As filed with the Securities and Exchange Commission on December 14, 2001
Registration No. 333-73874
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
______________
WELLSFORD REAL PROPERTIES, INC.
(Exact Name of Registrant as Specified in its Governing Instruments)
MARYLAND 13-3926898
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
535 Madison Avenue, 26th Floor
New York, New York 10022
(212) 838-3400
(Address and Telephone Number of Principal Executive Offices)
________________
Edward Lowenthal, President
Wellsford Real Properties, Inc.
535 Madison Avenue, 26th Floor
New York, New York 10022
(212) 838-3400
(Name, Address and Telephone Number of Agent for Service)
________________
Copy to:
Alan S. Pearce, Esq.
Robinson Silverman Pearce
Aronsohn & Berman LLP
1290 Avenue of the Americas
New York, New York 10104
(212) 541-2000
Approximate date of commencement of the proposed sale to the public:
From time to time after this Registration Statement has been declared effective.
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 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 reinvestment plans,
check the following box. [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 form is a post-effective amendment filed pursuant to Rule 462(c) 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 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 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<page>
SUBJECT TO COMPLETION
PROSPECTUS
1,402,152 Shares
WELLSFORD REAL PROPERTIES, INC.
Common Stock
The selling stockholders identified in this prospectus are offering up to
1,402,152 shares of our common stock originally issued in June 1997 in
connection with our private placement. Our common stock is traded on the
American Stock Exchange under the symbol "WRP." The last reported sale price for
our common stock on the American Stock Exchange on December 13, 2001 was $18.60
per share.
We will not receive any of the proceeds from the sale of shares by the
selling stockholders and we are not offering any shares for sale under this
prospectus. See "Selling Stockholders" and "Plan of Distribution" for a
description of sale of the shares by the selling stockholders.
INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 2.
---------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is December 14, 2001
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY............................................................1
RISK FACTORS..................................................................2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS............................15
USE OF PROCEEDS..............................................................16
SELLING STOCKHOLDERS.........................................................16
PLAN OF DISTRIBUTION.........................................................16
LEGAL MATTERS................................................................17
EXPERTS......................................................................17
WHERE YOU CAN FIND MORE INFORMATION..........................................18
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PROSPECTUS SUMMARY
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or SEC, using a "shelf" registration
process. Under the shelf process, the selling stockholders may, from time to
time, sell up to 1,402,152 shares of our common stock in one or more offerings.
You should read this prospectus together with the additional information
described under the heading "Where You Can Find More Information."
The registration statement that contains this prospectus, including the
exhibits to the registration statement, contains additional information about us
and the securities offered under this prospectus. That registration statement
can be read at the SEC's web site or at the SEC's offices referenced under the
heading "Where You Can Find More Information."
ABOUT WELLSFORD REAL PROPERTIES, INC.
We are a real estate merchant banking firm. We acquire, develop,
finance and operate real properties and organize and invest in private and
public real estate companies. We have established three strategic business
units, or SBU's, within which we currently execute our business plan. Our SBU's
consist of (i) the commercial property investments SBU which owns and operates
commercial properties through our ownership interest in Wellsford/Whitehall
Group, L.L.C., or Wellsford/Whitehall, (ii) the debt and equity investments SBU,
Wellsford Capital and (iii) the property development and land operations SBU,
Wellsford Development.
Our commercial property operations currently consists solely of our
interest in Wellsford/Whitehall, a joint venture we have with affiliates of The
Goldman Sachs Group, Inc., or Goldman Sachs, as well as a family based in New
England. We had a 35.68% interest in Wellsford/Whitehall as of September 30,
2001. The manager of the joint venture is a Goldman Sachs affiliate. At
September 30, 2001, Wellsford/Whitehall owned 36 office properties totaling
approximately 4,015,000 square feet, located primarily in New Jersey,
Massachusetts and Maryland. Wellsford/Whitehall leases and re-leases space,
performs construction for tenant improvements, expands buildings, re-develops
properties and, based on general and local economic conditions and specific
conditions in the real estate industry, may, from time to time, sell properties
for an appropriate price. It is not expected that Wellsford/Whitehall will
purchase any new assets, except in limited cases.
The Wellsford Capital SBU makes loans directly, or through joint
ventures, predominantly in real estate related senior, junior or otherwise
subordinated debt instruments and also in investment grade rated other
asset-backed securities. The debt instruments may be unsecured or secured by
liens on real estate or other assets including, but not limited to, aircraft
leases, auto loans and student and consumer loans,as well as interests in such
assets or their economic benefits. These loans and investments generally have
the potential for high yields or returns more characteristic of equity
ownership. They may include debt that is acquired at a discount, mezzanine
financing, commercial mortgage-backed securities, secured and unsecured lines of
credit, distressed loans, tax exempt bonds secured by real estate and loans
previously made by foreign and other financial institutions. We believe that
there are opportunities to acquire real estate and other debt, especially in the
low or below investment grade tranches, at significant returns as a result of
inefficiencies in pricing, while utilizing both our and our joint venture
partners expertise to analyze the underlying assets and thereby effectively
minimizing risk. Our joint venture partners have included JP Morgan Chase, Fleet
Boston Financial, Bank One, N.A., Deutsche Bank, N.A., Prudential Real Estate
Investors and The Liberty Hampshire Company, L.L.C.
-1-
At September 30, 2001, Wellsford Capital had the following investments:
o approximately $35,398,000 of direct debt investments which bore
interest at an average yield of approximately 11.30% for the nine
months ended September 30, 2001 and had an average remaining term to
maturity of approximately 4.6 years
o approximately $31,233,000 in companies which were organized to invest
in debt instruments, including $27,863,000 in Second Holding Company,
LLC, or Second Holding, a company organized to purchase investment and
non-investment grade rated real estate debt and also investment grade
rated other asset-backed securities
o approximately $6,783,000 in a real estate information and database
company and another real estate-related venture
o three commercial properties totaling approximately 218,000 square feet
located in the northeastern United States which are being held for
sale
The Wellsford Development SBU engages in selective development activities
as opportunities arise and when justified by expected returns which are greater
than returns which could be achieved by acquiring stabilized properties. Certain
development activities may be conducted in joint ventures with local developers
who may bear the substantial portion of the economic risks associated with the
construction, development and initial rent-up of properties. As part of our
strategy, we may seek to issue tax-exempt bond financing authorized by local
government authorities which generally bears interest at rates substantially
below rates available from conventional financing.
At present, our Wellsford Development activities consist solely of our
interest in a five phase, 1,800 unit Class A multifamily development in
Highlands Ranch, a south suburb of Denver, Colorado. At September 30, 2001, we
had an 85.85% interest as the managing owner in this project and an affiliate
of Equity Residential Properties Trust had the remaining 14.15% interest. Two
phases containing 760 rental units are completed and operational. The third
phase consists of 264 units which we are converting into condominiums, 89 units
of which were sold by September 30, 2001. The 424 unit fourth phase is
substantially completed and operations will be phased in starting January 1,
2002. The land for the remaining approximate 352 unit phase is being prepared
for sale or possible future development.
