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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
Date of Report (Date of earliest event reported): August 20, 1997
BRE PROPERTIES, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Maryland 0-5305 94-1722214
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
One Montgomery Street
Telesis Tower, Suite 2500
San Francisco, California 94104-5525
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(415) 445-6530
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 16, 1997, BRE Properties, Inc. ("BRE"), entered into an agreement (as
amended August 19, 1997) for purchase and sale of real property to purchase
Lakeshore Landing Apartments ("Community") with Eastrich No. 92 Corporation, a
Massachusetts corporation and Eastrich Lakeshore Landing Limited Partnership, a
Massachusetts limited partnership (collectively, "Seller"), which are unrelated
third parties. On August 20, 1997, BRE completed the purchase of the
Community. Lakeshore Landing is a 308-unit apartment community on 7.7 acres
of land in San Mateo, California. The purchase price for the Community was
$42.5 million. The purchase was funded through borrowings on BRE's line of
credit and cash and cash equivalent balances.
The Community was constructed in 1988 with an average unit size of 727 square
feet, and the current average monthly rent per unit was approximately $1,409.
The price of the Community was determined through negotiations with the Seller.
BRE believes the purchase price of the Community to be competitive under the
current market conditions.
The description contained herein is qualified in its entirety by reference to
the purchase agreement dated July 16, 1997 by BRE and Seller and the press
release dated August 26, 1997, attached hereto as Exhibits 2.1 and 99.1,
respectively, and incorporated herein by reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
As of the date of filing of this Current Report on Form 8-K, it is impracticable
for the Registrant to provide the financial statements required by this Item
7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial statements
shall be filed by amendment to this Form 8-K by November 3, 1997, which is not
later than 60 days after September 4, 1997.
(b) PRO FORMA FINANCIAL INFORMATION
As of the date of filing of this Current Report on Form 8-K, it is impracticable
for the Registrant to provide the financial statements required by this Item
7(b). In accordance with Item 7(b) of Form 8-K, such financial statements shall
be filed by amendment to this Form 8-K by November 3, 1997, which is not later
than 60 days after September 4, 1997.
(c) EXHIBITS
Exhibit No. Description
2.1 Agreement for Purchase and Sale of Real Property
between Registrant and the Seller, as amended.
99.1 Press release dated August 26, 1997.
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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.
BRE PROPERTIES, INC.
(Registrant)
Date: September 3, 1997 /s/ LeRoy E. Carlson
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LeRoy E. Carlson
Chief Financial Officer
(Principal Financial and Accounting
Officer)
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Exhibit 2.1
AGREEMENT FOR PURCHASE AND SALE
OF
REAL PROPERTY
JULY 16, 1997
TABLE OF CONTENTS
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PAGE
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ARTICLE I BASIC DEFINITIONS.............................................-1-
ARTICLE II PURCHASE AND SALE.............................................-2-
Section 2.1 Purchase and Sale..........................................-2-
Section 2.2 Purchase Price.............................................-3-
Section 2.3 Buyer's Review and Seller's Disclaimer.....................-3-
Section 2.4 Permitted Title Exceptions.................................-4-
ARTICLE III CONDITIONS PRECEDENT..........................................-5-
Section 3.1 Conditions.................................................-5-
Section 3.2 Failure or Waiver of Conditions Precedent..................-6-
ARTICLE IV COVENANTS, WARRANTIES AND REPRESENTATIONS.....................-6-
Section 4.1 Seller's Warranties and Representations....................-6-
Section 4.2 Seller's Covenants.........................................-8-
Section 4.3 Buyer's Warranties and Representations.....................-8-
Section 4.4 Limitations................................................-8-
Section 4.5 Notice of Adverse Changes..................................-9-
ARTICLE V DEPOSIT......................................................-10-
ARTICLE VI ESCROW AND CLOSING...........................................-10-
Section 6.1 Escrow Arrangements.......................................-10-
Section 6.2 Closing...................................................-12-
Section 6.3 Prorations................................................-12-
Section 6.4 Other Closing Costs.......................................-13-
Section 6.5 Further Documentation.....................................-13-
ARTICLE VII MISCELLANEOUS................................................-14-
Section 7.1 Damage or Destruction.....................................-14-
Section 7.2 Brokerage Commissions and Finder's Fees...................-14-
Section 7.3 Successors and Assigns....................................-14-
Section 7.4 Notices...................................................-15-
Section 7.5 Time......................................................-16-
Section 7.6 Possession................................................-16-
Section 7.7 Incorporation by Reference................................-16-
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TABLE OF CONTENTS
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(continued)
PAGE
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Section 7.8 No Deductions or Off-Sets.................................-16-
Section 7.9 Attorneys' Fees...........................................-16-
Section 7.10 Construction..............................................-16-
Section 7.11 Governing Law.............................................-16-
Section 7.12 Confidentiality...........................................-16-
Section 7.13 Counterparts..............................................-16-
Section 7.14 Entire Agreement; Amendments..............................-17-
Section 7.15 Further Assurances........................................-17-
Section 7.16 Partial Invalidity........................................-17-
Section 7.17 Waivers...................................................-17-
Section 7.18 Damages...................................................-17-
Section 7.19 Cooperation in SEC Filings................................-17-
EXHIBIT A DISCLOSURE STATEMENT
EXHIBIT B INSPECTION LETTER
EXHIBIT C PROPERTY DESCRIPTION
EXHIBIT D RENT ROLL
EXHIBIT E LIST OF SERVICE CONTRACTS
EXHIBIT F [Intentionally Omitted]
EXHIBIT G FORM OF DEED
EXHIBIT H BILL OF SALE
EXHIBIT I ASSIGNMENT OF LEASES AND INTANGIBLE PROPERTY
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AGREEMENT FOR PURCHASE AND SALE
OF
REAL PROPERTY
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY (this
"Agreement") is made and entered into as of July 16, 1997, by and between
EASTRICH NO. 92 CORPORATION, a California corporation ("Seller"), and
BRE PROPERTIES, INC., a Maryland corporation ("Buyer").
RECITALS
A. Seller owns certain improved real property consisting of a
308-unit residential apartment complex commonly known as Lakeshore Landing and
located at 2717 South Norfolk Street, San Mateo, California, together with
associated tangible and intangible personal property.
B. Buyer desires to purchase from Seller and Seller desires to sell
to Buyer, subject to the terms and conditions contained in this Agreement, the
foregoing real property and any and all associated tangible and intangible
personal property owned by Seller.
AGREEMENT
NOW, THEREFORE, Buyer and Seller do hereby agree as follows:
ARTICLE I
BASIC DEFINITIONS
For purposes of this Agreement, and in addition to the other terms defined
in this Agreement, each of the following terms, when used with an initial
capital letter, shall have the following meaning:
CLOSING DATE. The term "Closing Date" shall mean (a) the date that is
ten (10) days following the later of (i) the expiration of the Inspection Period
or (ii) the satisfaction or waiver of the condition described in
Section 3.1(a)(iii) below, or (b) any earlier date mutually approved by Buyer
and Seller for the close of escrow with respect to the purchase and sale of the
Property.
CONTRACT PERIOD. The term "Contract Period" shall mean the period
from the date of this Agreement through the Closing Date.
DISCLOSURE STATEMENT. The term "Disclosure Statement" shall mean the
statement set forth as EXHIBIT A to this Agreement.
INSPECTION PERIOD. The term "Inspection Period" shall mean the period
commencing on the date of this Agreement, and ending at 5:00 p.m. Pacific Time
on August 1, 1997; provided that the Inspection Period may end earlier at
Buyer's election upon delivery by Buyer to Seller of the Inspection Letter
(representing the conclusive waiver by Buyer of any further Inspection Period).
INSPECTION LETTER. The term "Inspection Letter" shall mean a letter
in the form attached as EXHIBIT B to this Agreement, to be delivered by Buyer to
Seller on or prior to the close of the Inspection Period pursuant to Section 3.2
below.
