8-K 1 d8k.txt FORM 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 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 (Date of earliest event reported) May 15, 2002 KONOVER PROPERTY TRUST, INC. (Exact name of registrant as specified in its charter) Maryland 1-11998 56-1819372 (State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.) incorporation or organization) 3434 Kildaire Farm Road Suite 200 Raleigh, North Carolina (919) 372-3000 27606 (Address of principal executive offices) (Registrant's telephone (Zip Code) number, including area code)

No Change (Former name or former address, if changed since last report) Konover Property Trust, Inc. ITEM 2: Acquisition or Disposition of Assets On May 15, 2002, Konover Property Trust, Inc. (the "Company"), through its wholly owned subsidiary Mount Pleasant KPT LLC, closed on the sale of Mount Pleasant Towne Centre, a 426,000 square foot shopping center located in Mount Pleasant, South Carolina, to DRA Advisors, Inc. for approximately $55.3 million, including the assumption of mortgage indebtedness of approximately $45.9 million. The net proceeds from the sale after transaction costs were approximately $9.1 million. Reference is made to the Press Release dated May 16, 2002 attached hereto as Exhibit 99.2 and incorporated by reference hereto. ITEM 7: Financial Statements and Exhibits (a) Not applicable (b) Pro forma financial information . Pro forma Consolidated Balance Sheet as of March 31, 2001 ........ 3 . Notes to Pro forma Consolidated Balance Sheet .................... 4 . Pro forma Consolidated Statement of Operations for the Three Months Ended March 31, 2002 ...................................... 5 . Pro forma Consolidated Statement of Operations for the Year Ended December 31, 2001 .......................................... 6 . Notes to Pro forma Consolidated Statements of Operations ......... 7

(c) Exhibits Exhibit Number Description of Exhibit -------------- ---------------------- Exhibit 99.1 The Agreement for Sale, dated March 15, 2002, by and between Mount Pleasant KPT LLC as seller and DRA Advisors, Inc. as buyer. Exhibit 99.2 Press Release issued by the Company on May 16, 2002. 2 Pro forma Consolidated Balance Sheet Konover Property Trust, Inc. As of March 31, 2002 (Amounts in thousands) (Unaudited)

