Exhibit 8.1
HOGAN & HARTSON L.L.P.
COLUMBIA SQUARE
555 Thirteenth Street, N.W.
Washington, D.C. 20004-1109
TEL (202) 637-5600
FAX (202) 637-5910
November 20, 2002
CarrAmerica Realty Corporation
1850 K Street, N.W.
Washington, DC 20006
Ladies and Gentlemen:
We have acted as counsel to CarrAmerica Realty Corporation, a Maryland
corporation (the "Company"), and CarrAmerica Realty, L.P., a Delaware limited
partnership (the "Partnership"), in connection with the issuance and sale by the
Company of $50,000,000 aggregate principal amount of the Company's 5.261% Senior
Notes due 2007, and the guarantee by the Partnership as to payment of principal,
interest and premium, if any, as described more fully in the prospectus
supplement of the Company dated November 15, 2002, (the "Prospectus Supplement")
to the prospectus of the Company dated January 8, 2002 (the "Prospectus"). This
opinion letter is furnished to you to be filed with the Securities and Exchange
Commission as Exhibit 8.1 to the registration statement on Form S-3 (the
"Registration Statement") that contains the Prospectus.
Basis for Opinions
The opinions set forth in this letter are based on relevant current
provisions of the Internal Revenue Code of 1986, as amended (the "Code"),
Treasury regulations thereunder (including proposed and temporary Treasury
regulations), and interpretations of the foregoing as expressed in court
decisions, legislative history, and administrative determinations of the
Internal Revenue Service (the "IRS") (including its practices and policies in
issuing private letter rulings, which are not binding on the IRS, except with
respect to a taxpayer that receives such a
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November 20, 2002
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ruling), all as of the date hereof. These provisions and interpretations are
subject to changes (which may apply retroactively) that might result in material
modifications of our opinions. Our opinions do not foreclose the possibility of
a contrary determination by the IRS or a court of competent jurisdiction, or of
a contrary position by the IRS or the Treasury Department in regulations or
rulings issued in the future. In this regard, although we believe that our
opinions set forth herein will be sustained if challenged, an opinion of counsel
with respect to an issue is not binding on the IRS or the courts, and is not a
guarantee that the IRS will not assert a contrary position with respect to such
issue or that a court will not sustain such a position asserted by the IRS.
In rendering the following opinions, we have examined such statutes,
regulations, records, certificates and other documents as we have considered
necessary or appropriate as a basis for such opinions, including (but not
limited to) the following: (1) the Prospectus and the Prospectus Supplement; (2)
the Articles of Amendment and Restatement of Articles of Incorporation of the
Company, dated as of May 15, 2002, as amended through the date hereof; (3) the
partnership agreements of Carr Realty, L.P., Carr Real Estate Services
Partnership, and CarrAmerica Realty L.P. and the form of partnership agreement
or limited liability company operating agreement, as applicable, used to
organize and operate the partnerships and limited liability companies in which
the Company owns an interest (the entities referred to in this clause 3 are
collectively referred to as the "Partnership Subsidiaries'); and (4) the
organizational documents and stock ownership records of certain corporations in
which the Company owns (or, in the past, has owned) an interest, including
CarrAmerica Development, Inc., Carr Real Estate Services, Inc., CarrAmerica
Realty Services, Inc., Carr Redmond Corporation, Carr Parkway North I
Corporation, CarrAmerica Realty GP Holdings, Inc., CarrAmerica Realty LP
Holdings, Inc., HQ Global Workplaces Inc. (formerly known as OmniOffices, Inc.),
OmniOffices (UK) Limited, OmniOffices (Lux) 1929 Holding Company, CARC Sixth
Street GP Holdings, Inc., CARC Sixth Street LP Holdings, Inc., BroadBand Office,
Inc., Essention, Inc., V Technologies International Corporation (also known as
AgilQuest) and CarrAmerica Realty Properties, Inc. (collectively, the "Corporate
Affiliates" and, together with the Partnership Subsidiaries and the Company, the
"Group Entities"). In addition, we have reviewed the Purchase and Sale
Agreement, dated as of November 15, 2001, by and between the Company, Security
Capital Group Incorporated and Security Capital Office Business Trust and have
assumed, for purposes of our opinions, the accuracy of the facts,
representations and warranties set forth therein. The opinions set
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November 20, 2002
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forth in this letter also are premised on certain written representations of the
Company contained in a letter to us dated November 20, 2002 (the "Management
Representation Letter").
