SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A-1 CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 21, 2001 AmeriVest Properties Inc. ------------------------- (Exact name of registrant as specified in its charter) Maryland 1-14462 84-1240264 ---------------------------- ------------------------ ------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 1780 South Bellaire Street, Suite 515, Denver, Colorado 80222 ------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 297-1800 Item 7. Financial Statements And Exhibits. (a) Financial Statements of Real Estate Property Acquired: Report of Independent Public Accountants F-1 Statements of Revenue and Certain Expenses - for the nine months ended September 30, 2001 (Unaudited) and for the year ended December 31, 2000 F-2 Notes to Statements of Revenue and Certain Expenses F-3 (b) Unaudited Pro Forma Financial Information: Pro Forma Financial Information (Unaudited) F-5 Pro Forma Consolidated Balance Sheet as of September 30, 2001 (Unaudited) F-6 Pro Forma Consolidated Statements of Operations (Unaudited): For the nine months ended September 30, 2001 F-7 For the year ended December 31, 2000 F-8 Notes to Pro Forma Consolidated Financial Statements (Unaudited) F-9 (c) Statement of Estimated Taxable Operating Results and Cash to be Made Available by Operations for the Year ended December 31, 2000 (Unaudited) F-11 Note to Statement of Estimated Taxable Operating Results and Cash to be Made Available by Operations F-12 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Management of AmeriVest Properties Inc.: We have audited the accompanying statement of revenue and certain expenses of the Kellogg Office Building (see Note 1) for the year ended December 31, 2000. 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 auditing standards generally accepted in the 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. This statement of revenue and certain expenses has been prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Property's revenue and expenses and/or financial position. In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenue and certain expenses of the Kellogg Office Building for the year ended December 31, 2000, in conformity with accounting principles generally accepted in the United States. /s/ Arthur Andersen LLP Denver, Colorado January 11, 2002 F-1 THE KELLOGG OFFICE BULDING STATEMENTS OF REVENUE AND CERTAIN EXPENSES For the Nine For the Year Months Ended Ended September 30, December 31, 2001 2000 ---------- ---------- (Unaudited) REVENUE: Rental revenue $1,655,705 $2,230,990 Other revenue 69,889 83,215 ---------- ---------- Total revenue 1,725,594 2,314,205 ---------- ---------- CERTAIN EXPENSES: Repairs and maintenance 102,229 106,748 Utilities 99,340 155,316 Property taxes 141,071 188,094 Property management fees 45,539 57,977 Operating services 251,169 345,754 ---------- ---------- Total expenses 639,348 853,889 ---------- ---------- EXCESS OF REVENUE OVER CERTAIN EXPENSES $1,086,246 $1,460,316 ========== ========== The accompanying notes are an integral part of these financial statements. F-2 THE KELLOGG OFFICE BUILDING NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 2000 NOTE 1 - BASIS OF PRESENTATION The accompanying statement of revenue and certain expenses reflect the operations of the Kellogg Office Building (the "Kellogg Building" or the "Property"). The Property consists of one office building located in Littleton, Colorado. The Property contains approximately 113,000 net rentable square feet and is located on approximately 5 acres of land. As of December 31, 2000, the Property had an occupancy percentage of approximately 94%. The Property was acquired by AmeriVest Properties Inc. and subsidiaries ("AmeriVest") from an unrelated party on December 21, 2001 for $13,550,000, which was paid with $9,500,000 from the proceeds of a loan from US Bank National Association and the balance from a portion of the proceeds of the July 2001 public offering. In addition, AmeriVest incurred approximately $250,000 related acquisition fees and costs, of which, $203,440 represents the advisory fee due to Sheridan Realty Advisors, LLC in connection with the acquisition per the Property Management and Advisory Agreement. The accounting records of the Property are maintained on the accrual basis. The accompanying statements of revenue and certain expenses are prepared pursuant to the rules and regulations of the Securities and Exchange Commission, and exclude certain expenses such as interest, depreciation and amortization, professional fees and other costs not directly related to future operations of the Property. