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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): October 11, 1995.
REAL ESTATE INVESTMENT TRUST OF CALIFORNIA
(Exact name of registrant as specified in its charter)
California 1-9639 95-2565432
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
12011 San Vicente Boulevard, Suite 707
Los Angeles, California 90049
(Address of principal executive offices)
(310) 476-7793
(Registrant's telephone number)
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ITEM 5. OTHER EVENTS
Reference is made to the press release of Registrant, issued on October 11,
1995, which contains information meeting the requirements of this Item 5, and
which is incorporated herein by this reference. A copy of the press release is
attached to this Form 8-K as Exhibit "A."
The press release describes the October 11, 1995 signing of an Agreement
and Plan of Merger by and among Registrant, Real Estate Investment Trust of
Maryland, a Maryland real estate investment trust and BRE Properties, Inc., a
Delaware corporation (the "Agreement"), pursuant to which Registrant will
redomicile in Maryland and then merge into BRE Properties, Inc., a Delaware
corporation ("BRE"). BRE will be the surviving corporation in the merger.
Pursuant to the Agreement, at the effective time of the merger, each share of
beneficial interest of Registrant, no par value, will be converted into .57
shares of common stock, par value $0.01 of BRE.
As a condition to the merger, the Registrant will be requried to suspend
its Dividend Reinvestment and Stock Purchase Plan (the "Plan"). No shares of
Registrant will be issued or sold under the Plan after October 11, 1995, unless
a request for purchase of shares is made in accordance with the Plan by a
shareholder of Registrant of record as of October 2, 1995 and the request is
post marked on or prior to October 11, 1995. Pursuant to the Agreement, the
Plan will also be terminated at or prior to the scheduled closing of the merger
between BRE and Registrant.
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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.
November 8, 1995 REAL ESTATE INVESTMENT TRUST OF
CALIFORNIA
By: /s/ Jay W. Pauly
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Jay W. Pauly
President and Chief Executive Officer
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EXHIBIT "A"
CONTACT: Frank C. McDowell Jay W. Pauly
BRE Properties, Inc. REIT of California
415/445-6530 310/476-7793
Lauren L. Barr LeRoy E. Carlson
BRE Properties, Inc. REIT of California
415/445-6523 310/476-7793
FOR IMMEDIATE RELEASE
BRE PROPERTIES AND REIT OF CALIFORNIA
ANNOUNCE DEFINITIVE AGREEMENT TO MERGE
SAN FRANCISCO/LOS ANGELES, October 11, 1995 -- BRE Properties, Inc.
(NYSE:BRE) and Real Estate Investment Trust of California (NYSE:RCT) today
announced the execution of a definitive agreement in which the two companies
will be merged, forming one of the largest multifamily real estate investment
trusts in the Western United States. BRE Properties will be the surviving
entity.
Based on the current market price of BRE's stock, the combined companies
will have an equity market capitalization of approximately $540 million and
ownership interests in 47 multifamily properties, totaling 12,449 apartment
units, located in nine major markets in California, Arizona, Oregon, Washington
and Nevada. The transaction is expected to be accretive to Funds From
Operations (FFO) on a per share basis due, in part, to operating efficiencies
anticipated to be derived from the merger.
Under the terms of the agreement, BRE would exchange 0.57 shares of its
common stock for each share of beneficial interest of RCT in a tax free
transaction to be accounted for as a purchase. Upon completion of the merger,
shareholders of RCT would own approximately 33% of the combined entity. The
merger is subject to the approval of the shareholders of both companies and
other conditions; closing is expected to occur as soon as practical following
such approvals. The Boards of both companies have unanimously approved the
transaction.
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Frank C. McDowell, President and Chief Executive Officer of BRE Properties,
said, "This strategic merger moves BRE closer to its stated goal of becoming the
preeminent multifamily REIT in the Western United States. In addition to a
balance sheet that should position the company for future growth, the combined
entity will have a deeper management team, and a geographically stronger and
more diversified position in our markets."
McDowell added, "Based on market capitalization, the merger will place BRE
among the ten largest multifamily REITs in the country. We stand to achieve
important efficiencies that should have substantial and immediate benefits. In
particular, we will be able to combine REIT of California's proven internal
property management capabilities with BRE's asset management skills to
accomplish our goal of internalizing property management."
Jay W. Pauly, President and Chief Executive Officer of REIT of California,
commented, "We are excited about the strategic combination and believe
shareholders will be well served by the transaction. Our companies share a
multifamily focus; currently, multifamily assets represent approximately 80% and
70%, respectively, of the equity investments of BRE and RCT. The combined
entity would continue to seek to redeploy non-core assets into additional
apartment properties. This merger strengthens the regional multifamily focus
and allows for net cost savings from internal management of BRE's properties,
the closing of REIT of California's corporate offices, elimination of certain
duplicative administrative costs, and realization of economics of scale."
McDowell stated, "The merger builds on BRE's presence in the
Phoenix/Scottsdale, San Diego, Sacramento and Los Angeles/Orange County markets
and gives us entry into Las Vegas. These additions complement our presence in
Tucson, Seattle, San Francisco, and Portland. Apartment ownership interests
will total 12,449 units, including 3,319 units on land leased to others.
Current commitments on three additional properties, currently in development,
will bring the unit total to 13,387."
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In the combined entity, which will be headquartered in San Francisco, Frank
C. McDowell will serve as President and Chief Executive Officer, Jay W. Pauly
will serve as Chief Operating Officer. Additionally, LeRoy E. Carlson and John
H. Nunn, both of RCT, will join BRE's senior management team. Three directors
from REIT of California will be appointed to the BRE Board of Directors,
increasing BRE's Board from six to nine members.
McDowell and Pauly noted that the strategic merger should result in both
financial and operating advantages: With an equity market capitalization of
approximately $540 million and debt to total market capitalization of about 26%,
the combined company should have greater financing flexibility and better access
to the capital markets. The stock of the combined companies will have a broader
shareholder base which should serve to increase liquidity. The balance sheet of
the combined entity will have low debt ratios, long-term debt maturity
schedules, a significant number of unencumbered assets, and average fixed
interest rates of approximately 7.6%.
The closing market price per share on October 11, 1995 was $33.375 for BRE
Properties and $16.375 for REIT of California. In the event the average share
price of BRE common stock immediately prior to the closing is below $28.07, or,
if both the average share price is less than $28.575 and the stock price has
declined by more than a specified index value, RCT may elect to terminate the
agreement subject to BRE's right to increase the exchange ratio. The complete
terms of the merger will be more fully described in a proxy expected to be
mailed to shareholders in November.
The strategic merger will combine two well-established and financially
sound REITs with compatible strategies and portfolios. Both BRE Properties and
REIT of California have paid dividends to shareholders for 100 or more
consecutive quarters. BRE's financial advisor is Dean Witter Reynolds Inc.;
RCT's financial advisor is Prudential Securities Incorporated.
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REIT of California, headquartered in Los Angeles, is a self-administered
and self-managed REIT which owns properties in California, Arizona and Nevada,
BRE Properties, headquartered in San Francisco, is a self-administered REIT
which primarily owns and operates multifamily properties in California, Arizona,
Oregon and Washington.
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