of partnership interest and use of the proceeds to pay down floating rate debt, had occurred as of January 1, 1996. In management's opinion, all adjustments necessary to reflect the effects of these transactions have been made. This unaudited Pro Forma Condensed Statement of Operations is not necessarily indicative of what actual results of operations would have been had these transactions occurred on January 1, 1996, nor does it purport to represent the results of operations for future periods. [Enlarge/Download Table] Adjustments Adjustments for for Acquisition Pro Other Pro Historical of Regency(A) Forma Transactions Forma ---------- ------------- ----- ------------ ----- Revenues $262,729 $ 13,219 $275,948 $ 22,833(B) $298,781 -------- -------- -------- -------- -------- Operating Costs: Recoverable expenses $ 72,093 $ 3,842 $ 75,935 $ 7,661(B) $ 83,596 Other operating 26,518 327 26,845 3,281(B) 30,126 Management, leasing and development services 4,212 4,212 4,212 General and administrative 21,803 21,803 21,803 Interest 70,454 8,141 78,595 (966)(B),(C) 77,629 Depreciation and amortization 35,770 3,044 38,814 3,527(B) 42,341 -------- -------- -------- -------- -------- $230,850 $ 15,354 $246,204 $ 13,503 $259,707 -------- -------- -------- -------- -------- Income before equity in income of unconsolidated Joint Ventures and before extraordinary items $ 31,879 $ (2,135) $ 29,744 $ 9,330 $ 39,074 Equity in income before extraordinary items of unconsolidated Joint Ventures 52,215 52,215 (1,029)(B) 51,186 -------- -------- -------- -------- -------- Income before extraordinary items $ 84,094 $ (2,135) $ 81,959 $ 8,301 $ 90,260 ======== ======== ======== ======== ======== Allocation of income before extraordinary items: General Partners $ 65,913 $ 64,239 $ 69,901 Limited Partners 18,181 17,720 20,359 -------- -------- -------- $ 84,094 $ 81,959 $ 90,260 ======== ======== ======== Earnings per Unit of Partnership Interest: Income before extraordinary items $ 1,290 $ 1,259 $ 1,289 ======== ======== ======== Weighted Average Number of Units of Partnershsip Interest Outstanding 65,109 65,109 4,890(B),(C) 69,999 ======== ======== ======== ======== See the accompanying Notes and Significant Assumptions 8
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THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP NOTES AND SIGNIFICANT ASSUMPTIONS Year Ended December 31, 1996 (A) Acquisition of Regency Square --------------------------------- In September 1997, TRG acquired Regency Square shopping center for approximately $123.9 million. Transaction costs were approximately $0.7 million. TRG borrowed under its existing commercial paper facility and an existing revolving credit facility to fund the acquisition (average rate of 6.4% in 1996). The purchase price was allocated primarily to land and to buildings and site improvements, which will be depreciated over 40 years and 15 years, respectively. Pro forma revenues and expenses other than interest and depreciation represent the historical amounts of Regency Square. (B) Acquisition of Interests in Centers --------------------------------------- In June 1996, TRG acquired the Paseo Nuevo shopping center, located in Santa Barbara, California, for $37 million. TRG used unsecured debt (average rate of 7.4% in 1996) to fund the acquisition. The Center is owned subject to two participating ground leases with remaining terms of approximately 70 years. TRG also assumed a $2.0 million note receivable due from the lessor of one of the ground leases. The note accrues interest at an annual rate of 10%. The purchase price was allocated primarily to the buildings and site improvements, which are being depreciated over 40 years and 15 years, respectively. Pro forma revenues and expenses other than interest, depreciation and management fee expense are based on unaudited information provided by the seller of the property. In July 1996, TRG completed transactions that resulted in the acquisition of the 75% interest in Fairlane Town Center (Fairlane), previously held by a joint venture partner. In connection with the transactions, TRG issued to the joint venture partner 3,096 units of partnership interest, exchangeable for approximately 6.1 million shares of Taubman Centers, Inc. (TCO) common stock, which had a closing price of $10.75 per share on the day prior to the issuance date. TCO is the managing general partner of TRG. TRG also assumed mortgage debt of $26 million, representing the former joint venture partner's beneficial interest in the $34.6 million mortgage encumbering the property. TRG used unsecured debt (average rate of 7.4% in 1996) to fund the repayment of the 9.73% mortgage and the prepayment penalty of approximately $1.2 million. The acquisition, which resulted in TRG owning 100% of Fairlane, was accounted for at fair value. Prior to the acquisition date, TRG's interest in Fairlane was accounted for under the equity method. The purchase price was allocated primarily to land and to buildings and site improvements, which are being depreciated over 40 years and 15 years, respectively. Pro forma revenues and expenses, other than interest and depreciation and amortization, represent the historical amounts of Fairlane. In December 1996, TRG acquired La Cumbre Plaza in Santa Barbara, California for $22.25 million in cash. TRG used proceeds from an equity offering (Note C) to fund the acquisition. The Center is subject to four ground leases (three of which are participating). The leases expire in 2028. The purchase price was allocated to buildings and site improvements, which are being depreciated over 40 years and 15 years, respectively. Pro forma revenues and expenses other than interest, depreciation, and management fee are based on unaudited information provided by the seller of the property. 9
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THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP NOTES AND SIGNIFICANT ASSUMPTIONS Year Ended December 31, 1996 - (Continued) (C) Issuances of Units of Partnership Interest ---------------------------------------------- In December 1996, TRG issued 3,048 units of partnership interest to TCO for the $75 million proceeds from TCO's December 1996 equity offering of 5.97 million shares of common stock. Also in December 1996, TCO exchanged 652 thousand shares of common stock for 333 TRG units of partnership interest newly issued under TRG's incentive option plan. TRG used the net proceeds totaling $82.3 million from the issuance of units to pay down short term floating rate debt (average rate of 7.0%) and to acquire La Cumbre Plaza. 10
