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): May 28, 1998
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 5. Other Events
A. Governor's Square
On May 28, 1998, Aegis Realty, Inc. ("Aegis") acquired Governor's Square, a
183,339-square-foot neighborhood shopping center located in Montgomery, Alabama,
for $8.2 million. The purchase price consisted of $6,968,562 in cash, which was
provided from borrowings under Aegis' BankBoston $40 million line of credit (the
"Facility") and with 94,726 Operating Partnership Units ("OP Units") of Aegis
Realty Operating Partnership ("AROP"), whose sole general partner is Aegis,
valued at $1,231,438. The OP Units are convertible to shares of common stock of
Aegis on a one-to-one basis, subject to adjustment, on the one year anniversary
of the closing date. The OP Units were issued at an agreed upon value of $13 per
share. If as of the last trading day prior to the first anniversary of the
closing date (the "Post-Closing Adjustment Date"), the Average Price Per Share
(the "Average Price Per Share", as defined below) is less than $13.00, Aegis is
obligated to issue additional units to the seller in the amount of the
difference between (i) the quotient obtained by dividing $1,231,438 by the
Average Price Per Share as of the Post-Closing Adjustment Date and (ii) 94,726.
The Average Price Per Share shall mean, with respect to any given date, the
average final closing price per share of the common stock of Aegis, ($.01 par
value per share), as such closing price is set forth in the Wall Street Journal,
American Stock Exchange Composite Transactions section, under the column
"Close", unless otherwise unavailable or inaccurate, during the twenty (20)
trading day period ending on such date.
Governor's Square is contiguous to one of Montgomery's two regional malls. As of
July 6, 1998, the center is 86% leased and is anchored by Big Lots. Governor's
Square will be managed by RCC Property Advisors ("RCCPA"), an affiliate of
Related Aegis LP, the advisor to Aegis (the "Advisor").
B. Marion City Square
On June 25, 1998, Aegis acquired Marion City Square, a 163,970-square-foot
neighborhood shopping center located in Marion, North Carolina, the county seat
of McDowell County, for $5.1 million in cash. Aegis financed the acquisition of
Governor's Square entirely from borrowings under the Facility.
Included in the purchase was an undeveloped parcel of land adjacent to the
center that Aegis may ultimately use for expansion of the center. As of July 6,
1998, Marion City Square is 83% leased and is anchored by Bi-Lo, Dollar General
and Roses. Marion City Square will also be managed by RCCPA.
C. Repayment of Cross Creek Apartments
On June 24, 1998 Walsh/Cross Creek L.P. (the "Owner"), the owner of Cross Creek
Apartments ("Cross Creek") and an affiliate of the Advisor, sold Cross Creek to
a third party for $23.4 million. The Owner then fully repaid its outstanding
debt due to Aegis totaling $22,199,045 including a $16,971,528 FHA first
mortgage loan, a $1,783,900 equity loan, a $3,060,000 additional loan made by
Aegis to the Owner, a $286,948 prepayment penalty due Aegis on the FHA loan and
accrued interest through the closing date of $96,669.
The interest income on the Cross Creek debt recognized during the fiscal year
ending December 31, 1997 was $435,269., and for the three months ended March 31,
1998 was $433,141.
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Aegis used the repayment proceeds to reduce its outstanding debt under the
Facility. As of July 6, 1998, the outstanding balance of the Facility has been
fully paid down.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a). Financial Statements
Not Applicable
(b). Pro Forma Financial Information
Not Applicable
(c). Exhibits
99.1 June 29, 1998 Press Release "Aegis Realty, Inc. Acquires Two
Neighborhood Shopping Centers Totaling $13.3 Million; Makes First
Acquisition With Operating Partnership Units; Continues
Disposition of Non-Core Assets."
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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/ Stuart J. Boesky
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Stuart J. Boesky
President
July 9, 1998
EXHIBIT 99.1
CONTACT: Brenda Abuaf
Director of Shareholder Services
Aegis Realty, Inc.
