Pacific Gulf Plans Sale

NEWPORT BEACH — Real estate investment trust Pacific Gulf Properties Inc. said Wednesday that it is planning a new issue of common stock to be used to retire at least $37.7 million worth of unsecured debt.

The stock will be issued in a so-called Dutch auction to holders of $50 million worth of Pacific Gulf’s 8.375% subordinated debentures--a type of bond or corporate IOU--that mature in 2001. In the auction, the seller sets a price range for an item and collects sealed bids from buyers--selling the item at the best price received. The best price is the lowest.

Pacific Gulf said it will offer to exchange new stock for the debt at a rate of between 55 and 58 common shares for each $1,000 of debentures--a rate that would let debenture holders obtain company stock at between $17.25 and $18.175 a share. Pacific Gulf stock fell 12.5 cents Wednesday to close at $18.375 per share in heavy trading on the American Stock Exchange.

The company will determine the lowest rate for which it can exchange stock for at least $37.7 million of the bonds. All debenture holders whose bids fall at or below that level will be able to trade their bonds for stock, while those who wanted higher amounts will be excluded from the swap. The system minimizes the total number of new shares that must be issued.

Company officials said the offering should become effective early next month and will remain in effect for about a month.

Pacific Gulf, based in Newport Beach, invests in apartments and industrial properties throughout California and the Pacific Northwest. The company’s portfolio is valued at $300 million.