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
Date of Report (Date of earliest event reported): JUNE 18, 1998
MGI PROPERTIES
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(Exact name of registrant as specified in its charter)
MASSACHUSETTS 1-6833 04-6268740
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
ONE WINTHROP SQUARE, BOSTON, MASSACHUSETTS 02110
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(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (617) 422-6000
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Item 5. OTHER EVENTS.
On June 18, 1998, MGI Properties (NYSE: MGI) (the "Trust")
announced a quarterly dividend of $.31 per share, a 6.9% increase from the prior
quarter's dividend of $.29 per share and a 10.7% increase from a year ago.
The Trust also announced that the Board of Trustees would
undertake a review of strategic alternatives available to the Trust to maximize
shareholder value, including a possible liquidation of the Trust's properties.
There can be no assurance with respect to the results that may or may not be
accomplished by the Board's strategic review. In the event of a liquidation of
the Trust's properties, there can be no assurance of the net realizable value
thereof.
For additional information, reference is made to the news
release which is incorporated herein by reference and is attached hereto as
Exhibit 99.1.
This Current Report on Form 8-K contains forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are dependent on a number of factors which could cause actual results
to differ materially from those expressed or implied in the forward-looking
statements. Such factors include, among other things, the risks of future action
or inaction by the Board of Trustees (and the actual results thereof) with
respect to the subject matter of the foregoing Current Report on Form 8-K
(including the possibility of litigation pertaining
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<PAGE>
thereto); current market conditions remaining the same or improving, maintaining
the current occupancy and rent levels at the properties, as well as those set
forth under "Forward-Looking Statements," in Management's Discussion and
Analysis of Financial Condition and Results of Operations in MGI's Form 10-K for
the year ended November 30, 1997 and in the most recent report on Form 10-Q.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(C) EXHIBITS
EXHIBIT NO. EXHIBIT
99.1 News Release of MGI Properties dated June 18,
1998.
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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.
MGI PROPERTIES
(Registrant)
Dated: June 22, 1998 By: /S/ PHILLIP C. VITALI
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Name: Phillip C. Vitali
Title: Executive Vice President and
Treasurer
(Chief Financial Officer)
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<PAGE>
EXHIBIT INDEX
99.1 News Release of MGI Properties dated June 18, 1998.
FOR IMMEDIATE RELEASE
June 18, 1998
MGI PROPERTIES ("MGI")
REPORTS SECOND QUARTER RESULTS;
INCREASES DIVIDEND;
ANNOUNCES STRATEGIC REVIEW
RESULTS OF OPERATIONS
BOSTON, MASSACHUSETTS . . . . MGI Properties (NYSE:MGI), today
reported 1998 second quarter results. Funds from operations ("FFO") for the
quarter ended May 31, 1998 were $7,986,000, or $.58 per share. On a per share
basis, this was a 16% increase from the $.50 per share earned in the comparable
1997 quarter. Funds from operations for the six months ended May 31, 1998 were
$15,363,000, or $1.12 per share, which was a 12% increase per share when
compared to $13,014,000, or $1.00 per share, earned in the comparable 1997
period.
Net income for the quarter ended May 31, 1998 was $7,075,000, or
$.51 per share, compared to $4,264,000, or $.31 per share, for the second
quarter one year ago. Included in 1998 second quarter net income was a gain of
$1,950,000, or $.14 per share, from the sale of an industrial building located
in South Carolina. Net income was $17,903,000, or $1.31 per share, in the
current six-month period, versus $8,213,000, or $.63 per share, a year ago.
Included in 1998 year-to-date net income were net gains of $8,025,000, or $.59
per share, from five property sales. In the first six months of 1997, MGI
realized a net gain of $600,000, or $.05 per share, which was partially offset
by a $306,000, or $.03 per share, loan prepayment fee.
W. Pearce Coues, Chairman of the Board of Trustees, stated that the
16% growth in FFO to $.58 per share, when the second quarter of 1998 is compared
to the second quarter of 1997, was driven by the favorable performance of the
Trust's properties, which was further enhanced by $47 million of property
acquisitions in the second quarter of 1998 that produced a 10.5% return.
Additionally, the 46 "same store" properties owned during both the second
quarters of 1998 and 1997, produced a 10.4% increase in "same store" property
operating income. At May 31, 1998, MGI's commercial portfolio was approximately
96.9% leased and its residential properties were 94.0% leased. Leases executed
year-to-date for non-residential space totaled 631,900 square feet. Base rents
on commercial leases renewed or released year-to-date in 1998 are expected to
increase approximately 28%, which should generate an estimated $.4 million of
additional revenues in fiscal 1998 as such new leases become effective. For the
balance of the year, scheduled lease expirations approximate 230,000 square
feet, or 4% of the commercial portfolio.
