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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): May 5, 2000
KEYSTONE PROPERTY TRUST
(Exact Name of Registrant as Specified in its Declaration of Trust)
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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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200 Four Falls Corporate Center, Suite 208
West Conshohocken, PA 19428
(Address of Principal Executive Offices)(Zip Code)
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Registrant's telephone number, including area code:
(484) 530-1800
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 5, 2000, Keystone Property Trust (the "Company") completed
the second and third stages of a transaction (the "Reckson Morris
Transaction") involving the Company's acquisition of 28 entities from Reckson
Construction Group, Inc., Reckson Operating Partnership, L.P., Robert Morris,
Joseph D. Morris and certain of their related entities (collectively, the
"Reckson Morris Contributors"), pursuant to a Contribution and Exchange
Agreement (the "Contribution Agreement"), dated as of August 6, 1999, by and
among, among others, the Reckson Morris Contributors, American Real Estate
Investment Corporation, the Company's predecessor-in-interest ("American")
and American Real Estate Investment, L.P. (now known as Keystone Operating
Partnership, L.P.) (the "Operating Partnership"). References herein to the
Company include its subsidiaries and American as predecessor to the Company,
unless the context otherwise requires. The Contribution Agreement was filed
as an exhibit to a Report on Form 8-K which was filed by the Company on
August 20, 1999. Pursuant to the Contribution Agreement, entities owning 28
"big box" industrial facilities (the "Reckson Morris Facilities") were to be
contributed in three stages to the Company in exchange for approximately $296
million in a combination of convertible preferred shares and common shares of
the Company, convertible preferred units of the Operating Partnership, the
assumption of mortgage indebtedness and cash.
On September 27, 1999, the Company completed the first stage of the
Reckson Morris Transaction. In the first stage, the Company acquired Reckson
Morris Operating Partnership, L.P., which owned 22 warehouse buildings
comprising approximately 3.9 million square feet and 105 acres of ground
which can accommodate an additional 1.5 million square feet of development.
The total consideration for the first stage was approximately $205 million,
including closing costs. The completion of the first stage was reported in a
Report on Form 8-K which was filed by the Company on October 12, 1999.
In the second and third stages of the Reckson Morris Transaction,
the Company acquired interest in six entities owning in the aggregate six
warehouse buildings containing approximately 1.9 million square feet and
approximately six acres of ground which can accommodate an additional 130,000
square feet of development. The total consideration for these stages
(excluding 6 Joanna Court which was acquired and simultaneously sold on April
11, 2000) was approximately $91 million, including closing costs, consisting
of the issuance to the Reckson Morris Contributors of approximately $25.7
million of convertible preferred units of the Operating Partnership and the
payment of approximately $73.7 million of cash proceeds. The cash proceeds
were financed with $59.0 million of fixed rate debt and other mortgage
financing.
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The buildings owned by the entities contributed in the second and
third stages of the Reckson Morris Transaction (collectively, "the
Buildings") are located in New Jersey as follows:
<TABLE>
<CAPTION>
LEASABLE OCCUPANCY YEAR BUILT/
PROPERTY ADDRESS LOCATION SQUARE FEET MAY 8, 1999 RENOVATED
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<S> <C> <C> <C> <C>
Nixon Park Edison, NJ 851,907 72.1%(1) 1999/2000
30 Stults Road South Brunswick, NJ 64,285 100.0% 1974
400 Cabot Drive Hamilton Township, NJ 585,510 100.0% 1979
Four Applegate Drive Washington, NJ 265,000 100.0% 1998
5 Henderson Road West Caldwell, NJ 210,530 100.0% 1967/1990/2000
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TOTAL 1,977,232
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</TABLE>
(1) Approximately 248,723 square feet of leases are signed of which these
tenants will occupy the space later in 2000.
The following table shows certain information regarding rental rates
and lease expirations for the Buildings as of May 8, 2000 (assuming that no
tenants exercise renewal or cancellation options and that there are no tenant
bankruptcies or other tenant defaults):
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF ANNUALIZED RENT PER
YEAR OF LEASE EXPIRING SQUARE FOOTAGE OF TOTAL LEASE ANNUALIZED RENT OF LEASE SQUARE FOOT OF
EXPIRATION LEASES EXPIRING LEASES SQUARE FEET EXPIRING LEASES (1) EXPIRING LEASES
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<S> <C> <C> <C> <C> <C>
2001 1 585,510 33.87% $2,740,187 $4.68
2002 --- --- --- --- ---
2003 --- --- --- --- ---
2004 --- --- --- --- ---
2005 2 216,536 12.53% 1,028,410 $4.75
2006 --- --- --- --- ---
2007 --- --- --- --- ---
2008 --- --- --- --- ---
2009 2 474,823 27.47% 2,287,969 $4.82
2010 1 210,530 12.18% 1,324,234 $6.29
Thereafter 1 241,110 13.95% 1,084,995 $4.50
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Grand Total 7 1,728,509 100.00% $8,465,795 $4.90
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--- -------- ------ ---------- -----
</TABLE>
(1) Annualized Rent of Expiring Leases, as used above, represents the
monthly contractual rental rate in the month the lease expires,
multiplied by twelve.
As of May 8, 2000, five tenants, Dr. Leonard's, Urban Children's
Stores, C and I Promotions, Vestcom and Nestle Foods individually occupy more
than 10% of the total net leasable area of the Reckson Morris Transaction.
At the time of execution of the Contribution Agreement, the
contributors of the Reckson Morris Facilities were unaffiliated with the
Company and 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 tenants. The purchase price was
determined through an arm's length negotiation between the Company and the
sellers.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
It is impracticable to file with this Form 8-K the financial
statements required by this Item 7 with regard to the acquisition
described in Item 2 above. Those financial statements will 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.
(b) PRO FORMA FINANCIAL INFORMATION
It is impracticable to file with this Form 8-K the pro forma financial
information required by this Item 7 with regard to the acquisition
described in Item 2 above. This information will 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.
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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, thereunto duly authorized.
KEYSTONE PROPERTY TRUST
Date: May 19, 2000 By /s/ Jeffrey E. Kelter
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Jeffrey E. Kelter
President and Chief Executive Officer
Date: May 19, 2000 By /s/ Timothy A. Peterson
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Timothy A. Peterson
Executive Vice President and
Chief Financial Officer
Date: May 19, 2000 By /s/ Timothy E. McKenna
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Timothy E. McKenna
Senior Vice President-Finance
and Corporate Controller
(Principal Accounting Officer)
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