Exhibit 99.2
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
Page 1
AEGIS REALTY
Moderator: Stuart Rothstein
December 26, 2002
8:00 a.m. CT
Operator: Welcome to today's Aegis Realty conference call. Today's call is being
recorded. Certain items in this press release may constitute
forward-looking statements within the meaning of the Private Litigation
Reform Act of 1995.
And as such may involve known and unknown risks, trends, uncertainties,
and other factors which may cause the actual results, performance, or
achievements to differ materially from these expressed or implied by such
forward-looking statements. With respect to the proposed merger, there is
the risk that (PICO) will not obtain the financing necessary to consummate
the merger, notwithstanding the fact that it has obtained commitments for
such financing as described in the merger agreement.
Additional risks relating to the company can be found in the company's
filings with the Securities and Exchange Commission, including the 2001
annual report on form 10-K, and the proxy statement which will be
delivered to stockholders as part of the approval process.
The company expressly disclaims any obligational undertaking to release
publicly any updates or revisions to any forward-looking statements
contained herein to reflect any changes in the company's expectations with
regard thereto or change in events, conditions, or circumstances on which
any sub-statement is based.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
Page 2
Aegis will be filing a proxy statement with the SEC in connection with the
above-described transaction. Investors and security holders are urged to
read the proxy statement because it will contain important information.
The proxy statement and other documents filed by Aegis with the SEC may be
obtained when they become available, free of charge, at the SECs Web site,
http://www.sec.com.
Aegis and its directors and officers and the advisor, and the directors
and officers of its sole general partner may be deemed to be participants
in the solicitation of proxies from Aegis stockholders in connection with
the transaction. These potential participants have interest in this
transaction, some of which could differ from those of Aegis stockholders
generally. Information about the directors and officers of Aegis and the
general partner of the advisor, including such individual ownership of
Aegis shares, as set forth in the proxy statement for Aegis' 2002 annual
meeting of stockholders, and is available at the SEC Web site listed
above.
Investors and security holders may obtain additional information regarding
the interest of such potential participants by reasons of proxy statement
when it becomes available. At this time I'd like to turn the call over to
your moderator, Mr. Stuart Rothstein.
Stuart Rothstein: Good morning, everybody, and thank you for joining me. As you
are aware, on Tuesday, December 24th, we announced a transaction whereby
Aegis would be merged into an entity controlled by the Phillips Edison
Company effectively selling Aegis for $11.52 a share in cash to each of
the shareholders of Aegis. The transaction that was announced on Tuesday
was the result of a yearlong process where in conjunction with our
investment bankers, approximately 50 potential investors were contacted to
see if they would be interested in acquiring all or a portion of the Aegis
portfolio of shopping centers, which consists of 28 shopping centers,
aggregating about three million square feet.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
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That yearlong process culminated just a few days ago with the transaction
that was announced on Tuesday. The transaction is still subject to Aegis
shareholder approval. That process will get underway with the filing of a
proxy with the SEC sometime in the month of January. Once we clear the SEC
process, the proxy will be mailed to shareholders and the vote will be
taken.
The purpose of this call is really to open it up to questions that any of
our shareholders may have about the potential transaction. So with that I
will just turn it back to the operator and open it up for questions.
Operator: Thank you, sir. Today's question and answer bid will be handled
electronically. If you'd like to ask a question, please press the star key
followed by the digit one on your touch-tone phone. If you're on a
speakerphone, please be sure your mute function is turned off to allow
your signal to reach our equipment. Once again, if you'd like to ask a
question, please press the star key followed by the digit one.
We go first to Andrew Dakos, Elmhurst Capital.
Andrew Dakos: Yes, my question's regarding the dividend. Will there be a partial
dividend reflecting the period from the most recent dividend? I believe
the stock's going (x-dividend) tomorrow. Will there be a - will there be a
partial dividend reflecting the period from this dividend to the closing
of the sale of the company?