INTANGIBLE PROPERTY. The term "Intangible Property" shall mean
Seller's rights and interests in: (a) any and all transferable or assignable
permits, building plans and specifications, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, trade names, service marks, engineering, soils, pest
control and other reports relating to the Property, tenant lists, advertising
materials, and telephone exchange numbers identified with the Property; (b) all
maintenance, service and other operating contracts, equipment leases and other
arrangements or agreements to which Seller is a party affecting the ownership,
repair, maintenance, management, leasing or operation of the Property, not
terminated
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pursuant to Section 4.2(c); and (c) all other transferable intangible property,
miscellaneous rights, benefits or privileges of any kind or character with
respect to the Property.
PERSONAL PROPERTY. The term "Personal Property" shall mean all
furniture, furnishings, trade fixtures, building systems and equipment
(including, without limitation, HVAC, security and life safety systems) and
other tangible personal property owned by Seller that is located at and used in
connection with the operation of the Real Property.
PROPERTY. The term "Property" shall mean the Real Property, Seller's
interest in the Personal Property and the Intangible Property.
REAL PROPERTY. The term "Real Property" shall mean that certain real
property commonly known as Lakeshore Landing and situated at 2717 South Norfolk
Street, San Mateo, California, the land component of which is legally described
in EXHIBIT C attached to this Agreement.
SELLER'S KNOWLEDGE. The term "Seller's Knowledge" shall have the
meaning set forth in Section 4.1 below.
TITLE COMPANY. The term "Title Company" shall mean Chicago Title
Insurance Company, 388 Market Street, San Francisco, California 94111.
ARTICLE II
PURCHASE AND SALE
Section 2.1 PURCHASE AND SALE. Seller agrees to sell the Property to
Buyer, and Buyer agrees to purchase the Property upon all of the terms,
covenants and conditions set forth in this Agreement.
Section 2.2 PURCHASE PRICE. The purchase price for the Property (the
"Purchase Price") shall be the sum of Forty-Two Million Seven Hundred Thousand
Dollars ($42,700,000). The entire amount of the Purchase Price (less the
Deposit delivered pursuant to Article V below) shall be payable by Buyer to
Seller in cash on the Closing Date through the escrow described in Section 6.1
below.
Section 2.3 BUYER'S REVIEW AND SELLER'S DISCLAIMER.
(a) Subject to the provisions of subsection 2.3(c) below, during the
Inspection Period Buyer shall be permitted to make a complete review and
inspection of the physical, legal, economic and environmental condition of the
Property, including, without limitation, any leases and contracts affecting the
Real Property, books and records maintained by Seller or its agents relating to
the Property, boundary and other survey-related issues relating to the Real
Property, pest control matters, soil condition, asbestos, PCB, hazardous waste,
toxic substance or other environmental matters, compliance with building,
health, safety, land use and zoning laws, regulations and orders, plans and
specifications, structural, life safety, HVAC and other building system and
engineering characteristics, traffic patterns and all other information
pertaining to the Property. Without representation or warranty, Seller shall
cooperate in Buyer's review and provide Buyer with the opportunity to review and
copy (at Buyer's expense) all leases, financial reports, survey and other
third-party inspection reports and similar non-proprietary or confidential
materials in Seller's possession relating to the Property. Buyer
acknowledges (i) that Seller played no role in the development or construction
of the Real Property, (ii) that Buyer has entered into this Agreement with the
intention of making and relying upon its own investigation of the physical,
environmental, economic and legal condition of the Property, and (iii) that
Buyer is not relying upon any representations and warranties, other than those
specifically set forth in this Agreement, made by Seller or anyone acting or
claiming to act on Seller's behalf concerning the Property. Buyer further
acknowledges that it has not received from Seller any accounting, tax, legal,
architectural, engineering, property management or other advice with respect to
this transaction and is relying solely upon the advice of its own accounting,
tax, legal, architectural, engineering, property management and other advisors.
Subject to the provisions of Section 4.1 of this Agreement, Buyer shall
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purchase the Property in its "as is" condition on the Closing Date and assumes
the risk that adverse physical, environmental, economic or legal conditions may
not have been revealed by its investigation.
(b) Except with respect to any claims arising out of (i) any breach
of express covenants, representations or warranties set forth in this Agreement
or any of the documents to be executed and delivered by Seller on the Closing
Date or as a condition of the closing or (ii) Seller's commission of fraud in
the inducement of this transaction: Buyer, for itself and its agents,
affiliates, successors and assigns, hereby releases and forever discharges
Seller, its agents, affiliates, successors and assigns from any and all rights,
claims and demands at law or in equity, whether known or unknown at the time of
this Agreement, which Buyer has or may have in the future, arising out of the
physical, environmental, economic or legal condition of the Property, including,
without limitation, any claim for indemnification or contribution arising under
the Comprehensive Environmental Response, Compensation, and Liability Act
(42 U.S.C. Section 9601, et. seq.), as amended, or any similar federal, state or
local statute, rule or ordinance relating to liability of property owners for
environmental matters. For the foregoing purposes, Buyer hereby specifically
waives the provisions of Section 1542 of the California Civil Code and any
similar law of any other state, territory or jurisdiction. Section 1542
provides:
A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor.
Buyer hereby specifically acknowledges that Buyer has carefully reviewed this
subsection and discussed its import with legal counsel and that the provisions
of this subsection are a material part of this Agreement.
(c) Buyer's exercise of the rights of review and inspection set forth
in subsection (a) shall be subject to the following limitations: (i) any entry
onto the Real Property by Buyer, its agents or representatives, shall be during
normal business hours, following reasonable prior notice to Seller and delivery
to Seller of satisfactory evidence of Buyer's general liability insurance, and,
at Seller's discretion, accompanied by a representative of Seller; (ii) Buyer
shall not conduct any drilling, test borings or other disturbance of the Real
Property for review of soils, compaction, environmental, structural or other
conditions without Seller's prior written consent; (iii) any discussions or
interviews with any of the tenants of the Real Property shall be conducted in
the presence of Seller or its representatives; (iv) Buyer shall exercise
reasonable diligence not to disturb the use or occupancy of any occupant of the
Property; and (v) Buyer shall indemnify, defend and hold Seller harmless from
all loss, cost, and expense resulting from any personal injury, property damage,
liens or claims of liens caused by or arising from any entry or inspections
performed by Buyer, its agents or representatives. Buyer's obligations under
clause (v) above shall survive any termination of this Agreement.
Section 2.4 PERMITTED TITLE EXCEPTIONS. During the Inspection
Period, Buyer shall obtain from Title Company and review a preliminary title
report or commitment with respect to the Real Property ("Title Report"),
together with all documents and information pertaining to the exceptions to
title listed in the Title Report. In addition, during the Inspection Period,
Buyer may obtain any survey of the Real Property desired by Buyer or required by
Title Company as a condition to issuance of an ALTA extended coverage title
policy (the "Survey"). Buyer may advise Seller in writing and in reasonable
detail, not later than ten (10) days prior to the close of the Inspection
Period, what exceptions to title, if any, listed in the current preliminary
report for the Real Property or disclosed on the Survey are not acceptable to
Buyer with respect to the Real Property ("Title Objections"). Prior to
notifying Seller of any Title Objections, Buyer shall endeavor in good faith to
cause Title Company to modify and update the preliminary report to reflect
requested corrections and revisions. Seller shall have five (5) business days
after receipt of Buyer's Title Objections to give Buyer notice that (a) Seller
will remove any Title Objections from title (or, if acceptable to Buyer, in its
reasonable judgment, afford the Title Company necessary information or
certifications to permit it to insure over such exceptions) or (b) Seller elects
not to cause such exceptions to be removed. Seller's failure to provide notice
to Buyer within such 5-business day period as to any Title Objection shall be
deemed an election by Seller not to remove the Title Objection. If Seller so
notifies or is deemed to have notified Buyer that Seller shall not remove any or
all of the Title Objections, Buyer shall have until the close of the Inspection
Period to determine whether (i) to proceed with the purchase and take the
Property subject to such exceptions or (ii) to terminate this Agreement.
Buyer's delivery of the Inspection Letter shall constitute Buyer's
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conclusive agreement to accept the Property subject to the Permitted Exceptions.
"Permitted Exceptions" shall include and refer to (x) any and all exceptions to
title disclosed by the Title Report or the Survey, excepting solely Title
Objections timely identified by Buyer that Seller agrees to remove pursuant to
this Section, and (y) any other exceptions to title approved by or caused by the
acts, omissions or status of Buyer.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS.