RISK FACTORS
You should carefully consider the following risk factors as well as other
information we have included in this prospectus before making an investment
decision.
Our performance and value are subject to risks associated with our real estate
assets and within the real estate industry
Our financial condition, results of operations, the value of our real
estate assets and consequently the value of your investment, are subject to the
risk that our properties will not generate revenues sufficient to meet our
operating expenses, including debt service and capital expenditures, and to
certain risks inherent in the real estate industry. The following factors, among
others, may adversely affect our financial condition and results of operations:
o downturns in the national, regional and local economic climate
particularly in Denver, Colorado, northern New Jersey, metropolitan
and suburban Boston, Massachusetts, areas outside of Baltimore,
Maryland and Washington D.C., Philadelphia, Pennsylvania and Salem,
New Hampshire where substantially all of our owned properties are
currently located
-2-
o competition from other office, industrial, residential and other
commercial buildings
o local real estate market conditions, such as oversupply of, or
reduction in demand for, commercial office and residential buildings
o vacancies or inability to rent space on favorable terms
o ability to collect rent from tenants on a timely basis or at all
o increased operating costs, including insurance premiums, utilities and
real estate taxes
o increases in interest rates on financing
o cost of complying with environmental, zoning, and other laws, natural
disasters, terrorism and other occurrences that may result in
uninsured or underinsured losses
o ability to obtain appropriate insurance coverage on our properties at
reasonable rates
Significant expenditures associated with each investment, such as debt
service payments, real estate taxes, insurance and renovation and maintenance
costs are generally not reduced when circumstances cause a reduction in revenues
from a property.
We may have difficulty locating suitable investments and sufficient capital
Investments in real estate and debt secured by real estate is highly
competitive and realizing profits on such investments involves a high degree of
uncertainty. We compete for investments with many public and private real estate
investment vehicles, including mortgage banks, pension funds and real estate
investment trusts, or REITs, as well as individuals, some of which have more
resources, more experienced personnel than we do and a lower cost of capital. In
addition, our inability to make investments which satisfy our rate of return
objectives or to fully invest our available capital may have an adverse effect
on our business and results of operations.
Furthermore, our business may be materially adversely affected if we cannot
obtain significant amounts of equity capital and proceeds from borrowings on
terms financially advantageous to us with which to make investments.
We may face risks associated with property acquisitions
The success of our property acquisitions are subject to several investment
risks associated with any real estate investment, including the risks that the
acquired property may fail to perform as we expected and our estimates of the
costs of repositioning or redeveloping acquired properties may be inaccurate.
We may also acquire properties subject to liabilities and without any
recourse, or with only limited recourse, with respect to unknown liabilities. As
a result, if liability were asserted against us based upon those properties, we
might have to pay substantial sums to settle it, which could materially
adversely affect our business, operating results, financial condition and cash
flow. Unknown liabilities with respect to properties acquired might include
liabilities for clean-up of undisclosed environmental contamination and claims
by tenants, vendors or other persons who dealt with the former owners of the
properties.
-3-
We face risks associated with property development, construction and renovation
We engage in the selective development of land, including the subdivision
and sale of improved real estate, and the development, construction and
renovation of commercial, office and residential properties. Risks associated
with our development, construction and renovation activities which, if they
materialize, could have a material adverse effect on our business, results of
operations and financial condition include:
o the possibility we may abandon development opportunities after
expending resources to determine feasibility
o costs may exceed original estimates
o occupancy rates and rents at a newly completed or renovated property
may not be sufficient to make the property or the renovation
profitable
o development, construction, renovation and lease-up of properties, and,
where applicable, the sale of property, may not be completed on
schedule resulting in increased debt service expense and construction
costs
o inability to obtain, or costly delays in obtaining, zoning, land-use,
building, occupancy and other required governmental permits and
authorizations, which could prevent completion of these activities.
o properties under development or acquired for development usually
generate little or no cash flow until completion of development and
may experience operating deficits after the date of completion
o inability to obtain expected prices on sales
o inability of potential buyers to obtain financing
We may not be able to fill vacancies at the properties in which we invest
Through our investment in Wellsford/Whitehall we own 36 commercial
properties, one of which is vacant and two of which consist of land parcels that
can be developed. The occupied buildings were approximately 81% leased, as of
September 30, 2001. We own three other properties in Wellsford Capital which
were approximately 60% leased at September 30, 2001. We have, through Wellsford
Development, 896 residential units of which approximately 86% were leased at
September 30, 2001. In the future, we might acquire other properties that are
vacant or not fully leased. It is expected that significant costs, including
those relating to leasing commissions, renovations and tenant improvements, will
be incurred in connection with the leasing of these properties. We may be
required to offer tenant concessions, including free rental periods. The failure
to lease these properties in a timely manner and on economically favorable terms
may have a material adverse effect on our business, operating results and
financial condition.
Tenants may not pay rent
Our business, results of operations and financial condition would be
materially adversely affected if a significant number of tenants at our
properties fail to meet their lease obligations, including the obligation, in
certain cases to pay a portion of increases in our operating expenses. In the
event of a default by a tenant, we may experience delays in enforcing our rights
as landlord and may incur substantial costs in
-4-
protecting our investment. If a tenant seeks protection under the bankruptcy
laws, the lease may be terminated or rejected in which case the amount of rent
we are able to collect will be substantially reduced and in some cases we may
not collect any rent. In addition, it is likely we would not be able to recover
any unamortized deferred costs related to such tenant. Accordingly, the
bankruptcy or insolvency of one or more major tenants or a number of other
tenants may materially adversely effect our business, results of operations and
financial condition.
It may be difficult to buy and sell real estate related investments quickly
Equity and debt real estate investments are relatively difficult to buy and
sell quickly. Such illiquidity limits our ability to modify our portfolio in
response to changes in economic conditions. Illiquidity may result from the
absence of an established market for our investments as well as legal or
contractual restrictions on their resale. For example, we cannot transfer our
interest in Wellsford/Whitehall without the prior consent of certain Goldman
Sachs affiliates.
We face potential risks with asset sales
Wellsford/Whitehall has indicated that it would seek to dispose of its
office properties if the appropriate conditions exist. There may also be other
instances when we might find it necessary or appropriate to sell properties.
