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 1, 1998
Price Enterprises, Inc.
(Exact name of registrant as specified in its charter)
Maryland 0-20449 33-0628740
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of incorporation)
4649 Morena Blvd., San Diego, CA 92117
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (619) 581-4530
Page 1 of 7
Exhibit Index on Page 5
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This Current Report on Form 8-K is filed by Price Enterprises, Inc., a
Maryland corporation (the "Company"), in connection with the matters described
herein.
Item 2. Acquisition or Disposition of Assets.
On May 1, 1998, the Company acquired a four-building, 300,000 square-foot
office complex on the Highway 50 corridor of Sacramento, California for
$35,551,000 in cash. The project, completed in 1995, is fully occupied under
long-term leases by two subsidiaries of AT&T Corp. and by Level One
Communications, Inc.
The Company funded the acquisition through available cash and an advance of
$14,575,000 under its $75,000,000 unsecured revolving credit facility with Union
Bank of Switzerland. The initial interest rate is LIBOR plus 80 basis points
(currently 6.46%). In connection with the acquisition of the office complex, the
Company incurred certain transaction costs that will be capitalized into the
value of the office complex and that are not reflected in the acquisition price
described above.
The Company acquired the properties from Ivanhoe-Bradshaw L.L.C., a
California limited liability company controlled by Sol Price
("Ivanhoe-Bradshaw"). Sol Price is a significant stockholder of the Company and
the father of Robert E. Price, the Company's Chairman of the Board. In addition,
James F. Cahill, a member of the Company's Board of Directors, serves as Manager
of Ivanhoe-Bradshaw and previously held membership interests in
Ivanhoe-Bradshaw. On April 1, 1998, Mr. Cahill sold all of such membership
interests to a trust controlled by Sol Price.
The purchase price for the office complex was approximately 8% below the
value determined by an independently prepared appraisal commissioned by the
Company at the request of members of the Board of Directors other than Robert E.
Price and James F. Cahill. Messrs. Price and Cahill did not participate in any
discussions regarding the transaction and abstained from voting on the
transaction. The Board of Directors (with Messrs. Price and Cahill abstaining)
approved the transaction following receipt of the appraisal.
In assessing the acquisition of the office complex, the Company considered,
among other factors, the location and occupancy rates of the buildings
comprising the office complex, the quality of the tenants (including the
tenants' credit quality), comparative rents and the Company's existing presence
in Sacramento. The Company also assessed potential expenses associated with
owning and operating the office complex, including among other factors,
estimated maintenance expenses, capital improvement costs and other operating
expenses.
On May 26, 1998, the Company acquired a 1,550 unit, 242,000 square-foot
self storage facility in San Diego, California for $17,750,000. The purchase
price included an adjacent 4.5 acre parcel which will provide additional
development opportunities to the Company.
The Company funded the acquisition through (i) cash of $2,800,000; (ii) an
advance of $6,000,000 under its $75,000,000 unsecured revolving credit facility
with Union Bank of Switzerland; and (iii) the assumption of an existing secured
first trust deed of $8,950,000 with a fixed interest rate of 9%. The initial
interest rate under the unsecured revolving credit facility is LIBOR plus 80
basis points (currently 6.46%).
The Company acquired the property from Mini Max Properties L.L.C., a
California limited liability company. The purchase price for the self storage
facility was determined through negotiations with the seller, an unrelated
party.
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In assessing the acquisition of the self storage facility, the Company
considered, among other factors, the location and occupancy rates of the units
comprising the facility, comparative rents and the potential future cash flows.
The Company also assessed potential expenses associated with owning and
operating the self storage facility, including among other factors, estimated
maintenance expenses, capital improvement costs and other operating expenses.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Financial Statements of Real Estate Properties Acquired.
It was impracticable for the Company to provide the financial statements of
the acquired real estate properties required hereunder at the time of filing of
this Report. The Company intends to file the required financial statements as an
amendment to this Report as promptly as practicable, but in any event no later
than 60 days following the date of filing of this Report.
(b) Pro Forma Financial Information.
It was impracticable for the Company to provide the pro forma financial
information required hereunder at the time of filing of this Report. The Company
intends to file the required pro forma financial information as an amendment to
this Report as promptly as practicable, but in any event no later than 60 days
following the date of filing of this Report.
(c) Exhibits.