~~Outlet~~Mount ~~Centers~~Pro ~~Location~~Forma ~~Size~~Konover ~~(sq.~~Pleasant ftKonover Property Towne Property Trust, Inc./(a)/ Centre /(b)/ Trust, Inc. -------------- -------- ----------------------------- ~~Factory~~Assets ~~Stores~~Investment ofin ~~America~~rental ~~Arcadia~~property, LAexcluding ~~89,500~~properties ~~Factory~~held ~~Stores~~for ~~of America Boaz~~sale, ALnet ~~104,600~~$ ~~Factory Shoppes at Branson Meadows Branson~~270,281 MO$ ~~287,500~~- ~~Carolina~~$ ~~Outlet Center Smithfield~~270,281 NCProperties ~~443,000~~held ~~Factory~~for ~~Stores~~sale ~~of America Corsicana, TX~~ 63,~~600~~107 ~~Factory Stores of America Crossville~~(53,079) ~~TN 151~~10,~~300~~028 ~~Factory~~Cash ~~Stores~~and ofcash ~~America~~equivalents ~~Draper~~18,316 ~~UT 185~~9,~~300~~130 ~~Factory Stores of America Georgetown~~27,446 KYRestricted ~~176,600~~cash ~~Factory Stores of America Graceville~~6,475 ~~FL 84~~(1,~~000~~484) ~~Factory Stores of America Hanson~~4,991 KYAccounts 63receivable,~~900~~ ~~Factory~~net ~~Stores of America Hempstead~~4,401 TX- 634,~~600~~401 ~~Factory~~Deferred ~~Stores~~charges ofand ~~America~~other ~~Iowa,~~assets ~~LA 130~~6,~~800~~360 ~~Factory~~(826) ~~Stores of America Kittery~~5,534 MENotes ~~24,600~~receivable ~~Factory Stores of America Lake George~~2,628 NY- 432,~~700~~628 ~~Factory~~Investment ~~Stores~~in ofand ~~America~~advances ~~LaMarque,~~to TXunconsolidated ~~176,000~~entities ~~Factory Stores of America Lebanon~~13,071 MO- 8613,~~200~~071 ~~Factory~~--------------------------------------------------- ~~Stores~~Total ofassets ~~America~~$ ~~Livingston~~384,639 TX$ 63(46,~~600~~259) ~~Factory~~$ ~~Stores of America Mesa~~338,380 AZ=================================================== ~~170,700~~Liabilities ~~Factory~~and ~~Stores~~Shareholders ofEquity ~~America~~Debt ~~Mineral~~on ~~Wells,~~income TXproperties ~~63,600~~$ ~~Factory Stores of America Nebraska City~~229,212 NE$ 89(45,~~600~~946) ~~Factory~~$ ~~Stores of North Bend North Bend~~183,266 WACapital ~~223,400~~lease ~~Factory~~obligation ~~Stores~~74 ~~of America Story City, IA 112,400 Factory Stores of America Tri~~-~~Cities~~ ~~132,900~~74 ~~Factory~~Accounts ~~Stores~~payable ofand ~~America~~other ~~Tucson,~~liabilities ~~AZ 127~~10,~~600~~764 ~~Factory~~(473) ~~Stores of America Tupelo~~10,291 ~~MS 129,400 Factory Stores of America Union City, TN 60,200 Factory Stores of Vacaville Vacaville, CA 447,700 Factory Stores of America West Frankfort, IL 91,100~~ ---------------------------------------------------~~----------~~ ~~Subtotal~~Total ~~Outlet~~liabilities ~~Centers 3~~240,~~886,400~~050 ~~Community Centers ----------------- Dare Center Kill Devil Hills~~(46,419) ~~NC 115~~193,~~300~~631 ~~MacGregor~~Minority ~~Village~~interests ~~Cary~~4,952 NC- ~~142~~4,~~400~~952 ~~NorthRidge Shopping Center Raleigh, NC 165,300~~ --------------------------------------------------- Shareholders' equity: Convertible preferred stock 18,679 - 18,679 Stock purchase warrants 9 - 9 Common stock 319 - 319 Additional paid-in capital 291,045 -~~-----~~ ~~Subtotal~~291,045 ~~Community~~Accumulated ~~Centers~~deficit ~~423~~(170,~~000~~359) 160 (170,199) Deferred compensation (56) - (56) ---------------------------------------------------~~---------~~ ~~Portfolio~~ Total 4shareholders' equity 139,~~309~~637 160 139,~~400~~797 ---------------------------------------------------~~----------~~ Total liabilities and shareholders' equity $ 384,639 $ (46,259) $ 338,380 ===================================================

3 Notes to Pro forma Consolidated Balance Sheet Konover Property Trust, Inc. (Unaudited) Basis of Presentation: On May 15, 2002, Konover Property Trust, Inc. (the "Company"), through its wholly owned subsidiary Mount Pleasant KPT LLC, closed on the sale of Mount Pleasant Towne Centre, a 426,000 square foot shopping center located in Mount Pleasant, South Carolina, to DRA Advisors, Inc. for approximately $55.3 million, including the assumption of mortgage indebtedness of approximately $45.9 million. The net proceeds from the sale after transaction costs were approximately $9.1 million. The unaudited pro forma consolidated balance sheet as of March 31, 2002 is based on the unaudited historical financial statements of the Company after giving effect to the disposition of Mount Pleasant Towne Centre and certain adjustments as described below. Balance Sheet Adjustments: (a) Represents the historical unaudited consolidated balance sheet of the Company as of March 31, 2002. (b) Represents the elimination of the historical unaudited balance sheet accounts as of March 31, 2002 of Mount Pleasant Towne Centre and the impact of the sale as described above. 4 Pro forma Consolidated Statement of Operations Konover Property Trust, Inc. For the Three Months Ended March 31, 2002 (Amounts in thousands, except per share information) (Unaudited)