(a) Notwithstanding anything in this Agreement to the contrary,
Buyer's obligation to purchase the Property shall be subject to and contingent
upon the satisfaction or waiver of the following conditions precedent:
(i) Buyer's inspection and approval, within the Inspection
Period, of all physical, environmental, economic and
legal matters relating to the Property, as contemplated
in Section 2.3 above;
(ii) The willingness of Title Company to issue, upon the
sole condition of the payment of its regularly
scheduled premium, its American Land Title Association
extended coverage Owner's Policy of Title Insurance
[1992 Form] (the "Title Policy"), insuring Buyer in the
amount of the Purchase Price that fee title to the Real
Property is vested of record in Buyer on the Closing
Date subject only to the printed conditions and
exceptions of such policy and the Permitted Exceptions;
(iii) the approval of this transaction by Buyer's Board of
Directors, on or before July 28, 1997; and
(iv) Seller's performance or tender of performance of all
material obligations under this Agreement and the truth
and accuracy of Seller's express representations and
warranties, as of the Closing Date.
(b) Notwithstanding anything in this Agreement to the contrary,
Seller's obligation to sell the Property shall be subject to and contingent upon
the satisfaction or waiver of the following conditions precedent:
(i) Buyer's performance or tender of performance of all
material obligations under this Agreement and the truth
and accuracy of Buyer's express representations and
warranties, as of the Closing Date; and
(ii) The satisfaction or Buyer's written waiver of the
conditions set forth in subparagraphs (a)(i), (ii) and
(iii) above.
Section 3.2 FAILURE OR WAIVER OF CONDITIONS PRECEDENT. In the event
any of the conditions set forth in Section 3.1 are not fulfilled or waived, the
party benefitted by such condition may, by written notice to the other party,
terminate this Agreement, whereupon all then remaining rights and obligations
hereunder of each party shall be at an end. Either party may, at its election,
at any time or times on or before the date specified for the satisfaction of the
condition, waive in writing the benefit of any of the conditions set forth in
Section 3.1(a) and 3.1(b) above. Notwithstanding the foregoing, Buyer's failure
to deliver to Seller on or prior to the close of the Inspection Period an
executed Inspection Letter in the form attached as EXHIBIT B, without
modification or qualification in any manner whatsoever, shall be deemed a
failure of the condition set forth in Section 3.1(a)(i) above. Moreover,
Buyer's failure to notify Seller in writing on or before July 28, 1997 that
Buyer's Board of Directors has approved this transaction shall be deemed a
failure of the condition set forth in Section 3.1(a)(iii)
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above. In the event this Agreement is terminated as a result of the failure of
any condition set forth in Section 3.1(a), Seller shall instruct Title Company
to return to Buyer the full amount of the Deposit, plus any accrued interest,
but less any escrow cancellation charges assessed by Title Company. In any
event, Buyer's consent to the close of escrow pursuant to this Agreement shall
waive any remaining unfulfilled conditions.
ARTICLE IV
COVENANTS, WARRANTIES AND REPRESENTATIONS
Section 4.1 SELLER'S WARRANTIES AND REPRESENTATIONS. Seller hereby
makes the following representations and warranties to Buyer as of the date of
this Agreement; provided that each of such representations and warranties shall
be deemed to be modified by any contrary or qualifying information set forth on
the Disclosure Statement:
(a) Seller has full power and lawful authority to enter into and
carry out the terms and provisions of this Agreement and to execute and deliver
all documents which are contemplated by this Agreement, and all actions of
Seller necessary to confer such power and authority upon the persons executing
this Agreement (and all documents which are contemplated by this Agreement) on
behalf of Seller have been taken.
(b) To Seller's Knowledge, (i) the leases and rental agreements
listed on EXHIBIT D to this Agreement (the "Leases") are all of the leases and
rental agreements presently in effect with respect to the Real Property, and,
(ii) the copies of the Leases and related correspondence delivered or made
available to Buyer are true, correct and complete, and set forth all agreements
in effect with any tenant of the Property with respect to such tenant's
occupancy of the Property.
(c) To Seller's Knowledge, Seller has received no written notice from
any governmental authority that any of the improvements located on the Real
Property are presently in violation of any applicable building codes, zoning or
land use laws, or other law, order, ordinance, rule or regulation affecting the
Real Property.
(d) To Seller's Knowledge, (i) the contracts listed on EXHIBIT E to
this Agreement (the "Contracts") are all of the service and equipment contracts
to which Seller is a party that relate to the operation and maintenance of the
Property and that would be binding upon a purchaser of the Property, and
(ii) the copies of the Contracts delivered or made available to Buyer pursuant
to this Agreement, are true, correct and complete in all material respects.
(e) To Seller's Knowledge, Seller has received no written notice from
any governmental authorities that eminent domain proceedings for the
condemnation of the Real Property are pending or threatened.
(f) To Seller's Knowledge, Seller has received no written notice of
(i) any threatened or pending litigation affecting the Property (other than
litigation arising in the ordinary course of the operation of the Property and
covered by insurance) or (ii) any threatened or pending litigation against
Seller which would materially and adversely affect Seller's capacity to perform
under this Agreement.
(g) To Seller's knowledge, except as may be disclosed in any
environmental audit or report provided or made available to Buyer pursuant to
Section 2.3(a) above, (i) there are no underground or other storage tanks
situated on the Real Property, and (ii) there are no Hazardous Materials present
at the Real Property in violation of applicable laws. For purposes of this
Agreement, "Hazardous Materials" shall mean inflammable explosives, radioactive
materials, asbestos, polychlorinated biphenyls, hazardous materials, hazardous
wastes, hazardous or toxic substances, oil, or related materials, which are
listed in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, the Resource Conservation and Recovery Act, the Clean
Water Act, the Clean Air Act, the Toxic Substances Control Act, the Safe
Drinking Water Act or California's Carpenter-Presley-Tanner Hazardous Substance
Account Act, Hazardous Waste Control Law, Safe Drinking Water
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and Toxic Enforcement Act of 1986, or in the regulations adopted and
publications promulgated pursuant thereto, or in any other federal, state or
local environmental law, ordinance, rule or regulation.
(h) Seller is not a "foreign person" within the meaning of
Section 1445(f)(3) of the Internal Revenue Code of 1986, as amended.
As used herein, the term "Seller's Knowledge" or words of similar effect shall
mean the current actual knowledge of Julia Hupman and Mark Domash, after inquiry
of Seller's property manager, but without other inquiry and without any
imputation of knowledge. Neither Ms. Hupman nor Mr. Domash nor any party other
than Seller shall bear responsibility for any breach of representation. Seller,
however, represents and warrants that Ms. Hupman and Mr. Domash are the
individuals within Seller's investment advisory organization with principal
administrative and oversight responsibility for the Property.
Section 4.2 SELLER'S COVENANTS. Seller hereby covenants and agrees
as follows:
(a) During the Contract Period, Seller shall ensure that the Property
is operated and maintained in a manner consistent with past practices and shall
maintain current levels and coverages of insurance and Seller shall not create
or acquiesce in the creation of liens or exceptions to title other than the
Permitted Exceptions or voluntarily take any action (other than as may be
permitted pursuant to subparagraphs (b) and (c) of this Section 4.2) to render
any of the representations or warranties of Seller set forth in Section 4.1
materially incorrect.
(b) During the Contract Period, Seller will enter into new Leases or
modify existing Leases only in the ordinary course of business and on market
terms, and Seller will provide Buyer with an updated rent roll from time to time
during the Contract Period upon Buyer's request.
(c) During the Contract Period, Seller will not execute or modify any
Contracts, (i) without promptly notifying Buyer thereof in writing and providing
Buyer with copies of the relevant documents, and (ii) as to any Contract (or
modification thereof) executed during the period between the expiration of the
Inspection Period and the Closing Date, other than in the ordinary course of
business and on market terms.
(d) Upon Buyer's written request given on or before the expiration of
the Inspection Period, Seller will give notice as of the Closing Date
terminating any Contracts that are so terminable without liability to Seller.