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THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS Six Months Ended June 30, 1997 (unaudited) (in thousands, except unit data) This unaudited Pro Forma Condensed Consolidated Statement of Operations is presented as if TRG's acquisition of Regency Square shopping center had occurred on January 1, 1996. In management's opinion, all adjustments necessary to reflect the effect of this transaction have been made. This unaudited Pro Forma Condensed Consolidated Statement of Operations is not necessarily indicative of what actual results of operations would have been had these transactions been completed as of January 1, 1996, nor does it purport to represent the results of operations for future periods. Adjustments for Acquisition Pro Historical of Regency(A) Forma ---------- -------------- ---------- Revenues $145,242 $ 6,453 $151,695 -------- -------- -------- Operating Costs: Recoverable expenses $ 39,291 $ 1,750 $ 41,041 Other operating 18,238 192 18,430 Management, leasing and development services 1,928 1,928 General and administrative 12,070 12,070 Interest 34,614 3,981 38,595 Depreciation and amortization 20,334 1,880 22,214 -------- -------- -------- $126,475 $ 7,803 $134,278 -------- -------- -------- Income before equity in income of unconsolidated Joint Ventures and before extraordinary items $ 18,767 $ (1,350) $ 17,417 Equity in income before extra- ordinary items of unconsolidated Joint Ventures 26,987 26,987 -------- -------- -------- Income before extraordinary items $ 45,754 $ (1,350) $ 44,404 ======== ======== ======== Allocation of income before extraordinary items: General Partners $ 35,434 $ 34,388 Limited Partners 10,320 10,016 -------- -------- $ 45,754 $ 44,404 ======== ======== Earnings per Unit of Partnership Interest: Income before extraordinary items $ 654 $ 634 ======== ======== Weighted Average Number of Units of Partnership Interests Outstanding 69,999 69,999 ======== ======== See the accompanying Notes and Significant Assumptions 11
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THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP NOTES AND SIGNIFICANT ASSUMPTIONS Six Months Ended June 30, 1997 (A) Acquisition of Regency Square --------------------------------- In September 1997, TRG acquired Regency Square shopping center for approximately $123.9 million. Transaction costs were approximately $0.7 million. TRG borrowed under its existing commercial paper facility and an existing revolving credit facility to fund the acquisition (average rate of 6.4% for the six months ended June 30, 1997). The purchase price was allocated primarily to land and to buildings and site improvements, which will be depreciated over 40 years and 15 years, respectively. Pro forma revenues and expenses other than interest and depreciation are based on unaudited information provided by the seller of the property. 12
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THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS OF REGENCY SQUARE AND ESTIMATED CASH TO BE MADE AVAILABLE BY OPERATIONS OF REGENCY SQUARE For a twelve-month period ended June 30, 1997 (unaudited) (in thousands) Revenues $ 13,064 -------- Operating Costs: Recoverable expenses $ 3,671 Other operating 356 Interest 8,113 Depreciation and amortization 3,993 -------- $ 16,133 -------- Estimated taxable operating loss $ (3,069) Add back depreciation and amortization 3,993 -------- Estimated cash to be made available by operations $ 924 ======== Note: This statement of estimated taxable operating results and estimated cash to be made available from operations is an estimate of operating results of Regency Square for a period of twelve months and does not purport to reflect actual results for any period. 13
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c. Exhibits. Exhibit Number Description -------------- ----------- 2 (a) Purchase and Sale Agreement By and Between One Federal Street Joint Venture and The Taubman Realty Group Limited Partnership, dated July 16, 1997 (Purchase and Sale Agreement) (without exhibits or schedules, which will be supplementally provided to the Securities and Exchange Commission upon its request). 2 (b) First Amendment to Purchase and Sale Agreement, dated August 15, 1997 (without exhibits or schedules, which will be supplementally provided to the Securities and Exchange Commission upon its request). 23 Consent of Deloitte & Touche LLP. 14
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SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized. THE TAUBMAN REALTY GROUP LIMITED PARTNERSHIP Date: September 10, 1997 By: /s/ Lisa A. Payne ---------------------------- Lisa A. Payne Executive Vice President and Chief Financial Officer 15
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EXHIBIT INDEX Exhibit Number Description -------------- ----------- 2 (a) Purchase and Sale Agreement By and Between One Federal Street Joint Venture and The Taubman Realty Group Limited Partnership, dated July 16, 1997 (Purchase and Sale Agreement) (without exhibits or schedules, which will be supplementally provided to the Securities and Exchange Commission upon its request). 2 (b) First Amendment to Purchase and Sale Agreement, dated August 15, 1997 (without exhibits or schedules, which will be supplementally provided to the Securities and Exchange Commission upon its request). 23 Consent of Deloitte & Touche LLP. 16

Dates Referenced Herein   and   Documents Incorporated by Reference

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This ‘8-K’ Filing    Date First  Last      Other Filings
9/29/97
Filed on:9/11/97
9/10/9715
For Period End:9/4/9712
8/15/971416
7/31/974
7/16/971416
6/30/9721310-Q
12/31/9621010-K,  11-K
1/1/96811
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