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):
May 1, 2007
CORNERSTONE CORE PROPERTIES REIT, INC.
(Exact name of registrant as specified in its charter)
Maryland |
| 000-52566 |
| 33-0827161 |
(State or other jurisdiction |
| (Commission |
| (IRS Employer |
of incorporation) |
| File Number) |
| Identification No.) |
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1920 Main Street, Suite 400 | ||||
Irvine, California 92614 | ||||
(Address of principal executive offices) | ||||
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(949) 852-1007 | ||||
(Registrant’s telephone number, including area code) | ||||
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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)
Section 1 — Registrant’s Business and Operations
Item 1.01 Entry into a Material Definitive Agreement
We have entered into a definitive agreement (the “Agreement”) to purchase an newly constructed multi-tenant industrial property known Classic Business Park from CP215 Business Park, LLC, a non-related party, for a purchase price of $9.8 million. As of May 1, 2007, our right to terminate the agreement without penalty expired and our initial deposits became non-refundable.
The property will consist of approximately 79,042 square feet of leasable space in two single-story buildings located on approximately 4.9 acres of land in Perris, California. The property is currently under development and expected to be completed and ready for occupancy in the first quarter of 2008, at which time the purchase is expected to close.
Classic Business Park will be part of a multi-phase, master planned project that will consist of approximately 397,000 square feet of retail, warehouse and multi-tenant industrial space located in 16 free-standing buildings. Classic Business Park will be a part of the first phase of the development, which will include approximately 153,000 square feet of space in six buildings.
The property is located on interstate 215, approximately 70 miles east of Los Angeles, in the eastern Inland Empire growth corridor that extends from San Bernardino and Riverside to Temucula. Considered to be one of the fastest growing areas in the United States, as cited in John E. Husing’s Inland Empire quarterly Economic Report, Perris, California offers upscale urban lifestyes at affordable prices. Although construction activity in the eastern sector of the Inland Empire increased in 2006, there is limited multi-tenant industrial property available for lease in the Perris market.
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 targeted net rental income, location, demographics, existing and planned competitive properties and price per square foot 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 $8.9 million which is subject to final adjustment. The depreciation expense will be calculated using the straight-line method based upon an estimated useful life of 39 years for the building 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 expected to appromixate 1.25% and annual real estate taxes are projected to be approximately $122,000 for the initial year subsequent to the purchase.
In connection with the Agreement, we have paid a non-refundable $500,000 deposit to an escrow agent and under the terms of the Agreement, we are obligated to pay certain closing costs, including, but not limited to attorney fees, certain title insurance premiums, survey costs, recording costs and one-half of the escrow charges. The Agreement closing date is expected to be three days after the buildings have passed final inspection by the City Buiiding Department, but not later than March 31, 2008.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
99.1 |
| Purchase and Sale Agreement, as amended, by and between Cornerstone Operating Partnership, L.P. and CP 215 Business Park, LLC, a Califrornia limited Liability company, dated March 16, 2007 |
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99.2 |
| Free-writing prospectus dated May 7, 2007 |
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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. | ||
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Dated: May 7, 2007 |
| By: | /s/ TERRY G. ROUSSEL |
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| Terry G. Roussel, |
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| Chief Executive Officer |
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