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) September 25, 2001
KONOVER PROPERTY TRUST, INC.
(Exact name of registrant as specified in its charter)
Maryland 1-11998 56-1819372
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
3434 Kildaire Farm Road
Suite 200 (919) 372-3000
Raleigh, North Carolina (Registrant's telephone 27606
(Address of principal executive offices) number, including area code) (Zip Code)
Not Applicable
(Former name or former address, if changed since last report)
Konover Property Trust, Inc.
ITEM 2: Acquisition or Disposition of Assets
On September 25, 2001, Konover Property Trust, Inc. (the "Company") closed
on the sale of a portfolio consisting of 28 outlet shopping centers and three
community centers to Chelsea GCA Realty, Inc. for the aggregate consideration of
approximately $180 million, including the assumption and pay down of mortgage
indebtedness of approximately $164 million. As discussed in Item 5 below, the
Company simultaneously refinanced certain assets. The net proceeds from the
sale and refinancing after transaction costs and escrow funding were
approximately $14 million.
The 28 outlet centers and three community centers (collectively, the
"Outlet Portfolio") sold to Chelsea GCA Realty, Inc. aggregate approximately 4.3
million square feet of gross leasable area as follows:
Outlet Centers Location Size (sq. ft.)
-------------- -------- --------------
Factory Stores of America Arcadia, LA 89,500
Factory Stores of America Boaz, AL 104,600
Factory Shoppes at Branson Meadows Branson, MO 287,500
Carolina Outlet Center Smithfield, NC 443,000
Factory Stores of America Corsicana, TX 63,600
Factory Stores of America Crossville, TN 151,300
Factory Stores of America Draper, UT 185,300
Factory Stores of America Georgetown, KY 176,600
Factory Stores of America Graceville, FL 84,000
Factory Stores of America Hanson, KY 63,900
Factory Stores of America Hempstead, TX 63,600
Factory Stores of America Iowa, LA 130,800
Factory Stores of America Kittery, ME 24,600
Factory Stores of America Lake George, NY 43,700
Factory Stores of America LaMarque, TX 176,000
Factory Stores of America Lebanon, MO 86,200
Factory Stores of America Livingston, TX 63,600
Factory Stores of America Mesa, AZ 170,700
Factory Stores of America Mineral Wells, TX 63,600
Factory Stores of America Nebraska City, NE 89,600
Factory Stores of North Bend North Bend, WA 223,400
Factory Stores of America Story City, IA 112,400
Factory Stores of America Tri-Cities 132,900
Factory Stores of America Tucson, AZ 127,600
Factory Stores of America Tupelo, MS 129,400
Factory Stores of America Union City, TN 60,200
Factory Stores of Vacaville Vacaville, CA 447,700
Factory Stores of America West Frankfort, IL 91,100
-------------------------------------------------------------
Subtotal Outlet Centers 3,886,400
Community Centers
-----------------
Dare Center Kill Devil Hills, NC 115,300
MacGregor Village Cary, NC 142,400
NorthRidge Shopping Center Raleigh, NC 165,300
-------------------------------------------------------------
Subtotal Community Centers 423,000
-------------------------------------------------------------
Portfolio Total 4,309,400
-------------------------------------------------------------
2
Reference is made to the Press Release dated September 25, 2001 attached
hereto as Exhibit 99.2.
ITEM 5: Other Events
On September 25, 2001, the Company closed on a $58 million refinancing of
certain assets, simultaneously with the sale of assets discussed in Item 2.
Reference is made to the Press Release dated September 25, 2001 attached hereto
as exhibit 99.2 and incorporated by reference hereto.
ITEM 7: Financial Statements and Exhibits
(a) Not applicable.
(b) Pro forma financial information.
Page
----
. Proforma Consolidated Balance Sheet as of June 30, 2001 4
. Notes to Proforma Consolidated Balance Sheet 5
. Proforma Consolidated Statement of Operations for the Six Months
Ended June 30, 2001 6
. Proforma Consolidated Statement of Operations for the Year Ended
December 31, 2000 7
. Notes to Proforma Consolidated Statements of Operations 8
(c) Exhibits.
