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: March 9, 1998
Entertainment Properties Trust
(Exact name of registrant as specified in its charter)
Maryland 1-13561 43-179877
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1200 Main, Suite 3250 Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 472-1700
N/A
(Former name or former address, if changed since last report.)
Item 2 Acquisition or Disposition of Assets
As part of the Formation Transactions described in the
Company's Registration Statement on Form S-11, Registration No.
33-35281 (the "Registration Statement"), the Company has
acquired the megaplex theatre property known as South Barrington
30 in Chicago, Illinois ("South Barrington 30") from an affiliate
of American Multi-Cinema, Inc. ("AMC"), a wholly-owned subsidiary
of AMC Entertainment, Inc. ("AMCE"). South Barrington 30 is the
last of the Initial Properties described in the Registration
Statement. South Barrington 30 was purchased for cash with
proceeds from the Company's $200 million Bank Credit Facility and
remaining proceeds of the Company's initial public offering.
South Barrington 30 was acquired on March 9, 1998. The
theatre has 30 screens and 6,210 seats and occupies 130,891 gross
square feet. The purchase price for South Barrington 30 was
$34.5 million. South Barrington 30 has been leased to AMC at an
initial annual rental rate of $3,622,000. Title to the theatre
is held in the name of a wholly-owned subsidiary of the Company.
<PAGE>
The Lease for South Barrington 30 is a triple-net lease with
an initial term of 15 years which may be extended upon the same
terms and conditions for four additional five-year terms at the
option of AMC. The Lease is referred to as a triple net lease in
that it requires AMC to pay substantially all expenses associated
with the operation of the property, such as taxes and other
governmental charges, insurance, utilities, service, maintenance
and any ground lease payments, if applicable. The Lease requires
that, for a specified period, AMC shall operate the property only
as a movie theatre and activities incidental thereto. AMC's
performance of its obligations under the Lease has been
guaranteed by AMCE.
Peter C. Brown, Chairman of the Board of the Company, is the
President, Chief Financial Officer and a director of AMCE. Mr.
Brown is also Executive Vice President, Chief Financial Officer
and a director of AMC. Robert C. Harris, President, Chief
Development Officer and a trustee of the Company, is the former
Senior Vice President of AMC in charge of its international
affairs.
The purchase price for the property was determined by the
management of both AMCE and the Company as the cost of developing
and constructing the property.
The Lease payment obligations with respect to the property
were determined by the management of AMCE and the Company and
were not negotiated on an arms-length basis. The Lease payments
are based on an initial capitalization rate of 10.5%, which the
Company believes reflects the fair market value of the property
to the Company based on rates for comparable triple net lease
transactions.
The property will be operated by AMC as a megaplex movie
theatre under the terms of the Lease.
The description of the Initial Properties (including South
Barrington 30) and underlying Lease terms contained in the
Prospectus which is a part of the Registration Statement under
the captions "Business of the Company and its Properties,"
"Leases" and "The Formation Transactions" is incorporated by
reference in this Report.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
WITH THE EXCEPTION OF HISTORICAL INFORMATION, THIS REPORT ON
FORM 8-K CONTAINS FORWARD-LOOKING STATEMENTS AS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND IDENTIFIED
BY SUCH WORDS AS "WILL BE," "INTENDED," "CONTINUE," "BELIEVE,"
"MAY," "EXPECT," "HOPE," "ANTICIPATE," "GOAL," "FORECAST" OR
OTHER COMPARABLE TERMS. THE COMPANY'S ACTUAL FINANCIAL
CONDITION, RESULTS OF OPERATIONS OR BUSINESS MAY VARY MATERIALLY
FROM THOSE CONTEMPLATED BY SUCH FORWARD-LOOKING STATEMENTS AND
INVOLVE VARIOUS RISKS AND UNCERTAINTIES, INCLUDING BUT NOT
LIMITED TO THE FOLLOWING:
<PAGE>
. THE COMPANY'S INITIAL DEPENDENCE ON A SINGLE
TENANT AND LEASE GUARANTOR FOR ITS LEASE REVENUES
AND ABILITY TO MAKE DISTRIBUTIONS TO ITS
SHAREHOLDERS
. THE COMPANY'S ABILITY TO DIVERSITY ITS PORTFOLIO
. POTENTIAL CONFLICTS OF INTEREST INVOLVING THE
COMPANY AND ITS INITIAL TENANT AND LEASE GUARANTOR
. COMPETITION FROM OTHER ENTITIES PROVIDING CAPITAL
TO THE ENTERTAINMENT INDUSTRY
. DEPENDENCE ON KEY PERSONNEL
. OPERATING RISKS IN THE ENTERTAINMENT INDUSTRY THAT
MAY AFFECT THE OPERATIONS OF THE COMPANY'S TENANTS
. TAX RISKS ARISING FROM THE COMPANY'S INTENTION TO
QUALIFY AS A REIT
. INTEREST RATES AND AVAILABILITY OF DEBT FINANCING
. GENERAL REAL ESTATE INVESTMENT RISKS
. OTHER RISKS AND UNCERTAINTIES
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS, AND ARE ENCOURAGED TO REVIEW THE RISK
FACTORS IDENTIFIED IN THE COMPANY'S PROSPECTUS CONTAINED IN THE
REGISTRATION STATEMENT ON FORM S-11.
