-----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, S1CCcrU3JNjCOTtBuTdFdcqU4/a1sDEfFE9Xi2fQlxLrRM15w2qo3xmq3Lc+NKVl mcxki7OGmNpTd62mq8meMw== 0000950146-96-001656.txt : 19960917 0000950146-96-001656.hdr.sgml : 19960917 ACCESSION NUMBER: 0000950146-96-001656 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960702 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19960916 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MGI PROPERTIES 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: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-06833 FILM NUMBER: 96630862 BUSINESS ADDRESS: STREET 1: 30 ROWES WHARF CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6173305335 MAIL ADDRESS: STREET 1: 30 ROWES WHARF CITY: BOSTON STATE: MA ZIP: 02110 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 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report: July 2, 1996 (Date of earliest event reported) MGI PROPERTIES (Exact name of Registrant as specified in its charter) Massachusetts 1-6833 04-6268740 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation) File Number) Identification Number) One Winthrop Square, Boston, Massachusetts 02110 (Address of Principal executive offices) (Zip Code) Registrant's telephone number, including area code: (617) 422-6000 This report consists of eight consecutively numbered pages. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits 1. Pro forma consolidated statement of earnings (unaudited) of the Registrant for the year ended November 30, 1995, pro forma consolidated balance sheet as of May 31, 1996 and the pro forma consolidated statement of earnings for the six months ended May 31, 1996. 2. Historical summaries of gross income and direct operating expenses (audited) of three properties acquired on July 2, 1996 for the year ended December 31, 1995 (Exhibit A). MGI Properties Pro Forma Consolidated Statement of Earnings Year Ended November 30, 1995 (unaudited)
Pro Forma Adjustments -------------------------- Audited Unaudited As Reported Properties Properties Pro Forma - --------------------------------------------------------------------------------------------------------- Income Rental and other income $44,811,000 $5,521,000 $2,808,000 a $53,140,000 Interest 514,000 (91,000) 0 b 423,000 Other 64,000 0 0 64,000 - --------------------------------------------------------------------------------------------------------- Total Income 45,389,000 5,430,000 2,808,000 53,627,000 - --------------------------------------------------------------------------------------------------------- Expenses Property operating expenses 12,348,000 1,032,000 229,000 a 13,609,000 Real estate taxes 5,600,000 641,000 425,000 a 6,666,000 Depreciation and amortization 7,814,000 664,000 452,000 c 8,930,000 Interest 5,807,000 2,071,000 2,087,000 d 9,965,000 General and administrative 2,651,000 0 0 2,651,000 - --------------------------------------------------------------------------------------------------------- Total expenses 34,220,000 4,408,000 3,193,000 41,821,000 - --------------------------------------------------------------------------------------------------------- Income before net gains 11,169,000 1,022,000 (385,000) 11,806,000 Net gains 3,150,000 0 0 3,150,000 - --------------------------------------------------------------------------------------------------------- Net income $14,319,000 $1,022,000 ($385,000) $14,956,000 ========================================================================================================= Per Share Data Net Income $1.25 $1.30 ========================================================================================================= Weighted average shares outstanding 11,487,677 11,487,677 =========================================================================================================
See Note 1 of the accompanying notes to the proforma consolidated financial statements. -5- MGI Properties Pro Forma Consolidated Statement of Earnings Six Months Ended May 31, 1996 (unaudited)
Pro Forma Adjustments ---------------------- Actual 6 Month As Reported Results Proforma Pro Forma - ------------------------------------------------------------------------------------------------------ Income Rental and other income $25,815,000 ($871,000) $4,323,000 h $29,267,000 Interest 185,000 0 0 185,000 Other 6,000 0 0 6,000 - ------------------------------------------------------------------------------------------------------ Total Income 26,006,000 (871,000) 4,323,000 29,458,000 - ------------------------------------------------------------------------------------------------------ Expenses Property operating expenses 6,753,000 (113,000) 782,000 h 7,422,000 Real estate taxes 3,102,000 (111,000) 536,000 h 3,527,000 Depreciation and amortization 4,550,000 (129,000) 558,000 i 4,979,000 Interest 3,966,000 (382,000) 2,114,000 g 5,698,000 General and administrative 1,479,000 0 0 1,479,000 - ------------------------------------------------------------------------------------------------------ Total expenses 19,850,000 (735,000) 3,990,000 23,105,000 - ------------------------------------------------------------------------------------------------------ Income before net gains 6,156,000 (136,000) 333,000 6,353,000 Net gains 9,350,000 0 9,350,000 - ------------------------------------------------------------------------------------------------------ Net income $15,506,000 ($136,000) $333,000 $15,703,000 ====================================================================================================== Per Share Data Net Income $1. 35 $1.36 ====================================================================================================== Weighted average shares outstanding 11,526,406 11,526,406 ======================================================================================================
