MGI Properties
August 14, 2000
Dear Fellow Shareholders:
I would like to update you on the progress of MGI Properties' Plan of
Liquidation. On August 1, 2000, the Board of Trustees declared an additional
liquidating distribution of $1.85 per share, which will be paid September 28,
2000 to shareholders of record on September 14, 2000. We are pleased to report
that the $1.85 distribution will bring total distributions since our October 14,
1998 liquidation vote to $29.01 per share.
As you may recall from our original liquidation proxy material, and as
required under the tax laws, MGI must complete its liquidation and transfer its
remaining assets to a liquidating trust on or before the two-year anniversary of
the October 14, 1998 vote to liquidate the Trust. Accordingly, as we are
approaching the completion of the liquidation, MGI Properties will be terminated
as of September 30, 2000, at which time its remaining assets, which currently
include cash and three properties, will be distributed, subject to any of its
remaining liabilities, to the newly established MGI Properties Liquidating
Trust. Two of the properties, consisting of an office complex and an adjacent
property located in Tampa, Florida, were previously under conditional contract
for sale and are now in the process of being remarketed for sale. The third
property is a shopping center located in Temple Terrace, Florida, which is under
conditional contract for sale.
The owners of MGI Properties Liquidating Trust will be the shareholders
of MGI Properties at the time MGI Properties is terminated. The purpose of the
MGI Properties Liquidating Trust will be to dispose of the three properties,
satisfy any liabilities of MGI Properties, and distribute any remaining assets
to the beneficial owners of the MGI Properties Liquidating Trust.
It is presently estimated that the MGI Properties Liquidating Trust
should also be in a position to make future cash distributions totaling
approximately $.65 per share. We anticipate that such amount may be paid in one
or two distributions. The final payment may occur one year or more after the
establishment of the MGI Properties Liquidating Trust. However, no assurances
can be given as to the amount or the actual timing of the cash distributions.
With respect to the MGI Properties Liquidating Trust, there are several
administrative and logistical issues that should be addressed as we move to the
next and final stage of our liquidation.
1. Ownership in the MGI Properties Liquidating Trust
-------------------------------------------------
Upon payment of the $1.85 per share distribution on September 28,
2000 and the September 30, 2000 transfer of MGI Properties' remaining assets to
the MGI Properties Liquidating Trust, MGI Properties will cease to exist. DO NOT
DESTROY YOUR MGI SHARE CERTIFICATES as they will represent your ownership
interest in the MGI Properties Liquidating Trust. You will have the same
interest in the MGI Properties Liquidating Trust as you did in MGI Properties.
YOUR INTEREST IN THE MGI PROPERTIES LIQUIDATING TRUST WILL NOT BE TRANSFERABLE
OR ASSIGNABLE EXCEPT BY WILL, INTESTATE SUCCESSION OR OPERATION OF LAW. AS A
RESULT, YOU WILL NOT BE ABLE TO SELL OR TRANSFER YOUR INTEREST IN THE MGI
PROPERTIES LIQUIDATING TRUST.
(Continued)
MGIProperties is a Massachusetts Trust and all persons
dealing with the Trust must look solely to the property of
this Trust for the enforcement of any claims against this
Trust. Neither the Trust, officers, agents nor shareholders
of this Trust assume any personal liability in connection
with its business or assume any personal liability for
obligations entered into on its behalf.
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MGI Properties
August 14, 2000
Page 2
2. Termination of Stock Trading
----------------------------
The last day of trading of MGI's Common Shares on the New York
Stock Exchange will be September 27, 2000. MGI's stock transfer books will be
closed as of the close of business on September 27, 2000.
3. Tax Reporting of MGI Properties' Liquidating Distributions in the
-----------------------------------------------------------------
year 2000
---------
As of September 28, 2000, MGI Properties will have made cash
liquidating distributions in 2000 equal to $4.85 per share. In addition, the per
share fair market value of the assets distributed to the MGI Properties
Liquidating Trust, less the value of related liabilities, is also considered to
be a liquidating distribution made by MGI Properties and will be reported to the
Internal Revenue Service as a "non-cash liquidating distribution" on Form 1099.