Risks associated with the sale of properties which if they materialize may have
a material adverse effect on our business, results of operations and financial
condition include:
o lack of demand by prospective buyers
o inability to find qualified buyers
o inability of buyers to obtain satisfactory financing
o lower than anticipated sale prices
o payments under financings to release property may be in excess of
sales proceeds
o the inability to close on sales of properties under contract
o substantial prepayment penalties on certain debt which may have to be
paid in order to effectuate a sale
o substantial tax indemnities related to the sale of certain properties
acquired as part of a tax free exchange by Wellsford/Whitehall
There are risks associated with the conversion of apartments to condominiums
We are currently, and may in the future, convert apartment units to
condominium ownership. Our ability to successfully complete a condominium
conversion, sell the apartments and achieve our economic goals in connection
therewith is subject to various risks, which if they materialize, may have an
adverse effect on our business, results of operations and financial condition
including:
o the inability to obtain approvals to rezone the property and releases
from financing obligations
o increases in costs resulting from delays in obtaining such approvals
and releases
o increases in costs of improving the property
-5-
o lack of demand by prospective buyers
o inability of buyers to qualify for financing
o lower than anticipated sale prices
o inability to close on sales of units under contract
o competition from other condominiums and types of residential housing
Investing in properties that incur debt could increase our risk of loss
Some of our real estate equity investments may incur debt, in which case a
third party lender would be entitled to cash flow generated by such investments
prior to us receiving a return. As a result of such borrowings, we would be
subject to certain risks normally associated with debt financing which if they
(or any of the risks set forth below) materialize may have a material adverse
effect on our business, results of operations and financial condition, including
the risk that cash flow from operations and investments will be insufficient to
meet required payments of principal and interest, the risk that existing debt
(which in many cases will not have been fully amortized at maturity) will not be
able to be refinanced or that the terms of such refinancings will not be as
favorable to us and the risk that necessary capital expenditures will not be
able to be financed on favorable terms or at all. While such borrowings may
increase returns or the funds available for investment by us, it also will
increase the risk of loss on an investment which utilizes borrowings. If we
default on secured indebtedness, the lender may foreclose and we could lose our
entire investment in the security for such loan. Because we may engage in
portfolio financings where several investments are cross-collateralized,
multiple investments may be subject to the risk of loss. As a result, we could
lose our interest in performing investments in the event such investments are
cross-collateralized with poorly performing or nonperforming investments. In
addition, recourse debt, which we may incur, may subject our other assets to
risk of loss.
There are a number of related risks in our investments in various types of debt
instruments
We intend to originate and participate in debt investments and may acquire
performing or nonperforming debt investments. In general, debt investments
secured by real estate or other assets carry the following risks which if they
materialize may have a material adverse effect on our business, results of
operations and financial condition:
o downturns in the national, regional and local economic climate
o borrowers may not be able to make debt service payments or pay
principal when due
o the value of any collateral may decline and may be less than the
amounts owed
o the collateral may be mismanaged
o borrowers may not be able to complete construction in a timely manner,
or at all, or costs could be substantially in excess of the
construction budget, each of which could result in a default under the
construction financing
o inability of borrowers who are constructing condominiums or apartments
to achieve estimated sales prices
o interest rates payable on the debt instruments may be lower than our
cost of funds
-6-
o failure by tenants to pay rent on real estate or other assets
collateralizing debt instruments
o the loans may be structured so that all or a substantial portion of
the principal will not be paid until maturity, which increases the
risk of default at that time
o the debt may not be rated by any nationally-recognized rating agency,
therefore its value is subject to more fluctuation due to economic
conditions than it would be if rated; our acquisition of credit
supported classes of securitizations which are unrated at the time of
acquisition or which have lower ratings may increase the risk of
nonpayment or of a significant delay in payments
o if the debt is rated and the rating is downgraded, it may adversely
effect the value of the debt
o inadequacy of insurance coverage on collateral
o the value of our collateral may be materially adversely effected by
environmental contamination
o there may not be a readily available market in which to sell
foreclosed collateral
o insurance companies may not be able to make payments in accordance
with the terms of guarantees made on outstanding debt investments
There are certain risks to making non-recourse loans and in connection with a
foreclosure
Mortgages and other loans in which we invest may not be recourse
obligations of the borrower and generally they will not be insured or guaranteed
by governmental agencies or otherwise. In the event of a default under such
obligations, we may have to foreclose on our mortgage or other collateral or
protect our investment by acquiring title to the collateral and, in the case of
mortgage loans, thereafter make substantial improvements or repairs in order to
maximize the collateral's investment potential. Borrowers may contest
enforcement of foreclosure or other remedies, seek bankruptcy protection against
such enforcement and/or bring claims for lender liability in response to actions
to enforce mortgage and other obligations. These factors and relatively high
"loan-to-value" ratios and declines in the value of the collateral may prevent
us from realizing an amount equal to the loan upon foreclosure. The failure to
obtain full timely repayment of certain individual loans may have a material
adverse effect on our business, results of operations and financial condition.
There are certain risks we incur in participating in loans
If we participate in loans originated by and or serviced by other financing
institutions, we may not have the sole authority to declare a default under the
loan or to control the collateral or any foreclosure. In addition, there maybe
conflicts among the ownership positions.
There are certain risks we incur in making subordinated loans
Investments in junior secured obligations which are subordinate to liens of
senior secured obligations would also involve the risks of lack of control over
the collateral and any related foreclosure proceeding. In the event of a default
on a senior secured obligation, we may make payments to prevent foreclosure on
the lien of the senior lender without necessarily improving our position with
respect to the subject collateral. In such event, we would be entitled to share
in the proceeds only after satisfaction of the amounts due to the holder of the
senior secured obligation.
-7-
There are risks of loss on investments in securitized debt obligations
We may seek to invest in real estate-related debt instruments, including
commercial mortgage-backed securities, and other debt securitizations secured by
real estate and other assets including, but not limited to aircraft leases, auto
loans, and student and consumer loans. Many of the risks of investing in
securitized debt instruments secured by real estate or other assets reflect the
risks of investing directly in the real estate or other assets securing the
underlying mortgage loans. This may be especially true in the case of
securitized debt obligations secured by, or evidencing an interest in, a single
asset commercial loan or a relatively small or less diverse pool of commercial
loans.
Mortgage-backed securities and other asset-backed securities are often
backed by a pool of assets representing the obligations of a number of different
parties. In some cases, there may be a single borrower and there may be a single
asset serving as collateral. To lessen the effect of failures by obligors on
underlying assets to make payments, those securities may contain elements of
credit support to seek to ensure that the receipt of payments on the underlying
pool occurs in a timely fashion and to ensure ultimate payment of the
obligations on at least a portion of the assets in the pool. This protection may
be provided through guarantees, insurance policies or letters of credit obtained
by the issuer or sponsor from third parties. The degree of credit support
provided for each issue is generally based on historical information respecting
the level of credit risk associated with the underlying assets. Delinquencies or
losses in excess of those anticipated, as well as a default by the third party
providing the credit support, could materially adversely affect the return on an
investment in a security. In addition, delays or difficulties encountered in
servicing securitized debt obligations may cause greater losses and, therefore,
greater resort to credit support than was originally anticipated, and may cause
a rating agency to downgrade a security.
We may acquire subordinated tranches of securitized debt obligations
issuances. In general, subordinated tranches of securitized debt obligations are
subordinated to more senior tranches with respect to interest payments and are
entitled to receive repayment of principal only after all principal payments
have been made on more senior tranches. These tranches are also subordinate to
more senior tranches with respect to receiving interest distributions. In
addition, subordinated securitized debt obligations may have limited
marketability because an active secondary market for such subordinated
securities is not as well developed as the market for certain senior tranches of
asset-backed securities.