We have made such legal and factual inquiries, including an
examination of the documents set forth above, including the Prospectus, the
Prospectus Supplement, and the Management Representation Letter, as we have
deemed necessary or appropriate for purposes of rendering our opinion. For
purposes of rendering our opinions, however, we have not made an independent
investigation or audit of the facts set forth in the above referenced documents,
including the Prospectus, the Prospectus Supplement, and the Management
Representation Letter. We consequently have relied upon the representations in
the Management Representation Letter that the information presented in such
documents or otherwise furnished to us is accurate and have assumed that the
information presented in such documents or otherwise furnished to us is accurate
and complete in all material respects. We are not aware, however, of any
material facts or circumstances contrary to, or inconsistent with, the
representations we have relied upon as described herein or other assumptions set
forth herein. Finally, our opinion is limited to the tax matters specifically
covered herein, and we have not addressed, nor have we been asked to address,
any other tax matters relevant to the Company.
In connection with our opinion, we have assumed, with your consent:
(1) that all of the representations and statements set forth in the
documents (including, without limitation, the Management Representation
Letter) we reviewed are true and correct, and all of the obligations
imposed by any such documents on the parties thereto, including
obligations imposed under the Company's articles of incorporation, have
been and will be performed or satisfied in accordance with their terms;
(2) the genuineness of all signatures, the proper execution of all
documents, the authenticity of all documents submitted to us as
originals, the conformity to originals of documents submitted to us as
copies, and the authenticity of the originals from which any copies
were made;
(3) that each of the Group Entities has been and will continue to be
operated in the manner described in the relevant partnership agreement,
articles
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November 20, 2002
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(or certificate) of incorporation or other organizational documents and
in the Prospectus and Management Representation Letter;
(4) that the Company is a validly organized and duly incorporated
corporation under the laws of the State of Maryland, each Corporate
Affiliate is a validly organized and duly incorporated corporation
under the laws of the state or country in which it is purported to be
organized, and each of the Partnership Subsidiaries is a duly organized
and validly existing partnership or limited liability company, as the
case may be, under the applicable laws of the state in which it is
purported to be organized.
Opinions
Based upon, subject to, and limited by the assumptions and
qualifications set forth herein, including, without limitation, the discussion
in the next three paragraphs below, we are of the opinion that:
1. the Company has been organized and has operated in conformity with the
requirements for qualification as a real estate investment trust
("REIT") under the Code for its taxable years ended December 31, 1993,
through December 31, 2001, and the Company's current and proposed
method of operation (as described in the Management Representation
Letter and in the Prospectus (including the documents incorporated by
reference into and made part of the Prospectus)) will enable it to
continue to meet the requirements for qualification and taxation as a
REIT under the Code; and
2. the portions of the discussion in the Company's report on Form 8-K
that was filed with the Securities and Exchange Commission on April
19, 2002, under the caption "Federal Income Tax Considerations" (which
is incorporated by reference into and made part of the Prospectus
Supplement) that describe applicable U.S. federal income tax law are
correct in all material respects as of the date hereof.
To qualify as a REIT, the Company must derive at least 95% of its
gross income from certain specified sources, including "rents from real
property." Income from a particular property will not qualify as "rents from
real property" if
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November 20, 2002
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the REIT derives "impermissible tenant service income" from the property in an
amount that exceeds 1% of the total income derived by the REIT from that
property. A REIT will be considered to derive impermissible tenant service
income if it provides to tenants of a property services that are provided
primarily for the convenience of tenants, except to the extent that the services
are provided by a qualifying independent contractor or through a taxable REIT
subsidiary. If a service is not customarily provided by landlords to tenants of
similar buildings in the relevant geographic area, a service provider will be a
qualifying independent contractor only if, among other things, the REIT does not
bear any expenses related to the service provided. On the other hand, if a
service that is primarily for the convenience of the tenants is customarily
provided by landlords to tenants of similar buildings in the relevant geographic
area, a service provider will be a qualifying independent contractor even where
the REIT bears the expenses related to the service.
