-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CQt37CwSbw7JcqYNsWwdJ9x8SJFrpTJB4XkK644xfLcoh69ZQvXDeGmw06fFP9NQ 2nWKDT6ldpzA2MJSrKFw/Q== 0001116679-03-000004.txt : 20030103 0001116679-03-000004.hdr.sgml : 20030103 20030103135025 ACCESSION NUMBER: 0001116679-03-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20021224 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030103 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AEGIS REALTY INC CENTRAL INDEX KEY: 0001043324 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 133916825 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13239 FILM NUMBER: 03502471 BUSINESS ADDRESS: STREET 1: 625 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2124215333 MAIL ADDRESS: STREET 1: 625 MADISON AVENUE CITY: NEW YORK STATE: NY ZIP: 10022 8-K 1 aegis8k.txt DECEMBER 24, 2002 AND DECEMBER 26, 2002 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 December 24, 2002 - -------------------------------------------------------------------------------- Date of Report Aegis Realty, Inc. - -------------------------------------------------------------------------------- (Exact name of Registrant as specified in its charter) DELAWARE - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation) 0-13239 13-3967879 - -------------------------------------------------------------------------------- (Commission File No.) (IRS Employer Identification Number) 625 Madison Avenue, New York, NY 10022 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (212) 421-5333 - -------------------------------------------------------------------------------- (Registrant's Telephone Number, Including Area Code) Item 5. OTHER EVENTS - ------- On December 24, 2002, Aegis Realty, Inc. ("Aegis") reported in a press release that it had entered into a definitive merger agreement with a subsidiary of Phillips Edison, LTD ("PECO"), whereby Aegis will merge with and into PECO. On December 26, 2002, Aegis hosted a conference call with regard to the proposed transaction. Attached hereto as Exhibit 99.1 and 99.2, respectively, are (i) the press release issued by Aegis on December 24, 2002, and (ii) a transcript of the December 26, 2002 conference call hosted by Aegis regarding the proposed transaction. This Current Report on Form 8-K and the exhibits hereto contain forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and also includes a cautionary statement identifying important factors that could cause actual results to differ materially from those anticipated. 1 Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL STATEMENTS, AND EXHIBITS --- (a) Financial Statements -------------------- Not Applicable (b) Pro Forma Financial Information ------------------------------- Not Applicable (c) Exhibits -------- 99.1 Press Release Issued by Aegis on December 24, 2002. 99.2 Transcript of the December 26, 2002 Conference Call hosted by Aegis regarding the Proposed Transaction. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 3, 2003 AEGIS REALTY, INC. By: /s/ Stuart J. Boesky ------------------------------------ Stuart J. Boesky President 3 EXHIBIT INDEX Exhibit Number Description - ------- ----------- 99.1 Press Release Issued by Aegis on December 24, 2002. 99.2 Transcript of the December 26, 2002 Conference Call hosted by Aegis regarding the Proposed Transaction. 4 EX-99 3 ex99-1.txt EX. 99.1 PRESS RELEASE, DATED DECEMBER 24, 2002 Exhihit 99.1 PRESS RELEASE AEGIS REALTY, INC. SIGNS DEFINITIVE MERGER AGREEMENT WITH PHILLIPS EDISON, LTD Aegis Stockholders to Receive $11.52 Per Share in Cash NEW YORK, NY - December 24, 2002 - Aegis Realty Inc., ("Aegis"), (AMEX: AER) today announced that it has entered into a definitive merger agreement with a subsidiary of Phillips Edison, LTD ("PECO"), a privately held owner of grocery-anchored community shopping centers, whereby Aegis will merge with and into PECO. Pursuant to the merger agreement, PECO will acquire Aegis' entire portfolio of shopping center assets, consisting of 28 community shopping centers in 15 states, aggregating over 3.1 million square feet of gross leasable area. As part of the total consideration that is being paid by PECO, each share of Aegis' issued and outstanding common stock will be converted into the right to receive $11.52 per share in cash. This transaction is the result of a year-long process whereby Aegis and its financial advisor, RBC Capital Markets ("RBC"), explored various alternatives and conducted a broad-based marketing effort which resulted in the receipt of numerous bids from potential buyers to effect the sale of Aegis and its assets. "After an extensive process and a careful evaluation of the alternatives generated by the RBC engagement, we believe this transaction will provide our shareholders with the best combination of value and liquidity," said Stuart J. Boesky, Chairman, Chief Executive Officer and President of Aegis. Merger Terms - ------------ The proposed transaction is structured so that Aegis will merge with and into a subsidiary