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: August 30, 1996
(Date of earliest event reported)
MGI PROPERTIES
(Exact name of Registrant as specified in its charter)
Massachusetts 1-6833 04-6268740
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification
Number)
One Winthrop Square, Boston, Massachusetts 02110
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 422-6000
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
1. Pro forma consolidated statements of earnings (unaudited) of the Registrant
for the year ended November 30, 1995 and for the nine months ended August
31, 1996. A pro forma balance sheet is not presented, as Eight Forge Park,
Franklin, Massachusetts was acquired on August 30, 1996 and is presented in
the Form 10-Q for the three months ended August 31, 1996.
2. Historical summary of gross income and direct operating expenses (audited)
of Eight Forge Park, Franklin, Massachusetts acquired on August 30, 1996 for
the year ended December 31, 1995 (Exhibit A).
<PAGE>
MGI Properties
Pro Forma Consolidated Statement of Earnings
Year Ended November 30, 1995
(unaudited)
<TABLE>
Pro Forma Adjustments
-----------------------------
Eight Forge Previous 96
As Reported Park Acquisitions Pro Forma
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Income
Rental and other income $44,811,000 $656,000 $8,329,000 a $53,796,000
Interest 514,000 0 (91,000)b 423,000
Other 64,000 0 0 64,000
- -------------------------------------------------------------------------------------------------------
Total Income 45,389,000 656,000 8,238,000 54,283,000
- -------------------------------------------------------------------------------------------------------
Expenses
Property operating expenses 12,348,000 25,000 1,260,000 a 13,633,000
Real estate taxes 5,600,000 66,000 1,067,000 a 6,733,000
Depreciation and amortization 7,814,000 104,000 1,116,000 b 9,034,000
Interest 5,807,000 335,000 3,807,000 c 9,949,000
General and administrative 2,651,000 0 0 2,651,000
- -------------------------------------------------------------------------------------------------------
Total expenses 34,220,000 530,000 7,250,000 42,000,000
- -------------------------------------------------------------------------------------------------------
Income before net gains 11,169,000 126,000 988,000 12,283,000
Net gains 3,150,000 0 0 3,150,000
- -------------------------------------------------------------------------------------------------------
Net income $14,319,000 $126,000 $988,000 $15,433,000
- -------------------------------------------------------------------------------------------------------
Per Share Data
Net Income $1.25 $1.34
- -------------------------------------------------------------------------------------------------------
Weighted average shares outstanding 11,487,677 11,487,677
- -------------------------------------------------------------------------------------------------------
</TABLE>
See Note 1 of the accompanying notes to the pro forma consolidated financial
statements.
<PAGE>
MGI Properties
Pro Forma Consolidated Statement of Earnings
Nine Months Ended August 31, 1996
(unaudited)
<TABLE>
Pro Forma Adjustments
-------------------------
Actual 9 Month
As Reported Results Pro Forma Pro Forma
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Income
Rental and other income $39,886,000 ($2,626,000) $7,303,000 a $44,563,000
Interest 301,000 0 0 301,000
Other 6,000 (1,000) 0 5,000
- -------------------------------------------------------------------------------------------------------
Total Income 40,193,000 (2,627,000) 7,303,000 44,869,000
- -------------------------------------------------------------------------------------------------------
Expenses
Property operating expenses 10,477,000 (394,000) 1,094,000 a 11,177,000
Real estate taxes 4,743,000 (319,000) 753,000 a 5,177,000
Depreciation and amortization 6,944,000 (366,000) 837,000 c 7,415,000
Interest 6,424,000 (308,000) 3,107,000 d 9,223,000
General and administrative 2,157,000 0 0 2,157,000
- -------------------------------------------------------------------------------------------------------
Total expenses 30,745,000 (1,387,000) 5,791,000 35,149,000
- -------------------------------------------------------------------------------------------------------
Income before net gains 9,448,000 (1,240,000) 1,512,000 9,720,000
Net gains 9,350,000 0 0 9,350,000
- -------------------------------------------------------------------------------------------------------
Net income $18,798,000 ($1,240,000) $1,512,000 $19,070,000
- -------------------------------------------------------------------------------------------------------
Per Share Data
Net Income $1.63 $1.65
- -------------------------------------------------------------------------------------------------------
Weighted average shares outstanding 11,534,604 11,534,604
- -------------------------------------------------------------------------------------------------------
</TABLE>
See Note 2 of the accompanying notes to the pro forma consolidated financial
statements.
<PAGE>
Notes to Pro Forma Consolidated Financial Statements:
The accompanying pro forma consolidated financial statements have been prepared
by MGI Properties' management. Management is not aware of any material factors
relating to the properties which would have caused the pro forma financial
information not to be indicative of future operating results. The pro forma
consolidated statements of earnings should be read in conjunction with MGI
Properties audited financial statements as of November 30, 1995 and the
unaudited Form 10-Q for the quarter ended August 31, 1996.
Note 1:
The pro forma consolidated statement of earnings for the year ended November 30,
1995 combines the audited consolidated statement of earnings of MGI Properties
with the audited historical summary of gross income and direct operating
expenses of the property for the year ended, described on the Form 8-K dated
August 30, 1996, and, for all other properties acquired from December 1, 1995
through August 30, 1996, the historical summaries of gross income and direct
operating expenses. The pro forma consolidated statement of earnings assumes the
acquisition of the properties as if they had occurred on December 1, 1994. The
pro forma information is based upon the historical financial statements of MGI
Properties after giving effect to the acquisition of these properties.
