As filed withFiled With the Securities and Exchange Commission on March 28, 2000.July 19, 2005
Registration Statement No.333-31630
- -------------------------------------------------------------------------------No.
SECURITIES AND EXCHANGE COMMISSION
Washington,WASHINGTON, D.C. 20549
----------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
----------------------------
ACADIA REALTY TRUST
----------------------------------------------
(Exact nameName of registrantRegistrant as specifiedSpecified in its charter)Its Charter)
Maryland 23-2715194
- ------------------------------------- ------------------------------------
(State or other jurisdiction ofOther Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
incorporation or organization)
20 Soundview Marketplace
Port Washington, New York 11050
(516) 767-8830
------------------------------------------------------------------------------Number)
Organization)
1311 Mamaroneck Avenue, Suite 260, White Plains, NY 10605
(Address, including zip code,Including Zip Code, and telephone
number, including area code,Telephone Number, Including Area Code,
of registrant's principal executive offices)
Ross DwormanRegistrant's Principal Executive Offices)
Kenneth F. Bernstein With copies to:
President and Chief Executive Officer Mark Schonberger, Esq.
Acadia Realty Trust 20 Soundview Marketplace
Port Washington, New York 11050
(516) 767-8830
------------------------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Mark Schonberger, Esquire
Battle FowlerPaul, Hastings, Janofsky & Walker LLP
1311 Mamaroneck Avenue, Suite 260 75 East 55th Street
White Plains, New York 10605 New York, New York 10022
(914) 288-8100 (212) 856-7000318-6000
(Name, Address, Including Zip Code, and
Telephone Number, Including Area Code,
of Agent For Service)
Approximate date of commencement of proposed sale to the public: From
time to time or at one time after the effective date of this Registration Statement.
---------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[__] /_/
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [ X ]/X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [__]/_/
If this Formform is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the
same offering. [__]/_/
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [__]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION/_/
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Title of securities to be Amount to be Proposed maximum Proposed maximum Amount of
registered registered offering price per share aggregate offering price registration fee
============================================================================================================================
Common Shares of
Beneficial Interest 250,000 shares(1) $18.96(2) $4,740,000 $557.89
- ----------------------------------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended,
this Registration Statement also covers such additional securities as may
hereinafter be offered or issued to prevent dilution resulting from share split,
share dividends, recapitalization or certain other capital adjustments.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(h) of the Securities Act, on the basis of
the average of the high and low prices of the Company's common shares as
reported by the New York Stock Exchange on July 18, 2005, which was within five
business days of the filing of the initial Registration Statement.
The registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the registrant will file a
further amendment which specifically states that this Registration Statement
will thereafter become effective in accordance with Section 8(a) OF THE
SECURITIES ACT OFof the
Securities Act of 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTIONor until this Registration Statement will become
effective on such date as the Commission, acting pursuant to said Section 8(a),
MAY DETERMINE.may determine.
The information in this Prospectusprospectus is not complete and may be changed. We may
not sellA
registration statement relating to these securities until the registration statementhas been filed with the
Securities and Exchange Commission isCommission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectusprospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any statejurisdiction where the
offer or sale is not permitted.
Subject to Completion Dated March 28, 2000
PROSPECTUS
250,000 COMMON SHARES OF BENEFICIAL INTEREST OF
ACADIA REALTY TRUST
26,719,319 Common Shares of Beneficial Interest
We are Acadia Realty Trust ("Acadia" or the "Company"), a Marylandstatutory
real estate investment trust formerly known as Mark Centers Trust. Thisformed under the laws of the State of Maryland. Our
common shares of beneficial interest ("Common Shares") which are the subject of
this prospectus relates to the offermay be offered and salesold from time to time by the personsperson listed
under the "Selling Shareholders"Shareholder" section of this prospectusprospectus.
The Selling Shareholder may sell its Common Shares directly or
indirectly in one or more transactions on any stock exchange or stock market on
which the Common Shares may be listed at the time of upthe sale, in privately
negotiated transactions, or through a combination of such methods. These sales
may be at fixed prices (which may be changed), at market prices prevailing at
the time of sale, at prices related to 26,719,319 of our common shares.such prevailing market prices or at
negotiated prices.
Our common shares tradeCommon Shares are listed on the New York Stock Exchange under the
symbol "AKR." The selling shareholders, from time to time, may offerOn July 18, 2005, the common shares
covered bylast reported sale price for our Common
Shares was $18.93 per share.
This prospectus has been prepared for the purpose of registering the
Common Shares which are the subject of this prospectus under the Securities Act
to allow for future sales by the Selling Shareholder to the public. The Selling
Shareholder may sell Common Shares directly to purchasers or through brokers or
dealers, which may act as agents or principals, or pursuant to a distribution by
one or more underwriters on a firm commitment or best efforts basis. Such
brokers or dealers may receive compensation in the New York Stock Exchangeform of commissions,
discounts or concessions from the Selling Shareholder and/or purchasers of the
Common Shares, or both (which compensation as to a particular broker or dealer
may be in other markets
where our common sharesexcess of customary commissions). In connection with such sales, the
Selling Shareholder and any participating broker or dealer may trade at pricesbe deemed to whichbe
"underwriters" within the meaning of the Securities Act, and any commissions
they agree.receive and the proceeds of any sale of Common Shares may be deemed to be
underwriting discounts and commissions under the Securities Act. We will not
receive any proceeds from the sale of common sharesthe Common Shares by the selling shareholders. We have agreed to bear certain expenses of registering the
common shares covered by this prospectus under federal and state securities
laws.
The selling shareholders and any agents or broker-dealers that
participate with them in the distribution of common shares covered by this
prospectus may be deemed "underwriters" within the meaning of the Securities Act
of 1933, as amended, and any commissions received by them on the resale of
common shares may be deemed to be underwriting commissions or discounts under
the Securities Act.Selling
Shareholder. See "Plan of Distribution" (p.31).
--------------------Distribution," herein.
---------------
Investing in our common sharesCommon Shares involves various risks. In considering
whether to purchase our common shares,Common Shares, you should carefully consider the matters
discussed under "Risk Factors" beginning on page 83 of this prospectus.
---------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined ifwhether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
--------------------offence.
This prospectus does not constitute an offer to sell securities in any
state to any person to whom it is unlawful to make such offer in such state.
The date of this prospectus is _______, 2000
909738.11, 2005.
TABLE OF CONTENTS
Page
WHERE YOU CAN FIND MORE INFORMATION..........................................3PROSPECTUS SUMMARY.............................................................1
RISK FACTORS...................................................................3
USE OF PROCEEDS................................................................3
SELLING SHAREHOLDER............................................................3
PLAN OF DISTRIBUTION...........................................................4
DESCRIPTION OF OUR COMMON SHARES...............................................6
RESTRICTIONS ON TRANSFERS OF CAPITAL SHARES AND ANTI-TAKEOVER PROVISIONS......10
FEDERAL INCOME TAX CONSIDERATIONS.............................................13
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS.............................23
LEGAL MATTERS.................................................................23
EXPERTS.......................................................................23
AVAILABLE INFORMATION.........................................................23
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................3
FORWARD-LOOKING INFORMATION..................................................4REFERENCE...............................23
-i-
PROSPECTUS SUMMARY...........................................................5
RISK FACTORS.................................................................6
OUR COMPANY..................................................................9
DESCRIPTION OF OUR COMMON SHARES............................................10
USE OF PROCEEDS.............................................................14
INTERESTS OF NAMED EXPERTS AND COUNSEL......................................14
FEDERAL INCOME TAX CONSIDERATIONS...........................................14
SELLING SHAREHOLDERS........................................................22
PLAN OF DISTRIBUTION........................................................31
EXPERTS.....................................................................32
LEGAL MATTERS...............................................................32
909738.11
2
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-3 under the Securities Act to register the
common shares offeredSUMMARY
This summary highlights information included elsewhere in or
incorporated by reference in this prospectus. This prospectus is part of the
registration statement. This prospectus doesIt may not contain all of the
information containedthat is important to you. You should read the following summary
together with the more detailed information included or incorporated by
reference in this prospectus, including risk factors regarding our business and
the Common Shares being offered hereby.
In this prospectus, we refer to Acadia together with its subsidiaries
(unless the context otherwise requires) as "we," "us," "our," or "our Company."
Our Company
Overview
We are Acadia Realty Trust, a Maryland real estate investment trust
("REIT") formed on March 4, 1993. We are a fully integrated, self-managed and
self-administered equity REIT focused on the ownership, acquisition,
redevelopment and management of neighborhood and community shopping centers. All
of our assets are held by, and all of our operations are conducted through,
Acadia Realty Limited Partnership, a Delaware limited partnership, and its
majority-owned subsidiaries. We refer to Acadia Realty Limited Partnership and
its majority-owned subsidiaries as the "Operating Partnership" throughout this
prospectus.
As of the date of this prospectus, we controlled 98% of the Operating
Partnership as the sole general partner. As the general partner, we are entitled
to share, in proportion to our percentage interest, in the registration statement because we have omitted certain partscash distributions
and profits and losses of the registration statementOperating Partnership. The limited partners
represent entities or individuals who contributed their interests in accordance withcertain
properties or partnerships to the rules and regulationsOperating Partnership in exchange for common
or preferred units of limited partnership interest, which we refer to as "OP
Units." The common OP Units are exchangeable for our Common Shares on a
one-for-one basis, subject to adjustment for certain events.
As of the SEC. For further information,date of this prospectus, we refer youoperate 69 properties which we
own or have an ownership interest in, consisting of 64 neighborhood and
community shopping centers, one shopping center under development, one enclosed
mall, one mixed-use property (retail/residential) and two multifamily
properties, all of which are located in the Northeast, Mid-Atlantic and Midwest
regions of the United States and, in total, comprise approximately 9.6 million
square feet.
Our primary business objective is to acquire and manage commercial
retail properties that will provide cash for distributions to our shareholders
while also creating the potential for capital appreciation to enhance investor
returns. Currently, the primary conduit for our acquisition program is through a
joint venture, Acadia Strategic Opportunity Fund II, LLC ("Fund II"), which we
and six institutional investors formed on June 15, 2004. The investors have
committed $240 million. We have committed an additional $60 million of investor
capital to the registration statement, which
you may readventure and copy at the public reference facilities maintainedare entitled to receive standard management,
construction and leasing fees with respect to properties acquired by the SEC
at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549joint
venture. In addition, we are entitled to an asset management fee equal to 1.5%
of the capital committed as well as an incentive payment of 20% after the return
of all investor capital with an 8% preferred return. As of the date of this
prospectus, Fund II has invested in approximately $66.8 million of properties
and we and the investors have contributed equity to Fund II in the amount of
$9.8 million and $39.0 million, respectively. Total expected costs to complete
these projects are estimated between $135.0 and at the SEC's Regional Offices at 7 World Trade Center, 13th Floor, New York,
New York 10048 and Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You may obtain copies at the prescribed rates from the
Public Reference Section of the SEC at its principal office in Washington, D.C.
You may call the SEC at 1-800-SEC-0330 for further information about the public
reference rooms. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding our company. You may
access the SEC's web site at "http://www.sec.gov."
We$143.0 million.
Our Common Shares are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. As a result, we are required to file reports,
proxy statements and other information with the SEC. These materials can be
copied and inspected at the locations described above. Copies of these materials
can be obtained from the Public Reference Section of the SEC at 450 Judiciary
Plaza, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates. Our common
shares are listedtraded on the New York Stock Exchange under the
symbol "AKR."
You may
read our reports, proxy and other information statements which we file at the
offices of the NYSE at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allowsTax Status
We have elected to be treated as a REIT for federal income tax
purposes. This treatment permits us to "incorporatededuct dividend distributions to our
shareholders for federal income tax purposes, thus effectively eliminating the
"double taxation" that generally results when a corporation earns income and
distributes that income to its shareholders by reference" the informationway of dividends. In order to
maintain our status as a REIT, we filemust comply with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be parta number of
1
requirements under federal income tax law. See "Risk Factors" and "Federal
Income Tax Considerations" beginning on pages 3 and 12, respectively, of this
prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
oprospectus.
Our Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, filed with the SEC on March 31, 1999 (SEC
File No. 001-12002);
o Our Quarterly Report on Form 10-Q for the quarter ended
March 31, 1999, filed with the Commission on May 17, 1999;
o Our Quarterly Report on Form 10-Q for the quarter ended
June 30, 1999, filed with the Commission on August 13, 1999;
o Our Quarterly Report on Form 10-Q for the quarter ended
September 30, 1999, filed with the Commission on November 15,
1999;
o Our Definitive Proxy Statement on Schedule 14A prepared in
connection with our Annual Meeting of Shareholders held on
June 16, 1999, filed with the Commission on May 3, 1999;
o Our Report on Form 8-K filed with the Commission on
January 5, 1999; and
o The description of our common shares of beneficial interest
contained in our registration statement on Form 8-A together
with all amendments and reports updating such description
dated May 21, 1993 (SEC File No. 33-6008).
909738.11
3
You may request a copy of these filings (not including the exhibits to
such documents unless the exhibits are specifically incorporated by reference in
the information contained in this prospectus), at no cost, by writing or
telephoning us at the following address:
Investor Relations
Acadia Realty Trust
20 Soundview Marketplace
Port Washington, New York 11050
Telephone requests may be directed to (516)767-8830.
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
Statements contained in this prospectus as to the contents of any
contract or document are not necessarily complete and in each instance reference
is made to the copy of that contract or document filed as an exhibit to the
registration statement or as an exhibit to another filing, each such statement
being qualified in all respects by such reference and the exhibits and schedules
thereto.
FORWARD-LOOKING INFORMATION
Certain information both included and incorporated by reference in this
prospectus may contain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Securities and Exchange Act of
1934 and as such may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of our
company to be materially different from future results, performance or
achievements expressed or implied by such forward-looking statements.
Forward-looking statements, which are based on certain assumptions and describe
our future plans, strategies and expectations are generally identifiable by use
of the words "may," "will," "should," "expect," "anticipate," "estimate,"
"believe," "intend" or "project" or the negative thereof or other variations
thereon or comparable terminology. Factors which could have a material adverse
effect on the operations and future prospects of our company include, but are
not limited to, changes in: economic conditions generally and the real estate
market specifically, legislative/regulatory changes (including changes to laws
governing the taxation of REITs), availability of capital, interest rates,
competition, supply and demand for retail space and multi-family housing in our
current and proposed market areas and general accounting principles, policies
and guidelines applicable to REITs. These risks and uncertainties should be
considered in evaluating any forward-looking statements contained or
incorporated by reference herein.
909738.11
4
PROSPECTUS SUMMARY
This Summary only highlights the more detailed information appearing
elsewhere in this prospectus or incorporated herein by reference. As this is a
summary, it may not contain all information that is important to you. You should
read this entire prospectus carefully before deciding whether to purchase our
common shares.
Throughout this Prospectus, the terms "we", "us", "our company", "the
company", "the trust" and "Acadia" are all used in reference to Acadia Realty.
The term "operating partnership" is used in reference to Acadia Realty Limited
Partnership, a Delaware limited partnership, formerly known as Mark Centers
Limited Partnership, which is our majority-owned subsidiary. Lastly, the term
"OP Units" is used in reference to units of limited partnership interest in the
operating partnership.
The Company
We are a fully-integrated and self-managed real estate investment trust.
We are primarily engaged in the ownership, acquisition, redevelopment and
management of neighborhood and community shopping centers, and multi-family
properties. We were organized in March, 1993, and until August, 1998, our name
was Mark Centers Trust. Our common shares trade on the New York Stock Exchange
under the symbol "AKR."
We are formed under the laws of the State of Maryland.Offices
Our principal executive offices are located at 20 Soundview Marketplace, Port Washington,1311 Mamaroneck Avenue,
Suite 260, White Plains, NY 10605, and our telephone number is (914) 288-8100.
Recent Developments
On May 16, 2005, we closed on a $65 million line of credit with Bank of
America, N.A. which is collateralized by five of our properties. Outstanding
amounts under the facility, which has an initial term of five years, bear
interest at LIBOR plus 1.3%. To date, we have drawn a total of $32.0 million
under this facility.
On July 7, 2005, we sold the Berlin Shopping Center, located in Berlin,
New Jersey, for a gross sales price of $5.75 million. Simultaneously, we
acquired a shopping center located on Staten Island, New York, 11050. Our phone numberfor $15.8
million. The shopping center, which totals 60,000 square feet, is (516) 767-8830.subject to a
ground lease of 23 years and is improved with a supermarket and drug store as
well as 13,000 square feet of shop space.
Declaration of Dividends
On May 18, 2005, our board of trustees declared a quarterly dividend of
$0.1725 per share payable on July 15, 2005 to common shareholders and holders of
common OP Units of record as of June 30, 2005.
Securities That May Be Offered
This prospectus relates to the offer and sale from time to time by the
personsperson listed under the "Selling Shareholders"Shareholder" section of this prospectus of (i) up
to 16,061,238 common shares and (ii) up to 10,658,081 common shares250,000 Common Shares which may be issued upon the exchange of common OP Units
held by certain of the selling
shareholders including 294,933 OP Units issuable upon the conversion of
preferred OP units.Selling Shareholder. We are registering the common sharesCommon Shares covered by
this prospectus to satisfy our obligations under a registration rights agreementsagreement
with the selling shareholders.Selling Shareholder.
We will not receive any cash proceeds from the sale of the common sharesour Common
Shares by the selling shareholders.Selling Shareholder.
Risk Factors
Investing in our common sharesCommon Shares involves various risks. In considering
whether to purchase our common shares,Common Shares, you should carefully consider the matters
discussed under "Risk Factors" beginning on page 83 of this prospectus.
Tax Status of the Company
Acadia has elected to qualify as a REIT under Sections 856 through 860
of the Internal Revenue Code of 19862
RISK FACTORS
Investing in each year since 1993. As long as we
qualify for taxation as a REIT, we generally will not be subject to federal
income tax onour securities involves risks that portion of our ordinary incomecould affect us and capital gains that is
distributed to our shareholders. Even if we qualify for taxation as a REIT, we
may be subject to certain state and local taxes on our income and property and
to federal income and excise taxes on our undistributed income. See "Risk
Factors--Risk factors relating to our
business as a REIT" (p.7) and "Federal
Income Tax Considerations" (p.14) for a more detailed explanation.
909738.11
5
RISK FACTORS
You should consider carefullywell as the followingreal estate industry generally. Please see the risk
factors together with
alldescribed in our Annual Report on Form 10-K for the year ended December
31, 2004, which is incorporated by reference into this prospectus. Much of the
business information as well as the financial and operational data contained in
our risk factors is updated in our periodic reports, which are also incorporated
by reference into this prospectus. Although we have tried to discuss key
factors, please be aware that other risks may prove to be important in the
future. New risks may emerge at any time and we cannot predict such risks or
estimate the extent to which they may affect our financial performance. Before
purchasing our securities, you should carefully consider the risks discussed in
our Annual Report on Form 10-K for the year ended December 31, 2004 and the
other information included orin this prospectus, as well as the documents incorporated by
reference herein. Each of the risks described could result in a decrease in the
value of our securities and your investment therein.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Common Shares
which may be sold pursuant to this prospectus before you decide to purchase our common shares. This section
includes or refers to certain forward-looking statements. You should refer tofor the explanationaccount of the qualificationsSelling
Shareholder. All such proceeds, net of brokerage commissions, if any, will be
received by the Selling Shareholder. See "Selling Shareholder," below, and limitations on such forward-looking
statements discussed"Plan
of Distribution," beginning on page 4 of this prospectus.
We could encounter problemsSELLING SHAREHOLDER
This prospectus covers offers and sales from time to time by the
Selling Shareholder of up to 250,000 Common Shares which may be issued to the
Selling Shareholder upon exchange of common OP Units held by the Selling
Shareholder. Under Rule 416 of the Securities Act, the Selling Shareholder may
also offer and sell Common Shares issued to the Selling Shareholder as a result
of, among other events, stock splits, stock dividends and similar events that
affect the number of Common Shares held by the Selling Shareholder.
The following table sets forth certain information as to the beneficial
ownership of our useCommon Shares as of debt.
We borrow money to payJune 30, 2005 for the acquisition, development and operationSelling Shareholder:
- ----------------------------------------------------------------------------------------------------------
Name Common Shares Percentage of
Beneficially Common Shares Common Shares to
Owned Before Common Shares Beneficially Owned be Owned After
Offering(1) Offered After Offering Offering
- ----------------------------------------------------------------------------------------------------------
Klaff Realty, L.P. -0- 250,000 -0- 0%
- ----------------------------------------------------------------------------------------------------------
(1) The number of properties and for other general corporate purposes. Our declaration of trust
(as amended) and our bylaws do not limit the amount of indebtedness that we may
incur. By borrowing money, we expose ourselves to several problems, including
the following:
o inability to meet existing obligations;
o reduced access to additional debt; and
o loss of our property as a result of any default on existing debt.
