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BROBECK, PHLEGER & HARRISON LLP EXHIBIT 8.2
March 24, 1997
Sunstone Hotel Investors, Inc.
115 Calle de Industrias, Suite 201
San Clemente, CA 92672
Re: SUNSTONE HOTEL INVESTORS, INC./TAX OPINION
Gentlemen:
We have acted as counsel to Sunstone Hotel Investors, Inc., a
Maryland corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission (as amended, the "Registration Statement") and the Prospectus
Supplement, with respect to the offering and sale (the "Offering") of
approximately 805,000 shares of the Company's common shares (the "Common
Shares"), and the Company's contribution of substantially all of the net
proceeds of the Offering to Sunstone Hotel Investors, L.P., a Delaware limited
partnership (the "Partnership"), in exchange for an additional interest in the
Partnership.
The Partnership currently owns several hotels and associated
personal property (the "Current Hotels") and leases each of the Current Hotels
to Sunstone Hotel Properties, Inc., a Colorado corporation (the "Lessee"),
pursuant to a percentage lease (the "Leases"). Sunstone Hotel Management, Inc.
(the "Management Company") is managing the Current Hotels and will continue to
do so. Robert A. Alter and Charles L. Biederman are 80% and 20% shareholders,
respectively, of the Lessee and Mr. Alter is the sole shareholder of the
Management Company. Mr. Alter is the Chairman of the Board of Directors and
President of the Company and will continue to serve as such.
Terms not defined in this letter have the meaning ascribed to
them in the Registration Statement and the Prospectus Supplement.
The Company has requested our opinion as to:
A. Whether, since the inception of its taxable year ended on
December 31, 1995, the Company has been organized and operated in conformity
with
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the requirements for qualification as a real estate investment trust (a "REIT")
pursuant to Sections 856 through 860 of the Internal Revenue Code of 1986, as
amended (the "Code"), and whether the Company's organization and contemplated
method of operation will enable it to continue to meet the requirements for
qualification and taxation as a REIT under the Code in 1996 and subsequent
years.
B. Whether the description of law and legal conclusions
contained in the Registration Statement with respect to the Offering under the
caption "Federal Income Tax Considerations" are correct in all material
respects, and whether the discussion therein fairly summarizes the federal
income tax considerations that are material to a holder of Common Shares.
C. Whether the Partnership has been and will continue to be
treated for federal income tax purposes as a partnership and not as an
association taxable as a corporation.
In connection with the opinions rendered below, we have
examined the following:
1. The Amended Articles of Incorporation of the Company.
2. The Company's By-Laws.
3. The Registration Statement.
4. The Prospectus Supplement.
5. The form of First Amended and Restated Limited Partnership
Agreement of the Partnership.
6. The forms of Percentage Leases.
7. The cost segmentation analysis dated August 15, 1995,
the cost segmentation analysis as of December 31, 1995,
the cost segmentation analysis as of May 31, 1996, and the
cost segmentation analysis as of December 31, 1996
(collectively, the "Cost Segmentation Analyses") prepared
by Coopers & Lybrand L.L.P.
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8. Such other documents as we have deemed necessary or
appropriate for purposes of this opinion.
In connection with the opinions rendered below, we have
assumed generally that:
a. Each of the documents referred to above has been duly
authorized, executed, and delivered, is authentic, if an original, or accurate,
if a copy, and has not been amended.
b. Commencing with its 1995 taxable year and in all subsequent
years, the Company has been operated and will operate in such a manner that will
make the representations set forth below true for all such years.
c. The Company will not make any amendments to its
organizational documents after the date of this opinion that would affect its
qualification as a REIT for any taxable year.
d. No actions will be taken by the Company, the Partnership,
or the Partners after the date hereof that would have the effect of altering the
facts upon which the opinions set forth below are based.
e. The Cost Segmentation Analyses are accurate in all material
respects. There have been no material changes in the information reflected in
the cost segmentation analysis as of December 31, 1996, since the date of
preparation of said analysis.
Furthermore, we have relied upon the correctness of the
following representations of the Company and its authorized representatives on
behalf of itself and the Partnership:
(1) The following requirements have been and will be met by
the Lessee, the Management Company and any other person who leases, manages, or
operates the Current Hotels or other hotel properties in which the Company
owns, or may in the future own, an interest in ("Other Hotel Properties"):
(a) Such person will not own, directly or indirectly
(within the meaning of Section 856(d)(5) of the Code), more than 35% of
the shares of the Company.