See Note 3 of the accompanying notes to the proforma consolidated financial statements. MGI PROPERTIES PRO FORMA CONSOLIDATED BALANCE SHEETS May 31, 1996 (unaudited)
- --------------------------------------------------------------------------------------------------------------- Proforma As Reported Adjustments Pro Forma - --------------------------------------------------------------------------------------------------------------- ASSETS Real estate, at cost $315,353,000 $35,529,000 e $350,882,000 Accumulated depreciation and amortization (40,618,000) (40,618,000) - --------------------------------------------------------------------------------------------------------------- Net investments in real estate 274,735,000 35,529,000 310,264,000 Cash 1,521,000 1,521,000 Short-term investments, at cost 4,202,000 (4,202,000)f 0 Accounts receivables 3,608,000 3,608,000 Other assets 9,277,000 9,277,000 =============================================================================================================== $293,343,000 $31,327,000 $324,670,000 =============================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Mortgage and other loans payable $96,110,000 $31,327,000 g $127,437,000 Other liabilities 6,178,000 6,178,000 - --------------------------------------------------------------------------------------------------------------- Total liabilities 102,288,000 31,327,000 133,615,000 Shareholders' equity: Preferred shares -- $1 par value; 6,000,000 shares authorized; none issued -- Common shares -- $1 par value; 17,500,000 shares authorized; 11,538,095 issued (11,502,271 at November 30, 1995) 11,538,000 11,538,000 Additional paid-in capital 166,852,000 166,852,000 Undistributed (distributions in excess of) net income 12,665,000 12,665,000 - --------------------------------------------------------------------------------------------------------------- Total shareholders' equity 191,055,000 0 191,055,000 =============================================================================================================== $293,343,000 $31,327,000 $324,670,000 ===============================================================================================================
See Note 2 of the accompanying notes to the proforma consolidated financial statements. Notes to Pro Forma Consolidated Financial Statements: The accompanying pro forma consolidated financial statements have been prepared by MGI Properties' management. Management is not aware of any material factors relating to the properties which would have caused the pro forma financial information not to be indicative of future operating results. The pro forma consolidated balance sheet and consolidated statements of earnings should be read in conjunction with MGI Properties audited financial statements as of November 30, 1995 and the unaudited Form 10-Q for the quarter ended May 31, 1996. Note 1: The pro forma consolidated statement of earnings for the year ended November 30, 1995 combines the audited consolidated statement of earning of MGI Properties with the audited historical summaries of gross income and direct operating expenses of the three properties described on the Form 8-K dated July 2, 1996 and the unaudited historical summaries of gross income and direct operating expenses of five properties acquired from December 1, 1995 through July 2, 1996. The pro forma consolidated statement of earnings assumes the acquisition of the eight properties as if they had occurred on December 1, 1994. The pro forma information is based upon the historical statements of MGI Properties after giving effect to the acquisition of these properties. (a) Rental income represents that which would have been derived from leases in place during the period from December 1, 1994 through November 30, 1995. The operating expenses for the unaudited properties were provided by the buildings' prior owners. (b) The reduction in interest income is due to the pro forma use of cash and short-term investments which would have been required to purchase the properties if they had been acquired on December 1, 1994. (c) The adjustment for depreciation applies a forty-year life based upon the straight line method to the building component of acquisitions for twelve months. (d) The increase in interest expense is due to the pro forma use of debt to acquire properties, which would have been outstanding for the period from December 1, 1994 to November 30, 1995. The acquisition of the eight properties assumes the Trust borrowed $21.8 million at a floating rate of 7.45% and also reflects the interest expense related to debt incurred with the July 2, 1996 acquisitions which totaled $21.3 million at an average rate of 8.7%. Note 2: The accompanying pro forma consolidated balance sheet as of May 31, 1996 assumes the acquisitions of the properties as if they occurred on May 31, 1996. The pro forma information is based upon the historical statements of the Trust after giving effect to the acquisition of these properties. (e) Real estate, at cost, reflects the historical cost of the four acquisitions which were purchased subsequent to May 31, 1996. (f) The reduction in short term investment represents its pro forma use in the acquisition of properties subsequent to May 31, 1996. (g) Additions to mortgages payable