As of September 30, 1999, Acadia had total mortgage debt of $308.6
million of which $249.5 million was fixed-rate and $59.1 million was variable
rate based upon either LIBOR or the lender's commercial paper rate plus certain
spreads. Our mortgage indebtednessshares beneficially owned is generally nonrecourse to us. However, even
with respect to nonrecourse mortgage indebtedness, we could be obligated to pay
our lenders deficiencies resulting from, among other things, fraud,
misapplication of funds and environmental liabilities.
A downturn in the economy could make it difficult for us to borrow money
on favorable terms. If we are unable to borrow, we might need to sell some of
our assets at unfavorable prices in order to pay our loans. We could encounter
several problems, including:
o insufficient cash flow necessary to meet required payments of
principal and interest;
o an increase on variable interest rates on indebtedness; and
o the inability to refinance existing indebtedness on favorable
terms or at all.
Increase in market interest rates could have an adverse effect on the price of
our common shares.
One of the factors that may influence the prices for the common shares
in public trading markets will be the annual yield from our distributions on the
common shares as compared to yields on certain financial instruments. An
increase in market interest rates will result in higher yields on certain
financial instruments, which could adversely affect the market prices for our
common shares.
We may suffer an uninsured loss.
We maintain comprehensive liability, fire, flood (where appropriate),
extended coverage, and rental loss insurance with respect to our properties with
policy specifications, limits, and deductibles customarily carried for similar
properties. Certain types of losses, however, may be either uninsurable or not
economically insurable, such as losses due to earthquakes, riots or acts of war.
Should an uninsured loss occur, we could lose both our investments in, and
anticipated cash flow from, a property.
909738.11
6
The loss of a key executive officer could have an adverse effect on the company.
Although we have entered into employment agreements with our Chairman
and Chief Executive Officer, Ross Dworman and our President, Kenneth F.
Bernstein, the loss of any of their services could have an adverse effect on our
operations.
Risk factors relating to our business as a REIT:
As a real estate company, our ability to generate revenues and pay distributions
to our shareholders is affecteddetermined under rules
promulgated by the risks inherent in owning real property
investments.
We derive most of our revenue from investments in real property. Real
property investments are subjectCommission and includes outstanding Common Shares or
restricted Common Shares and options for Common Shares that have vested or
will vest within 60 days.
3
PLAN OF DISTRIBUTION
This prospectus relates to different typesthe offer and degrees of risk that may
reduce the value of our assets and our ability to generate revenues. The factors
that may reduce our revenues, net income and cash available for distributions to
shareholders include the following:
o local conditions, such as an oversupply of space or a reduction
in demand for real estate in an area;
o competition from other available space;
o the ability of the owner to provide adequate maintenance;
o insurance and variable operating costs;
o government regulations;
o changes in interest rate levels;
o the availability of financing;
o potential liability due to changes in environmental and other
laws; and
o changes in the general economic climate.
We may not be able to sell our assets if we need to do so.
Real estate investments are relatively illiquid, and therefore we may
not be able to sell one or more of our properties in order to respond promptly
to changes in economic or other conditions. In addition, the Internal Revenue
Code limits a REIT's ability to sell properties held for fewer than four years.
Our inability to sell one or more of our properties could harm our performance
and ultimately our ability to make distributions to our shareholders.
We could have financial problems as a result of our tenants' financial
difficulty.
Our commercial and residential tenants may,sale from time to time experience downturnsby the
person listed under the "Selling Shareholder" section of this prospectus of up
to 250,000 Common Shares. As used in their businesses/personal financesthis section of the prospectus, the term
"Selling Shareholder" includes the Selling Shareholder named in the table above
and any of its donees, pledgees, transferees or other successors in interest who
receive shares offered hereby from a Selling Securityholder as a gift, pledge,
or other non-sale related transfer and who subsequently sell any of such shares
after the date of this prospectus. We have registered the Selling Shareholder's
Common Shares for resale to provide the Selling Shareholder with freely
tradeable Common Shares. However, registration of the Selling Shareholder's
Common Shares does not necessarily mean that the Selling Shareholder will offer
or sell any of its shares. We will not receive any proceeds from the offering or
sale of the Selling Shareholder's shares.
The Selling Shareholder may sell our Common Shares to which this
prospectus relates from time to time on the New York Stock Exchange, where our
Common Shares are listed for trading, in other markets where our Common Shares
may be traded, in negotiated transactions, through underwriters or dealers,
directly to one or more purchasers, through agents or in a combination of such
methods of sale. The Selling Shareholder may sell our Common Shares at prices
which are current when the sales take place or at other prices to which it
agrees. All costs, expenses and fees in connection with the registration of the
Common Shares offered hereby will be borne by us. Brokerage commissions and
similar selling expenses, if any, attributable to the sale of Common Shares
offered hereby will be borne by the Selling Shareholder.
The Selling Shareholder may effect such transactions by selling the
Common Shares offered hereby directly to purchasers or through broker-dealers,
which may resultact as agents or principals, or pursuant to a distribution by one or
more underwriters on a firm commitment or best-efforts basis. The methods by
which the Common Shares which are the subject of this prospectus may be sold
include: (a) a block trade in their failurewhich the broker-dealer will attempt to make their rental paymentssell
shares as agent but may position and resell a portion of the block as principal
to us when due. Missed rental
payments,facilitate the transaction; (b) purchases by a broker-dealer as principal and
resale by the broker-dealer for its account; (c) ordinary brokerage transactions
and transactions in which the broker solicits purchasers; (d) an exchange
distribution in accordance with the rules of the New York Stock Exchange; (e)
privately negotiated transactions; and (f) underwritten transactions.
The Selling Shareholder may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with those
transactions, broker-dealers and other financial institutions may engage in
short sales of our Common Shares in the aggregate, could impaircourse of hedging the related positions
they assume. The Selling Shareholder may also sell our funds from operationsCommon Shares short and
subsequently, our abilityredeliver the Common Shares covered by this prospectus to make distributions to our shareholders.close out the short
positions. In addition, at any time, our tenantsthe Selling Shareholder may seekenter into option or other
transactions with broker-dealers or other financial institutions which require
the protection of the bankruptcy
laws and have their leases either rejected or terminated. Our tenants' failure
to affirm their leases following bankruptcy could similarly impair our funds
from operations and ability to make distributions.
Our acquisition and development of real estate could cost more than we
anticipate.
We may acquire existing retail and multi-family housing propertiesdelivery to the extent we can acquire these properties on acceptable terms. We could incur
higher than anticipated costs for improvements to these properties
909738.11
7
to conform them to standards established for the intended market position. Once
improved, the properties may not perform as expected.
We also intend to pursue retail and multi-family housing development
projects. Developing properties generally carries more risk than acquiring
existing properties. For example, development projects usually require
governmental and other approvals, which we may not be able to obtain.
Furthermore, approvals frequently require the improvement of public
infrastructurebroker-dealers or other activities to mitigatefinancial institutions of Common
Shares offered by this prospectus, which shares the effects of the proposed
development, which may cost more than we anticipate. Our development activities
will also entail other risks, including:
o that we will devote financial and management resources to projects
which may not come to fruition;
o that we will not complete a development project as scheduled;
o that we will incur higher construction costs than anticipated;
o that occupancy rates and rents at a completed project will be less
than anticipated; and
o that expenses at a completed development will be higher than
anticipated.
These risks may harm our results of operations and impair our ability to make
distributions to our shareholders.
Integrating the aforementioned acquisition and development properties
into our current systems and procedures presents a challenge to our management.
Failure to do so could cause us financial harm and impair our ability to make
distributions to our shareholders.
We could incur unanticipated expenses if we fail to qualify as a REIT.
We have elected to qualify as a REIT under the Internal Revenue Code.
We believe that since 1993 we have satisfied the REIT qualification
requirements. However, the IRS could challenge our REIT qualification for
taxable years still subject to audit. Moreover, we may fail to qualify as a REIT
in future years. Qualification as a REIT involves the application of highly
technical and complex Internal Revenue Code provisions for which there are only
limited judicial or administrative interpretations. For example, in order to
qualify as a REIT, we must derive at least 95% of our gross income in any year
from qualifying sources, and we must distribute annually to shareholders 95% of
our REIT taxable income, excluding net capital gains. In addition, REIT
qualification involves the determination of factual matters and circumstances
not entirely within our control.
If we were to operate in a manner that prevented us from qualifying as
a REIT, or if we were to fail to qualify for any reason, a number of adverse
consequences would result. If in any taxable year we fail to qualify as a REIT,
we would not be allowed to deduct distributions to shareholders in computing our
taxable income. Furthermore, we would be subject to federal income tax on our
taxable income at regular corporate rates. Unless entitled to statutory relief,
we would also be disqualified from treatment as a REIT for the four taxable
years following the year during which qualification was lost. As a result, the
funds available for distribution to our shareholders would be reduced for each
of the years involved. Although we currently intend to operate as a qualified
REIT, future economic, market, legal, taxbroker-dealers or other
considerationsfinancial institutions may impair our
REIT qualificationresell pursuant to this prospectus (as supplemented
or amended to reflect the transaction).
Broker-dealers may cause our board of trustees to revoke the REIT
election. See "Federal Income Tax Considerations" (p.14).
We could incur costs from environmental problems even though we did not cause,
contribute to or know about them.
Because we own, operate, manage and develop real estate, for liability
purposes we may be considered under the law to be an owner or operator of those
properties or as having arranged for the disposal or treatment of hazardous or
toxic substances. As a result, we could have to pay removal or remediation
costs. Federal, state and local laws often impose liability regardless of
whether the owner or operator knew of, or was responsible for, the presence of
the hazardous or toxic substances. The presence of those substances, or the
failure to properly remediate them, may
909738.11
8
impair the owner's or operator's ability to sell or rent the property or to
borrow using the property as collateral. A person who arranges for the disposal
or treatment of hazardous or toxic substances may also be liable for the costs
of removing or remediating the substances at a disposal or treatment facility,
whether or not that person owns or operates the facility. Furthermore,
environmental laws impose liability for release of asbestos-containing materials
into the air. If we were ever held responsible for releasing asbestos-containing
materials, third parties could seek recovery from us for personal injuries.
Thus, we might have to pay other costs, including governmental fines and costs
related to personal injuries and property damage, resulting from the
environmental condition of our properties, regardless of whether we actually had
knowledge of or contributed to those conditions.
Rent control/stabilization legislation may reduce the rental income we receive from residential properties.
While none of our five residential properties are located in
jurisdictions which have adopted rent control/stabilization legislation, such
legislation may be enacted in these jurisdictions in the future. Similarly, we
may purchase additional properties in jurisdictions where such legislation is
already in place. In either event, our income from residential leases could be
reduced, as could our ability to recover increases in operating expenses and the
costs of capital improvements.
Laws benefitting disabled persons may result in unanticipated expenses.
A number of Federal, state and local laws ensure that disabled persons
have reasonable access to public buildings. For example, the Fair Housing
Amendments Act of 1988 (the "FHAA") requires that apartment properties first
occupied after March 13, 1990, be accessible to the handicapped. Noncompliance
with the FHAA could result in an imposition of fines, an award of damages to
private litigants, and/or an order to correct any non-complying feature (which
could result in substantial capital expenditures). Although we believe that our
properties are substantially in compliance with laws such as the FHAA, we may
incur unanticipated expenses associated with such laws.
OUR COMPANY
Our company (formerly known as Mark Centers Trust) is a fully
integrated and self-managed REIT focused primarily on the ownership,
acquisition, redevelopment and management of neighborhood and community shopping
centers and multi-family properties. All of our assets are held by, and all of
our operations are conducted through, the operating partnership (formerly known
as Mark Centers Limited Partnership) and its majority owned partnerships. As of
September 30, 1999, our company owned a 71% interest in the operating
partnership and the selling shareholders owned the remaining 29%compensation in the form of OP Units,discounts,
concessions, or commissions from the Selling Shareholder and/or the purchasers
of the Common Shares offered hereby for whom such broker-dealers may act as
agents or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). In
connection with an underwritten offering, underwriters or agents may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholder or from purchasers of the shares which are exchangeable onthe subject of
this prospectus for whom they may act as agents, and underwriters may sell the
shares which are the subject of this prospectus to or through dealers, and such
dealers may receive compensation in the form of discounts, concessions or
commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents.
We will file a one-for-one basis (subjectsupplement to adjustmentthis prospectus, if required, pursuant to
Rule 424(b) under the Securities Act upon being notified by the Selling
Shareholder that any material arrangements have been entered into with a
broker-dealer for certain events) for common shares. Our companythe sale of shares through a block trade, special offering,
exchange or secondary distribution or a purchase by a broker-dealer.
4
In addition, upon receiving notice from the Selling Shareholder that a
donee, pledgee or transferee or other successor in interest intends to sell more
than 500 shares covered by this prospectus, we will at all times befile a supplement to this
prospectus pursuant to Rule 424(b) under the sole
general partnerSecurities Act to identify the
non-sale transferee who may sell the shares which are the subject of this
prospectus.
The Selling Shareholder and any underwriters, dealers or agents
participating in the distribution of the operating partnership.
Our principal officesshares which are located at 20 Soundview Marketplace, New York
11050,the subject of this
prospectus may be deemed to be "underwriters" within the meaning of the
Securities Act, and our telephone number is (516) 767-8830.
909738.11
9any profit on the sale of such shares by the Selling
Shareholder and any commissions received by any such broker-dealers may be
deemed to be underwriting commissions under the Securities Act.
5
DESCRIPTION OF OUR COMMON SHARES
The following description of our common sharesCommon Shares does not purport to be
complete and is qualified in its entirety by reference to our declaration of
trust and bylaws, each as amended and restated, copies of which are exhibits to
the registration statement of which this prospectus is a part. See "Where you
can find more information" (p.3)."Available
Information" on page 22 of this prospectus.
General
Under our declaration of trust, we have authority to issue 100,000,000
common shares,Common Shares, par value $0.001 per share. All common shares,Common Shares, when issued, are
duly authorized, fully paid and nonassessable. This means that the full price
for the shares has been paid at the time of issuance and consequently that any
holder of such shares will not later be required to pay us any additional money
for the same. As of September 30, 1999, 26,044,615 common sharesMarch 31, 2005, 31,394,210 Common Shares were issued and
outstanding, as were 10,484,143642,255 common OP Units which are convertible into the same
number of common shares.Common Shares.
In addition, 2,212 convertible preferredSeries A Preferred OP Units were issued at a price
of $1,000 per Unit to certain selling shareholders on November 18,16, 1999. These
preferredSeries A Preferred OP Units which are convertible into common OP Units at a conversion
price of $7.50 per common Unit have a distribution
preference and entitle the holderare entitled to a 9.0% dividend yield. Anypreferred quarterly distribution
of the greater of (a) $22.50 per Series A Preferred OP Unit (9% annually) or (b)
the quarterly distribution attributable to a Series A Preferred OP Unit if such
unit were converted into a Common OP Unit. A total of 1,580 Series A Preferred
OP Units which
result fromwere outstanding as of March 31, 2005, following the conversion of 632
Series A Preferred OP Units during 2003.
On January 27, 2004, 4,000 Series B Preferred OP Units were issued in
connection with the acquisition of the rights to provide asset management,
leasing, disposition, development and construction services for an existing
portfolio of retail properties from Klaff Realty, L.P. ("Klaff"). These Units
have a stated value of $1,000 per Unit and are entitled to a quarterly preferred
distribution of the greater of (i) $13.00 (5.2% annually) per Unit or (ii) the
quarterly distribution attributable to a Preferred OP Unit if such preferredUnit were
converted into a common OP Unit. The Series B Preferred OP Units are subjectconvertible
into common OP Units based on the stated value of $1,000 divided by $12.82 at
any time. Additionally, the holder of the Series B Preferred OP Units may redeem
them at par for either cash or common OP Units (at our option) after the earlier
of the third anniversary of their issuance, or the occurrence of certain events,
including a change in control of our Company. Finally, after the fifth
anniversary of the issuance, we may redeem the Series B Preferred OP Units and
convert them into common OP Units at market value as of the redemption date. In
response to a 12-monthsubsequent request from Klaff, our Board of Trustees approved a
waiver on February 24, 2004 which allows Klaff to redeem 1,500 Series B
Preferred OP Units at any time. Klaff has not redeemed any Series B Units as of
the date of this Form S-3 filing.
Effective February 15, 2005, we acquired the balance of Klaff's rights
to provide the above referenced services and certain potential future revenue
streams. In consideration for this transaction, we issued 250,000 restricted
Common OP Units to Klaff. These Units have a stated value of $16.00 per unit and
are convertible into our Common Shares on a one-for-one basis after a five year
lock-up period ending November 16, 2000, during which time they cannot be
converted into common shares.period. The Common Shares issuable upon conversion of these Common OP
Units are the subject of this prospectus.
Our Common Shares have equal dividend, liquidation and other rights,
and have no preference, exchange or appraisal rights, except for any appraisal
rights provided by Maryland law. Holders of our Common Shares have no
conversion, sinking fund or redemption rights, or preemptive rights to subscribe
for any of our securities.
Distributions
Holders of our Common shareholdersShares may receive distributions out of assets
that we can legally use to pay distributions, when and if they are authorized
and declared by our board of trustees. Each common shareholder shares in the
same proportion as other common shareholders out of the assets that we can
legally use to pay distributions after we pay or make adequate provision for all
of our known debts and liabilities in the event we are liquidated, dissolved or
our affairs are wound up.
6
Voting Rights
Holders of common sharesCommon Shares have the power to vote on all matters
presented to our shareholders, including the election of trustees, except as
otherwise provided by Maryland law. Our declaration of trust prohibits us from
merging or selling all or substantially all of our assets without the approval
of two-thirds of the outstanding shares that are entitled to vote on such
matters. Holders of common sharesCommon Shares are entitled to one vote per share.
There is no cumulative voting in the election of our trustees, which
means that holders of more than 50% of the common sharesCommon Shares voting for the election
of trustees can elect all of the trustees if they choose to do so and the
holders of the remaining shares cannot elect any trustees.
Other Rights
All common shares have equal dividend, liquidation and other rights,
and have no preference, appraisal or exchange rights, except for any appraisal
rights provided by Maryland Law. Holders of our common shares have no
conversion, sinking fund or redemption rights, or preemptive rights to subscribe
for any of our securities.
Restrictions on Transfer
To qualify as a REIT under the Internal Revenue Code of 1986, we must
satisfy certain ownership requirements. Specifically, not more than 50% in value
of our outstanding common sharesCommon Shares may be owned, directly or indirectly, by five
or fewer individuals (as defined in the Internal Revenue Code of 1986 to include
certain entities) during the last half of a taxable year, and the common sharesCommon Shares
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of twelve months or during a proportionate part of a shorter
taxable year. We must also satisfy certain income requirements to maintain our
REIT status. One such requirement is that at least 75% of our company's gross
income for each calendar year must consist of rents from real property and
income from 909738.11
10
certain other real property investments. This is complicated by the
fact that the rents received by the operating partnership will not qualify as
rents from real property if we own, actually or constructively, 10% or more of
the ownership interests in our lessees, within the meaning of section
856(d)(2)(B) of the Internal Revenue Code of 1986, as amended. See "Federal
Income Tax Considerations--Requirements for Qualification--Income Tests" (p.16).Considerations--General" beginning on page 12 of this prospectus.
Because our board of trustees believes it is essential for us to
continue to qualify as a REIT, our declaration of trust contains provisions
aimed at satisfying the requirements described above. In regard to the ownership
requirements, the declaration of trust provides that subject to certain
exceptions, no person may own, or be deemed to own by virtue of the attribution
provisions of the Internal Revenue Code of 1986, more than 4% of our outstanding
common shares.Common Shares. The Trustees may waive this 4% limitation if evidence
satisfactory to them or our tax counsel is presented that such ownership will
not jeopardize our status as a REIT. As a condition of such waiver, the Trustees
may require opinions of counsel satisfactory to them and/or an undertaking from
the applicant with respect to preserving our REIT status.
The trustees of Mark Centers Trust waived the 4% ownership limitation
in August, 1998 when certain affiliates of RD Capital, Inc. received shares in
consideration of their contribution to Mark Center Limited Partnership. On two
subsequent occasions, our trustees permitted investors owing in excess of 4% of
the trust'sTrust's outstanding shares to acquire additional shares through open market
purchases transacted during specified three-month windows.
