sec document

-----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, QSbj0SaD0HoKj0Yt+D+IznSx0tOXofgsoeeqy7OD+UDMp7gsfXlSYKFdZqUP5G61 Lj48qHj60Zhi10ufCTLGDA== 0000921895-02-000153.txt : 20020415 0000921895-02-000153.hdr.sgml : 20020415 ACCESSION NUMBER: 0000921895-02-000153 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MGI PROPERTIES LIQUIDATING TRUST CENTRAL INDEX KEY: 0000068330 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046268740 STATE OF INCORPORATION: MA FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 002-31795 FILM NUMBER: 02593692 BUSINESS ADDRESS: STREET 1: 50 CONGRESS STREET STREET 2: SUITE 222 CITY: BOSTON STATE: MA ZIP: 02109 BUSINESS PHONE: 6172482300 MAIL ADDRESS: STREET 1: 50 CONGRESS STREET STREET 2: SUITE 222 CITY: BOSTON STATE: MA ZIP: 02109 FORMER COMPANY: FORMER CONFORMED NAME: MGI PROPERTIES DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MORTGAGE GROWTH INVESTORS DATE OF NAME CHANGE: 19880225 FORMER COMPANY: FORMER CONFORMED NAME: EASTERN SHOPPING CENTERS INC DATE OF NAME CHANGE: 19711121 10-K 1 form10k00170_12312001.htm sec document

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2001

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-6833*

MGI PROPERTIES LIQUIDATING TRUST
(Exact name of registrant as specified in its charter)

Massachusetts 04-3532592
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

50 Congress Street, Suite 222
Boston, Massachusetts 02109
(Address and zip code of principal executive offices)

(617) 248-2300
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

DOCUMENTS INCORPORATED BY REFERENCE
None

- -----------------

*MGI Properties Liquidating Trust is the distributee of the assets and
liabilities of MGI Properties, and files reports under MGI Properties' former
Commission file number.

MGI PROPERTIES LIQUIDATING TRUST

TABLE OF CONTENTS

PART I
Page No.
--------

ITEM 1. BUSINESS.......................................................... 3

ITEM 2. PROPERTIES........................................................ 5

ITEM 3. LEGAL PROCEEDINGS................................................. 5

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............... 6

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS....................................... 6

ITEM 6. SELECTED FINANCIAL DATA........................................... 6

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS............................... 7

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK....................................................... 7

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA....................... 8

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.......................................... 16

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.............. 16

ITEM 11. EXECUTIVE COMPENSATION.......................................... 17

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT...................................................... 17

ITEM 13. CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS.................. 18

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K..................................................... 18

SIGNATURES.................................................................. 19

-2-

PART I

ITEM 1. BUSINESS

Liquidation of REIT
- -------------------

MGI Properties Liquidating Trust (the "Liquidating Trust") is the
distributee of the assets and liabilities of MGI Properties (the "REIT"). The
REIT was organized as an unincorporated business trust under the laws of the
Commonwealth of Massachusetts in 1971. The REIT elected to operate as a real
estate investment trust pursuant to Sections 856 to 860 of the Internal Revenue
Code of 1986, as amended (the "Code"). The REIT was a self-administered equity
REIT that owned and operated a diversified portfolio of income producing real
estate.

On June 18, 1998, the REIT publicly announced that its Board of Trustees
had decided to undertake a review of strategic alternatives available to the
REIT to maximize shareholder value, including a possible liquidation of the
REIT's properties. The Trustees ultimately determined that the appropriate
course for the REIT to maximize shareholder value was to pursue the sale of its
assets pursuant to a plan of complete liquidation of the REIT. Accordingly, on
August 12, 1998, the Trustees unanimously approved a Plan of Complete
Liquidation and Termination of the REIT (the "Plan") and directed that the Plan
be submitted to the REIT's shareholders for approval. The shareholders of the
REIT approved the Plan at a special meeting held on October 14, 1998.

The Plan authorized the Trustees to dispose of all of the assets of the
REIT, wind up its affairs, pay or adequately provide for the payment of all of
its liabilities and distribute to or for the benefit of its shareholders all of
the REIT's assets, including interests in any liquidating trust established in
connection with the complete liquidation of the REIT. The Plan provided that if
24 months after the adoption of the Plan by the shareholders, the REIT still had
outstanding debts, obligations or liabilities or owned any assets, the assets
(subject to the outstanding debts, obligations and liabilities) would be
transferred to a liquidating trust.

