8-K: Current report
Published on February 17, 1998
UNITED STATES
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: February 2, 1998
Entertainment Properties Trust
(Exact name of registrant as specified in its charter)
Maryland 1-13561 43-179877
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1200 Main, Suite 3250 Kansas City, Missouri 64105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 472-1700
N/A
(Former name or former address, if changed since last report.)
Item 2 Acquisition or Disposition of Assets
As part of the Formation Transactions described in the
Company's Registration Statement on Form S-11, Registration No.
33-35281 (the "Registration Statement"), the Company has
acquired the megaplex theatre properties described in the
following table (the "Properties") from subsidiaries of AMC
Entertainment, Inc. ("AMCE"), including American Multi-Cinema,
Inc. and its subsidiaries ("AMC"). The Properties constitute all
but one of the Initial Properties and one of the Option
Properties described in the Registration Statement. All of the
Properties are megaplex movie theatres and were purchased for
cash with the proceeds of the Company's initial public offering.
The Company elected to purchase the Option Property known as
Gulfpointe 30 prior to acquiring the last of the Initial
Properties (known as South Barrington 30, located in Chicago,
Illinois) in light of the relative construction schedules of
those two Properties.
INITIAL PROPERTIES
Description Location Opening Screens Seats
Grand 24 /1/ Dallas, TX 5/1/95 24 5,067
Mission Valley
20 /2/ San Diego, CA 12/1/95 20 4,361
Promenade
16 /1/ Los Angeles, CA 3/1/96 16 2,860
Ontario Mills
30 /1/ Los Angeles, CA 12/1/96 30 5,469
Lennox 24 /2/ Columbus, OH 12/1/96 24 4,412
West Olive
16 /1/ St. Louis, MO 5/1/97 16 2,817
Studio 30 /1/ Houston, TX 5/1/97 30 6,032
Huebner Oaks
24 /1/ San Antonio, TX 6/1/97 24 4,400
First Colony
24 /2/ Houston, TX 12/19/97 24 5,098
Oakview
24 /2/ Omaha, NE 12/19/97 24 5,098
Leawood Town
Centre /1/ Kansas City, MO 12/19/97 20 2,995
Ann.
Gross Cost Acq. Rent
Description Sq.Ft. (1,000's) Date (1,000's)
Grand 24 /1/ 98,175 18,600 11/24/97 1,953
Mission Valley
20 /2/ 84,352 16,300 11/24/97 1,711
Promenade
16 /1/ 129,822 28,500 11/24/97 2,992
Ontario Mills
30 /1/ 131,534 25,300 11/24/97 2,656
Lennox 24 /2/ 98,261 12,900 11/24/97 1,354
West Olive
16 /1/ 60,418 17,800 11/24/97 1,869
Studio 30 /1/ 136,154 26,400 11/24/97 2,772
Huebner Oaks
24 /1/ 96,004 16,900 12/22/97 1,774
First Colony
24 /2/ 107,690 19,100 12/22/97 2,005
Oakview 24/2/ 107,402 16,700 12/22/97 1,753
Leawood Town
Centre /1/ 75,224 15,800 12/22/97 1,659
OPTION PROPERTY
Description Location Opening Screens Seats
Gulfpoint
30 /1//3/ Houston, TX 12/19/97 30 6,008
Ann.
Gross Cost Acq. Rent
Description Sq.Ft. (1,000's) Date (1,000's)
Gulfpoint
30/1//3/ 130,891 25,800 2/02/98 2,709
/1/ Fee simple title acquired.
/2/ Third party ground leased Property. Although the Company is
the tenant under the ground leases and has assumed
responsibility for performing the obligations thereunder,
pursuant to the terms of the Leases with AMC, AMC is
responsible for performing the Company's obligations under
such ground leases.
3/ Three undeveloped pad sites with an aggregate cost of
$1,766,000 were also purchased with this Property.
It is currently anticipated that the remaining Initial
Property(South Barrington 30) will be acquired in March 1998
consistent with the construction schedule for that Property.
Each Property has been leased back to AMC in accordance with
the terms of a triple net lease at the annual rental rate listed
above for each Property.
The Leases have initial terms ranging from 13 to 15 years
and may be extended upon the same terms and conditions for four
additional five-year terms at the option of AMC. Each Lease is
referred to as a triple net lease in that it requires AMC to pay
substantially all expenses associated with the operation of the
Properties, such as taxes and other governmental charges,
insurance, utilities, service, maintenance and any ground lease
payments. Each Lease requires that, for a specified period, AMC
shall operate the Property only as a movie theatre and activities
incidental thereto. AMC's performance of its obligations under
each Lease has been guaranteed by AMCE.
Peter C. Brown, Chairman of the Board of the Company, is the
President, Chief Financial Officer and a director of AMCE. Mr.
Brown is also Executive Vice President, Chief Financial Officer
and a director of AMC. Robert C. Harris, President, Chief
Development Officer and a trustee of the Company, is the former
Senior Vice President of AMC in charge of its international
affairs.
The purchase price for each Property was determined by the
management of both AMCE and the Company as the cost of developing
and constructing such Property.
The Lease payment obligations with respect to each Property
were determined by the management of AMCE and the Company and
were not negotiated on an arms-length basis. The Lease payments
are based on an initial capitalization rate of 10.5%, which the
Company believes reflects the fair market value of the Properties
to the Company based on rates for comparable triple net lease
transactions.
The Properties will be operated by AMC as megaplex movie
theatres under the terms of each Lease.