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of revenue and expenses during the reporting period. The ultimate results could differ from those estimates. Interim Information (Unaudited) ------------------------------- In the opinion of management, the unaudited information as of September 30, 2001 included herein contains all the adjustments necessary, which are of a normal recurring nature, to present fairly the revenue and certain expenses for the nine months ended September 30, 2001. Results of interim periods are not necessarily indicative of results to be expected for the year. Management is not aware of any material factors that would cause the information included herein to not be indicative of future operating results. F-3 THE KELLOGG OFFICE BUILDING NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES DECEMBER 31, 2000 NOTE 2 - OPERATING LEASES The Property's revenue is obtained from tenant rental payments as provided for under non-cancelable operating leases, many of which are renewable. Future minimum rentals on these leases, excluding tenant reimbursements of operating expenses, as of December 31, 2000, are as follows: Year Ending December 31: 2001 $ 1,873,826 2002 1,609,026 2003 1,165,870 2004 499,115 2005 150,767 Thereafter -- ----------- $ 5,298,604 =========== F-4 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES PRO FORMA FINANCIAL INFORMATION (Unaudited) The accompanying unaudited pro forma consolidated balance sheet presents the historical financial information of AmeriVest as of September 30, 2001 as adjusted for the acquisition of the Kellogg Building, as if the transaction had occurred on September 30, 2001. The accompanying unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2001 and the year ended December 31, 2000 combine the historical operations of AmeriVest with the historical operations of the Kellogg Building as if the transaction had occurred on January 1, 2000. The unaudited pro forma consolidated financial statements have been prepared by AmeriVest management based upon the historical financial statements of AmeriVest and the Kellogg Building. These pro forma statements may not be indicative of the results that actually would have occurred if the combination had been in effect on the dates indicated or which may be obtained in the future. The pro forma financial statements should be read in conjunction with the historical financial statements included in AmeriVest's previous filings with the Securities and Exchange Commission. F-5 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 2001 (Unaudited) Acquisition of the AmeriVest Kellogg Pro Forma (Historical) Building Combined ------------ ------------ ------------ ASSETS Investment in Real Estate Land $ 9,960,376 $ 2,773,093 (b) $ 12,733,469 Building and improvements 50,417,352 11,092,372 (b) 61,509,724 Furniture, fixtures and equipment 155,808 -- 155,808 Tenant improvements 1,431,132 -- 1,431,132 Tenant leasing commissions 271,632 -- 271,632 Less: accumulated depreciation and amortization (2,717,634) -- (2,717,634) ------------ ------------ ------------ Net Investment in Real Estate 59,518,666 13,865,465 73,384,131 Cash and cash equivalents 9,216,887 (3,929,975)(a) 5,286,912 Accounts receivable 156,853 -- 156,853 Deferred rent receivable 324,330 -- 324,330 Deferred financing costs, net 463,351 81,399 (c) 544,750 Prepaid expenses, escrows and other assets 1,346,069 -- 1,346,069 ------------ ------------ ------------ Total Assets $ 71,026,156 $ 10,016,889 $ 81,043,045 ============ ============ ============ LIABILITIES Mortgage loans and notes payable $ 41,875,236 $ 9,500,000 (c) $ 51,375,236 Accounts payable and accrued expenses 1,662,097 203,440 (d) 1,865,537 Accrued real estate taxes 810,955 141,071 (b) 952,026 Prepaid rents and security deposits 990,573 110,353 (b) 1,100,926 Dividends payable 826,605 -- 826,605 ------------ ------------ ------------ Total Liabilities 46,165,466 9,954,864 56,120,330 ------------ ------------ ------------ OWNERS' EQUITY Common stock 6,613 -- 6,613 Capital in excess of par value 30,709,501 62,025 (e) 30,771,526 Distributions in excess of accumulated earnings (5,855,424) -- (5,855,424) ------------ ------------ ------------ Total Owners' Equity 24,860,690 62,025 24,922,715 ------------ ------------ ------------ Total Liabilities and