During the 24-month period provided for in the Plan, the REIT assigned,
sold or otherwise disposed of all of its real estate assets except for three
properties, which included an office building and an adjacent property located
in Tampa, Florida, and the Terrace Ridge Shopping Center, a 100,500 square foot
shopping center located in Temple Terrace, Florida (the "Shopping Center"). The
Liquidating Trust sold the office building and adjacent property in Tampa,
Florida in November 2000.

Because all of the REIT's assets would not be disposed of on or before
October 14, 2000, the Trustees established the Liquidating Trust to continue
winding up the REIT's affairs. The REIT terminated its existence as of September
30, 2000 and transferred its remaining assets (consisting primarily of cash and
cash equivalents, government securities and three properties), subject to its
remaining liabilities, to the Liquidating Trust. Three of the Trustees of the
REIT became the Trustees of the Liquidating Trust. The Trustees are charged with
the duty to operate the Trust, liquidate its remaining assets, provide for and
satisfy its remaining liabilities and make distributions to the Beneficiaries
(as hereinafter defined).

The last day of trading of the REIT's common shares on the New York Stock
Exchange was September 27, 2000, at which time, the REIT's stock transfer books
were closed. Subsequently, the REIT filed a Form 15 with the Securities and
Exchange Commission (the "Commission") to terminate the registration of its
common shares under Section 12(b) of the Securities Exchange Act of 1934, as
amended (the "1934 Act") and its obligation to file periodic reports with
respect thereto. The REIT also received a "No-action" letter from the Commission
regarding the 1934 Act reporting obligations of the Liquidating Trust.

All shareholders and option holders of the REIT were deemed to be
beneficial owners (the "Beneficiaries") of the units of beneficial interests of
the Liquidating Trust (the "Beneficial Interests").

-3-

Accordingly, the certificates that formerly evidenced ownership of common shares
of the REIT, now evidence ownership of Beneficial Interest of the Liquidating
Trust. The Beneficial Interests are nontransferable, except by will, intestate
succession or operation of law.

The Liquidating Trust's activities are specifically limited to conserving,
protecting and selling the assets transferred to it and distributing the
proceeds therefrom, including holding such assets for the benefit of the
Beneficiaries, enforcing the rights of the Beneficiaries, temporarily investing
such proceeds and collecting income therefrom, providing for the liabilities of
the REIT, making liquidating distributions to the Beneficiaries and taking such
other actions as may be necessary to conserve and protect the assets of the
Liquidating Trust and providing for the orderly liquidation thereof. To the
extent the Trustees invest cash prior to distribution or invest cash retained to
meet the Liquidating Trust's expenses and liabilities, such investments will be
made in only demand and time deposits at commercial banks, short-term
certificates of deposit, treasury bills, securities issued by state or local
governments (or agencies or instrumentalities thereof) or commercial paper rated
A1P1 or higher.

Tax Treatment
- -------------

An entity classified as a liquidating trust will be treated as a grantor
trust, and accordingly will not be subject to tax on any income or gain
recognized by it. Each Beneficiary will be treated as the owner of his pro rata
portion of each asset, including cash, received by and held by the Liquidating
Trust and will be required to take into account in computing his own taxable
income, his pro rata share of each item of income, gain and loss of the
Liquidating Trust.

The Liquidating Trust will issue an annual information statement to the
Beneficiaries with tax information sufficient to enable Beneficiaries to
complete their tax returns. Beneficiaries are urged to consult with their own
tax advisors as to their own filing requirements and the appropriate tax
reporting of this information on their returns.

Reports to Beneficiaries; Meetings
- ----------------------------------

The Trustees are required to issue annual reports to the Beneficiaries
showing the assets and liabilities of the Liquidating Trust at the end of each
fiscal year and the receipts and disbursements of the Liquidating Trust for the
period. The annual reports also describe the changes in the Liquidating Trust's
assets during the reporting period and the actions taken by the Trustees during
the period. The Trustees are also required to file with the Commission an annual
report on Form 10-K and interim reports on Form 8-K whenever, in the opinion of
the Trustees, a significant event relating to the Liquidating Trust's assets has
occurred.

Generally, there will not be meetings of the Beneficiaries. However,
holders of at least a majority of the aggregate Beneficial Interests may require
the Trustees to call a meeting of the holders of the Beneficial Interests.
Holders of a majority of the aggregate Beneficial Interests may vote to remove
the Trustees and elect successor Trustees. Holders of a majority of the
aggregate Beneficial Interests may also vote to amend the Liquidating Trust
Agreement, provided that no amendment may permit the Trustees to engage in any
prohibited activities or affect the holders' rights to receive their pro rata
share of property held by the Liquidating Trust at the time of final
distribution.