Declining interest rates would reduce interest income on cash and investments
We make loans and invest in debt. Accordingly, if interest rates decrease,
the interest income we derive from any new loans or investments which have fixed
or variable rates will be less than interest income previously derived when
rates were higher. Additionally, if interest rates decrease, our interest income
will also decrease during the term of a loan or investment that bears interest
at a variable rate. Furthermore, reduced interest rates will result in a
decrease in income on our cash. Therefore, a decrease in interest rates may have
an adverse effect on our business, results of operations and financial
condition.
During periods of declining interest rates, prepayment of debt underlying
asset-backed securities can be expected to accelerate. Accordingly, our ability
to maintain the yield we anticipated from investments in asset-backed securities
will be affected by reductions in the principal amount of such securities
resulting from such prepayments, and our ability to reinvest the returns of
principal at comparable rates is subject to general prevailing interest rates at
the that time. Prepayments may also result in the realization of capital losses
with respect to higher yielding securities that had been bought at a premium or
the loss of opportunity to realize capital gains in the future from possible
appreciation.
-8-
There are risks in making investments in loans or securitized debt obligations
with non-real estate assets as collateral
We currently have debt investments through our joint venture interest in
Second Holding, and may in the future have debt investments, that are not
secured by real estate but other assets, including, but not limited to, leases
on aircraft, truck or car fleets, leases on equipment, consumer receivables,
pools of corporate bonds and loans and sovereign debt. The risks of these other
assets are subject to the same general investment risks as noted in the risk
factor, "There are a number of related risks in our investments in various types
of debt instruments" above, as well as other risks associated with the
applicable asset category. In addition, asset-backed securities not involving
real estate have certain risks resulting mainly from the fact that they do not
usually contain the complete benefit of a security interest in the underlying
asset or related collateral. For example, credit card receivables generally are
unsecured. There are also various economic and legal factors which may affect
the ability to obtain full payment of certain loans. In this regard, debtors are
entitled to the protection of a number of state and Federal consumer credit
laws, some of which may reduce the ability to obtain full payment. In addition,
due to these factors, in the case of automobile receivables, proceeds from
repossessed collateral may not always be sufficient to support payments on
related asset-backed securities. Some of our securitized debt investments in
non-real estate assets are not secured by the underlying asset and would be
materially adversely affected by a failure of the underlying obligor to make
lease payments or payments of principal and interest.
Risk of nonpayment of World Trade Center Certificates
Through our investment in Second Holding, we purchased an aggregate of
$24,825,000 in two classes of Mortgage Pass - Through Certificates, Series 2001
- - WTC. The certificates were part of a bond offering which was used to finance
the acquisition of the leasehold interest in Towers 1, 2, 4 and 5 of the World
Trade Center in New York City. These buildings were destroyed as a result of the
events which occurred on September 11, 2001. Accordingly, our investment in the
certificates is subject to various risks, including the failure or delay to make
scheduled payments of interest and principal, the inadequacy of insurance
coverage, the inability or delay of insurers to pay claims and the effects of
changes in the rating of the certificates by Standard & Poors and Fitch. The
materialization of any of these risks may have an adverse effect on our
business, results of operations and financial condition.
We face risks relating to our equity investments in and with third parties
We may invest in other entities that invest in real estate and other
assets, including debt instruments and equity interests. In such cases, we will
be relying on the ability of management of the entity in which we are investing.
We may also co-invest with third parties through partnerships, joint
ventures or other entities. This means we will be acquiring non-controlling
interests in, or sharing responsibility for managing the affairs of a property,
partnership, joint venture or other entity and not be in a position to exercise
sole decision-making authority. In this regard, it should be noted that we
formed Wellsford/Whitehall together with the Goldman Sachs affiliates and
others. Except for certain major decisions, the Goldman Sachs affiliate makes
all day-to-day decisions. Additionally, we are involved in other ventures where
decisions require shared approval with third parties.
Entities in which we invest and their properties, including,
Wellsford/Whitehall, will be subject to the other risks affecting the ownership
and operation of real estate and other assets and investments in debt set forth
in this registration statement.
-9-
Investments in partnerships, joint ventures, or other entities may, under
certain circumstances, involve risks not present were a third party not
involved. Our investments with third parties pose the following risks: the
possibility that our partners or co-venturers might become bankrupt or otherwise
fail to fund their share of required capital contributions; that such partners
or co-venturers might at any time have economic or other business interests or
goals which are inconsistent with our business interests or goals and that such
partners or co-venturers may be in a position to take action contrary to our
instructions, requests, policies or objectives. There is also potential risk
that decisions, such as a sale, will be deadlocked because neither we nor the
partner or co-venturer has full control over the partnership or joint venture.
We have agreed with Goldman Sachs that after December 31, 2003 either of us can
trigger a process by which one of us would either acquire the interest of the
other in Wellsford/Whitehall or acquire all of the property owned by
Wellsford/Whitehall. In addition, we may in certain circumstances be liable for
the actions of third- party partners or co-venturers.
Other parties with whom we invest may also require us to agree not to
engage in certain of our business activities in certain geographical areas. In
this regard, our Wellsford/Whitehall arrangements may prohibit us, in certain
limited circumstances, from owning office properties in the northeastern states.
Some of our investments may involve a high degree of risk
We may make investments in real estate-related assets and businesses which
have or could experience severe financial difficulties which may not be
overcome. Since we may only make a limited number of investments and since many
of our investments may involve a high degree of risk, poor performance by one of
the investments could materially adversely affect our business, results of
operations and financial condition.
We face risks associated with the repayment of debt on maturity
We anticipate that a certain portion of our debt will be unpaid prior to
maturity based on current contractual terms. Therefore, since available cash may
not be sufficient to repay the debt on maturity, we are likely to need to
refinance such debt as it matures through additional debt or equity sources. Our
inability to refinance existing debt on satisfactory terms may have a material
adverse effect on our business, results of operations and financial condition.
In addition, if we cannot refinance debt on satisfactory terms, we may have to
dispose of properties on disadvantageous terms to obtain funds with which to
repay such debt.
Rising interest rates would increase our interest costs
We currently have, and may incur additional indebtedness that bears
interest at variable rates. Accordingly, if interest rates increase, so will our
interest costs, which may have an adverse effect on our business, results of
operations and financial condition.
Our loan agreements contain covenants, which contain restrictions and
obligations with which we must comply and could adversely affect our financial
condition
Various credit facilities and other debt obligations may require us to
comply with a number of financial and other covenants on an ongoing basis. Some
of those obligations may restrict our ability to incur additional debt and
engage in certain transactions and make certain types of investments and take
other actions. In other cases failure to comply with covenants may limit our
ability to borrow funds under a credit facility or cause a default under one or
more of our then existing loans possibly causing acceleration of the unpaid
principal balance.