(800) 831-4826
PRESS: Elisabeth Philippe
Morgen-Walke Associates
(212) 850-5705
AEGIS REALTY, INC. ACQUIRES TWO NEIGHBORHOOD
SHOPPING CENTERS TOTALING $13.3 MILLION;
MAKES FIRST ACQUISITION WITH OPERATING PARTNERSHIP UNITS;
CONTINUES DISPOSITION OF NON-CORE ASSETS
NEW YORK, NEW YORK - June 29, 1998 - Aegis Realty, Inc. (AMEX:AER) today
announced the acquisition of two neighborhood shopping centers totaling $13.3
million.
Governor's Square
Aegis acquired Governor's Square, a 183,339-square-foot neighborhood shopping
center located in Montgomery, Alabama, for $8.2 million. A portion of the
purchase price was paid in Operating Partnership Units, marking the first
acquisition for Aegis utilizing its UPREIT structure.
"The seller of Governor's Square had been a long term owner who took advantage
of Aegis' UPREIT structure to avoid negative tax consequences which occur when a
seller has a low adjusted tax basis in a property," said Paul Rutledge, Senior
Vice President of Aegis.
Located at one of the city's major retail intersections, Governor's Square is
contiguous to one of Montgomery's two regional malls. Currently the center is
86% leased and is anchored by Big Lots. Aegis' objective in acquiring the
property is to reposition the center and attract new "big-box" retailers who
typically chose locations that are peripheral to regional malls.
"Governor's Square has one of the best retail locations in the city and it is
clear to us that the property can be greatly enhanced through the implementation
of our redevelopment and releasing plan," said Stuart J. Boesky, President and
Chief Operating Officer of Aegis. "We are excited to have acquired a center that
is below replacement cost, is immediately accretive to FFO and has significant
upside potential,"
Marion City Square
Aegis also acquired Marion City Square, a 163,970-square-foot neighborhood
shopping center located in Marion, North Carolina, the county seat of McDowell
County, for $5.1 million in cash. Included in the purchase was an undeveloped
parcel of land adjacent to the center that Aegis will
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ultimately use for expansion. Marion City Square is currently 83% leased and is
anchored by Bi-Lo, Dollar General and Roses.
"Like Governor's Square, we purchased this center below replacement cost.
Through our leasing efforts as well as the development of the additional parcel
of land, we see Marion City Square as a center that will provide Aegis with
significant upside," said Mr. Boesky.
Repayment of Cross Creek Apartments
Aegis also announced today that Walsh/Cross Creek L.P., the owner of Cross Creek
Apartments, has sold the property to a third party for $23.4 million and will
fully repay their outstanding debt due to Aegis. The mortgage on Cross Creek is
one of the three FHA co-insured mortgages that Aegis currently holds in its
portfolio.
Walsh/Cross Creek L.P. will use the proceeds from the sale of the property to
repay the approximately $22.1 million in obligations due to Aegis, including the
first mortgage note, the equity loan, an additional loan made by Aegis to
Walsh/Cross Creek L.P., and a prepayment penalty.
Aegis will use the repayment proceeds to reduce its outstanding debt under their
$40 million line of credit facility from BankBoston, N.A. This will provide
Aegis with additional capital to acquire neighborhood shopping centers.
"The prepayment of the Cross Creek loan is consistent with our business plan to
dispose of non-core assets," said Mr. Boesky. The Cross Creek Loan had earned
Aegis an 8.95% annual yield. Currently, Aegis is acquiring neighborhood shopping
centers that, on average, have been providing Aegis with a minimum initial
annual cash-on-cash return of at least 10%. "As a fixed income instrument with
limited participation in the performance of the underlying property, the Cross
Creek loan did not provide Aegis with great potential for strategic growth,"
said Mr. Boesky.
"Aegis' recent activity is moving us closer to meeting our business objectives
for 1998, which are to acquire a minimum of $100 million of retail centers that
are immediately accretive to FFO and to dispose of certain non-core assets."
Aegis, a geographically diversified real estate investment trust, has property
holdings in 14 states. The company's current portfolio includes direct or
indirect interests in 20 neighborhood shopping centers, one garden apartment
complex and two participating Federal Housing Administration (FHA) co-insured
mortgage loans. Aegis is currently seeking retail acquisitions throughout the
continental United States.
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 Aegis to be materially
different from any future results, performances, or achievements expressed or
implied by such forward-looking statements. Such forward-looking statements
speak only as of the date of this press release Aegis expressly disclaims any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the Aegis'
expectations with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
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