Distributions
- -------------

On April 12, 2001, the Liquidating Trust made a cash distribution of $0.45
per unit. It was then estimated that the Liquidating Trust would make additional
future cash distributions of approximately $0.20 per unit of Beneficial
Interest, based upon funds available, estimated net proceeds from the ultimate
sale of the Shopping Center, the estimated timing of such sale, the levels of
reserves deemed necessary or appropriate, and other considerations. At the date
of this filing, the Liquidating Trust believes that, subject to the ultimate
realization of the sale price of the Shopping Center and remaining liquidation
costs, including, without limitation, future operating expenses and
contingencies, funds available for liquidation could range from $0.35 to $0.45
per unit, although there is no assurance thereof. Although the Trustees believe
that the assumptions and projections used in

-4-

arriving at the estimate of the remaining net cash liquidation proceeds are
reasonable, there can be no assurance that such assumptions will in fact prove
correct. Accordingly, there can be no assurance that the actual remaining
distributions will not be in an amount that will vary materially from the
Trustees' estimates of net liquidation values. The timing of such distributions
is also uncertain.

Through September 30, 2000, the REIT made cash liquidating distributions to
its shareholders of $29.01 per share and a non-cash liquidating distribution of
$1.0232 per share. During the period from October 1, 2000 to December 31, 2000,
the Liquidating Trust did not make any distributions. On April 12, 2001, the
Liquidating Trust distributed $0.45 per share against the non-cash liquidating
distribution of $1.0232 per share.

Property Sales after REIT's Dissolution
- ---------------------------------------

Tampa Properties

On November 3, 2000, the Liquidating Trust completed the sale of an office
building and an adjacent property located in Tampa, Florida for an aggregate
sale price of $6.3 million. The Liquidating Trust realized net proceeds of $6.1
million.

ITEM 2. PROPERTIES.

Terrace Ridge Shopping Center
- -----------------------------

The Terrace Ridge Shopping Center is a 100,500 square foot retail property
located in Hillsborough County, Temple Terrace, Florida. The Shopping Center's
anchor tenant, Publix, occupies a 55,000 full service store. At December 31,
2001, the Shopping Center was approximately 98% leased.

As of March 26, 2002, the Shopping Center was subject to a purchase and
sale agreement dated as of February 27, 2002, as amended, which is subject to
certain conditions and the completion of due diligence by the purchaser. Under
the terms of the sale, the seller will be required to make certain repairs and
improvements.

The Liquidating Trust entered into a Voluntary Cleanup Agreement (the
"Agreement") with the State of Florida Department of Environmental Protection
(the "FDEP"), effective as of February 26, 2001, as a result of the release of
certain dry cleaning solvents by a former tenant that operated a dry cleaning
facility located on a portion of the Shopping Center (the "Release"). The dry
cleaning facility is no longer being operated at the Shopping Center. In
connection with the Agreement, the Liquidating Trust performed the remediation
as required to date by the FDEP and the Trustees were advised that the FDEP
approved a program of sampling and monitored natural attenuation as the current
remedy in respect of the Release (albeit there can be no assurance that other
remedies may not be required).

Office Lease
- ------------

The Liquidating Trust's headquarters, at 50 Congress Street, Boston,
Massachusetts, include approximately 1,600 square feet of office space. The
Liquidating Trust pays $4,213 monthly rent pursuant to a lease that expires
April 30, 2002.

ITEM 3. LEGAL PROCEEDINGS.

There are no material legal proceedings to which the Liquidating Trust is a
party or with respect to which any of its properties is subject.

-5-

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to a vote of the Beneficiaries during the fiscal
year ended December 31, 2001.

PART II

ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

There is no public market for the Beneficial Interests of the Liquidating
Trust. On September 27, 2000, the REIT formally closed its stock transfer books
and its common shares were delisted from the New York Stock Exchange. On October
2, 2000, the REIT filed a Form 15 with the Commission to terminate the
registration of its common shares under Section 12(b) of the 1934 Act and its
obligation to file periodic reports with respect thereto.

The Beneficial Interests are not transferable except by will, intestate
succession, or operation of law. As of December 31, 2001, the Liquidating Trust
had approximately 1,750 Beneficiaries of record and 15,289,096 units of
Beneficial Interest outstanding.

