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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
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CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES AND EXCHANGE ACT of 1934
November 17, 2000
Date of Report
T REIT, INC.
(Exact name of registrant as specified in its charter)
Virginia 333-77229 52-2140299
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(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
1551 N. Tustin Avenue
Suite 650
Santa Ana, California 92705
(Address of principal executive offices)
(877) 888-7348
(Registrant's telephone number, including area code)
N/A
(former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
PROPERTY ACQUISITIONS
Plaza del Rey Shopping Center - Guadalupe County, Seguin, Texas
On November 17, 2000, TREIT - PDR, LLC, a Virginia limited liability
company, whose sole member is T REIT L.P., a Virginia limited partnership, whose
general partner is T REIT, Inc. purchased the Plaza del Ray Shopping Center and
simultaneously transferred an aggregate 83.5% undivided tenant in common
interest in the property to 2 other tenants in common, one of which is Lake Air
Mall - PDR, LLC, a Virginia limited liability company, whose sole member is NNN
Lake Air Mall, L.P., an affiliate of our advisor who purchased a 19% undivided
interest in the property. TREIT - PDR, LLC retained a 16.5% undivided tenant in
common interest in the property. The property was purchased from CMF Capital
Company L.L.C., a Delaware limited liability company under an Agreement for
Purchase and Sale Agreement dated November 6, 2000. The seller was not an
affiliate of our company or our advisor. We paid a total of $833,250 for our
16.5% undivided interest in the shopping center. The total purchase price for
the shopping center for all tenants in common was $5,050,000. In addition, we
paid approximately $3,396.55 for our share of the acquisition expenses such as
attorneys' fees, recording fees and other closing costs. The total acquisition
expenses for all of the tenants in common was $20,585.16, which represents $.16
per square foot of leasable space.
In connection with the purchase of Plaza del Rey, Fair Oak, LLC, an entity
affiliated with GE Capital Realty Group, Inc., provided a short-term acquisition
loan in the amount of $3,995,000. The promissory note evidencing the loan
provides for monthly interest only payments commencing January 1, 2001, at a
rate of 3.5% over the GECC Composite Commercial Paper Rate, currently 6.47%.
The note is due and payable in December, 2001 and is prepayable without penalty
in whole or in part upon 10 days prior written notice. The note is secured by a
first mortgage on the property. There are no loan fees or similar costs
attached with the loan. The loan may not be assumed by any future purchaser.
Under the terms of the note, the GECC Composite Commercial Paper Rate is
the average interest expense on the principal amount of the GECC Composite
Commercial Paper outstanding for General Electric Capital Corporation's full
fiscal month preceding the interest billing month. Fair Oaks will determine the
GECC Composite Commercial Paper Rate and evidence the rate by a certificate
issued by an authorized employee of Fair Oak.
GECC Composite Commercial Paper is General Electric Capital Corporation's
outstanding commercial paper for terms of 12 months or less from sources within
the United States but excluding the current portion of General Electric Capital
Corporation's long term debt and its borrowings and interest expense. Average
interest expense is the percentage obtained by dividing the interest expense on
the GECC Composite Commercial Paper for the current fiscal month by the average
daily principal amount of GECC Composite Commercial Paper outstanding during
that fiscal month divided by the actual number of days in the fiscal month and
multiplied by the actual number of days in the calendar year.
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Plaza del Rey Shopping Center is a 126,322 square foot shopping center, in
Guadalupe County, City of Seguin, Texas, which is a suburb of San Antonio. As
of November 17, 2000, Plaza del Rey Shopping Center was approximately 75%
occupied, with numerous national tenants, including Subway, Goodwill, Heilig-
Meyers Furniture, Dollar General, Blockbuster Video, Merle Norman Cosmetics,
Kentucky Fried Chicken and Popeye's Chicken, as well as various local tenants.
All of the leases will expire during the next several years, with over 25%
of the leases expiring in 2007. The anchor tenants include Goodwill, Heilig-
Meyers Furniture and Dollar General. Goodwill leases 11,038 square feet and
their lease expires in June, 2009, Heilig-Meyers Furniture leases 23,408 square
feet and their lease expires in May, 2007 and Dollar General leases 10,000
square feet and their lease expires in September, 2002.
Plaza del Rey Shopping Center was built in 1975 and consists of one linear
shaped strip center building and three out-parcel buildings on 14.454 acres,
including one available pad site. The property has approximately 125,722 net
rentable square feet, which will increase to 126,322 net rentable square feet
once the Popeye's expansion is complete. The property has approximately 1,000
parking stalls, including 14 that are designated for handicap use. The property
is located at 130 State Highway 123 Bypass at the southwest corner of Court
Street (U.S. Highway 90) and State Highway 123 in Seguin, Texas.
