U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) July 6,1998
MILESTONE PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
1-10641 65-0158204
(Commission File Number) (IRS Employer Identification Number)
150 East Palmetto Park Road, Boca Raton, FL 33486
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (561) 394-9260
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended (the "Securities Act") and Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"). Such forward-looking statements include
statements regarding the intent, belief or current expectations of Milestone
Properties, Inc. ("Milestone") and its wholly-owned subsidiaries (together,
Milestone with its subsidiaries is hereinafter referred to as the "Company") and
its management and involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among other things, the following: general economic and
business conditions, which will, among other things, affect the demand for
retail space or retail goods, availability and creditworthiness of prospective
tenants, lease rents and the terms and availability of financing; adverse
changes in the real estate markets including, among other things, competition
with other companies; risks of real estate development and acquisition;
governmental actions and initiatives; and environment/safety requirements.
The Company is engaged in the business of owning, acquiring, managing,
developing and investing in commercial real estate and real estate related
assets.
Item 2. Disposition of Assets.
On July 7, 1998, the Company completed the sale of its Mountain View
Mall property located in Bend, Oregon (the "Bend Property")(the "Sale"), to Sima
Mountain View Mall LLC, an unrelated party, for a negotiated sales price of
$17,750,000 cash.
The Company realized net proceeds from the Sale of approximately $319,200,
having used approximately $17,065,000 of the gross proceeds to pay off the
balance of the underlying first mortgage debt on the Bend Property (which
represented approximately 23% of the Company's total liabilities) and used the
remaining funds for closing costs and net credits to the buyer. At the time of
the Sale, the Bend Property represented approximately 17% of the Company's total
assets with a carrying value, net of accumulated depreciation, of approximately
$16,482,000. As a result of the Sale, the Company will realize a book gain of
approximately $948,000 in the third quarter of 1998.
Item 5. Other Events.
As previously reported, on January 30, 1996 Milestone, its Board of
Directors and Concord Assets Group, Inc. ("Concord"), a New York corporation,
the executive officers and directors of which are also executive officers and
directors of Milestone, were named as defendants in a purported class action
lawsuit (the "Winston Action") which was brought by a holder of Milestone's $.78
Convertible Series A Preferred Stock (the "Series A Preferred Stock"), par value
$.01 per share, $10 liquidation preference, purporting to bring the action on
behalf of himself and other holders of the Series A Preferred Stock in
connection with (i) Milestone's acquisition in October 1995 of certain
wraparound notes, wraparound mortgages and fee properties from certain
affiliates of Concord, (ii) the transfer in August and October 1995 of 16 of
Milestone's retail properties to Union Property Investors, Inc. ("UPI"), a then
wholly-owned Delaware subsidiary of Milestone and (iii) the subsequent
distribution of all of the issued and outstanding shares of UPI's common stock
to holder's of Milestone's common stock (the "Common Stock"), par value $.01 per
share, on a share-for-share basis and for no consideration.
<PAGE>
On July 14, 1998 the Company announced that it had reached a settlement
(the "Proposed Settlement") with plaintiff's counsel relating to the Winston
Action. Pursuant to the Proposed Settlement, each holder of Series A Preferred
Stock who does not opt-out will be required to surrender such Series A Preferred
Stock and all claims it may have against Milestone and the other named
defendants in connection with the purported class action in exchange for $3.00
in cash for each share of Series A Preferred Stock, payable by Milestone. A
settlement agreement has not yet been signed and any settlement agreement, once
signed, will be subject to court approval, as well as a number of conditions
which may be waived at the option of the defendants, including the condition
that not more than 10% of the issued and outstanding shares of Series A
Preferred Stock opt out of the Proposed Settlement.
The New York Stock Exchange (the "Exchange") suspended trading in
shares of the Series A Preferred Stock and Common Stock prior to the market
opening on July 6, 1998 because the Exchange had determined that Milestone had
fallen below certain of its continued listing criteria relating to net income
and market value of publicly held shares of the Series A Preferred Stock and
Common Stock and the Exchange subsequently applied to the Securities and
Exchange Commission to delist the Series A Preferred Stock and Common Stock. The
Company has been advised that on or about July 6, 1998, a market developed for
trading shares of the Series A Preferred Stock and Common Stock on the
over-the-counter Bulletin Board with the ticker symbols MPRPP and MPRP,
respectively.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro forma financial information:
Pro forma consolidated balance sheet as of March 31, 1998.
Pro forma consolidated statements of revenues and expenses for
the three months ended March 31, 1998 and for the year ended
December 31, 1997.
(c) Exhibits:
Milestone Properties, Inc. Press Release, dated July 14, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
MILESTONE PROPERTIES, INC.