In addition, our declaration of trust provides that any purported
transfer or issuance of shares or securities transferable into shares which
would (i) violate the 4% limitation described above, (ii) result in shares being
owned by fewer than 100 persons for purposes of the REIT provisions of the
Internal Revenue Code of 1986, (iii) result in Acadiaour Company being "closely held"
with the meaning of Section 856(h) of the Internal Revenue Code of 1986, or (iv)
otherwise jeopardize our REIT status under the Internal Revenue Code (including
a transfer which would cause Acadiaus to own, actually or constructively, 9.8% or more
of the ownership interests in one of our lessees) will be null and void ab
initio (from the beginning). Moreover, common sharesCommon Shares transferred, or proposed to
be transferred, in contravention of the above will be subject to purchase by the
Acadiaus
at a price equal to the lesser of (i) the price stipulated in the challenged
transaction and (ii) the fair market value of such shares (determined in
accordance with the rules set forth in our declaration of trust).
All certificates representing the common sharesCommon Shares bear a legend referring
to the restrictions described above.
7
The ownership limitations described above could have the effect of
delaying, deferring or preventing a takeover or other transaction in which
holders of some, or a majority, of common sharesCommon Shares might receive a premium for
their shares over the then prevailing market price or which such holders might
believe to be otherwise in their best interest.
Registration Rights
The selling shareholders and certain other holders of OP Units entered
into Registration Rights and Lock-Up Agreements with Acadia whereby the selling
shareholders and OP Unit holders agreed not to sell or otherwise transfer their
common shares and Units during a specified lockup period in exchange for certain
registration rights. We are filing the registration statement of which this
prospectus is a part pursuant to the such agreements.
The Registration Rights and Lock-Up Agreements provide that we will
indemnify and hold harmless the selling shareholders against losses, claims,
damages, or liabilities (or actions in respect thereof) to which such
individuals may become subject under Federal and state securities laws which
arise out of (i) any untrue statement or alleged untrue statement of a material
fact contained in a registration statement (or any amendment or supplement
thereto) pursuant to which their common shares were registered under the
Securities Act of 1933, as amended, (ii) the omission or alleged omission from a
registration statement of a material fact required to be stated therein or
necessary to make the statements therein not misleading, (iii) any untrue
statement or alleged untrue statement of a material fact contained in any
prospectus, or (iv) the omission or alleged omission from a registration
statement of a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they
909738.11
11
were made, not misleading. The Registration Rights and Lock-Up Agreements also
provide that we will reimburse certain of the selling shareholders (and the
officers, directors or controlling persons of those selling shareholders) for
any legal or any other expenses reasonably incurred by such individuals in
connection with investigating or defending any such loss, claim, damage,
liability or action.
However, the indemnity discussed above does not apply to a selling
shareholder if the loss, claim, damage or liability arises out of (i) any untrue
statement or omission made by Acadia in a registration statement, preliminary
prospectus or prospectus (or any amendment or supplement thereto) in reliance
upon, and in conformity with, written information furnished to Acadia by a
selling shareholder specifically for use in, or the preparation of, such
registration statement, preliminary prospectus or prospectus (or any amendment
or supplement thereto), or (ii) such selling shareholder's failure to deliver an
amended or supplemental prospectus, after having been provided copies of any
such amended or supplemental prospectus by Acadia, if such loss, liability,
claim, damage or expense would not have arisen had such delivery occurred.
Transfer Agent and Registrar
The transfer agent and registrar for our common sharesCommon Shares is American
Stock Transfer & Trust Company which has an address at 40 Wall Street, New York,
NY 10005.
Declaration of Trust and Bylaw Provisions and Certain Provisions of Maryland Law
Number of Trustees; Election of Trustees, Removal of Trustees, the
Filling of Vacancies. Our declaration of trust provides that the board of
trustees will consist of not less than two nor more than fifteen persons, and
that the number of trustees will be set by the trustees then in office. Our
board currently consists of sixseven trustees, each of whom serves until the next
annual meeting of shareholders and until his successor is duly elected and
qualified. Election of each trustee requires the approval of a plurality of the
votes cast by the holders of common sharesCommon Shares in person or by proxy at our annual
meeting. The board of trustees does not havehas a nominating committee. Our bylaws provide
that the shareholders may, at any time, remove any trustee, with or without
cause, by the affirmative vote of a majority of all the votes entitled to be
cast on the matter and may elect a successor to fill any resulting vacancy for
the balance of the term of the removed trustee. Any vacancy (including a vacancy
created by an increase in the number of trustees) will be filled, at any regular
meeting or at any special meeting called for that purpose, by a majority of the
trustees.
Limitation of Liability and Indemnification of Trustees and Officers.
Our bylaws and declaration of trust authorize our company, to the extent
permitted under Maryland law, to indemnify its trustees and officers in their
capacity as such. Section 8-301(15) of the Maryland General Corporation Law
("MGCL") permits a Maryland REIT to indemnify or advance expenses to trustees
and officers to the same extent as is permitted for directors and officers of a
Maryland corporation under the MGCL. The MGCL requires a Maryland corporation
(unless its charter provides otherwise, which our declaration of trust does not)
to indemnify a director or officer who has been successful, on the merits or
otherwise, in the defense of any proceeding to which he is made a party by
reason of his service in that capacity. The MGCL permits a Maryland corporation
to indemnify its present and former directors and officers, among others,
against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities unless it
is established that (a) the act or omission of the director or officer was
material to the matter giving rise to the proceeding and (i) was committed in
bad faith or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. However, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation or for a judgment of
liability on the basis that a personal benefit was improperly received, unless
in either case a court orders indemnification and then only for expenses. In
addition, the MGCL permits a corporation to advance reasonable expenses to a
director or officer upon the corporation's receipt of a written affirmation by
the director or officer of his or her good faith belief that he or she has met
the standard of conduct necessary for indemnification by the corporation and a
written undertaking by such director or officer on his or her behalf to repay
909738.11
12
the amount paid or reimbursed by the corporation if it shall ultimately be
determined that the standard of conduct was not met.
Our bylaws also permit the company,us, subject to the approval of our board of
trustees, to indemnify and advance expenses to any person who served as
a
predecessor of the companyours in any of the capacities described above and to any employee
or agent of the companyus or a predecessor of the company.us.
In addition to the above, our company haswe have purchased and maintainsmaintain insurance on
behalf of all of itsour trustees and executive officers against liability asserted
against or incurred by them in their official capacities with the company,us, whether or not
the company iswe are required or hashave the power to indemnify them against the same liability.
8
Business Combinations. Section 8-301(14) of the MGCL permits a Maryland
REIT to enter to a business combination (including a merger, consolidation,
share exchange or, in certain circumstances, an asset transfer or issuance or
reclassification of equity securities) on the same terms as a Maryland
corporation under the MGCL. Under the MGCL, certain business combinations
between a Maryland corporation and any person who beneficially owns 10% or more
of the voting power of such corporation's shares, or an affiliate of such
corporation who, at any time within the two-year period prior to the date in
question, was the beneficial owner of 10% or more of the voting power of the
then-outstanding voting shares of such corporation (an "Interested Stockholder")
or an affiliate thereof, are prohibited for five years after the most recent
date on which the Interested Stockholder becomes an Interested Stockholder.
Thereafter, any such business combination must be recommended by the board of
directors of such corporation and approved by the affirmative vote of at least
(a) 80% of the votes entitled to be cast by holders of outstanding shares of
voting stock of such corporation and (b) two-thirds of the votes entitled to be
cast by holders of shares of voting stock of such corporation other than the
shares held by the Interested Stockholder with whom (or with whose affiliate)
the business combination is to be affected,effected, unless, among other conditions, the
corporation's common shareholders receive a minimum price (as defined in the
MGCL) for their shares and the consideration is received in cash or in the same
form as previously paid by the Interested Stockholder for its shares.
Control Share Acquisitions. The MGCL provides that "control shares" of
a Maryland corporation acquired in a "control share acquisition" have no voting
rights except to the extent approved by a vote of two-thirds of the votes
entitled to be cast on the matter, excluding shares owned by the acquirer, by
officers or by directors who are employees of the corporation. "Control Shares"
are voting shares of stock which, if aggregated with all other such shares of
stock previously acquired by the acquirer, or in respect of which the acquirer
is able to exercise or direct the exercise of voting power (except solely by
virtue of a revocable proxy), would entitle the acquirer to exercise voting
power in electing directors within one of the following ranges of voting power:
(i) one-fifthone-tenth or more but less than one-third, (ii) one-third or more but less
than a majority, or (iii) a majority or more of all voting power. Control Shares
do not include shares which the acquiring person is then entitled to vote as a
result of having previously obtained stockholder approval. A "control share
acquisition" means the acquisition of control shares, subject to certain
exceptions.
A person who has made or proposes to make a control share acquisition,
upon satisfaction of certain conditions (including an undertaking to pay
expenses), may compel the board of directors of the corporation to call a
special meeting of stockholders to be held within 50 days of demand to consider
the voting rights of the shares. If no request for a meeting is made, the
corporation may itself present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring
person does not deliver an acquiring person statement as required by the
statute, then, subject to certain conditions and limitations, the corporation
may redeem any or all of the control shares (except those for which voting
rights have previously been approved) for fair value determined, without regard
to the absence of voting rights for the control shares, as of the date of the
last control share acquisition by the acquirer or of any meeting of stockholders
at which the voting rights of such shares are considered and not approved. If
voting rights for control shares are approved at a stockholders meeting and the
acquirer becomes entitled to vote a majority of the shares entitled to vote, all
other stockholders may exercise appraisal rights. The fair value of the shares
as determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquirer in the control share acquisition,
and certain limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of a control share acquisition.
909738.11
13
The foregoing does not apply to shares acquired in a merger,
consolidation or share exchange, if the corporation is a party to the
transaction, or to acquisitions approved or exempted by the charter or bylaws of
the corporation. Pursuant to the MGCL, the company haswe have exempted control share
acquisitions involving our trustees and employees of the company and any person approved by theour
trustees of the company in their sole discretion.
Amendments to Our Declaration of Trust. In general, the declaration of
trust may be amended by the affirmative vote or written consent of the holders
of not less than a majority of the common sharesCommon Shares then outstanding and entitled
to vote thereon. However, amendments with respect to certain provisions relating
to the ownership requirements, reorganizations and certain mergers or
consolidations or the sale of substantially all of the company'sour assets, which
amendments require the
affirmative vote or written consent of the holders of not less than two-thirds
of the common sharesCommon Shares then outstanding and entitled to vote thereon. The Trustees
of our company, by a two-thirds vote, may amend the
9
provisions of the declaration of trust from time to time to effect any change
deemed necessary by the Trustees to allow Acadiaus to qualify and continue to qualify
as a REIT.
Dissolution of Our Company or its REIT Status. The declaration of trust
permits the termination and the discontinuation of our operations by the
affirmative vote of the holders of not less than a majority of the outstanding
shares entitled to vote at a meeting of shareholders called for that purpose. In
addition, the declaration of trust permits the Trustees to terminate our REIT
status at any time.
Anti-Takeover Effect of Certain Provisions of Maryland Law and of the
Declaration of Trust. The limitation on ownership of common sharesCommon Shares set forth in
our declaration of trust, as well as the provisions of the MGCL dealing with
business combinations and control share acquisitions could have the effect of
discouraging offers to acquire Acadiaour Company or of hampering the consummation of a
contemplated acquisition.
USERESTRICTIONS ON TRANSFERS OF PROCEEDS
WeCAPITAL SHARES AND ANTI-TAKEOVER PROVISIONS
Maryland Law
Maryland law includes certain other provisions which may also
discourage a change in control of management. Maryland law provides that, unless
an exemption applies, we may not engage in any "business combination" with an
"interested shareholder" or any affiliate of an interested shareholder for a
period of five years after the interested shareholder became an interested
shareholder, and thereafter may not engage in a business combination with such
interested shareholder unless the combination is recommended by our board of
trustees and approved by the affirmative vote of at least (i) 80% of the votes
entitled to be cast by the holders of all of our outstanding voting shares, and
(ii) 66 2/3% of the votes entitled to be cast by all holders of outstanding
voting shares other than voting shares held by the interested shareholder. An
"interested shareholder" is defined, in essence, as any person owning
beneficially, directly or indirectly, 10% or more of the outstanding voting
shares of a Maryland real estate investment trust. The voting requirements do
not apply at any time to business combinations with an interested shareholder or
its affiliates if approved by our board of trustees prior to the time the
interested shareholder first became an interested shareholder. Additionally, if
the business combination involves the receipt of consideration by our
shareholders in exchange for Common Shares that satisfies certain "fair price"
conditions, such supermajority voting requirements do not apply.
As an additional anti-takeover defense, Maryland law permits
publicly-held Maryland statutory real estate investment trusts ("REITs") to
elect to be governed by all or any part of Maryland law provisions relating to
unsolicited takeovers. The election to be governed by one or more of these
provisions can be made by a publicly held Maryland REIT in its declaration of
trust or bylaws ("charter documents") or by resolution adopted by its board of
trustees so long as the REIT has at least three trustees who, at the time of
electing to be subject to the provisions, are not officers or employees of the
REIT, are not persons seeking to acquire control of the REIT, are not trustees,
officers, affiliates or associates of any person seeking to acquire control, and
were not nominated or designated as trustees by a person seeking to acquire
control. Our charter documents do not contain any such provisions.
If the charter documents do not already contain these provisions, the
REIT may adopt one or more by a board resolution or a bylaw amendment, following
which it must file articles supplementary to its declaration of trust with the
Maryland State Department of Assessments and Taxation. Shareholder approval is
not required for the filing of these articles supplementary. Our board of
trustees has not passed any such resolution or by-law amendment and we have not
filed such articles supplementary.
Maryland law permits a REIT to elect to be subject to all or any
portion of the following provisions, notwithstanding any contrary provisions in
the REIT's charter documents:
Classified Board: The REIT may divide its board into three classes
which, to the extent possible, will not receivehave the same number of trustees, the terms
of which will expire at the third annual meeting of shareholders after the
election of each class, with the first class term expiring one year after
adoption, the second class term expiring two years later, and the third class
term expiring three years later;
10
Two-thirds Shareholder Vote to Remove Trustees Only for Cause: The
shareholders may remove any proceeds fromtrustee only by the saleaffirmative vote of common sharesat least
two-thirds of all votes entitled to be cast by selling shareholders.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Martin L. Edelman,the shareholders generally in the
election of trustees, but a trustee may not be removed without cause;
Size of Board Fixed by Vote of Board: The number of trustees will be
fixed only by resolution of the company, is counsel toboard, but the law firm
of Battle Fowler LLP. Battle Fowler LLP is renderingnumber cannot be less than three
trustees;
Board Vacancies Filled by the Board for the Remaining Term: Vacancies
that result from an opinion as to certain
tax mattersincrease in the registration statementsize of the board, or the death,
resignation, or removal of a trustee, may be filled only by the affirmative vote
of a majority of the remaining trustees even if they do not constitute a quorum.
Trustees elected to fill vacancies will hold office for the remainder of the
full term of the class of trustees in which this prospectusthe vacancy occurred, as opposed to
until the next annual meeting of shareholders, and until a successor is elected
and qualified; and
Shareholder Calls of Special Meetings: Special meetings of shareholders
may be called by the secretary of the REIT only upon the written request of
shareholders entitled to cast at least a part.majority of all votes entitled to be
cast at the meeting and only in accordance with procedures set out in the
Maryland General Corporation Law.
We have not elected to be subject to any of the foregoing provisions.
11
FEDERAL INCOME TAX CONSIDERATIONS
You are advised to assume that the information in this prospectus is
accurate only as of their respective dates.
The following is a summary ofdiscussion summarizes the material federal income tax
matters
relatingconsiderations to the operationsyou as a prospective holder of our companyshares. Paul, Hastings,
Janofsky & Walker LLP has acted as our tax counsel, has reviewed this summary,
and is of the opinion that maythe discussion contained herein fairly summarizes the
federal income tax considerations that are likely to be relevantmaterial to prospective
Acadia shareholders. Ita holder of
our Common Shares. However, the following discussion is based upon current lawfor general information
purposes only, is not exhaustive of all possible tax considerations and is not
intended to be and should not be construed as tax advice. This
discussionFor example, this
summary does not give a detailed discussion of any state, local or foreign tax
considerations. In addition, this discussion is intended to address only those
federal income tax considerations that are generally applicable to all our
security holders. It does not discuss all of the aspects of federal income
taxation that may be relevant to particular shareholdersyou in light of their personal investment or taxyour particular circumstances
or to certain types of shareholders (including,security holders who are subject to special treatment
under the federal income tax laws including, without limitation, insurance
companies, tax-exempt organizations,entities (except as discussed in " - Taxation of
Tax-Exempt Shareholders"), financial institutions or broker-dealers, foreign
corporations and persons who are not citizens or residents of the United States) subjectStates
(except as discussed in " - Taxation of Non-U.S. Shareholders").
The information in this section is based on the Internal Revenue Code
of 1986, as amended, which is referred to special treatmentas the Code, existing, temporary and
proposed regulations under the federal income tax laws, nor does it give a detailed discussionCode, the legislative history of the Code,
current administrative rulings and practices of the IRS and court decisions, all
as of the date hereof. No assurance can be given that future legislation,
regulations, administrative interpretations and court decisions will not
significantly change current law or adversely affect existing interpretations of
current law. Any such change could apply retroactively to transactions preceding
the date of the change. In addition, we have not received, and do not plan to
request, any state, local or foreign tax considerations. Inrulings from the opinion ofIRS concerning our tax counsel,treatment. Thus no
assurance can be provided that the following discussion accurately reflectsstatements set forth herein (which do not
bind the federal income tax
considerations relating toIRS or the operations ofcourts) will not be challenged by the companyIRS or that are likely tosuch
statements will be material to an Acadia shareholder.sustained by a court if so challenged.
EACH PROSPECTIVE SHAREHOLDERPURCHASER OF THE COMPANYSHARES IS ENCOURAGEDADVISED TO CONSULT ITSWITH HIS OR
HER OWN TAX ADVISOR REGARDING THE SPECIFIC TAX CONSEQUENCES TO ITHIM OR HER OF THE
PURCHASE, OWNERSHIP AND SALE OF THE COMPANY'S COMMON SHARES AND OF THE COMPANY'S ELECTIONAN ENTITY ELECTING TO BE TAXED AS A
REIT, INCLUDING THE FEDERAL, STATE, LOCAL AND FOREIGN AND OTHER TAX CONSEQUENCES
OF SUCH PURCHASE, OWNERSHIP, SALE AND ELECTION AND OF POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
909738.11
14
Taxation of our Company
General. We made an electionelected to be taxed as a REIT for federal income
tax purposesunder Sections 856 through
860 of the Code, commencing with our taxable year ended December 31, 1993. We
believe the company isthat we have been organized, and operateshave operated, in such a manner so as
to qualify for taxation as a REIT under the Internal Revenue Code of 1986. Weand intend to conduct our
operations so as to continue to operate in suchqualify for taxation as a manner. However, noREIT. No assurance,
however, can be given that we will operatehave operated in a manner so as to qualify or will
be able to operate in such a manner so as to remain qualified.
The requirements relatingqualified as a REIT.
Qualification and taxation as a REIT depend upon our ability to meet on a
continuing basis, through actual annual operating results, the federal income tax treatmentrequired
distribution levels, diversity of share ownership and the various qualification
tests imposed under the Code discussed below, the results of which will not be
reviewed by counsel. Given the highly complex nature of the rules governing
REITs, the ongoing importance of factual determinations, and their shareholders are highly technical and complex. The following
discussion sets forth only the material aspectspossibility of
thosefuture changes in our circumstances, no assurance can be given that the actual
results of our operations for any one taxable year have satisfied or will
continue to satisfy such requirements. This
summary is qualified in its entirety by the applicable Code provisions and
Treasury Regulations promulgated thereunder, and administrative and judicial
interpretations thereof.
Opinion of Our Tax Counsel.
In the opinion of Paul, Hastings, Janofsky & Walker LLP, based on
certain assumptions and our tax counsel,factual representations that are described in this
section and in an officer's certificate, commencing with theour taxable year ended
December 31, 1999 , we have been organized and have operated in conformity with the
requirements for qualification as a REIT within the meaning of the Internal Revenue Code of 1986 and our current and proposed method of
operation of the company will enable Acadiaus to continue to meet the requirements for qualification
and taxation as a REIT under the Internal Revenue
Code of 1986.REIT. It must be emphasized that thethis opinion of our tax counsel is based on
various assumptions and is conditioned upon certain representations made by the company and othersus
as to factual matters. Moreover, such qualificationmatters including, but not
12
limited to, those set forth herein, and taxationthose concerning our business and
properties as set forth in this prospectus. An opinion of counsel is not binding
on the IRS or the courts.
The following is a general summary of the Code provisions that govern
the federal income tax treatment of a REIT depends upon our ability to meet, through actual annual
operating results,and its shareholders. These
provisions of the distribution levels, diversity of share ownershipCode are highly technical and complex. This summary is
qualified in its entirety by the various other qualification tests imposed under the Internal Revenueapplicable Code of
1986 that are discussed below, the resultsprovisions, Treasury
Regulations and administrative and judicial interpretations thereof, all of
which have not been and will not
be reviewed by our tax counsel. Accordingly, no assurance can be given that the
actual results of the company's operations for any one taxable year will satisfy
such requirements.