Stuart Rothstein: There will be a partial - to - as you noted correctly, Andrew,
the fourth quarter dividend goes (x) tomorrow, that dividend will be paid.
As it pertains to any dividends in 2003, there will be dividends paid or
partial dividends paid up until the point that represents 30 days prior to
the transaction closing.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
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Andrew Dakos: OK, so then the - so then it would - if that's the case, you won't
know what that period is until the transaction closes, so then the record
date will not be announced until I would assume after the transaction is
closed?
Stuart Rothstein: Actually given, you know, when we - given the way most of
these things usually work, you typically have a vote and closing
simultaneously. And that date is typically driven off when you mailed the
proxy per say.
Andrew Dakos: So it's going to be about 30 days prior to the meeting date.
Stuart Rothstein: Correct.
Andrew Dakos: OK. Thank you.
Stuart Rothstein: You're welcome.
Operator: We go next to ST Tallapragada, Cathay Financial.
ST Tallapragada: Yes hi, I just wanted to know if you could tell me about
your expectations on timing. I know that you said that you expect the
proxy to go out in January. But if you had any other expectations on
timing. And on top of that, if there are any termination dates and numbers
in the merger agreement.
Stuart Rothstein: The best guess on timing today is that we would be hopeful to
file the proxy sometime in January. Historically it has taken the SEC at
least 30 days to review a proxy once it's filed. Depending on how long it
takes to clear that SEC process, we would mail proxies immediately once we
have been given SEC approval. And then you're typically talking about a
month to 45
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
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days to give people to review the proxy and actually call the vote. So I
think we're looking at sometime in Q2 ideally to take a vote on this
transaction.
ST Tallapragada: OK.
Stuart Rothstein: As it pertains to termination or anything like that, that
information will be contained in the proxy. But broadly speaking, we've
given ourselves either a year for the transaction to close, or four months
after we get SEC approval, whichever is the longer date to get the
transaction closed.
ST Tallapragada: Got it - got it. And also in the - in the press release,
there was some discussion about a range that needs to be maintained in
budgeting. And I was wondering if you might just be able to describe that
to me.
Stuart Rothstein: Sure. Obviously one of the risks to the buyer, given that
they're buying active assets as the performance of those assets during the
period in which the transaction has been announced but not yet closed. We
budget regularly anyway for each of the shopping centers that we own, and
essentially we and the folks at Phillips Edison have agreed on budgets
that we believe the properties should operate within on the expense side
of things and not on the revenue side of things.
And as long as we can operate those properties within those expense
budgets, there's no adjustment to the price to the extent the experience
on the expense side of things is either greater or less than a - varies by
more than $250,000 - excuse me - in either direction, there would be an
adjustment to the purchase price.
ST Tallapragada: Got it. Great, thank you. And...
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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Stuart Rothstein: You're welcome.
ST Tallapragada: ... congratulations.
Stuart Rothstein: Thank you.
Operator: We go next to Diana Drapkin with Guard Hill Capital.
Diana Drapkin: Yes hi, I just wanted to know besides the shareholders
approvals, are there any other regulatory approvals that are needed?
Stuart Rothstein: Not that we believe.
Diana Drapkin: And also, is it subject to financing?
Stuart Rothstein: It is not - there is no financing contingency in the
merger agreement.
Diana Drapkin: OK, thank you.
Stuart Rothstein: You're welcome.
Operator: We go next to Phillip Goldstein with Opportunity Partners.
Phillip Goldstein: Yes hi. There's a mention about a - certain fees that are due
to the advisor regarding the termination of the management agreement, and
apparently in lieu of cash they're going to get the partnership interests
in the Garden apartment complexes. Could you fill in the numbers on the -
like how much - how much actual - if it was cash, how - what is the - what
is the advisor entitled to? Because I noticed that there has yet to be -
or that you plan on having some sort of
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
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fairness evaluation of those assets. But you didn't state what the actual
cash number would be that's due under the contract.
Stuart Rothstein: The advisor is due two fees for the transaction...
Phillip Goldstein: Yes.