The purchase of the property was unanimously approved by our board of
directors, including our independent directors.
The property has 29 tenant spaces and is anchored by Heilig-Meyers
Furniture, which is the only tenant occupying more than 18% of the total
rentable square footage. Only 8 of the tenants are national tenants. As of
November 17, 2000, the shopping center was approximately 75% occupied with 8
vacant spaces. A total of 94,518 square feet was leased to 21 tenants at this
property as of November 22, 2000.
We have retained Triple Net Properties Realty, Inc. to provide supervisory
management services at the property. We will pay Triple Net Properties Realty,
Inc. a property management fee equal to 5% of gross income from the property
(currently $2,750 per month based on current gross income at the property).
Under the terms of a sub-management agreement, Triple Net Properties Realty,
Inc. has retained Trammell Crow Company to provide local management services,
including leasing and managing the property. Triple Net Properties Realty, Inc.
will pay Trammell Crow a property management fee equal to 3.5% of gross income
from the property. Trammell Crow is not affiliated with our company or our
advisor.
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Fees Paid in Connection with the Acquisition of Plaza del Rey
Acquisition Expenses
We will reimburse our advisor for costs and expenses of selecting,
evaluating and acquiring properties, whether or not actually acquired, including
surveys, appraisals, title insurance and escrow fees, legal and accounting fees
and expenses, architectural and engineering reports, environmental and asbestos
audits, travel and communication expenses, nonrefundable option payments on
properties not acquired and other related expenses payable to our advisor and
its affiliates. As November 17, 2000, we had incurred $4,166 in acquisition
fees payable to our advisor.
Property Management Fee
We will pay Triple Net Properties Realty, Inc. a property management fee
equal to 5% of the gross income from the Plaza del Rey Shopping Center. This
fee will be paid monthly. As of November 17, 2000, we had not incurred any
property management fees.
Real Estate Commission
The seller of the Plaza del Rey Shopping Center paid a real estate
commission of $350,000 to Triple Net Properties Realty, Inc., which reallowed
$114,000 of this amount to a non-affiliated third party.
Compensation for Services
We will pay our advisor or an affiliate of our advisor for other property-
level services, including leasing fees, construction management fees, loan
origination and servicing fees, property tax reduction fees and risk management
fees. Such compensation will not exceed the amount which would be paid to
unaffiliated third parties providing such services. As of November 17, 2000, we
had not incurred any fees for such services.
Reimbursable Expenses
We will reimburse our advisor for:
. the cost to our advisor or its affiliates of goods and services used for
and by us and obtained from unaffiliated parties; and
. administrative services related to such goods and services limited to
ministerial services such as typing, record keeping, preparing and
disseminating company reports, preparing and maintaining records regarding
shareholders, record keeping and administration of our dividend
reinvestment program, preparing and disseminating responses to shareholder
inquiries and other communications with shareholders and any other record
keeping
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required.
As of November 17, 2000, we had not incurred any reimbursable expenses
payable to our advisor.
Seguin Corners Shopping Center - Seguin, Texas
On November 22, 2000, TREIT - Seguin, LLC, a Virginia limited liability
company, whose sole member is T REIT L.P., a Virginia limited partnership, whose
general partner is T REIT, Inc. purchased the Seguin Corners Shopping Center and
simultaneously transferred an aggregate 74% undivided interest to 2 other
tenants in common, one of which is Lake Air Mall - Seguin, LLC, a Virginia
limited liability company, whose sole member is NNN Lake Air Mall, L.P., an
affiliate of our advisor who purchased a 10% interest in the property. TREIT -
Seguin, LLC retained a 26% undivided tenant in common interest in the property.
The property was purchased from S-SI Seguin, LP, a Texas limited partnership
under an Agreement for Purchase and Sale of Real Property and Escrow
Instructions dated October 6, 2000. The seller was not an affiliate of our
company or our advisor. We paid a total of $637,000 for our 26% undivided
interest in the shopping center. The total purchase price for the shopping
center for all tenants in common was $2,450,000. In addition, we paid
approximately $4,030 for our share of the acquisition expenses such as
attorneys' fees, recording fees and other closing costs. The total acquisition
expenses for all of the tenants in common was $15,500, which represents $0.72
per square foot of leasable space.
In connection with the purchase of the shopping center, Bank of America,
allowed a loan assumption of an existing loan in the original principal amount
of $1,735,000. The note was paid down at closing to $545,000 with no exit fee.