Taxation of Our Company. As long asare subject to change prospectively or retroactively.
If we qualify to be taxedfor taxation as a REIT, we generally will not be subject
to federal corporate income taxes on that
portion of its ordinaryour net income or capital gain that is currently
distributed currently to shareholders. This is because the REIT provisions of the Internal Revenue Code
of 1986 generally allow a REIT to deduct dividends paid to its shareholders.
This deduction for dividends paid to shareholderstreatment substantially eliminates the federal "double
taxation" on earnings (once at(at the corporate level and once
again at the shareholder level)levels) that generally results from
investment in a corporation. Even ifHowever, we qualify to be taxed as a REIT, we maywill be subject to federal income tax
in the following circumstances.as follows:
o First, a REITwe will be taxed at regular corporate rates on any undistributed
REIT taxable income, andincluding undistributed net capital gains.
o Second, under certain circumstances, a REITwe may be subject to the
"alternative minimum tax" on itsour items of tax preference, if
any.preference.
o Third, if a REIT has (i)we have (a) net income from the sale or other disposition of
"foreclosure property" (generally,, which is, in general, property acquired by reason of aon
foreclosure or otherwise on default on a loan secured by such real
property or a lease or an indebtedness held by a REIT) thatof such property, which is held primarily for sale
to customers in the ordinary course of business or (ii)(b) other
non-qualifying netnonqualifying income from foreclosure property, itwe will be subject to
tax at the highest corporate rate on such income.
o Fourth, if a REIT haswe have net income from "prohibited transactions," such
income will be subject to a "prohibited transaction" (generally, a sale100% tax. Prohibited transactions are, in
general, certain sales or other dispositiondispositions of property held primarily
for sale to customers in the ordinary course of business other than
foreclosure property), such income will be subject to a 100% tax.property.
o Fifth, if a REITwe should fail to satisfy the 75% gross income test or the
95% gross income test (as discussed below), and hasbut nonetheless maintained itsmaintain
our qualification as a REIT because certain other requirements have
been met, itwe will be subject to a 100% tax on an amount equal to (a)
the netgross income attributable to the greater of (1) the amount by which
the REIT failswe fail the 75% gross income test or (2) the amount by which 95% (90%
for taxable years beginning on or before October 22, 2004) of our gross
income exceeds the amount of income qualifying under the 95% gross
income test multiplied, in each case, by (b) a fraction intended to
reflect the REIT'sour profitability.
o Sixth, if we should fail to satisfy the asset tests (as discussed
below) but nonetheless maintain our qualification as a REIT because
certain other requirements have been met, we may be subject to a tax
that would be the greater of (a) $50,000; or (b) an amount determined
by multiplying the highest rate of tax for corporations by the net
income generated by the nonqualifying assets for the period beginning
on the first date of the failure and ending on the day we dispose of
the assets (or otherwise satisfy the requirements for maintaining REIT
qualification).
o Seventh, if we should fail to satisfy one or more requirements for REIT
qualification, other than the 95% and 75% gross income tests and other
than the asset tests, but nonetheless maintain our qualification as a
REIT because certain other requirements have been met, we may be
subject to a $50,000 penalty for each failure.
o Eighth, if we should fail to distribute with
respect toduring each calendar year at
least the sum of (i)(a) 85% of itsour REIT ordinary income for such year, (ii)(b)
95% of itsour REIT capital gain net income for such year, and (iii)(c) any
undistributed taxable income from prior periods, the REIT
willwe would be subject to
a 4% nondeductible excise tax on the excess of such required
distribution over the amounts actually distributed.
Seventh,13
o Ninth, assuming we do not elect to instead be taxed at the time of the
acquisition, if a REIT acquireswe acquire any asset from a C corporation (i.e., a
corporation generally subject to a full corporate-levelcorporate level tax) in a
transaction in which the basis of the asset in the
REIT'sour hands is determined
by reference to the basis of the asset (or any other property) in the
hands of the C corporation, andwe would be subject to tax at the REIT recognizes gain on the
dispositionhighest
corporate rate if we dispose of such asset during the ten-year10-year period
beginning on the date on
whichthat we acquired that asset, to the extent of
such asset was acquired by the REIT, then theproperty's "built-in gain" (the excess of the fair market value of
such property at the beginningtime of the applicable ten-year periodour acquisition over the REIT's adjusted basis in such asset as of the beginning of
such ten-year
period, or built in gain,property at such time). We refer to this tax as the "Built-In
Gains Tax."
o Tenth, we will generally be subject toincur a 100% excise tax at the highest
regular corporate rate.
909738.11
15
on transactions with a taxable
REIT subsidiary that are not conducted on an arm's-length basis.
Requirements for Qualification. To qualify as aA REIT under the Internal
Revenue Code of 1986, an enterprise must elect to be so treated and must meet
the requirements, discussed below, relating to its organization, sources of
income, nature of assets, and distributions of income to shareholders.
Organizational Requirements. The Internal Revenue Code of 1986 defines
a REIT asis a corporation, trust or
association: (i)association (1) that is managed by one or more trustees or directors; (ii)directors, (2) the
beneficial ownership of which is evidenced by transferable shares, or by
transferable certificates of beneficial interest;
(iii)interest, (3) that would be taxable as a
domestic corporation, but for the REIT
provisionsSections 856 through 859 of the Internal Revenue Code, of 1986; (iv)(4) that is
neither a financial institution nor an insurance company subject to certain
provisions of the Internal Revenue Code, of 1986; (v)(5) that has the calendar year as its taxable year, (6)
the beneficial ownership of which is held by 100 or more persons; and (vi)persons, (7) during the
last half of each taxable year (after the first REIT taxable year) not more than
50% in value of the outstanding shares of which is owned, directly or
indirectly,
through the application of certain attribution rules, by five or fewer individuals (as defined in the Internal Revenue Code of 1986 to include
certain entities). In addition, (the "5/50 Rule"), and (8) that meets certain other tests,
described below, regarding the nature of a REIT'sits income and assets, also must be satisfied.assets. The Code
provides that conditions (i)(1) through (iv)(5), inclusive, must be met during the
entire taxable year and that condition (v)(6) must be met during at least 335 days
of a taxable year of 12 months, or during a proportionate part of a taxable year
of less than 12 months. Conditions (v) and (vi) will not apply until aftermonths (other than the first taxable year forof a REIT).
We may redeem, at our option, a sufficient number of shares or restrict
the transfer thereof to bring or maintain the ownership of the shares in
conformity with the requirements of the Code. In addition, our declaration of
trust includes restrictions regarding the transfer of our shares that are
intended to assist us in continuing to satisfy requirements (6) and (7).
Moreover, if we comply with regulatory rules pursuant to which an election is madewe are required
to be taxed as a REIT.
For taxable years beginning after 1997, if a REIT complies with
Treasury Regulations that provide procedures for ascertainingsend annual letters to our shareholders requesting information regarding the
actual ownership of itsour shares, for such taxable year and the REIT didwe do not know, (and
with the exercise ofor exercising reasonable
diligence couldwould not have known) that itknown, whether we failed to meet the requirement of condition (vi)(7) above,
for such taxable year, the REITwe will be treated as having met the requirementrequirement. See "See "Description of condition (vi) for such year.
We have satisfiedOur
Common Shares" and "Restrictions on Transfers of Capital Shares and
Anti-Takeover Provisions" beginning on pages 9 and 13, respectively, of this
prospectus.
The Code allows a REIT to own wholly-owned subsidiaries which are
"qualified REIT subsidiaries." The Code provides that a qualified REIT
subsidiary is not treated as a separate corporation, and all of its assets,
liabilities and items of income, deduction and credit are treated as assets,
liabilities and items of income, deduction and credit of the REIT. Thus, in
applying the requirements set forthdescribed herein, our qualified REIT subsidiaries will
be ignored, and all assets, liabilities and items of income, deduction and
credit of such subsidiaries will be treated as our assets, liabilities and items
of income, deduction and credit.
A REIT may also hold any direct or indirect interest in (i) through (iv) abovea corporation
that qualifies as a "taxable REIT subsidiary", as long as the REIT's aggregate
holdings of taxable REIT subsidiary securities do not exceed 20% of the value of
the REIT's total assets. A taxable REIT subsidiary is a fully taxable
corporation that generally is permitted to engage in businesses, own assets, and
believeearn income that, we have sufficient diversityif engaged in, owned, or earned by the REIT, might jeopardize
REIT status or result in the imposition of share ownershippenalty taxes on the REIT. To qualify
as a taxable REIT subsidiary, the subsidiary and the REIT must make a joint
election to allowtreat the subsidiary as a taxable REIT subsidiary. A taxable REIT
subsidiary also includes any corporation (other than a REIT) in which a taxable
REIT subsidiary directly or indirectly owns more than 35% of the total voting
power or value. See "-- Asset Tests" below. A taxable REIT subsidiary will pay
tax at regular corporate income rates on any taxable income it to
satisfy conditions (v) and (vi) above. Our declarationearns. Moreover,
the Code contains rules, including rules requiring the imposition of trust includes certain
restrictions regarding transfers of common shares that are intended to assist
the company in satisfying the share ownership requirements described in (v) and
(vi) above. See "Description of our Common Shares--Restrictionstaxes on Transfer"
(p.10).
In addition, an enterprise may not elect to become a
REIT unlessat the rate of 100% on certain reallocated income and expenses, to ensure
that contractual arrangements between a taxable REIT subsidiary and its taxable year is the calendar year. Acadia's taxable year is the calendar year.parent
REIT are at arm's-length.
14
In the case of a REIT thatwhich is a partner in a partnership, suchTreasury
Regulations provide that the REIT will be deemed to own its proportionate share
of each of the assets of the partnership and will be deemed to be entitled to
the income of the partnership attributable to such share. In addition, the
character of the assets and items of gross income of the partnership will retain
the same character in the hands of the REIT for purposes of Section 856 of the
REIT requirements,Code, including satisfying the gross income and assetassets tests described herein.(as discussed
below). Thus, Acadia'sour proportionate share of the assets, liabilities, and items of
gross income of the operating partnership, and of our subsidiary
partnerships limited liability companies, joint ventures and business trusts in which the company or the operating partnership have and will havewe own an interest are and will be treated as our
assets, liabilities and items of gross income of Acadia for purposes of applying the
requirements described herein, provided that the
operating partnership and our subsidiary partnerships are treated as
partnerships for federal income tax purposes. See "--Income Taxation of the
Operating Partnership, the Subsidiary Partnerships and Their Partners" (p.24).herein.
Income Tests. In order for us to maintain qualification as a REIT, we must
satisfy twoannually certain gross income tests annually.requirements. First, at least 75% of our
gross income (excluding gross income from prohibited transactions) for each
taxable year must be derived directly or indirectly from investments relating to
real property or mortgages on real property (including "rents from real
property,"
dividends from qualified REITsproperty" and, in certain circumstances, interest) or from "qualifiedcertain types of
qualified temporary investment income" (generally, income attributable to the
temporary investment of new capital received by the REIT).investments. Second, at least 95% of our gross income
(excluding gross income from prohibited transactions) for each taxable year must
be derived from such real property investments, and from
dividends, interest and gain
from the sale or disposition of stock or securitiessecurities. For taxable years beginning
on or after October 23, 2004, income from any combinationcertain hedging transactions that is
clearly and timely identified and that hedges indebtedness incurred or to be
incurred to acquire or carry real estate assets will not constitute gross income
(rather than being treated as qualifying or nonqualifying income) for purposes
of the foregoing. In addition, for taxable
years prior to 1998, short-term gain from the sale or other disposition of stock
or securities, gain from prohibited transactions and gain on the sale or other
disposition of real property held for less than four years (apart
909738.11
16
from involuntary conversions and sales of foreclosure property) must have
represented less than 30% of the95% gross income of our predecessor (including
gross income from prohibited transactions) for each taxable year.
Substantially all of our income is expected to be rental income from
rents. In order for such income totest.
Rents received by us will qualify as "rents from real property" for
purposes ofin
satisfying the 75% and 95% gross income tests, we must satisfy
several conditions.requirements for a REIT described above only if the
following conditions are met:
o First, the amount of rent must not be based in whole or in part on the
income or profits of any person, although rentsperson. However, an amount received or accrued
generally will qualify as rentsnot be excluded from the term "rents from real property if they areproperty"
solely by reason of being based on a fixed percentage or percentages of
receipts or sales.
o Second, the Code provides that rents received from a tenant will not
qualify as "rents from real property" in satisfying the gross income
tests if the company,we, or an owner of 10% or more of the
company, directlyour shares, actually or
constructively ownsown 10% or more of such tenant (a "Related
Party Tenant").tenant.
o Third, if rent attributable to personal property, leased in connection
with a lease of real property, is greater than 15% of the total rent
received under the lease, then the portion of rent attributable to such
personal property will not qualify as "rents from real property."
o Finally, in order for rents received to qualify as "rents from real
property," we generally must not operate or manage the property
(subject to a de minimis exception as described below) or furnish or
render services to the tenants of such property, other than through an
"independent contractor"independent contractor from whom we derive no income. However, the "independent contractor" requirement does
not apply to the extent therevenue or through a
taxable REIT subsidiary. We may, however, directly perform certain
services rendered by usthat are customarily furnished or
rendered in connection with the rental of the real property in the geographic
area in which the property is located. Based on our experience we believe that
all services provided to tenants by us will be considered "usually or customarily rendered" in connection with
the rental of retailspace for occupancy only and multi-family
space, although there canare not otherwise considered
"rendered to the occupant" of the property ("Permissible Services").
Rents received generally will qualify as rents from real property
notwithstanding the fact that we provide services that are not Permissible
Services so long as the amount received for such services meets a de minimis
standard. The amount received for "impermissible services" with respect to a
property (or, if services are available only to certain tenants, possibly with
respect to such tenants) cannot exceed one percent of all amounts received,
directly or indirectly, by us with respect to such property (or, if services are
available only to certain tenants, possibly with respect to such tenants). The
amount that we will be no assurance thatdeemed to have received for performing "impermissible
services" will be the IRS will not contend
otherwise.greater of the actual amounts so received or 150% of the
direct cost to us of providing those services.
We believe that our real estate investments, which include an allocable
share of income from the operating partnership, will give rise to income,
substantially all of whichour rental income will qualify as "rents from real property" for
purposes of the 75% and 95% gross income tests. We will not (i) charge rent for
any property that is based in whole or in part on the income or profits of any
person (other than being based on a percentage of receipts of sales); (ii)
receive rents in excess of a de minimis amount from Related Party Tenants; (iii)
derive more than a de minimus amount of rents attributable to personal property
which constitute greater than 15% of the total rents received under the lease;
or (iv) perform non-customary services considered to be
rendered to the occupant
of property, other than through an independent contractor from whom we derive no
income.
We may receive fees in exchange for the performance of certain
management activities for third parties with respect to properties in which we
do not own an interest. Such fees will result in nonqualifyingqualifying income under the 95% and 75% gross income tests. If the sumtests, and that our provision of
the income realized by us (whether
directly or through our interest in the operating partnership or our subsidiary
partnerships) which does not satisfy the requirements of the 95% gross income
test (collectively, "Non-Qualifying Income") exceeds 5% of our gross income for
any taxable year, our status as a REIT would be jeopardized. We have represented
that the amount of Non-Qualifying Income in any taxable year, including such
fees,services will not exceed 5% of our annual grosscause the rental income for any taxable year.to fail to be qualifying income under
those tests.
15
If we fail to satisfy one or both of the 75% or 95% gross income tests
for any taxable year, we may nevertheless qualify as a REIT for such year if
we
are entitled to relief under certain provisions of the Internal Revenue Code of
1986. These relief provisions generally will be available if (i) thesuch failure to
meet such tests was due to reasonable cause and not due to willful neglect (ii)and we
disclosed the nature and amounts of our items of gross income in a schedule
of the sources of qualifying income is attached to the federalour Federal income tax return of the company(and for such taxable year, and (iii)years beginning on or
before October 22, 2004, any incorrect information on the schedule was not due
to fraud with intent to evade tax.tax). It is not possible, however, to state
whether in all circumstances we would be entitled to the benefit of thesethis relief
provisions. As discussed above in
"--Taxation of our company," evenprovision. Even if thesethis relief provisions apply,provision applied, a 100% penalty tax would be
imposed on the greater of (1) the amount by which we fail the 75% gross income
test or (2) the amount by which 95% (90% for taxable years beginning on or
before October 22, 2004) of our gross income exceeds the amount of income
qualifying under the 95% gross income test multiplied, in each case, by a
fraction intended to reflect our profitability.
Subject to certain safe harbor exceptions, any gain realized by us on
the sale of any property held as inventory or other property held primarily for
sale to customers in the ordinary course of business will be treated as income
from a prohibited transaction that is subject to a 100% penalty tax. Such
prohibited transaction income may also have an adverse effect upon our ability
to satisfy the income tests for qualification as a REIT. Under existing law,
whether property is held as inventory or primarily for sale to customers in the
ordinary course of a trade or business is a question of fact that depends on all
the facts and circumstances with respect to the excess net income. No similar relief provision
would apply if the 30% income test had been failed for a taxable year prior to
1998 and, in such case, Acadia would cease to qualify as a REIT. See"--Failure
to Qualify" (p.19).particular transaction.
Asset Tests. In order for us to qualify as a REIT, atAt the close of each quarter of itsour taxable year, we must
also satisfy threethe following tests relating to the nature of the our assets. First, atAt least
75% of the value of itsour total assets must be represented by real estate assets,
(which for this purpose include (i)including (1) our allocable share of real estate assets held by partnerships in
which the
company or a "qualified REIT subsidiary" ownswe own an interest (ii)or held by our qualified REIT subsidiaries and (2)
stock or debt instruments held for not more than one year purchased with the
proceeds of a sharean offering of equity securities or a long-term (at least five
years) debt offering and held for not more than one year from the
date the company receives such proceeds, and (iii) shares in qualified REITs andby us, cash, cash items and government securities. Second,In
addition, not more than 25% of our total assets may be represented by securities
909738.11
17
other than those in the 75% asset class. Third,Not more than 20% of the value of our
total assets may be represented by securities of one or more taxable REIT
subsidiaries (as defined above under "-Requirements for Qualification"). Except
for investments included in the 25%75% asset class, the value of any one issuer's securities mayin a taxable REIT
subsidiary or qualified REIT subsidiary and certain partnership interests and
debt obligations, (1) not exceedmore than 5% of the value of our total assets and the company may not own more than 10% of
any one issuer's outstanding voting securities (excluding securities of a
qualified REIT subsidiary or another REIT).
We anticipate that we will be
able to comply with these asset tests.
Acadia is currently deemed to, and will continue to be deemed to, hold directly
its proportionate share of all real estate and other assets of the operating
partnership and our subsidiary partnerships, and it should be considered to hold
its proportionate share of all assets deemed ownedrepresented by those partnerships through
the partnerships' ownership of partnership interests in other partnerships. As a
result, the company intends to hold more than 75% of its assets as real estate
assets. In addition, we do not plan to hold any securities representing more
than 10% of any one issuer's voting securities, other than any qualified REIT
subsidiary, nor securities of any one issuer exceeding 5%(the "5% value test"), (2) we may
not hold securities that possess more than 10% of the total voting power of the
outstanding securities of a single issuer (the "10% vote test") and (3) we may
not hold securities that have a value of more than 10% of the total value of the
outstanding securities of any one issuer (the "10% value test"). The following
assets are not treated as "securities" held by us for purposes of the 10% value
test: (i) "straight debt" meeting certain requirements, unless we hold (either
directly or through our "controlled" taxable REIT subsidiaries) certain other
securities of the same corporate or partnership issuer that have an aggregate
value greater than 1% of such issuer's outstanding securities; (ii) loans to
individuals or estates; (iii) certain rental agreements calling for deferred
rents or increasing rents that are subject to Section 467 of the Code, other
than with certain related persons; (iv) obligations to pay us amounts qualifying
as "rents from real property" under the 75% and 95% gross assets.income tests; (v)
certain securities issued by certain governmental entities; and (vi) securities
issued by another qualifying REIT. In addition, any debt instrument issued by a
partnership will not be treated as a "security" under the 10% value test if at
least 75% of the partnership's gross income (excluding gross income from
prohibited transactions) is derived from sources meeting the requirements of the
75% gross income test. If the partnership fails to meet the 75% gross income
test, then the debt instrument issued by the partnership nevertheless will not
be treated as a "security" to the extent of our interest as a partner in the
partnership. Also, in determining our allocable share of any securities owned by
the partnership, our share of the assets of the partnership, solely for purposes
of applying the 10% value test in taxable years beginning on or after January 1,
2005, will correspond not only to our interest as a partner in the partnership
but also to our proportionate interest in certain debt securities issued by the
partnership.
