BRE Properties and REIT of California Shareholders Approve Strategic Merger -- Forming Major Multifamily REIT.SAN FRANCISCO/LOS ANGELES--(BUSINESS WIRE)--March 12, 1996--Shareholders of BRE (Business Rules Engine) Software that automates policies and procedures within an organization, whether legal, internal or operational. The use of a rules engine (BRE) requires placing the company rules in an external repository that can be easily reviewed rather than Properties, Inc. (NYSE NYSE See: New York Stock Exchange : BRE) and Real Estate Investment Trust of California (NYSE: RCT RCT Randomized Controlled Trial RCT Regimental Combat Team (infantry regiment with their own artillery, engineers, medical and tanks) RCT Rollercoaster Tycoon RCT Randomized Clinical Trial RCT Rhondda Cynon Taff ) today approved a merger of the two companies, forming one of the largest multifamily real estate investment trusts (REITs) in the nation. The merger, in which BRE Properties will be the surviving entity, is expected to close on March 15, 1996. Including acquisition commitments, the combined company will wholly own 51 multifamily properties, totaling 10,881 apartment units, located in nine major markets in California, Arizona, Oregon, Washington and Nevada. The combined company will have 16.3 million shares outstanding, a total market capitalization Total Market Capitalization The total market value of all of a firm's outstanding securities. of approximately $800 million, and a debt to total market capitalization ratio of approximately 26%. Total combined revenues for the two companies in 1995 amounted to $96 million. Frank C. McDowell, president and chief executive officer of BRE Properties, stated, "The strategic merger of REIT REIT See: Real Estate Investment Trust REIT See real estate investment trust (REIT). of California with BRE Properties significantly advances our goal of establishing BRE as the preeminent multifamily real estate investment trust in the West. "We will continue to implement our multifamily growth strategy by building on the strong platform that is provided by the assets, resources, management expertise, and capital structure of the combined company." Jay Pauly, president and chief executive of REIT of California, added, "As a result of our many planning sessions with our new partners at BRE, we expect to accomplish a rapid and smooth integration of the two companies' operations, and extend our internal property management capabilities across the entire portfolio. The merger provides numerous opportunities for synergies, efficiencies and cost savings, and we want to derive these benefits and create enhanced value for our shareholders." The internalization Internalization A decision by a brokerage to fill an order with the firm's own inventory of stock. Notes: When a brokerage receives an order they have numerous choices as to how it should be filled. of the property management function will enable BRE to retain a significant portion of the approximately $1.6 million annual expense for third-party managers. The merger also will provide cost savings related to the closing of REIT of California's corporate offices and elimination of duplicative administration and corporate governance Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. expenses. The merger unites two established regional real estate investment trusts with a shared strategic focus on multifamily properties in Western U.S. markets. Each of the companies has paid dividends to their shareholders for more than 100 consecutive quarters. The merged company will be headquartered in San Francisco, and its senior management will include Frank McDowell, chief executive officer; Jay Pauly, chief operating officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. ; LeRoy Carlson, chief financial officer; Byron Fox, chief acquisitions officer; and senior vice presidents Howard Mason, John Nunn and Ronald Wargo. McDowell and Pauly noted that the merger creates an entity that is well prepared to take advantage of its financial and operating strengths. "BRE increases its wholly owned multifamily assets by about 60% and raises its market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. by approximately 50%. At the same time, BRE strengthens its management team, maintains a strong balance sheet, and expands its existing presence in key markets, while gaining entry into new Western U.S. markets." Three Trustees from REIT of California will be appointed to the BRE Board of Directors, increasing BRE's Board from six to nine members. REIT of California Trustees William E. Borsari, Roger P. Kuppinger and Gregory M. Simon will join current BRE Directors C. Preston Butcher, L. Michael Foley, Frank C. McDowell, John McMahan, Malcolm R. Riley and Arthur G. von Thaden. Shareholders of both companies approved the merger at simultaneous meetings held today. At BRE's meeting, shareholders also reelected L. Michael Foley and John McMahan as Class II Directors; approved the reincorporation of the company in Maryland; authorized the issuance of preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ; and approved an amended non-employee director stock option plan. Shareholders ratified the selection of Ernst & Young LLP LLP - Lower Layer Protocol as independent auditors. BRE's financial advisor is Dean Witter Reynolds Dean Witter Reynolds was an American stock brokerage catering to the middle class. In 1997, it merged with the Morgan Stanley Group to form Morgan Stanley Dean Witter. The amalgamated firm is now known as Morgan Stanley. Inc.; and REIT of California's financial advisor is Prudential Securities Inc. CONTACT: BRE Properties Frank C. McDowell, 415/445-6530 Lauren L. Barr, 415/445-6523 or REIT of California Jay Pauly, 310/476-7793 LeRoy Carlson, 310/476-7793 |
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