Exhibit Number Description of Exhibit
-------------- ----------------------
Exhibit 99.1 The Agreement for Purchase and Sale, dated July 12,
2001, by and between Konover Property Trust, Inc. as
seller and Chelsea GCA Realty, Inc. as buyer.
Exhibit 99.2 Press Release issued by the Company on September 25,
2001.
3
Proforma Consolidated Balance Sheet
Konover Property Trust, Inc.
As of June 30, 2001
(Amounts in thousands)
(Unaudited)
Outlet Properties
Historical /(a)/ Transactions/(b)/ /(c)/ Shoreside /(d)/ Proforma
--------------------------------------------------------------------------------
Assets
Income producing properties, net $ 253,877 $ (5,144) $ - $ 248,733
Properties under development 25,196 (423) - 24,773
Properties held for sale 245,732 (166,130) (6,563) 73,039
Cash and cash equivalents 1,083 14,200 1,971 17,254
Restricted cash 14,283 (7,677) - 6,606
Accounts receivable, net 8,165 (1,291) (58) 6,816
Deferred charges and other assets 11,945 (6,790) (19) 5,136
Notes receivable 519 - - 519
Investment in and advances to
unconsolidated entities 21,647 - - 21,647
--------------------------------------------------------------------
Total assets $ 582,447 $(173,255) $(4,669) $ 404,523
====================================================================
Liabilities and Shareholders Equity
Debt on income properties $ 405,686 $(170,370) $(5,428) $ 229,888
Capital lease obligation 331 (269) 62
Accounts payable and other liabilities 22,378 (4,076) (39) 18,263
--------------------------------------------------------------------
Total liabilities 428,395 (174,715) (5,467) 248,213
Minority interests 4,111 - - 4,111
Shareholders' equity:
Convertible preferred stock 18,679 - - 18,679
Stock purchase warrants 9 - - 9
Common stock 314 - - 314
Additional paid-in capital 286,745 - - 286,745
Accumulated deficit (155,580) 1,460 798 (153,322)
Deferred compensation (226) - - (226)
--------------------------------------------------------------------
Total shareholders' equity 149,941 1,460 798 152,199
--------------------------------------------------------------------
Total liabilities and
shareholders' equity $ 582,447 $(173,255) $(4,669) $ 404,523
====================================================================
See accompanying Notes to Proforma Consolidated Balance Sheet
4
Notes to Proforma Consolidated Balance Sheet
Konover Property Trust, Inc.
(Amounts in thousands)
(Unaudited)
Basis of Presentation:
On September 25, 2001, Konover Property Trust, Inc. (the "Company") closed
on the sale of a portfolio consisting of 28 outlet shopping centers and three
community centers (the "Outlet Properties") to Chelsea GCA Realty, Inc. for the
aggregate consideration of approximately $180 million, including the assumption
and pay down of mortgage indebtedness of approximately $164 million. As
discussed in Item 5, the Company simultaneously refinanced certain assets. The
net proceeds from the sale and refinancing after transaction costs and escrow
funding were approximately $14 million. The unaudited proforma consolidated
balance sheet as of June 30, 2001 is based on the unaudited historical financial
statements of the Company after giving effect to the transactions described
above and certain adjustments as described below.
Balance Sheet Adjustments:
(a) Represents the historical unaudited consolidated balance sheet of the
Company as of June 30, 2001.
(b) Represents the elimination of the historical unaudited balance sheets as of
June 30, 2001 of the Outlet Properties and the impact of the sale and
refinancing transactions as described above.
(c) In addition to the $164 million of debt paid down or assumed in connection
with the sale of the Outlet Properties and refinancing transactions, as
described above, the Company recognized the gain on a $6.0 million loan
premium included in "Debt on income properties". The $6.0 million loan
premium was offset by $4.5 million of all previously deferred loan fees
associated with paid or assumed debt. The net gain on early extinguishment
of debt of $1.5 million is reflected in accumulated deficit in the
shareholders' equity section of the balance sheet.