We believe that substantially all of our assets consist of (1) real
properties, (2) stock or debt investments that earn qualified temporary
investment income, (3) other qualified real estate assets, and (4) cash, cash
items and government securities. We may also invest in securities of other
entities, provided that such investments will not prevent us from satisfying the
asset and income tests for REIT qualification set forth above.
After initially meeting the asset tests at the close of any quarter, we
will not lose our status as a REIT status for failingfailure to satisfy the asset tests at the
end of a later quarter solely by reason of changes in asset values. If the failure
to satisfywe
16
inadvertently fail one or more of the asset tests results from an acquisitionat the end of a calendar
quarter because we acquire securities or other property during athe quarter, thewe
can cure this failure can be cured by dispositiondisposing of sufficient nonqualifying assets within 30
days after the close of that quarter. We intendthe calendar quarter in which it arose. If we were to
maintain adequate recordsfail any of the value of our assets to ensure compliance
with the asset tests and will takeat the end of any quarter without curing such
other actionfailure within 30 days after the closeend of anysuch quarter, as may be requiredwe would fail to cure any noncompliance. However,
there can be no assurance that such other action always will be successful.
Annual Distribution Requirements. In order to be taxedqualify
as a REIT, unless we were to qualify under certain recently enacted relief
provisions. Under one of these relief provisions, if we were to fail the 5%
value test, the 10% vote test or the 10% value test, we nevertheless would
continue to qualify as a REIT if the failure was due to the ownership of assets
having a total value not exceeding the lesser of 1% of our assets at the end of
the relevant quarter or $10,000,000, and we were to dispose of such assets (or
otherwise meet such asset tests) within six months after the end of the quarter
in which the failure was identified. If we were to fail to meet any of the REIT
asset tests for a particular quarter, but we did not qualify for the relief for
de minimis failures that is described in the preceding sentence, then we would
be deemed to have satisfied the relevant asset test if: (i) following our
identification of the failure, we were to file a schedule with a description of
each asset that caused the failure; (ii) the failure was due to reasonable cause
and not due to willful neglect; (iii) we were to dispose of the non-qualifying
asset (or otherwise meet the relevant asset test) within six months after the
last day of the quarter in which the failure was identified, and (iv) we were to
pay a penalty tax equal to the greater of $50,000, or the highest corporate tax
rate multiplied by the net income generated by the nonqualifying asset during
the period beginning on the first date of the failure and ending on the date we
dispose of the asset (or otherwise cure the asset test failure). These relief
provisions will be requiredavailable to meet certain annual distribution requirements. We will haveus in our taxable years beginning on or after
January 1, 2005, although it is not possible to predict whether in all
circumstances we would be entitled to the benefit of these relief provisions.
Annual Distribution Requirement. With respect to each taxable year, we
must distribute to our shareholders as dividends (other than capital gain
dividends) toat least 90% of our shareholders
intaxable income. Specifically, we must distribute
an amount at least equal to (1) 90% of the sum of (a) 95% of our "REIT taxable income" (computed(determined
without regard to the deduction for dividends paid deduction and the
company'sby excluding any net
capital gain) and (b) 95% of theany after-tax net income, if any, from
foreclosure property in excess of the special tax on income from foreclosure property, minus (2)
the sum of certain items of "excess noncash income. Such
distributionsincome" such as income attributable
to leveled stepped rents, cancellation of indebtedness and original issue
discount. REIT taxable income is generally computed in the same manner as
taxable income of ordinary corporations, with several adjustments, such as a
deduction allowed for dividends paid, but not for dividends received.
We will be subject to tax on amounts not distributed at regular United
States federal corporate income tax rates. In addition, a 4% nondeductible
excise tax is imposed on the excess of (1) 85% of our ordinary income for the
year plus 95% of capital gain net income for the year and the undistributed
portion of the required distribution for the prior year over (2) the actual
distribution to shareholders during the year (if any). Net operating losses
generated by us may be carried forward (but not carried back) and used by us for
15 years (or 20 years in the case of net operating losses generated in our tax
years commencing on or after January 1, 1998) to reduce REIT taxable income and
the amount that we will be required to distribute in order to remain qualified
as a REIT. As a REIT, our net capital losses may be carried forward for five
years (but not carried back) and used to reduce capital gains.
In general, a distribution must be paid inmade during the taxable year to
which they relate, orit relates to satisfy the distribution test and to be deducted in
computing REIT taxable income. However, we may elect to treat a dividend
declared and paid after the followingend of the year (a "subsequent declared dividend")
as paid during such year for purposes of complying with the distribution test
and computing REIT taxable yearincome, if the dividend is (1) declared before the
company timely files itsregular or extended due date of our tax return for such year and if(2) paid on or beforenot
later than the date of the first regular dividend payment made after the
declaration, but in no case later than 12 months after the end of the year. For
purposes of computing the 4% nondeductible excise tax, a subsequent declared
dividend is considered paid when actually distributed. Furthermore, any dividend
that is declared by us in October, November or December of a calendar year, and
payable to shareholders of record as of a specified date in such declaration.
Toquarter of such
year will be deemed to have been paid by us (and received by shareholders) on
December 31 of such calendar year, but only if such dividend is actually paid by
us in January of the extent that we do not distribute allfollowing calendar year.
For purposes of complying with the distribution test for a taxable year
as a result of an adjustment in certain of our net capitalitems of income, gain or
distribute at least 95% (but less than 100%)deduction by the IRS, we may be permitted to remedy such failure by paying a
"deficiency dividend" in a later year together with interest and a penalty. Such
deficiency dividend may be included in our deduction of our REIT taxable income, as
adjusted, we will be subject to tax ondividends paid for the
undistributed portion, at regular
ordinary and capital gains corporate tax rates. Furthermore, if we fail to
distributeearlier year for each calendar year at leastpurposes of satisfying the sumdistribution test. For purposes
17
of (a) 85% of our REIT
ordinary income for such year, (b) 95% of our REIT capital gain net income for
such year, and (c) any undistributed ordinary income and capital gain net income
from prior periods, we will be subject to athe 4% excise tax, on the excess of such
required distribution overdeficiency dividend is taken into account when paid,
and any income giving rise to the amounts actually distributed.deficiency adjustment is treated as arising
when the deficiency dividend is paid.
We believe that we have distributed and intend to makecontinue to
distribute to our shareholders in a timely distributionsmanner such amounts sufficient to
satisfy thisthe annual distribution requirement.
We expect that our taxable income typically will be less than our cash
flow, due to the allowance of depreciation and other noncash charges in
computing our taxable income. Accordingly, we anticipate that we generally will
have sufficient cash or liquid assets to enablerequirements. However, it to satisfy the 95%
distribution requirement.
It is possible that from time to time we may not have sufficient cash
or other liquid assets to meet the 95% distribution requirement due to
timing differences between the actual receiptaccrual of income and its actual payment of
deductible expensescollection, and
the inclusion of such income and deduction of such
expenses in arriving at ourneed to make non-deductible expenditures (such as capital improvements or
principal payments on debt) may cause us to recognize taxable income ifin excess
of our net cash receipts, thus increasing the amountdifficulty of nondeductible
expenses such as principal amortization or capital expenditures exceedscompliance with the
amount of noncash deductions.distribution requirement. In the event that such situation occurs, in order to meet the 95% distribution requirement, we
maymight find it necessary to arrange for short-term, or possibly long-term,
borrowings or to pay dividends in the
form of consent dividends. If the amount of nondeductible expenses exceeds
noncash deductions, we may refinance our indebtedness to reduce principal
payments and borrow funds for capital expenditures.
Under certain circumstances in which an adjustment is made that affects
the amount that should have been distributed for a prior taxable year, we may be
able to rectify the failure to meet such distribution requirement by paying
"deficiency dividends" to shareholders in the later year, which may be included
in our deduction for dividends
909738.11
18
paid for the earlier year. Thus, we may be able to avoid being taxed on amounts
distributed as deficiency dividends; however, we will be required to pay
interest based upon the amount of any deduction taken for deficiency dividends.borrowings.
Failure to Qualify. Under recently enacted law, if we were to fail to
satisfy one or more requirements for REIT qualification, other than an asset or
income test violation of a type for which relief is otherwise available as
described above, we would retain our REIT qualification if the failure was due
to reasonable cause and not willful neglect, and if we were to pay a penalty of
$50,000 for each such failure. This new relief provision will be available to us
in our taxable years beginning on or after January 1, 2005, although it is not
possible to predict whether in all circumstances we would be entitled to the
benefit of this relief provision.
If Acadia failswe fail to qualify for taxation as a REIT infor any taxable year, and theif certain
relief provisions of the Code do not apply, we would be subject to federal
income tax (including any applicable alternative minimum tax) on our taxable income
at regular corporate rates. Distributions to shareholders in any year in which
we fail to qualify will not be deductible by us nor will they be required to be
made. As a result, our failure to qualify as a REIT would reduce the cash
available for distribution by us to our shareholders. In such event,addition, if we fail to
the extent of current or accumulated earnings and
profits,qualify as a REIT, all distributions to shareholders will be taxable as ordinary
income, to the extent of our current and accumulated earnings and profits, which
may be eligible for long-term capital gains rates with respect to domestic
noncorporate shareholders if certain holding periods are met and, subject to
certain limitations of the Internal Revenue Code, of 1986, corporate distributees may be eligible for the
dividends-received deduction.
Unless entitledIf our failure to relief under specific statutory provisions, we also will be
disqualified from taxationqualify as a REIT is not due to reasonable cause but
results from willful neglect, we would not be permitted to elect REIT status for
the four taxable years followingafter the taxable year duringfor which qualification was lost. Itsuch disqualification is
not possibleeffective. In the event we were to state whetherfail to qualify as a REIT in all circumstancesone year and
subsequently requalify in a later year, we wouldmight be entitledrequired to such statutory relief.recognize
taxable income based on the net appreciation in value of our assets as a
condition to requalification. In the alternative, we may be taxed on the net
appreciation in value of our assets if we sell properties within ten years of
the date we requalify as a REIT under federal income tax laws.
Taxation of Taxable U.S. Shareholders
of the Company. As used in this
prospectus,herein, the term "U.S. Shareholder"shareholder" means a holder of our common shares
thatwho (for United States federal income tax purposes) (i)(1) is a citizen or resident
of the United States, (ii)(2) is a corporation, partnership, or other entity treated
as a corporation or partnership for federal income tax purposes created or
organized in or under the laws of the United States or of any political
subdivision thereof (iii)(unless, in the case of a partnership, Treasury Regulations
are adopted that provide otherwise), (3) is an estate the income of which is
subject to United States federal income taxation regardless of its source or (iv)(4)
is a trust ifwhose administration is subject to the primary supervision of a
United States court is able to exercise primary supervision over the
administration of the trust and which has one or more United States persons who have the
authority to control all substantial decisions of the trust. For any taxable
year for which Acadia qualifies for taxationtrust or a trust that has
a valid election to be treated as a U.S. person in effect.
As long as we qualify as a REIT, amounts distributeddistributions made to taxableour U.S.
Shareholders will be taxed as follows:
Distributions Generally. Distributions to U.S. Shareholders, other than
capital gain dividends discussed below, will be taxable as ordinary income to
such holders up to the amountshareholders out of the company's current or accumulated earnings
and profits. Such distributions are not eligible for the dividends-received
deduction for corporations. To the extent that the Acadia makes distributions in
excess of its current or accumulated earnings and profits (and not
designated as capital gain dividends) will be taken into account by them as
ordinary income and corporate shareholders will not be eligible for the
dividends-received deduction as to such distributionsamounts. For purposes of computing our
earnings and profits, depreciation for depreciable real estate will be computed
on a straight-line basis over a 40-year period.
Under the Jobs and Growth Tax Relief Reconciliation Act of 2003,
certain "qualified dividend income," received by domestic non-corporate
shareholders in taxable years 2003 through 2008, is subject to tax at the same
tax rates as long-term capital gain (generally, under the legislation, a maximum
rate of 15% for such taxable years). Dividends paid by a REIT generally would
not qualify under the legislation, because a REIT is not generally subject
18
to federal income tax on the portion of its REIT taxable income distributed to
its shareholders, and therefore will continue to be subject to tax at ordinary
income rates (generally, a maximum rate of 35% for taxable years 2003 through
2008), subject to two narrow exceptions. Under the first exception, dividends
received from a REIT may be treated as "qualified dividend income" eligible for
the reduced tax rates to the extent that the REIT itself has received qualified
dividend income from other corporations (such as taxable REIT subsidiaries) in
which the REIT has invested. Under the second exception, dividends paid by a
tax-free returnREIT in a taxable year may be treated as qualified dividend income in an amount
equal to the sum of capital, reducing(i) the tax basis in
the U.S. Shareholders' shares, and distributions in excess of the U.S.
Shareholders'REIT's "REIT taxable income" for the
preceding taxable year over the corporate-level federal income tax basis in their respective shares will be taxable as an amount
realized from the sale of such shares. Dividends declaredpayable by
the companyREIT for such preceding taxable year and (ii) the excess of the REIT's
income that was subject to the Built-In Gains Tax (as described above) in October, November, or December of anythe
preceding taxable year over the tax payable to a shareholder of record on
a specified date in any such month will be treated as both paid by the company
and received by the shareholderREIT on December 31 of such year, provided that the
dividend is actually paid by the company during January of the following
calendarincome for such
preceding taxable year.
Shareholders may not include on their own income tax returns any
tax losses of the company.
We will be treated as having sufficient earnings and profits to treat
as a dividend any distribution by the company up to the greater of our current
or accumulated earnings and profits. As a result, shareholders may be required
to treat certain distributions that would otherwise result in a tax-free return
of capital as taxable dividends. Moreover, any "deficiency dividend" will be
treated as a "dividend" (an ordinary dividend or a capital gain dividend, as the
case may be), regardless of the company's earnings and profits.
Capital Gain Dividends. Dividends to U.S. ShareholdersDistributions that are properly designated by us as capital gain dividends
will be treatedtaxed as long-termgains from the sale or exchange of a capital gainasset held for
more than one year (to the extent they do not exceed the company'sour actual net capital gain)gain
for the taxable yearyear) without regard to the period for which the shareholder has
held hisits shares. Shareholders, however,However, corporate shareholders may be required to treat up to
20% of certain capital gain dividends as ordinary income. Capitalincome under the Code.
Distributions in excess of our current and accumulated earnings and
profits will constitute a non-taxable return of capital to a shareholder to the
extent that such distributions do not exceed the adjusted basis of the
shareholder's shares, and will result in a corresponding reduction in the
shareholder's basis in the shares. Any reduction in a shareholder's tax basis
for its shares will increase the amount of taxable gain dividends are not eligible foror decrease the
dividends-received deduction for
corporations.
Individual U.S. Shareholders and U.S. Shareholdersdeductible loss that are estates and
trusts currently are subject to federal income tax on net capital gains at
different tax rates dependingwill be realized upon the natureeventual disposition of the
gain andshares. We will notify shareholders at the holding periodend of each year as to the portions
of the asset disposed of. Althoughdistributions which constitute ordinary income, capital gain or a REIT is taxed on its undistributed net
capital gains, for taxable years beginning after 1997, a REIT may elect to
include all or areturn
of capital. Any portion of such undistributed netdistributions that exceeds the adjusted basis of
a U.S. shareholder's shares will be taxed as capital gains in the income
of its shareholders. In such event, the shareholder will receive a credit or
refund for the amount of tax paid by the REIT on such undistributed net capital
gains.
909738.11
19
Passive Activity and Loss; Investment Interest Limitations.
Distributions by us and gain from the disposition
of common shares, ordinarilyprovided that the shares are held as capital assets in the hands of
the U.S. shareholder.
Aside from the different income tax rates applicable to ordinary income
and capital gain dividends, regular and capital gain dividends from us will not be
treated as dividend income for most other federal income tax purposes. In
particular, such dividends will be treated as "portfolio" income for purposes of
the passive activity income,loss limitation and therefore, U.S. Shareholdersshareholders generally will not be able
to applyoffset any "passive losses" against such income.dividends. Dividends from the company (to the extent they do not constitute a return of
capital) generally will be treated
as investment income for purposes of the investment interest limitation. Net capital gain fromlimitation
contained in Section 163(d) of the dispositionCode, which limits the deductibility of
common
shares and capital gaininterest expense incurred by noncorporate taxpayers with respect to indebtedness
attributable to certain investment assets.
In general, dividends generallypaid by us will be excluded from investment
income unlesstaxable to shareholders in the
taxpayer elects to haveyear in which they are received, except in the gain taxedcase of dividends declared at ordinary rates.
Dispositionsthe
end of Common Shares. A U.S. Shareholderthe year, but paid in the following January, as discussed above.
In general, a domestic shareholder will recognizerealize capital gain or loss on
the sale or exchangedisposition of common shares equal to the extent of the difference between (1) the amount realizedof cash
and the fair market value of any property received on such sale or exchangedisposition and (2)
the holder's taxshareholder's adjusted basis inof such shares. Such gain or loss will
generally will constitute long-termbe short-term capital gain or loss if the holdershareholder has not held
such shares for more than one year and in
the case of an individual, will be taxed at a lower rate. Losses incurred onlong-term capital gain or loss if
such shares have been held for more than one year. Loss upon the sale or
exchange of common shares by a shareholder who has held such shares for six months or
less (after applying certain holding period rules), however, generally will be deemedtreated as long-term
capital loss to the extent of anydistributions from us required to be treated by
such shareholder as long-term capital gain dividends receivedgain.
We may elect to retain and pay income tax on net long-term capital
gains. If we make such an election, you, as a holder of shares, will (1) include
in your income as long-term capital gains your proportionate share of such
undistributed capital gains and (2) be deemed to have paid your proportionate
share of the tax paid by us on such undistributed capital gains and thereby
receive a credit or refund for such amount. As a holder of shares you will
increase the basis in your shares by the U.S. Shareholderdifference between the amount of
capital gain included in your income and the amount of tax you are deemed to
have paid. Our earnings and profits will be adjusted appropriately.
19
Backup Withholding
We will report to our domestic shareholders and the IRS the amount of
dividends paid during each calendar year, and the amount of tax withheld, if
any, with respect thereto. Under the backup withholding rules, a shareholder may
be subject to backup withholding with respect to dividends paid unless such
shares.
Treatmentholder (a) is a corporation or comes within certain other exempt categories and,
when required, demonstrates this fact, or (b) provides a taxpayer identification
number, certifies as to no loss of Tax-Exempt U.S. Shareholders. The Internal Revenue Service
has ruled that amounts distributed by a REIT out of its earningsexemption from backup withholding and
profits to
a tax-exempt pension trust did not constitute unrelated business taxable income.
Although rulings are merely interpretations of law by the Internal Revenue
Service and may be revoked or modified, based on this analysis, indebtedness
incurred by us in connectionotherwise complies with the acquisitionapplicable requirements of an investment shouldthe backup withholding
rules. A shareholder who does not cause any income derived from the investment to be treated as unrelated business
taxable income upon the distribution of such income as dividends to a tax-exempt
entity. A tax-exempt entity that incurs indebtedness to financeprovide us with its purchase of
shares, however, willcorrect taxpayer
identification number also may be subject to unrelated business taxablepenalties imposed by the IRS.
Amounts withheld as backup withholding will be creditable against the
shareholder's income by virtue
of the debt-financed income rules.tax liability. In addition, tax-exempt pension and certain other tax-exempt trusts
that hold more than 10% (by value) of the interests in a REITwe may be required to treatwithhold
a percentageportion of REIT dividends as unrelated business taxable income.capital gain distributions made to any shareholders who fail to
certify their non-foreign status to us. See "-- Taxation of Non-U.S.
Shareholders" below. Additional issues may arise pertaining to information
reporting and backup withholding with respect to non-U.S. shareholders (persons
other than U.S. shareholders, also further described below). Non-U.S.
shareholders should consult their tax advisors with respect to any such
information and backup withholding requirements.
Taxation of Non-U.S. Shareholders
The requirement appliesfollowing discussion is only if (i) the qualificationa summary of the REIT depends upon the
application of a "look-through" exception to the restriction on REIT
shareholdings by five or fewer individuals, including such trusts and (ii) the
REIT is "predominantly held" by such trusts; i.e., either (A) at least one such
trust holds more than 25% (by value) of the interests in the REIT or (B) one or
more such trusts (each of whom own more than 10% by value of the interests in
the REIT) hold in the aggregate more than 50% (by value) of the interests in the
REIT. It is not anticipated that our REIT qualification will depend upon
application of the "look-through" exception or that we will be "predominantly
held" by such trusts.
