SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 1, 1997
Aegis Realty, Inc.
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(Exact Name of Registrant as Specified in Charter)
Maryland
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(State or other Jurisdiction of Incorporation)
1-13239 13-3967879
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(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 421-5333
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report
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Item 2. Acquisition or Disposition of Assets
On October 1, 1997, as part of the settlement of class action litigation
known as Prudential Securities Inc. Limited Partnership Litigation, MDL No.
1005, Summit Insured Equity L.P., Summit Insured Equity II L.P., Summit
Preferred Equity L.P., and Eagle Insured, L.P., four limited partnerships (the
"Partnerships") co-sponsored by Prudential Bache Properties, Inc. ("PBP") and
affiliates of Related Capital Company ("RCC"), consolidated to form Aegis
Realty, Inc. ("Aegis"), a Maryland real estate investment trust ("REIT"). The
consolidation (the "Consolidation") resulted in the formation of a publicly
traded diversified REIT specializing in direct and indirect equity investments
in retail and residential properties. Pursuant to the Consolidation, Aegis
issued shares to all partners in each of the Partnerships and commenced trading
on the American Stock Exchange on October 10, 1997, under the stock symbol
"AER". There are currently 8,097,539 shares outstanding. The terms of the
Consolidation are more fully described in Aegis' Solicitation Statement dated
June 18, 1997, (the "Solicitation Statement") which was previously distributed
to all partners of the Partnerships.
Aegis is governed by a board of five directors, three of whom are
affiliated with RCC and has engaged Related Aegis LP, a Delaware limited
partnership and an affiliate of RCC (the "Advisor"), to manage its day to day
affairs. The Advisor will provide to Aegis substantially the same services that
were provided to the Partnerships by the general partners. As part of the
Consolidation, the Advisor acquired PBP's general partner interest in each of
the Partnerships, and contributed one half of such interest back to the
Partnerships prior to the Consolidation.
For financial accounting and reporting purposes, the Consolidation is
being accounted for using the purchase method of accounting. Under this method,
the Partnership with the investor group receiving the largest ownership in
Aegis, in this case Summit Insured Equity L.P., is deemed to be the acquirer. As
the surviving entity for accounting purposes, Summit Insured Equity L.P.'s
assets and liabilities will be recorded by Aegis at their historical cost, with
the assets and liabilities of the other Partnerships recorded at their estimated
fair values, using the adjusted net asset value (the "Net Asset Value") for each
Partnership as set forth in the Solicitation Statement.
Aegis will own all of its assets directly or indirectly through Aegis
Realty Operating Partnership, L.P. , a Delaware partnership (the "Operating
Partnership"), of which Aegis is the sole general partner and holder of 99.42%
of the units of partnership interest (the "OP Units") as of the consummation of
the Consolidation. The balance of the units are currently held by affiliates of
RCC. As part of the Consolidation, Summit Insured Equity L.P. ("Insured I") and
Summit Insured Equity II L.P. ("Insured II") remain as stand alone entities each
wholly owned by the Operating Partnership, as the general partner, and a
subsidiary of Aegis, as the limited partner. Insured I and Insured II continue
to be the record owners of their respective shopping centers.
Aegis is an infinite life entity formed to generate distributable cash
flow through the acquisition and ownership (either directly or through
subsidiary partnerships) of a diversified portolio of retail and residential
properties and participating FHA insured and co-insured mortgages. Aegis
currently owns direct or indirect interests in 14 neighborhood shopping centers,
two garden apartment complexes and three participation FHA co-insured mortgage
loans and has a Net Asset Value of approximately $121,000,000, or $14.90 a
share. Aegis currently has outstanding debt of 7.0% of its total Net Asset Value
and may incur leverage up to 50% of its Total Market Value (as defined in the
Solicitation Statement). Aegis expects to provide
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quarterly distributions, commencing in the first fiscal quarter after October 1,
1997. The initial level of distribution has not yet been determined. To qualify
for the beneficial tax treatment accorded to REITs, Aegis must pay annual
distributions equal to at least 95% of its REIT taxable income.
