UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): August 13, 1999
COMMERCIAL ASSETS, INC.
(Exact name of Company as specified in its charter)
Delaware 1-2262 84-1501789
(State or other jurisdiction of (Commission File (IRS Employer
incorporation or organization) Number) Identification No.)
3410 South Galena Street, Suite 210 80231
Denver, Colorado (Zip Code)
(Address of principal executive offices)
(303) 614-9410
(Company's telephone number, including area code)
Not Applicable
(Former name or former address,
if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets
On August 13, 1999, Commercial Assets, Inc. (the "Company") acquired three
manufactured home communities and adjoining land located near Phoenix, Arizona
from The Norman Andrus Irrevocable Trust u/a/d 7/29/97. The communities and land
consist of 334 developed homesites and 206 sites available for future
development. The developed homesites are 97% occupied.
The consideration for the communities was determined through arms-length
negotiations with the seller. Total consideration for the communities was
$12,167,000, paid as follows:
o $8,977,000 in cancellation of participating mortgages which were previously
held by the Company and secured by the properties,
o $2,960,000 in the assumption of a note payable which is secured by one of
the communities, and
o $230,000 in cash.
The Company generally intends to continue to utilize the assets acquired in the
transaction as rental properties which is the same manner as they were employed
prior to the acquisition.
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for forward-looking statements in certain circumstances. Certain information
included in this Report, the Company's Annual Report to Stockholders and other
Company filings (collectively "SEC Filings") under the Securities Act of 1933,
as amended, and the Securities Exchange Act of 1934, as amended (as well as
information communicated orally or in writing between the dates of such SEC
Filings) contains or may contain information that is forward looking, including,
without limitation, statements regarding projections of the Company's future
financial performance, cash flow, dividends and anticipated returns on real
estate investments. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that 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 the
forward-looking statements. Such factors include: general economic and business
conditions; interest rate changes; financing and refinancing risks; risks
inherent in owning real estate or debt secured by real estate; future
development rate of homesites; competition; the availability of real estate
assets at prices which meet the Company's investment criteria; the Company's
ability to reduce expense levels, implement rent increases and use leverage; and
other risks set forth in the Company's Securities and Exchange Commission
filings. Readers should carefully review the Company's financial statements and
the notes thereto, as well as the risk factors described in the SEC Filings.
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements
The required financial statements will be filed by amendment within 60
days.
(b) Pro Forma Financial Information
The required pro forma financial information will be filed by amendment
within 60 days.
(c) Exhibits
Exhibit No. Description
10.11 Form of Amended and Restated Promissory Note entered into in
connection with investments in mortgages on three manufactured
home communities and adjoining land. (incorporated herein by
reference to Exhibit 10.11 to the Registrant's Annual Report on
Form 10-K dated December 31, 1998, Commission File No. 1-2262,
filed on March 24, 1999).
10.11(a) Form of Amended and Restated Combination Deed of Trust, Assignment
of Rents, Security Agreement and Fixture Financing Statement
entered into in connection with investments in mortgages on three
manufactured home communities and adjoining land. (incorporated
herein by reference to Exhibit 10.11(a) to the Registrant's Annual
Report on Form 10-K dated December 31, 1998, Commission File No.
1-2262, filed on March 24, 1999).
10.11(b) Receipt, Release and Settlement Agreement, dated as of August 13,
1999, between the Registrant, Casa Encanta Commercial, L.L.C.,
Fiesta/Encanta MHP, L.L.C., Fiesta MHP Investors, L.L.C., Fiesta
SPE, L.L.C., Southern Palms MHP, L.L.C., Norman Andrus, and The
Norman Andrus Irrevocable Trust.
10.11(c) Form of Assignment and Assumption of Membership Interest.
SIGNATURE
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.
COMMERCIAL ASSETS, INC.
Date: August 30, 1999
By: /s/David M. Becker
David M. Becker
Chief Financial Officer
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RECEIPT, RELEASE AND SETTLEMENT AGREEMENT
This RECEIPT, RELEASE AND SETTLEMENT AGREEMENT (the "Agreement") is
made and entered into to be effective as of this 13th day of August, 1999, by
and among COMMERCIAL ASSETS, INC., Maryland corporation ("CAX") and CASA ENCANTA
COMMERCIAL, L.L.C., an Arizona limited liability company, FIESTA/ENCANTA,
L.L.C., an Arizona limited liability company, FIESTA MHP INVESTORS, L.L.C., an
Arizona limited liability company, FIESTA SPE, L.L.C., an Arizona limited
liability company, SOUTHERN PALMS MHP, L.L.C., an Arizona limited liability
company, NORMAN ANDRUS an individual, THE NORMAN ANDRUS IRREVOCABLE TRUST
(created under agreement dated 7/20/97, and herein referred to as "Andrus")
(collectively, "Borrower").