of PECO, with the PECO subsidiary being the surviving entity. PECO will pay total consideration of up to $170.2 million, which includes the purchase of all of Aegis' common stock, options to purchase common stock and the operating partnership units of Aegis Realty Operating Partnership, L.P. ("OP Units"), for approximately $101.8 million and the assumption of $68.4 million of Aegis' debt. All of Aegis' common stock will be converted into the right to receive $11.52 per share (as mentioned above), each holder of options to purchase Aegis' common stock will be entitled to receive the difference between $11.52 and the strike price of the option, and each holder of OP Units will have the option to exchange the OP Units for common shares and receive $11.52 per share or remain limited partners of the Operating Partnership. PECO will pay the merger consideration in cash, utilizing a combination of equity and debt. Under the advisory contract between Aegis and Related Aegis, L.P., Aegis' external advisor (the "Advisor"), and the property management agreement between Aegis and RCC Property Advisors (the "Property Manager"), the Advisor and Property Manager are entitled to receive termination fees in connection with the merger. PECO, which is in the business of owning shopping center properties, did not view Aegis' interests in the two partnerships which own garden apartment complexes as core to its operations. To better facilitate a transaction, the Advisor and the Property Manager agreed to accept the transfer of 100% of those interests in the garden apartments in lieu of cash in satisfaction of all fees due to them under their agreements. In addition, the Advisor has agreed to be responsible for all fees due to RBC for their role as financial advisor to the Board of Directors of Aegis. Aegis has retained an independent valuation firm to assess the value of the garden apartment interests to confirm that their fair market value is not more than the amounts due to the Advisor and Property Manager (taking into consideration their obligation to pay the fees due to RBC). Completion of the merger with PECO is subject to approval of Aegis stockholders and normal closing conditions. In addition, until the closing, Aegis has agreed to operate in accordance with certain budgets which may result in an adjustment, up or down, to the amount of the merger consideration depending upon actual operations and expenses. The merger has been approved unanimously by the Board of Directors of Aegis and the transfer of the garden apartment interests to the Advisor and Property Manager, has been unanimously approved by the independent directors. Financial Advisor - ----------------- Aegis was advised in this transaction by RBC Capital Markets, Inc. RBC has issued an opinion that the consideration to be paid in the transaction is fair to the Company and its stockholders from a financial point of view, subject to the qualifications in such opinion. Conference Call - --------------- A conference call is scheduled for 9:00 a.m. Eastern Standard Time on Thursday, December 26, 2002. Investors, brokers, analysts and stockholders wishing to participate should call (800) 289-0485. For interested individuals unable to join the conference call, replay of the call will be available through January 9, 2003 at (888) 203-1112. The Passcode is 463543. About Aegis Realty - ------------------ Aegis Realty, a geographically diversified real estate investment trust, has property holdings in 15 states. The Company's current portfolio includes direct or indirect interests in 28 neighborhood shopping centers and two garden apartment complexes. For more information, please contact the Stockholder Services Department directly at (800) 831-4826. Certain items in this press release may constitute forward-looking statements within the meaning of the Private Litigation Reform Act of 1995 and as such may involve known and unknown risks, trends, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. With respect to the proposed merger, there is the risk that PECO will not obtain the financing necessary to consummate the merger notwithstanding the fact that it has obtained commitments for such financing as described in the merger agreement. Additional risks relating to the Company can be found in the Company's filings with the Securities and Exchange Commission, including the 2001 Annual Report on Form 10-K and the proxy statement which will be delivered to stockholders as part of the approval process. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any changes in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any such statement is based. Important additional information will be filed with the SEC - ----------------------------------------------------------- Aegis will be filing a proxy statement with the SEC in connection with the above-described transaction. Investors and security holders are urged to read the proxy statement because it will contain important information. The proxy statement and other documents filed by Aegis with the SEC may be obtained when they become available free of charge at the SEC's website (http://www.sec.gov). Aegis, and its directors and officers, and the advisor, and the directors and officers of its sole general partner, may be deemed to be "participants" in the solicitation of proxies from Aegis stockholders in connection with the transaction. These potential participants have interest in the transaction, some of which could differ from those of Aegis stockholders generally. Information about the directors and officers of Aegis and the general partner of the advisor, including such individuals' ownership of Aegis shares, is set forth in the proxy statement for Aegis' 2002 annual meeting of stockholders (and is available at the SEC website listed above). Investors and security holders may obtain additional information regarding the interests of such potential participants by reading the proxy statement when it becomes available. AT AEGIS REALTY, INC. Brenda Abuaf Director of Shareholder Services (800) 831-4826 EX-99 4 ex99-2.txt EX. 99.2 TRANSCRIPT OF 12/26/02 CONFERENCE CALL Exhibit 99.2 AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 1 AEGIS REALTY Moderator: Stuart Rothstein December 26, 2002 8:00 a.m. CT Operator: Welcome to today's Aegis Realty conference call. Today's call is being recorded. Certain items in this press release may constitute forward-looking statements within the meaning of the Private Litigation Reform Act of 1995. And as such may involve known and unknown risks, trends, uncertainties, and other factors which may cause the actual results, performance, or achievements to differ materially from these expressed or implied by such forward-looking statements. With respect to the proposed merger, there is the risk that (PICO) will not obtain the financing necessary to consummate the merger, notwithstanding the fact that it has obtained commitments for such financing as described in the merger agreement. Additional risks relating to the company can be found in the company's filings with the Securities and Exchange Commission, including the 2001 annual report on form 10-K, and the proxy statement which will be delivered to stockholders as part of the approval process. The company expressly disclaims any obligational undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any changes in the company's expectations with regard thereto or change in events, conditions, or circumstances on which any sub-statement is based. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 2 Aegis will be filing a proxy statement with the SEC in connection with the above-described transaction. Investors and security holders are urged to read the proxy statement because it will contain important information. The proxy statement and other documents filed by Aegis with the SEC may be obtained when they become available, free of charge, at the SECs Web site, http://www.sec.com. Aegis and its directors and officers and the advisor, and the directors and officers of its sole general partner may be deemed to be participants in the solicitation of proxies from Aegis stockholders in connection with the transaction. These potential participants have interest in this transaction, some of which could differ from those of Aegis stockholders generally. Information about the directors and officers of Aegis and the general partner of the advisor, including such individual ownership of Aegis shares, as set forth in the proxy statement for Aegis' 2002 annual meeting of stockholders, and is available at the SEC Web site listed above. Investors and security holders may obtain additional information regarding the interest of such potential participants by reasons of proxy statement when it becomes available. At this time I'd like to turn the call over to your moderator, Mr. Stuart Rothstein. Stuart Rothstein: Good morning, everybody, and thank you for joining me. As you are aware, on Tuesday, December 24th, we announced a transaction whereby Aegis would be merged into an entity controlled by the Phillips Edison Company effectively selling Aegis for $11.52 a share in cash to each of the shareholders of Aegis. The transaction that was announced on Tuesday was the result of a yearlong process where in conjunction with our investment bankers, approximately 50 potential investors were contacted to see if they would be interested in acquiring all or a portion of the Aegis portfolio of shopping centers, which consists of 28 shopping centers, aggregating about three million square feet. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 3 That yearlong process culminated just a few days ago with the transaction that was announced on Tuesday. The transaction is still subject to Aegis shareholder approval. That process will get underway with the filing of a proxy with the SEC sometime in the month of January. Once we clear the SEC process, the proxy will be mailed to shareholders and the vote will be taken. The purpose of this call is really to open it up to questions that any of our shareholders may have about the potential transaction. So with that I will just turn it back to the operator and open it up for questions. Operator: Thank you, sir. Today's question and answer bid will be handled electronically. If you'd like to ask a question, please press the star key followed by the digit one on your touch-tone phone. If you're on a speakerphone, please be sure your mute function is turned off to allow your signal to reach our equipment. Once again, if you'd like to ask a question, please press the star key followed by the digit one. We go first to Andrew Dakos, Elmhurst Capital. Andrew Dakos: Yes, my question's regarding the dividend. Will there be a partial dividend reflecting the period from the most recent dividend? I believe the stock's going (x-dividend) tomorrow. Will there be a - will there be a partial dividend reflecting the period from this dividend to the closing of the sale of the company? Stuart Rothstein: There will be a partial - to - as you noted correctly, Andrew, the fourth quarter dividend goes (x) tomorrow, that dividend will be paid. As it pertains to any dividends in 2003, there will be dividends paid or partial dividends paid up until the point that represents 30 days prior to the transaction closing. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 4 Andrew Dakos: OK, so then the - so then it would - if that's the case, you won't know what that period is until the transaction closes, so then the record date will not be announced until I would assume after the transaction is closed? Stuart Rothstein: Actually given, you know, when we - given the way most of these things usually work, you typically have a vote and closing simultaneously. And that date is typically driven off when you mailed the proxy per say. Andrew Dakos: So it's going to be about 30 days prior to the meeting date. Stuart Rothstein: Correct. Andrew Dakos: OK. Thank you. Stuart Rothstein: You're welcome. Operator: We go next to ST Tallapragada, Cathay Financial. ST Tallapragada: Yes hi, I just wanted to know if you could tell me about your expectations on timing. I know that you said that you expect the proxy to go out in January. But if you had any other expectations on timing. And on top of that, if there are any termination dates and numbers in the merger agreement. Stuart Rothstein: The best guess on timing today is that we would be hopeful to file the proxy sometime in January. Historically it has taken the SEC at least 30 days to review a proxy once it's filed. Depending on how long it takes to clear that SEC process, we would mail proxies immediately once we have been given SEC approval. And then you're typically talking about a month to 45 AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 5 days to give people to review the proxy and actually call the vote. So I think we're looking at sometime in Q2 ideally to take a vote on this transaction. ST Tallapragada: OK. Stuart Rothstein: As it pertains to termination or anything like that, that information will be contained in the proxy. But broadly speaking, we've given ourselves either a year for the transaction to close, or four months after we get SEC approval, whichever is the longer date to get the transaction closed. ST Tallapragada: Got it - got it. And also in the - in the press release, there was some discussion about a range that needs to be maintained in budgeting. And I was wondering if you might just be able to describe that to me. Stuart Rothstein: Sure. Obviously one of the risks to the buyer, given that they're buying active assets as the performance of those assets during the period in which the transaction has been announced but not yet closed. We budget regularly anyway for each of the shopping centers that we own, and essentially we and the folks at Phillips Edison have agreed on budgets that we believe the properties should operate within on the expense side of things and not on the revenue side of things. And as long as we can operate those properties within those expense budgets, there's no adjustment to the price to the extent the experience on the expense side of things is either greater or less than a - varies by more than $250,000 - excuse me - in either direction, there would be an adjustment to the purchase price. ST Tallapragada: Got it. Great, thank you. And... AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 6 Stuart Rothstein: You're welcome. ST Tallapragada: ... congratulations. Stuart Rothstein: Thank you. Operator: We go next to Diana Drapkin with Guard Hill Capital. Diana Drapkin: Yes hi, I just wanted to know besides the shareholders approvals, are there any other regulatory approvals that are needed? Stuart Rothstein: Not that we believe. Diana Drapkin: And also, is it subject to financing? Stuart Rothstein: It is not - there is no financing contingency in the merger agreement. Diana Drapkin: OK, thank you. Stuart Rothstein: You're welcome. Operator: We go next to Phillip