~~Page~~Pro Forma Konover Konover Property Mount Pleasant Towne Property Trust, Trust, Inc./(a)/ Centre Sale/(b)/ Inc. ------------------ .---------------------- ~~Proforma~~---------------- ~~Consolidated~~Revenues ~~Balance~~Base ~~Sheet~~rents as$ 7,914 $ (1,297) $ 6,617 Percentage rents 422 (15) 407 Property operating cost recoveries 2,183 (385) 1,798 Other income 129 48 177 ---------------------------------------------------------- Total revenues 10,648 (1,649) 8,999 Expenses Property operating 2,140 (285) 1,855 Real estate taxes 1,060 (173) 887 Depreciation and amortization 2,698 - 2,698 General and administrative 1,909 - 1,909 Stock compensation amortization 44 - 44 Operating loss of ~~June~~sold 30management business 84 - 84 Interest, ~~2001~~net 4,523 .(926) ~~Notes~~3,597 toEquity ~~Proforma~~in ~~Consolidated~~earnings ~~Balance~~of ~~Sheet~~unconsolidated 5earnings .(150) ~~Proforma~~- ~~Consolidated~~(150) ~~Statement~~---------------------------------------------------------- ofTotal ~~Operations~~expenses ~~for~~12,308 ~~the~~(1,384) ~~Six~~10,924 ~~Months~~---------------------------------------------------------- ~~Ended~~Loss ~~June~~before 30minority interests (1,660) ~~2001~~(265) 6(1,925) .Minority ~~Proforma~~interest ~~Consolidated~~57 ~~Statement~~- of57 ~~Operations~~---------------------------------------------------------- ~~for~~Net ~~the~~loss ~~Year~~(1,603) ~~Ended~~(265) ~~December~~(1,868) 31Preferred dividends - - - ---------------------------------------------------------- Loss applicable to common stockholders $ (1,603) ~~2000~~$ 7(265) $ (1,868) ========================================================== Earnings per common share: Basic $ (0.05) ~~Notes~~$ to(0.06) ~~Proforma~~========================================================== ~~Consolidated~~Diluted ~~Statements~~$ of(0.05) ~~Operations~~$ 8(0.06) ========================================================== Weighted average common shares outstanding: Basic 31,767 31,767 ========================================================== Diluted 31,767 31,767 ==========================================================

5 Pro forma Consolidated Statement of Operations Konover Property Trust, Inc. For the Year Ended December 31, 2001 (Amounts in thousands, except per share information) (Unaudited)

~~Outlet~~Pro ~~Properties~~Forma ~~Historical~~Mount Pleasant Konover Property Towne Centre 2001 Property Konover Property Trust, Inc./(a)/ ~~Transactions~~Sale/(b)/ Disposals/(c)/ ~~Shoreside~~Trust, ~~/(d)/~~Inc. ~~Proforma~~ --------------------------------------------------------------------------~~------~~ ~~Assets~~Revenues ~~Income~~Base ~~producing~~rents ~~properties, net~~ $ ~~253~~58,~~877~~265 $ (5,~~144~~328) $ -(26,243) $ ~~248~~26,~~733~~694 ~~Properties~~Percentage ~~under~~rents ~~development~~834 25(53) (378) 403 Property operating cost recoveries 13,~~196~~575 (~~423~~1,110) (5,857) 6,608 Other income 2,439 179 (1,620) 998 -------------------------------------------------------------------------- 24Total revenues 75,~~773~~113 ~~Properties~~(6,312) ~~held~~(34,098) ~~for~~34,703 ~~sale~~Expenses ~~245~~Property operating 17,~~732~~243 (~~166~~1,~~130~~078) (9,240) 6,~~563~~925 Real estate taxes 7,782 (690) 73(3,~~039~~627) ~~Cash~~3,465 Depreciation and ~~cash~~amortization ~~equivalents~~18,505 (1,~~083~~449) 14(5,~~200~~851) 111,~~971~~205 ~~17,254~~General ~~Restricted~~and ~~cash~~administrative 147,~~283~~950 (- - 7,~~677)~~950 Stock compensation amortization 845 - - 845 Severance and other related costs 6,~~606~~099 ~~Accounts~~- ~~receivable~~- 6,099 Interest, net 828,~~165~~131 (13,~~291~~623) (589,882) 614,~~816~~626 ~~Deferred~~Gain ~~charges~~on ~~and~~sale ~~other~~of ~~assets~~real 11estate (367) - 367 - Adjustment to carrying value of property and investments 114,~~945~~755 (6,~~790~~123) (19100,575) 58,~~136~~057 ~~Notes~~Abandoned ~~receivable~~transaction ~~519~~costs -83 - ~~519~~(22) ~~Investment~~61 Equity in ~~and~~losses ~~advances~~of to unconsolidated ~~entities~~ventures 216,~~647~~782 - - 216,~~647~~782 Minority interest (3,645) - - (3,645) -------------------------------------------------------------------------- Total ~~assets~~expenses ~~$ 582~~204,~~447~~163 $(~~173~~12,~~255~~963) $(4128,~~669~~830) ~~$ 404~~62,~~523 ==================================================================== Liabilities and Shareholders Equity Debt on income properties $ 405,686 $(170,~~370) ~~$(5,428) $ 229,888 Capital lease obligation 331 (269) 62 Accounts payable and other liabilities 22,378 (4,076) (39) 18,263~~ -------------------------------------------------------------------------- ~~Total~~Loss ~~liabilities~~before ~~428,395~~extraordinary ~~(174,715)~~item (5129,~~467~~050) ~~248~~6,~~213~~651 ~~Minority interests 4~~94,~~111~~732 ~~- - 4~~(27,~~111~~667) ~~Shareholders'~~Extraordinary ~~equity:~~gain ~~Convertible~~on ~~preferred~~early ~~stock~~retirement ~~18,679~~of -debt -775 ~~18,679 Stock purchase warrants 9~~ - -(775) ~~9 Common stock 314~~ - - ~~314 Additional paid~~-~~in capital 286,745~~ - - ~~286,745 Accumulated deficit (155,580) 1,460 798 (153,322) Deferred compensation (226)~~ - - ~~(226)~~ -------------------------------------------------------------------- ~~Total~~Net ~~shareholders'~~loss ~~equity~~(128,275) ~~149~~6,~~941~~651 193,~~460~~957 ~~798 152~~(27,~~199~~667) Preferred dividends (271) - - (271) -------------------------------------------------------------------------- ~~Total~~Loss ~~liabilities~~applicable ~~and~~to ~~shareholders'~~common ~~equity~~stockholders $ ~~582~~(128,~~447~~546) $ 6,651 $ 93,957 $ (~~173~~27,~~255~~938) ========================================================================== Earnings per common share: Basic $ (4~~,669~~.11) $ ~~404~~(0.89) ========================================================================== Diluted $ (4.11) $ (0.89) ========================================================================== Weighted average common shares outstanding: Basic 31,~~523~~292 31,292 ========================================================================== Diluted 31,292 31,292 ==========================================================================

