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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): June 22, 1998
AMERICAN REAL ESTATE INVESTMENT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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<S> <C> <C>
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Maryland 1-12514 84-1246585
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
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620 W. Germantown Pike, Suite 200
Plymouth Meeting, Pennsylvania 19462
(Address of Principal Executive Offices)(Zip Code)
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Registrant's telephone number, including area code:
(610) 834-7950
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On June 22, 1998 through July 1, 1998, American Real Estate Investment
Corporation (the "Company"), through American Real Estate Investment, L.P.
(the "Operating Partnership"), a limited partnership of which the Company is
the sole general partner and in which the Company owns, on the date of this
Current Report on Form 8-K, an interest of approximately 51%, consummated the
following acquisitions and disposition:
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
I. Acquisitions:
On June 22, 1998, the Company, through its Operating Partnership, consummated
the acquisitions of two office and two industrial properties. Set forth below
are brief descriptions of the properties acquired:
The British American Boulevard Property:
- - 6 British American Boulevard, Latham, New York - A 70,550 square foot
office building located in suburban Albany. The building was acquired for
approximately $3.8 million from R.I. Associates and is 94% leased. Major
tenants are the Board of Cooperative Educational Services of Albany, MKS
Industries, Inc. and Landis and Staefa, Inc.
The Gates Properties:
- - 4, 5 and 8 Marway Circle, Gates, New York - A three building, 171,300
square foot portfolio including two industrial buildings and one office
building ranging from 51,300 to 60,000 square feet. The buildings were
acquired for approximately $4.0 million from Wilson Income Properties 1983,
LP, and is 96% leased. Major tenants are Anixter, Imperial Chemical, and
Hills Pet Nutrition.
On July 1, 1998, the Company, through its Operating Partnership, consummated
the acquisition of three industrial buildings located in Ohio. A brief
description of the properties is as follows:
- - 3530 East Pike, Zanesville, Ohio - A 300,000 square foot industrial
facility which is 100% leased to Owens Brockway. This property was
purchased for approximately $5.0 million.
- - 1030 Edgewood Drive, Urbana, Ohio - A 200,000 square foot industrial
facility which is 100% leased to SC Johnson Wax. This property was
purchased for approximately $3.9 million.
- - 16725 Square Drive, Marysville, Ohio - A 133,500 square foot industrial
facility which is 100% leased to Midwest Express. This property was
purchased for approximately $2.8 million.
The aggregate purchase price of the acquisitions described above, including
closing costs, was funded through the Company's $150 million revolving
credit facility. The sellers of the British American Boulevard Property, the
Gates Properties, and the Ohio industrial buildings are not affiliated with
the Company or the Operating Partnership. The Company based its determination
of the purchase price of these properties on the expected cash flow, physical
condition, location, competitive advantages, existing tenancies, and
opportunities to retain and attract additional tenants. The purchase price
was determined through an arm's length negotiation between the Company and
the sellers.
The table set forth below shows certain information regarding rental rates
and lease expirations for the properties acquired (assuming that no tenants
exercise renewal or cancellation options and that there are no tenant
bankruptcies or other tenant defaults):
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Annualized
Rent Per
Square Annualized Leased
Number of Footage of Percentage of Rent of Square Foot
Year of Lease Expiring Expiring Total Leased Expiring of Expiring
Expiration Leases Leases Square Feet Leases Leases
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1998 5 23,725 2.7% $ 120,684 $ 5.09
1999 5 258,902 29.7% 594,708 2.30
2000 10 249,569 28.7% 898,538 3.60
2001 - - - - -
2002 2 320,500 36.8% 1,002,636 3.13
2003 1 7,800 .9% 56,556 7.25
2004 - - - - -
2005 - - - - -
2006 1 10,500 1.2% 78,756 7.50
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Total/Average 24 870,996 100.0% $2,751,878 $ 3.16
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"Annualized Rent" as shown in the above table, represents the rental rate as
of May 31, 1998 multiplied by twelve.
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II. Dispositions:
On June 24, 1998, Company consummated the sale of the Quadrangles Village
Apartments for approximately $26.5 million. The sale resulted in a gain of
approximately $5.5 million and net proceeds to the Company of approximately
$10.3 million. The property is located in Tempe, Arizona, and was sold to QAL
Properties, L.P. The 510-unit apartment building represented the last
remaining multi-family asset in the Company's portfolio.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(b) Pro Forma Financial Information
It is impracticable to file with this Form 8-K the financial
statements and pro forma financial information required by this Item
7 with regard to the acquisitions and the disposition described in
Item 2 above. Those financial statements and pro forma financial
information will
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be filed by amendment to this Form 8-K as soon as practicable and,
in any event, within 60 days after the required filing date for
this Form 8-K.
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.
AMERICAN REAL ESTATE INVESTMENT CORPORATION
Date: July 7, 1998 By: /s/ Jeffrey E. Kelter
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Jeffrey E. Kelter
President
Date: July 7, 1998 By: /s/ Timothy E. McKenna
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Timothy E. McKenna
Treasurer
(Principal Financial and
Accounting Officer)
