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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): July 30, 1998
AMERICAN INDUSTRIAL PROPERTIES REIT
(Exact Name of Registrant as Specified in its Charter)
Texas 1-9016 75-6335572
(State or Other Jurisdiction of (Commission File (I.R.S. Employer
Incorporation or Organization) Number) Identification No.)
6210 North Beltline Road, Suite 170, Irving, Texas 75063-2656
(Address of Principal Executive Offices) (ZIP Code)
Registrant's telephone number, including area code: (972)756-6000
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
On August 3, 1998, American Industrial Properties REIT (the "Trust")
entered into a definitive agreement providing for a strategic investment by
Developers Diversified Realty Corporation ("DDR") in the Trust. Under the terms
of the Share Purchase and Merger Agreements (the "Agreements"), dated to be
effective as of July 30, 1998, DDR will acquire approximately $115 million of
newly issued common shares of beneficial interest at $15.50 per share. The
investment will be made in two or more fundings. DDR made an initial purchase of
949,147 shares for $14.7 million and additionally acquired 1,258,477 shares in
exchange for five properties previously owned by DDR and valued at approximately
$19.5 million. The total shares acquired represent 19.9% of the Trust's
outstanding shares. DDR will purchase an additional 5,226,583 shares for $81.0
million, increasing its ownership to 40.0% of the Trust's shares on a
fully-diluted basis, following shareholder approval at a Special Meeting of
Shareholders to be held before the end of 1998, to fund property acquisitions.
The funds provided by DDR's investment will be used to continue the Trust's
strategy of consolidating the highly fragmented light industrial property
sector.
The Trust acquired the five industrial properties ("DDR Portfolio") under a
merger agreement between the Trust and DDR Office Flex Corporation, a wholly
owned subsidiary of DDR. The five properties, consisting of light and bulk
industrial space totaling approximately 464,000 square feet, are located in the
Cleveland, Ohio area and represent the Trust's entry into the Ohio market.
Tenant sizes range from 6,426 square feet to 236,225 square feet, with
major tenants including Hardline Services, Reynolds Aluminum, VSA, and Steris.
The DDR Portfolio includes the following properties:
(1) HARDLINE SERVICES BUILDING. Hardline Services Building ("Hardline") is
comprised of one building located on 20.0 acres in Aurora, Ohio and contains
236,225 square feet of bulk industrial space. Hardline is 100% leased to one
tenant. Hardline was constructed in 1974 with a 100,000 square foot addition
completed in 1993.
(2) HERITAGE VSA BUILDING. Heritage VSA Building ("Heritage VSA") is
comprised of one building located on 3.9 acres in Twinsburg, Ohio and contains
85,800 square feet of bulk industrial space. Heritage VSA is 100% leased to one
tenant. Heritage VSA was constructed in 1989.
(3) ALUMAX BUILDING. Alumax Building ("Alumax") is comprised of one
building on 5.0 acres in Streetsboro, Ohio and contains 66,200 square feet of
bulk industrial space. Alumax is 100% leased to one tenant. Alumax was
constructed in 1982.
(4) STERIS BUILDING. Steris Building ("Steris") consists of one building
located on 5.7 acres in Mentor, Ohio and contains 40,200 square feet of bulk
industrial space. Steris is 100% leased to one tenant. Steris was constructed in
1980.
(5) HERITAGE BUSINESS CENTER. Heritage Business Center ("Heritage") is
comprised of one building located on 6.8 acres in Twinsburg, Ohio and contains
35,502 square feet of light industrial space. Heritage is 100% leased to four
tenants. Heritage was constructed in 1990.
After the acquisition of the DDR Portfolio, the Trust now owns, directly or
through operating partnerships, 52 real estate properties in 13 states. The
Trust's industrial properties are concentrated in the Texas market with 23 of
the 40 industrial properties located in the Dallas, Austin and Houston areas.
The office buildings are primarily located in the west with three of the ten
located in California. The two retail properties are located in Colorado and
Florida.
Concurrent with entering into the Agreements, the Trust increased its Board
of Trust Managers by four positions and appointed DDR designees Scott A.