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(b) If such person is a corporation, not more than
35% of its stock, measured by voting power or number of shares, or, if
such person is a noncorporate entity, not more than 35% of the interest
in its assets or net profits will be owned, directly or indirectly
(within the meaning of Section 856(d)(5) of the Code), by one or more
persons who own 35% or more of the shares of the Company.
(c) The Company will not derive or receive any income
from such person, other than rents from the Current Hotels or Other
Hotel Properties.
(d) Such person will be adequately compensated for
its services.
(e) If such person is an individual, he or she will
not be an officer or employee of the Company.
(f) If such person is a corporation, none of its
officers or employees will be officers or employees of the Company.
(g) If an individual serves as both (i) one of such
person's directors and (ii) a director and officer or employee of the
Company, that individual will not receive any compensation for serving
as one of such person's directors.
(h) If an individual serves as both (i) one of such
person's directors and officers (or employees) and (ii) a director of
the Company, that individual will not receive any compensation for
serving as a director of the Company.
(i) If an individual serves as a director, officer or
employee of the Company, such person will not be engaged in the
day-to-day management of the Current Hotels or Other Hotel Properties
and will confine his or her activities as a shareholder or director of
any corporate entity which leases or manages the Current Hotels or
Other Hotel Properties to such activities as are consistent with his or
her status as a shareholder and/or director (as opposed to an officer
or employee) of such entity.
(2) The Company will not furnish or render, or bear the
cost of furnishing or rendering, any services to tenants of the Current Hotels
or Other Hotel Properties, other than the payment of real and personal property
taxes, ground lease rent (where applicable), insurance (other than workers'
compensation insurance), capital
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improvements, and the cost of repairing, replacing or refurbishing furniture,
fixtures and equipment with respect to such hotel property (to the extent
prescribed in the Percentage Leases). The payments described in the preceding
sentence are usually or customarily borne by lessors of hotel properties in the
geographic areas in which the Current Hotels or Other Hotel Properties are
located.
(3) The following requirements will be met by the Lessee, the
Management Company and any other person who furnishes or renders services
("Noncustomary Services") to the tenants of the Current Hotels or Other Hotel
Properties, other than services that are usually or customarily rendered in
connection with the rental of space for occupancy only and are not otherwise
considered rendered to the occupant:
(a) The Lessee, the Management Company and each such
other person will satisfy the requirements described in paragraph (1)
above.
(b) The cost of the Noncustomary Services will be
borne by the Lessee, the Management Company or such other person.
(c) Any charge for such Noncustomary Services will be
made, received and retained by the Lessee, the Management Company or
such other person.
(4) The Company is not chartered or supervised as a bank,
savings and loan, or similar association under state or federal law.
(5) The Company will not operate as a small business
investment company under the Small Business Investment Act of 1958.
(6) The Company was not created by or pursuant to an act of a
state legislature for the purpose of promoting, maintaining, and assisting the
economy within the state by making loans that generally would not be made by
banks.
(7) The Company will not engage in the business of issuing
life insurance, annuity contracts, or contracts of health or accident insurance.
(8) Beginning with the Company's 1996 taxable year, beneficial
ownership of the Company has been and will be held by 100 or more persons for at
least 335 days of each taxable year. During the entire 1995 and 1996 taxable
years as well as the 1997 taxable year to date, the Company has been managed by
one or more directors and the beneficial ownership of the Company has been
represented by transferable shares.
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(9) At all times during the last half of each taxable year
beginning with the Company's 1996 taxable year no more than 50% in value of the
Company's outstanding shares has been or will be owned, directly or indirectly
(within the meaning of Section 544 of the Code, as modified by Section
856(h)(i)(B) of the Code), by or for five or fewer individuals. For this
purpose, a qualified stock bonus, pension, or profit-sharing plan (as described
in Section 401(a) of the Code), a supplemental unemployment compensation
benefits plan (as described in Section 501(c)(17) of the Code), a private
foundation (as described in Section 509(a) of the Code), or a portion of a trust
permanently set aside or to be used exclusively for charitable purposes (as
described in Section 642(c) of the Code) generally is considered an individual.
However, stock held by a trust described in Section 401(a) of the Code and
exempt from tax under Section 501(a) of the Code (a "Qualified Trust") generally
is treated as held directly by the Qualified Trust's beneficiaries in proportion
to their actuarial interests in the Qualified Trust.