Special Tax Considerations for Foreign Shareholders. The rules governing
United States federal income taxation of non-residentnon-U.S. shareholders such as
nonresident alien individuals, foreign corporations, foreign partnerships andor
other foreign trusts and
estates (collectively, "Non-U.S. Shareholders") are complex, and the following
discussion is intended only as a summary of such rules.or trusts. Prospective Non-U.S.
Shareholdersnon-U.S. shareholders should
consult with their own tax advisors to determine the impact of federal, state
and local income tax laws onwith regard to an investment in the company,shares, including any
reporting requirements, as well as the tax treatment of such an
investment under their home country laws.
In general, Non-U.S. Shareholders will be subject to United States
federal income tax with respect to their investment in the company if such
investment is "effectively connected" with the Non-U.S. Shareholder's conduct of
a trade or business in the United States. A corporate Non-U.S. Shareholder who
receives incomerequirements.
Distributions that is (or is treated as) effectively connected with a United
States trade or business also may be subject to the branch profits tax under
section 884 of the Internal Revenue Code of 1986 which is payable in addition to
United States corporate income tax. The following discussion applies to Non-U.S.
Shareholders whose investment in the company is not so effectively connected. We
expect to withhold United States income tax, as described below, on the gross
amount of any distributions paid to a Non-U.S. Shareholder unless (i) a lower
treaty rate applies and the required form evidencing eligibility for that
reduced rate is filed with the company, or (ii) the Non-U.S. Shareholder files
an Internal Revenue Service Form 4224 or applicable successor form with the
company, claiming that the distribution is "effectively connected" income.
909738.11
20
A distribution by us that isare not attributable to gain from the salesales or exchangeexchanges
by us of a United States real property interestinterests and that is not designated by us as
a capital gain dividendgains dividends will be treated as andividends of ordinary income dividend to the
extent that they are made out of our current or accumulated earnings and
profits. Generally, an ordinary income dividendSuch distributions ordinarily will be subject to a United
States withholding tax
equal to 30% of the gross amount of the distribution unless such tax is reduced or eliminated by an applicable tax
treaty. A
distributiontreaty reduces or eliminates that tax. Certain tax treaties limit the extent to
which dividends paid by a REIT can qualify for a reduction of cashthe withholding
tax on dividends. Distributions in excess of our current and accumulated
earnings and profits will not be treated first
astaxable to a returnnon-U.S. shareholder to the extent
that they do not exceed the adjusted basis of capital thatthe shareholder's shares, but
rather will reduce the adjusted basis of such shares. To the extent that such
distributions exceed the adjusted basis of a Non-U.S. Shareholder's basis in its
holding of our commonnon-U.S. shareholder's shares, (but not below zero) and then asthey
will give rise to tax liability if the non-U.S. shareholder would otherwise be
subject to tax on any gain from the sale or disposition of his shares, as
described below.
For withholding tax purposes, we are generally required to treat all
distributions as if made out of our current or accumulated earnings and profits
and thus intend to withhold at the rate of 30% (or a reduced treaty rate if
applicable) on the amount of any distribution (other than distributions
designated as capital gain dividends) made to a non-U.S. shareholder. We would
not be required to withhold at the 30% rate on distributions we reasonably
estimate to be in excess of our current and accumulated earnings and profits. If
it cannot be determined at the time a distribution is made whether such
shares,distribution will be in excess of current and accumulated earnings and profits,
the distribution will be subject to withholding at the rate applicable to
ordinary dividends. However, the non-U.S. shareholder may seek from the IRS a
refund of such amounts from the IRS if it is subsequently determined that such
distribution was, in fact, in excess of our current or accumulated earnings and
profits, and the amount withheld exceeded the non-U.S. shareholder's United
States tax treatment of which is described under the
rules discussed belowliability, if any, with respect to dispositions of shares.
Distributions by usthe distribution.
For any year in which we qualify as a REIT, distributions that are
attributable to gain from the salesales or exchangeexchanges by us of a United States real
property interestinterests will be taxed to a Non-U.S.
Shareholdernon-U.S. shareholder under the provisions
of the Foreign Investment in Real Property Tax Act of 1980.1980 ("FIRPTA"). Under
the Foreign Investment in Real Property Tax Act, such distributions areFIRPTA, a non-U.S. shareholder is taxed to
a Non-U.S. Shareholder as if such distributionsgain were gains "effectively
connected"effectively
connected with a United States trade or business. Accordingly, a Non-U.S. Shareholder willshareholders would thus be
taxed at the normal capital gain rates applicable to a U.S. Shareholdershareholders (subject
to any applicable alternative minimum tax and a special alternative minimum tax in
the case of non-resident alien individuals). DistributionsAlso, distributions subject to
the Foreign Investment in Real Property Tax Act alsoFIRPTA may be subject to a 30% branch profits tax in the hands of a foreign corporate
non-U.S. shareholder that is not entitled to treaty relief or exemption. We are required
by applicable regulations to withhold from distributions to Non-U.S.
Shareholders, and remit to the Internal Revenue Service, (i) 35% of designated
capital gain dividends (or, if greater, 35% of the amount of any distributionsdistribution that could be
designated by us as a capital gains dividend regardless of the amount actually
20
designated as a capital gain dividends) and (ii) 30% of ordinary
dividends paid out of earnings and profits. In addition, if we designate prior
distributions as capital gain dividends, subsequent distributions, up todividend. This amount is creditable against the
amount of such prior distributions not withheld against, will be treated as
capital gain dividends for purposes of withholding. A distribution in excess of
the company's earnings and profits may be subject to 30% dividend withholding if
at the time of the distribution it cannot be determined whether the distribution
will be in an amount in excess of our current or accumulated earnings and
profits. Tax treaties may reduce our withholding obligations. If the amount
withheld by us with respect to a distribution to a Non-U.S. Shareholder exceeds
thenon-U.S. shareholder's United StatesFIRPTA tax liability with respect to such distribution
(as determined underliability.
For taxable years beginning after October 22, 2004, the rules described
in the two preceding paragraphs), the
Non-U.S. Shareholder may file for a refund of such excess from the Internal
Revenue Service. It should be noted that the 35% withholding tax rate onparagraph generally do not apply to capital gain dividends
currently correspondsreceived with respect to a class of our shares that is regularly traded on an
established securities market located in the maximum income tax rate applicable
to corporations, butUnited States if the non-U.S.
shareholder does not own more than five percent (5%) of such class at any time
during the taxable year. In that case, such capital gain dividends will be
treated and taxed as REIT ordinary dividends (that is higher than the 20% maximum rate onnot taxed as capital gains of
individuals.
Unless our common shares constitutegain)
as described above.
Gain recognized by a "United States real property
interest" within the meaning of the Foreign Investment in Real Property Tax Act
or are effectively connected with a U.S. trade or business,non-U.S. shareholder upon a sale of such
shares by a Non-U.S. Shareholder
generally will not be subject to United States
taxation. Our common shares will not constitutetaxed under FIRPTA if we are a United States real property
interest if the company is a "domestically-controlled REIT."domestically controlled
REIT," A
domestically-controlled REIT isdefined generally as a REIT in which at all times during a specified
testing period less than 50% in value of itsthe shares iswas held directly or
indirectly by Non-U.S. Shareholders.foreign persons. It is currently believedanticipated that we arewill continue to be a
domestically-controlled REIT, and therefore that"domestically controlled REIT" after the offering. Therefore, the sale of shares in our
company
will not be subject to taxation under the Foreign Investment in Real
Property Tax Act.FIRPTA. However, because the common sharesour Common Shares
are publicly traded, no assurance can be given that the companywe will continue to qualify
as a "domestically controlled REIT." In addition, a non-U.S. shareholder that
owns, actually or constructively, 5% or less of a class of our shares through a
specified testing period will not recognize taxable gain on the sale of its
shares under FIRPTA if the shares are traded on an established securities
market. If the gain on the sale of shares were to be a
domestically-controlled REIT. Notwithstandingsubject to taxation under
FIRPTA, the foregoing, capitalnon-U.S. shareholder would be subject to the same treatment as U.S.
shareholders with respect to such gain (subject to applicable alternative
minimum tax, special alternative minimum tax in the case of nonresident alien
individuals and possible application of the 30% branch profits tax in the case
of foreign corporations) and the purchaser would be required to withhold and
remit to the IRS 10% of the purchase price. Gain not subject to the Foreign Investment in Real Property Tax ActFIRPTA will be
taxable to a Non-U.S. Shareholdernon-U.S. shareholder if (1) investment in the Non-U.S. Shareholdershares is effectively
connected with the non-U.S. shareholder's United States trade or business, in
which case the non-U.S. shareholder will be subject to the same treatment as
U.S. shareholders with respect to such gain, or (2) the non-U.S. shareholder is
a nonresident alien individual who iswas present in the United States for 183 days
or more during the taxable year and certain other conditions apply,such nonresident alien individual has a "tax
home" in the United States, in which case the nonresident alien individual will
be subject to a 30% tax on suchthe individual's capital gains. If our company didgain.
Taxation of Tax-Exempt Shareholders
Tax-exempt entities, including qualified employee pension and profit
sharing trusts and individual retirement accounts ("Exempt Organizations"),
generally are exempt from federal income taxation. However, they are subject to
taxation on their unrelated business taxable income ("UBTI"). While investments
in real estate may generate UBTI, the IRS has issued a published ruling to the
effect that dividend distributions by a REIT to an exempt employee pension trust
do not constitute UBTI, provided that the shares of the REIT are not otherwise
used in an unrelated trade or business of the exempt employee pension trust.
Based on that ruling and on our intention to invest our assets in a domestically-controlledmanner that
will avoid the recognition of UBTI, amounts distributed by us to Exempt
Organizations generally should not constitute UBTI. However, if an Exempt
Organization finances its acquisition of our shares with debt, a portion of its
income from us, if any, will constitute UBTI pursuant to the "debt-financed
property" rules. Furthermore, social clubs, voluntary employee benefit
associations, supplemental unemployment benefit trusts, and qualified group
legal services plans that are exempt from taxation under specified provisions of
the Code are subject to different UBTI rules, which generally will require them
to characterize distributions from us as UBTI.
In addition, a pension trust that owns more than 10% of our shares is
required to treat a percentage of the dividends from us as UBTI (the "UBTI
Percentage") in certain circumstances. The UBTI Percentage is our gross income
derived from an unrelated trade or business (determined as if we were a pension
trust) divided by our total gross income for the year in which the dividends are
paid. The UBTI rule applies only if (i) the UBTI Percentage is at least 5%, (ii)
we qualify as a REIT whetherby reason of the modification of the 5/50 Rule that allows
the beneficiaries of the pension trust to be treated as holding our shares in
proportion to their actuarial interests in the pension trust, and (iii) either
(A) one pension trust owns more than 25% of the value of our shares or (B) a
Non-U.S. Shareholder's, salegroup of commonpension trusts individually holding more than 10% of the value of our
capital shares collectively owns more than 50% of the value of our capital
shares.
21
Other Tax Considerations
Entity Classification. A significant number of our investments are held
through partnerships. If any such partnerships were treated as an association,
the entity would be taxable as a corporation and therefore would be subject to
an entity level tax underon its income. In such a situation, the Foreign Investment in Real Property Tax Actcharacter of our
assets and items of gross income would change and might preclude us from
qualifying as a sale ofREIT.
We believe that each partnership in which we hold a United States
real propertymaterial interest
would depend on whether the shares were "regularly
traded" (as defined by applicable Treasury Regulations) on an established
securities market (e.g., the NYSE) and on the size of the selling shareholder's
interest in the company. If the gain on the sale of the company's shares were
subject to taxation under the Foreign Investment in Real Property Tax Act, the
Non-U.S. Shareholder would be subject to the same treatment as a U.S.
Shareholder with respect to such gain (subject to applicable alternative minimum
tax and a special alternative minimum tax in the case of nonresident alien
individuals). In any event, a purchaser of common shares from a Non-U.S.
Shareholder will not be required under the Foreign Investment in Real Property
Tax Act to withhold on the purchase price if the purchased common shares are
"regularly
909738.11
21
traded" on an established securities market(either directly or if our companyindirectly) is a
domestically-controlled REIT. Otherwise, under the Foreign Investment in Real
Property Tax Act the purchaser of our common shares may be required to withhold
10% of the purchase price and remit such amount to the Internal Revenue Service.
Income Taxation of the Operating Partnership, our Subsidiary
Partnerships and Their Partners. The following discussion summarizes certain
federal income tax considerations applicable to our investment in the operating
partnership and the indirect interest of our company in our subsidiary
partnerships.
Classification of the Operating Partnership and Our Subsidiary
Partnerships. We will be entitled to include in our income our distributive
share of the income and to deduct our distributive share of the losses of the
operating partnership (including the operating partnership's share of the income
or losses of our subsidiary partnerships) only if the operating partnership (or
our subsidiary partnerships) is classified for federal income tax purposes as
partnerships or, in the case of certain of our subsidiary partnerships that are
single-member limited liability companies, are disregarded as an entity separate
from such member, rather than as associations taxable as corporations. With
certain exceptions, an unincorporated domestic organization formed on or after
January 1, 1997 that has two or more members will beproperly treated as a partnership for federal income tax
purposes absent an election by such organization to be
treated(and not as an association taxable as a corporation. Such an organization formed
priorcorporation).
Tax Allocations with Respect to January 1, 1997 was treated asthe Properties. When property is
contributed to a partnership in exchange for federal income tax
purposes rather than as a corporation for periods prior to January 1, 1997 only
if it had no more than two of the four corporate characteristics that the
Treasury Regulations applicable to such organizations used to distinguish a
partnership from a corporation for tax purposes. These four characteristics were
continuity of life, centralization of management, limited liability, and free
transferability of interests. Unless such organization elects otherwise, the
classification claimed by the organization prior to January 1, 1997 will
continue for periods on or after January 1, 1997, and such classification will
be respected for all prior periods if the organization had a reasonable basis
for such classification, the organization and all members of the organization
recognized the federal tax consequences of any changean interest in the organization's
classification within the 60 months prior to January 1, 1997, and neither the
organization nor any member was notified in writing on or before May 8, 1996
that the classification of the organization was under examination.
We expect that the operating partnership, and all of our subsidiary
partnerships formed on and after January 1, 1997 either will have two or more
members at all times or, in the case of certain of our subsidiary partnerships,
will have a single member, and that none of those organizations will elect to be
treated as an association for federal income tax purposes. In addition, our
subsidiary partnerships in existence prior to January 1, 1997 and owned,
directly or indirectly, by the company and its predecessor claimed to be
partnerships for all periods prior to January 1, 1997 and were not notified in
writing on or before May 8, 1996 that such classification was under examination.
In the opinion of our tax counsel, which is based on the provisions of the
partnership agreement of the operating partnership and on certain factual
assumptions and representations, the operating partnership and our subsidiary
partnerships have been, continue to be and will be, treated as partnerships for
federal income tax purposes or,generally takes a carryover basis in the case of those subsidiary partnerships
that are single-member limited liability companies, will be disregarded as an
entity separate from such member. However, neither the operating partnership nor
any of our subsidiary partnerships have requested, nor do they intend to
request, a ruling from the Internal Revenue Service that they will be treated as
partnerships or disregarded, as applicable, for federal income tax purposes. Our
tax counsel's opinion is not binding on the Internal Revenue Service or the
courts.
A publicly-traded partnership is a partnership whose interests are
traded on an established securities market or are readily tradeable on a
secondary market (or the substantial equivalent thereof). A publicly traded
partnership will be treated as a corporation for federal income tax purposes
unless at least 90% of such partnership's gross income for each taxable year
consists of "qualifying income," which generally includes any income that is
qualifying income for purposes of the 95% gross income test applicable to REITs.
It is unclear whether the right of unit holders in the operating partnership to
exchange their units for shares of the company would be treated as the
"substantial equivalent" of the units being readily tradeable. However, because
it is anticipated that the operating partnership will meet the Qualifying Income
Exception, it should not be treated as a corporation under the publicly-traded
partnership rules. In addition, Treasury Regulations provide certain safe
harbors that, if applicable, will cause partnership interests to be treated as
interests that are not readily tradeable on a secondary market or the
substantial equivalent thereof. If for any reason the operating partnership or
one of our subsidiary partnerships were taxable as a
909738.11
22
corporation for federal income tax purposes, our company would not be able to
satisfy the requirements for REIT status.
Partners, Not Partnerships, Subject to Tax. A partnership is not a
taxable entity for federal income tax purposes. Rather, a partner is required to
take into account its allocable share of a partnership's income, gains, losses,
deductions, and credits for any taxable year of the partnership ending within or
with the taxable year of the partner, without regard to whether the partner has
received or will receive any distributions from the partnership.
Partnership Allocations. Although a partnership agreement will
generally determine the allocation of income and losses among partners, such
allocations will be disregardedproperty for tax purposes
under section 704(b)equal to the adjusted basis of the Internal Revenue Code of 1986 if they do not comply withcontributing partner in the provisions of
section 704(b)property, rather
than a basis equal to the fair market value of the Internal Revenueproperty at the time of
contribution (this difference is referred to as "Book-Tax Difference"). Special
rules under Section 704(c) of the Code of 1986 and the Treasury Regulations promulgated thereunder
as to substantial economic effect.
If an allocation is not recognized for federalrequire special allocations of income, tax purposes, the
item subject to the allocation will be reallocated in accordance with the
partners' interests in the partnership, which will be determined by taking into
account all of the factsgain, loss and circumstances relating to the economic arrangement
of the partnersdeduction with respect to
such item. The allocations of taxable income and
loss ofcontributed property, which tend to eliminate the operating partnership and our subsidiary partnerships are intended
to comply withBook-Tax Difference over the
requirements of section 704(b) of the Internal Revenue Code
of 1986 and the Treasury Regulations promulgated thereunder.
Sale of Partnership Property. Generally, any gain realized by a
partnership on the sale of property held by the partnership for more than one
year and allocated to a partner will be long-term capital gain, except for any
portiondepreciable lives of such gain that is treated as depreciationproperty, but which may not always entirely eliminate
the Book-Tax Difference on an annual basis or cost recovery recapture.
However, under the REIT requirements imposed by the Internal Revenue Code of
1986, our share, as a partner, of any gain realized by the operating partnership
or our subsidiary partnerships on the sale of any property held as inventory or
other property held primarily for sale to customers in the ordinary course of a
trade or business will be treated as income from a prohibited transaction that
is subject to a 100% penalty tax. See "--Taxation of Our Company" (p.15).
Information Reporting Requirements and Backup Withholding Tax. We will
report to our U.S. Shareholders and the Internal Revenue Service the amount of
distributions paid during each calendar year and the amount of tax withheld, if
any. Under certain circumstances, U.S. Shareholders may be subject to backup
withholding at a rate of 31% with respect to distributions paid. Backup
withholding will apply only if the shareholder (i) fails to furnish its taxpayer
identification number (which, for an individual, would be such individual's
Social Security number), (ii) furnishes an incorrect taxpayer identification
number, (iii) is notified by the Internal Revenue Service that it has failed
properly to report payments of interest and dividends, or (iv) under certain
circumstances, fails to certify, under penalty of perjury, that it has furnished
a correct taxpayer identification number and has not been notified by the
Internal Revenue Service that it is subject to backup withholding for failure to
report interest and dividend payments. Backup withholding will not apply with
respect to payments made to certain exempt recipients, such as corporations and
tax-exempt organizations. U.S. Shareholders should consult their own tax
advisors regarding their qualification for exemption from backup withholding and
the procedure for obtaining such an exemption. Backup withholding is not an
additional tax. Rather, the amount of any backup withholding with respect to a payment to a U.S. Shareholder will be allowedspecific taxable
transaction such as a credit against such U.S.
Shareholder's United States federal incomesale. Thus, the carryover basis of the contributed
properties in the hands of the partnership could cause us (i) to be allocated
lower amounts of depreciation and other deductions for tax liability and may entitle such
U.S. Shareholderpurposes than would
be allocated to us if all properties were to have a refund, provided thattax basis equal to their
fair market value at the required information is
furnishedtime the properties were contributed to the
Internal Revenue Service.
Additional issues may arise pertainingpartnership, and (ii) possibly to information reporting and
backup withholding with respect to Non-U.S. Shareholders. Non-U.S. Shareholders
should consult their tax advisors with respect to anybe allocated taxable gain in the event of a
sale of such information reporting
and backup withholding requirements.
State and Local Tax Considerations. We are, and our shareholders may
be, subject to state or local taxationcontributed properties in various state or local jurisdictions,
including those in which the company, its shareholders, the operating
partnership or our subsidiary partnerships transact business or reside. The
state and local tax treatmentexcess of the company, the operating partnership, our
subsidiary partnerships and our shareholders may not conformeconomic or book income
allocated to the federal
income tax
909738.11
23us as a result of such sale.
22
consequences discussed above. Consequently, prospective shareholders should
consult their own tax advisors regarding the effect of state and local tax laws
on their investment in the company.
