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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): July 10, 2000
BRE PROPERTIES, INC.
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Maryland 0-5305 94-1722214
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification Number)
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44 Montgomery Street, 36/th/ Floor, San Francisco, CA 94104-4809
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(Address of principal executive offices) (Zip Code)
415-445-6530
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(Registrants' telephone number, including area code)
n/a
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(former name or former address, if changed since last report)
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ITEM 5 OTHER EVENTS.
On July 10, 2000, we and BRE Properties Investors LLC entered into a
purchase and sale agreement with G&I III Residential One LLC, pursuant to which
we and BRE Properties Investors LLC agreed to sell 4,909 stabilized apartment
units in 22 apartment communities in Tucson, Albuquerque, Las Vegas and Phoenix
for $280 million in the form of approximately $260 million in cash and the
assumption of approximately $20 million in mortgage debt. It is anticipated that
G&I III Residential One LLC will assign its rights and obligations under the
purchase and sale agreement to G&I III Residential Portfolio LLC, and that we
will invest approximately $12 million of the cash proceeds from the sale in a
joint venture in which G&I III Residential Portfolio LLC will have an
approximate 85% equity interest and we will have an approximate 15% equity
interest. We intend to provide fee management services for the properties at
market rates through our third-party management subsidiary, Alliance Property
Management.
Initially, we intend to use funds that had been earning approximately 9%
while invested in the apartment communities to pay down variable debt under our
line of credit that carries a current average rate of 7.25%. Until we reinvest
the transaction proceeds, we anticipate that there will be a short-term dilutive
impact on our funds from operations, or FFO. FFO is defined by the National
Association of real estate investment trusts as net income or loss (computed in
accordance with generally accepted accounting principles) excluding gains or
losses from debt restructuring and sales of property, plus depreciation and
amortization of real estate assets. FFO does not represent cash generated from
operating activities in accordance with generally accepted accounting
principles, and therefore should not be considered a substitute for net income
as a measure of results of operations or for cash flow from operations as a
measure of liquidity. Additionally, the application and calculation of FFO by
other real estate investment trusts may vary materially from our application and
calculation of FFO, and therefore our FFO and the FFO of other real estate
investment trusts may not be directly comparable. Over the next several
quarters, we plan to reinvest some or all of the proceeds in the development and
acquisition of identified properties. We expect that the timing impact of our
reinvestment of the proceeds will decrease our FFO per share by approximately
$0.03-$0.04 per share in the second half of 2000. In connection with the
transaction, we will record a one-time loss on the sale, for GAAP accounting
purposes, of approximately $35 million in the third quarter of 2000.
The closing of the transaction is subject to customary closing conditions.
Although there can be no assurance, we expect the transaction to close with
respect to 19 of the apartment communities during September 2000 and with
respect to the remaining three before December 31, 2000. A copy of the purchase
and sale agreement is filed as Exhibit 2.1 to this report and incorporated by
reference in this report. The description of the purchase and sale agreement set
forth in this report does not purport to be complete and is qualified in its
entirety by the provisions of the purchase and sale agreement.
This report contains forward-looking statements, such as those pertaining
to the closing of the sale of the properties, our anticipated proceeds, the use
of those proceeds, our future investments, our future earnings, impact of the
transaction on our net income, our participation in
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a joint venture and management of the properties. These statements are based on
our current expectations and judgment. Forward-looking statements are
necessarily dependent on assumptions, data or methods that may be incorrect or
imprecise and we may not be able to realize them. Actual results and future
events could vary materially from those set forth in the forward-looking
statements as a result of various factors including the failure of the property
sale to close with respect to one or more properties, a delay in the closing,
difficulties in identifying properties to acquire and in effecting acquisitions,
failure to successfully integrate acquired properties and operations, the cost
of borrowing, the rate of return on investment in new properties, interest rates
and operating costs, future earnings, competitive factors, legislative or other
regulatory conditions, defaults or nonrenewals of leases, failure to obtain
necessary outside financing, risks and uncertainties affecting property
development and construction (including construction delays, cost overruns,
inability to obtain necessary permits and public opposition to such activities),
failure to qualify as a real estate investment trust under the Internal Revenue
Code of 1986, environmental uncertainties, risks related to natural disasters,
financial market fluctuations, changes in real estate and zoning laws, increases
in real property tax rates, general economic trends including income tax laws,
governmental regulation, legislation, population changes, and other factors
described under "Risk Factors" in our Annual Report on Form 10-K for the fiscal
year ended December 31, 1999. We caution you not to place undue reliance on
forward-looking statements, which reflect our analysis only and speak only as of
the date of this report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits:
Exhibit
Number Description
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2.1 Purchase and Sale Agreement, dated July 10, 2000, by and
among G & I III Residential One LLC, BRE Properties, Inc.
and BRE Properties Investors LLC (with certain exhibits
omitted)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
BRE Properties, Inc.
Date: September 7, 2000 By: /s/ Edward Lange
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Edward Lange
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibit
No. Description
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2.1 Purchase and Sale Agreement, dated July 10, 2000, by and among G
& I III Residential One LLC, BRE Properties, Inc. and BRE
Properties Investors LLC (with certain exhibits omitted)
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