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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) February 18, 1994
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SANTA ANITA REALTY ENTERPRISES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-9109 95-3520818
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
363 San Miguel Drive, Newport Beach, California 92660-7805
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (714) 721-2700
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
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Santa Anita Realty Enterprises, Inc., a Delaware corporation ("Realty"),
and Pacific Gulf Properties Inc., a Maryland corporation ("Pacific"), entered
into a Purchase and Sale Agreement dated as of November 15, 1993 (the "Purchase
and Sale Agreement"). Pursuant to the Purchase and Sale Agreement, Realty sold
to Pacific ten multifamily properties, containing 2,654 apartment units, located
in Southern California, Texas and the Pacific Northwest, and three industrial
properties, containing an aggregate of 185,000 leasable square feet of
industrial space, located in the State of Washington (the "Transferred
Properties"). Realty's corporate headquarters building, located in Newport
Beach, California, and related assets were also acquired by Pacific. The sale
of the Transferred Properties was consummated on February 18, 1994, following
public offerings of common stock and convertible subordinated debentures by
Pacific. Prior to such offering, Pacific was a wholly-owned subsidiary of
Realty.
In the Purchase and Sale Agreement, Pacific agreed to acquire Realty's
interest in an industrial property located in Baldwin Park, California ("Baldwin
Industrial Park") subject to satisfaction of certain conditions, for a minimum
price of $8.9 million payable in additional shares of Pacific common stock with
the final price dependent upon completion of negotiations with the other owners
of Baldwin Industrial Park and an appraisal
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process. Management believes that Pacific's acquisition of Baldwin Industrial
Park will be completed in the second half of 1994.
In consideration of the sale of the Transferred Properties, Realty received
approximately $44.4 million in cash and 149,900 shares of the common stock of
Pacific. In addition, Realty was relieved of approximately $44.3 million of
mortgage debt on the Transferred Properties. Realty will also receive, at the
time the acquisition of Baldwin Industrial Park is completed, approximately $1.2
million in additional common stock of Pacific as consideration for the corporate
headquarters building and other assets related to the Transferred Properties and
corporate headquarters (net of the miscellaneous liabilities assumed by
Pacific, including liabilities under employee benefit plans of Realty relating
to those officers and employees of Pacific who were formerly employees of
Realty). Realty and Pacific have also entered into a management agreement
whereby Pacific has agreed to manage certain properties retained by Realty and,
if requested by Realty, to negotiate the disposition of some or all of such
properties. Finally, with respect to the common stock of Pacific owned by
Realty, Pacific has entered into a registration rights agreement with Realty
which, under certain circumstances, allows Realty to require the registration
and the public offer and sale of such stock. To secure its obligations to
acquire Baldwin Industrial Park and pay for the corporate headquarters building
and other assets related to the Transferred Properties and
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corporate headquarters, on March 29, 1994, Pacific caused to be issued to Realty
letters of credit totaling $2.5 million.
The value of the consideration paid for the Transferred Properties was not
based on the book value of those properties, and no appraisals or other
valuations were obtained for any of the Transferred Properties. Rather, the
amount of consideration received by Realty resulted from the allocation of the
ownership interest in Pacific to purchasers of the common stock in Pacific's
public offering, which was equal to the percentage of annualized pro forma cash
available for distribution required to pay cash distributions resulting in an
annual distribution rate of approximately 8.55% of the public offering price per
share of $18.25. The remaining interest in Pacific was then allocated to
Realty.
Realty currently owns 150,000 shares of the Common Stock of Pacific,
comprising approximately 3.6 percent of the outstanding common shares of
Pacific. At the time of the transaction, Glenn L. Carpenter served as
President, Chief Executive Officer and a Director of Realty, as well as
President, Chief Executive Officer and a Director of Pacific; Donald G. Herrman
served as the Vice President -- Finance and Secretary of Realty, as well as the
Senior Vice President, Secretary, Treasurer and Chief Financial Officer of
Pacific; Lonnie P. Nadal served as Vice President -- Acquisitions of both Realty
and Pacific; and Robert H. Grant and Robert E. Morgan served on the
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Board of Directors of Realty, as well as on the Board of Directors of Pacific.
All of these officers resigned as officers of Realty, and Mr. Carpenter resigned
as a director of Realty, on February 18, 1994. Mr. Grant resigned as a director
of Pacific on March 14, 1994, but remains a director of Realty. Mr. Morgan
continues to serve on the Boards of Directors of both companies. All of
Pacific's other employees were formerly employees of Realty.
