Exhibit 8.1
February 27, 1998
Legg Mason Wood Walker
100 Light Street
Baltimore, Maryland 21202
Re: Form S-3 Registration
Gentlemen:
We have acted as special tax counsel to Healthcare Realty Trust
Incorporated, a Maryland corporation (the "Company"), in connection with the
Registration Statement on Form S-3 (File No. 33-97888) and the documents
incorporated by reference therein (the "Incorporated Documents") and Amendment
No. 1 thereto filed with the Securities and Exchange Commission (the
"Commission") pursuant to the provisions of the Securities Act of 1933, as
amended (the "Act") relating to the registration of shares of Common Stock,
warrants to purchase Common Stock, shares of preferred stock of the Company and
debt securities of the Company (the "Shelf Securities") to be issued from time
to time by the Company. The Company's registration statement, as amended,
including the Incorporated Documents, is hereinafter referred to as the
"Registration Statement" and the related prospectus dated November 2, 1995
(including the Incorporated Documents), relating to the Shelf Securities is
hereinafter referred to as the "Basic Prospectus". The Basic Prospectus, as
supplemented by the prospectus supplement dated February 24, 1998, relating to
the offering of up to 356,347 shares of common stock, par value $.01 per share
of the Company (the "Shares") by the Underwriters, in the form first used to
confirm sales of the Shares, is hereinafter referred to as the "Prospectus". In
connection with the Registration Statement, you have requested our opinions (A)
that the Company was and is organized in conformity with the requirements for
qualification as a real estate investment trust ("REIT") under Sections 856
through 860 of the Internal Revenue Code of 1986, as amended (the "Code") and
that its method of operation as described in the Prospectus permits it to meet
the requirements for qualification and taxation as a REIT, and (B) confirming
the statements made under the caption "Federal Income Tax and ERISA
Considerations" in the Basic Prospectus and "Federal Income Tax Considerations"
in the Prospectus Supplement. All capitalized terms in this opinion which are
defined in the Registration Statement and the Prospectus shall have the same
respective meanings as set forth in the Registration Statement and the
Prospectus.
February 27, 1998
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In rendering our opinion, we have examined and relied upon the following
documents and other materials:
1. Schedules prepared and delivered by officials of the Company setting
forth:
(a) REIT taxable and gross income for the fiscal year ended December 31,
1997, together with a schedule of actual dividends distributed and projected
dividends to be distributed in accordance with Code Section 858 and compliance
with the distribution requirements of Code Section 857(a); and
(b) Compliance with the applicable REIT ratios or tests for the fiscal year
ended December 31, 1997, including:
Income tests:
(1) 95% gross income test for the year;
(2) 75% gross income test for the year;
(3) 30% gross income test for the year;
Asset tests:
(1) 75% asset test at the end of each quarter;
(2) 25% asset test at the end of each quarter;
(3) 10% asset test at the end of each quarter;
(4) 5% asset test at the end of each quarter.
2. The Company's certificate, dated as of February 25, 1998.
In addition, we have examined such additional records, documents,
certificates and other instruments and made such investigations of fact and law
as in our judgment are necessary or appropriate to enable us to render the
opinion expressed below.
In rendering our opinion, we have made the following assumptions:
1. Five or fewer shareholders have not owned, directly or indirectly under
the rules of Code Section 544, as modified by Code Section 856(h), at any time
since the completion of the initial public offering, over 50% in value of the
outstanding stock of the Company; and "Excess Shares" (defined in the Company's
Second Articles of Amendment and Restatement to be shares of a value exceeding
9.9% in value of the outstanding shares of the Company) held or deemed held by
any person (pursuant to applicable rules of attribution) are deemed to have no
value or voting rights.
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February 27, 1998
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2. The Company has and will comply with any and all procedural requirements
for REIT status set forth in Code Sections 856 through 860 and the regulations
thereunder, including the timely making of such elections and the obtaining and
disclosing of such information as is required on the federal tax returns to be
filed by the Company.
3. The Company will operate in accordance with its past and proposed method
of operation as described in its filings with the Securities and Exchange
Commission under the Securities Act of 1933 and the Securities Exchange Act of
1934, as amended.
4. All partnerships in which the Company may have an ownership interest
will own only "real estate assets" and cash reserves. All activities of those
partnerships will consist of activities permitted to be undertaken by a REIT,
and income of such partnerships, other than interest income on cash reserves,
shall be "rents from real property".
5. Each corporation in which the Company has acquired or acquires an equity
interest shall either be a "Qualified REIT Subsidiary" under Code Section 856(i)
or a corporation in which the Company will not own over ten percent of the
outstanding voting securities, and the securities owned of any such corporation
which is not a Qualified REIT Subsidiary will not be greater in value than five
percent (5%) of the value of the total assets of the Company.
On the basis of and in reliance on the foregoing, we wish to advise you
that under current law, including relevant statutes, regulations and judicial
and administrative precedent (which law is subject to change on a retroactive
basis), in our opinion the Company was and is organized in conformity with the
requirements for qualification as a REIT under the Code and that its method of
operation as described in the Prospectus permits it to meet the requirements for
qualification and taxation as a REIT.
In addition, we also hereby confirm the statements made under the caption
"Federal Income Tax and ERISA Considerations" in the Basic Prospectus, including
Item 5 of the Company's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996, incorporated by reference therein, under the heading "Certain Federal
Income Tax and ERISA Considerations" and as supplemented under the heading
"Federal Income Tax Considerations" contained in the Prospectus Supplement.
Since actual qualification as a REIT is dependent upon future facts and
circumstances, it is possible that future events, operations, distributions or
other actions will cause the Company not to qualify or continue to qualify as a
REIT.
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February 27, 1998
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We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to references to Farris, Warfield &
Kanaday, PLC in the Prospectus Supplement.
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,
locality or foreign country. We undertake no obligation to update the opinions
expressed herein after the date of this letter.
Sincerely,
/s/ Farris, Warfield & Kanaday, PLC
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