Stuart Rothstein: ... related to (A) a disposition transaction, and (B) the
essentially cancellation of their contract based on the overall value of
the deal that was announced. Those fees total approximately $4.2 million.
In addition to receiving their fees, the advisor is also responsible for
paying its investment bankers - in this case RBC Capital Markets - upon
consummation of the transaction in an amount equal to approximately $1
million.
The interests in the Garden apartment entities that the advisor will be
receiving are on the books of the company at a book value of a little bit
north of $5 million at September 30th. The value - the independent
valuation of those assets has not yet been completed, but it is
anticipated that based on what we know of book value and what we know of
the fair market value of those interests, that the value of those
interests will approximate the fee that the advisor is due as well as what
the advisor needs to pay its investment bankers.
Phillip Goldstein: OK, thank you.
Stuart Rothstein: You're welcome.
Operator: We go next to Tony Reiner with Clinton Group.
Tony Reiner: Good morning. A couple of questions if - for a sec. Just as far as
this 250,000, and thanks for being specific as far as that affecting the
price for consideration per share - will we be kept
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
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abreast of when that number may change when we - when that threshold is
crossed either on the positive or negative side? Or we won't know until
closing date of the vote or anything? Or...
Stuart Rothstein: I think as we lead up to the vote as I understand it, to the
extent it appears there will be changes in that one way or another,
obviously we need to get that information to our shareholders before
they're in a position to ultimately vote on the transaction.
Tony Reiner: OK. So I guess it's fair to say we'll find out as developments
happen.
Stuart Rothstein: Yes.
Tony Reiner: OK. And just as far as the dividend, just can - I mean obviously
we're extremely consistent with the - with the dividend over the last
several years, suppose - could we - could we just have one specific date,
suppose that the merger were to close on - I don't know, March 1st. So it
would be 30 days before that, so we'd use one out of the - we'd use a
third out of 24 cents?
Stuart Rothstein: Exactly.
Tony Reiner: OK. And if we're to close after - I guess after March, then we get
the full 24 cents, and probably only that extra first quarter dividend
after that, unless it goes beyond 30 days in Q2, right?
Stuart Rothstein: I'll - you know, as best as I can explain it, if you were to
close on...
Tony Reiner: I'm surprised I got that...
Stuart Rothstein: ... you did most of it correctly. If you were to...
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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Tony Reiner: Shocking.
Stuart Rothstein: ... close let's say on March 30 - anytime between let's say -
if you were to close on March 31st for example, you would get two-thirds
of a first quarter dividend.
Tony Reiner: Two-thirds of a first quarter dividend; got you.
Stuart Rothstein: If we were to close April 30th, you would get a full 24
cents for the first quarter and nothing for the second quarter.
Tony Reiner: Got you.
Stuart Rothstein: And hopefully that - and we, you know, we'll do our best to
make that as clear as possible in the proxy when it's filed.
Tony Reiner: OK, that's pretty clear. And thank you. And the other question is,
I know it's been sort of a process. I don't know if the right commentary
is to say up for sale, but as far as exploring alternatives, how come we
decided to take this deal? And is this in final, done, best, and all that
language?
Stuart Rothstein: It was an exhaustive process I think to say - to sell all or
part of the company, is a fair way to describe the process. We contacted
about 50 potential acquirers for all or part of the properties, whittled
that down over time to those that received various amounts of due
diligence. And at the end of the day concluded that this was the best
transaction in terms of price and structure relative to the other
proposals out there. And then for the last few months have essentially
just been negotiating the final items of this transaction with the
Phillips Edison folks.
Tony Reiner: How many offers were there for the whole company as opposed to
just parts of it?
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
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Stuart Rothstein: For the whole company...
Tony Reiner: For the - for the whole operation as...
Stuart Rothstein: I...
Tony Reiner: ... opposed to part ...
Stuart Rothstein: I don't have the exact number at my fingertips. It will be in
the proxy, but suffices to say it was north of - somewhere between six and
a dozen offers.
