Filed by Aegis Realty Inc.
Pursuant to Rule 425 Under the Securities Act of 1933
and Deemed Filed
Pursuant to Rule 14a-12 Under the Securities Exchange Act of 1934
Subject Company: Aegis Realty Inc.
Commission File No.: 333-55973
AT AEGIS REALTY AT THE FINANCIAL RELATIONS BOARD
Brenda Abuaf Joe Calabrese - General Info (212) 661-8030
Director of Shareholder Services Pamela K. Belfor-Analyst Info (212) 661-8030
(800) 831-4826
Aegis Realty to Acquire 19 Community Shopping Centers
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& P.O'B. Mongtomery & Co.
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NEW YORK, NY - December 21, 2000 - Aegis Realty Inc. ("Aegis") (AMEX: AER), a
geographically diversified real estate investment trust ("REIT") today announced
that it has entered into a definitive acquisition agreement to acquire a
portfolio of 19 shopping centers and several retail development opportunities
from Dallas, Texas-based P.O.B. Montgomery & Company (and its investment
partners) ("POB"), together with POB's on-going development business. The
transaction, which is comprised of cash, operating partnership interests and
debt, is currently valued at about $203 million.
As a condition to the POB transaction, Aegis will terminate its advisory
agreement and acquire the assets of the property manager and terminate the
property management agreement pursuant to the management internalization
agreement which was entered into simultaneously with the acquisition agreement.
As a result, Aegis will become self-managed and self-administered. The POB
transaction is subject to Aegis' stockholder approval and customary conditions,
and both transactions are expected to close in the late Spring of 2001. The
acquisition and management internalization agreements have been approved by the
Board of Directors of Aegis and the shareholders of POB.
Highlights:
o Creates a fully integrated property acquisition, management and
development organization
o Increases Aegis' total market capitalization from approximately $155
million to approximately $352 million
o Increases the size of Aegis' shopping center portfolio from 3 million
square feet of GLA to 5.64 million square feet of GLA
o Adds new, and strengthens existing, retailer relationships
o Adds ground-up development capabilities
o Furthers Aegis' strategic plan as consolidator of shopping center
portfolios
o Increases insider stock ownership
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o Immediately accretive to FFO on a diluted per share basis
Transaction Terms
-----------------
Under the terms of the acquisition agreement, Aegis has agreed to pay POB and
its investment partners total consideration of $203.5 million. The consideration
will be comprised of: $3 million in cash, (ii) $58.4 million of limited
partnership interests in Aegis Realty Operating Partnership, LP ("OP Units"),
which are convertible on a one-for-one basis into Aegis common stock at a value
of $11 per share and cannot be transferred for one year, and (iii) assumption of
$142.1 million in non-recourse debt encumbering the acquired shopping centers.
The consideration and components of the consideration are subject to certain
adjustments provided for in the acquisition agreement. The Advisor will be paid
its standard acquisition fee in connection with the transaction. Up to $1
million of such fee will be paid in the form of cash and the balance of
approximately $6.5 million will be paid in the form of a distribution of Aegis'
non-core, non-retail assets based upon their assigned fair market value subject
to certain adjustments.
The acquisition will represent the first transaction to be completed under
Aegis' long-term strategic plan to act as a consolidator of shopping centers.
Aimed at quickly enhancing the nature and scope of its portfolio and operations,
Aegis, over the past year has mainly focused its acquisition efforts on large
portfolios. With the completion of this acquisition, Aegis will further many of
its strategic goals by: i) increasing its equity market capitalization by 62%
and its gross leaseable square footage of high-quality well anchored shopping
centers by 88%; ii) accumulating a critical mass of assets and revenue necessary
to allow for the internalization of a full-time management team to develop,
redevelop, manage, administer and lease retail assets; iii) enhancing the
company's redevelopment capabilities and adding ground-up development
capabilities; and iv) increasing share ownership of management and insiders.
"We are extremely excited about this acquisition. The totality of what we have
accomplished with this transaction significantly changes the nature and scope of
the Company and positions it for strong growth. As a result of this transaction,
we will add terrific assets and conform the Company's operating structure to
meet the demands of the marketplace. Following this transaction, Aegis will be
an internally managed and administered REIT with a first-class management team.
We are very excited about the growth opportunities arising from the joining of
Aegis, POB and POB's institutional partner, Apollo Real Estate Advisors",
remarked Stuart J. Boesky, Chairman and Chief Executive Officer of Aegis." "POB
is an exceptionally well-run company with strong name recognition. Their
expertise in value enhancement and ground-up development of high-quality
properties is the perfect complement to the property management capabilities of
Aegis' Manager. In addition, Apollo adds financial resources and industry
relationships that will insure the Company's continued growth. After the
acquisition, Aegis will be a much stronger company with better access to
capital, additional expertise in redevelopment, ground-up development, leasing
and property management skills."