ITEM 5. OTHER EVENTS.
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In light of the resignation of Glenn L. Carpenter as President and Chief
Executive Officer of Realty (see Item 2), the Board of Directors of Realty
appointed Glennon E. King as acting Chief Executive Officer of Realty. Mr. King
served as acting Chief Executive Officer from February 18 until March 15, 1994.
As of March 16, 1994, the Board of Directors of Realty has appointed Sherwood C.
Chillingworth as Chief Executive Officer of Realty and Mr. King as acting Chief
Financial Officer of Realty.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
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(a) Financial statements of businesses acquired.
None.
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(b) Pro forma financial information.
Incorporated by reference to Note 2 to Financial Statements to Joint
Annual Report on Form 10-K of Santa Anita Realty Enterprises, Inc. and Santa
Anita Operating Company for the year ended December 31, 1993.
(c) Exhibits.
See Exhibit Index.
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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.
SANTA ANITA REALTY ENTERPRISES, INC.
Date: April 18, 1994 By: /s/ GLENNON E. KING
______________________________
Name: Glennon E. King
Title: Acting Chief Financial
Officer
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EXHIBIT INDEX
10. Purchase and Sale Agreement dated as of November 15, 1993 between Realty
and Pacific (incorporated by reference to Exhibit 1 to the Current Report
on Form 8-K of Santa Anita Realty Enterprises, Inc., event date February
18, 1994).
99. Note 2 to Financial Statements to Joint Annual Report on Form 10-K of
Santa Anita Realty Enterprises, Inc. and Santa Anita Operating Company for
the year ended December 31, 1993.
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Exhibit 99
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NOTES TO FINANCIAL STATEMENTS
NOTE 2 - DISPOSITION OF MULTIFAMILY AND INDUSTRIAL PROPERTIES SUBSEQUENT TO YEAR
END
In November 1993, Realty entered into a Purchase and Sale Agreement to sell
its multifamily and industrial operations to Pacific Gulf Properties Inc.
("Pacific"), in conjunction with Pacific's proposed public offering of common
stock and debentures. The transaction was structured into two parts: (1)
Realty would sell all of its apartments and industrial properties to Pacific
with the exception of Realty's interest in the Baldwin Industrial Park joint
venture; and (2) Pacific would enter into a binding agreement to buy Realty's
interest in Baldwin Industrial Park.
On February 18, 1994, Realty completed the first part of this transaction
by selling to Pacific ten multifamily properties, containing 2,654 apartment
units, located in Southern California, the Pacific Northwest, and Texas and
three industrial properties, containing an aggregate of 185,000 leasable square
feet of industrial space, located in the State of Washington (the "Transferred
Properties"). Realty's corporate headquarters building and related assets were
also acquired by Pacific. The sale of the Transferred Properties followed the
public offerings of common stock and convertible subordinated debentures by
Pacific.
Pursuant to the Purchase and Sale Agreement, Pacific agreed to buy Realty's
interest in Baldwin Industrial Park subject to satisfaction of certain
conditions, for a minimum price of $8.9 million payable in additional shares of
Pacific common stock, with the final price dependent upon completion of
negotiations with the other owners of Baldwin Industrial Park and an appraisal
process. Management believes the sale of Realty's interest in Baldwin
Industrial Park will be completed in the second half of 1994. Pacific is
required to issue to Realty non-refundable letters of credit totaling $2.5
million by March 31, 1994 to secure its obligation to acquire Realty's interest
in Baldwin Industrial Park and pay for the corporate headquarters building and
other assets related to the Transferred Properties.
In consideration of the sale of the Transferred Properties, Realty received
approximately $44.4 million in cash and 149,900 shares of the common stock of
Pacific. In addition, Realty was relieved of approximately $44.3 million of
mortgage debt on the Transferred Properties. Realty will also receive, at the
time the acquisition of Baldwin Industrial Park is completed, up to $1.2 million
in additional common stock of Pacific as consideration for its corporate
headquarters and other net assets related to the Transferred Properties.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - DISPOSITION OF MULTIFAMILY AND INDUSTRIAL OPERATIONS SUBSEQUENT TO YEAR
END (CONTINUED)
The two parts of the above transaction will result in a loss of
$10,974,000. This loss has been reflected in the Realty and Realty and
Operating Company combined statements of operations for the year ended
December 31, 1993. If the Baldwin Industrial Park portion of the transaction
described above does not occur, an additional loss will be recognized by Realty
in 1994. The loss could approximate $5,900,000, depending upon whether the $2.5
million in letters of credit are drawn.