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We have no corporate limitation on the amount of debt we can incur
Neither our organizational documents nor those of entities in which we
invest contain or are likely in the future to contain, any limitation on the
amount of debt incurred. We can also incur more debt than is typically incurred
by REITs. Accordingly, we could incur significant amounts of debt, resulting in
increases in debt service payments which could increase the risk of default on
our indebtedness.
We engage in hedging transactions that could expose us to risks
We, or our joint venture investments, may employ hedging techniques
designed to protect or limit us against adverse movements in interest rates or
changes to the fair value of fixed rate investments or obligations. While such
transactions may reduce certain risks, such transactions themselves may entail
certain other risks. Thus, while we may benefit from the use of these hedging
mechanisms, unanticipated changes in interest rates, securities prices or fair
values of other instruments may result in our poorer overall performance than if
we had not entered into such hedging transactions.
We have limitations on available remedies
If our borrowers default we will have contractual remedies pursuant to
certain debt instruments. Such remedies will include foreclosing on the
underlying real estate or other collateral or collecting rents generated from
the real property. However, certain legal requirements (including the risks of
lender liability) may limit our ability to effectively exercise such remedies or
result in delays in realizing such efforts.
Any right we have as a mortgage lender to convert our loan into an equity
interest may be limited or prevented by certain common law or statutory
prohibitions or delayed by legal proceedings.
Third-party bankruptcy risks
Investments made in assets operating in workout modes or under Chapter 11
of the Bankruptcy Code could be subordinated or disallowed. Furthermore,
distributions or payments we receive with respect to such investments could be
recovered if any such distribution is found to be a fraudulent conveyance or
preferential payment. Bankruptcy laws, including the automatic stay imposed upon
the filing of a bankruptcy petition, may delay our ability to realize collateral
for loan positions we hold. The priority of such loans may be adversely effected
as a result of doctrines such as equitable subordination or may result in a
restructure of the debt through principles such as the "cramdown" provisions of
the bankruptcy laws. The materialization of any of these risks may materially
adversely effect our business, results of operations and financial condition.
Some of our potential losses may not be covered by insurance
There are some types of losses, such as those arising from acts of war or
pollution that are generally not insured. If an uninsured loss or a loss in
excess of insured limits occurs, we could lose all or a portion of our
investment in a property. If this happens, we might nevertheless remain
obligated for any mortgage debt or other financial obligations related to that
property.
In the event that parties to whom we lend money do not maintain adequate
insurance or fail to maintain required coverage, uninsured or underinsured
losses may occur which may adversely affect the borrower's ability to repay our
loan.
There maybe instances where currently available insurance coverages may not
be available in the future, such as insurance against acts of terrorism.
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Risk of terrorist activity
We, or companies in which we have invested, own properties or have a
security interest in properties, which are located in or near major cities of
the United States, including, but not limited to, Boston, Chicago, Philadelphia
and Washington, D.C. as well as suburban locations in New Jersey, Maryland,
Massachusetts, New Hampshire and Colorado. Such properties or the areas in which
they are located could also be subject to acts of terrorism. In addition,
certain insurance companies have indicated that they may no longer continue to
insure against acts of terrorism.
Further, terrorist attacks in the United States may cause disruption in our
business and operations and other attacks or acts of war may adversely affect
the markets in which our common stock trades, the markets in which we operate
and our profitability. We cannot assess the future effects of the terrorist
attacks, the ensuing U.S. military and other responsive actions on our business
at this time. The terrorist attacks and responsive actions have significantly
adversely affected general economic, market and political conditions, increasing
many of the risks in our business noted in this prospectus. These events may
have a negative effect on our business and results of operations over time. Some
of our investments are comprised of debt securities in industries we believe may
be adversely affected by terrorist attacks and responsive actions. For example,
the failure of an airline to make lease payments with respect to its leased
aircraft as a result of the adverse impact on its business from terrorist
attacks or otherwise would have a material adverse affect on our debt
investments relating to aircraft leases. Currently, all aircraft underlying
securitized debt transactions relating to aircraft leases in which we have
invested are, to our knowledge, insured. However, renewed and new policies may
not provide coverage for terrorist attacks. The cumulative effect of all these
contributing factors could have a material adverse effect on our business,
results of operations and financial condition.
Potential liability for environmental contamination could result in substantial
costs to us on assets we own or credit losses on debt investments collateralized
by real estate
Under Federal, state and local environmental laws, ordinances and
regulations, we may be required to investigate and clean up the effects of
releases of hazardous or toxic substances at our properties, regardless of our
knowledge or responsibility, simply because of our current or past ownership or
operation of the real estate. If certain environmental problems arise, we or a
borrower may have to make substantial payments which could materially adversely
affect our business, results of operations and financial condition because:
o we, as owner/operator, as well as parties to whom we lend money, may
have to pay for property damage and for investigation and clean-up
costs incurred in connection with the contamination
o the law typically imposes clean-up responsibility and liability
regardless of whether the owner or operator knew of or caused any
contamination
o even if more than one person may be responsible for the contamination,
each person who shares legal liability under the environmental laws
may be held responsible for all of the clean-up costs
o governmental entities and third parties may sue the owner or operator
of a contaminated site for damages and costs
Environmental laws also govern the presence, maintenance and removal of
asbestos. Such laws, among other things require that owners or operators of
buildings containing asbestos undertake special precautions, including removal
or other abatement, if asbestos would be disturbed during renovation or
demolition of a building. Due to the age of some of the buildings in our
portfolio, components of the
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buildings (such as wall plaster, ceiling and floor tiles) may contain asbestos.
When required, plans will be implemented in order to contain, remove or manage
the asbestos.
Such laws may impose fines and penalties on building owners or operators
who fail to comply with these requirements and may allow third parties to seek
recovery from owners or operators for personal injury associated with exposure
to asbestos fibers.
Costs associated with the foregoing could be substantial and in extreme
cases could exceed the value of the contaminated property. The presence of
hazardous or toxic substances or the failure to properly remediate contamination
may materially and adversely effect our ability to borrow against, sell or rent
an affected property. In addition, applicable environmental laws create liens on
contaminated sites in favor of the government for damages and costs it incurs in
connection with a contamination.
Some of our properties are located in urban and industrial areas where
landfill or current or historic industrial uses of the areas have caused site
contamination. Independent environmental consultants have conducted Phase I
environmental site assessments at all of our properties. These assessments
included, at a minimum, a visual inspection of the properties and the
surrounding areas, an examination of current and historical uses of the
properties and the surrounding areas and a review of relevant Federal, state and
historical documents. Where appropriate, on a property-by-property basis, these
consultants have conducted additional testing, including sampling for asbestos,
for lead or other contaminants in drinking water, for soil contamination where
underground storage tanks are or were located or where other past site usages
create a potential environmental problem, and for contamination in groundwater.