Section 4.3 BUYER'S WARRANTIES AND REPRESENTATIONS. Buyer hereby
represents and warrants to Seller that (a) Buyer has and as of the Closing Date
shall have, full power and lawful authority to enter into and carry out the
terms and conditions of this Agreement and to execute and deliver all documents
which are contemplated by this Agreement, (b) all actions necessary to confer
such power and authority upon the persons executing this Agreement and all
documents which are contemplated by this Agreement to be executed on behalf of
Buyer or its assignee have been taken, (c) Buyer has received no written notice
of any threatened or pending litigation which would materially and adversely
affect Buyer's capacity to perform under this Agreement, and (d) no more than
five percent (5%) of the beneficial ownership interest in Buyer is held by
General Motors Corporation or its affiliates.
Section 4.4 LIMITATIONS. The parties agree that (a) Seller's
warranties and representations contained in this Agreement and in any document
executed by Seller pursuant to this Agreement shall survive Buyer's purchase of
the Property only for a period of six (6) months after the Closing Date (the
"Limitation Period"), (b) Seller shall have no liability to Buyer for any
matters disclosed in any due diligence materials delivered or made available by
Seller to Buyer or otherwise procured by Buyer in connection with its review of
the Property, (c) Seller's liability for any breach of its representations or
warranties shall be limited to claims that, in the aggregate, exceed $50,000,
(d) Seller's aggregate liability for claims arising out of such representations
and warranties shall not exceed $250,000, and (e) Buyer shall provide written
notice to Seller prior to the expiration of
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the Limitation Period of any breach of such warranties or representations and
shall allow Seller 30 days within which to cure such breach, or, if such breach
cannot reasonably be cured within 30 days, an additional reasonable time period,
so long as such cure has been commenced within such 30 days and diligently
pursued. If Seller fails to cure such breach after actual written notice and
within such cure period, Buyer's sole remedy shall be an action at law for
damages as a consequence thereof, which must be commenced, if at all, within the
Limitation Period; PROVIDED, however, that if within the Limitation Period Buyer
gives Seller written notice of such a breach and Seller commences to cure and
thereafter terminates such cure effort, Buyer shall have an additional 30 days
from the date of such termination (and the Limitation Period shall be deemed
extended for such additional 30-day period) within which to commence an action
at law for damages as a consequence of Seller's failure to cure. The Limitation
Period referred to herein shall apply to known as well as unknown breaches of
such warranties or representations.
Section 4.5 NOTICE OF ADVERSE CHANGES.
(a) Each party shall promptly notify the other party in writing of
any event or circumstance that adversely affects the first party's ability to
perform its obligations under this Agreement in a timely manner or the
likelihood of timely satisfaction of the conditions precedent set forth in this
Agreement.
(b) Without limiting the generality of subsection (a) above, if
Seller becomes aware during the Contract Period of any matters which make any of
its representations or warranties untrue, Seller shall promptly disclose such
matters to Buyer in writing. In the event that Seller so discloses any matters
which make any of Seller's representations or warranties untrue in any material
respect, or in the event that Buyer otherwise becomes aware during the Contract
Period of any matters which make any of Seller's representations or warranties
untrue in any material respect, Seller shall bear no liability for such matters
(provided that Seller has not breached an express covenant set forth in this
Agreement), but Buyer shall have the right to elect in writing on or before the
Closing Date, (i) to waive such matters and complete the purchase of the
Property in accordance with the terms of this Agreement, or (ii) as to any
matters disclosed following the expiration of the Inspection Period, to
terminate this Agreement. Buyer's delivery of the Inspection Letter shall
constitute Buyer's conclusive agreement to accept or waive any such matters
disclosed to Buyer prior to the close of the Inspection Period.
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ARTICLE V
DEPOSIT
Within three (3) business days following the later to occur of (a) the
expiration of the Inspection Period, or (b) the satisfaction or Buyer's waiver
of the condition described in Section 3.1(a)(iii) above, Buyer shall deliver to
Title Company for deposit into the escrow described in Section 6.1 below, the
sum of Four Hundred Twenty-Seven Thousand Dollars ($427,000), which amount,
together with any interest that may accrue thereon in escrow, is referred to as
the "Deposit". In the event that the sale of the Property to Buyer is
consummated as contemplated by this Agreement, then the entire amount of the
Deposit shall be credited against the Purchase Price. The entire amount of the
Deposit shall be returned immediately to Buyer in the event that Buyer properly
terminates this Agreement prior to the Closing Date pursuant to Section 2.4,
3.2, 4.5 or 7.1(b), or in the event that (a) the conditions precedent set forth
in Section 3.1(b) shall have been satisfied or waived, (b) Buyer shall have
performed fully or tendered performance of its obligations hereunder and (c)
Seller shall be unable or fail to perform its obligations under this Agreement
to close the sale of the Property. IN ALL OTHER EVENTS, IF THE CLOSING OF THE
PURCHASE AND SALE OF THE PROPERTY DOES NOT OCCUR ON OR BEFORE THE DATE PROVIDED
THEREFOR IN THIS AGREEMENT, SELLER SHALL BE ENTITLED TO RETAIN THE DEPOSIT AS
LIQUIDATED DAMAGES, AND BUYER SHALL EXECUTE ANY REASONABLE DOCUMENTATION
REQUIRED BY TITLE COMPANY IN ORDER TO RELEASE THE DEPOSIT TO SELLER. BUYER AND
SELLER HEREBY ACKNOWLEDGE AND AGREE THAT SELLER'S DAMAGES IN THE EVENT OF SUCH A
BREACH OF THIS AGREEMENT BY BUYER WOULD BE DIFFICULT OR IMPOSSIBLE TO DETERMINE,
THAT THE AMOUNT OF THE DEPOSIT IS THE PARTIES' BEST AND MOST ACCURATE ESTIMATE
OF THE DAMAGES SELLER WOULD SUFFER IN THE EVENT THE SALE OF THE PROPERTY TO
BUYER FAILS TO CLOSE ON OR BEFORE THE CLOSING DATE CONTEMPLATED BY THIS
AGREEMENT, AND THAT SUCH ESTIMATE IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING
ON THE DATE OF THIS AGREEMENT. BUYER AND SELLER AGREE THAT SELLER'S RIGHT TO
RETAIN THE DEPOSIT SHALL BE THE SOLE REMEDY OF SELLER AT LAW IN THE EVENT THE
TRANSACTION CONTEMPLATED BY THIS AGREEMENT FAILS TO CLOSE DUE TO A BREACH OF
THIS AGREEMENT BY BUYER.
ACCEPTED AND AGREED TO:
- ---------------------------- ----------------------------------
Seller Buyer
ARTICLE VI
ESCROW AND CLOSING
Section 6.1 ESCROW ARRANGEMENTS. An escrow for the purchase and sale
contemplated by this Agreement has been opened by Buyer and Seller with Title
Company. On or before the Closing Date, Seller and Buyer shall each deliver
escrow instructions to the Title Company consistent with this Article VI, and
the parties shall deposit in escrow the funds and documents described below.
(a) Seller shall deposit (or cause to be deposited):
(i) a duly executed and acknowledged grant deed in favor of
Buyer from Seller with respect to the Real Property in
the form attached to this Agreement as EXHIBIT G (the
"Deed");
(ii) a duly executed bill of sale with respect to the
Personal Property in the form attached to this
Agreement as EXHIBIT H (the "Bill of Sale");
(iii) two duly executed counterparts of an assignment and
assumption of Seller's interest in the Leases and the
other Intangible Property, in the form attached to
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this Agreement as EXHIBIT I (the "Assignment of Leases
and Intangible Property");
(iv) a certificate from Seller certifying the information
required by Sections 18662 and 26131 of the California
Revenue and Taxation Code to establish that the
transaction contemplated by this Agreement is exempt
from the tax withholding requirements of the State of
California (the "California Certificate");
(v) a certificate from Seller certifying the information
required by Section 1445 of the Internal Revenue Code
and the regulations issued thereunder to establish, for
the purposes of avoiding Buyer's tax withholding
obligations, that Seller is not a "foreign person" as
defined in Internal Revenue Code Section 1445(f)(3)
(the "FIRPTA Certificate"); and
(vi) a certificate duly executed by Seller in favor of Buyer
confirming the representations and warranties set forth
in Section 4.1 above ("Seller's Closing Certificate").