(Registrant)
Date: July 21, 1998 /s/: Patrick S. Kirse
----------------------
Patrick S. Kirse
Vice President of Accounting
(Principal Accounting Officer)
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED PRO FORMA BALANCE SHEET
(Unaudited)
March 31, 1998
<TABLE>
<CAPTION>
Pro Forma Adjustments Pro Forma
ASSETS March 31, 1998 Debit Credit March 31, 1998
-------------- ----- ------ --------------
<S> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents $ 12,230,077 $ 319,228 $ 12,549,305
Restricted cash 222,000 222,000
Loans receivable 1,496,176 1,496,176
Accounts receivable 1,154,306 $ 205,637 948,669
Accrued interest receivable 1,870,514 1,870,514
Due from related party 469,805 469,805
Prepaid expenses and other 978,399 69,201 909,198
-------------- -------------
Total current assets 18,421,277 18,465,667
Property, improvements and equipment, net 19,540,217 16,481,547 3,058,670
Wraparound notes, net 52,849,581 52,849,581
Deferred income tax asset, net 4,586,209 18,993 4,567,216
Investment in preferred stock 1,783,100 1,783,100
Management contract rights, net 263,723 263,723
Goodwill and organizational cost, net 743,068 743,068
-------------- -------------
Total assets $ 98,187,175 $ 81,731,025
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 615,417 3,808 $ 611,609
Accrued interest payable 355,381 355,381
Master lease payable 3,439,381 3,439,381
Due to related party 100,680 100,680
Current portion of mortgages and notes payable 38,169,505 17,118,313 21,051,192
Income taxes payable 2,822,119 2,822,119
----------------- ------------
Total current liabilities 45,502,483 28,380,362
Mortgages and notes payable 27,470,179 10,341 27,459,838
--------------- -------------
Total liabilities 72,972,662 55,840,200
------------------ -------------
Commitments and Contingencies
Stockholders' Equity:
Common stock ($.01 par value, 10,000,000 shares
authorized, 4,905,959 issued and outstanding;
692,591 shares in treasury) 49,060 49,060
Preferred stock (Series A $.01 par value, $10
liquidation preference, 10,000,000 shares
authorized, 3,033,995 shares issued and outstanding) 30,341 30,341
Additional paid-in surplus 48,105,428 48,105,428
Accumulated deficit (19,529,898) 676,312 (18,853,586)
Shares held in treasury - 692,591 shares at cost ( 3,440,418) (3,440,418)
------------------ ---------------
Total stockholders' equity 25,214,513 25,890,825
----------------- -------------
Total liabilities and stockholders' equity $ 98,187,175 $ 81,731,025
================= -=============
</TABLE>
See Accompanying Notes to Consolidated Pro Forma Financial Statements
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENT OF REVENUES AND EXPENSES
(Unaudited)
For the Three Months Ended March 31, 1998
<TABLE>
<CAPTION>
Pro-Forma Adjustments Pro Forma
March 31, 1998 Debit Credit March 31, 1998
-------------- ------ ------- --------------
<S> <C> <C> <C> <C>
REVENUES:
Rent $ 2,745,805 $ 497,650 $ 2,248,155
Interest income 2,240,556 216 2,240,340
Revenue from management company operations 195,842 195,842
Tenant reimbursements 257,384 147,021 110,363
Management and reimbursement income 29,051 29,051
Percentage rent 109,248 41,394 67,854
Gain on realization of wraparound notes 81,890 81,890
-------------------- --------------
Total revenues 5,659,776 4,973,495
------------------ --------------
EXPENSES:
Master lease expense 3,445,833 3,445,833
Interest expense 1,519,598 $ 386,072 1,133,526
Depreciation and amortization 208,073 103,298 104,775
Salaries, general and administration 576,328 12,382 563,946
Property expenses 443,666 231,962 211,704
Expenses for management company operations 268,265 268,265
Professional fees 219,345 50 219,295
------------------ ----------------
Total expenses 6,681,108 5,947,344
----------------- ---------------
Loss before income tax (1,021,332) (973,849)
------------------ ----------------
(Benefit) provision for income taxes (487,038) 18,993 (468,045)
------------------- ---------- ----------------
Net loss $ (534,294) $ (505,805)
=================== ===============
Loss attributable to common stockholders $ (0.13) $ (0.12)
=================== ===============
Weighted average common shares outstanding 4,213,368 4,213,368
================== ===============
</TABLE>
See Accompanying Notes to Consolidated Pro Forma Financial Statements
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
CONSOLIDATED PRO FORMA STATEMENT OF REVENUES AND EXPENSES
(Unaudited)
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
Pro-Form Adjustments Pro Forma
December 31, 1997 Debit Credit December 31, 1997
----------------- ------ ------- -----------------
<S> <C> <C> <C> <C>
REVENUES:
Rent $ 10,280,548 $ 1,749,828 $ 8,530,720
Interest income 13,355,849 48,858 13,306,991
Revenue from management company operations 512,303 512,303
Tenant reimbursements 1,261,217 532,437 728,780
Management and reimbursement income 407,286 407,286
Percentage rent 450,423 151,391 299,032
Amortization of discount - available-for-sale securities 313,551 313,551
Unrealized loss on treasury notes sold short (316,887) (316,887)
Gain on sale of real estate related assets 316,061 316,061
Gain on sale of available-for-sale securities 3,511,560 3,511,560
-------------------- -------------
Total revenues 30,091,911 27,609,397
--------------------- -------------
EXPENSES:
Master lease expense 13,787,465 13,787,465
Interest expense 9,119,554 $ 1,557,550 7,562,004
Depreciation and amortization 847,385 413,192 434,193
Valuation allowance on wraparound notes 2,590,132 2,590,132
Salaries, general and administration 3,955,434 34,963 3,920,471
Property expenses 1,718,346 792,917 925,429
Expenses for management company operations 1,304,166 1,304,166
Professional fees 921,394 16,746 904,648
--------------------- -------------
Total expenses 34,243,876 31,428,508
--------------------- -------------
Loss before income taxes (4,151,965) (3,819,111)
(Benefit) provision for income taxes (721,234) 133,142 (588,092)
Net loss $ (3,430,731) $ (3,231,019)
====================== =============
Loss attributable to common stockholders $ (0.82) $ (0.77)
====================== =============
Weighted average common shares outstanding 4,206,550 4,206,550
====================== =============
</TABLE>
See Accompanying Notes to Consolidated Pro Forma Financial Statements
<PAGE>
MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
NOTES AND MANAGEMENT'S ASSUMPTIONS TO
CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The accompanying unaudited consolidated pro forma financial statements of
the Company have been prepared in accordance with the instructions to Form 8-K
and to Article 11 of Regulation S - X. The accompanying unaudited consolidated
pro forma balance sheet is presented as if the Sale occurred on March 31, 1998.
The accompanying unaudited consolidated pro forma statements of revenues and
expenses for the year ended December 31, 1997 and for the three months ended
March 31, 1998 are presented as if the Sale occurred as of January 1, 1997.
The unaudited consolidated pro forma financial statements should be read
in conjunction with the financial statements and footnotes included thereto in
the Company's Form 10-K for the year ended December 31, 1997 and the Company's
Form 10-Q for the period ended March 31, 1998. The unaudited consolidated pro
forma financial statements were prepared utilizing the accounting policies as
outlined in such historical financial statements except as noted herein. In
management's opinion, all adjustments considered necessary for a fair
presentation of the effects of the Sale have been reflected in the unaudited
consolidated pro forma financial statements.
As a result of the Sale, the Company will realize a book gain of
approximately $948,000 in the third quarter of 1998. Such non-recurring gain is
not reflected in the accompanying unaudited consolidated pro forma financial
statements.
The unaudited consolidated pro forma financial statements are not
necessarily indicative of the Company's actual financial position at March 31,
1998 or what the actual results of operations of the Company would have been
assuming the Sale occurred as of January 1, 1997 nor are they necessarily
indicative of the Company's results of operations for future periods.
2. Adjustments to Unaudited Consolidated Pro Forma Financials
All of the adjustments are to reflect the Sale of the Bend Property. For
the unaudited consolidated pro forma balance sheet, such adjustments reflect the
cash proceeds realized from the Sale, the eliminations of the Bend Property's
carrying value, net of accumulated depreciation, the elimination of the balance
of the first mortgage debt, and the elimination of tenant receivables and other
assets and liabilities related to the Bend Property. For the unaudited
consolidated pro forma statements of revenues and expenses, such adjustments
reflect elimination of rental and other revenues, property operating expenses,
interest expense on the first mortgage debt, depreciation and amortization,
income taxes and other expenses relating to the Bend Property.
<PAGE>
EXHIBIT INDEX
Exhibit Description
99.1 Milestone Properties, Inc.
Press Release, dated July 14, 1998.
PRESS RELEASE Milestone Properties, Inc. o 150 Palmetto
Park Road o Boca Raton, FL 33432 o (561) 394-9533 o Fax: (561) 392-8311
For Immediate Release
Date: July 14, 1998
Contact: Karen Renza
Phone: (561) 394-9533
Fax: (561) 392-8311
Boca Raton, Florida--Milestone Properties, Inc. announced today that it has
reached a settlement with plaintiff's counsel in a purported class action
lawsuit brought in the Court of Chancery of the State of Delaware by holders of
the Company's $.78 Convertible Series A Preferred Stock against the Company and
its directors. Pursuant to the proposed settlement, each holder of the Company's
Preferred Stock who does not opt-out will be required to surrender such
Preferred Stock and all claims it may have against the Company and the other
named defendants in connection with the purported class action in exchange for
$3.00 in cash for each share of preferred stock. A settlement agreement has not
yet been signed and any settlement agreement, once signed, will be subject to
court approval, as well as a number of conditions which may be waived at the
option of the defendants, including the condition that not more than 10% of the
issued and outstanding shares of Preferred Stock opt out of the Class.
Milestone, directly and through its wholly-owned subsidiaries, is engaged in the
business of owning, acquiring, managing, developing and investing in real estate
and real estate related assets.