Even though these environmental assessments have been conducted, there is still
the risk that:
o the environmental assessments and updates did not identify all
potential environmental liabilities
o a prior owner created a material environmental condition that is not
known to us or the independent consultants preparing the assessments
o new environmental liabilities have developed since the environmental
assessments were conducted
o future uses or conditions such as charges in applicable environmental
laws and regulations could result in environmental liability for us
One of the properties we acquired in 1998 as the result of the acquisition
of a public company,15 and 19-23 Keewaydin Drive in Salem, New Hampshire, has
ground water contamination containing volatile organic compounds, or VOCs. To
date, we have been unable to determine either the source of the VOCs or if the
VOCs have migrated off of our properties. Monitoring of groundwater for VOCs is
being performed pursuant to a groundwater management permit issued by the New
Hampshire Department of Environmental Services. In the event we determine the
source of the VOCs or that they have migrated off our properties we will have to
perform containment work. At this time, we are unable to ascertain the
containment work costs, however, they could be substantial and may have a
material adverse effect on our business, results of operations and financial
condition.
We may incur costs in complying with the Americans with Disabilities Act and
similar laws
The Americans with Disabilities Act and other Federal, state and local laws
generally require that public buildings, including commercial office buildings,
be made accessible to disabled persons. Noncompliance could result in imposition
of fines by the federal government, the award of damages to private litigants.
Final regulation under the American with Disabilities Act have not yet been
promulgated. If, pursuant to the Americans with Disabilities Act, we are
required to make substantial alterations and
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capital expenditures in one or more of our properties, including the removal of
access barriers, it could materially adversely affect our business, results of
operations and financial condition.
We may also incur significant costs complying with other regulations. Our
properties are subject to various Federal, state and local regulatory
requirements, such as state and local fire and life safety requirements. If we
fail to comply with these requirements, we could incur fines or be subject to
private damage awards. We believe that our properties are currently in material
compliance with all such regulatory requirements. However, we do not know
whether existing requirements will change or whether compliance with future
requirements will require significant unanticipated expenditures by us. Such
expenditures could materially adversely affect our business, results of
operations and financial condition.
Our success depends on key personnel whose continued service is not guaranteed
Jeffrey H. Lynford has been Chairman of the Board since our formation in
1997. On April 1, 2002 he will also assume the positions and duties of President
and Chief Executive Officer. Mr. Lynford's employment agreement with us expires
December 31, 2004. The loss of the services of Mr. Lynford could have an adverse
effect on our operations. In addition, our business could be negatively impacted
if we are unable to retain the services of other key personnel or hire suitable
replacements.
We can change current policies without stockholder approval
Our operating and financial policies, including our policies with respect
to acquisitions, growth, operations, indebtedness, capitalization and dividends,
are determined by our board of directors. Although it presently does not intend
to do so, the board of directors may amend or revise these policies at any time
in its discretion without stockholder approval. A change in these policies could
adversely affect our business, results of operations and financial condition.
Our stock is very thinly traded and subject to risk of changes in price
As of December 12, 2001, there were 6,334,154 shares of common stock issued
and outstanding. Although a trading market for the common stock exists, there
can be no assurance that an active trading market for the common stock will be
sustained in the future. The average daily volume of shares traded during 2001
is approximately 13,000. In the absence of an active public trading market, an
investor may be unable to liquidate his investment in us. In addition, our
common stock price may be influenced by many factors, including, our economic
performance, the quality and type of our investments, the depth and liquidity of
the market for our common stock, investor perception of our business, our
dividend policy, interest rates and general economic and market conditions. We
cannot predict the prices at which our common stock will trade in the future.
Future sales of our common stock could effect their price
Sales of a substantial number of shares of the common stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices of the common stock. In this regard, upon registration of the 1,402,152
shares of common stock offered hereby, the common stock may be sold in the
public markets from time to time. In addition, all the shares of common stock
which were issued in a private placement in June 1997 have been registered for
resale and may be sold in the public markets from time to time by the holders
thereof. Also, (i) 1,875,000 shares of common stock have been reserved for
issuance pursuant to our 1997 Management Incentive Plan and 1998 Management
Incentive Plan (1,069,562 options to purchase such shares have been granted and
257,935 restricted shares have been granted), (ii) 663,113 shares of common
stock have been reserved for issuance pursuant to the Company's Rollover Stock
Option Plan (options to purchase 663,113 of such shares have been granted);
(iii) approximately 1,000,000 shares of common stock have been reserved for
issuance upon conversion of our currently outstanding 8.25% senior subordinated
debentures; (iv) approximately 2,000,000 shares of common stock have been
reserved for
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issuance upon conversion of our authorized but unissued series A 8% convertible
redeemable preferred stock and class A-1 common stock, $.02 par value per share
and when issued, these reserved or otherwise available shares and shares subject
to options will be available for sale in the public markets from time to time
pursuant to exemptions from registration requirements or upon registration. No
prediction can be made about the effect that future sales of the common stock
will have on the market price of the common stock.
Our charter documents and applicable law may hinder an attempt to acquire
Wellsford
Our board of directors is divided into three classes. The terms of the
second, third and first classes will expire in 2002, 2003 and 2004,
respectively. Directors for each class will be chosen for a three-year term upon
the expiration of their current term. Each year one class of directors will be
elected by the stockholders. The staggered terms for directors may limit the
stockholders' ability to change control of us even if a change of control were
in the interests of stockholders.
Our charter authorizes the board of directors to establish one or more
series of preferred shares and the preferences and other terms of such series.
Although the board of directors has no intention at the present time, it could
issue a series of preferred shares that could impede or prevent a merger, tender
offer or other transaction that some, or a majority, of our stockholders might
believe to be in their best interest or in which stockholders might receive a
premium for their shares over the then current market price of such shares.
Under the Maryland General Corporation Law, or MGCL, certain "business
combinations" (including certain issuances of equity securities) between a
Maryland corporation and any person who beneficially owns ten percent or more of
the voting power of the corporation's shares or an affiliate thereof are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. Thereafter, unless exempted in
accordance with the MGCL, any such business combination must be approved by a
two-thirds supermajority stockholder vote. Our directors have exempted from the
Maryland statute any business combinations with Jeffrey H. Lynford or Edward
Lowenthal or any of their affiliates or any other person acting in concert or as
a group with any of such persons and, consequently, the five-year prohibition
and the supermajority vote requirements will not apply to business combinations
between such persons and us.
These provisions of the MGCL and the exemptions granted may discourage a
third party from making an acquisition proposal for us and may have the effect
of delaying, deferring or preventing a transaction with or a change in control
of us that might involve a premium price for the common stock or otherwise be in
the best interest of the stockholders.
We may be required to register under the Investment Company Act
We are not registered as an investment company under the Investment Company
Act of 1940. We believe that either we are not within the definition of
"investment company" thereunder or, alternatively, fall under one or more of the
Investment Company Act's exemptions. We intend to continue to conduct our
operations in a manner that will exempt us from the registration requirements of
the Investment Company Act. Therefore, the assets we may acquire or sell may be
limited by the provisions of the Investment Company Act. If we were to become an
"investment company" under the Investment Company Act and if we failed to
qualify for an exemption thereunder, we would have to change how we conduct
business. Such a change could have a material adverse affect on our business,
results of operations and financial condition.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make statements in this prospectus and documents incorporated by
reference that are considered forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934. The words "anticipate," "believe," "may,"
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"estimate," "expect," "intend," "would," "should," "could," "might," "project"
and similar expressions, and variations of such terms, are intended to identify
forward-looking statements.