(10) The Company was organized on September 23, 1994. The
Company has not at any time been a party to a tax-free reorganization with
another corporation and does not hold any asset the disposition of which could
be subject to Section 1374 of the Code.
(11) The Company has elected to be a REIT for its taxable year
ending December 31, 1995 by computing its taxable income as a REIT on its
federal income tax return for that taxable year (i.e., I.R.S. Form 1120-REIT).
The Company will continue to so compute and report its income in 1996 and in
subsequent years as a REIT and will not terminate or revoke its REIT election.
(12) The Company has not had, and will not have, at the end
of any taxable year, and will not succeed to, any earnings and profits
accumulated during a non-REIT year of the Company or any other corporation.
(13) During 1995 and each subsequent taxable year, at least
95% of the Company's gross income, excluding gross income from the sale of
property held as inventory or held primarily for sale to customers in the
ordinary course of the Company's trade or business ("Prohibited Income"), has
been and will be derived from:
(a) Dividends.
(b) Interest.
(c) "Rents from real property," within the meaning
of Section 856(d) of the Code.
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(d) Gain from the sale or other disposition of stock,
securities, and real property (including interests in real property and
interests in mortgages on real property) that is not Prohibited Income.
(e) Abatements and refunds of taxes on real property.
(f) Income and gain derived from real property
acquired directly by foreclosure or deed in lieu thereof ("Foreclosure
Property"), not including property acquired as a result of indebtedness
arising from the sale of property held as inventory or primarily for
sale to customers in the ordinary course of the Company's business.
(g) Amounts (other than amounts based on the income
or profits of any person) received or accrued as consideration for
entering into agreements (i) to make loans secured by mortgages on real
property or on interests in real property or (ii) to purchase or lease
real property (including interests in real property and interests in
mortgages on real property).
(h) Gain from the sale or other disposition of real
estate assets that is not Prohibited Income.
(i) Payments under bona fide interest rate swap or
cap agreements entered into by the Company to hedge variable rate
indebtedness it incurred to acquire or carry real estate assets
("Qualified Hedging Contracts").
(j) Gain from the sale or other disposition of
Qualified Hedging Contracts.
(14) During 1995 and each subsequent taxable year, at least
75% of the Company's gross income (excluding Prohibited Income) has been and
will be derived from:
(a) "Rents from real property" as defined in Section
856(d) of the Code.
(b) Interest (as defined in Section 856(f) of the
Code) on obligations secured by mortgages on real property or on
interests in real property.
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(c) Gain from the sale or other disposition of real
property (including interests in real property and interests in
mortgages on real property) that is not Prohibited Income.
(d) Dividends or other distributions on, and gain
(other than Prohibited Income) from the sale or other disposition of,
transferable shares in other REITs.
(e) Abatements and refunds of taxes on real property.
(f) Income and gain (other than Prohibited Income)
derived from Foreclosure Property.
(g) Amounts (other than amounts based on the income
or profits of any person) received or accrued as consideration for
entering into agreements (i) to make loans secured by mortgages on real
property or on interests in real property or (ii) to purchase or lease
real property (including interests in real property and interests in
mortgages on real property).
(h) Gain from the sale or other disposition of real
estate assets that is not Prohibited Income.
(i) Income that was (i) attributable to stock or a
debt instrument (with a maturity date of at least 5 years), (ii)
attributable to the temporary investment of new capital, and (iii)
received or accrued during the one-year period beginning on the date on
which the Company received such capital.
(15) To the extent that the Partnership acquired the personal
property contained in each of the Current Hotels for cash, the initial adjusted
basis of such personal property was equal to the fair market value of such
personal property that is shown on the Cost Segmentation Analyses. To the extent
that the Partnership acquired the personal property contained in a Current Hotel
in exchange for interests in the Partnership, the initial adjusted basis of such
personal property was the same as the transferor's basis in such personal
property on the date of acquisition. With respect to each Current Hotel for 1995
and each subsequent taxable year, the ratio of (i) the average of the adjusted
bases of the personal property contained in the Current Hotel at the beginning
and at the end of such taxable year to (ii) the average of the aggregate
adjusted bases of both the real property and personal property comprising the
Current Hotel at the beginning and at the end of such taxable year (the
"Adjusted Basis Ratio")
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has not exceeded and will not exceed 15%. The Adjusted Basis Ratio for any Other
Hotel Properties of the Partnership also will not exceed 15% for any taxable
year.