The cost of the undeveloped land parcels purchased as part
of the Gulf Pointe 30 acquisition was determined by the
management of both AMCE and the Company based on the estimated
market value for such parcels less estimated marketing and
selling costs. It is the Company's intention that the pad sites
be developed as restaurant locations and leased to restaurant
operators.
The description of the Properties and underlying Lease terms
contained in the Prospectus which is a part of the Registration
Statement under the captions "Business of the Company and its
Properties," "Leases" and "The Formation Transactions" is
incorporated by reference in this Report.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
WITH THE EXCEPTION OF HISTORICAL INFORMATION, THIS REPORT ON
FORM 8-K CONTAINS FORWARD-LOOKING STATEMENTS AS DEFINED IN THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND IDENTIFIED
BY SUCH WORDS AS "WILL BE," "INTENDED," "CONTINUE," "BELIEVE,"
"MAY," "EXPECT," "HOPE," "ANTICIPATE," "GOAL," "FORECAST" OR
OTHER COMPARABLE TERMS. THE COMPANY'S ACTUAL FINANCIAL
CONDITION, RESULTS OF OPERATIONS OR BUSINESS MAY VARY MATERIALLY
INVOLVE VARIOUS RISKS AND UNCERTAINTIES, INCLUDING BUT NOT
LIMITED TO THE FOLLOWING:
. The Company's initial dependence on a single
tenant and lease guarantor for its lease revenues
and ability to make distributions to its
shareholders
. Potential conflicts of interest involving the
Company and its initial tenant and lease guarantor
. Competition from other entities providing capital
to the entertainment industry
. Dependence on key personnel
. Operating risks in the entertainment industry that
may affect the operations of the Company's tenants
. Tax risks arising from the Company's intention to
qualify as a REIT
. Interest rates and availability of debt financing
. General real estate investment risks
. Other risks and uncertainties
INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON SUCH
FORWARD-LOOKING STATEMENTS, AND ARE ENCOURAGED TO REVIEW THE RISK
FACTORS IDENTIFIED IN THE COMPANY'S PROSPECTUS CONTAINED IN THE
REGISTRATION STATEMENT ON FORM S-11.
Item 7 Financial Statements and Exhibits
(a) Financial statements of business acquired. The Company
will not operate any of the Properties, but is instead
leasing the Properties to AMC in accordance with triple
net Leases guaranteed by AMCE. Each Property is being
used entirely by AMC in its business pursuant to a net
Lease from the Company and is not being used in any
significant way for rental to third parties.
Accordingly, consolidated financial statements of AMCE,
as guarantor of the Leases, have been provided in lieu
of operating statements for each of the Properties.
For information with respect to the financial condition
and results of operations of AMCE and subsidiaries
(including AMC), reference is made to the unaudited
Condensed Pro Forma Financial Statements and notes
thereto of AMC Entertainment, Inc. and subsidiaries for
the twenty-six week period ended October 2, 1997 and
the year (53 weeks) ended April 3, 1997; the unaudited
Financial Statements and notes thereto of AMC
Entertainment, Inc. and subsidiaries as of October 2,
1997 and April 3, 1997 and for the twenty-six weeks
Consolidated Financial Statements of AMC Entertainment,
Inc. and subsidiaries and report thereon of independent
accountants for the year (53 weeks) ended April 3, 1997
and years (52 weeks) ended March 28, 1996 and March 30,
1995 contained in the Registration Statement and
incorporated by reference into this Report.
(b) Pro forma financial information - For forecast
financial information reflecting the acquisition of the
Initial Properties reference is made to "The Company's
Selected Financial Information" contained in the
Registration Statement and incorporated by reference in
this Report. In accordance with instruction b.3 to
Form 8-K, the forecast financial information contained
in the Registration Statement is deemed to be
substantially the same as that which would be provided
in reflecting the acquisition of the Initial Properties
discussed in this Report.
(c) Exhibits
EXHIBIT NO. DESCRIPTION
10.1 Form of Agreement of Sale and Purchase
between the Company and American Multi-
Cinema, Inc. (incorporated by reference
to Exhibit 10.1 to the Registration
Statement)
10.2 Form of Option Agreement between the
Company and American Multi-Cinema, Inc.
(incorporated by reference to Exhibit
10.2 to the Registration Statement)
10.3 Form of Option Agreement between the
Company and Clip Funding, Limited
(incorporated by reference to Exhibit
10.3 to the Registration Statement)
10.5 Form of Lease entered into between the
Company and American Multi-Cinema, Inc.
(incorporated by reference to Exhibit
10.5 to the Registration Statement)
10.6 Form of Guaranty of Lease between the
Company and AMC Entertainment, Inc.
(incorporated by reference to Exhibit
10.6 to the Registration Statement)
EXHIBIT NO. DESCRIPTION
99 Sections of the Prospectus contained in
the Registration Statement and entitled
"The Company's Selected Financial
Information," "Business of the Company
and its Properties," Leases" and "The
Formation Transactions," and the
financial statements of AMCE and
subsidiaries identified in Item 7(a).
SIGNATURES
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 hereunto duly authorized.
ENTERTAINMENT PROPERTIES TRUST
Date: February 17, 1998 By /s/ Scottt Christian
Scott Christian, Treasurer
EXHIBIT INDEX
Exhibit Description
99 Sections of the Prospectus contained in the
Registration Statement and entitled "The
Company's Selected Financial Information,"
"Business of the Company and its Properties,"
Leases" and "The Formation Transactions," and
the financial statements of AMCE and
subsidiaries identified in Item 7(a).