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 22, 1999
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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
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On June 22, 1999, the registrant, MGI Properties (NYSE: MGI)
(the "Trust"), sold 53 New England commercial properties (the "Properties") to
BCIA Funding Corp., a Massachusetts corporation (the "Purchaser"). A copy of the
Purchase and Sale Agreement and the amendments thereto in respect the sale of
the Properties are attached hereto as Exhibits 2.1*, 2.2* and 2.3*. The sale of
the Properties was in furtherance of the Trust's Plan of Complete Liquidation
and Termination of Trust, which was adopted by the Trust's Board of Trustees on
August 12, 1998 and approved by the Trust's shareholders on October 14, 1998.
In consideration for the sale of the Properties, $403,541,709 (the
"Purchase Price") was paid by the Purchaser to the Trust, $395,679,514 of which
was paid in cash and $7,862,195 of debt was assumed by the Purchaser. The
Purchase Price was determined by arms-length negotiations between the parties
and was based upon the aggregate fair market value of the 53 Properties.
Item 5. Other Events.
On July 1, 1999, the Trust announced that it had also
completed the sale of a New Jersey office building for $18 million. A copy of
the news release in respect thereof is attached hereto as Exhibit 99.1 and
incorporated herein by reference.
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*Confidential treatment has been requested in respect of this exhibit
(marked with an asterisk (*)), which exhibit has been omitted herefrom and filed
separately with the Commission.
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<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(b) Pro Forma Financial Information
Pro Forma Financial Statements.
(c) Exhibits
Exhibit No. Exhibit
2.1* Purchase and Sale Agreement dated March 12,
1999, by and among the Trust, for itself and
as agent for each of the entities listed
therein, and BCIA Funding Corp.
2.2* Amendment to Purchase and Sale Agreement dated
March 28, 1999.
2.3* Second Amendment to Purchase and Sale
Agreement dated May 5, 1999.
99.1 Press Release dated July 1, 1999.
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*Confidential treatment has been requested in respect of this exhibit
(marked with an asterisk (*)), which exhibit has been omitted herefrom and filed
separately with the Commission.
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<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.
MGI PROPERTIES
(Registrant)
Dated: July 2, 1999 By: /s/ Phillip C. Vitali
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Name: Phillip C. Vitali
Title: Executive Vice President
and Treasurer
(Chief Financial Officer)
Dated: July 2, 1999 By: /s/ David P. Morency
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Name: David P. Morency
Title: Controller
(Principal Accounting Officer)
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<PAGE>
PRO FORMA FINANCIAL STATEMENTS
MGI PROPERTIES
CONSOLIDATED STATEMENT OF EARNINGS
Twelve Months Ended November 30, 1998
(unaudited)
<TABLE>
<CAPTION>
As Reported Pro Forma Adjustments Pro Forma
INCOME
<S> <C> <C> <C>
Rental $70,338,000 ($49,768,000) A $20,570,000
Interest 651,000 -- 651,000
Total income 70,989,000 (49,768,000) 21,221,000
EXPENSES
Property operating expenses 16,348,000 (10,664,000) A 5,684,000
Real estate taxes 8,134,000 (6,012,000) A 2,122,000
Depreciation and amortization 10,379,000 (6,174,000) A 4,205,000
Interest 10,122,000 (6,332,000) B 3,790,000
General and administrative 3,592,000 273,000 C 3,865,000
Liquidation plan expenses 972,000 (533,000) D 439,000
Total expenses 49,547,000 (29,442,000) 20,105,000
Income before net gains 21,442,000 (20,326,000) 1,116,000
Net (loss) gains on sale of real estate assets 8,375,000 -- 8,375,000
Income before extraordinary item 29,817,000 (20,326,000) 9,491,000
Extraordinary item - prepayment of debt -- -- --
Net income $29,817,000 ($20,326,000) $9,491,000
PER SHARE DATA
Basic earnings $2.17 ($1.48) $0.69
Diluted earnings $2.12 ($1.45) $0.68
Weighted average shares outstanding 13,736,729 13,736,729 13,736,729
</TABLE>
See Note 1 of the accompanying notes to the pro forma consolidated financial
statements.
