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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
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Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported): February 21, 1997
GROVE REAL ESTATE ASSET TRUST
(Exact name of registrant as specified in its charter)
Maryland 1-13080 06-1391084
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
598 Asylum Avenue Hartford, Connecticut 06105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (860) 246-1126
N/A
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On February 13, 1997, the Registrant filed a Proxy Statement with the
Securities and Exchange Commission (the "Proxy Statement") which contemplates
certain transactions (the "Consolidation Transactions") pursuant to which the
Registrant will become a self-administered and self-managed real estate
investment trust with control over a portfolio of 23 multi-family residential
projects and a neighborhood shopping center in the Northeastern United States.
Pursuant to a private placement (the "Private Placement") of common shares
of beneficial interest, par value $0.01 per share (the "Common Shares"), the
Registrant will sell Common Shares totaling, in the aggregate, up to 3,333,333
Common Shares, and will grant certain registration rights with respect to such
securities. The price per Common Share in the Private Placement will be $9.00,
with total gross proceeds to the Registrant of up to $30.0 million (the "Maximum
Private Placement"). Consummation of the Consolidation Transactions is
conditioned upon, among other things, completion of the Private Placement
resulting in gross proceeds to the Registrant of not less than $17.5 million
(the "Minimum Private Placement"), the minimum gross proceeds necessary to fund
the Consolidation Transactions, assuming all limited partners of certain
Property Partnerships (as defined in the Proxy Statement) entitled to receive
cash in the Exchange Offer, dated December 2, 1996, from Grove Operating, L.P.
(the "Operating Partnership") to such limited partners in exchange for their
interests in such Property Partnerships elect to do so. To the extent that such
limited partners elect to receive units of beneficial interest in the Operating
Partnership (the "Common Units") in lieu of cash, such minimum condition could
be reduced (at a rate of $9.00 per Common Unit issued to such limited partners)
to as low as $15.0 million. The Registrant currently expects to receive gross
proceeds equal to the Maximum Private Placement ($30.0 million) in connection
with the Private Placement.
The Securities Purchase Agreements to be entered into in connection with
the Private Placement contain representations and warranties by the Registrant
customary for transactions of this type, and each of the Registrant's and the
Private Placement investors' obligations to effect the closing for the
securities sales is subject to various conditions, including the condition
regarding minimum gross proceeds described above. The Registrant has agreed to
file six months after the completion of the Consolidation Transactions, and
generally keep continuously effective, a registration statement covering the
re-sale of Common Shares issued in the Private Placement. Such registration
rights will be subject to certain significant customary blackout provisions and
certain other limitations.
Certain of the purchasers in the Private Placement will own in excess of
5% of the issued and outstanding Common Shares upon consummation of the
Consolidation Transactions (including the Private Placement). The Securities
Purchase Agreements entered into in connection with such significant investments
include additional terms in favor of the purchasers. See "SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS" below.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of Common Shares
and Common Units by each person the Registrant expects will own beneficially
more than 5% of the issued and outstanding Common Shares and/or Common Units
immediately following, and giving effect to, the Consolidation Transactions,
assuming the issuance by the Registrant of 3,333,333 Common Shares in the New
Equity Investment (as defined in the Proxy Statement):
<TABLE>
<CAPTION>
Percent of
Class of
Amount and Nature of Percent of Common
Beneficial Ownership Class of Shares/
Name and Address ------------------------------- Common Percent of Common
of Beneficial Owner Common Shares Common Units Shares Common Units Units*
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<S> <C> <C> <C> <C> <C>
Damon D. Navarro .................. 32,585(1) 288,269(1) 0.8% 5.0% 5.5%
598 Asylum Avenue
Hartford, CT 06105
Brian A. Navarro .................. 30,215(1) 280,715(1) 0.8% 4.8% 5.4%
598 Asylum Avenue
Hartford, CT 06105
Grove Property Services Limited
Partnership ................... -- 687,076(2) -- 11.8% 11.8%
598 Asylum Avenue
Hartford, CT 06105
Morgan Stanley Group Inc. .........
