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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
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Date of report (Date of earliest event reported):
OCTOBER 30, 1998
WESTERN INVESTMENT REAL ESTATE TRUST
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(Exact name of registrant as specified in its charter)
California 001-08723 94-6100058
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Formation) File Number) Identification Number)
2200 Powell Street, Suite 600, Emeryville, California 94608
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(Address of principal executive offices) (Zip Code)
(510) 929-0211
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(Registrant's telephone number, including area code)
not applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
ACQUISITION OF KIENOW'S FOOD STORES, INC.
On October 30, 1998, Western Real Estate Services, Inc.
("WRESI"), a subsidiary of Western Investment Real Estate Trust ("Western"),
acquired all of the outstanding capital stock of Kienow's Food Stores, Inc.,
a privately held Oregon corporation ("Kienow's") from its ten shareholders
(the "Kienow's Acquisition"). Prior to the transaction, none of Kienow's
shareholders had any material relationship with Western, its directors or its
officers or any of their associates. Kienow's owns ten core retail properties
and holds a leasehold interest in two retail properties in the Portland,
Oregon metropolitan area. Six of the ten retail properties are multi-tenant
neighborhood shopping centers. Kienow's operates a retail grocery store at
each of the twelve locations. Additionally, Kienow's owns certain non-core
real property in the Portland, Oregon area, including an office building,
residential properties and its headquarters.
The Kienow's Acquisition was structured as follows.
Pursuant to the Stock Purchase and Contribution Agreement, immediately prior
to the closing of the transaction, Kienow's redeemed approximately $10.8
million of its stock from cash on hand. Holders of 4,570 non-redeemed shares
(valued at approximately $17.4 million) contributed such shares to
Western/Kienow, L.P., a newly-formed Delaware limited partnership controlled
by Western as the sole general partner (the "DownREIT Partnership"). Those
contributing stockholders became limited partners in the DownREIT
Partnership. The DownREIT Partnership contributed its shares in Kienow's to
WRESI, in exchange for non-voting preferred stock representing a 97% economic
interest in WRESI. The remaining 23,009 shares of Kienow's were purchased by
WRESI from their holders for approximately $26.2 million. WRESI funded the
cash portion of the purchase price primarily through borrowings from Western
and Western funded such loan primarily through draws on its unsecured line of
credit. In order to preserve Western's status as a REIT, the voting common
stock of WRESI was issued to officers of Western, in their individual
capacities, in exchange for a personal investment by such officers in an
amount equal to approximately 3% of the value of Kienow's. Such investment
was funded by loans from Western secured by the common stock of WRESI.
Western (together with the DownREIT Partnership and WRESI)
intends to cause Kienow's to dispose of certain of its non-core properties
and to lease its grocery store locations to third-party retail operators. In
the transition to third-party operators, Kienow's will discontinue its direct
operation of the grocery stores on a phased basis.
Western is an unincorporated business association organized
as a California trust that has elected to be taxed as a real estate
investment trust (a "REIT") under the federal income tax code.
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CAUTIONARY STATEMENT
This Current Report on Form 8-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The words "expect," "intends," "will" and similar expressions
identify forward-looking statements. Forward-looking statements involve risks
and uncertainties, many of which are outside of Western's control. Western's
actual results could differ materially from those described in such
forward-looking statements. Certain factors that may cause actual results to
differ include, but are not limited to, the risk that Western may not find
qualified lessees for the grocery store locations, the risk that economic
conditions may deteriorate in the Portland, Oregon area thereby decreasing
demand for retail space and increasing the likelihood that current tenants
will default, the risk of increases in construction costs which may
discourage new tenants from leasing space that would require remodeling for
their intended uses, and the risks relating to real estate ownership
generally detailed in the Company's filings with the Securities and Exchange
Commission.
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 thereunto duly authorized.
WESTERN INVESTMENT REAL ESTATE TRUST
(Registrant)
Date: November 12, 1998 By: /s/ Dennis D. Ryan
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Name: Dennis D. Ryan
Title: Chief Financial Officer
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