<PAGE>
MGI PROPERTIES
PRO FORMA CONSOLIDATED BALANCE SHEET
February 28, 1999
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
As Reported Adjustments Pro Forma
ASSETS
Real estate:
<S> <C> <C> <C>
Properties held for sale $365,626,000 ($263,588,000) E $102,038,000
Cash and cash equivalents 11,538,000 (1,763,000) F 9,775,000
Accounts receivable 4,414,000 (3,501,000) F 913,000
Other assets 11,437,000 (5,853,000) G 5,584,000
$393,015,000 ($274,705,000) $118,310,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Loans payable $125,041,000 ($89,799,000) H $35,242,000
Other liabilities 8,165,000 (3,431,000) F 4,734,000
Total liabilities 133,206,000 (93,230,000) 39,976,000
Shareholders' equity 259,809,000 (181,475,000) I 78,334,000
$393,015,000 ($274,705,000) $118,310,000
</TABLE>
See Note 2 of the accompanying notes to the pro forma consolidated financial
statements.
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<PAGE>
MGI PROPERTIES
CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended February 28, 1999
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
As Reported Adjustments Pro Forma
INCOME
<S> <C> <C> <C>
Rental $18,667,000 ($13,597,000) J $5,070,000
Interest 144,000 -- 144,000
Total income 18,811,000 (13,597,000) 5,214,000
EXPENSES
Property operating expenses 4,106,000 (2,824,000) J 1,282,000
Real estate taxes 2,215,000 (1,720,000) J 495,000
Depreciation and amortization 359,000 (272,000) J 87,000
Interest 2,560,000 (1,787,000) K 773,000
General and administrative 827,000 68,000 L 895,000
Liquidation plan expenses 878,000 (141,000) M 737,000
Total expenses 10,945,000 (6,676,000) 4,269,000
Income before net gains 7,866,000 (6,921,000) 945,000
Net (loss) gains on sale of real estate assets (143,000) -- (143,000)
Income before extraordinary item 7,723,000 (6,921,000) 802,000
Extraordinary item - prepayment of debt (286,000) -- (286,000)
Net income $7,437,000 ($6,921,000) $516,000
PER SHARE DATA
Basic earnings $0.54 ($0.50) $0.04
Diluted earnings $0.52 ($0.48) $0.04
Weighted average shares outstanding 13,770,999 13,770,999 13,770,999
</TABLE>
See Note 3 of the accompanying notes to the pro forma consolidated financial
statements.
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<PAGE>
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
Note 1
The pro forma consolidated statement of earnings for the year ended November 30,
1998 presents the audited consolidated statement of earnings of MGI properties
after adjusting for the impact of the sales of the properties described in Item
2 and Item 5 of the Form 8-K. The pro forma consolidated statement of earnings
assumes that the disposition of the properties occurred on December 1, 1997 but
does not reflect the impact of sale proceeds or the gain on sale in statement of
earnings for the twelve months ended November 30, 1998.
(A) The reduction in rental income, property operating expenses, real estate
taxes and depreciation and amortization reflects the actual operating
results for the twelve months ended November 30, 1998 for the properties
sold.
(B) The decrease in interest expense reflects the decrease in debt that was
secured by the properties sold. In addition, to the extent that the
Trust's line of credit was used to finance the acquisition of the sold
properties, interest charges associated with the line have been removed.
(C) The increase to general and administrative expense represents the
Trust's cost of rent had its business operations not been located in one
of the sold properties.
(D) The decrease in liquidation plan expenses is an estimate of the costs,
primarily employee severance and professional fees, that would not have
been incurred had the Trust not employed the individuals that managed
the sold properties and if the Trust's portfolio of properties consisted
of only the thirteen remaining unsold properties.
Note 2
The accompanying pro forma consolidated balance sheet as of February 28, 1999
assumes the disposition of the properties as if they occurred on February, 28,
1999, but does not reflect sale proceeds, the gain on sale or the announced
distribution of $19 per share. The pro forma information is based upon the
historical statements of the Trust after giving effect to the sale of these
properties.