All forward-looking statements are subject to certain risks, uncertainties,
assumptions, and other factors which may cause our actual results, performance
or achievements to differ materially from those expressed in, or implied by such
forward-looking statements. If one or more of these risks or uncertainties
materialize, or if underlying assumptions prove incorrect, our actual results,
performance or achievements could differ materially from those expressed or
implied by any such forward-looking statements. Important factors that could
cause or contribute to such difference include, among others, those, that are
discussed under "Risk Factors" in this prospectus.
Forward-looking statements are not guarantees of performance. Many of the
factors that determine these results are beyond our ability to control or
predict. You should not place undue reliance on such forward-looking statements
which speak only as to their dates. We do not undertake any obligation to update
or revise any forward-looking statements, whether as a result of new
information, future events or otherwise. Therefore you should carefully consider
the information set forth under the heading "Risk Factors."
USE OF PROCEEDS
The shares offered hereby are being registered for the account of selling
stockholders and, accordingly, we will not receive any of the proceeds from the
sale of the shares by the selling stockholders.
SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of shares by the selling stockholders as of December 12, 2001, and
the number of shares being offered by this prospectus. The selling stockholders
may offer all, some or none of their shares. Each selling stockholder will
receive all of the net proceeds from the sale of its respective shares offered
hereby.
Common Shares
Name of Selling Stockholder Beneficially Owned
- --------------------------- ------------------
MS Real Estate Special Situations Inc.......................... 127,747
Morgan Stanley Investment Management Inc....................... 1,274,405
___________
Total.......................................................... 1,402,152
===========
PLAN OF DISTRIBUTION
We will not receive any proceeds from the sale by the selling stockholders
of the shares offered hereby. As used in this prospectus, "selling stockholders"
includes the donees, transferees or others who may later hold the selling
stockholders' interests. The shares may be sold from time to time to purchasers
directly by any of the selling stockholders. Alternatively, any of the selling
stockholders may from time to time offer the shares through underwriters,
dealers or agents who may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling stockholders and/or the
purchasers of the shares for whom they may act as agent. Any underwriters,
dealers or agents who participate in the distribution of the shares may be
deemed to be underwriters, and discounts, commissions or concessions received by
any such underwriters, dealers or agents might be deemed to be underwriting
discounts and commissions under the Securities Act.
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The selling stockholders will act independently of Wellsford in making
decisions with respect to the timing, manner and size of each sale. The selling
stockholders may sell the common stock on the American Stock Exchange or
otherwise, at market prices prevailing at the time of sale, at prices related to
the prevailing market prices, or at negotiated prices. If underwriters are used
in the sale, the common stock will be acquired by the underwriters for their own
account and may be resold at various times in one or more transactions,
including negotiated transactions, at a fixed public offering price or prices,
which may be changed, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, or at negotiated prices. A
distribution of the common stock by the selling stockholders may also be
effected through the issuance by the selling stockholders or others of
derivative securities, including without limitation, warrants, exchangeable
securities, forward delivery contracts and the writing of options.
We will pay substantially all of the expenses incident to the registration,
offering and sale of the shares to the public other than (i) discounts,
commissions, fees and expenses of underwriters, dealers or agents and (ii) other
fees and expenses of the selling stockholders. We also have agreed to indemnify
the selling stockholders and any underwriter they may utilize against certain
liabilities, including liabilities under the Securities Act.
The selling stockholders may also enter into hedging transactions. For
example, the selling stockholders may:
o enter into transactions with a broker-dealer or affiliate thereof in
connection with which such broker-dealer or affiliate will engage in
short sales of the common stock pursuant to this prospectus, in which
case such broker-dealer or affiliate may use shares of common stock
received from the selling stockholders to close out its short
positions;
o sell common stock short itself and redeliver such shares to close out
its short positions;
o enter into option or other types of transactions that require the
selling stocholders to deliver common stock to a broker-dealer or an
affiliate thereof, who will then resell or transfer the common stock
under this prospectus; or
o loan or pledge the common stock to a broker-dealer or an affiliate
thereof, who may sell the loaned shares, or, in an event of default in
the case of a pledge, sell the pledged shares pursuant to this
prospectus.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Robinson Silverman
Pearce Aronsohn & Berman LLP, New York, New York. The legal authorization and
issuance of the common stock, as well as certain other legal matters concerning
Maryland law, will be passed upon for us by Ballard Spahr Andrews & Ingersoll
LLP, Baltimore, Maryland.
EXPERTS
The consolidated financial statements (including schedules incorporated by
reference) of Wellsford Real Properties, Inc. at December 31, 2000 and 1999, and
for each of the three years in the period ended December 31, 2000; and the
consolidated financial statements of Wellsford/Whitehall Group, LLC and
Subsidiaries at December 31, 2000 and 1999 and for each of the three years in
the period ended December 31, 2000, incorporated by reference in this prospectus
and registration statement have been audited by Ernst & Young LLP, independent
auditors as set forth in their reports thereon, incorporated by reference
elsewhere herein which, as to the year 2000 for Wellsford Real Properties, Inc.,
are based in part on the report of KPMG LLP, independent auditors, relating to
the consolidated financial statements of Second Holding Company, L.L.C. and
subsidiaries as of December 31, 2000 and for the year then ended. The financial
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statements referred to above are incorporated herein by reference in reliance
upon such reports given on the authority of such firms as experts in accounting
and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We are required to file periodic reports, proxy and information statements
and other information with the SEC. You may read any materials filed by us at
the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. You
may obtain information about the operation of the public reference room by
calling the SEC at 1-800-SEC-0330. Our SEC filings are also available to the
public on the SEC's Internet website located at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933 covering the issuance of the common stock. This
prospectus is part of that registration statement. As allowed by SEC rules, this
prospectus does not contain all of the information included in the registration
statement or in the exhibits to the registration statement. For further
information about us and the shares of common stock offered by this prospectus,
you should read the registration statement and the exhibits filed with the
registration statement. You may obtain copies of the registration statement and
exhibits from the SEC upon payment of a fee prescribed by the SEC or examine the
documents, free of charge, at the public reference facilities referred to above.
A summary in this prospectus of any document filed as an exhibit to the
registration statement, although materially complete, does not summarize all of
the information in that document. You should read the exhibit for a more
complete understanding of the document or matter involved.
We have also filed the following documents with the SEC under the
Securities Exchange Act of 1934 and they are incorporated into this document by
reference:
(1) Annual Report on Form 10-K for the year ended December 31, 2000, which
contains audited consolidated balance sheets as of December 31, 2000 and 1999,
and related consolidated statements of operations, changes in stockholders'
equity and cash flows for each of the years in the three year period ended
December 31, 2000 as filed with the SEC on March 22, 2001;
(2) Proxy Statement dated June 15, 2001, as filed with the SEC on April 25,
2001;
(3) Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2001, June 30, 2001 and September 30, 2001;
(4) Current Reports on Form 8-K filed with the SEC on January 11, 2001,
June 14, 2001 and December 10, 2001; and
(5) All other reports filed by us pursuant to Section 13 (a) or 15 (d) of
the Securities Exchange Act of 1934 since December 31, 2000.