All per share amounts have been computed in accordance with basic
earnings per share calculations pursuant to Statement of Financial Accounting
Standards No. 128, Earnings Per Share.
(Continued)
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DIVIDEND INCREASED
The Trustees declared a quarterly dividend of $.31 per share,
payable July 10, 1998, to shareholders of record July 1, 1998. The $.31
quarterly dividend constitutes a 6.9% increase from the prior quarter's dividend
of $.29 per share and a 10.7% increase from a year ago.
STRATEGIC REVIEW
Mr. Coues also announced today that the MGI Board of Trustees would
undertake a review of strategic alternatives available to MGI to maximize
shareholder value. Mr. Coues stated that the Board will be considering, among
other strategic alternatives, a liquidation of the Trust's properties in order
to realize the underlying value which it believes is not reflected in the
current stock price.
Mr. Coues added that the Board is pleased with the substantial
growth which MGI has accomplished under the current business plan, noting that
it now holds a portfolio of quality properties. The Board of Trustees,
nevertheless, believes that it is prudent to reevaluate MGI's overall business
strategy in light of the significant changes which have taken place in the real
estate market.
THIS PRESS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934. THESE FORWARD-LOOKING STATEMENTS ARE DEPENDENT
ON A NUMBER OF FACTORS WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY
FROM THOSE EXPRESSED OR IMPLIED IN THE FORWARD-LOOKING STATEMENTS. SUCH FACTORS
INCLUDE, AMONG OTHER THINGS, THE RISKS OF FUTURE ACTION OR INACTION BY THE BOARD
OF TRUSTEES (AND THE ACTUAL RESULTS THEREOF) WITH RESPECT TO THE SUBJECT MATTER
OF THE FOREGOING PRESS RELEASE (INCLUDING THE POSSIBILITY OF LITIGATION
PERTAINING THERETO); CURRENT MARKET CONDITIONS REMAINING THE SAME OR IMPROVING,
MAINTAINING THE CURRENT OCCUPANCY AND RENT LEVELS AT THE PROPERTIES, AS WELL AS
THOSE SET FORTH UNDER "FORWARD-LOOKING STATEMENTS," IN MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS IN MGI'S FORM 10-K
FOR THE YEAR ENDED NOVEMBER 30, 1997 AND IN ITS MOST RECENT REPORT ON FORM 10-Q.
(Continued)
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SELECTED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
For the Three Months Ended May 31, For the Six Months Ended May 31,
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1998 1997 1998 1997
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TOTAL INCOME:(1) $17,584,000 $15,574,000 $34,072,000 $30,662,000
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OPERATING RESULTS:
<S> <C> <C> <C> <C>
Funds from operations $ 7,986,000 $ 6,821,000 $15,363,000 $13,014,000
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PER SHARE-BASIC $ .58 $ .50 $ 1.12 $ 1.00
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Income before net gain $ 5,125,000 $ 4,264,000 $ 9,878,000 $ 7,919,000
Net gain 1,950,000 - 8,025,000 600,000
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Income before extraordinary
items 7,075,000 4,264,000 17,903,000 8,519,000
Extraordinary item -
prepayment of debt - - - ( 306,000)
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NET INCOME $ 7,075,000 $ 4,264,000 $17,903,000 $ 8,213,000
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BASIC EARNINGS PER SHARE $ .51 $ .31 $ 1.31 $ .63
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DILUTED EARNINGS PER SHARE $ .50 $ .31 $ 1.28 $ .62
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Average shares outstanding 13,756,217 13,598,472 13,711,816 12,964,645
</TABLE>
SUMMARY OF FINANCIAL POSITION: MAY 31, 1998 MAY 31, 1997
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Real estate, at cost $417,173,000 $383,158,000
Total assets $391,472,000 $355,520,000
Total debt $131,983,000 $112,336,000
Total shareholders' equity $253,562,000 $237,455,000
<TABLE>
<CAPTION>
PORTFOLIO LEASING: Scheduled Expirations
Total Percentage 1998 Remaining
Property Type Square Feet Leased Leasing 1998 1999
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<S> <C> <C> <C> <C> <C>
Office 1,826,700 96.6% 163,400 75,500 163,200
Office/R&D 1,392,100 97.8% 124,300 93,100 130,500
Industrial 1,792,400 96.9% 240,100 58,600 284,100
Retail 706,100 95.9% 104,100 3,000 21,300
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Total Commercial 5,717,300 96.9% 631,900 230,200 599,100
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Apartment Units 959 94.0%
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Portfolio Total 96.5%
</TABLE>
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(1) Total income excludes gains.
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FOR FURTHER INFORMATION CONTACT:
Phillip C. Vitali, Executive Vice President and Treasurer (617) 422-6000