(E) The adjustment to properties held for sale reflects the net carrying
value of the sold properties as of February 28, 1999.
(F) The adjustment to cash and cash equivalents, accounts receivable, and
other liabilities represent the carrying value of operating assets
associated with the properties sold.
(G) The adjustment in other assets represents capitalized deferred costs
such as leasing commissions and financing fees associated with the sold
properties.
(H) The adjustment to loans payable reflects the secured mortgage debt
associated with the sold properties and the repayment of the Trust's
line of credit.
(I) The adjustments to shareholders equity reflect the Trust's equity on a
historical cost basis for each of the properties sold.
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<PAGE>
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
Note 3
The pro forma consolidated statement of earnings for the three months ended
February 28, 1999 presents the unaudited consolidated statement of earnings of
MGI properties after adjusting for the impact of the sale of properties
described in Item 2 and Item 5 of the Form 8-K. The pro forma consolidated
statement of earnings assumes that the disposition of the properties occurred on
December 1, 1998 but does not reflect the impact of sale proceeds or the gain on
sale in statement of earnings for the three months ended February 28, 1999.
(J) The reduction in rental income, property operating expenses, real estate
taxes and depreciation and amortization reflects the actual operating
results for the three months ended February 28,1999 for the properties
sold.
(K) The decrease in interest expense reflects the decrease in debt that was
secured by the properties sold. In addition, to the extent that the
Trust's line of credit was used to finance the acquisition of the sold
properties, interest charges associated with the line have been removed.
(L) The increase to general and administrative expense represents the
Trust's cost of rent had its business operations not been located in one
of the sold properties.
(M) The decrease in liquidation plan expenses is an estimate of the costs,
primarily employee severance and professional fees, that would not had
been incurred had the Trust not employed the individuals that managed
the sold properties and if the Trust's portfolio of properties consisted
of only the thirteen remaining unsold properties.
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<PAGE>
EXHIBIT INDEX
2.1* Purchase and Sale Agreement dated March 12, 1999, by and
among the Trust, for itself and as agent for each of the
entities listed therein, and BCIA Funding Corp.
2.2* Amendment to Purchase and Sale Agreement dated March 28,
1999.
2.3* Second Amendment to Purchase and Sale Agreement dated May
5, 1999.
99.1 Press Release dated July 1, 1999.
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*Confidential treatment has been requested in respect of this exhibit
(marked with and asterisk (*)), which has been omitted herefrom and filed
separately with the Commission.
FOR IMMEDIATE RELEASE
July 1, 1999
MGI PROPERTIES ("MGI")
SELLS NEW JERSEY OFFICE BUILDING
BOSTON, MASSACHUSETTS . . . . MGI Properties (NYSE:MGI) announced
that it has completed the sale of a New Jersey office building for $18 million.
Following this sale, MGI owns 13 properties, which aggregate 1.1 million square
feet of commercial space and 959 residential apartments. The 13 properties are
being actively marketed.
The current estimate of pricing with respect to the remaining
properties, when added to the net proceeds of this and prior sales, is expected
to result in aggregate net liquidation proceeds of between $29 and $30 per share
after all fees and liquidation costs; however, no assurance can be given that
per share net cash distributions will be within this range or will reach this
range and no assurances can be made as to the timing of future remaining
distributions.
As previously announced, the Board of Trustees has declared a
liquidation distribution of $19 per share payable on July 30, 1999 to
shareholders of record at the close of business on July 16, 1999.
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 with respect to the Plan of Liquidation (and the actual results
thereof), including the possibility of litigation pertaining thereto; the net
realizable value of and the timing of the sales of the Trust's remaining
properties during the course of the liquidation; the amount and timing of
liquidating distributions, changes in national and local economic and financial
market conditions, as well as those factors set forth in MGI's Form 10-K for the
year ended November 30, 1998, including those set forth under "Forward-Looking
Statements," "Other" and Item 1 - "Adoption of Liquidation Plan," and in its
most recently filed Form 10-Q.