(16) The Leases provide that rent is the greater of a fixed
amount or a percentage amount that is calculated by multiplying specified
percentages by the gross room revenues for each of the Current Hotels in excess
of certain levels (the "Percentage Rent"). The percentages used to compute the
Percentage Rent (i) have not been and will not be renegotiated during the term
of the Leases in a manner that has the effect of basing the Percentage Rent on
income or profits of any person and (ii) conform with normal business practice.
The Company and the Lessee anticipate that the Lessee will have sufficient
future revenue to enable the Lessee to satisfy all of its liabilities (including
payments under the Leases and payments to the Management Company) and generate a
reasonable profit to the Lessee.
(17) The Company has not received and will not receive or
accrue, directly or indirectly, any rent, interest, contingency fees, or other
amounts that were determined in whole or in part with reference to the income or
profits derived by any person (excluding amounts received (i) as rents from
Hotels of the Partnership (including under the Leases and any subsequent leases)
that are (A) based solely on a percentage or percentages of receipts or sales
and the percentage or percentages are fixed at the time the leases are entered
into, are not renegotiated during the term of the leases in a manner that has
the effect of basing rent on income or profits, and conform with normal business
practices or (B) attributable to qualified rents from subtenants as provided by
Section 856(d)(6) of the Code and (ii) as interest that was (A) based solely on
a fixed percentage or percentages of receipts or sales or (B) attributable to
qualified rents received or accrued by debtors as provided by Section 856(f)(2)
of the Code).
(18) The Company has not owned and will not own, directly or
indirectly (within the meaning of Section 856(d)(5) of the Code), 10% or more of
the stock, by voting power or number of shares, of the Lessee, any other lessee
of its properties, the Management Company or any other manager of its
properties. The Company will not receive or accrue, directly or indirectly, any
rents from any of the following parties:
(a) A corporation of which the Company owns, directly
or indirectly (within the meaning of Section 856(d)(5) of the Code),
10% or more of the stock, by voting power or number of shares.
(b) A noncorporate entity in which the Company owns,
directly or indirectly (within the meaning of Section 856(d)(5) of the
Code), an interest of 10% or more of the assets or net profits.
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(19) During each taxable year, less than 30% of the Company's
gross income has been and will be derived from the sale or other disposition of:
(a) Stock, Qualified Hedging Contracts or other
securities held for less than one year.
(b) Property in a transaction that generates
Prohibited income.
(c) Real property (including interests in real
property interests in mortgages on real property) held for less than
four years other than (i) property compulsorily or involuntarily
converted to another form as a result of its destruction (in whole or
in part), seizure, requisition, or condemnation (or the threat or
imminence thereof) and (ii) Foreclosure Property.
(20) At the close of each quarter of each taxable year
(including the taxable year commencing January 1, 1995), (i) at least 75% of the
value of the Company's total assets have and will be represented by real estate
assets, cash and cash items, and government securities (the "75% Basket") and
(ii) with respect to the Company's securities not included in the 75% Basket,
(A) not more than 5% of the value of Company's total assets have or will consist
of the securities of any one issuer (excluding corporations with respect to
which the Company has held 100% of the stock at all times during the
corporation's existence) and (B) the Company has not and will not hold more than
10% of the outstanding voting securities of any one issuer (excluding
corporations with respect to which the Company has held 100% of the stock at all
times during the corporation's existence). For purposes of this representation,
(i) the term "securities" does not include the Company's interest in the
Partnership (or any other partnership in which the Company owns an interest),
(ii) the Company's proportionate share of the assets of the Partnership (and any
other partnership in which the Company owns an interest) are treated as assets
of the Company, and (iii) the term "value" means (A) fair value as determined in
good faith by the Board of Directors of the Company or (B) in the case of
securities for which market quotations are readily available, the market value
of such securities.
(21) The Company has and will maintain sufficient records as
to its investments to be able to show that it complies with the diversification
requirements described in the preceding paragraph.
(22) For each taxable year, the deduction for dividends paid
by the Company (as defined in Section 561 of the Code, but without regard to
capital gain dividends, as defined in Section 857(b)(3)(C) of the Code) has and
will equal or exceed (i) the sum of (A) 95% of the Company's real estate
investment trust taxable income (as
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defined in Section 857(b)(2) of the Code, but without regard to the deduction
for dividends paid and excluding any net capital gain) and (B) 95% of the excess
of its net income from Foreclosure Property over the tax imposed on such income
by Section 857(b)(4)(A) of the Code, minus (ii) any excess noncash income (as
defined in Section 857(e) of the Code).