(b) Buyer shall deposit:
(i) at least one (1) business day prior to the Closing
Date, immediately available funds sufficient to pay the
balance of the Purchase Price, plus sufficient
additional cash to pay Buyer's share of all applicable
escrow costs and closing expenses;
(ii) two duly executed counterparts of the Assignment of
Leases and Intangible Property; and
(iii) a certificate duly executed by Buyer in favor of Seller
confirming the representations and warranties set forth
in Section 4.3 above ("Buyer's Closing Certificate").
Section 6.2 CLOSING. Title Company shall close escrow for the sale
of the Property by:
(a) recording the Deed;
(b) issuing the Title Policy to Buyer;
(c) delivering to Buyer the Bill of Sale, the FIRPTA Certificate, the
California Certificate, the Seller's Closing Certificate and one fully executed
original of the Assignment of Leases and Intangible Property;
(d) delivering to Seller one fully executed original of the
Assignment of Leases and Intangible Property, the Buyer's Closing Certificate,
and funds in the amount of the Purchase Price, as adjusted for credits,
prorations and closing costs in accordance with this Article VI; and
(e) filing the information return for the sale of the Property
required by Section 6045 of the Internal Revenue Code of 1986, as amended, and
the Income Tax Regulations thereunder.
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Section 6.3 PRORATIONS.
(a) Real estate taxes and assessments, personal property taxes, if
any, rental income and all other items of income and expense with respect to the
Property shall be prorated between Seller and Buyer as of midnight on the night
before the Closing Date. Income and expenses for the Property shall be prorated
on the basis of the acutal number of days in the month in which the Closing Date
occurs and on the basis of the accrual method of accounting. All such items
attributable to the period through and including the Closing Date shall be
credited to Seller; all such items attributable to the period following the
Closing Date shall be credited to Buyer. Buyer shall be credited in escrow with
(i) any portion of rental agreement or lease deposits with respect to the
Property which are refundable to the tenants and (ii) rent prepaid beyond the
Closing Date. Buyer shall not be entitled to any interest on rental agreement
or lease deposits or prepaid rent accrued on or before the Closing Date, except
for any interest required to be paid to tenants under applicable law or pursuant
to the terms of the Leases. Seller shall be credited in escrow with any
refundable deposits or bonds held by any utility, governmental agency or service
contractor with respect to the Property (to the extent the same are assignable
to Buyer in connection with the sale of the Property).
(b) Buyer and Seller shall cooperate to produce prior to the Closing
Date a schedule of prorations to be made on and after the Closing Date
pertaining to the Property as complete and accurate as reasonably possible. All
prorations which can be liquidated accurately or reasonably estimated as of the
Closing Date shall be made in escrow on the Closing Date. All other prorations,
and adjustments to initial estimated prorations, shall be made by the parties
with due diligence and cooperation within 30 days following the Closing Date, or
such later time as may be required to obtain necessary information for
proration, by immediate cash payment to the party yielding a net credit from
such prorations from the other party.
(c) Buyer shall, consistent with reasonable business judgment, exert
its reasonable efforts to collect for Seller following the Closing Date all
rental income which is delinquent on the Closing Date with respect to the
Property; provided, however, that Buyer shall not be required to commence legal
proceedings to collect such rents. Notwithstanding the foregoing proviso,
Seller reserves the right to pursue any remedy for damages Seller may have
against any tenant with respect to such delinquent rents, but Seller shall not
seek to evict any tenant or terminate any Lease based on such default in rental
payments. Any sums collected on account of rents after the Closing Date shall
be successively applied to the payment of (i) rent for the Property due and
payable in the month in which the closing occurs, (ii) rent for the Property due
and payable in the months succeeding the month in which the closing occurs
(through and including the month in which payment is made), and (iii) rent for
the Property due and payable in the months preceding the month in which the
closing occurs.
Section 6.4 OTHER CLOSING COSTS.
(a) Buyer shall pay (i) the cost of the Survey, (ii) the entire
premium for the Title Policy (including any endorsements), (iii) 50% of any city
transfer taxes due on the transfer of the Property, (iv) 50% of any escrow or
other costs charged by or reimbursable to the Title Company (other than the
title premium), and (v) all fees and expenses of its legal counsel and other
third party consultants engaged by or on behalf of Buyer in connection with this
transaction.
(b) Seller shall pay (i) 100% of any state or county governmental
documentary transfer or transaction taxes or fees due on the transfer of the
Property, (ii) 50% of any city transfer taxes due on the transfer of the
Property, (iii) 50% of any escrow or other costs charged by or reimbursable to
the Title Company (other than the title premium) and (iv) all fees and expenses
of its legal counsel and other third party consultants engaged by or on behalf
of Seller in connection with this transaction.
(c) Any costs and expenses of closing that are not expressly
identified in subparagraph (a) or (b) above shall be allocated between the
parties in accordance with prevailing custom in San Mateo County, California.
Section 6.5 FURTHER DOCUMENTATION. Promptly after the close of
escrow for the sale of the Property, Buyer and Seller shall provide to each
tenant of the Real Property, by personal delivery or certified mail,
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written notice advising the tenant of the sale of the Real Property by Seller to
Buyer, and including any other information required by applicable state or local
law or the tenant's Lease. In addition, at or following the close of escrow,
Buyer and Seller each shall execute any certificate or other instruments
required by law or local custom or otherwise reasonably requested by the other
party or Title Company to effect the transaction contemplated by this Agreement.
ARTICLE VII
MISCELLANEOUS
Section 7.1 DAMAGE OR DESTRUCTION.
(a) Buyer shall be bound to purchase the Property for the Purchase
Price as required by the terms of this Agreement without regard to the
occurrence or effect of any damage to or destruction of the improvements on the
Real Property or condemnation by right of eminent domain, provided that the
occurrence of any damage or destruction involves repair costs of $2,000,000 or
less. If Buyer is so bound to purchase the Property, notwithstanding the
occurrence of damage, destruction or condemnation, then: (A) in the event of
damage covered by insurance or in the event of condemnation, Buyer shall receive
a credit against the Purchase Price in the amount (net of collection costs) of
any insurance proceeds or condemnation award collected and retained by Seller as
a result of any such damage or destruction or condemnation, plus any applicable
deductible amount, and Seller shall assign to Buyer all rights to such insurance
proceeds or condemnation awards as shall not have been collected prior to such
close of escrow; and (B) in the event of damage not covered by insurance, Buyer
shall receive a credit (not to exceed $2,000,000) in the amount of the estimated
cost to repair the damage.
(b) Buyer or Seller may terminate this Agreement by written notice of
election given to the other party promptly following the event if there occurs
damage or destruction to the Property which involves repair costs in excess of
$2,000,000.
Section 7.2 BROKERAGE COMMISSIONS AND FINDER'S FEES.
Each party to this Agreement warrants to the other that no person or
entity can properly claim a right to a real estate commission, real estate
finder's fee, real estate acquisition fee or other real estate brokerage-type
compensation (collectively, "Real Estate Compensation") based upon the acts of
that party with respect to the transaction contemplated by this Agreement. Each
party hereby agrees to indemnify and defend the other against and to hold the
other harmless from any and all loss, cost, liability or expense (including but
not limited to attorneys' fees and returned commissions) resulting from any
claim for Real Estate Compensation by any person or entity based upon such acts.
Section 7.3 SUCCESSORS AND ASSIGNS. Buyer may not assign any of
Buyer's rights or duties hereunder without the prior written consent of Seller;
provided that Buyer may assign this Agreement, (a) without Seller's prior
consent, to a title-holding corporation
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whose stock is wholly owned, directly or indirectly, by Buyer or (b) to any
other entity affiliated with Buyer, provided that such assignee has, in Seller's
reasonable judgment, the financial capacity to perform the obligations of Buyer
hereunder. No assignment by Buyer shall relieve Buyer of its obligations under
this Agreement. Subject to the limitations on assignment expressed in this
Section 7.3, this Agreement shall be binding upon, and inure to the benefit of,
Buyer and Seller and their respective successors and assigns.
