SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): December 10, 1998
Aegis Realty, Inc.
(Exact Name of Registrant as Specified in Charter)
Maryland
(State or other Jurisdiction of Incorporation)
1-13239 13-3967879
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(Commission File Number) (IRS Employer Identification Number)
625 Madison Avenue, New York, NY 10022
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (212) 421-5333
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report
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Item 2. Acquisition or Disposition of Assets
Southgate Shopping Center
On December 9, 1998, Aegis Realty Operating Partnership, L.P. ("AROP")
whose sole general partner is Aegis Realty, Inc. ("Aegis"), acquired, directly
and through a wholly owned subsidiary, 100% of the partnership interests of
Southgate Partners Limited Partnership ("SPLP"), an entity which directly owns
Southgate Shopping Center ("Southgate"), for $15,100,000. Southgate is a
213,923-square-foot neighborhood shopping center located in Heath, Ohio, is
anchored by Big Bear Supermarket and Odd Lots and is currently 99% leased.
SPLP, the selling entity, is a limited partnership of which 32.7% of
the partnership interests were owned by affiliates of Related Aegis, LP, Aegis'
Advisor (the "Advisor"). As an "Affiliated Transaction", approval of the
Southgate acquisition was subject to compliance with Article X, Section 2 of
Aegis' Amended By-Laws which set forth the following conditions designed to
avoid conflicts of interest with respect to the property ("Affiliated Property")
to be acquired in the Affiliated Transactions: 1) The acquisition must be
consistent with Aegis' business plan; 2) The purchase price must be no greater
than the value of the Affiliated Property, as established by a nationally
recognized appraisal firm selected by a majority of the Independent Directors;
3) The decision to acquire the Affiliated Property must be specifically approved
by a majority of the Independent Directors; 4) Affiliates of the Advisor who
have ownership interests in the Affiliated Property must receive Units of
Limited Partnership Interest of AROP ("OP Units") rather than cash in exchange
for their interest in the Affiliated Property, and the terms of the Affiliated
Transaction must be consistent with such pricing and terms as have been
negotiated by Aegis with other unaffiliated recipients of OP Units in connection
with other reasonably contemporaneous acquisitions by Aegis; and 5) The Advisor
must waive the portion of the acquisition fee payable to the Advisor from Aegis
attributable to the "Affiliated" portion of the transaction. The Southgate
acquisition met with the above listed criteria. The partnership interests
acquired from unaffiliated partners in SPLP were not subject to the condition in
Item #4 listed above, and therefore the unaffiliated partners could elect to
receive either cash or OP Units for their partnership interest.
The financing of the Southgate acquisition consisted of the following:
I) $1,295,734 in cash, which was provided from borrowings under Aegis'
BankBoston $40 million line of credit (the "Facility");
II) $2,715,882 by issuance of 208,914 OP Units of AROP. The OP Units
are convertible to shares of common stock of Aegis on a one-to-one basis,
subject to adjustment, on the one year anniversary of the closing date. The OP
Units were issued at an agreed upon value of $13 per OP Unit. If as of the last
trading day prior to the first anniversary of the closing date (the
"Post-Closing Adjustment Date"), the Average Price Per Share (the "Average Price
Per Share", as defined below) is less than $13, Aegis is obligated to issue
additional OP Units to those contributors who received OP Units in the amount of
the difference between (i) the quotient obtained by dividing $2,715,882 by the
Average Price Per Share as of the Post-Closing Adjustment Date and (ii) 208,914.
The "Average Price Per Share" is defined as the average final closing price per
share of the common stock of Aegis, during the twenty trading day period ending
on the valuation date;
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III) $10,888,384 by the assumption of the current outstanding balance
of an existing first mortgage loan encumbering the property. The mortgage was
originated in September 1997 with Merrill Lynch Credit Corp., having an original
balance of $11,000,000, an interest rate of 7.73%, a 30 year amortization period
and monthly payments of 79,508.79. The loan matures on October 1, 2007; and
IV) $200,000 by delivery of an unsecured purchase money note to the
seller, which is non-interest bearing, has a one year term and is fully
pre-payable without penalty.