1221 Avenue of the Americas
22nd Floor ..................... 777,778(3) -- 19.7% -- 13.4%
New York, NY 10020
Oregon Public Employees'
Retirement Fund, by ABKB/LaSalle
Securities
Limited, as agent for Oregon Public
Employees' Retirement Fund ........ 391,392(4) -- 9.9% -- 6.7%
100 East Pratt Street
20th Floor
Baltimore, MD 21202
</TABLE>
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* Gives effect to the exchange of all Common Units for Common Shares on a
one-for-one basis.
(1) Beneficial ownership of the Common Units held by certain companies and
individuals which are affiliated with the Registrant (the "Grove
Companies") has been attributed to such individuals based solely on their
respective pro rata ownership interests in the equity of the entities
included in the Grove Companies. However, because of their ability to
control certain voting and/or investment decisions of the entities
included in the Grove Companies, Damon and/or Brian Navarro may be deemed
to have beneficial ownership of all of the Common Units held by certain of
the Grove Companies pursuant to Regulation 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended. See Note (2) below.
(2) Includes the Common Units that may be held by Grove Properties Services
Limited Partnership, rather than by individuals, upon consummation of the
Consolidation Transactions. These Common Units are also
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included in the beneficial ownership of Damon and Brian Navarro to the
extent of their equity ownership of Grove Properties Services Limited
Partnership.
(3) The Common Shares beneficially owned by Morgan Stanley Group Inc. ("Morgan
Stanley") may be held in investor accounts over which Morgan Stanley has
discretionary authority. Pursuant to the Securities Purchase Agreement
entered into with Morgan Stanley in connection with its purchase of Common
Shares in the New Equity Investment, the Registrant has (i) agreed to
permit Morgan Stanley to nominate one member of the Board of Trust
Managers of the Registrant and (ii) granted to Morgan Stanley certain
preemptive rights in connection with future issuances (with certain
exceptions) by the Registrant of Common Shares and other securities
convertible into Common Shares ("Convertible Securities"); the preemptive
right is to purchase (a) in the case of the issuance by the Registrant of
Convertible Securities, up to the Percentage Amount of such Convertible
Securities and (b) in the case of the issuance by the Registrant of Common
Shares, a number of Common Shares up to that number of Common Shares such
that Morgan Stanley's ownership, following such issuance, would continue
to be the Percentage Amount of the issued and outstanding Common Shares
plus then-exercisable "in-the-money" employee stock options. For the
purposes of Morgan Stanley's Securities Purchase Agreement and the
preemptive rights described in the preceding sentence, "Percentage Amount"
means 20%, except in the case of any proposed issuance of Common Shares
for less than $9.00 per share or any Convertible Securities where the
initial conversion, exchange or exercise price, as the case may be, is
less than $9.00 per Common Share, in which case the "Percentage Amount"
means 25%. Morgan Stanley will retain the right to nominate a director and
the preemptive rights described above until the earlier of (i) Morgan
Stanley and its affiliates ceasing to own at least 10% of the issued and
outstanding Common Shares and (ii) the Registrant consummating an
underwritten public offering of Common Shares yielding gross proceeds of
at least $40.0 million.
(4) Pursuant to the Securities Purchase Agreement entered into with the Oregon
Public Employees' Retirement Fund, by ABKB/LaSalle Securities Limited, as
agent for the Oregon Public Employees' Retirement Fund ("ABKB/LaSalle") in
connection with its purchase of Common Shares in the New Equity
Investment, the Registrant has granted to ABKB/LaSalle certain preemptive
rights in connection with future issuances (with certain exceptions) by
the Registrant of Common Shares and Convertible Securities; the preemptive
right is to purchase (a) in the case of the issuance by the Registrant of
Convertible Securities, up to 9.9% of such Convertible Securities and (b)
in the case of the issuance by the Registrant of Common Shares, a number
of Common Shares up to that number of Common Shares such that
ABKB/LaSalle's ownership would continue to be 9.9% of the issued and
outstanding Common Shares following such issuance. ABKB/LaSalle will
retain the preemptive rights described above until the earlier of (i)
ABKB/LaSalle and its affiliates ceasing to own at least 5.0% of the issued
and outstanding Common Shares and (ii) the Registrant consummating an
underwritten public offering of Common Shares yielding gross proceeds of
at least $40.0 million.
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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 hereunto duly authorized.
GROVE REAL ESTATE ASSET TRUST
Date: February 24, 1997 /s/ Damon Navarro
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Damon Navarro
President
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