SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Pursuant to Section 12 or 15 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event report) April 4, 1996
PACIFIC GATEWAY PROPERTIES, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 1-8692 04-2816560
(State or other jurisdiction of (Commission (IRS Employer
incorporation File Number) Identification No.)
ONE RINCON CENTER, 101 SPEAR STREET, SUITE 215, SAN FRANCISCO, CA 94105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including are code (415)543-8600
Not Applicable
(Former name or former address and former fiscal year,
if changed since last report)
Not Applicable
(Former name or former address, if changed since last report)
Item 2. Disposition of Asset.
On April 4, 1996, the Registrant's 100% interest in Village Commons
Shopping Center was sold by the Registrant for $19,300,000 pursuant to a
Purchase and Sale Agreement dated March 18, 1996.
After selling costs of approximately $210,000 and payoff of the
underlying mortgage of $15,234,000, the Registrant realized pre-tax net
proceeds of approximately $3,856,000 from the sale. The sale of the shopping
center will result in a gain of approximately $10,900,000 and income taxes of
approximately $4,459,000 for financial reporting purposes in the second
quarter of 1996.
The foregoing is only a summary of certain principal terms and
conditions of the Redemption and Purchase Agreements. A copy of the
Redemption and Purchase Agreements is filed as an Exhibit to this Current
Report on Form 8-K and incorporated herein by this reference. The foregoing
description is subject in all respects to the terms and conditions of such
Exhibits.
Item 7. Financial Statements and Exhibits.
(b) Pro Forma Financial Information (Unaudited)
Consolidated Balance Sheet as of December 31, 1995.
Consolidated Statement of Income for the twelve months ended
December 31, 1995.
Exhibits
1.1 Press Release Dated March 25, 1995
1.2 Press Release Dated April 12, 1996
1.3 Purchase and Sale Agreement dated March 18,1996 between
Registrant and Metropolitan Life Company.
Exhibit 1.3 being filed in paper pursuant to reg. 201st
ITEM 7 (b)
The following unaudited pro forma financial information has been prepared to
reflect the April 4, 1996 sale of the Village Commons Shopping Center
(Village Commons) as if (I) the sale had occurred as of December 31, 1995
for pro forma consolidated balance sheet purposes and (ii) the sale had
occurred as of January 1, 1995 for pro forma consolidated statement
of income (loss) purposes. In the opinion of management, the pro forma
financial information provides for all adjustments necessary to reflect
the pro forma effects of the Village Common sale.
<TABLE>
PACIFIC GATEWAY PROPERTIES, INC.
CONSOLIDATED BALANCE SHEET
(In Thousands, Except Share Amounts)
<CAPTION>
Sale of
As of Village Pro Forma As Of
ASSETS December 31,1995 Commons December 31, 1995
<S> <C> <C> <C>
Cash and short-term investments $ 176 $ 3,358 (1) $ 3,534
Cash restricted for capital improvements 241 -- 241
Accounts receivable, prepaid taxes and
other current assets 1,043 -- 1,043
Investment and hotel properties:
Land 5,481 -- 5,481
Buildings 31,847 -- 31,847
Other deferred costs 8,350 -- 8,350
Subtotal investment and hotel properties 45,678 45,678
Less-accumulated depreciation
and write-down to net realizable
value (12,106) -- 12,106
Investment and hotel properties, net 33,572 -- 33,572
Properties held for sale, net of
accumulated depreciation of $8,776
at December 31, 1995 22,230 (7,900) (2) 14,330
Equity investment in and loans to RCA,
net
Deferred tax asset, notes receivable
and other assets 7,056 (4,459) (4) 2,597
Capitalized loan costs and lease
commissions, net of accumulated
depreciation of $2,731 and $2,267
at December 31, 1995 and 1994,
respectively 1,569 (273) (2) 1,296
Total assets $ 65,887 $ (9,274) $56,613
LIABILITIES AND STOCKHOLDERS' DEFICIT
Accounts payable $ 1,293 $ (511) (3) $ 782
Accrued liabilities 1,488 -- 1,488
Debt related to corporate, investment
and hotel properties 58,838 (15,250) (1) 43,588
Other debt related to equity investment
in RCA 2,940 -- 2,940
Deferred tax liability 10,514 -- 10,514
Total liabilities 75,073 (15,761) 59,312
Stockholders' deficit
Total stockholders' deficit (9,186) 6,487 (5) (2,699)
Total liabilities and stockholders'
deficit $65,887 $ ( 9,274) $56,613
1. Pro Forma cash proceeds from the Village Commons sale reflect pre tax sales proceeds of $3,856,000
(gross proceeds of $19,300,000, less selling and other costs of $210,000 offset by paydown of the
December 31, 1995 debt collateralized by Village Commons of $15,234,000) less approximately $498,000
in property taxes, assessments and other taxes.
2. Elimination of the net capitalized costs related to Village Commons comprising land, building
and furniture, fixtures and equipment of $8,600,000 and accumulated depreciation of $700,000,
together with other defined costs related to Village Commons of $273,000.