The note bears a floating interest rate priced at 215 basis points over the 30
day LIBOR rate with a loan maturity date of September 1, 2003. The current
interest rate is 8.77%
Seguin Corners Shopping Center is a 21,455 square foot neighborhood strip
retail center located in Seguin, Texas, a suburb of San Antonio. As of November
17, 2000, Seguin Corners Shopping Center was 100% occupied with ten tenants.
There are seven national tenants, including Dollar Tree, Bally's, Great Clips,
Friedman's, Bath & Body Works, Cato and H&R Block, which lease approximately
17,150 square feet. Additionally, there are three regional tenants, including
Oasis Tan, Cigarettes Cheaper and Premier Communications, which lease the
remaining space.
Six of the ten tenants signed five-year leases in 1999 and most of these
leases have two five-year extensions. Two of the tenants, Friedman's Jewelers
and Premier Communications have three year leases that expire in 2002. Bath and
Body Works, the third largest tenant, signed a ten year lease in 1999, with two
five year extensions. Cigarettes Cheaper signed a three year lease in early
2000 with three two-year extensions. The final tenant, H&R Block signed a five
year lease in early 2000 with two five year extensions.
Seguin Corners Shopping Center, which was built in 1999 for the previous
owners, SI
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Seguin, LP, a Texas limited partnership, consists of a single one-story
building, containing approximately 21,455 square feet on a 3.25 acre parcel of
land. The property has 118 parking stalls, including six that are designated for
handicap use. The property is located at 596 South 123 in Seguin, Texas. The
shopping center is positioned directly adjacent to the east of the Wal-Mart
Supercenter at the intersection of Highway 123 and State Highway 466.
The purchase of the property was unanimously approved by our board of
directors, including our independent directors.
The property has 10 tenant spaces with 7 of those parcels being leased by
national tenants, including Dollar Tree, Bally's, Great Clips, Friedman's, Bath
& Body Works, Cato and H&R Block, which collectively lease approximately 17,150
of the 21,455 square feet. As of November 17, 2000, the shopping center was
100% occupied.
Fees Paid in Connection with the Acquisition of Seguin Corners
Acquisition Expenses
We will reimburse our advisor for costs and expenses of selecting,
evaluating and acquiring properties, whether or not actually acquired, including
surveys, appraisals, title insurance and escrow fees, legal and accounting fees
and expenses, architectural and engineering reports, environmental and asbestos
audits, travel and communication expenses, nonrefundable option payments on
properties not acquired and other related expenses payable to our advisor and
its affiliates. As November 22, 2000, we had incurred $3,185 in acquisition
fees payable to our advisor.
Property Management Fee
We will pay Triple Net Properties Realty, Inc. a property management fee
equal to 5% of the gross income from the Seguin Corners Shopping Center. This
fee will be paid monthly. As of November 22, 2000, we had not incurred any
property management fees.
Real Estate Commission
The seller of the Seguin Corners Shopping Center paid a real estate
commission of $150,000 to Triple Net Properties Realty, Inc.
Compensation for Services
We will pay our advisor or an affiliate of our advisor for other property-
level services, including leasing fees, construction management fees, loan
origination and servicing fees, property tax reduction fees and risk management
fees. Such compensation will not exceed the amount which would be paid to
unaffiliated third parties providing such services. As of November 22, 2000, we
had not incurred any fees for such services.
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Reimbursable Expenses
. We will reimburse our advisor for:
. the cost to our advisor or its affiliates of goods and services used for
and by us and obtained from unaffiliated parties; and
. administrative services related to such goods and services limited to
ministerial services such as typing, record keeping, preparing and
disseminating company reports, preparing and maintaining records regarding
shareholders, record keeping and administration of our dividend
reinvestment program, preparing and disseminating responses to shareholder
inquiries and other communications with shareholders and any other record
keeping required.
As of November 22, 2000, we had not incurred any reimbursable expenses
payable to our advisor.
Seguin, Texas
Seguin, Texas is a suburb of San Antonio, Texas, which is strategically
located in South Central Texas on Interstate Highway 10. San Antonio, the tenth
largest city in the United States, is thirty minutes west of Seguin via IH-10.
Austin, the state capital, is conveniently accessible 50 miles to the north by
State Highway 123 and Interstate Highway 35. The ports of Houston and Corpus
Christi are nearly equal distance from Seguin. The population of Seguin is
approximately 30,000 and includes a diverse work force. Major employers for the
area include Motorola, the Seguin ISD, Structural Metals, Tyson Foods, HEB Food
Stores and The Guadalupe Valley Hospital.