Item 7 Financial Statements and Exhibits
(a) Financial statements of business acquired. The Company
will not operate South Barrington 30, but is instead
leasing the property to AMC in accordance with a triple
net Lease guaranteed by AMCE. The property is being
used entirely by AMC in its business pursuant to a
triple net Lease from the Company and is not being used
in any significant way for rental to third parties.
Accordingly, consolidated financial statements of AMCE,
as guarantor of the Lease, have been provided in lieu
of an operating statement for the property.
For information with respect to the financial condition
and results of operations of AMCE and subsidiaries
(including AMC), reference is made to the unaudited
Condensed Pro Forma Financial Statements and notes
thereto of AMC Entertainment, <PAGE> Inc. and subsidiaries for
the twenty-six week period ended October 2, 1997 and
the year (53 weeks) ended April 3, 1997; the unaudited
Financial Statements and notes thereto of AMC
Entertainment, Inc. and subsidiaries as of October 2,
1997 and April 3, 1997 and for the twenty-six weeks
ended October 2, 1997 and September 26, 1996; and the
Consolidated Financial Statements of AMC Entertainment,
Inc. and subsidiaries and report thereon of independent
accountants for the year (53 weeks) ended April 3, 1997
and years (52 weeks) ended March 28, 1996 and March 30,
1995 contained in the Registration Statement and
incorporated by reference into this Report.
(b) Pro forma financial information - For forecast
financial information reflecting the acquisition of the
Initial Properties (including South Barrington 30)
reference is made to "The Company's Selected Financial
Information" contained in the Registration Statement
and incorporated by reference in this Report. In
accordance with instruction b.3 to Form 8-K, the
forecast financial information contained in the
Registration Statement is deemed to be substantially
the same as that which would be provided in reflecting
the acquisition of the Initial Properties (including
South Barrington 30).
(c) Exhibits
EXHIBIT NO. DESCRIPTION
10.1 Form of Agreement of Sale and
Purchase between the Company and
American Multi-Cinema, Inc.
(incorporated by reference to
Exhibit 10.1 to the Registration
Statement)
10.5 Form of Lease entered into between
the Company and American Multi-
Cinema, Inc. (incorporated by
reference to Exhibit 10.5 to the
Registration Statement)
10.6 Form of Guaranty of Lease between
the Company and AMC Entertainment,
Inc. (incorporated by reference to
Exhibit 10.6 to the Registration
Statement)
<PAGE>
EXHIBIT NO. DESCRIPTION
99 Sections of the Prospectus
contained in the Registration
Statement and entitled "The
Company's Selected Financial
Information," "Business of the
Company and its Properties,"
Leases" and "The Formation
Transactions," and the financial
statements of AMCE and subsidiaries
identified in Item 7(a)
(incorporated by reference to
Exhibit 99 to the Company's Current
Report on Form 8-K dated January
30, 1998).
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 hereunto duly authorized.
ENTERTAINMENT PROPERTIES TRUST
Date: March 23, 1998 By /s/ Scott Christian
Scott Christian, Treasurer
