Filed by Cornerstone Realty Income Trust, Inc.
Pursuant to Rule 425 under the Securities Act of 1933
Subject Company: Merry Land Properties, Inc.
Commission File Number: 000-29778
Cornerstone Realty Income Trust, Inc.
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306 East Main Street Richmond, Virginia 23219 (804) 643-1761
February 19, 2003 Contacts:
For Immediate Release Mark Murphy--Cornerstone (804) 643-1761 x231
Dorrie E. Green--Merry Land (706) 722-6756
Cornerstone Realty and Merry Land Properties
Announce Merger Agreement
RICHMOND, Va. and AUGUSTA, Ga.---- Cornerstone Realty Income Trust, Inc.
(NYSE: TCR) and Merry Land Properties, Inc. (NASDAQ: MRYP) today announced that
they have entered into a merger agreement in which Merry Land Properties will
merge into a wholly-owned subsidiary of Cornerstone. The principal assets of
Merry Land include nine apartment communities, a third-party property management
business, undeveloped apartment land and ownership interests in two joint
ventures--one owning an existing apartment property and the other owning
apartment development land. Upon the closing of the merger, which is expected in
the second quarter of 2003, Cornerstone will own 90 apartment communities,
containing 23,360 apartment homes in major markets throughout the Southeast and
Texas.
The merger will significantly enhance Cornerstone's Southern presence,
adding direct ownership of nine apartment properties, containing 1,966 apartment
homes, in Charleston, South Carolina and Savannah, Georgia. In addition, the
transaction will provide Cornerstone with the opportunity to use its current
property management expertise to enhance shareholder value by expanding Merry
Land's existing third-party property management business.
The proposed transaction will be structured as a tax-free merger and is
subject to approval by Merry Land's shareholders. The total consideration for
the transaction is approximately $136 million. It consists of equity in the form
of Cornerstone stock with a transaction value of approximately $42 million and
the assumption by Cornerstone of existing Merry Land debt totaling approximately
$94 million. The equity consideration consists of 1.818 Cornerstone common
shares and 0.220 Cornerstone Series B Convertible Preferred Shares for each
issued and outstanding share of Merry Land common stock. The Series B Shares
will be voting shares of Cornerstone but will not pay dividends until converted
into Cornerstone common shares upon the completion of Merry Land's Merritt at
Whitemarsh project in Savannah, Georgia.
"We are extremely excited about acquiring high-quality assets that will
significantly increase the size of our portfolio," said Glade M. Knight,
Cornerstone's chairman and chief executive officer. "The merger will
substantially increase our presence in Charleston and establish Savannah as a
new Cornerstone market. Charleston and Savannah are strong secondary markets
with excellent employment and population growth prospects. In addition, some of
the assets being acquired are new Class A communities that I believe are among
the highest quality properties in these two markets."
W. Tennent Houston, chairman and chief executive officer of Merry Land,
commented: "We are extremely pleased with the proposed transaction with
Cornerstone. The transaction will provide Merry Land's shareholders with an
opportunity to participate in Cornerstone's existing
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operations and future growth prospects in many of the South's most dynamic
markets. In addition, the proposed transaction is expected to provide Merry
Land's shareholders with significant benefits--a premium over the current
trading prices of Merry Land's common shares, an attractive dividend and
significant liquidity--in a tax-free transaction."
In conjunction with the merger, Cornerstone will enter into development
agreements with a newly formed private company, Merry Land & Investment Company,
LLC for the development of three additional Class A communities in Savannah and
Charleston. One of the new developments will be a second phase to an existing
property. The principals of Merry Land & Investment Company are current
executives of Merry Land. They have substantial experience and a successful
development track record in the coastal markets of Charleston and Savannah. In
addition, Merry Land & Investment Company will acquire certain commercial real
estate properties, development land and land subject to clay leases from Merry
Land, on or before the closing of the merger for aggregate consideration of
approximately $7.4 million including assumed indebtedness.
Cornerstone has agreed to nominate one person from the Merry Land
management team to its Board of Directors. The proposed transaction may be
terminated, at the option of Merry Land, if the closing price of Cornerstone's
common shares is below $6.50 per share for 10 of any 30 consecutive trading days
prior to the consummation of the merger. The merger will be accounted for under
the purchase method of accounting and is being structured as a tax-free merger,
with the receipt of acceptable tax opinions a condition of closing.
In connection with the proposed merger, Cornerstone intends to file a
registration statement with the Securities and Exchange Commission that will
contain the prospectus of Cornerstone relating to the securities to be issued as
consideration in the merger and the proxy statement of Merry Land relating to
the special meeting at which the proposed merger will be considered and voted
upon by Merry Land's shareholders, as well as other relevant documents
concerning the proposed merger. Investors and security holders are urged to read
the proxy statement/prospectus, along with any other documents filed with the
SEC, when they become available, because they will contain important
information. You will be able to obtain a free copy of the registration
statement, including the exhibits filed therewith, at the SEC's website at
www.sec.gov. In addition, you may obtain the proxy statement/prospectus and
other documents filed with the SEC free of charge by requesting them from
Cornerstone, in writing, at Cornerstone Realty Income Trust, Inc., Attention:
Mark M. Murphy, 306 East Main Street, Richmond, Virginia 23219, or by telephone
at (804) 643-1761; or from Merry Land, in writing, at Merry Land Properties,
Inc., Attention: Dorrie E. Green, 209 Seventh Street, Suite 300, Augusta,
Georgia 30901, or by telephone at (706) 722-6756.
Merry Land, its directors and executive officers may be deemed to be
participants in the solicitation of proxies from Merry Land shareholders in
favor of the proposed merger. A description of any interests that the directors
and executive officers of Merry Land may have in the transaction will be
available in the proxy statement/prospectus.
Forward Looking Statements
Certain statements contained herein constitute "forward-looking statements"
within the meaning of the Securities Act of 1933 and the Securities Exchange Act
of 1934. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or achievements of Cornerstone or Merry Land to be materially
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different from results expressed or implied by such forward-looking statements.
Such factors include, among other things, risks associated with the completion
of the merger, risks associated with the unanticipated adverse business
developments affecting Cornerstone or Merry Land, adverse changes in the real
estate markets, and local as well as general economic and competitive factors.
In addition, the timing and amounts of distributions to common shareholders are
within the discretion of Cornerstone's board of directors. There is no assurance
that planned events or results will be achieved.
Cornerstone Corporate Profile
Cornerstone Realty Income Trust, Inc. (NYSE:TCR) is a fully integrated,
self-managed and self-advised real estate company that has operated as a real
estate investment trust (REIT) since 1993. The company focuses on the ownership
and management of multifamily communities in select markets in Virginia, North
Carolina, South Carolina, Georgia and Texas. Currently Cornerstone owns 81
apartment communities with 21,394 units. Cornerstone is headquartered in
Richmond, Va. and its common stock trades on the New York Stock Exchange under
the symbol "TCR". For more information about Cornerstone, visit the company's
web site at www.cornerstonereit.com.
Merry Land Corporate Profile
Merry Land Properties, Inc. is a publicly traded company whose shares are listed
on the NASDAQ under the symbol "MRYP". The company engages in the business of
buying, developing, renovating and managing apartment properties for itself and
others. Merry Land currently owns direct interests in nine apartment
communities, land for the development of three additional apartment communities,
joint venture interests in one existing apartment community and one apartment
development parcel, three commercial properties, commercial development land,
and land subject to clay leases, in Georgia, South Carolina and Florida. For
more information about Merry Land, visit the company's web site at
www.merryland.com.
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