Goldstein with Opportunity Partners. Phillip Goldstein: Yes hi. There's a mention about a - certain fees that are due to the advisor regarding the termination of the management agreement, and apparently in lieu of cash they're going to get the partnership interests in the Garden apartment complexes. Could you fill in the numbers on the - like how much - how much actual - if it was cash, how - what is the - what is the advisor entitled to? Because I noticed that there has yet to be - or that you plan on having some sort of AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 7 fairness evaluation of those assets. But you didn't state what the actual cash number would be that's due under the contract. Stuart Rothstein: The advisor is due two fees for the transaction... Phillip Goldstein: Yes. Stuart Rothstein: ... related to (A) a disposition transaction, and (B) the essentially cancellation of their contract based on the overall value of the deal that was announced. Those fees total approximately $4.2 million. In addition to receiving their fees, the advisor is also responsible for paying its investment bankers - in this case RBC Capital Markets - upon consummation of the transaction in an amount equal to approximately $1 million. The interests in the Garden apartment entities that the advisor will be receiving are on the books of the company at a book value of a little bit north of $5 million at September 30th. The value - the independent valuation of those assets has not yet been completed, but it is anticipated that based on what we know of book value and what we know of the fair market value of those interests, that the value of those interests will approximate the fee that the advisor is due as well as what the advisor needs to pay its investment bankers. Phillip Goldstein: OK, thank you. Stuart Rothstein: You're welcome. Operator: We go next to Tony Reiner with Clinton Group. Tony Reiner: Good morning. A couple of questions if - for a sec. Just as far as this 250,000, and thanks for being specific as far as that affecting the price for consideration per share - will we be kept AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 8 abreast of when that number may change when we - when that threshold is crossed either on the positive or negative side? Or we won't know until closing date of the vote or anything? Or... Stuart Rothstein: I think as we lead up to the vote as I understand it, to the extent it appears there will be changes in that one way or another, obviously we need to get that information to our shareholders before they're in a position to ultimately vote on the transaction. Tony Reiner: OK. So I guess it's fair to say we'll find out as developments happen. Stuart Rothstein: Yes. Tony Reiner: OK. And just as far as the dividend, just can - I mean obviously we're extremely consistent with the - with the dividend over the last several years, suppose - could we - could we just have one specific date, suppose that the merger were to close on - I don't know, March 1st. So it would be 30 days before that, so we'd use one out of the - we'd use a third out of 24 cents? Stuart Rothstein: Exactly. Tony Reiner: OK. And if we're to close after - I guess after March, then we get the full 24 cents, and probably only that extra first quarter dividend after that, unless it goes beyond 30 days in Q2, right? Stuart Rothstein: I'll - you know, as best as I can explain it, if you were to close on... Tony Reiner: I'm surprised I got that... Stuart Rothstein: ... you did most of it correctly. If you were to... AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 9 Tony Reiner: Shocking. Stuart Rothstein: ... close let's say on March 30 - anytime between let's say - if you were to close on March 31st for example, you would get two-thirds of a first quarter dividend. Tony Reiner: Two-thirds of a first quarter dividend; got you. Stuart Rothstein: If we were to close April 30th, you would get a full 24 cents for the first quarter and nothing for the second quarter. Tony Reiner: Got you. Stuart Rothstein: And hopefully that - and we, you know, we'll do our best to make that as clear as possible in the proxy when it's filed. Tony Reiner: OK, that's pretty clear. And thank you. And the other question is, I know it's been sort of a process. I don't know if the right commentary is to say up for sale, but as far as exploring alternatives, how come we decided to take this deal? And is this in final, done, best, and all that language? Stuart Rothstein: It was an exhaustive process I think to say - to sell all or part of the company, is a fair way to describe the process. We contacted about 50 potential acquirers for all or part of the properties, whittled that down over time to those that received various amounts of due diligence. And at the end of the day concluded that this was the best transaction in terms of price and structure relative to the other proposals out there. And then for the last few months have essentially just been negotiating the final