ITEM 6. SELECTED FINANCIAL DATA.

The following selected financial data of the Liquidating Trust are
qualified by reference to and should be read in conjunction with the financial
statements, related notes thereto and other financial data included elsewhere
herein. These historical results are not necessarily indicative of the results
to be expected in the future.

Operating Results and Distributions
- -----------------------------------
Year Ended December 31, 2001
----------------------------

Total rental income $1,440,000
==========
Distributions to unit holders (6,880,000)
==========

Net decrease in net assets in liquidation $(8,021,000)
==========
Net decrease in net assets per beneficial unit $ (0.5246)
==========

Data
- ----

December 31, 2001
-----------------

Cash and cash equivalents $ 6,938,000
===========
Property held for sale $ 6,499,000
===========
Total assets $13,688,000
===========
Mortgage loan payable $ 4,236,000
===========
Beneficiaries' net assets in liquidation $ 7,961,000
===========
Net asset value per beneficial unit $0.5207
=======

-6-

ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following discussion of results of operations and financial condition
should be read in conjunction with the Selected Financial Data and the Financial
Statements and Notes thereto (Item 8).

The financial statements contained herein have been prepared in accordance
with generally accepted accounting principles for an entity in liquidation.

MGI Properties Liquidating Trust (the "Liquidating Trust"), a grantor
trust, was established for the purpose of winding up the affairs of MGI
Properties (the "REIT") and began operations as of October 1, 2000 when the REIT
transferred its remaining assets (consisting primarily of cash and cash
equivalents, government securities and three properties), subject to its
remaining liabilities, to the Liquidating Trust. The Trustees are charged with
the duty to operate the Trust, liquidate its remaining assets, provide for and
satisfy its remaining liabilities and make distributions to the Beneficiaries of
the Liquidating Trust.

The Liquidating Trust recorded a decrease in net assets in liquidation of
$8.0 million ($0.5246 per unit) for the year ended December 31, 2001. The
decrease primarily resulted from distributions to unit holders exceeding
property operating income (which is defined as rental income less property
operating expense and real estate taxes) and interest income net of interest
expense, change in fair value of real estate investments and general and
administrative expense. The results for the year ended December 31, 2001 are not
comparable to any prior period because the Liquidating Trust began operations as
of October 1, 2000.

At December 31, 2001, the Liquidating Trust had cash and cash equivalents
of $6.9 million, one property held for sale with an estimated net realizable
value of $6.5 million, and a mortgage loan payable with an outstanding balance
of $4.2 million, which is secured by the property held for sale. The mortgage
loan payable can be prepaid subject to a prepayment penalty. Scheduled loan
principal payments associated with this loan due within 12 months of December
31, 2001 approximate $0.2 million. The Trustees believe that its cash resources
and its one property are sufficient to meet all anticipated liquidity
requirements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Liquidating Trust is presently exposed to interest rate changes
primarily as a result of the short maturity of the financial instruments
comprising its portfolio of cash and cash equivalents. The Liquidating Trust's
only obligation for borrowed money at December 31, 2001 was a $4.2 million fixed
rate mortgage loan with a fixed rate of 7.35%. It is presently anticipated that
the property securing this loan will be sold prior to its maturity in 2005.

-7-

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

MGI PROPERTIES LIQUIDATING TRUST
Financial Statements
December 31, 2001 and 2000
(With Independent Auditors' Report Thereon)

-8-

Independent Auditors' Report

The Board of Trustees
MGI Properties Liquidating Trust:

We have audited the statements of net assets in liquidation of MGI Properties
Liquidating Trust (the Trust) as of December 31, 2001 and 2000, and the related
statements of changes in net assets in liquidation for the year ended December
31, 2001 and the period from October 1, 2000 to December 31, 2000. These
financial statements are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

As described in note 1 to the financial statements, the Trust was formed for the
purpose of disposing of the remaining net assets of MGI Properties and
distributing the proceeds from liquidation to the former shareholders of MGI
Properties. As a result, the Trust has adopted the liquidation basis of
accounting, which is in conformity with accounting principles generally accepted
in the United States of America for an entity in liquidation.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets in liquidation of the Trust as of December
31, 2001 and 2000, and the changes in its net assets for the year ended December
31, 2001 and the period from October 1, 2000 to December 31, 2000 in conformity
with accounting principles generally accepted in the United States of America
applied on the basis described in the preceding paragraph.