Seguin serves as a secondary market to the San Antonio MSA. Seguin has
experienced moderate growth over the past couple of years while the majority of
the growth has occurred outside the city limits. The four dominant shopping
centers in the area are King Plaza, Plaza del Rey, the Wal-Mart Supercenter and
Seguin Corners. Because we are acquiring two of the four dominant shopping
centers, we will compete with ourselves for tenants.
Potential Property Acquisitions
We currently are considering several potential property acquisitions. Our
decision to acquire one or more of these properties will generally depend upon:
. our receipt of a satisfactory environmental survey and property appraisal
for each property;
. no material adverse change occurring in the properties, the tenants or in
the local economic conditions; and
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. our receipt of sufficient financing, either through the net proceeds from
this offering or satisfactory debt financing.
There can be no assurance that any or all of the conditions will be
satisfied or, if satisfied, that we will acquire any additional properties.
ITEM 5. OTHER EVENTS.
STATUS OF OUR OFFERING
General
On February 22, 2000 we commenced our offering of a maximum of 10 million
shares and a minimum of 100,000 shares of our common stock at an offering price
of $10.00 per share to the residents of the states listed in the prospectus. Our
offering will terminate on the earlier of February 22, 2002, or the date on
which we have sold the maximum offering.
As of November 22, 2000, we had sold 586,222 shares, including 22,090
shares issued to our advisor, Triple Net Properties, LLC, and 174,029 shares
issued to current shareholders under our dividend reinvestment program,
resulting in gross proceeds of $5,835,585 (excluding funds from Pennsylvania
investors) which exceeded the minimum offering amount of $1,000,000 and the
escrow of subscriptions (other than funds received from Pennsylvania investors)
has terminated. After the acquisition of the properties described below and
payment of selling commissions, marketing support, and due diligence
reimbursement fees, we had approximately $3,252,003 to invest in properties as
of November 22, 2000.
Subsequent State Registrations
After the date of the prospectus, we registered the offering in Louisiana,
Mississippi, and Oklahoma. As a result, we now offer and sell shares of our
common stock to residents of these states in addition to those listed in the
prospectus. We expect to register the offering in Idaho and New Mexico in the
near future.
Fees and Expenses Paid in Connection with Our Offering
Selling Commissions
NNN Capital Corp., the dealer manager, will receive 8% of the gross
proceeds of our offering, or $0.80 for each share sold, and may reallow a
portion of the selling commissions to broker-dealers participating in our
offering. As of November 22, 2000, we had incurred $446,545 in selling
commissions due to the dealer manager, a portion of which has been paid to
participating broker-dealers as commissions.
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The dealer manager will receive one warrant for every 40 shares of common
stock sold in our offering in states other than Arizona, Missouri, Ohio, or
Tennessee and may reallow a portion of the warrants to broker-dealers
participating in our offering. The dealer manager will not receive any warrants
for shares sold under our dividend reinvestment plan. Each warrant entitles the
holder to purchase one share of our common stock at a price of $12.00. As of
November 22, 2000, we had issued 4242.8 warrants to the dealer manager.
Marketing Support and Due Diligence Reimbursement Fee
We will pay the dealer manager an amount up to 1.5% of the gross proceeds
of our offering, or up to $0.15 for each share sold, to pay expenses associated
with marketing fees, wholesaling fees, expense reimbursements, bonuses and
incentive compensation and volume discounts and to generally reimburse the
dealer manager for due diligence expenses. We will not require the dealer
manager to account for spending of amounts comprising this fee. The dealer
manager may reallow a portion of this fee to broker-dealers participating in our
offering. As of November 22, 2000, we had incurred $83,727 in marketing
support and due diligence reimbursement fees to the dealer manager, a portion of
which has been reallowed to participating broker-dealers.
Other Organizational and Offering Expenses
Our advisor may advance, and we will reimburse it for, organization and
offering expenses incurred on our behalf in connection with our offering,
including legal and accounting fees, filing fees, printing costs and selling
expenses. As of November 22, 2000, we had incurred $145,890 in other
organizational and offering expenses.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements.
It is not practical to provide the required financial statements at this
time. Such financial statements will be filed as an amendment to this report on
Form 8-K no later than 60 days after the deadline for filing this Form 8-K.
(c) Exhibits.
10.1 Purchase and Sale Agreement, dated October 26, 2000, by and between
CMF Capital Company, L.L.C. and Triple Net Properties, LLC.
10.2 Purchase and Sale Agreement, dated October 6, 2000, by and between
S-SI Seguin, LP and T REIT L.P.
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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.
T REIT, INC.
Date: December 4, 2000 By: /s/ Anthony W. Thompson
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Anthony W. Thompson
President and Chief Executive Officer
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