Realty and Pacific have also entered into a one-year management agreement
whereby Pacific has agreed to provide management services to Realty. Finally,
with respect to the common stock of Pacific owned by Realty, Pacific has entered
into a registration rights agreement with Realty which, under certain
circumstances, allows Realty to require the registration of the Pacific stock it
owns.
The following unaudited pro forma condensed balance sheets of Realty and
Realty and Operating Company combined are presented as if both parts of the
transaction had occurred on December 31, 1993. The unaudited pro forma
condensed balance sheets are not necessarily indicative of what the actual
financial position of Realty or Realty and Operating Company combined would have
been at December 31, 1993 nor do they purport to represent the future financial
position of Realty or Realty and Operating Company combined.
<TABLE>
<CAPTION>
December 31, 1993
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Realty Realty
Historical Pro Forma
Cost Basis Adjustments (a) (Unaudited)
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<S> <C> <C> <C>
Real estate assets
Santa Anita Racetrack, net $ 6,997,000 $ - $ 6,997,000
Commercial properties, net 221,876,000 (107,593,000) 114,283,000
Investments in unconsolidated joint
ventures 3,616,000 - 3,616,000
Real estate loans and advances
receivable 22,084,000 - 22,084,000
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254,573,000 (107,593,000) 146,980,000
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Cash 7,633,000 (703,000) 6,930,000
Other assets 9,479,000 (1,387,000) 8,092,000
Investment in Pacific Gulf Properties Inc. (b) - 12,802,000 12,802,000
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$271,685,000 $ (96,881,000) $174,804,000
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Real estate loans payable $106,731,000 $ (53,769,000) $ 52,962,000
Other loans payable 77,913,000 (44,425,000) 33,488,000
Other liabilities 22,812,000 (1,719,000) 21,093,000
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207,456,000 (99,913,000) 107,543,000
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Minority interest in consolidated
joint ventures (4,590,000) 3,032,000 (1,558,000)
Shareholders' equity 68,819,000 - 68,819,000
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$271,685,000 $ (96,881,000) $174,804,000
============ ============= ============
</TABLE>
The accompanying notes are an integral part of this pro forma balance sheet.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - DISPOSITION OF MULTIFAMILY AND INDUSTRIAL OPERATIONS SUBSEQUENT TO YEAR
END (CONTINUED)
<TABLE>
<CAPTION>
December 31, 1993
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Combined Combined
Historical Pro Forma
Cost Basis Adjustments (a) (Unaudited)
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<S> <C> <C> <C>
Real estate assets
Santa Anita Racetrack, net $ 6,997,000 $ - $ 6,997,000
Commercial properties, net 216,832,000 (107,593,000) 109,239,000
Investments in unconsolidated joint
ventures 3,616,000 - 3,616,000
Real estate loans and advances
receivable 22,084,000 - 22,084,000
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249,529,000 (107,593,000) 141,936,000
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Cash and short-term investments 22,021,000 (703,000) 21,318,000
Other assets 36,716,000 (1,387,000) 35,329,000
Investment in Pacific Gulf Properties Inc. (b) - 12,802,000 12,802,000
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$308,266,000 $ (96,881,000) $211,385,000
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Real estate loans payable $106,731,000 $ (53,769,000) $ 52,962,000
Other loans payable 81,167,000 (44,425,000) 36,742,000
Other liabilities 49,436,000 (1,719,000) 47,717,000
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237,334,000 (99,913,000) 137,421,000
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Minority interest in consolidated
joint ventures (4,590,000) 3,032,000 (1,558,000)
Shareholders' equity 75,522,000 - 75,522,000
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$308,266,000 $ (96,881,000) $211,385,000
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</TABLE>
Notes:
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(a) Reflects the disposition of the assets and liabilities of the Multifamily
and Industrial Operations as if both parts of the transaction had occurred
on December 31, 1993. The amounts reflected represent the assets and
liabilities directly identifiable with the Multifamily and Industrial
Operations transferred by Realty to Pacific.