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Financial Summary
-----------------
Pro Forma for the transaction, Aegis will have approximately 14.4 million fully
diluted shares and OP units outstanding. Aegis will be assuming approximately
$142 million of mortgage debt and will have a total of approximately $216
million in debt upon completion of the acquisition. The combined company
generates in-place pro forma annualized revenues of approximately $50 million,
property level NOI of approximately $36 million and fully diluted FFO of
approximately $18 million. The transaction is expected to be immediately
accretive to FFO on a fully diluted per share basis.
Management Internalization
--------------------------
To attract the financial resources necessary to continue to grow the Company,
management of both Aegis and POB have concluded that Aegis must become
self-managed and self-advised. Since its formation in 1997, Aegis has been
externally advised by Related Aegis, LP (the "Advisor") and its properties have
been externally managed by RCC Property Advisors (the "Manager"). As a condition
of the transaction, Aegis will acquire substantially all of the assets of the
Manager and terminate its contracts with the Manager and the Advisor pursuant to
the management internalization agreement. In consideration of the management
internalization, the Manager and Advisor will be paid an aggregate amount of
approximately $3.4 million subject to adjustments pursuant to the management
internalization agreement. Such consideration will be paid in the form of shares
issued at a value of $11 and a distribution of non-core, non-retail assets based
upon their assigned fair market value. After the transaction is completed,
Related Capital Company and its officers, directors and affiliates will own
between 3.4% and 5.4% of Aegis' outstanding shares depending upon the actual
composition of the consideration received in accordance with the internalization
agreement.
New Management
--------------
Upon closing, Philip Montgomery and certain other officers of POB will assume
full-time executive positions with Aegis. Mr. Montgomery will assume the role of
President and Chief Executive Officer of Aegis replacing Stuart J. Boesky, who
will stay on as Chairman of the Board. Mr. Montgomery and the management team
have agreed to enter into multi-year employment contracts which will contain
compensation, non-compete provisions and other terms, which are customary to the
REIT industry. This transaction will include the contribution of POB
Montgomery's current and future retail development business. In addition, the
Board of Directors will be expanded from five to seven members, four of whom
will be independent directors.
Affiliates of Apollo Real Estate Advisors have been investment partners with POB
since 1994 and will own approximately 28% of the Company (as OP Unit holders)
following the consolidation. In addition, POB employees who will become key
members of Aegis' management, will own approximately 4% of the Company (as OP
Unit holders). Apollo
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and POB have veto rights over certain major decisions as defined in the
acquisition agreement.
"We have been in partnership with Phil Montgomery and P.O'B. Montgomery and
Company since 1994 and have purchased in excess of $250 million of neighborhood
and community shopping centers together," remarked Richard Mack of Apollo Real
Estate Advisors. "POB has consistently maintained its discipline in adherence to
investment and due diligence criteria and they are exceptionally skillful and
persistent in uncovering and capitalizing on value-added opportunities. They
distinguish themselves by their intensive, hands-on operational style. They are
strong, low-overhead, relationship oriented operators. Going forward, this
company will be Apollo's primary and dominant focus in the shopping center
business. We are excited about the potential of this management team to create
value for investors, and we are confident they will be successful. Consistent
with the Company's current philosophy, we believe the shopping center industry
is experiencing ongoing consolidation, providing management with the opportunity
to identify complementary retail property portfolios which would benefit from
POB's long-term tenant relationships and strong management capabilities."
After the consolidation, management expects to continue Aegis' strategy of
ownership and operation primarily of grocery-anchored shopping centers. In
addition, Aegis will benefit from POB's established relationships with national
retailers. Recent POB transactions with leading national retailers have included
Home Depot, Target, Bed, Bath and Beyond, and Albertsons. Aegis will also have
the advantage of POB's ground-up development ability, fully dedicated management
expertise and long-term external equity relationships. The combined entity will
extend POB's strong retailer relationships and acquisition skills across a
national platform. POB has produced a sustained record in both retailer driven
development projects and value-added acquisition opportunities.
Approval
--------
Completion of the POB transaction is subject to normal closing conditions and
the approval of Aegis stockholders. The acquisition and management
internalization agreements have been approved unanimously by the Board of
Directors of Aegis and the shareholders of POB.