Section 7.4 NOTICES. All notices or other communications required or
provided to be sent by either party shall be in writing and shall be sent by
United States Postal Service, postage prepaid or certified mail, return receipt
requested, by any nationally known overnight delivery service, by courier, or in
person. All notices shall be deemed to have been given forty-eight (48) hours
following deposit in the United States Postal Service or upon personal delivery
if sent by overnight delivery service, courier or personally delivered. All
notices shall be addressed to the party at the address below:
To Seller: c/o AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: General Counsel
with a copy to Ms. Julia E. Hupman, at the same address,
and with a copy to: Heller Ehrman White & McAuliffe
333 Bush Street
San Francisco, California 94104
Attn: Judith C. Miles, Esq.
To Buyer: BRE Properties, Inc.
One Montgomery Street, Suite 2500
San Francisco, California 94104
Attn: Ms. Jane Maushardt
with a copy to: Farella Braun & Martel LLP
235 Montgomery Street, 30th Floor
San Francisco, California 94104
Attn: Jon F. Hartung, Esq.
Any address or name specified above may be changed by notice given to the
addressee by the other party in accordance with this Section 7.4. The inability
to deliver because of a changed address of which no notice was given, or
rejection or other refusal to accept any notice, shall be deemed to be the
receipt of the notice as of the date of such inability to deliver or rejection
or refusal to accept. Any notice to be given by any party hereto may be given
by the counsel for such party.
Section 7.5 TIME. Time is of the essence of every provision
contained in this Agreement.
Section 7.6 POSSESSION. The rights of possession of the Property
(subject to the Leases) shall be delivered to Buyer on the Closing Date.
Section 7.7 INCORPORATION BY REFERENCE. All of the exhibits attached
to this Agreement or referred to herein and all documents in the nature of such
exhibits, when executed, are by this reference incorporated in and made a part
of this Agreement.
Section 7.8 NO DEDUCTIONS OR OFF-SETS. Buyer acknowledges that the
Purchase Price to be paid pursuant to this Agreement is a net amount and shall
not be subject to any off-sets or deductions.
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Section 7.9 ATTORNEYS' FEES. In the event any dispute between Buyer
and Seller should result in litigation, the prevailing party shall be reimbursed
for all reasonable costs incurred in connection with such litigation, including,
without limitation, reasonable attorneys' fees.
Section 7.10 CONSTRUCTION. The parties acknowledge that each party
and its counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be resolved
against the drafting party shall not be employed in the interpretation of this
Agreement or any amendments or exhibits hereto.
Section 7.11 GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with and shall be governed and enforced in all
respects according to the laws of the State of California.
Section 7.12 CONFIDENTIALITY. Each of Seller and Buyer hereby
acknowledges and agrees that the existence of this Agreement, and the terms and
conditions set forth herein, are to be kept strictly confidential unless and
until the Closing Date occurs. Accordingly, except as may be required by law or
court order, neither Seller nor Buyer shall, without the prior written consent
of the other, release, publish or otherwise distribute (and shall not authorize
or permit any other person or entity to release, publish or otherwise
distribute) any information concerning this Agreement or the transaction
contemplated herein to any person or entity other than such party's prospective
lenders and such party's legal and financial advisors or other consultants
engaged in connection with this transaction, each of whom shall agree to hold
such information strictly confidential as if such persons were bound by the
provisions of this Section 7.12. The foregoing shall not prevent either party
from disclosing the existence, but not the terms, of this transaction to other
persons, including, without limitation, prospective property managers and/or
leasing brokers.
Section 7.13 COUNTERPARTS. This Agreement may be executed in one or
more counterparts. All counterparts so executed shall constitute one contract,
binding on all parties, even though all parties are not signatory to the same
counterpart.
Section 7.14 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
attached exhibits, which are by this reference incorporated herein, and all
documents in the nature of such exhibits, when executed, contain the entire
understanding of the parties and supersede any and all other written or oral
understanding. This Agreement may not be amended or modified except by a
written instrument signed by Buyer and Seller.
Section 7.15 FURTHER ASSURANCES. From and after the date of this
Agreement, Seller and Buyer agree to do such things, perform such acts, and
make, execute, acknowledge and deliver such documents as may be reasonably
necessary or proper and usual to complete the transactions contemplated by this
Agreement and to carry out the purpose of this Agreement in accordance with this
Agreement.
Section 7.16 PARTIAL INVALIDITY. If any provision of this Agreement
is determined by a proper court to be invalid, illegal or unenforceable, such
invalidity, illegality or unenforceability shall not affect the other provisions
of this Agreement and this Agreement shall remain in full force and effect
without such invalid, illegal or unenforceable provision.
Section 7.17 WAIVERS. No waiver of any provision of this Agreement
or any breach of this Agreement shall be effective unless such waiver is in
writing and signed by the waiving party and any such waiver shall not be deemed
a waiver of any other provision of this Agreement or any other or subsequent
breach of this Agreement.
Section 7.18 DAMAGES. Buyer agrees that any liability of Seller
under any claim brought pursuant to this Agreement or any document or instrument
delivered simultaneously or in connection with, or pursuant to this Agreement,
shall be subject to the limitations of Section 4.4, and shall be limited solely
to Seller's interest in the Property (including the proceeds of the sale of the
Property to Buyer), and no other assets of Seller shall be subject to levy or
execution. In no event shall either party seek satisfaction for any claim
asserted by such party against the other from any of the other party's trustees,
beneficiaries or partners or from any partners, shareholders, directors,
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officers, employees, agents, legal representatives, successors or assigns of
such party or such party's trustees, beneficiaries or partners, nor shall any
such person or entity have any personal liability for any such obligations of
the other party.
Section 7.19 COOPERATION IN SEC FILINGS. Seller acknowledges that
Buyer may be required by governing securities laws to file a report of its
acquisition of the Property with the Securities and Exchange Commission, either
prior to or after the close of escrow, and Seller agrees to cooperate reasonably
with Buyer in connection with such filing, provided that such cooperation shall
not entail any additional expense to Seller or cause Seller any liability
whatsoever beyond its existing obligations under this Agreement. In furtherance
of the foregoing, Seller agrees to provide (or afford Buyer reasonable access
to) such records (including financial records of the Property, but excluding
records relating to the cost of construction) as may be reasonably required by
Buyer's independent accountants to review or prepare (at Buyer's cost) an
audited financial statement for the Property in connection with the filing of
Buyer's Form 8-K.
IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as
of the day and year first written above.
SELLER: BUYER:
EASTRICH NO. 92 CORPORATION BRE PROPERTIES, INC.
By: /s/ Mark A. Albertson By: /s/ Jane Maushardtt
--------------------- -------------------
Name: Mark A. Albertson Name: Jane Maushardt
Title: President Title: Vice President
By: /s/ Byron M. Fox
----------------
Name: Byron M. Fox
Title: Executive Vice President
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<PAGE>
EXHIBIT A
DISCLOSURE STATEMENT
All capitalized terms used herein but not otherwise defined shall have the
meanings given them in the Agreement.
1. Matters disclosed by any environmental reports and audits, structural,
soils and other physical inspection reports, title reports and surveys
delivered to Buyer prior to the end of the Inspection Period or included in
the materials delivered to or made available to Buyer pursuant to Section
2.3 of the Agreement.
2. The Personal Property and the improvements located on the Real Property,
and their structural components, the building systems and other mechanical
systems, and the parking and loading areas are, and have been, subject to
normal wear and tear and obsolescence as the result of the age of such
items.
3. Minor amounts of Hazardous Materials used in the ordinary course of
operation and maintenance of the Property (e.g. paint thinner) are present
at the Proeperty.
4. The pool deck on the smaller pool at the Property has shown some evidence
of failing, apparently due to rotting of part of the wood structure
enclosing the crawl space under the deck. Seller and Buyer are presently
investigating possible repairs for this item.
5. The wood siding on several of the buildings at the Property is buckled.
6. The property manager had previously informed Seller of some leakage
apparently related to faulty window flashing and of drainage problems on
certain of the individual apartment balconies at the Property. With the
exception of approximately five of the individual apartment balconies,
these problems have now been repaired.