items of this transaction with the Phillips Edison folks. Tony Reiner: How many offers were there for the whole company as opposed to just parts of it? AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 10 Stuart Rothstein: For the whole company... Tony Reiner: For the - for the whole operation as... Stuart Rothstein: I... Tony Reiner: ... opposed to part ... Stuart Rothstein: I don't have the exact number at my fingertips. It will be in the proxy, but suffices to say it was north of - somewhere between six and a dozen offers. Tony Reiner: OK. And as far - I'm assuming that there were probably, you know, some worse prices, maybe a couple of better prices, but you know, that were contingent on this, or financing, or other stuff. And so this is how we came to this price and this buyer and everything? Stuart Rothstein: Yes. Tony Reiner: OK, great. Thank you so much for answering a few questions... Stuart Rothstein: You're welcome. Tony Reiner: ... and congratulations. Thank you. Stuart Rothstein: Thank you. Operator: We take our next question from Matthew Mark with Mark Asset Management. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 11 Matthew Mark: Just one question. Can you talk about any environmental due diligence that needs to be done at all, or any of the centers, or that has been done as part of this process? Stuart Rothstein: You know, as you would expect anytime you're buying a piece of real estate, they have reviewed and been provided with all environmental reports that we had in our possession. And at this point, you know, they are comfortable from an environmental standpoint. Matthew Mark: Thanks. Stuart Rothstein: Sure. Operator: We go next to Richard Cook with Cook Bynum Capital Management. Richard Cook: Yes, I think my question's been asked, thanks. Stuart Rothstein: OK. Operator: We go next to Henry Cheu with First Capital Alliance. Henry Cheu: I have a question about the length of time that is - has been required to actually consummate this transaction. I know you've hired a financial advisor almost well over a year, and I'm just curious as to why it's taken so long to - you know, actually get to this point and whether there were any like maybe specific issues that made it difficult to get to this deal? Stuart Rothstein: There were no specific issues. I think given the number of assets in a number of different geographic locations, it took quite a while for the potential buyers or bidders to do their due diligence on the assets and on the markets. And that someone entering markets they may not have entered into previously. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 12 I think in the middle of this process, as some of you may or may not be aware, Aegis lost its CFO, so we needed to replace a CFO in that process. And then it was just the last few months was just the PECO negotiations, which I'm not sure there was anything unusual about it other than there was an extensive amount of negotiation that took place, but nothing out of the ordinary or unusual. Henry Cheu: OK. And then lastly in regards to the budget performance test that you have, is the - is the budget based on 2003, or maybe can you give us some... Stuart Rothstein: Yes... Henry Cheu: ... to say what that is. Stuart Rothstein: It's essentially assuming that the - it's a Q1 2003 budget. And depending on when the transaction ultimately closes, we will revise and extend that budget if necessary. But right now the budget is a Q1 2003 budget, that is what we're managing to on the expense side of things. Henry Cheu: Great, thank you. Stuart Rothstein: You're welcome. Operator: We go next to Kenneth Campbell with Clarion CRA. Kenneth Campbell: Yes, I wanted to try to explore the pricing a little bit and the ultimate selection of Phillips Edison and the first question is you know is does this pricing represent a cap rate in your mind that you could share with us or were there other - you know how is the pricing arrived at in you know ultimately selecting Phillips? AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 13 Stuart Rothstein: Certainly from their perspective and what they were willing to underwrite the portfolio that I can't comment on. How they came up with what they were willing to offer for the company certainly in terms of the company and its financial advisers reviewing that price and determining that it was a price that made sense we looked at it both as compared to trading in the stock and a premium to the stock price as well as where we were selling these assets on a cap rate basis and that will all be obviously highlighted in the proxy in discussing the fairness opinion that RBC put together. But it was both look at what was being offered relative to the stock and where the stock had traded historically and what was being offered for the assets on a cap rate basis both for actual results and go forward results or projected results as well. Kenneth Campbell: Great and can you give us a little more information about Phillips Edison I