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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO FORM 10-K
on
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[Fee Required]
For the fiscal year ended December 31, 1995
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[No Fee Required]
For the Transition period from
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Commission File Number 0-9097
THE PEREGRINE REAL ESTATE TRUST
-------------------------------
(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 94-2255677
---------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1300 ETHAN WAY, SUITE 200, SACRAMENTO, CALIFORNIA 95825
(Address of principal executive office) -----
(Zip Code)
Registrant's telephone number, including area code: (916) 929-8244
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Title of Each Class
-------------------
Common Shares of Beneficial Interest
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to the filing requirements for
at least the past 90 days.
Yes X No
--- ---
Sequential Page: 01 of
Exhibit Index: Page
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
[X]
MARKET VALUE
There is no active trading market for the Trust's Common Shares of Beneficial
Interest.
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
--- ---
OUTSTANDING SHARES
As of March 31, 1996, there were 4,881,055 outstanding Common Shares of
Beneficial Interest.
DOCUMENTS INCORPORATED BY REFERENCE
None.
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PART III
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Item 10. Trustees and Executive Officers of the Registrant
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(a) Executive Officers. See "Executive Officers of the Registrant," in
Part I of this report.
(b) Trustees. The Restated Declaration of Trust provides that, so long
as any Preferred Shares are outstanding, the Trust is to be managed by a Board
of five trustees, four of whom are to be elected by the holders of Common
Shares, and one of whom is to be elected by holders of Preferred Shares. At the
time of the reorganization, five trustees were designated, but due to the
resignation of Frank A. Morrow in February 1996, the Board is currently composed
of four trustees. At the next annual meeting of shareholders, the holders of
Common Shares will have the right to elect four trustees, for a term of one year
and until their successors are elected and qualified. Holders of Preferred
Shares may, at any time, elect a fifth trustee. If the holders of Preferred
Shares do not elect a fifth trustee, the unfilled position will remain vacant,
in accordance with the provisions of the Restated Declaration of Trust.
The following table sets forth certain information as of March 31, 1996
with respect to the trustees of the Trust, all of whom have served as trustees
since October 1994.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
John McMahan 58 Chairman of the Board of Trustees;
Interim Chief Executive Officer
E. Lawrence Hill 44 Trustee
John F. Salmon 50 Trustee
Kenneth T. Seeger 46 Trustee
</TABLE>
There are no arrangements or understandings between any Trustee and any
other person pursuant to which the Trustee was selected as a Trustee except as
specified in the Plan. There are no family relationships among any of the
Trustees. Mr. McMahan also serves on the Board of Trustees of CalREIT.
The principal occupations and affiliations of the Trustees are as
follows:
JOHN MCMAHAN, CHAIRMAN OF THE BOARD. Mr. McMahan is President of The
McMahan Group, a San Francisco-based real estate management firm founded in
1994. Mr. McMahan has also served as the Chief Executive Officer of
Mellon/McMahan Real Estate Advisors, Inc., which grew into one of the country's
largest real estate investment advisors. He is a faculty member at the Haas
Graduate School of Business at the University of California at Berkeley. Mr.
McMahan has published many articles on real estate investment and has been
active in several national real estate organizations, including the National
Association of Real Estate Investment Trusts. Mr. McMahan graduated from the
University of Southern California and received an MBA degree in 1961 from the
Harvard Graduate School of Business. He serves on the boards of California Real
Estate Investment Trust and BRE Properties, Inc., and has been chairman of The
National Association of Real Estate Investment Managers.
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E. LAWRENCE HILL, JR., TRUSTEE. Mr. Hill is the founder and President
of Hickey & Hill, Inc., a 12-year old turnaround and workout specialty firm
based in the San Francisco bay area. Mr. Hill's firm has worked with a variety
of clients including high-technology, banking and real estate companies
requiring near and/or long term rescue. His real estate clients have included
hotel, mixed-use light industrial, residential and retail property owners.
Successful turnarounds managed by his company have used various restructuring,
recapitalization and reorganization strategies. Prior to founding his own
company, Mr. Hill was a Vice President with the Bank of California in its
Workout and Restructuring Department. In this capacity, for more than five
years, he managed approximately one-third of the bank's non-performing assets
implementing appropriate hold/sell plans for each property. Mr. Hill received a
BS degree and an MS degree in engineering from Stanford University in 1974. He
currently serves as interim Chief Executive Officer of Carlos Murphy's, Inc.