/s/ KPMG LLP

February 8, 2002 (except for note 5,
as to which the date is March 26, 2002)

-9-

MGI PROPERTIES LIQUIDATING TRUST
Statements of Net Assets in Liquidation
December 31, 2001 and 2000

Assets 2001 2000
----------- -----------
Cash and cash equivalents $ 6,938,000 14,687,000
Property held for sale (notes 5 and 7) 6,499,000 7,435,000
Other assets 251,000 245,000
----------- ----------
Total assets 13,688,000 22,367,000
----------- ----------

Liabilities

Mortgage loan payable (note 7) 4,236,000 4,410,000
Other liabilities 1,491,000 1,975,000
----------- ----------
Total liabilities 5,727,000 6,385,000
----------- ----------
Net assets in liquidation $ 7,961,000 15,982,000
=========== ==========

See accompanying notes to financial statements.

-10-

MGI PROPERTIES LIQUIDATING TRUST
Statements of Changes in Net Assets in Liquidation
Year ended December 31, 2001 and period from October 1, 2000
to December 31, 2000

Period from
Year ended October 1, 2000
December 31, to December 31,
2001 2000
---------------- -----------------
Changes in net assets:
Rental property activities (note 6):
Rental income $ 1,440,000 444,000
Rental expense (485,000) (192,000)
---------------- ------------------
Net operating income 955,000 252,000
Change in fair value of real estate investments (970,000) --
---------------- ------------------
(Decrease) increase in net assets from rental
property activities and change in fair value
of real estate investments (15,000) 252,000
---------------- ------------------
Other activities:
Interest income 325,000 201,000
Interest expense (note 7) (318,000) (82,000)
Trust operating expenses (1,133,000) (334,000)
Distributions to unit holders (6,880,000) --
---------------- ------------------

Decrease in net assets from other activities (8,006,000) (215,000)
---------------- ------------------
(Decrease) increase in net assets in liquidation (8,021,000) 37,000

Net assets in liquidation, beginning of period 15,982,000 15,945,000
---------------- ------------------
Net assets in liquidation, end of period $ 7,961,000 15,982,000
================ ==================
See accompanying notes to financial statements.

-11-

MGI PROPERTIES LIQUIDATING TRUST

Notes to Financial Statements

December 31, 2001 and 2000

(1) The Purpose of MGI Properties Liquidating Trust

MGI Properties Liquidating Trust (the Trust) is the successor to MGI
Properties (MGI). MGI was an unincorporated business trust organized under
the laws of the Commonwealth of Massachusetts. MGI qualified to be treated
as a REIT under Sections 856-860 of the Internal Revenue Code of 1986. MGI
directly and through its wholly owned subsidiaries owned and operated a
diversified portfolio of real estate assets.

On August 12, 1998, the Board of Trustees of MGI unanimously approved a
Plan of Complete Liquidation and Termination of MGI (the Plan). The Plan
authorized the trustees to dispose of all of the assets of MGI, wind up its
affairs, pay or adequately provide for the payment of all its liabilities
and distribute to or for the benefit of its shareholders all of MGI's
assets, including interests in any liquidating trust established in
connection with the complete liquidation of MGI.

As of September 30, 2000, MGI terminated its existence, and transferred its
remaining assets (consisting primarily of cash and cash equivalents,
government securities and three properties), subject to its remaining
liabilities, to the Trust. Three of the trustees of MGI became the trustees
of the Trust. The trustees are charged with the duty to operate the Trust,
liquidate its remaining assets, provide for and satisfy its remaining
liabilities and make distributions to the beneficial owners (the
Beneficiaries) of units of the beneficial interests of the Trust (the
Beneficial Interests).

The common stock transfer books of MGI were permanently closed on September
27, 2000, and all shareholders and option holders of MGI were deemed to be
Beneficiaries. There were 15,289,096 units of beneficial interest
outstanding on the basis of one unit of beneficial interest for each common
share or option of MGI held on September 30, 2000. After September 30,
2000, the outstanding certificates that formerly represented common shares
of MGI were deemed to evidence the same number of units of beneficial
interest in the Trust. The liquidating trust agreement sets forth a time
limit of three years for the disposition of the Trust's assets and
distributions to the Beneficiaries unless a later termination is required
by the trustees of the Trust.