Owners' Equity $ 71,026,156 $ 10,016,889 $ 81,043,045 ============ ============ ============ See notes to the pro forma consolidated financial statements. F-6 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 2001 (Unaudited) Historical -------------------------- Kellogg Pro Forma Pro Forma AmeriVest Building Adjustments Combined ----------- ----------- ----------- ----------- REAL ESTATE OPERATING REVENUE Rental revenue $ 7,496,114 $ 1,725,594 $ -- $ 9,221,708 ----------- ----------- ----------- ----------- REAL ESTATE OPERATING EXPENSES Property Operating Expenses Operating expenses 1,955,488 448,172 -- 2,403,660 Real estate taxes 594,282 141,071 -- 735,353 Management fees 380,653 45,539 40,242 (f) 466,434 General and administrative 521,266 4,566 -- 525,832 Impairment of deferred rents receivable 326,113 -- -- 326,113 Interest 2,336,038 -- 447,850 (g) 2,783,888 Depreciation and amortization 1,667,362 -- 207,982 (h) 1,875,344 ----------- ----------- ----------- ----------- 7,781,202 639,348 696,074 9,116,624 ----------- ----------- ----------- ----------- OTHER INCOME Interest income 92,366 -- -- 92,366 Equity in loss of unconsolidated affiliate (10,843) -- -- (10,843) ----------- ----------- ----------- ----------- 81,523 -- -- 81,523 ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE GAIN ON SALE OF REAL ESTATE (203,565) 1,086,246 (696,074) 186,607 GAIN ON SALE OF REAL ESTATE 1,143,698 -- -- 1,143,698 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 940,133 $ 1,086,246 $ (696,074) $ 1,330,305 =========== =========== =========== =========== NET INCOME PER COMMON SHARE Basic $ 0.23 $ 0.33 =========== =========== Diluted $ 0.23 $ 0.32 =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 4,020,898 4,020,898 =========== =========== Diluted 4,143,767 4,143,767 =========== =========== See notes to the pro forma consolidated financial statements. F-7 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS YEAR ENDED DECEMBER 31, 2000 (Unaudited) Historical -------------------------- Kellogg Pro Forma Pro Forma AmeriVest Building Adjustments Combined ----------- ----------- ----------- ----------- REAL ESTATE OPERATING REVENUE Rental revenue $ 7,222,437 $ 2,314,205 $ -- $ 9,536,642 ----------- ----------- ----------- ----------- REAL ESTATE OPERATING EXPENSES Property Operating Expenses Operating expenses 1,946,633 600,950 -- 2,547,583 Real estate taxes 668,224 188,094 -- 856,318 Management fees 344,636 57,977 55,737 (f) 458,350 General and administrative 517,019 6,868 -- 523,887 Severance expense 255,442 -- -- 255,442 Interest 2,167,869 -- 787,133 (g) 2,955,002 Depreciation and amortization 1,205,795 -- 277,309 (h) 1,483,104 ----------- ----------- ----------- ----------- 7,105,618 853,889 1,120,179 9,079,686 ----------- ----------- ----------- ----------- OTHER INCOME Interest income 55,874 -- -- 55,874 Equity in loss of unconsolidated affiliate (52,808) -- -- (52,808) ----------- ----------- ----------- ----------- 3,066 -- -- 3,066 ----------- ----------- ----------- ----------- INCOME (LOSS) BEFORE GAIN ON SALE OF REAL ESTATE 119,885 1,460,316 (1,120,179) 460,022 GAIN ON SALE OF REAL ESTATE 2,556,839 -- -- 2,556,839 ----------- ----------- ----------- ----------- NET INCOME (LOSS) $ 2,676,724 $ 1,460,316 $(1,120,179) $ 3,016,861 =========== =========== =========== =========== NET INCOME PER COMMON SHARE Basic and diluted $ 1.07 $ 1.21 =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING Basic 2,492,584 2,492,584 =========== =========== Diluted 2,495,919 2,495,919 =========== =========== See notes to the pro forma consolidated financial statements. F-8 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited pro forma consolidated financial statements are presented to reflect the acquisition of the Kellogg Building by AmeriVest. The accompanying unaudited pro forma consolidated balance sheet presents the historical financial information of AmeriVest as of September 30, 2001 as adjusted for the acquisition of the Kellogg Building, as if the transaction had occurred on September 30, 2001. The accompanying unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2001 and the year ended December 31, 2000 combine the historical operations of AmeriVest with the historical operations of the Kellogg Building as if the transaction had occurred on January 1, 2000. NOTE 2 - PRO FORMA ADJUSTMENTS The unaudited pro forma consolidated financial statements reflect the following pro forma adjustments: (a) The net cash paid for the Kellogg