In connection with the transaction, Aegis' Board of Directors formed a special
committee consisting of its independent directors (the "Special Committee"). The
agreements have been recommended for adoption to the entire Board by the Special
Committee and unanimously approved by the Board of Directors of Aegis. The
Special Committee and Aegis were advised in this transaction by Bear, Stearns &
Co. Inc. Aegis also engaged the law firm of Paul, Hastings, Janofsky, & Walker
LLP to advise it and the Special Committee engaged Ballard Spahr Andrews &
Ingersoll, LLP to act as its legal counsel. Bear, Stearns & Co. Inc. has issued
an opinion that the consideration paid pursuant to the transaction is fair from
a financial perspective. Additionally, the Special Committee engaged Houlihan
Lokey Howard & Zukin Financial Advisors, Inc. to provide an opinion with respect
to the internalization of Aegis' Manager and Advisor.
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Houlihan Lokey has issued an opinion that the consideration paid by Aegis to the
Advisor and the Manager is fair to the Company. POB was advised by the law firm
of Jenkins & Gilchrist, P.C.
Although there are limitations on Aegis' ability to solicit competing
transactions, Aegis' Board of Directors retains the right to consider
alternative transactions in accordance with its duties under applicable law. An
alternative transaction may include, among others, any merger, consolidation,
share exchange or business combination. The exercise of such rights by Aegis'
Board of Directors could result in payment of a termination fee of $3 million to
POB plus, in certain circumstances, agreed upon expenses.
Conference Call
---------------
A conference call is scheduled for 1:00 p.m. Eastern Standard Time on Thursday
December 21, 2000. Investors, brokers, analysts and stockholders wishing to
participate should call 800-482-5519 and for international callers the number is
303-224-6998. To listen to the webcast, visit www.streetfusion.com and install
the necessary audio software. For interested individuals unable to join the
conference call, replay of the call will be available through December 28, 2000
at 800-625-5288 (domestic calls) and 303-804-1855 (international calls). The
Passcode is 892797.
About Aegis Realty
Aegis Realty, a geographically diversified real estate investment trust, has
property holdings in 15 states. The Company's current portfolio includes direct
or indirect interests in 28 neighborhood shopping centers, two garden apartment
complexes and one participating Federal Housing Administration (FHA) co-insured
mortgage loan. Aegis Realty is currently seeking other acquisitions throughout
the 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 risks, trends, uncertainties and other factors which
may cause the actual results, performance or achievements expressed or implied
by such forward-looking statements. Among those risks, trends and uncertainties
are the general economic climate; the supply of and demand for shopping center
properties; interest rate levels; the availability of financing; and other risks
associated with the development and acquisition of properties; the failure of
Aegis stockholders to approve the consolidation and the risk that the businesses
will not be integrated successfully. Additional factors that could cause Aegis'
results to differ materially from those described in the forward-looking
statements can be found in the Company's filings with the Securities and
Exchange Commission ("SEC"), including the 1999 Annual Report on Form 10-K and
the proxy statement which will be delivered to stockholders as part of the
approval process. The Company expressly disclaims any obligation or undertaking
to release publicly any updates or revisions to any forward-looking statements
contained herein to reflect any changes 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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AEGIS WILL BE FILING A PROXY STATEMENT WITH THE SEC IN CONNECTION WITH THE
ABOVE-DESCRIBED TRANSACTION. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
THE PROXY STATEMENT BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION. THE PROXY
STATEMENT AND OTHER DOCUMENTS FILED BY AEGIS WITH THE SEC MAY BE OBTAINED WHEN
THEY BECOME AVAILABLE FREE OF CHARGE AT THE SEC'S WEBSITE (http://www.sec.gov).
AEGIS, AND ITS DIRECTORS AND OFFICERS, AND THE ADVISOR, AND THE DIRECTORS AND
OFFICERS OF ITS SOLE GENERAL PARTNER, MAY BE DEEMED TO BE "PARTICIPANTS" IN THE
SOLICITATION OF PROXIES FROM AEGIS STOCKHOLDERS IN CONNECTION WITH THE
TRANSACTION. THESE POTENTIAL PARTICIPANTS HAVE INTERESTS IN THE TRANSACTION,
SOME OF WHICH COULD DIFFER FROM THOSE OF AEGIS STOCKHOLDERS GENERALLY.