At some of its properties, the Company has entered into arrangements
with third party contractors under which the third party contractors operate
food service facilities and the Company bears part or all of the expenses
incurred in connection with the operation of those facilities. The Company has
represented in the Management Representation Letter that with respect to certain
key properties where it has entered into the arrangements described above, it is
(and has been during all relevant periods) customary for tenants of similar
buildings in the applicable geographic areas to be provided with food service
facilities by landlords. Although the Internal Revenue Service has issued
several private letter rulings to taxpayers (including one that was issued to
the Company in 1993) approving similar economic arrangements in other arguably
analogous areas, such as parking, where it has agreed that the provision of such
facilities by landlords was customary, the Internal Revenue Service has not
published any such rulings with respect to food service facilities. (Private
letter rulings are binding on the Internal Revenue Service only with respect to
the taxpayer to which the letter ruling is issued and only with respect to the
facts addressed in that letter.) In 1998, the Company requested a private letter
ruling from the Internal Revenue Service with respect to a proposed national
arrangement with a third-party contractor to operate food service facilities at
the Company's properties across the country (including several of those
described above), on terms similar to the arrangements described above. The
Internal Revenue Service initially indicated that it was not inclined to issue
that ruling, but it then agreed to issue a different ruling related to
below-market
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November 20, 2002
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leases to food service operators. Accordingly, the Company withdrew its initial
request.
The Company has determined, based on surveys it has conducted, that the
relevant facts (including substantial facts that support this position that were
not developed and provided to the IRS as part of the private letter ruling
request process in 1998) enable it to make the representation described above.
There can be no assurance, however, that the Company's position would be upheld
by a court in the event that the IRS were to challenge the Company's position.
If the IRS were to challenge the Company's determination and a court were to
determine that the food service facilities were not customary, the Company would
have impermissible tenant service income because the third-party providers would
not qualify as independent contractors as a result of the expense-bearing
arrangements. At some properties where the food service facilities are located,
the amount of any resulting impermissible tenant service income likely would
exceed the 1% limit described above for certain years, depending upon the actual
facts with respect to the relevant properties. Moreover, depending upon which
properties were determined to have impermissible tenant service income in excess
of the 1% limit, the Company could fail to satisfy the 95% gross income test for
the years 1999, 2000, and possibly 2001. In that event, the IRS could assert
that the Company fails to qualify as a REIT for one or more of those years,
although the IRS also could agree, if the Company could so demonstrate, that any
failure to meet the 95% income test was due to reasonable cause and not willful
neglect, in which event the Company would continue to qualify as a REIT for the
years in question. If the reasonable cause exception applied and the Company
were not disqualified as a REIT, it would be required to pay some taxes based on
the amount of its income that did not qualify for the 95% income test.
We assume no obligation to advise you of any changes in our opinions
or of any new developments in the application or interpretation of the federal
income tax laws subsequent to the date of this opinion letter. The Company's
qualification and taxation as a REIT depend upon the Company's ability to meet
on a continuing basis, through actual annual operating and other results, the
various requirements under the Code with regard to, among other things, the
sources of its gross income, the composition of its assets, the level of its
distributions to stockholders, and the diversity of its stock ownership. We will
not review the Company's compliance with these requirements on a continuing
basis. Accordingly, no assurance can be given that the actual results of the
operations of the Company,
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November 20, 2002
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Carr Realty, L.P., CARLP and the other Group Entities, the sources of their
income, the nature of their assets, the level of the Company's distributions to
its stockholders and the diversity of the Company's stock ownership for any
given taxable year will satisfy the requirements under the Code for
qualification and taxation as a REIT.
This opinion letter has been prepared solely for your use in
connection with the Registration Statement and speaks only as of the date
hereof. This opinion may not be relied upon by you or any other person other
than in connection with the Registration Statement. We hereby consent to the
filing of this opinion letter as Exhibit 8.1 to the Registration Statement. In
giving this consent, however, we do not admit thereby that we are an "expert"
within the meaning of the Securities Act of 1933, as amended.
Very truly yours,
/s/ HOGAN & HARTSON L.L.P.
HOGAN & HARTSON L.L.P.