Possible Federal Tax Developments. The rules dealing with federal
income taxation are constantly under review by the Internal Revenue Service, the
Treasury Department, CongressSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the courts. New federal tax legislation orinformation incorporated herein by reference
contain certain statements and other provisions may be enacted into law or new interpretations, rulings or
Treasury Regulations could be adopted or judicial decisions rendered, all of
which could affect the taxation of the companywritten material and its shareholders. No
prediction can beoral statements made as to the likelihood of passage of any new tax
legislation or other provisions either directly or indirectly affecting the
company and its stockholders. Consequently, the tax treatment described herein
may be modified prospectively or retroactively by such legislative, judicial or
administrative action.
SELLING SHAREHOLDERS
As described elsewhere in this prospectus, the selling shareholders are
persons who either have received our restricted common shares or may receive
common shares in exchange for their OP Units. The following table sets forth, as
of the date of this prospectus, the name of each selling shareholder, the number
of common shares beneficially owned by each selling shareholder, and the number
and percentage of our common shares to be beneficially owned by each selling
shareholder following the offering to which this prospectus relates. Since
selling shareholders may sell all, some or none of their shares that are to be
offered by this prospectus, no estimate can be made of the aggregate number of
common shares offered by this prospectus, or the aggregate number of common
shares that will be owned by each selling shareholder upon completion of the
offering to which this prospectus relates. Except as otherwise noted below, none
of the selling shareholders has, within the past three years, had any position,
office or other material relationship with Acadia.
The common shares offered by this prospectus may be offered from time
to time directly by the selling shareholders named below or by pledgees, donees,
transferees or other successors in interest thereto:
Number of Percentage to
Maximum Shares to Be Be
Shares Number of Beneficially Beneficially
Beneficially Shares Which Owned After Owned After
Owned Prior to May Be Sold this the
Name this Offering(1) Hereunder Offering(2) Offering(2)
- ----------------------------------- ------------------ ---------------- -------------- ---------------
RD New York VI, LLC 134,661(3) 134,661 0 *
Yale University 6,138,492(4) 6,138,492 0 *
Yale University Retirement Plan for
Staff Employees 403,994(5) 403,994 0 *
Vanderbilt University 1,346,647(5) 1,346,647 0 *
Carnegie Corporation of New York 942,653(5) 942,653 0 *
Howard Hughes Medical Institute 2,266,667(6) 2,266,667 0 *
Harvard Private Capital Realty, Inc. 2,000,000(6)(7) 2,000,000 0 *
The Board of Trustees of the Leland
Stanford Junior University 2,133,333(6) 2,133,333 0 *
TRW Master Trust 1,200,000(6) 1,200,000 0 *
Five Arrows Realty Securities LLC 3,266,667(8)(9) 2,266,667 1,000,000
3.89(10)
909738.11
24
Name Shares Beneficially Maximum Number of Number of Percentage to
Owned Prior to Shares Which May Shares to Be Be Beneficially
this Offering(1) Be Sold Hereunder Beneficially Owned After the
Owned After Offering(2)
this
Offering(2)
Chestnut Hill Trust 76,426(11) 76,426 0 *
Naperville Associates 166,248(12) 166,248 0 *
Global Investors Corp. 468,072(13) 468,072 0 *
Jack Nash 364,393(14) 364,393 0 *
Brown University 685,997(15) 685,997 0 *
Halil Bezman 225,288(16) 225,288 0 *
SRRD Associates, L.P. 731,089(16) 731,089 0 *
Samada Limited (as Trustee of the Forest 1,855,974(17) 1,855,974 0
Trust) *
Pragusa One Inc. 892,030(18) 892,030 0 *
L & J Realty Company 2,000 2,000 0 *
Ross Dworman(19) 1,270,816(20) 595,149 675,667 *
Kenneth Bernstein(21) 628,557(22) 261,691 366,866 *
RD Woonsocket, Inc.(23) 7,540 7,540 0 *
RD Abington, Inc.(23) 3,684 3,684 0 *
RD Missouri, Inc.(23) 2,883 2,883 0 *
RD Merrilville, Inc.(23) 7,799 7,799 0 *
RD Elmwood, Inc.(23) 5,205 5,205 0 *
RD Village, Inc.(23) 9,545 9,545 0 *
RD Marley, Inc.(23) 6,807 6,807 0 *
RD Soundview Inc.(23) 6,323 6,323 0 *
RD Bloomfield Inc.(23) 5,399 5,399 0 *
RD Hobson, Inc.(24) 5,189 5,189 0 *
RD Townline, Inc.(24) 5,036 5,036 0 *
RD Whitegate, Inc.(24) 1,650 1,650 0 *
RD Crossroads Inc.(24) 8,443 8,443 0 *
RD Smithtown Inc.(24) 7,642 7,642 0 *
909738.11
25
Name Shares Beneficially Maximum Number of Number of Percentage to
Owned Prior to Shares Which May Shares to Be Be Beneficially
this Offering(1) Be Sold Hereunder Beneficially Owned After the
Owned After Offering(2)
this
Offering(2)
RD New York, LLC(25) 103,936 103,936 0 *
Homkor Colony, L.P. 31,333 31,333 0 *
G.O. Associates Limited Partnership 38,877(26) 38,877 0 *
Great Universal Capital Corp. 220,300 220,300 0 *
Cheerful Corp. 118,391 118,391 0 *
Wanda Dworman 8,475(27) 8,475 0 *
David Dworman 2,825(27) 2,825 0 *
Evan Frazier Partners(28) 19,739 19,739 0 *
Evan Frazier Realty LLC(29) 294,434 294,434 0 *
RD Greenbelt, Inc.(30) 55,011 55,011 0 *
KAL Partners, L.P. 102,068 102,068 0 *
Michael A. Young 34,005 34,005 0 *
Mindy White(31) 17,029 17,029 0 *
S&J Roth Revocable Trust 25,517 25,517 0 *
Rabinowitz Family 1991 Trust 21,247 21,247 0 *
Rabinowitz Family 1986 Trust 21,247 21,247 0 *
Perry Kamerman(32) 154,866(33) 50,000 104,866 *
Joel Braun(34) 84,334(35) 6,667 77,667 *
Eric Newberg 8,000 8,000 0 *
Robert Masters(36) 66,888(37) 4,667 62,221 *
Jay A. Kaiser 38,667(38) 38,667(39) 0 *
H. Robert Holmes 25,067(38) 25,067(39) 0 *
Steve Bollerman 1,333(38) 1,333(39) 0 *
AmCap Incorporated 44,267(38) 44,267(39) 0 *
Lennox Securities, Inc. 185,600(38) 185,600(39) 0 *
TOTALS -- 26,719,319 -- --
==========
- ---------------------
909738.11
26
(*) Less than 1%.
(1) Beneficial ownership based upon information provided by the respective
selling shareholders and is based upon a common share price of $7.50.
Beneficial ownership will differ at alternate share prices due to
allocations of distributions as provided in the various partnership
agreements of the partnerships which are currently the record owners
of these shares as noted in the applicable footnotes. Assumes that all
OP Units held by or attributable to the person are exchanged for
common shares.
(2) Assumes sale of all common shares registered hereunder.
(3) As of the date of this prospectus, the record owner of 134,395 of
these common shares is RD Properties, L.P. VI, the record owner of 133
common shares is RD Properties, L.P. VIA, and the record owner of the
remaining 133 common shares is RD Properties, L.P., VIB. All three
limited partnerships are expected to distribute their shares to their
partners, including the selling shareholder, in accordance with the
terms of their respective partnership agreements, prior to their
resale pursuant to this prospectus. The LLC is 80% owned by Dworman
and 20% owned by Mr. Bernstein. All of these shares are subject to a
lock-up agreement that, subject to certain limited exceptions, would
prohibit the sale or other disposition of such common shares pursuant
to this prospectus or otherwise until December 28, 2000.
(4) As of the date of this prospectus, the record owner of 3,366,616 of
these common shares is RD Properties, L.P. VI, and the record owner of
the remaining 2,771,876 common shares is RD Properties, L.P. V. Both
limited partnerships are expected to distribute their shares to their
partners, including the selling shareholder, in accordance with the
terms of their respective partnership agreements, prior to their
resale pursuant to this prospectus. The shares attributable to RD
Properties, L.P. VI are subject to a lock-up agreement that, subject
to certain limited exceptions, would prohibit the sale or other
disposition of such common shares pursuant to this prospectus or
otherwise until December 28, 2000.
(5) As of the date of this prospectus, the record owner of these common
shares is RD Properties, L.P. VI, which is expected to distribute its
shares to its partners, including the selling shareholder, in
accordance with the terms of its partnership agreement, prior to their
resale pursuant to this prospectus. All of these shares are subject to
a lock-up agreement that, subject to certain limited exceptions, would
prohibit the sale or other disposition of such common shares pursuant
to this prospectus or otherwise until December 28, 2000.
(6) As of the date of this prospectus, the record owner of these common
shares is RD Properties, L.P. VIA, which is expected to distribute its
shares to its partners, including the selling shareholder, in
accordance with the terms of its partnership agreement, prior to their
resale pursuant to this prospectus. All of these shares are subject to
a lock-up agreement that, subject to certain limited exceptions, would
prohibit the sale or other disposition of such common shares pursuant
to this prospectus or otherwise until December 28, 2000.
(7) Charlesbank Capital Partners, LLC ("Charlesbank"), a Massachusetts
limited liability company, pursuant to an agreement among Charlesbank,
the President and Fellows of Harvard College and certain individuals,
has sole power to direct the vote of these shares and may be deemed
the beneficial owner of these shares.
(8) As of the date of this prospectus, the record owner of 2,266,667 of
these common shares is RD Properties, L.P. VIB, which is expected to
distribute its shares to its partners, including the selling
shareholder, in accordance with the terms of its partnership
agreement, prior to their resale pursuant to this prospectus. All of
the 3,266,667 shares are subject to a lock-up agreement that, subject
to certain limited exceptions, would prohibit the sale or other
disposition of such common shares pursuant to this prospectus or
otherwise until December 28, 2000. In a series of open market
purchases between September 3, 1998 and April 20, 1999, Five Arrows
Realty Securities L.L.C. acquired 1,000,000 common shares as reported
in the statement on Schedule 13D filed by Acadia on September 15,
1998, as amended by Amendment No.1 on May 21, 1999, and Amendment No.
2 on May 24, 1999.
909738.11
27
(9) Rothschild Realty Investors II L.L.C., a Delaware limited liability
company and sole managing member of Five Arrows Realty Securities
L.L.C., may be deemed the beneficial owner of these shares.
(10) Assumes the selling shareholder sold all its shares which are covered
by this prospectus (i.e., 2,266,667) and no selling shareholder who
holds OP Units has converted such OP Units to common shares.
(11) As of the date of this prospectus, the record owner of 60,267 of these
common shares is RD Properties, L.P. II, the record owner of 4,520
common shares is Columbia VGH Investors and the record owner of the
remaining 11,639 common shares is RD Bloomfield Associates Limited
Partnership II.
(12) As of the date of this prospectus, the record owner of 60,267 of these
common shares is RD Properties, L.P. II, and the record owner of the
remaining 105,981 common shares is RD Bloomfield Associates Limited
Partnership II. Both limited partnerships are expected to distribute
their shares to their partners, including the selling shareholder, in
accordance with the terms of their respective partnership agreements,
prior to their resale pursuant to this prospectus.
(13) As of the date of this prospectus, the record owner of 362,091 of
these common shares is RD Properties, L.P. II and the record owner of
the remaining 105,981 common shares is RD Bloomfield Associates
Limited Partnership II.
(14) As of the date of this prospectus, the record owner of 60,267 of these
common shares is RD Properties, L.P. II, the record owner of 48,024
common shares is Columbia VGH Investors, the record owner of 105,981
common shares is RD Bloomfield Associates Limited Partnership II and
the record owner of the remaining 150,121 common shares is RD
Properties, L.P. III.
(15) As of the date of this prospectus, the record owner of 120,663 of
these common shares is RD Properties, L.P. II, the record owner of
300,242 common shares is RD Properties, L.P. III, the record owner of
138,603 common shares is RD Properties, L.P., V, the record owner of
31,074 common shares is Columbia VGH Investors and the record owner of
the remaining 95,415 common shares is RD Bloomfield Associates, L.P.
II. All five limited partnerships are expected to distribute their
shares to their partners, including the selling shareholder, in
accordance with the terms of their respective partnership agreements,
prior to their resale pursuant to this prospectus.
(16) As of the date of this prospectus, the record owner of these common
shares is RD Properties, L.P. III, which is expected to distribute its
shares to its partners, including the selling shareholder, in
accordance with the terms of its partnership agreement, prior to their
resale pursuant to this prospectus.
(17) As of the date of this prospectus, the record owner of 300,242 of
these common shares is RD Properties, L.P. III, and the record owner
of the remaining 1,555,732 common shares is RD Properties, L.P. IV.
Both limited partnerships are expected to distribute their shares to
their partners, including the selling shareholder, in accordance with
the terms of their respective partnership agreements, prior to their
resale pursuant to this prospectus.
(18) As of the date of this prospectus, the record owner of 225,288 of
these common shares is RD Properties, L.P. III, and the record owner
of the remaining 666,742 common shares is RD Properties, L.P. IV. Both
limited partnerships are expected to distribute their shares to their
partners, including the selling shareholder, in accordance with the
terms of their respective partnership agreements, prior to their
resale pursuant to this prospectus.
(19) Mr. Dworman is currently Chairman and Chief Executive Officer of
Acadia.
(20) Reflects the common shares beneficially owned by Mr. Dworman in
his individual capacity (either directly or indirectly). The 1,209,066
common shares he directly owns in his individual capacity include: (i)
533,399 shares issuable upon the conversion of OP Units, (ii) 666,667
shares issuable upon the exercise of stock options
909738.11
28
(iii) 4,000 shares purchased on the open market and (iv) 5,000
restricted shares issued to Mr. Dworman on March 15, 2000. The 61,750
common shares he indirectly owns in his individual capacity (through
his equity interests in various limited partnerships) are
attributable to him as follows:
Partnership Name Beneficial Interest
RD Properties, L.P. II 11,578
RD Town Square Associates 5,362
Columbia VGH Investors 1,129
RD Properties, L.P. III 21,233
RD Properties, L.P. IV 22,448
---------
61,750
======
In the aggregate, Mr. Dworman is deemed to beneficially own 14,558,582 common
shares, which in addition to the shares held by Mr. Dworman in his individual
capacity (x) as noted above (799,149) or (y) as noted in footnote (26) (3,887),
include:
(i) 12,848,990 shares which represent 80% of the total common shares of RD
Properties, L.P. VI, RD Properties, L.P. VIA and RD Properties, L.P.
VIB (collectively the "RD Funds") which Mr. Dworman is deemed to
beneficially own as an 80% managing member of RD New York VI LLC, the
general partner of the RD Funds and indirect owner of 134,661 shares.
Mr. Dworman's 80% share of the 134,661 shares is 107,728.
(ii) 55,185 common shares beneficially owned by Mr. Dworman by virtue of
his 100% equity interest in those entities designated by footnote
(23).
(iii) 22,368 common shares beneficially owned by Mr. Dworman by virtue of
his 80% equity interest in those entities designated by footnote (24).
(iv) 83,149 common shares beneficially owned by Mr. Dworman by virtue of
his 80% equity interest in RD New York LLC as described in footnote
(25).
(v) 15,791 common shares beneficially owned by Mr. Dworman virtue of his
80% equity interest in Evan Frazier Partners as described in footnote
(28).
(vi) 214,937 common shares beneficially owned by Mr. Dworman by virtue of
his 73% interest in Evan Frazier Realty LLC as described in footnote
(29).
(vii) 43,459 common shares beneficially owned by Mr. Dworman by virtue of
his 79% equity interest in RD Greenbelt, Inc. as described in footnote
(30).
(viii) Mr. Dworman owns 3,499 common shares and 388 shares, respectively, in
his own name through the partnership described in footnote 26 and
through RD G.O. Properties, Inc., a wholly owned corporation.
(21) Mr. Bernstein is currently President of the trust.
(22) Reflects the common shares beneficially owned by Mr. Bernstein in his
individual capacity. These shares include: (i) 261,691 shares issuable
upon the conversion of OP Units, (ii) 333,334 shares issuable upon the
exercise of stock options, (iii) 25,532 restricted shares issued to
Mr. Bernstein on January 3, 2000 (which
909738.11
29
shares are not being registered under this registration statement) and
(iv) 8,000 shares purchased on the open market. In the aggregate, Mr.
Bernstein is deemed to beneficially own 3,944,516 common shares which,
in addition to the shares held by Mr. Bernstein in his individual
capacity, include:
(i) 3,212,248 shares which represent 20% of the total common
shares of the RD Funds which Mr. Bernstein is deemed to
beneficially own as a 20% managing member of RD New York VI
LLC, the general partner of the RD Funds and owner of 134,661
shares. Mr. Bernstein's 20% share of the 134,551 shares is
26,933.
(ii) 5,593 common shares beneficially owned by Mr. Bernstein by
virtue of his 20% equity interest in those entities
designated by footnote (24).
(iii) 20,787 common shares beneficially owned by Mr. Bernstein by
virtue of his 20% equity interest in RD New York LLC as
described in footnote (25).
(iv) 3,948 common shares beneficially owned by Mr. Bernstein by
virtue of his 20% equity interest in Evan Frazier Partners as
described in footnote (28).
(v) 61,831 common shares beneficially owned by Mr. Bernstein by
virtue of his 21% interest in Evan Frazier Realty LLC as
described in footnote (29).
(vi) 11,552 common shares beneficially owned by Mr. Bernstein by
virtue of his 21% interest in RD Greenbelt, Inc. as described
in footnote (30).
(23) Mr. Dworman is the sole shareholder of this corporation.
(24) Messrs. Dworman and Bernstein own 80% and 20%, respectively, of the
issued and outstanding shares.
(25) Messrs. Dworman and Bernstein own 80% and 20%, respectively, of this
limited liability corporation.
(26) Mr. Dworman owns 3,499 common shares and 388 shares, respectively,
through this partnership in his own name and through RD G.O.
Properties, Inc., a wholly owned corporation.
(27) As of the date of this prospectus, the record owner of these common
shares in Columbia VGH Investors.
(28) Messrs. Dworman and Bernstein own 80% and 20%, respectively, of this
partnership.
(29) Messrs. Dworman and Bernstein own 73% and 21%, respectively, of this
partnership.
(30) Messrs. Dworman and Bernstein own 79% and 21%, respectively, of the
issued and outstanding shares.
(31) Mrs. White is married to Gregory White, a trustee of Acadia. Mr. White
owns 17,229 shares, none of which are the subject of this prospectus
and all of which Mrs. White disclaims ownership of.
(32) Mr. Kamerman is currently a Senior Vice President and Treasurer of
Acadia.
(33) These shares include: (i) 50,000 shares issuable upon the conversion
of OP Units, (ii) 103,334 shares issuable upon the exercise of stock
options and (iii) 1,532 restricted shares issued to Mr. Kamerman on
January 3, 2000 (which shares are not being registered under this
registration statement).
(34) Mr. Braun is currently a Senior Vice President of Acadia.
(35) These shares include: (i) 6,667 shares issuable upon the conversion of
OP Units, (ii) 76,667 shares issuable upon the exercise of stock
options and (iii) 1,000 shares purchased on the open market.
909738.11
30
(36) Mr. Masters is currently a Senior Vice President and General Counsel
of Acadia.
(37) These shares include: (i) 4,667 shares issuable upon the conversion of
OP Units, (ii) 56,667 shares issuable upon the exercise of stock
options, (iii) 2,554 restricted shares issued to Mr. Masters on
January 3, 2000 (which shares are not being registered under this
registration statement) and (iv) 3,000 shares purchased on the open
market.
(38) As of the date of this prospectus, this selling shareholder holds
preferred OP Units which were issued pursuant to a certain Agreement
of Contribution dated November 8, 1999. Preferred OP Units are
convertible into regular OP Units at a rate of approximately 133.33
regular OP Units for each preferred OP Unit. Regular OP Units are
convertible into common shares on a one-for-one basis. Amounts set
forth in the table reflect the "as converted" number of common shares
held by each selling shareholder as of the date of this prospectus.
(39) These shares are subject to a lock-up agreement that, subject to
certain limited exceptions, would prohibit the sale or other
disposition of such common shares pursuant to this prospectus or
otherwise until November 16, 2000.
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale
from time to time by the
persons listed under the "Selling Shareholders" section of this prospectus of upus do not relate strictly to 26,719,319 common shares. We have issued 16,061,238 restricted common shares
to certain selling shareholders and may issue further shares to the extent
certain other selling shareholders exchange their 10,658,081 OP Units, including
294,934 OP Units issuable upon the conversion of preferred OP Units, held by
them in our subsidiary, the operating partnership, for an equal number of common
shares. We have registered the selling shareholders' common shares for resale to
provide them with freely tradeable securities. However, registration of their
shares does not necessarily mean thathistorical or current facts.