JOHN F. SALMON, TRUSTEE. Mr. Salmon is a San Francisco-based commercial
real estate consultant. He previously served in Sacramento for five years as
Director of the Governor's Office of Asset Management of the State of
California. While in that position, he established procedures for reviewing the
state's sizable real estate holdings, developed real property operating and
disposition proposals for the Administration and the Legislature, redirected the
state's office leasing policies and counseled state government agencies on
institutional facility and asset management strategies. Prior to joining the
Governor's Office, Mr. Salmon was the Vice President, Property Development and
Sales of Santa Fe Pacific Realty Corporation (now Catellus Development
Corporation) in San Francisco. There he managed the land planning, building
development and property disposition activities of the company's three million
acre, 18-state real estate portfolio. Mr. Salmon graduated from the University
of Notre Dame in 1967 with a BBA degree in Accounting, and received a JD degree
from the University of Illinois in 1971.
KENNETH T. SEEGER, TRUSTEE. Mr. Seeger is the president of The Presidio
Group, Inc., TPG Management, Inc., and Residences, Inc., all of which are real
estate asset management and development companies based in the San Francisco Bay
Area. Until November 1993, Mr. Seeger was responsible for all finance and
acquisition activities for Southwest Diversified/Coscan Partners, a major
Irvine-based development company. Real estate development projects have included
both residential and commercial properties throughout California and in Arizona.
Prior to that, Mr. Seeger was a Senior Vice President with The Fox Group of
Companies where he was responsible for all project financing. He also has had
considerable experience in risk management, income-property operations and new
business development. Mr. Seeger graduated from the Wharton School at the
University of Pennsylvania in 1972. He is a full member of the Urban Land
Institute, is on the Pacific Rim Urban Planning and Development Council and has
served on the Advisory Board of the School of Real Estate at the University of
California at Berkeley.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the
Trust's trustees and executive officers, and persons who own more than ten
percent (10%) of a registered class of its equity securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of all equity securities of the Trust.
To the Trust's knowledge, based solely on review of the copies of such
reports furnished to it and written representations that no other reports were
required during the fiscal year ended December 31, 1995, all Section 16(a)
filing requirements applicable to its officers, trustees and greater than ten
percent shareholders were complied with.
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Item 11. Executive Compensation
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SUMMARY COMPENSATION TABLE
The following Summary Compensation Table shows compensation paid by the
Trust from the effective date of the reorganization in 1994 until the end of
fiscal 1995 to Frank A. Morrow, who served as chief executive officer of the
Trust during fiscal 1995, and to each other executive officer whose annual
compensation exceeded $100,000 (together, the "Named Officers"). Mr. Morrow's
engagement with the Trust as Chief Executive Officer was terminated on January
18, 1996 in accordance with the terms of his services agreement. John McMahan
was appointed interim Chief Executive Officer as of such date. Mr. Arnold
Brown's engagement with the Trust as Vice President and Chief Financial
Officer was terminated in November 1995 in accordance with the terms
of his services agreement.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND OTHER ANNUAL
PRINCIPAL POSITION PERIOD* SALARY BONUS COMPENSATION
------------------ ------ ------ ----- ------------
<S> <C> <C> <C> <C>
Frank A. Morrow 1995 $300,000 -- --
Chief Executive Officer October 7 to
during 1995 December 31, 1994 $ 70,000 -- --
Arnold E. Brown** 1995 $ 99,750 -- $28,500***
Vice President and Chief October 7 to
Financial Officer December 31, 1994 $ 28,500 $12,500 --
</TABLE>
*The officers named above were engaged at the time of the Effective Date of the
Plan of Reorganization on October 7, 1994. Accordingly, compensation information
is provided from the date of engagement until the end of fiscal 1995.
**In addition , Mr. Brown received from CalREIT salary and severance pay
of $40,500 in 1995, and salary of $9,000 in 1994.
***Consists of severance pay, as described below.
COMPENSATION OF TRUSTEES
During 1995, each Trustee of the Trust was paid $5000 per quarter,
$1000 for each full-day Board of Trustees meeting attended, and $500 for each
half-day meeting, telephone meeting, or special committee meeting attended.