(d) On September 14, 2001, the Company sold its Shoreside property located in
Kitty Hawk, North Carolina for $7.5 million including the assumption of
mortgage indebtedness of $5.4 million. The net cash proceeds from this
sale after closing costs was approximately $2.0 million. The Company had a
gain on sale of approximately $0.8 million. All historical balances as of
June 30, 2001 for Shoreside have been eliminated.
5
Proforma Consolidated Statement of Operations
Konover Property Trust, Inc.
For the Six Months Ended June 30, 2001
(Amounts in thousands, except per share information)
(Unaudited)
Outlet
Properties
Historical /(a)/ Transactions/(b)/ /(c)/ Shoreside /(d)/ Proforma
---------------------------------------------------------------------------
Revenues
Base rents $ 34,260 $ (17,519) $ (422) $ 16,319
Percentage rents 530 (391) (5) 134
Property operating cost recoveries 7,590 (3,665) (71) 3,854
Other income 1,771 (1,335) (2) 434
------------------------------------------------------------------------
Total revenues 44,151 (22,910) (500) 20,741
------------------------------------------------------------------------
Expenses
Property operating costs 9,650 (5,756) (114) 3,780
Real estate taxes 4,391 (2,347) (29) 2,015
Depreciation and amortization 12,533 (5,803) (77) 6,653
General and administrative 3,664 (8) - 3,656
Stock compensation amortization 563 - - 563
Severance and other related costs 5,931 - - 5,931
Interest, net 15,578 (6,992) (252) 8,334
Adjustment to carrying value of
property 105,110 (100,487) - 4,623
Abandoned transaction costs 46 (20) - 26
Equity in losses of unconsolidated
ventures 5,081 - - 5,081
------------------------------------------------------------------------
Total expenses 162,547 (121,413) (472) 40,662
========================================================================
(Loss) gain before minority interest (118,396) 98,503 (28) (19,921)
Minority interest 3,297 (2,955) 1 343
------------------------------------------------------------------------
Net (loss) gain (115,099) 95,548 (27) (19,578)
Preferred stock dividends (271) - - (271)
------------------------------------------------------------------------
(Loss) gain applicable to common
stockholders $(115,370) $ 95,548 $ (27) $(19,849)
========================================================================
Loss applicable to common stockholders
per common share:
Basic $ (3.70) $ (0.64)
========================================================================
Diluted $ (3.70) $ (0.64)
========================================================================
Weighted average common shares
outstanding:
Basic 31,204 31,204
========================================================================
Diluted 31,204 31,204
========================================================================
6
Proforma Consolidated Statement of Operations
Konover Property Trust, Inc.
For the Year Ended December 31, 2000
(Amounts in thousands, except per share information)
(Unaudited)
Outlet Properties
Historical/(a)/ Transactions/(b) (c)/ Shoreside/(d)/ Proforma
----------------------------------------------------------------------------------
Revenues
Base rents $ 68,854 $(34,215) $(866) $ 33,771
Percentage rents 1,418 (770) - 650
Property operating cost recoveries 16,758 (9,045) (47) 7,654
Other income 1,890 (646) - 1,256
----------------------------------------------------------------------------------
Total revenues 88,920 (44,676) (913) 43,331
----------------------------------------------------------------------------------
Expenses
Property operating costs 20,689 (11,660) (197) 8,832
Real estate taxes 8,526 (4,574) (53) 3,899
Depreciation and amortization 25,614 (12,090) (154) 13,370
General and administrative 6,669 - - 6,669
Stock compensation amortization 2,865 - - 2,865
Interest, net 27,806 (13,500) (514) 13,792
Loss (gain) on sale of real estate 1,946 - - 1,946
Adjustment to carrying value of property 19,338 - - 19,338
Abandoned transaction costs 1,257 (485) - 772
Equity in losses of unconsolidated ventures 10,416 - - 10,416
----------------------------------------------------------------------------------
Total expenses 125,126 (42,309) (918) 81,899
----------------------------------------------------------------------------------
(Loss) gain before minority interest (36,206) (2,367) 5 (38,568)
Minority interest 1,157 71 - 1,228
----------------------------------------------------------------------------------
Net (loss) gain (35,049) (2,296) 5 (37,340)
Preferred stock dividends (1,084) - - (1,084)
----------------------------------------------------------------------------------
(Loss) gain applicable to common stockholders $(36,133) (2,296) 5 (38,424)
==================================================================================
Loss applicable to common stockholders per
common share:
Basic $ (1.17) $ (1.24)
===================================================================================
Diluted $ (1.17) $ (1.24)
===================================================================================
Weighted average common shares
outstanding:
Basic 30,954 30,954
===================================================================================
Diluted 30,954 30,954
===================================================================================
7
Notes to Proforma Consolidated Statements of Operations
Konover Property Trust, Inc.