As such, they will offer or sell any of their
shares. We will not receive any proceeds from the offering or sale of their
shares.
Selling shareholders (or pledgees, donees, transferees or other
successors in interest) may sell the common shares to which this prospectus
relates from time to time on the New York Stock Exchange, where our common
shares are listed for trading, in other markets where our common shares are
traded, in negotiated transactions, through underwriters or dealers, directly to
one or more purchasers, through agents or in a combination of such methods of
sale. They will sell the common shares at prices which are current when the
sales take place or at other prices to which they agree. All costs, expenses and
fees in connection with the registration of the common shares offered hereby
will be borne by us. Brokerage commissions and similar selling expenses, if any,
attributable to the sale of common shares offered hereby will be borne by the
selling shareholders.
The selling shareholders may effect such transactions by selling the
common shares offered hereby directly to purchasers or through broker-dealers,
which may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions, or commissions from the
selling shareholders and/or the purchasers of the common shares offered hereby
for whom such broker-dealers may act as agents or to whom they sell as
principal, or both (which compensation as to a particular broker-dealer might be
in excess of customary commissions).
In connection with an underwritten offering, underwriters or agents
may receive compensation in the form of discounts, concessions or commissions
from a selling shareholder or from purchasers of the shares which are the
subject of this prospectus for whom they may act as agents, and underwriters may
sell the shares which are the subject of this prospectus to or through dealers,
and such dealers may receive compensation in the form of discounts, concessions
or commissions from the underwriters and/or commissions from the purchasers for
whom they may act as agents. We have agreed to indemnify each selling
shareholder against certain liabilities, including liabilities arising under the
Securities Act. The selling shareholders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
common shares offered hereby against certain liabilities, including liabilities
arising under the Securities Act.
909738.11
31
The shares which are the subject of this prospectus may be sold
directly or through broker-dealers acting as principal or agent, or pursuant to
a distribution by one or more underwriters on a firm commitment or best-efforts
basis. The methods by which the shares which are the subject of this prospectus
may be sold include: (a) a block trade in which the broker-dealer so engaged
will attempt to sell such shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker- dealer for its account
pursuant to this prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; (d) an exchange
distribution in accordance with the rules of the New York Stock Exchange; (e)
privately negotiated transactions; and (f) underwritten transactions. The
selling shareholders and any underwriters, dealers or agents participating in
the distribution of the shares which are the subject of this prospectus may be
deemed to be "underwriters"considered "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are not historical facts, but rather are based on our current
expectations, estimates and any
profit on the saleprojections about our industry, beliefs and
assumptions. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions are intended to
identify forward-looking statements. These statements are not guarantees of
such shares by the selling shareholdersfuture performance and any
commissions received by any such broker-dealers may be deemedare subject to be underwriting
commissions under the Securities Act. Nonerisks, uncertainties and other factors,
some of the selling shareholders has
informed us aswhich are beyond our control, are difficult to their plan of distribution.
EXPERTS
The financial statementspredict and schedule includedcould cause
actual results to differ materially from those expressed or forecasted in the
annual report on
form 10-K for the fiscal year ended December 31, 1998 incorporated by referenceforward-looking statements. These risks and uncertainties are described in this prospectus"Risk
Factors" and elsewhere in this registration statement have been
audited by Ernst & Young LLP. These audited financialprospectus. We caution you not to place undue
reliance on these forward-looking statements, are
incorporated inwhich reflect our view only as of
the respective date of this prospectus by reference in reliance upon the authority of
Ernst & Young LLP as experts in accounting and auditing.or other dates which are specified
herein.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Battle Fowler LLP,
New York, New York.
The validity of the common shares offered hereby will besecurities has been passed upon for us by Berliner,
Corcoran & Rowe L.L.P., Washington, D.C. In
addition,DC.
EXPERTS
Ernst & Young, LLP, independent registered public accounting firm, has
audited our consolidated financial statements included in our Annual Report on
Form 10-K for the descriptionyear ended December 31, 2004, and management's assessment of
federal income tax matters contained in the sectioneffectiveness of this prospectus entitled "Federal Income Tax Considerations" is based on the
opinionour internal control over financial reporting as of
Battle Fowler LLP.
909738.11
32
No dealer, salesperson or other individual has been authorized to give any
information or make any representations not contained in this prospectus in
connection with the offering covered by this prospectus. If given or made, such
information or representation must not be relied uponDecember 31, 2004, as having been authorized
by Acadia or the selling shareholders. This prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, the common shares in any
jurisdiction where, or to any person to whom, it is unlawful to make such offer
or solicitation. Neither the delivery of this prospectus nor any sale made
hereunder shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in their reports, which are incorporated by
reference in this prospectus orForm S-3. Our financial statements and management's assessment
are incorporated by reference in reliance on Ernst & Young, LLP's reports, given
on their authority as experts in accounting and auditing.
AVAILABLE INFORMATION
We are subject to the affairsinformational requirements of the Securities
Exchange Act of 1934 which requires us to file reports and other information
with the Securities and Exchange Commission. You can inspect and copy reports,
proxy statements and other information filed by us at the public reference
facility maintained by the SEC at 450 Fifth Street, N.W., Washington, D.C.
20549. You can obtain copies of this material by mail from the Public Reference
Section of the SEC at 450 West Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. You can also obtain such reports, proxy statements and other
information from the web site that the SEC maintains at http://www.sec.gov.
Reports, proxy statements and other information concerning us may also
be obtained electronically at our company sincewebsite, http://www.acadia.com and through a
variety of databases, including, among others, the date hereof.
TABLE OF CONTENTS
Prospectus
Page
WHERE YOU CAN FIND MORE INFORMATION..........................................3SEC's Electronic Data
Gathering and Retrieval ("EDGAR") program, Knight-Ridder Information Inc.,
Federal Filing/Dow Jones and Lexis/Nexis.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................3
FORWARD-LOOKING INFORMATION..................................................4
PROSPECTUS SUMMARY...........................................................5
RISK FACTORS.................................................................6
OUR COMPANY..................................................................9
DESCRIPTION OF OUR COMMON SHARES.............................................10
USE OF PROCEEDS..............................................................14
INTERESTS OF NAMED EXPERTS AND COUNSEL.......................................14
FEDERAL INCOME TAX CONSIDERATIONS............................................14
SELLING SHAREHOLDERS.........................................................24
PLAN OF DISTRIBUTION.........................................................31
EXPERTS......................................................................32
LEGAL MATTERS................................................................32
909738.11REFERENCE
The Commission allows us to "incorporate by reference" the information
we file with them, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus, and information that we file later
with the Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the Commission under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
o Our Annual Report on Form 10-K for the fiscal year ended December 31,
2004, filed with the Commission on March 16, 2005 (Commission File No.
001-12002);
23
26,719,319 Shareso Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2005, filed with the Commission on May 9, 2005;
o Our Current Report on Form 8-K, filed with the Commission on April 21,
2005 (Commission File No. 001-12002);
o Our Current Report on Form 8-K, filed with the Commission on March 28,
2005 (Commission File No. 001-12002); and
o Our Definitive Proxy Statement dated April 11, 2005 on Schedule 14A
prepared in connection with our Annual Meeting of Shareholders held on
May 18, 2005.
You may request a copy of these filings (not including the exhibits to such
documents unless the exhibits are specifically incorporated by reference in the
information contained in this prospectus), at no cost, by writing or telephoning
us at the following address:
Acadia Realty Trust
Common Shares1311 Mamaroneck Avenue, Suite 260
White Plains, New York 10605
Attn: Robert Masters
Telephone requests may be directed to (914) 288-8100.
This prospectus is part of a registration statement we filed with the
Commission. You should rely only on the information or representations provided
in this prospectus. We have authorized no one to provide you with different
information. We are not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
Statements contained in this prospectus as to the contents of any
contract or document are not necessarily complete and in each instance reference
is made to the copy of that contract or document filed as an exhibit to the
registration statement or as an exhibit to another filing, each such statement
being qualified in all respects by such reference and the exhibits and schedules
thereto.
24
250,000 COMMON SHARES OF
ACADIA REALTY TRUST
PROSPECTUS
, 2000
- -------------------------------------------------------------------------------
909738.112005
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set fort h below is an estimate of the approximate amount of the fees
andOTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses (other than underwriting commissions and discounts) payable by the
Registrant in connection with the issuanceoffering are as follows:
Securities and distribution of the common
shares.
SECExchange Commission registration fee.......................................fee..... $35,489.94
Printing expenses.............................................$700.00 557.89
Accounting fees and expenses................................$3,500.00expenses............................ 5,000.00
Legal fees and expenses....................................expenses................................. 5,000.00
Miscellaneous........................................... 5,000.00
------------
TOTAL $40,000.00
Miscellaneous expenses.....................................$10,000.00
Total........................................$89,689.94
========== 15,557.89
============
Item 15. Indemnification of Directors and Officers.
OurINDEMNIFICATION OF TRUSTEES AND OFFICERS
The Company's bylaws and declaration of trust authorize our company,the Company, to
the extent permitted under Maryland law, to indemnify its trustees and officers
in their capacity as such. Section 8-301(15) of the Maryland General Corporation
Law ("MGCL") permits a Maryland REIT to indemnify or advance expenses to
trustees and officers to the same extent as is permitted for directors and
officers of a Maryland corporation under the MGCL. The MGCL requires a Maryland
corporation (unless its charter provides otherwise, which ourthe Company's
declaration of trust does not) to indemnify a director or officer who has been
successful, on the merits or otherwise, for reasonable expenses incurred in the
defense of any proceeding to which he is made a party by reason of his service
in that capacity. The MGCL permits a Maryland corporation to indemnify its
present and former directors and officers, among others, against judgments,
penalties, fines, settlements and reasonable expenses actually incurred by them
in connection with any proceeding to which they may be made a party by reason of
their service in those or other capacities unless it is established that (a) the
act or omission of the director or officer was material to the matter giving
rise to the proceeding and (i) was committed in bad faith or (ii) was the result
of active and deliberate dishonesty, (b) the director or officer actually
received an improper personal benefit in money, property or services or (c) in
the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful. However, a Maryland
corporation may not indemnify for an adverse judgment in a suit by or in the
right of the corporation or for a judgment of liability on the basis that the
officer or director shall have been adjudged to be liable to the Company or that
a personal benefit was improperly received, unless in either case a court orders
indemnification and then only for expenses. In addition, the MGCL permits a
corporation to advance reasonable expenses to a director or officer upon the
corporation's receipt of a written affirmation by the director or officer of his
or her good faith belief that he or she has met the standard of conduct
necessary for indemnification by the corporation and a written undertaking by
such director or officer on his or her behalf to repay the amount paid or
reimbursed by the corporation if it shall ultimately be determined that the
standard of conduct was not met.
OurThe Company's bylaws also permit the company,Company, subject to the approval
of ourits board of trustees, to indemnify and advance expenses to any person who
served as a predecessor of the companyCompany in any of the capacities described above
and to any employee or agent of the companyCompany or a predecessor of the company.Company.
In addition to the above, our companythe Company has purchased and maintains
insurance on behalf of all of its trustees and executive officers against
liability asserted against or incurred by them in their official capacities with
the company,Company, whether or not the companyCompany is required or has the power to
indemnify them against the same liability.
909738.11
II-1
Item 16. Exhibits.EXHIBITS
Exhibit No. Description
- ----------------------------------------------------------------------------------------------------------------------
3.1(a) Declaration of Trust of the registrant, as amended Incorporated by reference to the
copy thereof filed as an exhibit to
the registrant's Form 10-K for the
fiscal year ended December 31, 1994,
filed with the SEC on March 17, 1995
(SEC File No. 001-12002)
3.1(b) Fourth Amendment to Declaration of Trust of the registrant Incorporated by reference to the
copy thereof filed as an Exhibit to
the registrant's Form 10-Q for the
quarter ended September 30, 1998,
filed with the SEC on November 16,
1998
3.2 Bylaws of the registrant Incorporated by reference to the
copy thereof filed as an exhibit to
the registrant's Form S-11 filed
with the SEC on March 25, 1993 (SEC
File No. 33-60008)
4.1 Specimen Share Certificate Incorporated by reference to
Exhibit 4.1 to Amendment No. 3 to
the registrant's registration
statement on Form S-11 filed with
the SEC on May 23, 1993Registration Rights Agreement (filed herewith)
5.1 Opinion of Berliner, Corcoran & Rowe, L.L.P. regarding the Previously filed
legality of the securities being registered(filed herewith)
8.1 Opinion of Battle FowlerPaul, Hastings, Janofsky & Walker LLP
regarding certain tax matters Previously filed
10.1(a) AgreementII-1
23.1 Consent of Limited PartnershipErnst & Young, LLP (filed herewith)
23.2 Consent of the operating Incorporated by reference to the
partnership copy thereof filed as anBerliner, Corcoran & Rowe, L.L.P. (included in exhibit to
Amendment No.3 to the registrant's Form
S-11 filed with the SEC5.1)
23.3 Consent of Paul, Hastings, Janofsky & Walker LLP (included in exhibit 8.1)
24.1 Power of Attorney (included on March 25, 1993.
10.1(b) First, Second and Third Amendments to the Agreement of Incorporated by reference to the
Limited Partnership of the operating partnership copy thereof filed as an exhibit to
the registrant's Form 10-K for them fiscal
year ended December 31, 1998, filed with
the SEC on March 31, 1999.
10.1(c)signature page hereto)
99.1 Amended and Restated Agreement of Limited Partnership of the PreviouslyOperating Partnership
(previously filed operating partnership
10.1(d)with the Company's Registration Statement on Form S-3 filed on March 3,
2000)
99.2 First and Second Amendments to the Amended and Restated Previously filed
Agreement of Limited Partnership of
the operating partnership
23.1 ConsentOperating Partnership (previously filed with the Company's Registration Statement on
Form S-3 filed on March 3, 2000)
99.3 Third Amendment to Amended and Restated Agreement of Berliner, Corcoran & Rowe L.L.P. (included in PreviouslyLimited Partnership of the Operating
Partnership (previously filed Exhibit 5.1)
23.2 Consentwith the Company's Annual Report on Form 10-K, filed on March
15, 2004)
99.4 Fourth Amendment to Amended and Restated Agreement of Battle Fowler LLP (included in Exhibit 8.1) PreviouslyLimited Partnership of the Operating
Partnership (previously filed 23.3 Consent of Ernst & Young LLP (New York, New York) Filed Herewith
909738.11
II-2
24.1 Power of Attorney (includedwith the Company's Annual Report on signature page hereto) PreviouslyForm 10-K, filed 99.1(a) Registration Rights and Lock-Up Agreement (RD Capital Previously filed
Transaction)
99.1(b) Registration Rights and Lock-Up Agreement (Pacesetter Previously filed
Transaction)on March
15, 2004)
Item 17. Undertakings.UNDERTAKINGS
The Company hereby undertakes:
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high and of
the estimated maximum offering range may be reflected in the form of a
prospectus pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
II-2
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offering therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions referred to in Item 15 of this
Registration Statement, or otherwise, the registrant has been advised that in
the opinion of the SEC such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
909738.11
II-3
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question as to whether such
indemnification by it is against public policy as expressed in the act, and will
be governed by the final adjudication of such issue.
909738.11
II-4II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Acadia
Realty Trustthe registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration Statementregistration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Port Washington,White Plains, State of New York, on this 28th19th day of
March, 2000.July, 2005.
ACADIA REALTY TRUST
A Maryland real estate investment trust
(registrant)(Registrant)
By: /s/ Ross Dworman
------------------------------
Name: Ross Dworman
Title:Kenneth F. Bernstein
----------------------------
Kenneth F. Bernstein
President and Chief Executive Officer
Each person whose signature appears below hereby constitutes and appoints
Kenneth F. Bernstein, his true and lawful attorney-in-fact with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement (or any registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act of 1933) and to cause the same to be filed, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting to said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
whatsoever requisite or desirable to be done in and about the premises, as fully
to all intents and purposes as the undersigned might or could do in person,
hereby ratifying and confirming all acts and things that said attorney-in-fact
and agent, or its substitutes or substitute, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statementregistration
statement has been signed below by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
Signature Title Date
- --------- ----- ----
/s/ Ross Dworman
- --------------------------- Chairman of the Board of Trustees and March 28, 2000
Ross DwormanKenneth F. Bernstein Chief Executive Officer, President and July 19, 2005
- ---------------------------- Trustee (Principal Executive Officer)
President and Trustee March 28, 2000
- ---------------------------
Kenneth F. Bernstein
* Treasurer and/s/ Michael Nelsen Senior Vice President and Chief Financial July 19, 2005
- ---------------------------- Officer (Principal Financial and Account
Michael Nelsen Officer)
/s/ Douglas Crocker, II Trustee July 19, 2005
- ----------------------------
Douglas Crocker, II
/s/ Alan S. Forman Trustee July 19, 2005
- ----------------------------
Alan S. Forman
/s/ Suzanne Hopgood Trustee July 19, 2005
- ----------------------------
Suzanne Hopgood
/s/ Lorrence T. Kellar Trustee July 19, 2005
- ----------------------------
Lorrence T. Kellar
/s/ Wendy Luscombe Trustee July 19, 2005
- ----------------------------
Wendy Luscombe
/s/ Lee S. Wielansky Trustee July 19, 2005
- ----------------------------
Lee S. Wielansky
II-4
Acadia Realty Trust
Page 5
April 20, 2004
INDEX TO EXHIBITS
ACADIA REALTY TRUST
-------------------
Exhibit No. Description
- ----------------------------------------------------------------------------------------------------------------------
4.1 Registration Rights Agreement (filed herewith)
5.1 Opinion of Berliner, Corcoran & Rowe, L.L.P. (filed herewith)
8.1 Opinion of Paul, Hastings, Janofsky & Walker LLP (filed herewith)
23.1 Consent of Ernst & Young, LLP (filed herewith)
23.2 Consent of Berliner, Corcoran & Rowe, L.L.P. (included in exhibit 5.1)
23.3 Consent of Paul, Hastings, Janofsky & Walker LLP (included in exhibit 8.1)
24.1 Power of Attorney (included on signature page hereto)
99.1 Amended and Restated Agreement of Limited Partnership of the Operating Partnership
(previously filed with the Company's Registration Statement on Form S-3 filed on March
28, 2000
- -------------------------------------
Perry S. Kamerman
* Trustee3, 2000)
99.2 First and Second Amendments to the Amended and Restated Agreement of Limited
Partnership of the Operating Partnership (previously filed with the Company's
Registration Statement on Form S-3 filed on March 28, 2000
- -------------------------------------
Martin L. Edelman
* Trustee3, 2000)
99.3 Third Amendment to Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (previously filed with the Company's Annual Report on Form 10-K,
filed on March 28, 2000
- -------------------------------------
Marvin L. Levine
* Trustee15, 2004)
99.4 Fourth Amendment to Amended and Restated Agreement of Limited Partnership of the
Operating Partnership (previously filed with the Company's Annual Report on Form 10-K,
filed on March 28, 2000
- -------------------------------------
Lawrence J. Longua
* Trustee March 28, 2000
- -------------------------------------
Gregory White
*By:/s/ Ross Dworman March 28, 2000
------------------------
Ross Dworman
Attorney-in-fact15, 2004)
909738.11
II-5
EXHIBIT INDEX
Exhibit No. Description
3.1(a) Declaration of Trust of the registrant, as
amended
3.1(b) Fourth Amendment to Declaration of Trust of
the registrant
3.2 Bylaws of the registrant
4.1 Specimen Share Certificate
5.1 Opinion of Berliner, Corcoran & Rowe L.L.P.
regarding the legality of the securities being
registered
8.1 Opinion of Battle Fowler LLP regarding certain
tax matters
10.1(a) Agreement of Limited Partnership of the
operating partnership
10.1(b) First, Second and Third Amendments to the
Agreement of Limited Partnership of the
operating partnership
10.1(c) Amended and Restated Agreement of Limited
Partnership of the operating partnership
10.1(d) First and Second Amendments to the Amended and
Restated Agreement of Limited Partnership of
the operating partnership
23.1 Consent of Berliner, Corcoran & Rowe L.L.P.
(included in Exhibit 5.1)
23.2 Consent of Battle Fowler LLP (included in
Exhibit 8.1)
23.3* Consent of Ernst & Young LLP (New York, New
York)
24.1 Power of Attorney (included on signature page
hereto)
99.1(a) Registration Rights and Lock-Up Agreement (RD
Capital Transaction)
99.1(b) Registration Rights and Lock-Up Agreement
(Pacesetter Transaction)
_____________________
* Filed herewith
909738.11
II-6