don't know them they're obviously private so I'm wondering if you could tell you know how long they've been out there you know where they're located that kind of information? Stuart Rothstein: Sure. Phillips Edison has been around for a little bit more than 10 years now they are headquartered in dual locations, Cincinnati and Baltimore. And they own a sizable portfolio of shopping centers around the country. They have demonstrated an ability to be extremely good hands on operators or shopping centers and they knew the assets fairly well, knew many of the markets fairly well and demonstrated themselves to be a very capable buyer for a portfolio like this. Kenneth Campbell: OK thank you. Stuart Rothstein: You're welcome. Operator: Once again if you'd like to ask a question please press the star key followed by the digit one. We go next to Phillip Goldstein Opportunity Partner. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 14 Stuart Rothstein: Yes. Phillip Goldstein: Hi two more questions. Stuart Rothstein: Sure. Phillip Goldstein: One was in considering proposals strategical partners was the liquidation analysis done? Stuart Rothstein: I'm not sure I'd call it a liquidation analysis certainly some internal valuation analysis were done of what we thought pricing should come in at. But there was never an analysis of ok let's adopt the plan of liquidation and sell these things off one by one for being historically that has not resulted in the best value to share holders. Phillip Goldstein: OK and the other question is that you know just a curious I mean this company's only been it was a roll up as I recall of and started out with a net asset value of $15.00 five years ago now you're telling us we're going to get 11 dollars and 52 cents. Seems like a pretty good market for these properties. Can you explain how, how so much value was lost for the shareholders in those five years? Stuart Rothstein: I can't comment on what net asset value was at the time of the roll out. Phillip Goldstein: That was a press release put out by the company. Right. Stuart Rothstein: What I can say is based on the process that was run for the last year I think in terms of capturing what value was today there was a very exhaustive process that has been run through AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 15 we think based on the number of folks that were contacted the price that we are arriving at for this action today is reflective of what the market will bear today. Phillip Goldstein: That may be true but it seems you know with all due respect that the advisor over the last five years has done better than the stock holders and is cashing out pretty well. Stuart Rothstein: I have no comment on that. Operator: We go next to Mike Doniger, Aegis Realty. Mike Doniger: With Milton Partners. Hi how are you? You didn't know I worked for you? Just a couple quick clear ups on one on the budget expense the 250,000? Stuart Rothstein: Yes. Mike Doniger: What percent is that of the target expense? Stuart Rothstein: Of the target? It was essentially bracketed to be - it is let me just get the numbers handy. Mike Doniger: Maybe you can tell me the target that's fine too. Stuart Rothstein: Yes it is for the quarter we will have approximately - it is in the five percent range based on how you look at the... Mike Doniger: So plus or minus five percent? Stuart Rothstein: Yes, not exactly but broadly speaking. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 16 Mike Doniger: Around there - on the environmental diligence? Stuart Rothstein: Yes. Mike Doniger: Are you saying that there's no phase I testing any merger agreement or anything like that? Stuart Rothstein: They have reviewed - it's not subject to their additional testing. Mike Doniger: All right and lastly do you not have to apply for HSR? Stuart Rothstein: You know it is not contemplated at this time that that's going to be an issue we may have to do it just for perfunctory reasons. But even that's unfair whether we even need to do it for perfunctory reasons. Mike Doniger: I just heard your description of Phillips with properties making sure there's no overlaps. Stuart Rothstein: Yes. Mike Doniger: So there's none. All right that is it. Stuart Rothstein: OK. Mike Doniger: Good luck congratulations. Stuart Rothstein: Thank you. AEGIS REALTY Moderator: Stuart Rothstein 12-26-02/8:00 a.m. CT Confirmation # 463543 Page 17 Operator: There are no further questions at this time I'd like to turn the call back over to Mr. Rothstein for any additional closing comments. Stuart Rothstein: I'd like to thank everybody for their questions and taking an interest in the transaction this morning. We would hope to have the proxy filed sometime in January and the company will be available to answer questions on a go forward basis. With that that ends the call and thank you very much. Operator: Technically today's conference call thank you for your participation. You may now disconnect. END -----END PRIVACY-ENHANCED MESSAGE-----