SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) JULY 1, 1998
FRANKLIN SELECT REALTY TRUST
(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 1-12708 94-0395938
State or other jurisdiction Commission File IRS Employer
of incorporation Number Identification
Number
2000 ALAMEDA DE LAS PULGAS, SAN MATEO, CA 94404
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (650) 312-3000
ITEM 2: DISPOSITION OF ASSETS.
MIRA LOMA SHOPPING CENTER - RENO, NEVADA
GLEN COVE SHOPPING CENTER - VALLEJO, CALIFORNIA
On November 17, 1998 Franklin Select Realty Trust (the "Company") sold the
Mira Loma Shopping Center, located in Reno, Nevada, and the Glen Cove
Shopping Center located in Vallejo, California (the "Properties").
The Properties were sold for a gross price of $15.4 million under an
installment sale contract in which $7.7 million was paid to the Company at
closing. The balance of the sale price will be paid to the Company on
January 6, 1999 under the terms of a note receivable. The note bears interest
at 8% annually and requires interest-only payments of $51,333 per month.
Approximately $800,000 of the net proceeds will be used to repay the
outstanding balance of the Company's line of credit, and the remainder will
be held by the Company for general corporate purposes. The unaffiliated
buyer was Pan Pacific Retail Properties, Inc ("Pan Pacific"). Gain from sale
of the Properties was approximately $0.9 million.
There was no material relationship between Pan Pacific and the Company or any
of the affiliates, directors or officers of the Company or Franklin
Properties, Inc. (the "Advisor") or any associate of any director or officer
of the Company or the Advisor.
CARMEL MOUNTAIN GATEWAY PLAZA - SAN DIEGO, CALIFORNIA
On July 1, 1998, the Company sold the Carmel Mountain Gateway Plaza, located
in San Diego, California. The property was sold for cash at a gross price of
$8.9 million. Approximately $8.6 million of the net proceeds were used to
repay debt, and remainder was held by the Company for general corporate
purposes. The unaffiliated buyer was the Ben Tipp Testamentary Trust
("Tipp"). Gain from sale of the property was approximately $382,000.
There was no material relationship between Tipp and the Company or any of the
affiliates, directors or officers of the Company or the Advisor or any
associate of any director or officer of the Company or the Advisor.
Page 1
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
PRO FORMA FINANCIAL INFORMATION
Index
Page
3 Unaudited Pro Forma Balance Sheet as of September 30, 1998
4 Unaudited Pro Forma Statement of Income for the 9 months ended
September 30, 1998
5 Unaudited Pro Forma Statement of Income for the year ended December
31, 1998
6 Notes to the Pro Forma Financial Statements
Page 2
Unaudited Pro Forma Balance Sheet as of September 30, 1998
Franklin Select Realty Trust
(IN THOUSANDS)
Historical Adjustments Pro Forma
Real estate, net $127,278 $(14,013) A $113,265
Cash and cash equivalents 2,893 - 2,893
Mortgage-backed securities, 412 6,912 B 7,324
available for
sale
Note receivable - 7,500 B 7,500
Deferred rent receivable 1,790 (240) C 1,550
Deferred costs and other 2,504 (168) C 2,336
- ------------------------------------------------------------------------
Total assets 134,877 (9) 134,868
- ------------------------------------------------------------------------
Notes and bonds payable 27,694 (800) D 26,894
Tenant deposits, accounts payable
and 2,003 (73) E 1,930
accrued expenses
Distributions payable 1,642 - 1,642
- ------------------------------------------------------------------------
Total liabilities 31,339 (873) 30,466
- ------------------------------------------------------------------------
Minority interest 9,200 - 9,200
Stockholders' equity
Common stock A 103,161 - 103,161
Common stock B 6,294 - 6,294
Unrealized loss (30) - (30)
Accumulated distribution over net (15,087) 864 (14,223)
income
- ------------------------------------------------------------------------
Total stockholders' equity 94,338 864 95,202
- ------------------------------------------------------------------------
- ------------------------------------------------------------------------
Total liabilities and $134,877 $(9) $134,868
stockholders' equity
- ------------------------------------------------------------------------
The accompanying notes are an integral part of these pro forma financial
statements.
Page 3
Unaudited Pro Forma Statement of Income for the 9 months ended
September 30, 1998
Franklin Select Realty Trust
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
Historical Adjustments Pro Forma
Revenue
Rent $13,619 $(2,003) F $11,616
Interest, dividends and other 145 693 G 838
- ------------------------------------------------------------------------
Total revenue 13,764 (1,310) 12,454
- ------------------------------------------------------------------------
Expenses
Property operating 3,074 (333) H 2,741
Interest 2,308 (472) I 1,836
Related party 1,125 (168) H 957
General and administrative 844 - 844
Depreciation and amortization 3,016 (380) J 2,636
- ------------------------------------------------------------------------
Total expenses 10,367 (1,353) 9,014
- ------------------------------------------------------------------------
Operating income before gain on
sale and minority interest 3,397 43 3,440
Gain on sale 552 (382) K 170
Operating income before minority 3,949 (339) 3,610
interest
Minority interest 515 - 515
========================================================================
Net income $ 3,434 $(339) $3,095
========================================================================
Net income per share $0.28 $(0.03) $0.25
Weighted average shares 12,250 12,250
outstanding
The accompanying notes are an integral part of these pro forma financial
statements.