(b) As a result of the February 18, 1994 sale to Pacific, Realty will have an
investment in the common shares of Pacific totaling $2,738,000. Upon
completion of Realty's disposition of Baldwin Industrial Park, assuming a
price per share equal to $18.25 (the initial public offering price of
Pacific's common shares) and the minimum price for Realty's interest in
Baldwin Industrial Park and the corporate headquarters building and certain
other assets related to the Transferred Properties, Realty will receive
additional Pacific stock totaling approximately $10,064,000.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - DISPOSITION OF MULTIFAMILY AND INDUSTRIAL OPERATIONS SUBSEQUENT TO YEAR
END (CONTINUED)
The following unaudited pro forma statements of operation of Realty and Realty
and Operating Company combined are presented as if both parts of the transaction
had occurred on January 1, 1993. The unaudited pro forma statements of
operation are not necessarily indicative of what the actual results of
operations would have been if the transaction had been consummated on January 1,
1993 nor do they purport to represent the results of operations of Realty or
Realty and Operating Company combined for any future period.
<TABLE>
<CAPTION>
For the Year Ended December 31, 1993
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Realty Realty
Historical Pro Forma
Cost Basis Adjustments (1) (Unaudited)
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<S> <C> <C> <C>
Revenues
Rental property $38,953,000 $(20,007,000) $18,946,000
Rental income from Operating Company 11,634,000 - 11,634,000
Interest and other (2) 4,991,000 695,000 5,686,000
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55,578,000 (19,312,000) 36,266,000
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Costs and expenses
Rental property operating expenses 16,522,000 (8,562,000) 7,960,000
Depreciation and amortization 8,795,000 (3,264,000) 5,531,000
General and administrative 4,244,000 (1,538,000) 2,706,000
Interest and other (3) 12,477,000 (7,005,000) 5,472,000
Losses from unconsolidated joint ventures 1,993,000 - 1,993,000
Minority interest in earnings of
consolidated joint ventures (4) 477,000 289,000 766,000
Loss on disposition of multifamily and
industrial operations 10,974,000 - 10,974,000
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55,482,000 (20,080,000) 35,402,000
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Income before income tax benefit 96,000 768,000 864,000
Income tax benefit (2,523,000) - (2,523,000)
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Net income $ 2,619,000 $ 768,000 $ 3,387,000
=========== ============ ===========
</TABLE>
The accompanying notes are an integral part of this pro forma statement of
operations.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - DISPOSITION OF MULTIFAMILY AND INDUSTRIAL OPERATIONS SUBSEQUENT TO YEAR
END (CONTINUED)
<TABLE>
<CAPTION>
For the Year Ended December 31, 1993
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Combined Combined
Historical Pro Forma
Cost Basis Adjustments (1) (Unaudited)
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<S> <C> <C> <C>
Revenues
Horse racing $ 49,081,000 $ - $49,081,000
Rental property 41,354,000 (20,007,000) 21,347,000
Food and beverage 11,695,000 - 11,695,000
Interest and other (2) 5,405,000 695,000 6,100,000
------------ ------------ -----------
107,535,000 (19,312,000) 88,223,000
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Costs and expenses
Direct horse racing operating costs 40,981,000 - 40,981,000
Rental property operating expenses 16,522,000 (8,562,000) 7,960,000
Food and beverage cost of sales 3,411,000 - 3,411,000
Depreciation and amortization 11,392,000 (3,264,000) 8,128,000
General and administrative 10,937,000 (1,538,000) 9,399,000
Interest and other (3) 12,970,000 (7,005,000) 5,965,000
Losses from unconsolidated joint ventures 1,993,000 - 1,993,000
Minority interest in earnings of
consolidated joint ventures (4) 477,000 289,000 766,000
Loss on disposition of multifamily and
industrial operations 10,974,000 - 10,974,000
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109,657,000 (20,080,000) 89,577,000
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Income (loss) before income tax benefit (2,122,000) 768,000 (1,354,000)
Income tax benefit (2,523,000) - (2,523,000)
------------ ------------ -----------
Net income $ 401,000 $ 768,000 $ 1,169,000
============ ============ ===========
</TABLE>
Notes:
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(1) Reflects the operations for the year ended December 31, 1993 of the
Multifamily and Industrial Operations directly identifiable with, and
allocations of other costs and expenses related to, the Multifamily and
Industrial Operations being transferred by Realty to Pacific.
(2) Estimated annual distributions to be received on Realty's investment in
Pacific ($1.56 per common share) less the amount of such distributions
estimated to represent the return of capital ($.56 per common share).
(3) Elimination of interest expense on real estate and other loans payable
repaid or assumed by Pacific.
(4) Elimination of the minority interest in earnings of joint ventures resulting
from Realty's acquisition of the Partnership interests and subsequent
transfer to Pacific.
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