Under the terms of the Trust's Stock Option Plan, options to purchase
Common Shares have been granted to members of the Board of Trustees who are not
full time employees or officers of the Trust or any subsidiary of the Trust.
During 1995, the four non-employee trustees received options covering a total of
26,668 Common Shares. The exercise price in each case was $2.00 per share. No
outstanding options were exercised under the Stock Option Plan during 1995.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
The Chief Executive Officer of the Trust during 1995, Frank A. Morrow,
was engaged at the time of the reorganization in October 1994 pursuant to a
personal services contract (the "Services Contract") between the Trust, Mr.
Morrow, and a management company of which Mr. Morrow is a principal. The terms
of the Services Contract
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were approved by the Bankruptcy Court. Compensation provided to Mr. Morrow under
the Services Contract was in a fixed monthly amount of $25,000. The Services
Contract was terminated on January 18, 1996 pursuant to its terms. Upon
termination, Mr. Morrow was entitled to receive and did receive a severance
payment equal to $212,500.
The former Chief Financial Officer of the Trust, Arnold Brown, was
engaged at the time of the reorganization in October 1994 pursuant to an
independent contractor agreement (the "Independent Contractor Agreement")
between the Trust and a corporation of which Mr. Brown is a principal.
Compensation provided to Mr. Brown under the Independent Contractor Agreement
was in a fixed monthly amount of $9,500. The Independent Contractor Agreement
was terminated in November 1995 and Mr. Brown was entitled to and did receive a
severance payment equal to three months compensation, or $28,500.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION.
The Board of Trustees has established a Compensation Committee
consisting of one independent trustee, Kenneth T. Seeger.
Mr. John McMahan, the Chairman of the Board of Trustees and interim
Chief Executive Officer, also serves on the Board of Trustees of CalREIT. Mr.
Frank A. Morrow, the former Chief Executive Officer during 1995, also served and
continues to serve as Chairman of the Board of Trustees and Chief Executive
Officer of CalREIT. Mr. Arnold Brown, the Trust's former Chief Financial Officer
during part of 1995, also served and continues to serve as a trustee of CalREIT.
Both the Trust and CalREIT are self-administered. However, they share
certain costs, including personnel costs, for which CalREIT reimburses the Trust
pursuant to a cost allocation agreement based on each trust's respective asset
values (real property and notes receivable) that is negotiated annually. During
1995 reimbursable costs charged by the Trust to CalREIT approximated $435,000.
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Item 12. Security Ownership of Certain Beneficial Owners and Management
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The following table sets forth certain information as of March 31, 1996
with respect to the beneficial ownership of the outstanding Common Shares and
Preferred Shares by (i) all persons known by the Trust to own more than five
percent of either class of shares, or to be a member of a group that owns more
than five percent of either class of shares, and (ii) by each trustee, or Named
Officer.
<TABLE>
<CAPTION>
Shares
Name and Address of Beneficially Percent
Title of Class Beneficial Owner Owned of Class
- -------------- ---------------- ----- --------
<S> <C> <C> <C>
Redeemable Convertible Pacific Mutual Life Insurance Company
Preferred Shares c/o Ronn Cornelius
700 Newport Center Drive
Newport Beach, CA 92660 3,475,384 26.6%
The Prudential Insurance Company
of America(1)
c/o Don Dyche
Corporate Finance Group, 9th Floor
Four Gateway Center
100 Mulberry Center
</TABLE>
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<TABLE>
<CAPTION>
Shares
Name and Address of Beneficially Percent
Title of Class Beneficial Owner Owned of Class
- -------------- ---------------- ----- --------
<S> <C> <C> <C>
Newark, NJ 07102-4069 2,172,115 16.6%
TCW Special Credits Plus Fund(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 1,729,178 13.3%
TCW Special Credits Fund IV(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 1,617,617 12.4%
TCW Special Credits Trust IV(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 1,394,498 10.7%
PRUCO Life Insurance Company(1)
c/o Don Dyche
Corporate Finance Group, 9th Floor
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102-4069 1,303,270 10.0%
Orix USA Corp.