The Trust's activities are specifically limited to conserving, protecting
and selling the assets transferred to it and distributing the proceeds
therefrom, including holding such assets for the benefit of the
Beneficiaries, enforcing the rights of the Beneficiaries, temporarily
investing such proceeds and collecting income therefrom, providing for the
liabilities of MGI, making liquidating distributions to the Beneficiaries
and taking such other actions as may be necessary to conserve and protect
the assets of the Trust and providing for the orderly liquidation thereof.

The Beneficial Interests are not transferable except by will, intestate
succession, or operation of law. As of December 31, 2001 and 2000, the
Trust had 15,289,096 units of Beneficial Interest outstanding.

(2) Summary of Significant Accounting Policies

(a) Basis of Presentation
---------------------

The Trust uses the liquidation basis of accounting. All assets have
been estimated at net realizable value and liabilities incurred as of
the reporting date are reflected at their estimated settlement
amounts, if determinable. The valuation of the assets and liabilities
have been estimated by the trustees of the Trust as of the date of the
financial statements. Due to inherent uncertainties, actual

(Continued)

-12-

MGI PROPERTIES LIQUIDATING TRUST

Notes to Financial Statements

December 31, 2001 and 2000

realization of the assets and settlement of liabilities could be
materially different from the amounts indicated.

(b) Use of Estimates
----------------

The preparation of financial statements in conformity with the
liquidation basis of accounting which is in conformity with accounting
principles generally accepted in the United States of America for an
entity in liquidation requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported changes in net assets during the
reporting period. One such estimate is the valuation of the property
held for sale by the trustees of the Trust as of the date of the
financial statements. Due to inherent uncertainties, actual
realization of the assets and settlement of liabilities could be
materially different than the amounts indicated.

(3) Assets and Liabilities Transferred to the Trust

MGI transferred the following assets and liabilities to the Trust on
September 30, 2000:

Properties held for sale $ 13,543,000
Cash and cash equivalents 8,884,000
Other assets 239,000
Mortgage loan payable (4,452,000)
Other liabilities (2,269,000)
--------------
$ 15,945,000
==============

All former shareholders and option holders of MGI were granted beneficial
interests in the net assets of the Trust based on their ownership interest
of MGI shares and options to acquire MGI shares on the formation date of
the Trust. All shares and options outstanding were converted to units at
that date.

On March 28, 2001, the Trust declared a cash distribution of $0.45 per
unit, which was paid April 12, 2001 to unit holders of record on April 4,
2001.

(4) Income Taxes

The Trust is treated as a grantor trust and accordingly is not subject to
federal or state income tax on any income earned or gains recognized by the
Trust. Instead, each beneficiary of the Trust is required to report on his
or her federal and state income tax return his or her pro rata share of
taxable income, gain or loss from the Trust. Accordingly, no provision for
income taxes has been recorded in the accompanying financial statements.

-13-

MGI PROPERTIES LIQUIDATING TRUST

Notes to Financial Statements

December 31, 2001 and 2000

(5) Property Held for Sale

On September 30, 2000, MGI owned two commercial properties consisting of
approximately 220,000 aggregate square feet and a parcel of land, all of
which were transferred to the Trust on October 1, 2000. One property and
the parcel of land were sold during the period from October 1, 2000 to
December 31, 2000. The aggregate net proceeds from these sales were
$6,085,000. This amount approximates the estimated fair value of the
properties on the date these properties were transferred from MGI to the
Trust.

At December 31, 2001 and 2000, MGI owned one shopping center, located in
Tampa, Florida (the Property). The Property generated net operating income
of $955,000 and $190,000, respectively, for the year ended December 31,
2001 and the period from October 1, 2000 to December 31, 2000. The Trust
has a purchase and sale agreement, dated as of February 27, 2002, as
amended through March 26, 2002, with an outside party. The Property is
valued at net realizable value in the opinion of the Trust's management.
The purchase and sale agreement, as amended, lists the selling price of the
Property at $8,050,000. The buyer has the option to purchase the Property
subject to the mortgage which encumbers the Property (see note 7).
Completion of the sale is subject to, among other things, satisfactory due
diligence by the buyer.

There can be no assurance that the Property will be sold in 2002 or at all,
or that it will be sold for the purchase price provided under the
agreement.