99.1 Press Release, dated May 4, 1998, issued by Price Enterprises, Inc.
99.2 Press Release, dated June 1, 1998, issued by Price Enterprises, Inc.
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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.
Date: June 17, 1998 Price Enterprises, Inc.
By: /s/ Jack McGrory
---------------------
Jack McGrory
President and Chief
Executive Officer
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EXHIBIT INDEX
Exhibit No. Page
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99.1 Press Release, dated May 4, 1998, issued by Price Enterprises, Inc.
99.2 Press Release, dated June 1, 1998, issued by Price Enterprises, Inc.
5
PRICE ENTERPRISES, INC.
ANNOUNCES ACQUISITION OF AN OFFICE COMPLEX
SAN DIEGO, California, May 4/PR Newswire/ - Price Enterprises, Inc. (Nasdaq:
PREN) announced today the acquisition of a four-building 300,000 square foot
office complex on the Highway 50 corridor of Sacramento, California. The
project, completed in 1995, is fully occupied under long term leases by two AT&T
subsidiaries and Level One Communications, Inc., a well-capitalized technology
company.
The property was acquired from a partnership controlled by Sol Price, a major
stockholder. The all-cash purchase price of $35,551,000 was approximately 8%
below the value determined by an independently prepared appraisal commissioned
by the Company. The Company expects this investment to generate an initial
annual return of approximately 10%.
The Company considers the favorable purchase price and the related investment
return, the long term leases, the Company's strong presence in Sacramento, and
the strong credit standing of the tenants to be an attractive opportunity for
its stockholders.
The Company funded this acquisition through available cash and an advance of
$14,575,000 under its $75,000,000 unsecured revolving credit facility with Union
Bank of Switzerland. The initial interest rate is LIBOR plus 80 basis points
(initially 6.46%).
Price Enterprises, Inc. is operating as a real estate investment trust whose
principal business is to acquire, develop, operate, manage and lease real
property. The Company's current real estate portfolio consists of 29 commercial
properties located primarily in the West and Northeast and which are principally
leased to major retail tenants. This is the Company's second major acquisition
since becoming a REIT as of September 2, 1997. On December 31, 1997, the Company
acquired a $24 million power center in the Sacramento metropolitan area.
This press release contains forward-looking statements that are subject to risks
and uncertainties that might cause actual results to differ from those foreseen,
including the competition for acquisition of real estate, and the Company's
dependence on rental income from real property as well as the other risks
detailed in the Company's SEC reports, including the report on Form 10-K filed
on March 27, 1998.
- -0- CONTRACT: Gary W. Nielson, Executive Vice President and Chief Financial
Officer, 619-581-5430/
[LOGO] PRICE ENTERPRISES, INC.
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4649 MORENA BLVD., SAN DIEGO, CA 92117 (619) 581-4679 FAX (619) 581-4964
PRICE ENTERPRISES, INC.
ANNOUNCES ACQUISITION OF
SELF STORAGE FACILITY
SAN DIEGO, California, June 1/PR Newswire/ -- Price Enterprises, Inc. (Nasdaq:
PREN) announced today the acquisition of a 1,550 unit self storage facility
located in San Diego with approximately 242,000 gross square feet. The purchase
price was $17.75 million including and $8.9 million existing mortgage which was
assumed.
The acquisition will enhance the Company's presence in the Southern California
self storage industry consistent with its strategy to selectively expand its
successful self storage operations on a limited basis. This acquisition will
take advantage of the Company's existing storage management personnel and
infrastructure in San Diego.
The acquisition is expected to contribute approximately $1.0 million annually to
net operating income after debt service on the mortgage assumed in the
transaction. The acquisition will also include additional potential development
opportunities on adjacent land included in the purchase.
Price Enterprises, Inc. is operating as a real estate investment trust whose
principal business is to acquire, develop, operate, manage and lease real
property. The Company's current real estate portfolio consists of 29 commercial
properties located primarily in the West and Northeast and which are principally
leased to major retail tenants.
This press release contains forward-looking statements that are subject to risks
and uncertainties that might cause actual results to differ from those foreseen,
including the competition for acquisition of real estate, and the Company's
dependence on rental income from real property as well as the other risks
detailed in the Company's SEC reports, including the report on Form 10-K filed
on March 27, 1998.
- -0- CONTACT: Gary W. Nielson, Executive Vice President and Chief Financial
Officer, 619-581-5430/