Page 4
Unaudited Pro Forma Statement of Income for the year ended December 31, 1997
Franklin Select Realty Trust
(IN THOUSANDS EXCEPT PER SHARE
AMOUNTS)
Historical Adjustments Pro Forma
Revenue
Rent $17,522 $(3,049) F $14,473
Interest, dividends and other 204 1,046 G 1,250
- ------------------------------------------------------------------------
Total revenue 17,726 (2,003) 15,723
- ------------------------------------------------------------------------
Expenses
Property operating 4,036 (563) H 3,473
Interest 2,773 (716) I 2,057
Related party 1,454 (243) H 1,211
General and administrative 648 - 648
Depreciation and amortization 4,003 (556) J 3,447
- ------------------------------------------------------------------------
Total expenses 12,914 (2,078) 10,836
- ------------------------------------------------------------------------
Operating income before minority 4,812 76 4,888
interest
Minority interest 644 - 644
========================================================================
Net income $4,168 $76 $4,244
========================================================================
Net income per share $0.34 $0.01 $0.35
Weighted average shares 12,250 12,250
outstanding
The accompanying notes are an integral part of these pro forma financial
statements.
Page 5
FRANKLIN SELECT REALTY TRUST
NOTES TO PRO FORMA FINANCIAL STATEMENTS (Unaudited)
1 Basis of Presentation
The pro forma financial statements of Franklin Select Realty Trust (the
"Company"), which are unaudited, have been prepared based on the historical
financial statements of the Company. In 1998, the Company sold its three
retail properties - Carmel Mountain Gateway Plaza ("Carmel"), Mira Loma
Shopping Center ("Mira Loma") and Glen Cove Center ("Glen
Cove")(collectively, "the Properties"). The sale of Carmel was completed in
July 1998 and the sale of Mira Loma and Glen Cove was completed in November
1998. The accompanying pro forma balance sheet as of September 30, 1998, has
been prepared as if the sale of Mira Loma and Glen Cove had occurred on
September 30,1998. The accompanying pro forma statements of operations for
the nine months ended September 30, 1998 and the year ended December 31, 1997
have been prepared as if the sale of the Properties had occurred on January
1, 1997. In management's opinion, all adjustments necessary to reflect the
effects of these transactions have been made. The pro forma financial
statements should be read in conjunction with the historical financial
statements of the Company. The pro forma financial statements are not
necessarily indicative of what the financial condition or the actual results
of operations of the Company would have been as of and for the nine months
ended September 30, 1998, or for the year ended December 31, 1997, had the
sales occurred on January 1, 1997, nor do they purport to represent the
financial condition or results of operations for future periods.
2 Pro Forma Balance Sheet Adjustments
Adjustments have been made to reflect the sale of the Properties, giving
effect to the following items:
A The carrying value of Mira Loma and Glen Cove.
B The net proceeds from the sale of Mira Loma and Glen Cove, less the
amount used to pay down the Company's line of credit. The terms of the sale
provided for a note receivable of $7.5 million and cash of $7.7 million. It
is management's current intention to invest the cash proceeds in
mortgage-backed securities.
C Note receivable relating to Mira Loma and Glen Cove, bearing interest
at 8% per annum with full settlement due on January 6, 1999.
D Proceeds from the sale of Mira Loma and Glen Cove used to pay down the
Company's debt.
E Payables relating to Mira Loma and Glen Cove.
Page 6
3. Pro Forma Income Statement Adjustments
Adjustments have been made to reflect the sale of the Properties, giving
effect to the following items:
F Rental revenue from the Properties.
G Interest income from the investment of the net proceeds at 6% per annum
for cash invested in mortgage-backed securities and 8% per annum for interest
on the note receivable for a period of 50 days.
H Operating expenses relating to the management and operation of the
Properties.
I Interest expense on notes and bonds payable secured on the Properties
that were repaid from the net proceeds, using the weighted average interest
rates paid on debt during the periods under review.
J Depreciation and amortization on the Properties.
K Gain on sale related to the sale of Carmel that was recorded in July
1998.
Page 7
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 heretofore duly authorized.
Dated: December 2, 1998 Franklin Select Realty Trust
BY: /s/ David P. Goss
David P. Goss
President
