<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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)
August 20, 1997
American Real Estate Investment Corporation
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 1-12514 84-1246585
- --------------------------------------------------------------------------------
(State or other jurisdiction Commission (IRS Employer
of incorporation) File Number) Identification No.)
1670 Broadway, Suite 3350, Denver, Colorado 80202
-------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 303-869-4700
------------
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events.
------------
On August 20, 1997, the Registrant and its operating partnership, American
Real Estate Investment, L.P. (the "Operating Partnership") entered into
agreements with a group of investors (the "Investors") whereby the Investors
will contribute cash, real estate properties and other assets to the Registrant
and the Operating Partnership and in exchange the Investors will receive shares
of common stock, par value $0.001 per share, of the Registrant and units of
interest (the "LP Units") in the Operating Partnership, each valued at $11.00
per share of common stock or LP Unit. The transactions are subject to the
approval of the Registrant's shareholders, among other closing conditions.
A copy of the Registrant's press release dated August 21, 1997 is attached
hereto and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial statement of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
(i) Press release dated August 21, 1997;
(ii) Master Investment Agreement (the "Master Agreement") dated
August 20, 1997 by and between the Registrant, American Real Estate Investment,
L.P. (the "Operating Partnership"), the McBride Entities (as further identified
in the Master Agreement), the FLIP Shareholders (as further identified in the
Master Agreement), Jeffrey Kelter, Penn Square Properties, Inc., and Hudson Bay
Partners, L.P. (to be filed by amendment);
(iii) Stock Purchaser Agreement dated August 20, 1997 between the
Registrant and Hudson Bay Partners, L.P. (to be filed by amendment);
(iv) Management Contribution Agreement dated August 20, 1997
between the Registrant, the Operating Partnership, Jeffrey Kelter and Penn
Square Properties, Inc. (to be filed by amendment);
(v) McBride Contribution Agreement between the Registrant, the
Operating Partnership and the parties identified on the signature page of the
agreement (to be filed by amendment); and
<PAGE>
(vi) Agreement and Plan of Merger among the Registrant, Fairlawn
Industrial Park, Inc. and the parties identified on the signature page of the
agreement (to be filed by amendment).
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.
American Real Estate
Investment Corporation
By: /s/ Rick A. Burger
----------------------------------------
Rick A. Burger, Treasurer
Dated: August 21, 1997
Enclosure
<PAGE>
EXHIBIT 99
AMERICAN REAL ESTATE INVESTMENT CORPORATION
1670 BROADWAY, SUITE 3350
DENVER, COLORADO 80202
(303) 869-4700
(303) 869-4602 (FAX)
PRESS RELEASE
AMERICAN REAL ESTATE INVESTMENT CORPORATION PROPOSES TRANSACTIONS TO TRANSFORM
TO AN OFFICE AND INDUSTRIAL REIT
Denver, Colorado - August 21, 1997. AMERICAN REAL ESTATE INVESTMENT
CORPORATION (the "Company"), a real estate investment trust (AMEX: REA),
announced today that it has entered into agreements whereby the Company will
enter into a combination transaction with McBride Enterprises ("McBride") and
Penn Square Properties, Inc. ("Penn Square"), and will receive a cash investment
from Hudson Bay Partners, L.P. ("Hudson Bay") (collectively the "Investor
Group") to transform the Company into an office and industrial REIT that will be
focused on markets in the mid-Atlantic and Northeast states. McBride, a New
Jersey-based real estate company, and Penn Square, a private real estate
management and development company based in Philadelphia, PA, will contribute
real estate assets, primarily comprised of office and industrial properties in
New Jersey and Pennsylvania, and management operations, cash and other assets to
the Company. Hudson Bay, a private real estate fund capitalized by Crescent
Real Estate Equities (NYSE: CEI) will invest approximately $15 million, subject
to certain adjustments, in the Company. In exchange, the Investor Group will
receive shares of common stock of the Company ("Common Stock") or partnership
units in the operating partnership of the Company ("OP Units"), each valued at
$11.00 per share (the "Merger Price").
Upon consummation of the proposed transaction, the Company's pro forma
total market capitalization, based on the Merger Price, will be approximately
$146 million with a 37% debt to total market capitalization ratio. In the
aggregate, upon issuance, the shares of Common Stock and OP Units issued to the
Investor Group (assuming the OP Units are redeemed for shares of Common Stock
pursuant to the partnership agreement of the Operating Partnership) are expected
to constitute 77% of the shares of the Common Stock then outstanding. The
Company believes the transaction will enable the Company to capitalize on the
experience and expertise of the Investor Group by acquiring, developing and
redeveloping institutional quality office and industrial properties in strategic
locations. The Company intends to re-deploy the capital in its existing asset
base of multifamily properties.
McBride is a real estate development, management and construction
company based in Franklin Lakes, New Jersey, that has developed office and
industrial property in New Jersey for over 40 years. The McBride portfolio to
be contributed to the Company includes 15 properties,
<PAGE>
including 9 office buildings, 4 office/industrial buildings, one neighborhood
shopping center and one medical building. David McBride, the Chief Executive
Officer of McBride, will become the Chairman of the Board of the Company.
Penn Square Properties, Inc. is a full service real estate
development, management, construction and brokerage company founded in
Philadelphia in 1982. Penn Square owns, manages and leases office and
industrial space in Pennsylvania and New Jersey. The Company will assume from
Penn Square contracts to purchase up to six additional industrial properties
located throughout eastern Pennsylvania. Jeffrey Kelter, the founder of Penn
Square, will be the President of the Company.
Hudson Bay Partners, L.P. is a discretionary investment fund formed by
David Lesser to make strategic investments in real estate and real estate
related securities. Prior to forming Hudson Bay Partners, Mr. Lesser was a
Senior Vice President of Crescent Real Estate Equities, Ltd. Crescent is the
beneficial owner of a significant economic interest in Hudson Bay Partners
through the ownership of debt and non-voting common stock in the fund's limited
partner. Prior to joining Crescent, Mr. Lesser was a Director in the Real
Estate Investment Banking Department of Merrill Lynch & Co.
Upon consummation of the transaction, the board of the Company will be
reconfigured to consist of seven directors: Robert Branson, Jeffrey Kelter,
David Lesser, David McBride, Timothy McBride, Jim Mulvihill and Evan Zucker.
Donaldson, Lufkin and Jenrette Securities Corporation acted as advisor
to American Real Estate Investment Corporation and provided a fairness opinion
in connection with the transaction. The closing of the transactions is subject
to the fulfillment of various closing conditions, including approval by the
stockholders of the Company.
Evan Zucker, current President of the Company, commented: "We are
excited about the opportunity to join forces with this Investor Group and
believe the transaction accomplishes the Company's business objectives of re-
deploying its capital and seeking additional growth opportunities. The infusion
of cash, a quality portfolio of industrial and office assets in favorable
secondary mid-Atlantic and Northeast markets and an experienced in-house
development and management team led by Jeff Kelter and David McBride, when
combined with the significant opportunities which exist in our target markets
and the experience and reputation of the new investors, provides a very
favorable platform for future growth and the creation of shareholder value."
David Lesser added: "The Investor Group will provide additional capital markets
expertise and access to capital, which should accelerate the growth of
American."
American Real Estate Investment Corporation, a real estate investment
trust, is currently engaged in the ownership and operation of multifamily
residential properties located in certain markets within the Southwestern United
States, including the Denver, Phoenix and San Diego metropolitan areas. The
Company presently owns either a full or partial interest in multifamily
residential properties which comprise an aggregate of 1,542 units.