6 Notes to Pro forma Consolidated Statements of Operations Konover Property Trust, Inc. (Amounts in thousands) (Unaudited) Basis of Presentation: On May 15, 2002, Konover Property Trust, Inc. (the "Company"), through its wholly owned subsidiary Mount Pleasant KPT LLC, closed on the sale of Mount Pleasant Towne Centre, a 426,000 square foot shopping center located in Mount Pleasant, South Carolina, to DRA Advisors, Inc. for approximately $55.3 million, including the assumption of mortgage indebtedness of approximately $45.9 million. The net proceeds from the sale after transaction costs were approximately $9.1 million. The unaudited pro forma consolidated statements of operations for the three months ended March 31, 2002 and the year ended December 31, 2001 are based on the unaudited financial statements of the Company after giving effect to the dispositions of the Mount Pleasant Towne Centre and certain adjustments as described below. Statements of Operations Adjustments: (a) Represents, the unaudited consolidated statement of operations of the Company for the three months ended March 31, 2002 and audited consolidated statement of operations for the year ended December 31, 2001. (b) Represents the elimination of the historical unaudited statements of operations for the three months ended March 31, 2002 and the year ended December 31, 2001 of Mount Pleasant Towne Centre. Other income includes management fees earned in connection with the Company's on-going management of the property. (c) Represent the elimination of the historical unaudited statements of operations for the year ended December 31, 2001 of the 33 properties sold during 2001. The properties include the 31 property outlet portfolio sale in September 2001, the sale of the Shoreside shopping center in September 2001, and the sale of the Nashville outlet shopping center in December 2001. General and Administrative Expenses: The pro forma consolidated statements of operations presented herein do not reflect planned reductions in certain indirect general and administrative costs arising from the Company's reorganization plans resulting from the sale of 33 properties in 2001. 7 EXHIBIT INDEX Number Description --------------------- 99.1 The Agreement for Purchase and Sale, dated March 15, 2002, by and between Mount Pleasant KPT LLC as seller and DRA Advisors, Inc. as buyer. 99.2 Press Release issued by the Company on May 16, 2002 regarding the completion of the sale of Mount Pleasant Towne Centre. 8 KONOVER PROPERTY TRUST, INC. SIGNATURE 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 thereunto duly authorized. Konover Property Trust, Inc. (Registrant) Dated: May 29, 2002 By: /s/ Daniel J. Kelly ----------------------------- Name: Daniel J. Kelly Title: Executive Vice President, Chief Financial Officer 9