The Property has been valued based on the following significant
assumptions:

Sales price per purchase and sale agreement $ 8,050,000
Required capital costs and estimated costs to complete (1,114,000)
Estimated closing costs and fees (437,000)
------------
Estimated net realizable value at
December 31, 2001 $ 6,499,000
=============

The Trust entered into a Voluntary Cleanup Agreement (the Agreement) with
the State of Florida Department of Environmental Protection (the FDEP),
effective as of February 26, 2001, as a result of the release of certain
dry cleaning solvents by a former tenant that operated a dry cleaning
facility located on a portion of the Property (the Release). The dry
cleaning facility is no longer being operated at the Property. In
connection with the Agreement, the Trust performed the remediation as
required to date by the FDEP and the Trustees were advised that the FDEP
approved a program of sampling and monitored natural attenuation as the
current remedy in respect of the Release (albeit there can be no assurance
other remedies may not be required).

(6) Operating Leases

Certain of the Trust's operating leases for retail space contain contingent
rent provisions under which tenants are required to pay a percentage of
their sales in excess of a specified amount as additional rent. The Trust
recognizes contingent rental income only when such specified targets are
met. Rental income earned under such provisions amounted to approximately
$79,000 in 2001.

-14-

MGI PROPERTIES LIQUIDATING TRUST

Notes to Financial Statements

December 31, 2001 and 2000

Leases for retail space generally contain provisions under which the
tenants reimburse the Trust for a portion of property operating expenses
and real estate taxes incurred by the Trust. Reimbursements for operating
expenses and real estate taxes amounted to approximately $257,000 and
$128,000, respectively, during 2001 and for the period from October 1, 2000
to December 31, 2000, and are included as part of rental income on the
statements of changes in net assets in liquidation.

For the year ended December 31, 2001, one tenant provided approximately 39%
of base rental income.

Scheduled minimum future rentals under the Trust's noncancelable operating
leases at the shopping center are as follows at December 31, 2001:

Amount
-------------
Year ending December 31:
2002 $ 1,073,000
2003 $ 1,003,000
2004 980,000
2005 855,000
2006 608,000
Thereafter 198,000
------------
Total minimum future rentals $ 4,717,000
============

(7) Mortgage Loan Payable

The Trust is obligated under a loan secured by a mortgage. The mortgage
loan has a fixed rate of 7.35%, is, with certain exceptions, nonrecourse,
and is collateralized by and encumbers the Trust's remaining property. The
loan agreement requires monthly principal amortization payments and a
balloon payment at the loan maturity date, which is September 10, 2005.

Interest expense was $318,000 and $82,000, respectively, for the year ended
December 31, 2001 and for the period from October 1, 2000 to December 31,
2000. Principal repaid was $174,000 and $42,000, respectively, for the year
ended December 31, 2001 and for the period from October 1, 2000 to December
31, 2000.

Future principal payments under the mortgage loan are as follows at
December 31, 2001:

Amount
-------------
Year ending December 31:
2002 $ 187,000
2003 201,000
2004 216,000
2005 3,632,000
--------------

$ 4,236,000
==============

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ITEM 9. CHANGES IN A ND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

The following are the names and respective ages as of December 31, 2001 of
the Trustees and officers of the Liquidating Trust:

Name Age Position
- ---- --- --------
W. Pearce Coues 61 Chief Executive Officer and Trustee
George M. Lovejoy, Jr. 71 Trustee
Robert M. Melzer 61 Trustee

W. Pearce Coues has been Chief Executive Officer and a Trustee of the
Liquidating Trust since its inception in September 2000 and was Chairman of the
Board of Trustees and Chief Executive Officer of the REIT from 1982 until its
dissolution in September 2000.

George M. Lovejoy, Jr. has been a Trustee of the Liquidating Trust since
its inception in September 2000 and was a Trustee of the REIT from 1993 until
its dissolution in September 2000. He has been President since 1994, and
director, since 1972, of Fifty Associates, a real estate investment trust that
is in liquidation. Mr. Lovejoy was Chairman of the Board of Meredith & Grew
Incorporated, a real estate brokerage and management firm, from 1988 to March
1993. He was a Director of Scudder Global High Income Fund and was a trustee of
Cabot Industrial Trust.

Robert M. Melzer has been a Trustee of the Liquidating Trust since its
inception in September 2000 and was a Trustee of the REIT from 1998 until its
dissolution in September 2000. Until 1999, he had been President (since 1980)
and Chief Executive Officer (since 1992) of Property Capital Trust, a real
estate investment trust. Mr. Melzer is a director of Genesee & Wyoming Inc., a
railroad holding company, Beacon Capital Partners, Inc., a real estate
investment trust, the Cronos Group, a lessor of intermodal marine containers and
Lawson Products, Inc., a supplier of maintenance and repair products for
industrial users.