All the matters set forth on this Disclosure Statement are limited to
Seller's Knowledge. Seller does not make any representations or warranties,
other than as expressly set forth in the Agreement, regarding the scope or
content of the matters referenced in this Disclosure Statement. Neither the
foregoing list nor the materials referred to therein are intended to be an
exhaustive enumeration of issues relevant to the Property, nor are they intended
to fully inform you of any particular issue or its ramifications. Rather this
Disclosure Statement is presented to you pursuant to Section 4.1 of the
Agreement and is merely intended to assist you with your investigation of the
Property by flagging for you those matters which, to Seller's Knowledge, may
affect the Property or Seller's warranties and representations set forth in
Section 4.1 of the Agreement.
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<PAGE>
EXHIBIT B
INSPECTION LETTER
, 1997
------
AEW Capital Management, L.P.
225 Franklin Street
Boston, Massachusetts 02110
Attn: General Counsel
Re: Agreement for Purchase and Sale of Real Property dated _______, 1997
(the "Purchase Agreement") between __________________ ("Seller") and
__________________ ("Buyer")
Gentlemen & Ladies:
This letter constitutes the Inspection Letter contemplated by the
above-referenced Purchase Agreement and is delivered to confirm the satisfaction
of the condition precedent described in Section 3.1(a)(i) of the Purchase
Agreement.
Buyer hereby expressly confirms to Seller (and to its trustees and
beneficiaries and their respective agents, employees, successors and assigns)
that Buyer has completed to its satisfaction the inspection and review
contemplated by Section 2.3 of the Purchase Agreement. Buyer, moreover, hereby
ratifies and affirms all of the acknowledgements, waivers and releases set forth
in Section 2.3.
Accordingly, based on its inspection and review of the Property, Buyer
is prepared to proceed with the purchase of the Property in accordance with the
terms of the Purchase Agreement subject only to the satisfaction of the
conditions described in Sections 3.1(a)(ii), 3.1(a)(iii) and 3.1(a)(iv) of the
Purchase Agreement.
Very truly yours,
[Buyer]
By:
Its
---------------------------------
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EXHIBIT C
PROPERTY DESCRIPTION
LOTS 1, 2, 3 AND 4, AS SHOWN ON THAT CERTAIN MAP ENTITLED "LAKESHORE LANDING
CONDOMINIUMS, CITY OF SAN MATEO, SAN MATEO COUNTY, CALIFORNIA", WHICH MAP WAS
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN MATEO COUNTY, STATE OF
CALIFORNIA ON JANUARY 6, 1988, IN BOOK 117 OF MAPS AT PAGES 40 THROUGH 45.
EXCEPTING THEREFROM, ANY PORTION BELOW THE LINE OF ORDINARY HIGH TIDE LYING
WITHIN THE NATURAL BED OF SEAL SLOUGH, AS SAME EXISTED PRIOR TO ANY ARTIFICIAL
CHANGES.
<PAGE>
EXHIBIT D
RENT ROLL
[COPY ATTACHED]
<PAGE>
EXHIBIT E
LIST OF SERVICE CONTRACTS
[COPY ATTACHED]
<PAGE>
EXHIBIT F
[INTENTIONALLY OMITTED]
<PAGE>
EXHIBIT G
FORM OF DEED
RECORDING REQUESTED BY AND
WHEN RECORDED MAIL TO:
MAIL TAX STATEMENTS TO:
- ------------------------------------------------------------------------------
(Above Space For Recorder's Use Only)
GRANT DEED
FOR A VALUABLE CONSIDERATION, RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED,
__________________, a ________________ ("Grantor"), hereby grants to
_________________, a _________________, that certain real property described on
EXHIBIT "A" attached hereto and made a part hereof (the "Property").
This conveyance is made subject to all liens and encumbrances of record.
DATED: , 1997
--------------
GRANTOR: , a
-------------------------------- -----------------------
By:
Its:
<PAGE>
EXHIBIT H
BILL OF SALE
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby expressly acknowledged, __________________, a _________________, hereby
assigns, transfers and conveys to
("Buyer"), WITHOUT WARRANTY, EXPRESS OR IMPLIED, all of Seller's right, title
and interest in and to all of the personal property described in the attached
SCHEDULE 1 (the "Personal Property"). The foregoing conveyance is made pursuant
to, and is subject to the terms and conditions of, that certain Agreement for
Purchase and Sale of Real Property dated as of June __, 1997, by and between
Seller and Buyer.
IN WITNESS WHEREOF, Seller has executed this Bill of Sale as of
, 1997.
SELLER:
, a
--------------------------------------
--------------------------------
By:
Its:
<PAGE>
SCHEDULE 1
Personal Property
<PAGE>
EXHIBIT I
ASSIGNMENT OF LEASES AND INTANGIBLE PROPERTY
FOR VALUABLE CONSIDERATION, the receipt and sufficiency of which are
hereby expressly acknowledged, ____________________, a ___________________
("Assignor"), hereby assigns, transfers and conveys to ____________, a
__________________ ("Assignee"), all of the landlord's right, title and interest
in and to the Leases and the Intangible Property, as those terms are defined in
that certain Agreement for Purchase and Sale of Real Property dated
_______, 1997 (the "Agreement"), entered into by and between Assignor, as
"Seller," and Assignee, as "Buyer."
In accordance with the Agreement, Assignee hereby assumes all
obligations of Seller as landlord under the Leases and as owner of the
Intangible Property (including, without limitation, Assignor's rights and
interests as a party to the Contracts) to the extent such obligations arise on
or after the date of this Assignment (collectively, the "Assigned Obligations"),
and Assignee agrees to indemnify and defend Assignor against, to hold Assignor
harmless from, and to reimburse Assignor for, any and all loss, cost, liability
and expense (including attorneys' fees) arising out of or relating to any breach
or alleged breach of the Assigned Obligations occurring (or alleged to have
occurred) on or after the date of this Assignment.
Assignor agrees to indemnify and defend Assignee against, to hold
Assignee harmless from, and to reimburse Assignee for, any and all loss, cost,
liability and expense (including attorneys' fees) arising out of or relating to
any breach or alleged breach of any obligations of the Landlord under the Leases
or as owner of the Intangible Property (including the Contracts) occurring (or
alleged to have occurred) prior to the date of this Assignment. Notwithstanding
anything to the contrary in this Assignment, Assignor's liability to Assignee
under the foregoing indemnification shall be limited to claims that, in the
aggregate, exceed $50,000, and Assignor's aggregate indemnification obligation
to Assignor with respect to any breach or alleged breach of any obligations of
the Landlord under the Leases or as owner of the Intangible Property occurring
(or alleged to have occurred) prior to the date of Assignor's acquisition of fee
title to the Property shall be limited to $250,000.
This Assignment may be executed in one or more counterparts. All
counterparts so executed shall constitute one contract, binding on all parties,
even though all parties are not signatory to the same counterpart.
Any liability which may arise as a consequence of the execution of
this Assignment by or on behalf of either Assignor or Assignee shall be a
liability of Assignor or Assignee, as applicable, and not the personal liability
of any trustee, corporate officer of a trustee, corporate officer of such party
or employee of such party.
IN WITNESS WHEREOF, Assignor and Assignee have executed this
Assignment of Leases and Intangible Property as of , 1997.
ASSIGNOR: ASSIGNEE:
, a ,a
- -------------------- ---------------- ------------------ -------------
By: By:
Its: Its:
<PAGE>
FIRST AMENDMENT TO AGREEMENT
FOR PURCHASE AND SALE OF REAL PROPERTY
THIS FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL
PROPERTY is entered into as of August 19, 1997, among BRE PROPERTIES, a Maryland
corporation ("Buyer"), EASTRICH NO. 92 CORPORATION, a Massachusetts corporation
(previously inadvertently referred to as a California corporation) and EASTRICH
LAKESHORE LANDING LIMITED PARTNERSHIP, a Massachusetts limited partnership.
RECITALS
A. Reference is made to that certain Agreement for Purchase and Sale of
Real Property dated as of July 16, 1997 (the "Purchase Agreement"). The
Purchase Agreement inadvertently referred to the Seller thereunder as Eastrich
No. 92 Corporation, whereas title to the Property is held in the name of
Eastrich Lakeshore Landing Limited Partnership, a Massachusetts limited
partnership, of which Eastrich No. 92 Corporation is the general partner. The
parties hereto now desire to amend the Purchase Agreement as set forth herein.
All capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Purchase Agreement.
B. Upon the expiration of the Inspection Period, the Buyer failed to
approve all physical, environmental, economic and legal matters relating to the
Property and pursuant to Section 3.2 of the Purchase Agreement, Buyer's failure
to so approve such matters was deemed a failure of a condition precedent. The
parties now desire to reinstate the Purchase Agreement.
AGREEMENT
NOW THEREFORE, incorporating the foregoing recital, and in consideration of
the mutual covenants and agreements contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree that the terms and conditions of the Purchase
Agreement are amended as follows:
1. Each reference in the Purchase Agreement to Eastrich No. 92
Corporation is hereby amended to refer to Eastrich Lakeshore Landing Limited
Partnership and all references to Seller are hereby deemed to refer to Eastrich
Lakeshore Landing Limited Partnership, a Massachusetts limited partnership.
<PAGE>
2. Buyer hereby approves all physical, environmental, economic and legal
matters relating to the Property and expressly waives the conditions set forth
in Sections 3.1(a)(i) and 3.1(a)(iii) of the Purchase Agreement. Accordingly,
the Purchase Agreement is hereby reinstated as of the date hereof as amended
hereby.
3. The Purchase Price as defined in Section 2.2 of the Purchase Agreement
is hereby amended to Forty-Two Million Four Hundred Sixty-Seven Thousand Dollars
($42,467,000).
4. The Closing Date as defined in Article 1 of the Purchase Agreement is
hereby amended to be August 21, 1997, or as otherwise mutually approved by
Buyer and Seller.
5. It is hereby acknowledged that the Deposit as defined in Article V of
the Purchase Agreement was not delivered. Accordingly, the entire amount of the
Purchase Price shall be deposited into the escrow at the Title Company pursuant
to Article VI of the Purchase Agreement.
6. The Purchase Agreement is incorporated herein in its entirety by this
reference. Other than as expressly provided herein, the Purchase Agreement
shall remain in full force and effect, unmodified hereby. The Purchase
Agreement, as amended hereby, forms the entire agreement between Seller and
Buyer with respect to the subject matter hereof, and all prior oral or written
agreements between the parties hereto with respect to the subject matter hereof
are superseded by the Purchase Agreement, as amended hereby.
7. This amendment may be executed in any number of counterparts, each of
which taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, Buyer and Seller have caused this Amendment to be
executed as of the date first set forth above.
SELLER: EASTRICH LAKESHORE LANDING LIMITED PARTNERSHIP, a Massachusetts
limited partnership
By: Eastrich No. 92 Corporation, a Massachusetts
corporation, General Partner
<PAGE>
By: /s/ Mark Albertson
------------------
Mark Albertson
Vice President
BUYER: BRE PROPERTIES, INC., a Maryland corporation
By: /s/ Jane Maushardt
------------------
Its: Vice President
CONFIRMED:
EASTRICH NO. 92 CORPORATION, a Massachusetts
corporation
By: /s/ Mark Albertson
------------------
Mark Albertson
Vice President
<PAGE>
Exhibit 99.1
BRE PROPERTIES BUYS 308-UNIT APARTMENT COMMUNITY IN
SAN FRANCISO BAY AREA FOR $42.5 MILLION
--COMPANY ANNOUNCES REDUCTION IN INTEREST RATES ON LINES OF CREDIT--
SAN FRANCISCO (August 26, 1997) - BRE Properties, Inc.
(NYSE: BRE), one of the nation's largest multifamily real estate
investment trusts (REITs), has purchased Lakeshore Landing, a
308-unit apartment community in the San Francisco Bay Area city
of San Mateo, for an all-cash purchase price of $42.5 million.
"The purchase of Lakeshore Landing reflects BRE's investment
strategy to acquire and manage a high-quality multifamily
portfolio balanced across Western markets that display strong
apartment demand fundamentals," said Frank C. McDowell, BRE's
President and Chief Executive Officer. "The Bay Area continues
to demonstrate strong growth in employment, population and levels
of personal income. These factors--along with the Bay Area's
shortage and high cost of available land for future apartment
development--combine to create one of the strongest apartment
rental markets in the country."
Year-to-date, BRE has invested approximately $142.7 million,
adding to its holdings in the major metropolitan regions of San
Francisco, Seattle and Las Vegas. In 1996, BRE acquired
approximately $230 million in research-driven apartment
acquisitions; the company expects to invest a similar amount in
1997.
The acquisition of Lakeshore Landing increases BRE's
ownership in the Bay Area to six multifamily communities
containing 2,229 units. "With Lakeshore Landing, BRE has
increased its critical mass in the Bay Area, providing the
opportunity for continued achievements in operating
efficiencies," said Jay W. Pauly, BRE's Chief Operating Officer.
"Lakeshore
<PAGE>
Landing will provide an important management complement to Foster's
Landing, a neighboring 453-unit acquisition made by BRE in September
1996.
"Lakeshore Landing reflects the strong focus BRE places on
access to employment and transportation centers when considering
properties for inclusion in its portfolio," said Pauly. "San
Mateo is located roughly halfway between San Francisco's
financial district and the Silicon Valley. The property's
quarter-mile proximity to Highway 101 places Lakeshore's
residents within minutes of San Francisco International Airport
as well as to the area's major computer, manufacturing,
financial, and health services employers."
The garden-style apartment community was built in 1988 and
contains twelve two-story buildings on a 7.7 acre site. The
floorplans average 727 square feet and include 61% one-bedroom
and 39% two-bedroom units. The property is currently 97%
occupied with average rents of approximately $1,409 per unit.
Including replacement reserves, the property was purchased at an
initial 8.2% capitalization rate.
Residents enjoy garages, walk-in closets and full size
washer and dryer hookups in each apartment. Upstairs units
feature vaulted ceilings and fireplaces. Additional amenities
include two swimming pools, a fitness center and an on-site car
wash. Many units have views of the adjacent Marina Lagoon.
In other news, the company announced that it had recently
renewed and extended its $150 million lines of credit on more
favorable terms. The interest rate on $115 million was decreased
from LIBOR plus 1.125% to LIBOR plus .80%; the non-use fee was
eliminated and the term was extended to July 2000. The interest
rate on $35 million was reduced from LIBOR plus 1.0% to LIBOR
plus .80%. The term was extened to April 2000 and an annual fee
of .125% on undrawn balances was added.
<PAGE>
BRE Properties, Inc., headquartered in San Francisco, is a
self-administered, self-managed and fully integrated real estate
investment trust focusing on the ownership and management of
multifamily properties in the Western United States. BRE owns
and operates 56 apartment communities totaling 13,543 units in
nine major markets in California, Arizona, Washington, Oregon and
Nevada. Additional information about BRE can be found on the
company's website (http:\\breproperties.com).
###
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995: EXCEPT FOR THE HISTORICAL INFORMATION
CONTAINED HEREIN, THIS NEWS RELEASE CONTAINS FORWARD-LOOKING
STATEMENTS REGARDING COMPANY AND PROPERTY PERFORMANCE, AND IS
BASED ON THE COMPANY'S CURRENT EXPECTATIONS AND JUDGMENT. ACTUAL
RESULTS COULD VARY MATERIALLY DEPENDING ON RISKS AND
UNCERTAINTIES INHERENT TO GENERAL AND LOCAL REAL ESTATE
CONDITIONS, COMPETITIVE FACTORS SPECIFIC TO MARKETS IN WHICH BRE
OPERATES, LEGISLATIVE OR OTHER REGULATORY DECISIONS, FUTURE
INTEREST RATE LEVELS OR CAPITAL MARKETS CONDITIONS. THE COMPANY
ASSUMES NO LIABILITY TO UPDATE THIS INFORMATION. FOR MORE
DETAILS, PLEASE REFER TO THE COMPANY'S SEC FILINGS, INCLUDING ITS
MOST RECENT ANNUAL REPORT ON FORM 10-K AND QUARTERLY REPORTS ON
FORM 10-Q.