RECITALS
WHEREAS, CAX is the holder in due course of certain promissory notes
and the beneficiary of certain security instruments all of which relate to loans
made to and guaranteed by Borrower, which were made for the purpose of acquiring
and improving the mobile home and related property generally located on the real
property described on Exhibit "A", attached hereto (such notes, security
instruments, and other agreements, certifications and documents herein, the
"Loan Documents");
AND WHEREAS, Borrower has failed to perform and observe its covenants
under the Loan Documents, including without limitation, the agreement to pay
certain installments of interest and principal and to complete certain
improvements as required by the Loan Documents;
AND WHEREAS, the parties entered into that Letter Agreement dated July
1, 1999 (the "Forbearance Agreement"), pursuant to which CAX and Borrower agreed
that notwithstanding the present and existing and continuing defaults by
Borrower under the various Loan Documents, Borrower would be given an
opportunity to satisfy in full the obligations due CAX under the Loan Documents,
including the participating interest provided to CAX as set forth therein;
AND WHEREAS Borrower has failed to make the Earnest Money Deposit as
required in the Forbearance Agreement;
AND WHEREAS pursuant to its rights under the Forbearance Agreement, CAX
has duly elected to exercise its "Call" right (as defined therein) for the sum
of $1.00 in cash, in exchange for the release by Borrower from all liabilities
set forth in the applicable Loan Documents;
THEREFORE, FOR VALUABLE CONSIDERATION, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
1. The parties incorporate into this Agreement the foregoing recitals and
hereby confirm the accuracy thereof;
2. On or about the execution of this Agreement, CAX shall tender, and by
execution hereof, Borrower acknowledges receipt of, the sum of $1.00 in cash.
<PAGE>
3. Borrower agrees that all rights, titles and interests it or any
affiliates, assignees or assigns holds in the property described on Exhibit A
hereto, or in the limited liability companies listed and identified as
"Borrower" in the first paragraph of this Agreement, shall be relinquished and
transferred in favor of CAX. Borrower expressly acknowledges and agrees the
Assignment and Assumption of Membership Interests previously executed and
delivered by Andrus on or about July 14, 1999 and delivered to CAX, for the
property described on Exhibit "A" hereto, remains valid as a conveyance and the
representations, warranties and certifications set forth therein, remain true
and correct.
4. CAX hereby releases Borrower from any further liability set forth in the
Loan Documents which evidence, govern or secure the loan made by CAX which
covers the property attached hereto as Exhibit "A". CAX shall execute such
further acknowledgements of said release as may be reasonably requested by
Borrower from time to time. In addition, CAX shall release the encumbrances of
record which encumber property which is adjacent to, but not a part of the
property described on Exhibit "A" hereto, otherwise known by the parties as the
"Commercial Parcels", and not utilized in the operation of the mobile home park
known as SOUTHERN PALMS, FIESTA MHP or CASA ENCANTA MHP or any ancillary
facilities (including entranceways) utilized or to be utilized in the operation
thereof.
5. In consideration of the foregoing, Borrower does hereby jointly and
severally release, acquit and forever irrevocably discharge CAX and its
affiliates, successors, assigns, officers, representatives and agents
(including, without limitation, Community Acquisition and Development
Corporation) of and from any and all claims, actions, causes of action, damages,
costs, losses, expenses, and attorney's fees, in law or in equity, which are or
could be asserted in regard to the loan transaction contemplated by the Loan
Documents, or any matter relating thereto.
6. In consideration of the foregoing, CAX does hereby jointly and severally
release, acquit and forever irrevocably discharge Borrower and its affiliates,
successors, assigns, officers, representatives and agents of and from any and
all claims, actions, causes of action, damages, costs, losses, expenses, and
attorney's fees, in law or in equity, which are or could be asserted in regard
to the loan transaction contemplated by the Loan Documents, or any matter
related thereto.
7. Each party agrees to cooperate fully, to execute any and all necessary
supplementary documents and to undertake any reasonable additional actions which
may be necessary, desirable or appropriate to effectuate the terms, conditions
and intent of this Agreement, which are not inconsistent with the terms hereof.
8. Each party acknowledges that they have read and understood the terms of
this Agreement, and that each such party intends to be legally bound hereby.
This Agreement may be executed in counterpart, each of which will be effective
upon the signature of a corresponding counterpart by all parties.
9. In any action hereafter to enforce, based upon, arising out of this
Agreement, the prevailing party shall be entitled to its costs and expenses,
including reasonable attorney's fees, as allowed by law.