(Amounts in thousands)
(Unaudited)
Basis of Presentation:
On September 25, 2001, Konover Property Trust, Inc. (the "Company") closed
on the sale of a portfolio consisting of 28 outlet shopping centers and three
community centers (the "Outlet Properties") to Chelsea GCA Realty, Inc. for the
aggregate consideration of approximately $180 million, including the assumption
and pay down of mortgage indebtedness of approximately $164 million. As
discussed in Item 5, the Company simultaneously refinanced certain assets. The
net proceeds from the sale and refinancing after transaction costs and escrow
funding were approximately $14 million. The unaudited proforma consolidated
statements of operations for the six months ended June 30, 2001 and the year
ended December 31, 2000 are based on the unaudited financial statements of the
Company after giving effect to the transactions described above and certain
adjustments as described below.
Statements of Operations Adjustments:
(a) Represents, the unaudited consolidated statement of operations of the
Company for the six months ended June 30, 2001 and audited consolidated
statement of operations for the year ended December 31, 2000. Effective
June 30, 2001, the Company included in its historical consolidated
statement of operations an estimated adjustment to the carrying value of
the Outlet Properties.
(b) Represents the elimination of the historical unaudited statements of
operations for the six months ended June 30, 2001 and the year ended
December 31, 2000 of the Outlet Properties.
(c) The $164 million of debt paid down or assumed in connection with the sale
of the Outlet Properties and refinancing transactions, as described above,
resulted in interest expense savings of approximately $7.4 million for the
six months ended June 30, 2001 and $13.7 million for the year ended
December 31, 2000, respectively. The $6.0 million loan premium was offset
by $4.5 million of all previously deferred loan fees associated with paid
or assumed debt. The net gain on early extinguishment of debt of $1.5
million is reflected in accumulated deficit in the shareholders' equity
section of the balance sheet.
(d) On September 14, 2001, the Company sold its Shoreside property located in
Kitty Hawk, North Carolina for $7.5 million including the assumption of
mortgage indebtedness of $5.4 million. The net cash proceeds from this
sale after closing costs was approximately $2.0 million. All historical
balances for the six months ended June 30, 2001 and year ended December 31,
2000 for Shoreside have been eliminated. The Company recognized a gain on
sale of approximately $0.8 million related to this sale and is reflected in
accumulated deficit in the shareholders' equity section of the balance
sheet.
General and Administrative Expenses:
The pro forma consolidated statements of operations presented herein do not
reflect planned reductions in certain indirect general and administrative
costs arising from the Company's reorganization plans resulting from the
sale of the Outlet Properties.
8
KONOVER PROPERTY TRUST, INC.
SIGNATURE
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 thereunto duly authorized.
KONOVER PROPERTY TRUST, INC.
(Registrant)
Dated: October 10, 2001
By: /s/ Daniel J. Kelly
-------------------
Name: Daniel J. Kelly
Title: Executive Vice President,
Chief Financial Officer
9
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
------------------------------------
99.1 The Agreement for Purchase and Sale, dated July 12, 2001, by and
between Konover Property Trust, Inc. as seller and Chelsea GCA
Realty, Inc. as buyer.
99.2 Press Release issued by the Company on September 25, 2001.
10