NEWPORT BEACH, Calif., March 2 /PRNewswire/ -- Pacific Gulf Properties
Inc. (NYSE: PAG) today announced that on March 1, 2001 it entered into a
definitive merger agreement with FountainGlen Properties LLC ("FountainGlen"),
an affiliate of Prudential Real Estate Investors ("PREI"). Under the merger
agreement, Pacific Gulf will be merged with and into FountainGlen in a cash
transaction valued at approximately $143 million, consisting of approximately
$78 million in equity consideration, or approximately $3.00 per share, plus
assumption of related debt of approximately $65 million. The transaction was
approved by the Board of Directors of Pacific Gulf and remains subject to the
approval of Pacific Gulf's shareholders.
The merger agreement provides that FountainGlen will acquire only Pacific
Gulf's senior housing assets and the corporate office building. Prior to the
closing of the merger, Pacific Gulf intends to continue with its previously
announced plan to sell its remaining conventional multifamily and industrial
assets to third parties in one or more sales. In a transaction to be
undertaken separately from the merger, Pacific Gulf will transfer any
remaining conventional multifamily and industrial assets, as well as the cash
proceeds from any such sales, to a liquidating trust for the benefit of
shareholders. The trust will be responsible for selling any assets
transferred to it and distributing the proceeds received from sales to the
shareholders.
Under the terms of the agreement between Pacific Gulf and FountainGlen,
Pacific Gulf shareholders will receive, in exchange for their shares of
Pacific Gulf stock, an aggregate amount of approximately $78 million in cash,
or $3.00 per share, subject to certain adjustments. These adjustments are
based on amounts that Pacific Gulf has agreed to deliver at closing for items
such as net working capital, total equity invested in the senior properties,
total deposits for new senior properties and any increases in the development
budgets for the senior properties.
Pacific Gulf currently estimates, based on the per share price in the
merger and the value of assets and cash expected to be distributed to
shareholders through the liquidating trust, after consideration of transaction
costs, including the costs of the merger, that shareholders may receive up to
$6.40 per share. This figure is a preliminary estimate and the actual amount
distributed will likely differ, perhaps materially, from the estimate
depending on market conditions for the sales of the remaining multifamily and
industrial assets, claims asserted by the purchasers of the properties, the
adjustments to the per share price in the FountainGlen merger, future
liabilities and other factors.
The merger is subject to several conditions, including the approval of
Pacific Gulf Properties' shareholders and Pacific Gulf obtaining insurance
policies, in favor of FountainGlen, covering contingent liabilities of Pacific
Gulf. FountainGlen's obligation to close is conditioned upon Glenn L.
Carpenter, Pacific Gulf's Chairman and Chief Executive Officer, and members of
the Pacific Gulf management team entering into employment agreements with
FountainGlen at the closing. Mr. Carpenter and such members have agreed with
Pacific Gulf that they intend to do so. The transaction is expected to close
mid-2001, subject to the satisfaction of these conditions.
Mr. Carpenter said "This transaction represents the second major step
Pacific Gulf has taken to complete its plan of liquidation. By selecting
Prudential as our merger partner, Pacific Gulf is dealing with a buyer that is
reputable, established and knowledgeable in various real estate investments.
Additionally, our senior management team looks forward to working with PREI in
the future."
Marc R. Halle, Principal of PREI, said "We are pleased to enter into this
transaction with Pacific Gulf. Glenn Carpenter and his team have developed,
refined and successfully implemented a unique investment strategy. We look
forward to working with Glenn and his team to build unassisted age-restricted
multi-family housing in the United States."
Morgan Stanley is financial advisor to Pacific Gulf Properties and has
issued a fairness opinion to the company in connection with the proposed
merger.
PREI provides global real estate investment management services to
institutional clients in the U.S., Europe, Asia, and Latin America. PREI
currently manages $12.3 billion assets on behalf of 325 institutional clients
as of December 31, 2000. PREI is a unit of Prudential Investment Corporation,
an affiliate of The Prudential Insurance Company of America.
Pacific Gulf Properties Inc. is a real estate investment trust (REIT) that
is in the process of liquidating its assets. The Company is headquartered in
Newport Beach, California.
Forward-looking statements and comments in this press release are made
pursuant to the safe harbor provisions of Section 21E of the Securities
Exchange Act of 1934. Such statements relating to, among other things,
events, conditions, prospects, expectations and financial trends that may
affect the transactions discussed herein, as well as the Company's future
distributions, plans of operations, and financial position are not guarantees
of future performance and are necessarily subject to risks and uncertainties,
some of which are significant in scope and nature, including without
limitation, the conditions to such transactions, increased competition,
adverse economic trends, increasing interest rates, future liabilities and
other factors.
For further information, please contact Donald G. Herrman, Chief Financial
Officer of Pacific Gulf Properties Inc., 949-223-5000.
SOURCE Pacific Gulf Properties Inc.
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Related links:
http://www.pacificgulf.com
Company News On-Call:
http://www.prnewswire.com/comp/671475.html or fax,
800-758-5804, ext. 671475
CONTACT:
Donald G. Herrman, Chief Financial Officer of
Pacific Gulf Properties Inc., 949-223-5000
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