(a) Rental income represents that which would have been derived from leases in
place during the period from December 1, 1994 through November 30, 1995.
The operating expenses for the unaudited properties were provided by the
buildings' prior owners.
(b) The reduction in interest income is due to the pro forma use of cash and
short-term investments which would have been required to purchase the
properties if they had been acquired on December 1, 1994.
(c) The adjustment for depreciation applies a forty-year life based upon the
straight line method to the building component of acquisitions for twelve
months.
(d) The increase in interest expense is due to the pro forma use of debt to
acquire properties, which would have been outstanding for the period from
December 1, 1994 to November 30, 1995. The pro forma acquisition of the
nine properties assumes the Trust borrowed $31.0 million at a floating rate
of 7.45%, of which $4.5 million is related to the acquisition of Eight
Forge Park. Also reflected is the interest expense related to debt incurred
with the July 2, 1996 acquisition of real estate in Portland, Maine which
totaled $21.3 million at an average rate of 8.7%.
<PAGE>
Note 2:
The accompanying pro forma consolidated statement of earnings for the nine-month
period ended August 31, 1996 assumes the acquisition of the properties as if
they were owned as of December 1, 1995. The pro forma information is based upon
the historical statements of the Trust after giving effect to the acquisition of
these properties. Rental income and operating expenses for the period of Trust
ownership are deducted as pro forma adjustments.
(a) Rental income represents that which would have been derived from leases in
place during the period from December 1, 1995 through August 31, 1996. The
operating expenses for the nine-month period are estimated based upon MGI's
actual experience and upon information provided by the prior owner.
(b) The adjustment for depreciation reflects the building component of
acquisitions for nine months using a forty-year life based upon the
straight line method.
(c) The increase in interest expense is due to the pro forma use of debt that
would have been outstanding for the period from December 1, 1995 to August
31, 1996.
<PAGE>
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.
Date: November 15, 1996 /s/ Phillip C. Vitali
------------------------------------------
Phillip C. Vitali
Executive Vice President and Treasurer
(Chief Financial Officer)
Date: November 15, 1996 /s/ David P. Morency
------------------------------------------
David P. Morency
Controller
(Principal Accounting Officer)
<PAGE>
EIGHT FORGE PARK
Historical Summary of Gross Income and
Direct Operating Expenses
Year ended December 31, 1995
(With Independent Auditors' Report Thereon)
<PAGE>
Independent Auditors' Report
To the Board of Directors of MGI Properties:
We have audited the accompanying Historical Summary of Gross Income and Direct
Operating Expenses ("Historical Summary") for Eight Forge Park (the "Property")
for the year ended December 31, 1995. This Historical Summary is the
responsibility of the Property's management. Our responsibility is to express an
opinion on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
basis of accounting used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission for
inclusion in Form 8-K of MGI Properties as described in Note 1 and is not
intended to be a complete presentation of the Property's revenues and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the gross income and direct operating expenses described in
Note 1 of the Property for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
November 13, 1996
<PAGE>
EIGHT FORGE PARK
Historical Summary of Gross Income and Direct Operating Expenses
Year ended December 31, 1995
Gross income:
Rental income $ 587,442
Operating expense contributions 68,568
---------
Total gross income 656,010
---------
Direct operating expenses:
Rental property operating expenses 25,023
Real estate taxes 65,795
---------
Total direct operating expenses 90,818
---------
Gross income in excess of direct operating expenses $ 565,192
=========
See accompanying notes to historical summary of gross income and direct
operating expenses.
<PAGE>
EIGHT FORGE PARK
Notes to Historical Summary of Gross Income and Direct Operating Expenses
For the year ended December 31, 1995
(1) Business
Eight Forge Park (the "Property") is comprised of land and a 100,000
square-foot research and development industrial building located in
Franklin, Massachusetts. On August 30, 1996, MGI Properties acquired
the Property from Prudential Insurance Company of America.
(2) Basis of Presentation
The Historical Summary has been prepared in accordance with the applicable
rules and regulations of the Securities and Exchange Commission for the
acquisition of real estate operations for inclusion in Form 8-K of the
acquirer, MGI Properties. Therefore, the Historical Summary presents
only specified revenues and expenses and is not a complete presentation
of the revenues and expenses of the Property. The Historical Summary
has been prepared on the accrual basis of accounting.
(a) Gross Income
The Property is 100% leased to and occupied by one tenant under an
operating lease that was scheduled to expire on June 30, 1997. In
February 1996, a new lease was executed with this tenant which is
scheduled to expire on January 31, 2006. Both leases provide for rents
where the tenant pays for property operating expenses, real estate tax
and insurance.
Only income from the operating lease is included in gross income. All
other forms of revenue are excluded from this Historical Summary, as
they are not comparable to the proposed future operations of the
Property.
(b) Direct Operating Expenses
Direct operating expenses include only those costs comparable to the
future operation of the Property. Costs such as depreciation,
amortization and certain professional and administrative costs are
excluded from the Historical Summary.