Any document we file with the SEC pursuant to Sections 13(a),13(c), 14 or
15(d) of the Securities Exchange Act of 1934 after the date of this prospectus
and before the termination of this offering will be deemed to be incorporated by
reference into this prospectus and to be a part of this prospectus from the date
it is filed.
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We will provide to each person to whom this prospectus is delivered and who
makes a written or oral request, free of charge, a copy of any document referred
to above which has been incorporated into this prospectus by reference, except
exhibits to the document. Requests for these documents should be sent to
Investor Relations, Wellsford Real Properties, Inc., 535 Madison Avenue, New
York, NY 10022. Telephone requests for copies should be made to Investor
Relations at (212) 838-3400 or via email at wrpny@wellsford.com.
You should rely only on the information contained in this prospectus or any
supplement and in the documents incorporated by reference above. We have not
authorized anyone else to provide you with different information. You should not
assume that the information in this prospectus or any supplement or in the
documents incorporated by reference is accurate on any date other than the date
on the front of those documents.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
The information in this prospectus is accurate as of the date on the front
cover. You should not assume that the information contained in this prospectus
is accurate after the date on the cover page.
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<page>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table itemizes the expenses incurred by the Company in
connection with the offering of the common stock being registered. All the
amounts shown are estimates except the Securities and Exchange Commission
registration fee.
Item Amount
Registration Fee - Securities and Exchange Commission............ $ 6,450
Legal Fees and Expenses.......................................... 90,000
Accounting Fees and Expenses..................................... 22,500
Miscellaneous.................................................... 3,000
-----------
Total............................................................ $ 121,950
===========
Item 15. Indemnification of Directors and Officers.
The Maryland General Corporation Law ("MGCL") permits a Maryland
corporation to include in its charter a provision limiting the liability of its
directors and officers to the corporation and its stockholders for money damages
except for liability resulting from (a) actual receipt of an improper benefit or
profit in money, property or services or (b) active and deliberate dishonesty
established by a final judgment as being material to the cause of action. The
charter contains such a provision which eliminates such liability to the maximum
extent permitted by Maryland law.
The charter authorizes the Company, to the maximum extent permitted by
Maryland law, to obligate itself to indemnify and to pay or reimburse reasonable
expenses in advance of final disposition of a proceeding to (a) any present or
former director or officer or (b) any individual who, while a director of the
Company, and at the request of the Company, serves or has served another
corporation, partnership, joint venture, trust, employee benefit plan, limited
liability company or any other enterprise as a director, officer, partner,
trustee, manager or member of such corporation, partnership, joint venture,
trust, employee benefit plan, limited liability company or other enterprise from
and against any claim or liability to which such person may become subject or
which such person may incur by reason of his status as a present or former
director or officer of the Company. The Bylaws of the Company obligate it, to
the maximum extent permitted by Maryland law, to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any present or former director or officer who is made a party to the
proceeding by reason of his service in that capacity or (b) any individual who,
while a director of the Company and at the request of the Company, serves or has
served another corporation, partnership, joint venture, trust, employee benefit
plan, limited liability company or any other enterprise as a director, officer,
partner, trustee, manager or member of such corporation, partnership, joint
venture, trust, employee benefit plan, limited liability company or other
enterprise and who is made a party to the proceeding by reason of his service in
that capacity. The charter and by-laws also permit the Company to indemnify and
advance expenses to any person who served a predecessor of the Company in any of
the capacities described above and to any employee or agent of the Company or a
predecessor of the Company.
The MGCL requires a corporation (unless its charter provides otherwise,
which the charter 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
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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, under the MGCL, 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 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) a
written affirmation by the director or officer of his good faith belief that he
has met the standard of conduct necessary for indemnification by the corporation
as authorized by the Bylaws and (b) a written undertaking by him or on his
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.
Item 16. Exhibits.
--------
(a) Exhibits:
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP, regarding
legality of securities being registered
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (contained
in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP
23.3 Consent of KPMG LLP
24.1 Power of Attorney (included on signature page)
Item 17. Undertakings.
------------
The Company 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;
(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;
(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 (a)(1)(i) and (a)(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.
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(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 offered 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 Company hereby further undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the Company's annual report
pursuant to Section 13 (a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) 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.
The Company hereby further undertakes to deliver or cause to be delivered
with the Prospectus, to each person to whom the Prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the Prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Exchange Act; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not set
forth in the Prospectus, to deliver, or cause to be delivered to each person to
whom the Prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the Prospectus to provide such interim
financial information.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company 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 Company will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
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
Pre-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York on the 14th day of December, 2001.
WELLSFORD REAL PROPERTIES, INC.
By: /s/ Jeffrey H. Lynford
-------------------------------
Jeffrey H. Lynford
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Jeffrey H. Lynford and Edward
Lowenthal, and each or any of them, his true and lawful attorney-in-fact and
agent, 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, and to
file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto each said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that said attorney-in-fact and agent or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title Date
/s/*Jeffrey H. Lynford Chairman of the Board, December 14, 2001
- ------------------------ Secretary and Director
Jeffrey H. Lynford
/s/*Edward Lowenthal President, Chief Executive December 14, 2001
- ------------------------ Officer and Director
Edward Lowenthal (principal executive officer)
/s/*Rodney F. DuBois Vice Chairman and Director December 14, 2001
- ------------------------
Rodney F. DuBois
/s/*James J. Burns Senior Vice President, Chief December 14, 2001
- ------------------------ Financial Officer
James J. Burns
/s/*Mark P. Cantaluppi Vice President, Chief December 14, 2001
- ------------------------ Accounting Officer
Mark P. Cantaluppi
/s/*Martin Bernstein Director December 14, 2001
- ------------------------
Martin Bernstein
/s/*Douglas Crocker II Director December 14, 2001
- ------------------------
Douglas Crocker II
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/s/*Richard S. Frary Director December 14, 2001
- ------------------------
Richard S. Frary
/s/*Meyer S. Frucher Director December 14, 2001
- ------------------------
Meyer S. Frucher
/s/*Mark S. Germain Director December 14, 2001
- ------------------------
Mark S. Germain
*By: /s/ Jeffrey H. Lynford
- ---------------------------
Jeffrey H. Lynford
Pursuant to Power of Attorney Dated
November 21, 2001
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EXHIBIT INDEX
Exhibit Number Description of Document
* 5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP, regarding legality
of securities being registered
* 23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (contained in
Exhibit 5.1)
** 23.2 Consent of Ernst & Young LLP
** 23.3 Consent of KPMG LLP
* 24.1 Power of Attorney (included on signature page)
___________
* Filed previously
** Filed herewith
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