The actual value of this non-cash liquidating distribution will be determined
when the final accounting for MGI Properties is completed later in 2000.
4. Taxes and the MGI Properties Liquidating Trust
----------------------------------------------
The MGI Properties Liquidating Trust will be treated as a grantor
trust and accordingly, will not be subject to tax on any income received by it.
Each owner of the MGI Properties Liquidating Trust will be treated as the owner
of his or her pro rata portion of the MGI Properties Liquidating Trust. As a
result, when calculating taxable income, each shareholder will be required to
take into account, the pro rata share of each item of income, gain and loss of
the MGI Properties Liquidating Trust. It is our understanding that an individual
who itemizes deductions may deduct a pro rata share of taxes and expenses of the
MGI Properties Liquidating Trust only to the extent that such amount, together
with the other miscellaneous deductions, exceeds 2% of such person's adjusted
gross income. The owners of the MGI Properties Liquidating Trust will also
recognize taxable gain or loss when an asset is disposed of for an amount
greater or less than the fair market value of such asset at the time it was
transferred to the MGI Properties Liquidating Trust. (Individuals should consult
with and must rely on their own tax advisors on these tax matters.) The
information necessary to complete your tax returns for 2000 will be furnished to
shareholders by the MGI Properties Liquidating Trust when available in 2001.
5. Trustees of MGI Properties Liquidating Trust
--------------------------------------------
George M. Lovejoy, Jr., Robert M. Melzer and I, Trustees of MGI,
will serve as Trustees of the MGI Properties Liquidating Trust. The offices of
MGI Properties Liquidating Trust will continue to be 50 Congress Street, Boston,
Massachusetts 02109 and the phone number remains (617) 248-2300.
6. Future Communication with Shareholders
--------------------------------------
During the liquidation process, we have endeavored to keep
shareholders informed of significant developments and to promptly respond to
your questions and concerns. We will continue to communicate periodically with
you by press releases and through SEC filings such as Forms 8-K and 10-K.
However, in order to minimize costs over the next several months as operations
wind down, we will experience further shrinking of our already reduced staff.
(Continued)
<PAGE>
MGI Properties
August 14, 2000
Page 3
I want to assure you that we remain focused on the process that began
with the October 14, 1998 shareholder approval of the Plan of Liquidation and
will continue to work diligently to complete the remaining property sales and
make subsequent cash distributions at the earliest practicable date.
Having now realized most of the liquidation proceeds, it is
constructive to review the liquidation process and what has been accomplished.
Over the five-year period ended December 31, 1999, MGI produced a total annual
compounded return for shareholders of 20.1% per year. This is a particularly
strong return when compared to the NAREIT Total Return Index for REITs, which
was 7.7% during the comparable period. As one of the oldest REITs in the
country, and as we near the completion of an eventful and productive business
life, it is worthy to note that $10,000 invested in MGI in December 1974, with
the dividends reinvested in the stock, would have been worth approximately
$620,000 at the close of 1999. This is an annual compounded total return of
approximately 17.9% for 25 years, a performance record not easily replicated.
With shareholders receiving $29.01 in liquidating distributions through
the September 28, 2000 payment, and the process nearing completion, our course
was timely and well executed. The Trust's level of performance reflects the
strength of an exceptional staff and a Board that has been without equal.
Representing MGI shareholders has been an honor and a pleasure.
W. Pearce Coues
Chairman of the Board of Trustees
This Letter to Shareholders 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 any
remaining 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, 1999, including those set forth under
"Forward-Looking Statements," "Other" and Item 1 - "Adoption and Implementation
of Liquidation Plan," and the Form 10-Q for the quarter ended May 31, 2000.