(23) The dividends paid by the Company have been and will be
made pro rata, with no preference to any share as compared with other shares of
the same class.
(24) Within 30 days after the end of each of the 1995 taxable
year and the 1996 taxable year, and within 30 days after the end of each
subsequent taxable year, the Company has demanded and will demand written
statements from its shareholders that, at any time during the last six months of
the taxable year, owned 5% or more of its shares (or if the Company has less
than 2,000 and more than 200 shareholders of record of its shares on any
dividend record date, 1% or more of its shares, or if the Company has 200 or
less shareholders of record on any dividend record date, one-half of 1% or more
of its shares) setting forth the following information:
(a) The actual owners of the Company's stock (i.e.,
the persons who are required to include in gross income in their
returns the dividends received on the stock).
(b) The maximum number of shares of the Company
(including the number and face value of securities convertible into
shares of the Company) that were considered owned, directly or
indirectly (within the meaning of Section 544 of the Code, as modified
by Section 856 (h)(1)(B) of the Code), by each of the actual owners of
any of the Company's shares at any time during the last half of the
Company's taxable year.
(25) The Company has maintained and will maintain the written
statements described in the preceding paragraph (and other information required
by Section 1.857-8(d) of the Regulations) in its principal office, and the
statements (and such other information) will be available for inspection by the
Internal Revenue Service (the "Service").
(26) The Company has and will use the calendar year as its
taxable year.
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(27) The Company will operate in such a manner that the
representations described in paragraphs 1 through 26 will continue to be true
throughout its existence.
(28) The Partnership has been duly formed as a limited
partnership under Delaware law and has been and will be operated in accordance
with applicable Delaware law and the Partnership Agreement.
(29) The Partnership Agreement will remain in substantially
the same form as its current form and will not be amended in any material
respect (except upon the substitution of partners in accordance with the terms
of the Partnership Agreement).
(30) The Company is not acting as an agent of the Limited
Partners in connection with the investment by the Limited Partners in, and
operation of, the Partnership.
(31) The investment in the Partnership by the Limited Partners
will not entail a mandatory purchase of any type of security of, or interest in,
the Company.
(32) No Limited Partner (nor any affiliate of any Limited
Partner) has owned or will own, directly or indirectly (as defined in Section
856(d)(5) of the Code), 10% or more of the Company.
(33) A majority of the Company's Board of Directors at all
times will be independent directors.
(34) The Partnership has since its formation satisfied the
private placement "safe harbor" from publicly traded partnership status under
Notice 88-75 issued by the Service (including the requirement that the
Partnership not have more than 500 partners). If the Partnership should fail to
satisfy at least one of the safe harbors set forth in Notice 88-75, or the
Regulations under Section 7704 of the Code, whichever is applicable, in any
taxable year, the Partnership will satisfy the gross income test to avoid
corporate treatment, as set forth in Section 7704(c)(2) of the Code, for such
taxable year and all taxable years thereafter.
(35) The interests in the Partnership have not been and will
not be traded on an established securities market.
(36) The Partnership has not issued and will not issue any
Units in a transaction required to be registered under the Securities Act of
1933 (the "1933 Act").
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After reasonable inquiry, we are not aware of any facts
inconsistent with the representations set forth in paragraphs 1 through 36
above. Furthermore, where such representations involve matters of law, we have
explained to the Company's representatives the relevant and material sections of
the Code, the Regulations thereunder, published rulings of the Service, and
other relevant authority to which such representations relate and are satisfied
that the Company's representatives understand such provisions and are capable of
making such representations.
Based on the documents, assumptions and representations set
forth above, the discussion in the Prospectus under the caption "Federal Income
Tax Considerations" (which is incorporated herein by reference) and the
discussion set forth below, we are of the opinion that:
(a) Since the inception of its taxable year ended on
December 31, 1995, the Company has been organized and operated in
conformity with the requirements for qualification as a REIT pursuant
to Sections 856 through 860 of the Code, and the Company's organization
and contemplated method of operation will enable it to continue to meet
the requirements for qualification and taxation as a REIT under the
Code in 1996 and subsequent years.
(b) The description of law and legal conclusions
contained in the Registration Statement under the caption "Federal
income Tax Considerations" are correct in all material respects, and
the discussion therein fairly summarizes the federal income tax
considerations that are material to a holder of Common Shares.
(c) The Partnership will be treated for federal
income tax purposes as a partnership and not as an association taxable
as a corporation.