Outlet Properties Historical /(a)/ Transactions/(b)/ /(c)/ Shoreside /(d)/ Proforma --------------------------------------------------------------------------- Revenues Base rents $ 34,260 $ (17,519) $ (422) $ 16,319 Percentage rents 530 (391) (5) 134 Property operating cost recoveries 7,590 (3,665) (71) 3,854 Other income 1,771 (1,335) (2) 434 ------------------------------------------------------------------------ Total revenues 44,151 (22,910) (500) 20,741 ------------------------------------------------------------------------ Expenses Property operating costs 9,650 (5,756) (114) 3,780 Real estate taxes 4,391 (2,347) (29) 2,015 Depreciation and amortization 12,533 (5,803) (77) 6,653 General and administrative 3,664 (8) - 3,656 Stock compensation amortization 563 - - 563 Severance and other related costs 5,931 - - 5,931 Interest, net 15,578 (6,992) (252) 8,334 Adjustment to carrying value of property 105,110 (100,487) - 4,623 Abandoned transaction costs 46 (20) - 26 Equity in losses of unconsolidated ventures 5,081 - - 5,081 ------------------------------------------------------------------------ Total expenses 162,547 (121,413) (472) 40,662 ======================================================================== (Loss) gain before minority interest (118,396) 98,503 (28) (19,921) Minority interest 3,297 (2,955) 1 343 ------------------------------------------------------------------------ Net (loss) gain (115,099) 95,548 (27) (19,578) Preferred stock dividends (271) - - (271) ------------------------------------------------------------------------ (Loss) gain applicable to common stockholders $(115,370) $ 95,548 $ (27) $(19,849) ======================================================================== Loss applicable to common stockholders per common share: Basic $ (3.70) $ (0.64) ======================================================================== Diluted $ (3.70) $ (0.64) ======================================================================== Weighted average common shares outstanding: Basic 31,204 31,204 ======================================================================== Diluted 31,204 31,204 ========================================================================

Outlet Properties Historical/(a)/ Transactions/(b) (c)/ Shoreside/(d)/ Proforma ---------------------------------------------------------------------------------- Revenues Base rents $ 68,854 $(34,215) $(866) $ 33,771 Percentage rents 1,418 (770) - 650 Property operating cost recoveries 16,758 (9,045) (47) 7,654 Other income 1,890 (646) - 1,256 ---------------------------------------------------------------------------------- Total revenues 88,920 (44,676) (913) 43,331 ---------------------------------------------------------------------------------- Expenses Property operating costs 20,689 (11,660) (197) 8,832 Real estate taxes 8,526 (4,574) (53) 3,899 Depreciation and amortization 25,614 (12,090) (154) 13,370 General and administrative 6,669 - - 6,669 Stock compensation amortization 2,865 - - 2,865 Interest, net 27,806 (13,500) (514) 13,792 Loss (gain) on sale of real estate 1,946 - - 1,946 Adjustment to carrying value of property 19,338 - - 19,338 Abandoned transaction costs 1,257 (485) - 772 Equity in losses of unconsolidated ventures 10,416 - - 10,416 ---------------------------------------------------------------------------------- Total expenses 125,126 (42,309) (918) 81,899 ---------------------------------------------------------------------------------- (Loss) gain before minority interest (36,206) (2,367) 5 (38,568) Minority interest 1,157 71 - 1,228 ---------------------------------------------------------------------------------- Net (loss) gain (35,049) (2,296) 5 (37,340) Preferred stock dividends (1,084) - - (1,084) ---------------------------------------------------------------------------------- (Loss) gain applicable to common stockholders $(36,133) (2,296) 5 (38,424) ================================================================================== Loss applicable to common stockholders per common share: Basic $ (1.17) $ (1.24) =================================================================================== Diluted $ (1.17) $ (1.24) =================================================================================== Weighted average common shares outstanding: Basic 30,954 30,954 =================================================================================== Diluted 30,954 30,954 ===================================================================================

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