Building consists of the following: Purchase price $ 13,550,000 Estimated acquisition costs 50,000 Advisory fee per Sheridan Realty Advisors, LLC agreement 203,440 Loan origination fees 81,399 Less: mortgage loan (9,500,000) Less: accrued advisory fee (203,440) Less: credit for accrued real estate taxes (141,071) Less: credit for security deposits (110,353) ------------ Cash paid $ 3,929,975 ============ (b) The purchase price of the Kellogg Building was allocated to the assets and liabilities based on estimated fair values. (c) The loan in the amount of $9.5 million from US Bank bears interest at 4.77% for the initial 12 months and matures on December 21, 2004. After the initial 12 months, the rate floats on one of three indices elected by AmeriVest, provided by US Bank, plus 250 basis points. AmeriVest paid a 0.75% loan origination fee plus additional loan costs, which have been capitalized and are being amortized over the life of the loan. F-9 (d) Advisory fee of $203,440 due to Sheridan Realty Advisors, LLC in connection with the acquisition of the Kellogg Building per the Property Management and Advisory Agreement. (e) Fair value of 85,445 incentive warrants granted to Sheridan Realty Advisors, LLC in connection with the acquisition of the Kellogg Building per the Property Management and Advisory Agreement. (f) Adjustment to management fees pursuant to the Property Management and Advisory Agreement: Nine Months Ended Year Ended September 30, December 31, 2001 2000 --------- --------- Management fees per Sheridan Realty Advisors, LLC agreement $ 85,781 $ 113,714 Less: historical management fees (45,539) (57,977) --------- --------- Pro forma adjustment $ 40,242 $ 55,737 ========= ========= (g) Interest expense to be recognized related to the mortgage loan. Includes loan interest (assumed interest rates of 6% and 8% for the nine months ended September 30, 2001 and the year ended December 31, 2000, respectively) and the amortization of the loan origination fee. (h) Depreciation expense calculated assuming a 40-year useful life. NOTE 3 - INCOME PER SHARE Pro forma income per common share for the nine months ended September 30, 2001 and the year ended December 31, 2000 is computed based on the weighted average number of common shares outstanding during the periods presented. F-10 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS AND CASH TO BE MADE AVAILABLE BY OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 (Unaudited) The following represents an estimate of the taxable operating results and cash to be made available by operations expected to be generated by AmeriVest (including the operations of the Kellogg Building) based upon the pro forma consolidated statement of operations for the year ended December 31, 2000. These estimated results do not purport to represent results of operations for these properties in the future and were prepared on the basis described in the accompanying notes, which should be read in conjunction herewith. Revenue $9,552,600 ---------- Expenses: Operating expenses 2,547,583 Real estate taxes 856,318 Management fees 458,350 General and administrative 523,887 Severance expense 255,442 Interest 2,955,002 Depreciation and amortization 1,021,036 ---------- Total expenses 8,617,618 ---------- Estimated Taxable Operating Income 934,982 Add back depreciation and amortization 1,021,036 ---------- Estimated Cash to be Made Available by Operations $1,956,018 ========== F-11 AMERIVEST PROPERTIES INC. AND SUBSIDIARIES NOTE TO STATEMENT OF ESTIMATED TAXABLE OPERATING RESULTS AND CASH TO BE MADE AVAILABLE BY OPERATIONS (Unaudited) NOTE 1 - BASIS OF PRESENTATION Depreciation has been estimated based upon an allocation of the purchase price of the Kellogg Building to land (20%) and building (80%) and assuming (for tax purposes) a 39-year useful life applied on a straight-line method. No income taxes have been provided because the Company is organized and operates in such a manner so as to qualify as a Real Estate Investment Trust ("REIT") under the provisions of the Internal Revenue Code (the "Code"). Accordingly, the Company generally will not pay Federal income taxes provided that distributions to its stockholders equal at least the amount of its REIT taxable income as defined under the Code. F-12 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. AMERIVEST PROPERTIES INC. February 28, 2002 By: /s/ D. Scott Ikenberry ------------------------------------ D. Scott Ikenberry Chief Financial Officer F-13