We are assuming that each of the foregoing representations is
accurate as of the date of this letter. We will not review the Company's
compliance with the documents, assumptions, and representations set forth above
on a continuing basis. Accordingly, we can provide no assurance that the
Company's or Partnership's operations for any given taxable year will satisfy
the requirements for qualification and taxation as a REIT or partnership,
respectively.
With regard to the opinion set forth in subparagraph (c)
above, Section 7704 of the Code generally provides that a "publicly traded
partnership" will be taxed as a corporation unless at least 90% of its gross
income in each year consists of "qualifying income" within the meaning of
Section 7704(c)(2) of the Code. Section 7704(b) defines
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Sunstone Hotel Investors, Inc. March 24, 1997
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a "publicly traded partnership" as any partnership whose interests are traded on
an established securities market or are readily tradable on a secondary market
(or the substantial equivalent thereof). The Treasury Department recently issued
Regulations providing rules governing the meaning of the term "publicly traded
partnership." Prior to the issuance of those Regulations, the Service issued a
notice providing limited safe harbors from the definition of a "publicly traded
partnership." I.R.S. Notice 88-75, 1988-2 C.B. 386.
Pursuant to one of the safe harbors provided in Notice 88-75
(a "private placement" safe harbor), interests in a partnership will not be
treated as readily tradable on a secondary market or the substantial equivalent
thereof if (i) all of the partnership interests are issued in transactions that
are not required to be registered under the 1933 Act and (ii) the partnership
does not have more than 500 partners (as calculated in the manner specified in
Notice 88-75). Since the General Partner has represented that (i) the
Partnership has not and will not offer any Units in a transaction required to be
registered under the 1933 Act, (ii) the Partnership does not currently have more
than 500 Partners, and (iii) the interests in the Partnership are not traded on
an established securities market, we are of the opinion that the Partnership is
not a publicly traded partnership at present.
The Regulations under Section 7704 provide that Notice 88-75
will continue to apply to the Partnership through the year 2005 unless the
Partnership enters into a "substantial new line of business" prior to that date.
Commencing in the year 2006 (or in such earlier taxable year in which the
Partnership enters a substantial new line of business), the Partnership would be
required to have less than 100 partners in order to fall under the private
placement safe harbor. There is no assurance that the Partnership will continue
to satisfy either the 500-partner safe harbor provided in Notice 88-75 or that
the Partnership will satisfy the 100-partner safe harbor provided in the
Regulations. However, the Partnership has represented that, if in any taxable
year the Partnership falls outside of an applicable safe harbor from publicly
traded partnership status, it will satisfy the gross income test set forth in
Section 7704(c)(2) of the Code in that taxable year and each subsequent taxable
year. (Among other things, this will require that Mr. Alter (or any other
substantial shareholder of the Lessee) own less than a 5% interest in the
Partnership in the particular taxable year. Mr. Alter currently owns less than a
5% interest in the Partnership.)
Our opinion as to the classification of the Partnership is
based on an assumption that the Partnership will either (i) continue to fall
within a safe harbor from publicly traded partnership status, or (ii) if the
Partnership is ever treated as a publicly traded partnership, it will satisfy
the qualifying income test of Section 7704(c)(2) of the
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Code in the taxable year in which such treatment commences and all years
thereafter. If future events prove to be inconsistent with our assumptions, our
opinion would be altered. Because the continuing treatment of the Partnership as
a partnership is based on subsequent events, we can provide no absolute
assurance that the Partnership will not be treated as a corporation at some time
in the future.
# # #
The foregoing opinions are based on current provisions of the
Code and the Regulations, published administrative interpretations thereof, and
published court decisions. The Service has not issued Regulations or
administrative interpretations with respect to various provisions of the Code
relating to REIT qualification. No assurance can be given that the law will not
change in a way that will prevent the Company from qualifying as a REIT, or the
Partnership from being classified as a partnership for federal income tax
purposes.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and Prospectus Supplement. We also consent to the
references to Brobeck, Phleger & Harrison LLP under the captions "Federal Income
Tax Considerations" and "Legal Matters" in the Registration Statement.
The foregoing opinions are limited to the federal income tax
matters addressed herein, and no other opinions are rendered with respect to
other federal tax matters or to any issues arising under the tax laws of any
state or locality. We undertake no obligation to update the opinions expressed
herein after the date of this letter. This opinion letter is solely for the
information and use of the addressee and the purchasers of the Common Shares in
the Offering, and may not be relied upon for any purpose by any other person
without our express written consent.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP