- Company to Continue Marketing Multi-Family Apartments for Sale
- Combined Sale Transactions May Total Over $1 Billion
- Net Proceeds of Transactions to be Distributed to Shareholders
- Company Exploring Strategies for its Active Senior Rental Housing
NEWPORT BEACH, Calif., June 20 /PRNewswire/ -- Pacific Gulf Properties
Inc. (NYSE: PAG) today announced that it has entered into a definitive
agreement to sell its portfolio of industrial properties to CalWest Industrial
Properties, LLC ("CalWest"), a joint venture between CalPERS and RREEF. The
value of the transaction is approximately $929 million in the form of cash and
debt assumption. Net proceeds of the sale, after the payment of debt and
establishment of reserves, will be distributed to Pacific Gulf's shareholders.
According to the buyer, based on its internal projections, CalWest expects to
receive a net operating income yield in the first full year of ownership of
approximately 8.75%. The transaction was unanimously approved by the Board of
Directors of Pacific Gulf and the Investment Committees of CalPERS and RREEF,
and remains subject to the approval of the Pacific Gulf's shareholders.
Pacific Gulf Properties is also continuing its previously announced plan
to market its multi-family apartments, and is examining strategic alternatives
for its active senior rental housing operations. These efforts, together with
the industrial portfolio sale, represent a comprehensive program by the
company's management to capture the intrinsic value of Pacific Gulf's real
estate assets for the benefit of its shareholders.
Pacific Gulf Properties Chairman and Chief Executive Officer, Glenn L.
Carpenter, said "We are very pleased to announce this definitive agreement
with CalPERS and RREEF. We believe these transactions represent the best
means in the current market environment to realize the true value of the
company's assets, and to deliver that value directly to our shareholders. We
view these steps as particularly opportune in light of ongoing real estate
valuation discrepancies between the public securities and private real estate
markets, and the continued high cost of capital for REITs."
"We've captured a portfolio of high quality industrial assets in strong
markets, including markets in our own home state," said Michael Flaherman,
Chair of CalPERS's Investment Committee. "We have confidence in Pacific Gulf
Properties' strong management team and we look forward to their continued role
in the management of the portfolio. As an advocate of good corporate
governance, we would also like to applaud Pacific Gulf's management and Board
of Directors for maximizing the value for shareholders and putting
shareholders' interests first."
Steve Steppe, a RREEF Principal, states "The acquisition of these assets
from Pacific Gulf Properties is a unique opportunity to assemble 15 million
square feet of industrial properties in strong markets at a cap rate of about
8.75% with good growth prospects."
Warren Otto, CalWest's Portfolio Manager, says "We're pleased that Pacific
Gulf will continue managing these assets for us. The company's management
team has proven capabilities and has created significant value for their
shareholders. We look forward to working with them in adding value for our
investors. We are also excited about the many new customers we will be
serving through our ownership of these properties. The business parks in this
portfolio house over 2,300 small businesses which are generating many new jobs
and opportunities for their communities. We believe the portfolio we are
assembling will meet the growing needs of these businesses for years to come."
Under the terms of the agreement, the purchase price of approximately
$929 million will be comprised of a cash payment and the assumption of
approximately $117 million of debt. Approximately $206 million of additional
debt will be repaid out of the sale proceeds. The terms of the transaction
include the funding of a $25 million deposit by CalWest that is non-refundable
except in limited circumstances. Financial and general physical due diligence
have been completed and the buyer has 90 days to complete reviews of
structural, environmental, title, zoning and other code matters. The
transaction is expected to close in the fall of 2000, subject to the approval
of Pacific Gulf Properties' shareholders.
If all of the industrial and multi-family properties are sold as planned,
Pacific Gulf Properties expects to make a cash distribution to shareholders in
the fourth quarter of 2000 of up to $26.00 per share from the sale proceeds.
CalWest's due diligence review may result in a reduction of the transaction's
aggregate value, or a partial deferral in its payment, as well as Pacific Gulf
Properties' expenditures to remedy identified problems. These adjustments,
deferrals and expenditures, together with the company's establishment of
reserves for contingent liabilities, will affect the amount and timing of
distributions to Pacific Gulf's shareholders. Subsequent additional
distributions to shareholders may be made if and when additional funds are
available.
The industrial portfolio subject to the definitive agreement is comprised
of 72 properties encompassing an aggregate of over 15.0 million leasable
square feet of space in California, Washington, Nevada, Arizona and Oregon.
The industrial properties are leased to small and mid-size business tenants in
targeted high-growth markets. At March 31, 2000 the portfolio was 97 percent
occupied.
Pacific Gulf anticipates maintaining its status as a real estate
investment trust following the sale pending its determination of a strategic
plan for its remaining assets.
Morgan Stanley Dean Witter is financial advisor to Pacific Gulf Properties
and has issued a fairness opinion to the company in connection with the
proposed sale of the industrial portfolio.
Pacific Gulf Properties Inc. is a real estate investment trust (REIT) that
owns, develops and manages a growing portfolio of industrial properties
targeting small to mid-size tenants in selected high-growth U. S. western
markets. The company's industrial portfolio is comprised of 73 properties
encompassing more than 15.2 million square feet of space (one of these assets
is currently under contract to buyers other than CalWest). Pacific Gulf
Properties Inc. also has 1,631 units of traditional multifamily apartments
which are currently being marketed for sale. The company also maintains a
portfolio of eight rental apartment communities comprising almost 1,500 units
designed for the burgeoning population of active seniors age 55 and older.
The company is headquartered in Newport Beach, California. For more
information, please visit the company's web site at http://www.pacificgulf.com.
California Public Employees Retirement System (CalPERS) provides
retirement and health benefits to more than 1.1 million members, including
active workers and retirees, their families and beneficiaries, and their
employers. The pension fund is headquartered in Sacramento, California. For
further information, please visit the company site at http://www.calpers.ca.gov.
RREEF, a wholly owned subsidiary of RoProperty Investment Management,
N.V., is a full service commercial real estate investment advisor with
$12.4 billion in assets currently under management. Corporate offices are
located in San Francisco, Chicago, Dallas, and New York. For more information
visit http://www.rreef.com.
CalWest was created in 1998 as a joint venture between CalPERS and RREEF
to invest exclusively in industrial properties in the western United States.
With this acquisition, CalWest's total assets will approximate $2.0 billion.
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 and financial trends that may affect the
Company's future distributions, plans of operations, business strategy, growth
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, increased
competition, adverse economic trends, increasing interest rates, factors
described above and other factors.
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:
Don Herrman, Chief Financial Officer of
Pacific Gulf Properties Inc., 949-223-5000; or General
Information, Victoria J. Baker, 703-370-8652, for Pacific Gulf
Properties Inc.
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