represents the pro forma use of debt which would have been required to purchase those properties acquired from June 1, 1996 through July 2, 1996. Note 3: The accompanying pro forma consolidated statement of earnings for the six month period ended May 31, 1996 assumes the acquisitions of the properties as if they were owned as of December 1, 1994. The pro forma information is based upon the historical statements of the Trust after giving effect to the acquisition of these properties. Rental income and operating expenses for the period of trust ownership are deducted as pro forma adjustments. (h) Rental income represents that which would have been derived from leases in place during the period from December 1, 1995 through May 31, 1996. The operating expenses for the six-month period are estimated based upon MGI's actual experience for its period of ownership. (i) The adjustment for depreciation reflects the building component of acquisitions for six months using a forty-year life based upon the straight line method. (j) The increase in interest expense is due to the pro forma use of debt that would have been outstanding for the period from December 1, 1995 to May 31, 1996. REPORT OF INDEPENDENT AUDITORS To the Board of Directors MGI Properties We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses ("Historical Summary") for One Portland Square (the "Property") for the year ended December 31, 1995. This Historical Summary is the responsibility of the Property's management. Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion. The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K of MGI Properties as described in Note 1 and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in Note 1 of the Property for the period ended December 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Boston, Massachusetts February 9, 1996 Historical Summary of Gross Income And Direct Operating Expenses One Portland Square For the year ended December 31, 1995 Gross Income Rental Income $1,789,216 Operating expense contributions 90,666 -------------- Total Gross Income 1,879,882 -------------- Direct Operating Expenses Rental Property Operating Expenses 385,289 Real Estate Taxes 196,119 -------------- Total Direct Operating Expenses 581,408 -------------- Gross Income in excess of Direct Operating Expenses $1,298,474 ============== Note to Historical Summary of Gross Income and Direct Operating Expenses 1. Basis of Presentation and Summary of Significant Accounting Policies Organization The accompanying Historical Summary of Gross Income and Direct Operating Expenses relate to the One Portland Square office building (the Property). The Property is comprised of land and a six unit office condominium located in Portland, ME. On July 2, 1996, MGI Properties acquired the Property from the Portland Square Limited Partnership (the Partnership). Basis of Presentation The accompanying Historical Summary has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate operations for inclusion in Form 8-K of the acquirer, MGI Properties. Accordingly, certain historical expenses which may not be comparable to the expenses expected to be incurred in the proposed future operations of the Properties have been excluded. Excluded expenses consist of depreciation and amortization, interest expense and certain professional and administrative costs not directly related to future operations. The Partnership's accounting records are maintained on an income-tax basis of accounting. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles and thus reflect lease receivables that are not reflected in the accounting records. Concentration of Credit Risk In the normal course of business, the Partnership extends credit to its tenants. The Partnership does not believe that this concentration of revenues and credit risk represents a material risk of loss with respect to its financial position. 2. Leases The Partnership earns rental income under operating leases that expire from 1996 to 2004. Future minimum rents to be received under noncancelable operating leases for each of the following five years are as follows: 1996 $ 1,836,422 1997 1,832,205 1998 1,533,848 1999 1,363,162 2000 1,320,493 In 1995, revenues from one tenant of $1,038,490 represented 51% of total rent revenues while in 1994, revenues from this same tenant amounted to $1,038,490 representing 22% of total rent revenues. REPORT OF INDEPENDENT AUDITORS To the Board of Directors MGI Properties We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses ("Historical Summary") for the One Portland Square Parking Lot (the "Property") for the year ended December 31, 1995. This Historical Summary is the responsibility of the Property's management. Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion. The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K of MGI Properties as described in Note 1 and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in Note 1 of the Property for the period ended December 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Boston, Massachusetts February 9, 1996 Historical Summary of Gross Income And Direct Operating Expenses One Portland Square Parking Lot For the year ended December 31, 1995 Gross Income Rental Income $ 592,280 -------------- Total Gross Income 592,280 -------------- Direct Operating Expenses Rental Property Operating Expenses 174,096 Real Estate Taxes 102,791 -------------- Total Direct Operating Expenses 276,887 -------------- Gross Income in excess of Direct Operating Expenses $ 315,393 ============== Note to Historical Summary of