INFORMATION ABOUT THE DIRECTORS AND OFFICERS OF AEGIS AND THE GENERAL PARTNER OF
THE ADVISOR, INCLUDING SUCH INDIVIDUALS' OWNERSHIP OF AEGIS SHARES, IS SET FORTH
IN THE PROXY STATEMENT FOR AEGIS' 2000 ANNUAL MEETING OF STOCKHOLDERS (AND IS
AVAILABLE AT THE SEC WEBSITE LISTED ABOVE). INVESTORS AND SECURITY HOLDERS MAY
OBTAIN ADDITIONAL INFORMATION REGARDING THE INTERESTS OF SUCH POTENTIAL
PARTICIPANTS BY READING THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE.
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Aegis Portfolio
Name of Center Location Anchor Tenants Leasable Occ
Sq. Ft.
Governors Square Montgomery, AL Odd Lots 183,339 74%
Cactus Village Glendale, AZ Safeway 72,598 98%
Walgreens
Rolling Hills Square Tucson, AZ Fry's 101,864 92%
Winery Square Fairfield, CA Food 4 Less 121,950 87%
Barclay Place Lakeland, FLA Food Lion 81,459 87%
Pablo Plaza Jacksonville, FLA Publix/Office Depot 141,565 97%
Westbird SC Miami, FLA Publix 100,087 83%
Eckerds
Mountain Park Plaza Atlanta, GA Publix 77,686 89%
Mountain View Snellville, GA Kroger 99,908 93%
Village
Kokomo Plaza Kokomo, IN Kroger 89,546 97%
Town West SC Indianapolis, IN Kroger 88,200 96%
Emporia West Emporia, KS Dillons 76,705 100%
Crossroads East Columbus, OH Lenscrafters 72,925 74%
Forest Park Cincinnati, OH Kroger 92,824 100%
Southgate SC Heath, OH Big Bear 213,923 97%
Odd Lots
Pier One
Highland Fair Gresham, OR Safeway 74,764 98%
Oxford Mall Oxford, MS Wal-Mart 166,860 93%
JC Penney
Southaven Southaven, MS Kroger 83,750 89%
The Market Place Newton, NC Bi-Lo 125,095 90%
White Oaks Plaza Spindale, NC Wal-Mart 186,758
Winn-Dixie
Applewood Center Omaha, NE Hy-Vee 101,130 97%
Marion City Square Marion, NC Bi-Lo 163,970 82%
Centre Stage SC Springfield, TN K-Mart 146,549 98%
Food Lion
Hickory Plaza Nashville, TN Kroger 67,336 100%
CVS
Birdneck SC Virginia Beach, VA Food Lion 67,060 96%
Eckerds
Cape Henry Plaza Virginia Beach, VA Food Lion 55,075 96%
Rite Aid
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Dunlop Village SC Colonial Heights, Food Lion 77,315 86%
VA
CVS
Midlothian, VA Winn Dixie 78,611 97%
-----------------
3,008,852 90.8%
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POB Portfolio
Name of Center Location Anchor Tenants Leasable Occ
Sq. Ft.
Sonora Plaza Sonora, CA Orchard Hardware 162,127 77.3%
Cost U Less
Piedmont Plaza Apopka, FLA Albertsons 150,975 99.2%
K-Mart
River Run Mirimar, FLA Publix 92,787 97.3%
Walgreens
MarketPlace Independence, MO Price Chopper 244,215 97.4%
Old Navy
Univerisity Place Lincoln, NE Hy-Vee 120,323 95.9%
Coronado Santa Fe, NM Furr's Grocery 116,484 89.1%
Holly Farm Portland, OR Albertsons, Staples 112,617 90.3%
Plaza Rios Dallas, TX Tom Thumb 103,358 92.6%
(Safeway)
San Mar Plaza San Marcos, TX Hastings Books & 185,955 83.7%
Records (Kroger)
Hobby Lobby
Skillman/Abrams Dallas, TX Tom Thumb/ 134,269 93.7%
Safeway
Country Hills Ogden, UT Smiths/Kroger 128,954 94.0%
Staples Odessa, TX Staples 23,942 100.0%
Court Street Pasco, WA Albertsons/Rite Aid 117,030 99.3%
Franklin Park Spokane, WA Bed, Bath & Beyond 136,350 73.1%
Ross, Rite Aid
Rite Aid
Highlands Center Kennewick, WA REI/Hastings Books 123,196 80.6%
& Records,
Rite Aid
Tacoma Place Tacoma, WA Homebase 233,548 99.1%
Gart Sports
Marysville Towne Albertsons 238,147 94.6%
Centre Rite Aid, Staples
JC Penney
Washington Plaza Richland, WA Safeway 149,176 94.9%
Rite Aid
Cheyenne Plaza Cheyenne, WY Hobby Lobby 60,000 100.0%
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2,633,453 93.0%
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