UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
March 30, 2007
CORNERSTONE CORE PROPERTIES REIT, INC.
(Exact name of registrant as specified in its charter)
Maryland |
| 333-121238 |
| 33-0827161 |
(State or other jurisdiction |
| (Commission |
| (IRS Employer |
of incorporation) |
| File Number) |
| Identification No.) |
1920 Main Street, Suite 400
Irvine, California 92614
(Address of principal executive offices)
(949) 852-1007
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions.
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14d-2(b)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
Item 8.01 Other Events
Acquisition of Marathon Center
We have entered into a definitive agreement to purchase an existing multi-tenant industrial property known as Marathon Center from Marathon Venture of Pinnellas, LLC, a non-related party, for a purchase price of $4.5 million. As of March 30, 2007, our right to terminate the agreement without penalty expired, and our initial deposit became non refundable. We closed the purchase of the property on April 2, 2007. We acquired the property in a joint venture with JBK Capital, LLC. We are the managing partner of the venture and own a 97% interest in the venture. The property was purchased with no debt financing. Under the terms of the agreement, we are obligated to pay certain closing costs, including, but not limited to attorney fees, survey costs, recording costs and one-half of the escrow closing fees.
Marathon Center consists of approximately 52,020 square feet of leasable space in two single-story buildings located on approximately 4.8 acres of land near Tampa Bay, Florida. The property is currently 85% leased at an average annual rent of $6.75 per square foot to eight tenants whose spaces range in size from approximately 1,300 square feet to approximately 25,100 square feet. Tenants of the property are engaged in varying businesses including services, printing, distribution and light manufacturing.
Marathon Center is located in central Pinellas County within minutes of major interstate highways providing access to downtown Tampa, Tampa’s airport, St. Petersburg, the St. Petersburg/Clearwater International Airport and Tampa International airport. According to CB Richard Ellis, the Tampa Bay industrial market continued to tighten in late 2006, experiencing decreased vacancy rates and rental rate increases across product types. Limited supply, paired with Tampa Bay’s continued economic growth, indicates that the favorable vacancy and rental rate trends should continue.
One tenant, Golden Ribbon, a printing business, leases two spaces, occupying 63% of the center. The following table sets forth lease expiration information for the next ten years.
|
|
|
| Approx |
|
|
| Percent of |
| Percent of |
|
|
| No of |
| Amount of |
| Base Rent of |
| Total Leaseable |
| Total |
|
Year Ending |
| Leases |
| Expiring Leases |
| Expiring Leases |
| Area Expiring |
| Annual Base |
|
December 31, |
| Expiring |
| (Sq. Feet) |
| (Annual $) |
| % |
| Rent Expiring |
|
2007 |
| 3 |
| 5,560 |
| 37,390 |
| 12.7 | % | 12.6 | % |
2008 |
| 3 |
| 8,587 |
| 67,384 |
| 19.5 | % | 22.7 | % |
2009 |
| 1 |
| 1,395 |
| 10,800 |
| 3.2 | % | 3.6 | % |
2010 |
| 1 |
| 3,280 |
| 23,844 |
| 7.5 | % | 8.0 | % |
2011 and thereafter |
| 1 |
| 25,117 |
| 156,984 |
| 57.2 | % | 53.0 | % |
Average annual lease rates and occupancy percentages for the last two years are as set forth below:
| Average Lease Rate |
|
|
| ||
|
| Per Total |
| Average Annual |
| |
Year Ending |
| Square Foot |
| Occupancy |
| |
December 31, |
| (Annual $) |
| (%) |
| |
|
|
|
|
|
| |
2006 |
| $ | 6.75 |
| 85 | % |
2005 |
| $ | 7.35 |
| 100 | % |
The seller purchased the property in late 2004, and no average lease rate or occupancy information is available prior to that date.
In evaluating this property as a potential acquisition and determining the appropriate amount of consideration to be paid for the property, we considered a variety of factors including overall valuation of net rental income, location, demographics, physical condition, tenant mix, quality of tenants, length of leases, price per square foot and occupancy and analyzed how the property compares to comparable properties in its market.
For federal income tax purposes, the depreciable basis of the property is estimated at approximately $3.4 million which is subject to final adjustment. Depreciation expense will be calculated using the straight-line method based upon an estimated useful life of 39 years for the building and improvement costs and the related lease term for the tenant improvements. Leasing commissions will be amortized over the initial term of the related leases. The real estate tax rate is 1.9%, and annual real estate taxes are projected to be approximately $86,100 for the initial year subsequent to the purchase.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CORNERSTONE CORE PROPERTIES REIT, INC. | |||
|
|
|
| |
|
|
|
| |
Dated: April 5, 2007 |
| By: | /s/ TERRY G. ROUSSEL |
|
|
|
| Terry G. Roussel, | |
|
|
| Chief Executive Officer | |
3