Tony Reiner: OK. And as far - I'm assuming that there were probably, you know,
some worse prices, maybe a couple of better prices, but you know, that
were contingent on this, or financing, or other stuff. And so this is how
we came to this price and this buyer and everything?
Stuart Rothstein: Yes.
Tony Reiner: OK, great. Thank you so much for answering a few questions...
Stuart Rothstein: You're welcome.
Tony Reiner: ... and congratulations. Thank you.
Stuart Rothstein: Thank you.
Operator: We take our next question from Matthew Mark with Mark Asset
Management.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
Confirmation # 463543
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Matthew Mark: Just one question. Can you talk about any environmental due
diligence that needs to be done at all, or any of the centers, or that
has been done as part of this process?
Stuart Rothstein: You know, as you would expect anytime you're buying a piece of
real estate, they have reviewed and been provided with all environmental
reports that we had in our possession. And at this point, you know, they
are comfortable from an environmental standpoint.
Matthew Mark: Thanks.
Stuart Rothstein: Sure.
Operator: We go next to Richard Cook with Cook Bynum Capital Management.
Richard Cook: Yes, I think my question's been asked, thanks.
Stuart Rothstein: OK.
Operator: We go next to Henry Cheu with First Capital Alliance.
Henry Cheu: I have a question about the length of time that is - has been
required to actually consummate this transaction. I know you've hired a
financial advisor almost well over a year, and I'm just curious as to why
it's taken so long to - you know, actually get to this point and whether
there were any like maybe specific issues that made it difficult to get to
this deal?
Stuart Rothstein: There were no specific issues. I think given the number of
assets in a number of different geographic locations, it took quite a
while for the potential buyers or bidders to do their due diligence on the
assets and on the markets. And that someone entering markets they may not
have entered into previously.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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I think in the middle of this process, as some of you may or may not be
aware, Aegis lost its CFO, so we needed to replace a CFO in that process.
And then it was just the last few months was just the PECO negotiations,
which I'm not sure there was anything unusual about it other than there
was an extensive amount of negotiation that took place, but nothing out of
the ordinary or unusual.
Henry Cheu: OK. And then lastly in regards to the budget performance test that
you have, is the - is the budget based on 2003, or maybe can you give us
some...
Stuart Rothstein: Yes...
Henry Cheu: ... to say what that is.
Stuart Rothstein: It's essentially assuming that the - it's a Q1 2003 budget.
And depending on when the transaction ultimately closes, we will revise
and extend that budget if necessary. But right now the budget is a Q1 2003
budget, that is what we're managing to on the expense side of things.
Henry Cheu: Great, thank you.
Stuart Rothstein: You're welcome.
Operator: We go next to Kenneth Campbell with Clarion CRA.
Kenneth Campbell: Yes, I wanted to try to explore the pricing a little bit and
the ultimate selection of Phillips Edison and the first question is you
know is does this pricing represent a cap rate in your mind that you could
share with us or were there other - you know how is the pricing arrived at
in you know ultimately selecting Phillips?
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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Stuart Rothstein: Certainly from their perspective and what they were willing to
underwrite the portfolio that I can't comment on. How they came up with
what they were willing to offer for the company certainly in terms of the
company and its financial advisers reviewing that price and determining
that it was a price that made sense we looked at it both as compared to
trading in the stock and a premium to the stock price as well as where we
were selling these assets on a cap rate basis and that will all be
obviously highlighted in the proxy in discussing the fairness opinion that
RBC put together. But it was both look at what was being offered relative
to the stock and where the stock had traded historically and what was
being offered for the assets on a cap rate basis both for actual results
and go forward results or projected results as well.
Kenneth Campbell: Great and can you give us a little more information about
Phillips Edison I don't know them they're obviously private so I'm
wondering if you could tell you know how long they've been out there you
know where they're located that kind of information?