Aegis is widely held, with no investor holding more than two percent of
the outstanding shares.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a). Financial Statements
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Not Applicable
(b). Pro Forma Financial Information
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Not Applicable
(c). Exhibits
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99.1 October , 1997 Press Release "Related Capital Launches Public
REIT Targeting Neighborhood Shopping Centers and Garden Apartments."
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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 thereunto duly authorized.
Aegis Realty, Inc.
(Registrant)
BY: /s/ Alan P. Hirmes
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Alan P. Hirmes
Senior Vice President
October 14, 1997
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Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact: Eric Starkman/Elisabeth Philippe/
Scott Sunshine
Morgen-Walke Associates, Inc.
(212) 850-5600
RELATED CAPITAL LAUNCHES PUBLIC REIT TARGETING
NEIGHBORHOOD SHOPPING CENTERS AND GARDEN APARTMENTS
New York, NY, October 10, 1997 -- Related Capital Company, a leading
national real estate financial services firm, today announced the launch of
Aegis Realty, Inc. ("Aegis"), a publicly-traded real estate investment trust
(REIT) targeting neighborhood shopping centers and garden apartments. Aegis's
shares are listed on the American Stock Exchange under the stock symbol "AER."
Aegis is a consolidation of four partnerships previously sponsored by
affiliates of Related Capital. Aegis's portfolio, currently valued at
approximately $121 million, comprises 14 grocery-anchored neighborhood shopping
centers in 10 states, with an aggregate of more than 1.3 million square feet of
retail space. Also included in the portfolio are two apartment properties
totaling 236 units and mortgages on three multifamily residential properties
with outstanding balances of $27.6 million.
Aegis has outstanding debt of approximately 7% of its portfolio value of
$11 million which is significantly below the industry norm of 30%-40%.
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"Aegis will be well positioned to take advantage of opportunities to
acquire retail and multifamily housing on a national basis, " said J. Michael
Fried, President of Related Capital.
"Aegis will benefit from Related's national presence and resources to
identify properties which can take advantage of professional management and
redevelopment expertise."
Aegis has approximately eight million shares of common stock outstanding,
with a net asset value of $15.00 per share. Principals and affiliates of Related
Capital own approximately 1.1% of the REIT's outstanding stock.
Aegis is designed to provide quarterly distributions to shareholders. The
amount of quarterly distributions will be based upon the amount of cash
available for distribution ("CAD") generated each quarter after giving adequate
consideration to the working capital needs of Aegis and industry norms for
REITs. In addition, REITs limit their distribution levels to 90% or less of
AFFO. Although the initial level of distributions have not yet been determined,
the fund's proforma statements indicate that Aegis could produce sufficient CAD
to set initial distribution levels at $.22 - $.26 per share, per quarter.
However, Mr. Fried emphasized that there is no guarantee that actual CAD levels
will be sufficient to make such distributions. Additionally, there is no
guarantee that FFO levels will be sufficient to allow Aegis to make
distributions as such levels and stay within industry norms.
Aegis is managed by a board of five directors, three of whom are
affiliated with Related Capital. The REIT will pay distributions quarterly.
Related Capital is a nationwide, fully integrated real estate financial
services firm. Since 1972, Related and its affiliates have raised more than $3
billion in equity from more than 100,000 investors to acquire a portfolio of
more than 800 properties, bonds and mortgages with a value at a cost of over $7
billion.
Certain items in this press release may constitute forward-looking
statements within the meaning of the Private Litigation Reform Act of 1995 and
as such may involve known and unknown risk, uncertainties and to other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performances, or
achievements expressed or implied by such
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forward-looking statements, including without limitation those set forth in
Aegis's Solicitation Statement dated June 18, 1997. Such forward-looking
statements speak only as of the date of this press release. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statements contained herin to
reflect any change in the Company's expectations with regard thereto or change
in events, conditions or circumstances on which any such statement is based.
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