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<PAGE>
10. This Agreement shall be construed according to the laws of the State of
Arizona.
11. Each party by signing below represents and warrants that it has
sufficient capacity to sign on behalf of and bind the entity for which its
signature stands.
Dated to be effective as of the date first written above.
The Norman Andrus Irrevocable Trust,
u/a/d July 20, 1997
By: /s/Norman Andrus
Norman Andrus, Sole Trustee
And
By: /s/Norman Andrus
Norman Andrus, a single man
FIESTA SPE, L.L.C., an Arizona limited
liability company
By: Fiesta Manager SPE, L.L.C.,
an Arizona limited liability
company, Managing Member
By: Community Acquisition
and Development
Corporation, a Delaware
corporation, Managing
Member
By: /s/Joseph W. Gaynor
Joseph W. Gaynor,
President
COMMUNITY ACQUISITION AND DEVELOPMENT
CORPORATION, a Delaware corporation
By: /s/Joseph W. Gaynor
Joseph W. Gaynor, President
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<PAGE>
SOUTHERN PALMS MHP, L.L.C., an Arizona
limited liability company
By: /s/Norman Andrus
Norman Andrus, Its Manager
By: Community Acquisition and
Development Corporation,
a Delaware corporation,
as its Manager
By: /s/Joseph W. Gaynor
Joseph W. Gaynor, President
CASA ENCANTA COMMERCIAL, L.L.C., an
Arizona limited liability company
By: Community Acquisition and
Development Corporation, its
Manager
By: /s/Joseph W. Gaynor
Joseph W. Gaynor, President
By: /s/Norman Andrus
Norman Andrus, Manager
Fiesta/Encanta MHP, L.L.C., an Arizona
limited liability company
By: /s/Norman Andrus
Norman Andrus, Manager
Fiesta MHP Investors, L.L.C., an
Arizona limited liability company
By: Community Acquisition and
Development Corporation
By: /s/Joseph W. Gaynor
Joseph W. Gaynor, President
767773/10169-0001
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SCHEDULE OF OMITTED
ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTERESTS
The Company has also entered into three additional Assignment and Assumption of
Membership Interests which are substantially identical to the following
Assignment and Assumption of Membership Interest in all material respects except
as to the company. Listed below are the material details in which such documents
differ from the document filed as part of this exhibit.
Company
- -------------------------------------------
Casa Encanta Commercial, L.L.C.
Fiesta/Encanta MHP, L.L.C.
Southern Palms MHP, L.L.C.
<PAGE>
ASSIGNMENT AND ASSUMPTION OF MEMBERSHIP INTEREST
This Assignment is entered in to as of this 14th day of July, 1999, by
and among THE NORMAN ANDRUS IRREVOCABLE TRUST, u/a/d 7/29/97 (the "Assignor"),
and COMMERCIAL ASSETS, INC., a Maryland corporation (the "Assignee").
RECITALS:
A. Assignor owns a membership interest in FIESTA MHP INVESTORS, L.L.C.,
an Arizona limited liability company (the "Company").
B. Assignor desires to assign all of its membership interest in the
Company to Assignee, and Assignee desires to acquire such interest.
NOW, THEREFORE, for valuable consideration, the parties hereto agree as
follows:
AGREEMENT
1. Assignment. Assignor hereby assigns to Assignee all of its right,
title and interest in the Company, including, without limitation, its membership
interests. As a result of this assignment, Assignor shall have no further
interests of any kind in the Company, or the assets and property owned by the
Company.
2. Consideration. As consideration for the assignment of the foregoing
percentage interests, the Assignee shall pay indemnify and hold Assignor
harmless from any indebtedness of the Company.
3. Warranty. In connection with this Assignment, Assignor hereby
warrants to the Assignee that the membership interests being assigned are free
and clear of all claims, liens and encumbrances of any nature or description.
The undersigned further warrants that it is duly authorized to execute this
Assignment and to effect the transactions described herein, in his capacity as
sole trustee of the Assignor.
4. Further Documents. All parties hereby agree to cooperate in the
execution of any further documentation necessary to evidence or affect this
transaction.
<PAGE>
5. Construction. This Assignment shall be construed in accordance with
Arizona law.
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the date first set forth above.
"ASSIGNOR"
THE NORMAN ANDRUS IRREVOCABLE
TRUST, u/a/d 7/29/97
By: /s/ Norman Andrus
NORMAN ANDRUS
Its: Sole Trustee
"ASSIGNEE"
COMMERCIAL ASSETS, INC., a Delaware
corporation
By: /s/Bruce E. Moore
Name: Bruce E. Moore
Its: President
759793/10169-0001
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