-16-

ITEM 11. EXECUTIVE COMPENSATION

Pursuant to Section 9.1 of the Liquidating Trust Agreement, the Trustees
(excluding Mr. Coues), receive as compensation (i) a $15,000 annual fee and (ii)
$1,000 per Board of Trustees meeting attended. Each Trustee is also reimbursed
for all expenses reasonably incurred by him in the performance of his duties
pursuant to the Liquidating Trust Agreement.

The Liquidating Trust is subject to certain agreements dated September 13,
2000, concerning the compensation and length of employment with its executive
officers. Mr. Coues, a Trustee and Chief Executive Officer of the Liquidating
Trust, elected to reduce his current compensation to $145,000, from the $291,200
per annum amount that he was previously paid by the REIT. Mr. Coues has agreed
to remain employed in his executive capacity until the sale of all real estate
properties has been completed.

Pursuant to severance agreements dated September 17, 1998 between the REIT
and its executive officers, Mr. Coues elected to defer receipt of his remaining
$215,000 of severance benefits. In addition, bonuses aggregating $912,000
through September 30, 2000 due to officers of the REIT have not yet been paid.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth, as of December 31, 2001, information with
respect to the ownership of Beneficial Interests in the Liquidating Trust by (i)
each named executive of the Liquidating Trust, (ii) each Trustee of the
Liquidating Trust, (iii) all named executive officers and Trustees of the
Liquidating Trust as a group, and (iv) each person who, to the knowledge of
management, owned beneficially more than 5% of the units of Beneficial Interest.
Unless otherwise indicated, the address of each person listed below is 50
Congress Street, Suite 222 Boston, Massachusetts 02109.

Number of Beneficial Percent of Outstanding
Name and Address Units of Interest Owned Beneficial Units of Interest
- ---------------- ----------------------- ----------------------------

Warren E. Buffet 1,854,500(1) 12.1%
144 Kiewit Plaza
Omaha, Nebraska

S Muoio & Co LLC 985,600(2) 6.4%

W. Pearce Coues 506,600 3.3%

George M. Lovejoy, Jr. 25,300 *

Robert M. Melzer 22,500 *

All Executive Officers 554,400 3.3%
and Trustees as a group
(three persons)

- ---------------------
* Less than 1.0%

-17-

(1) Based on a Schedule 13G/A dated February 14, 2000, Warren E. Buffett
beneficially owned 1,854,500 Common Shares of MGI Properties,
representing 13.5% thereof as of such date. Mr. Buffett had sole voting
and dispositive power with respect to all 1,854,500 of such shares.

(2) Based on a Schedule 13G/A dated February 14, 2002, Salvatore Muoio
beneficially owned 985,600 units of the Liquidating Trust, representing
7.15% thereof as of such date. Mr. Muoio had sole voting and dispositive
power with respect to 231,000 of such units and shared voting and
dispositive power with SM Investors, LP with respect to 754,600 of such
units.

ITEM 13. CERTAIN RELATIONSHIPS AND CERTAIN TRANSACTIONS.

Not applicable.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) Financial Statements and Financial Statement Schedules

1. The financial statements are included in Item 8.

(b) Exhibits.

2.1 Plan of Complete Liquidation and Termination of MGI Properties
(incorporated by reference to Exhibit A of MGI Properties'
Definitive Proxy Statement dated October 14, 1998 on Form 14A).

4.1 Liquidating Trust Agreement of MGI Properties Liquidating Trust
dated September 20, 2000 (incorporated by reference to Exhibit 4.1
of the Liquidating Trust's Annual Report on Form 10-K for the period
ended December 31, 2000).

None.

-18-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

MGI PROPERTIES LIQUIDATING TRUST

By: /s/ W. Pearce Coues
------------------------------------------
W. Pearce Coues, Chief Executive Officer
and Trustee

MGI Properties Liquidating Trust and each of the undersigned do hereby
appoint W. Pearce Coues its or his true and lawful attorney to execute on behalf
of MGI Properties Liquidating Trust and the undersigned any and all amendments
to this Report and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ W. Pearce Coues Chief Executive Officer and March 26, 2002
- ------------------------- Trustee (principal executive
W. Pearce Coues officer)

/s/ George M. Lovejoy, Jr. Trustee March 26, 2002
- ------------------------------
George M. Lovejoy, Jr.

/s/ Robert M. Melzer Trustee March 26, 2002
- ------------------------------
Robert M. Melzer

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