bir8kexecutivehouse.htm
UNITED
STATES
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
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Date
of Report (Date of Earliest event reported)
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August
11, 2008
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Berkshire
Income Realty, Inc.
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(Exact
name of Registrant as specified in its charter)
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Maryland
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001-31659
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32-0024337
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(State
or other jurisdiction of incorporation)
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(Commission
File Number)
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(IRS
Employer Identification No.)
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One
Beacon Street, Boston, Massachusetts
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02108
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(Address
of principal executive offices)
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(Zip
Code)
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Registrants telephone number, including area code
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(617)
523-7722
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(Former
name or former address, if changes since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General Instruction A.2. below):
[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement
On August
11, 2008 the operating partnership of the Registrant, Berkshire Income Realty –
OP, L.P., through its wholly owned subsidiaries, BIR Executive GP, L.L.C. and
BIR Executive LP, L.L.C. (collectively, the “Buyer”), simultaneously entered
into purchase and sale agreements to purchase 100% of the partnership interests
(the “Partnership Interests”) of Executive House Associates, the owner of Executive
House Apartments (“Executive House”), a 302 unit multifamily apartment building
located in Philadelphia, Pennsylvania. One agreement (the “Primary
Agreement”) was entered into with EHGP, Inc., Eric Blumenfeld, and EHA
Acquisition, L.P. (collectively, the
“Majority Seller”) with respect to approximately 96.5% of the Partnership
Interests and the other agreement (the “Secondary Agreement” and, together with
the Primary Agreement, the “Agreements”) was entered into with Anthony W.
Packer, Jerome D. Winnick and Shoreline/Marin LLC (collectively, the “Minority
Seller” and, together with the Majority Seller, the “Sellers”) with respect to
approximately 3.5% of the Partnership Interests. The purchase price
for the Partnership Interests is approximately $19,328,000 in cash plus the
assumption of approximately $30,672,000 of outstanding mortgage debt secured by
the property, and is subject to customary operating prorations and adjustments
as provided for in the Agreements. The Sellers are unaffiliated third
parties. The closing of the purchase and sale of the Partnership
Interests under both Agreements is subject to certain conditions specified in
the Agreements.
The
Primary Agreement provides for an inspection period commencing on the date of
the Primary Agreement and ending on August 7, 2008, during which the Buyer (i)
may enter the property to perform due diligence activities and (ii) shall have
the right to terminate the Primary Agreement. Under the Primary
Agreement, the Buyer shall indemnify the Majority Seller from any and all
liabilities, claims, costs and expenses arising out of the Buyer’s entry onto
the property during the inspection period. Further, on or before
August 11, 2008, the Buyer shall submit an application for the assumption of the
outstanding mortgage debt and the Buyer and Majority Seller shall seek the
Lenders written consent to the proposed transaction.
The
Agreements provide that the closing of the purchase and sale of the Partnership
Interests will take place on the date that is ten days after the date of Buyer’s
receipt of the lender’s written consent, or such other date that the parties
mutually agree. Under the Primary Agreement, in the event that the
lender’s written consent is not obtained on or before November 5, 2008, either
the Buyer or the Majority Seller will have the right to terminate the Primary
Agreement. The Primary Agreement provides that in the event that (i)
the Majority Seller fails to satisfy any of its obligations under the Primary
Agreement, the Buyer may (x) waive such failed obligations, (y) terminate the
Primary Agreement and recover its actual, out-of-pocket expenses (not to exceed
$250,000), or (z) compel specific performance by the Majority Seller (or in
certain instances pursue any and all other rights and remedies at law or in
equity on account thereof) and (ii) the Buyer fails to satisfy its closing
obligations under the Primary Agreement, the Majority Seller may terminate the
Primary Agreement and retain the $1,000,000 deposit as the full and liquidated
damages in lieu of all other rights and remedies at law or in equity on account
thereof. The Secondary Agreement contains similar termination
provisions. Both Agreements provide for cross-default and cross-termination
provisions.
Further,
under the Primary Agreement, EHGP, Inc. and Eric Blumenfeld shall indemnify the
Buyer from any liabilities, claims, demands, losses, expenses or damages (i)
resulting from the breach of any representations, warranties, covenants and
other obligations of the Majority Seller under the Primary Agreement or the
Minority Seller under the Secondary Agreement, subject to certain limitations,
or (ii) arising out of (x) a third party claim and (y) an act or omission of the
Majority Seller or the Minority Seller occurring prior to the closing or
otherwise arising out of the ownership or operation of the property prior to the
closing. In addition, the Primary Agreement provides that the Buyer
shall indemnify the Majority Seller from any liabilities, claims, demands,
losses, expenses or damages arising out of (x) a third party claim and (y) an
act or omission of the Buyer occurring after the closing or otherwise arising
out of the ownership or operation of the property after the
closing.
The
Agreements provide that the Buyer may elect to require the Seller to convert
Executive House Associates into a Delaware limited liability company prior to
closing in the event that the Buyer determines that there are structural or tax
advantages to such conversion.
The
acquisition of the Partnership Interests is intended to qualify as a replacement
property in a transaction structured to comply with the requirements of a
Section 1031 tax deferred exchange (“1031 Exchange”) under the Internal Revenue
Code of 1986, as amended, (the “Tax Code”). As required by
the Tax Code, a qualified 1031 Exchange intermediary was retained to execute the
Executive House acquisition transaction.
The
forgoing description of the Agreements does not purport to be complete and is
qualified in its entirety by reference to the full text of the Agreements, which
are filed with this report as Exhibits 99.1 and 99.2 and are incorporated herein
by reference.
Item
9.01 Financial Statements and Exhibits
(d) Exhibits
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Exhibit
99.1
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Purchase
and Sale Agreement by and among EHGP, Inc., a Pennsylvania corporation ,
Eric Blumenfeld, an individual, EHA Acquisition, L.P., a Pennsylvania
limited partnership, BIR Executive GP, L.L.C. and BIR Executive LP,
L.L.C.
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Exhibit
99.2
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Purchase
and Sale Agreement by and among Anthony W.
Packer, an individual, Jerome D. Winnick , an individual,
Shoreline/Marin LLC, a Delaware limited liability company, BIR Executive
GP, L.L.C. and BIR Executive LP, L.L.C.
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SIGNATURES
Pursuant
to the requirements of the Securities and Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the undersigned
hereunto duly authorized.
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Berkshire
Income Realty, Inc.
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(Registrant)
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Date: August 13,
2008
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/s/
Christopher M. Nichols
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Name: Christopher
M. Nichols
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Title: Chief
Accounting Officer
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