3. Elimination of security deposits and other liabilities assumed by the buyer.
4. Estimated reduction in deferred tax asset for the estimated income taxes as a result of the sale.
5. Includes the gain on the sale of the property
</TABLE>
ITEM 7 (b)
<TABLE>
PACIFIC GATEWAY PROPERTIES, INC.
CONSOLIDATED STATEMENT OF INCOME (LOSS)
(In Thousands, Except Per Share Amounts)
<CAPTION>
For the Sale of Pro Forma
Year Ended Village Year Ended
Investment Properties: December 31,1995 Commons Dec 31, 1995
<S> <C> <C> <C>
Rental revenues $12,200 $ 2,661 (1) $ 9,539
Operating expenses (5,517) (1,080) (1) (4,437)
Interest expense (3,355) (1,120) (2) (2,235)
Depreciation and amortization (2,581) ( 182) (3) (2,399)
Investment properties income 747 279 468
Hotel Income 1,158 -- 1,158
Equity in partnership losses (4,090) -- (4,090)
General and administrative expenses (1,476) -- (1,476)
Interest and fee expense for debt related
to equity investment in RCA (340) -- (340)
Interest income 16 -- 16
Other expense (31) -- (31)
Loss before reserves, income taxes and
extraordinary items (4,016) 279 (4,295)
Provision for net realizable value reserve (540) -- (540)
Income (loss) before extraordinary gain and
income taxes (4,556) 279 (4,835)
Income tax benefit 1,883 -- 1,883
Income (loss) before extraordinary gain and
gain on sale (2,673) 279 (2,952)
Income (loss) before extraordinary items
and gain on sale, per share, primary $ (0.60) $ .07 $ (0.67)
Income (loss) before extraordinary items
and gain on sale, per share,
fully diluted $ (0.60) $ 0.07 $ (0.67)
Weighted average common shares outstanding--
Primary and fully diluted 4,124 4,124
1. Elimination of operating activity due to sale of property
2. Elimination of interest expense associated with debt collateralized by the property
3. Elimination of operating amortization and depreciation expense associated with the property
4. The pro forma consolidated statement of income reflects the sale of Village Commons
Shopping Center as if such transaction had occurred on January 1, 1995. In connection with
such pro forma sale, the Registrant would have recorded a pro forma gain on January 1, 1995, as follows:
Sales Proceeds $19,300
Less: Basis of property (8,215)
Less: Other costs of sale (210)
Gain on sale, net $10,875
Provision for income taxes ($ 4,459)
</TABLE>
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 thereunto duly authorized.
Dated: April 19, 1996
PACIFIC GATEWAY PROPERTIES, INC.
(Registrant)
Raymond V. Marino
Raymond V. Marino
President and Chief Executive Officer
Gary W. Furney
Gary W.Furney
Vice President and Controller
(Principal Financial and Accounting Officer)
1.1
NEWS RELEASE
FOR RELEASE: MARCH 25, 1996
PACIFIC GATEWAY PROPERTIES ANNOUNCES
ENTERING INTO CONTRACT TO SELL FLORIDA SHOPPING CENTER
FOR $19.3 MILLION
SAN FRANCISCO,CALIFORNIA ...Pacific Gateway Properties (PGP-AMEX) announced
today that it has entered into a contract with an unrelated third party to sell
its 170,000 square foot Florida shopping center for $19.3 million. The
sale of the shopping center and anticipated completion of the sale of the
Radisson Hotel in Tucson, Arizona will complete the disposition of the PGP's
non-office properties. In addition, these sales further consolidate PGP's
real estate investment holdings primarily in the western U.S. After taxes
and debt repayment PGP will receive approximately $2 million in net proceeds
from the sale of the shopping center. PGP anticipates that it will use the
net proceeds from the sale of the shopping center to increase cash reserves,
and fund future leasing capital improvements, and possible new acquisitions.
FOR MORE INFORMATION CONTACT: RAYMOND MARINO, PRESIDENT & CEO.
1.2
NEWS RELEASE
FOR RELEASE: April 12, 1996
PACIFIC GATEWAY PROPERTIES
COMPLETES SALE OF FLORIDA SHOPPING CENTER
FOR $19.3 MILLION
SAN FRANCISCO, CALIFORNIA ....Pacific Gateway Properties (PGP-AMEX) announced
today that it completed the sale of its 170,000 square foot West Palm Beach,
Florida, shopping center for $19.3 million to Metropolitan Life Insurance
Company. The sale of the shopping center will result in a gain of
approximately $10.9 million for financial reporting purposes in the second
quarter of 1996. PGP will receive approximately $3.86 million in pre-tax
net proceeds from the sale. PGP anticipates that it will use the after tax
net proceeds from the sale of the shopping center to increase cash reserves,
and fund future leasing and capital improvement costs.
The sale of the shopping center and anticipated completion of the sale of
the Radisson Hotel in Tucson, Arizona will complete the disposition of
the PGP's non-office properties. In addition, these sales further
consolidate PGP's real estate investment holdings primarily in the
western U.S.
FOR MORE INFORMATION CONTACT: RAYMOND MARINO, PRESIDENT & CEO.