In addition, AROP made a $1,429,435 loan to Standard Investment Company
("SIC"), a limited liability company that had a 34.99% partnership interest in
SPLP. The loan is secured by the 107,974 OP Units that were issued to SIC in
exchange for their partnership interest in SPLP. The loan bears an initial
interest rate of 7.613% and matures on December 9, 2015 or earlier if Southgate
is sold. The principals of SIC executed guarantees for 25% of the total loan
amount.
In connection with the transaction, AROP agreed not to sell Southgate
for a minimum of 10 years except in a transaction that does not result in
recognition of gain to the contributors who received OP Units, or if sold to pay
the tax on the gain to the contributors there from. AROP has also agreed to
maintain for the same 10 year period a minimum of $2,300,000 of indebtedness
which will be available for such contributors to guarantee.
Southgate will be managed by RCC Property Advisors ("RCCPA"), an
affiliate of the Advisor.
Crossroads Shopping Center
On December 9, 1998, AROP acquired 100% of the members' equity of
Crossroads East Shopping Center, Ltd. ("CESC"), an entity which directly owned
Crossroads Shopping Center ("Crossroads"), for $4,800,000. Crossroads is a
71,925-square-foot neighborhood shopping center located in Columbus, Ohio, is
anchored by Lenscrafters and is currently 78% leased.
CESC, the selling entity, is a limited liability company of which 52.5%
of the member interests were owned by affiliates of the Advisor. The Crossroads
transaction met all the conditions for an Affiliated Transaction as disclosed
above. The members' equity acquired from unaffiliated members were not subject
to the condition in Item 4 listed above, and therefore the unaffiliated members
could elect to receive cash rather than OP Units for their member equity.
The financing of the acquisition of the member interest in CESC
consisted of the following:
I) $2,129,785 in cash, which was provided from borrowings under the
Facility;
II) $2,165,215 by issuance of 166,555 OP Units of AROP. The OP Units
are convertible and subject to adjustment in the same manner as described above
for Southgate;
III) $230,000 by delivery of an unsecured purchase money note to the
seller, which will be non-interest bearing, have a one year term and fully
pre-payable without penalty; and
IV) $275,000 by delivery of an unsecured purchase money note to the
seller, which will be non-interest bearing, have a one year term and fully
pre-payable without penalty.
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In addition, AROP made a $915,401 loan to SIC, who had 40% of the
members' equity in CESC. The loan is secured by the 57,055 OP Units that were
issued to SIC in exchange for their members' equity in CESC. The loan bears an
interest rate of 7.613% and matures on December 9, 2015 or earlier if Crossroads
is sold. The principals of SIC executed guarantees for 25% of the total loan
amount.
In connection with the transaction, AROP agreed not to sell Crossroads
for a minimum of 10 years except in a transaction that does not result in
recognition of gain to the contributors who received OP Units, or if sold to pay
the tax on the gain to the Contributors there from. AROP has also agreed to
maintain for the same 10 year period a minimum of $50,000 of indebtedness which
will be available for such contributors to guarantee.
Crossroads will be managed by managed by RCCPA as well.
As a result of the forgoing transactions, as of December , 1998, the
officers and directors of Aegis, as well as the employees of the affiliates of
the Advisor, have increased their ownership interest in Aegis, assuming
conversion of all OP Units to common stock, from 2.8% to 4.9%.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
A. Financial Statements
Financial Statements will be filed by amendment not later than 60
days after the date this Form 8-K must be filed.
B. Pro Forma Financial Information
Financial Statements will be filed by amendment not later than 60
days after the date this Form 8-K must be filed.
C. Exhibits
3.1 Contribution Agreement dated as of December 9, 1998 by and among
Southgate General Corporation, HPI Riverwood Management, Inc.,
Southgate Limited Associates, HPI Partners - Four, L.P., Kenneth
Lebow, Andrew Kaskel, Aegis Realty Operating Partnership, L.P. and
Aegis Realty, Inc.
3.2 First Amendment to Contribution Agreement dated as of
December 9, 1998 by and among Standard Investment Co., Ltd., RCC
Crossroads East Associates, J. Michael Fried, H. Leon
Pachter, Alan P. Hirmes, Stuart J. Boesky, Rita S. Boesky,
Andrew L. Kaskel, Allison K. Spitalny, Mark J. Schlacter, Aegis
Realty Operating Partnership, L.P. and Aegis Realty, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Aegis Realty, Inc.
(Registrant)
BY: /s/ Stuart J. Boesky
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Stuart J. Boesky
President
December 18, 1998
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