Special Shareholder's Meeting Set to Liquidate REIT

ORANGE COUNTY, CA–Plans to liquidate the remainder of Pacific Gulf Properties, Inc., (PAG) portfolio have been finalized. The Newport Beach-based real estate investment trust filed a final proxy on October 19, setting November 9 as the date of a special shareholders meeting to approve proposals to sell the REIT’s industrial portfolio,liquidate the remainder of its assets, and distribute the proceeds in cash to shareholders. Shareholders of record on Oct. 13 may vote at the meeting.

“Basically, if you look at where stock has beentrading until now and the assets were around $28-$29 a share, the company decided to realize the value of the assets. Most of Wall Street thought it was good for the investors so they looked upon it positively,” said Bear Stearns analyst Ross L. Smotrich.

The buyer, CalWest Industrial Properties has complete due diligence on at least 66 of PAG’s industrial properties totaling 13.6 million sf, which are expected to be part of the final sale, according to an October 23 liquidation report from Bear Stearns. Price for those properties is estimated to be $847.5 million or about $526 million after debt, fees and other price adjustments are made.

Another six industrial properties are valued at $80.3 million, or $73 million after debt, fees and price adjustments–part of the originalagreement has been delayed for remediation or further review.

PAG’s management believes, however, that anyproperties not included in the final sale to CalWest can be sold to other buyers for comparable or higher prices, the report notes.

PAG also owns 12 multi-family properties: 10traditional apartment complexes and two seniorcommunities. Four of the apartment complexes arecurrently under contract to sell for $60 million or $49 million after debt. The remaining six complexes and two senior communities are under contract to sellfor $82 million or $35 million after debt.

According to published reports, a lawsuit was filed in Sacramento last month by a tenant of one of PAG’s properties alleging that toxic mold contamination had caused illness to employees, and destroyed office equipment and computers. At the time of the suit, PAG’s attorney Lewis G. Feldman expected no repercussions from the suit on theimpending asset sale to CalWest. Feldman was notavailable for comment on the current status of the suit.