Wolstein, Albert T. Adams, Robert H. Gidel and James A. Schoff to the Board. Mr.
Wolstein has been named Chairman of the Board of Trust Managers.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
Financial statements will be filed within sixty (60) days from the date
this report is filed.
(b) Pro forma Financial Information.
Pro forma financial information will be filed within sixty (60) days from
the date this report is filed.
(c) Exhibits:
*2.1 Agreement and Plan of Merger by and among the Trust, Developers
Diversified Realty Corporation ("DDR") and DDR Office Flex
Corporation ("DDR Flex") dated July 30, 1998.
*3.1 Statement of Designation of Series A Preferred Shares of Beneficial
Interest of the Trust dated July 30, 1998.
*10.1 Share Purchase Agreement by and between the Trust and DDR dated
July 30, 1998.
*10.2 Demand Promissory Note dated July 30, 1998.
*10.3 Second Amended and Restated Registration Rights Agreement by and
among the Trust, MS Real Estate Special Situations, Inc. ("MSRE") and
Morgan Stanley Asset Management Inc. ("MSAM") dated July 30, 1998.
*10.4 Second Amended and Restated Registration Rights Agreement by and
between the Trust and USAA Real Estate Company ("USAA") dated
July 30, 1998.
*10.5 Registration Rights Agreement by and between the Trust and DDR dated
July 30, 1998.
*10.6 First Amended and Restated Registration Rights Agreement by and
between the Trust and Praedium II Industrial Associates LLC
("Praedium") dated July 30, 1998.
*10.7 Second Amended and Restated Registration Rights Agreement by and
among the Trust, ABKB/LaSalle Securities Limited Partnership ("ABKB")
and LaSalle Advisors Limited Partnership ("LaSalle") dated July 30,
1998.
*10.8 Letter Agreement by and between MSRE/MSAM and DDR dated July 30,
1998.
*10.9 Letter Agreement by and among ABKB, LaSalle and DDR dated July 30,
1998.
*10.10 Letter Agreement by and between Praedium and DDR dated July 30,
1998.
*10.11 Letter Agreement by and between USAA and DDR dated July 30, 1998.
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*Filed herewith.
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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.
AMERICAN INDUSTRIAL PROPERTIES REIT
By: /s/ Charles W. Wolcott
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Charles W. Wolcott
President and Chief Executive Officer
Dated: August 5, 1998
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EXHIBIT LIST
*2.1 Agreement and Plan of Merger by and among the Trust, Developers
Diversified Realty Corporation ("DDR") and DDR Office Flex
Corporation ("DDR Flex") dated July 30, 1998.
*3.1 Statement of Designation of Series A Preferred Shares of Beneficial
Interest of the Trust dated July 30, 1998.
*10.1 Share Purchase Agreement by and between the Trust and DDR dated
July 30, 1998.
*10.2 Demand Promissory Note dated July 30, 1998.
*10.3 Second Amended and Restated Registration Rights Agreement by and
among the Trust, MS Real Estate Special Situations, Inc. ("MSRE") and
Morgan Stanley Asset Management Inc. ("MSAM") dated July 30, 1998.
*10.4 Second Amended and Restated Registration Rights Agreement by and
between the Trust and USAA Real Estate Company ("USAA") dated
July 30, 1998.
*10.5 Registration Rights Agreement by and between the Trust and DDR dated
July 30, 1998.
*10.6 First Amended and Restated Registration Rights Agreement by and
between the Trust and Praedium II Industrial Associates LLC
("Praedium") dated July 30, 1998.
*10.7 Second Amended and Restated Registration Rights Agreement by and
among the Trust, ABKB/LaSalle Securities Limited Partnership ("ABKB")
and LaSalle Advisors Limited Partnership ("LaSalle") dated July 30,
1998.
*10.8 Letter Agreement by and between MSRE/MSAM and DDR dated July 30,
1998.
*10.9 Letter Agreement by and among ABKB, LaSalle and DDR dated July 30,
1998.
*10.10 Letter Agreement by and between Praedium and DDR dated July 30,
1998.
*10.11 Letter Agreement by and between USAA and DDR dated July 30, 1998.
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*Filed herewith.