Gross Income and Direct Operating Expenses 1. Basis of Presentation and Summary of Significant Accounting Policies: Organization The accompanying Historical Summary of Gross Income and Direct Operating Expenses relate to the One Portland Square parking lot (the Property). On July 2, 1996, MGI Properties acquired the Property from the Portland Square Limited Partnership (the Partnership). Basis of Presentation The accompanying Historical Summary has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate operations for inclusion in Form 8-K of the acquirer, MGI Properties. Accordingly, certain historical expenses which may not be comparable to the expenses expected to be incurred in the proposed future operations of the Properties have been excluded. Excluded expenses consist of depreciation and amortization, interest expense and certain professional and administrative costs not directly related to future operations. The Partnership's accounting records are maintained on an income-tax basis of accounting. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles and thus reflect lease receivables that are not reflected in the accounting records. Concentration of Credit Risk In the normal course of business, the Partnership extends credit to its tenants. The Partnership does not believe that this concentration of revenues and credit risk represents a material risk of loss with respect to its financial position. REPORT OF INDEPENDENT AUDITORS To the Board of Directors MGI Properties We have audited the accompanying Historical Summary of Gross Income and Direct Operating Expenses ("Historical Summary") for Two Portland Square (the "Property") for the year ended December 31, 1995. This Historical Summary is the responsibility of the Property's management. Our responsibility is to express an opinion on the Historical Summary based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Historical Summary is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the Historical Summary. An audit also includes assessing the basis of accounting used and significant estimates made by management, as well as evaluating the overall presentation of the Historical Summary. We believe that our audit provides a reasonable basis for our opinion. The accompanying Historical Summary was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission for inclusion in Form 8-K of MGI Properties as described in Note 1 and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the Historical Summary referred to above presents fairly, in all material respects, the gross income and direct operating expenses described in Note 1 of the Property for the period ended December 31, 1995, in conformity with generally accepted accounting principles. ERNST & YOUNG LLP Boston, Massachusetts February 9, 1996 Historical Summary of Gross Income And Direct Operating Expenses Two Portland Square For the year ended December 31, 1995 Gross Income Rental Income $ 2,984,026 Operating expense contributions 64,523 -------------- Total Gross Income 3,048,549 -------------- Direct Operating Expenses Rental Property Operating Expenses 472,190 Real Estate Taxes 342,314 -------------- Total Direct Operating Expenses 814,504 -------------- Gross Income in excess of Direct Operating Expenses $2,234,045 ============== Note to Historical Summary of Gross Income and Direct Operating Expenses 1. Basis of Presentation and Summary of Significant Accounting Policies: Organization The accompanying Historical Summary of Gross Income and Direct Operating Expenses relate to the Two Portland Square office building (the Property). On July 2, 1996, MGI Properties acquired the Property from the Two Portland Square Limited Partnership (the Partnership) Basis of Presentation The accompanying Historical Summary has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for the acquisition of real estate operations for inclusion in Form 8-K of the acquirer, MGI Properties. Accordingly, certain historical expenses which may not be comparable to the expenses expected to be incurred in the proposed future operations of the Properties have been excluded. Excluded expenses consist of depreciation and amortization, interest expense and certain professional and administrative costs not directly related to future operations. The Partnership's accounting records are maintained on an income tax basis of accounting. The accompanying financial statements have been prepared in accordance with generally accepted accounting principles and thus reflect lease receivables that are not reflected in the accounting records. Concentration of Credit Risk In the normal course of business, the Partnership extends credit to its tenants. The Partnership does not believe that this concentration of revenues and credit risk represents a material risk of loss with respect to its financial position. 2. Leases The Partnership earns rental income under operating leases that expire from 1996 to 2005. Future minimum rents to be received under noncancelable operating leases for each of the following five years are as follows: 1996 $ 2,734,567 1997 2,645,879 1998 2,461,844 1999 2,212,667 2000 2,151,587 In 1995, revenues from two tenants represented 46% of total rent revenues. 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: September 16, 1996 -------------------------------------- Phillip C. Vitali Executive Vice President and Treasurer (Chief Financial Officer) Date: September 16, 1996 -------------------------------------- David P. Morency Controller (Principal Accounting Officer) -----END PRIVACY-ENHANCED MESSAGE-----