Stuart Rothstein: Sure. Phillips Edison has been around for a little bit more
than 10 years now they are headquartered in dual locations, Cincinnati and
Baltimore. And they own a sizable portfolio of shopping centers around the
country. They have demonstrated an ability to be extremely good hands on
operators or shopping centers and they knew the assets fairly well, knew
many of the markets fairly well and demonstrated themselves to be a very
capable buyer for a portfolio like this.
Kenneth Campbell: OK thank you.
Stuart Rothstein: You're welcome.
Operator: Once again if you'd like to ask a question please press the star key
followed by the digit one. We go next to Phillip Goldstein Opportunity
Partner.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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Stuart Rothstein: Yes.
Phillip Goldstein: Hi two more questions.
Stuart Rothstein: Sure.
Phillip Goldstein: One was in considering proposals strategical partners was the
liquidation analysis done?
Stuart Rothstein: I'm not sure I'd call it a liquidation analysis certainly some
internal valuation analysis were done of what we thought pricing should
come in at. But there was never an analysis of ok let's adopt the plan of
liquidation and sell these things off one by one for being historically
that has not resulted in the best value to share holders.
Phillip Goldstein: OK and the other question is that you know just a curious I
mean this company's only been it was a roll up as I recall of and started
out with a net asset value of $15.00 five years ago now you're telling us
we're going to get 11 dollars and 52 cents. Seems like a pretty good
market for these properties. Can you explain how, how so much value was
lost for the shareholders in those five years?
Stuart Rothstein: I can't comment on what net asset value was at the time of the
roll out.
Phillip Goldstein: That was a press release put out by the company. Right.
Stuart Rothstein: What I can say is based on the process that was run for the
last year I think in terms of capturing what value was today there was a
very exhaustive process that has been run through
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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we think based on the number of folks that were contacted the price that
we are arriving at for this action today is reflective of what the market
will bear today.
Phillip Goldstein: That may be true but it seems you know with all due respect
that the advisor over the last five years has done better than the stock
holders and is cashing out pretty well.
Stuart Rothstein: I have no comment on that.
Operator: We go next to Mike Doniger, Aegis Realty.
Mike Doniger: With Milton Partners. Hi how are you? You didn't know I worked
for you? Just a couple quick clear ups on one on the budget expense the
250,000?
Stuart Rothstein: Yes.
Mike Doniger: What percent is that of the target expense?
Stuart Rothstein: Of the target? It was essentially bracketed to be - it is let
me just get the numbers handy.
Mike Doniger: Maybe you can tell me the target that's fine too.
Stuart Rothstein: Yes it is for the quarter we will have approximately - it is
in the five percent range based on how you look at the...
Mike Doniger: So plus or minus five percent?
Stuart Rothstein: Yes, not exactly but broadly speaking.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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Mike Doniger: Around there - on the environmental diligence?
Stuart Rothstein: Yes.
Mike Doniger: Are you saying that there's no phase I testing any merger
agreement or anything like that?
Stuart Rothstein: They have reviewed - it's not subject to their additional
testing.
Mike Doniger: All right and lastly do you not have to apply for HSR?
Stuart Rothstein: You know it is not contemplated at this time that that's going
to be an issue we may have to do it just for perfunctory reasons. But even
that's unfair whether we even need to do it for perfunctory reasons.
Mike Doniger: I just heard your description of Phillips with properties making
sure there's no overlaps.
Stuart Rothstein: Yes.
Mike Doniger: So there's none. All right that is it.
Stuart Rothstein: OK.
Mike Doniger: Good luck congratulations.
Stuart Rothstein: Thank you.
AEGIS REALTY
Moderator: Stuart Rothstein
12-26-02/8:00 a.m. CT
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Operator: There are no further questions at this time I'd like to turn the call
back over to Mr. Rothstein for any additional closing comments.
Stuart Rothstein: I'd like to thank everybody for their questions and taking an
interest in the transaction this morning. We would hope to have the proxy
filed sometime in January and the company will be available to answer
questions on a go forward basis. With that that ends the call and thank
you very much.
Operator: Technically today's conference call thank you for your participation.
You may now disconnect.
END