c/o Arnold Kawano
780 Third Avenue, Floor #48
New York, NY 10017 521,308 4.0%
Weyerhaeuser Company Master
Retirement Trust(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 502,019 3.8%
TCW Special Credits Fund IVA(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 334,680 2.6%
---------- ---
Total 13,050,069 100%
</TABLE>
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(1) Shares held by: Gateway Recovery Trust
c/o Michael Morcom
Trust Administrator
Chemical Bank
450 West 33rd Street
New York, NY 10001-2697
(2) Shares held by: Salkeld & Company
c/o Bankers Trust Company
16 Wall Street, M/S 4042
New York, NY 10015
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<TABLE>
<CAPTION>
Shares
Name and Address of Beneficially Percent
Title of Class Beneficial Owner Owned of Class
- -------------- ---------------- ----- --------
<S> <C> <C> <C>
Common Shares Pacific Mutual Life Insurance Company
c/o Ronn Cornelius
700 Newport Center Drive
Newport Beach, CA 92660 681,913 13.9%
The Prudential Insurance Company
of America(1)
c/o Don Dyche
Corporate Finance Group, 9th Floor
Four Gateway Center
100 Mulberry Center
Newark, NJ 07102-4069 426,195 8.7%
TCW Special Credits Plus Fund(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 339,286 6.9%
TCW Special Credits Fund IV(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 317,396 6.5%
TCW Special Credits Trust IV(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 273,618 5.6%
PRUCO Life Insurance Company(1)
c/o Don Dyche
Corporate Finance Group, 9th Floor
Four Gateway Center
100 Mulberry Street
Newark, NJ 07102-4069 255,717 5.2%
Orix USA Corp.
c/o Arnold Kawano
780 Third Avenue, Floor #48
New York, NY 10017 102,287 2.1%
</TABLE>
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<TABLE>
<CAPTION>
Shares
Name and Address of Beneficially Percent
Title of Class Beneficial Owner Owned of Class
- -------------- ---------------- ----- --------
<S> <C> <C> <C>
Weyerhaeuser Company Master
Retirement Trust(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 98,502 2.0%
TCW Special Credits Fund IVA(2)
Richard Masson
c/o Oaktree Capital Management
550 South Hope Street, Floor #22
Los Angeles, CA 90071 65,668 1.3%
---------
Subtotal 2,560,582
E. Lawrence Hill, Jr. 13,334** *
John McMahan*** 13,334** *
John F. Salmon 13,334** *
Kenneth T. Seeger 13,334** *
Subtotal 53,336
---------
Total 2,613,918
=========
</TABLE>
(1) Shares held by: Gateway Recovery Trust
c/o Michel Morcom
Trust Administrator
Chemical Bank
450 West 33rd Street
New York, NY 10001-2697
(2) Shares held by: Cede & Company
7 Hanover Square
New York, NY 10004
No Other Officers or Trustees beneficially own any shares.
* Does not exceed one percent of outstanding shares.
** Shares under option.
*** John McMahan also owns 10,000 shares of the California Real Estate
Investment Trust ("CalREIT"), which is 76% owned by the Trust (see
"Certain Relationships and Related Transactions" below). Such shares
represent less than .001% of the outstanding shares of CalREIT.
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Item 13. Certain Relationships and Related Transactions
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The Trust owns 76% of the shares of CalREIT and Messrs. McMahan, Morrow
and Brown are trustees of CalREIT. Both the Trust and CalREIT are
self-administered. However, they share certain costs, including personnel costs,
for which CalREIT reimburses the Trust pursuant to a cost allocation agreement
based on each trust's respective asset values (real property and notes
receivable) that is negotiated annually. During 1995 reimbursable costs charged
by the Trust to CalREIT approximated $435,000.
Employees of The McMahan Group, a real estate management firm of which
the Trust's interim Chief Executive Officer, Mr. John McMahan, is a principal,
began providing consulting services in 1996 to the Trust for hourly rates up to
$150.00.
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Signatures
Pursuant to the requirements of Section 13 or Section 15(d) 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.
THE PEREGRINE REAL ESTATE TRUST
April 30, 1996 /s/ John McMahan
----------------
John McMahan
Chairman of the Board
Interim Chief Executive Officer
12
