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As filed with the Securities and Exchange Commission on October 22, 1996
Registration No. 333-
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
SUN COMMUNITIES, INC. (Exact name of Issuer of the Partnership Debt
(Exact name of Issuer of the Company Debt Securities as specified in its governing instrument)
Securities, Preferred Stock, Common Stock and
Securities Warrants as specified in its governing
instrument)
MARYLAND MICHIGAN
(State or Other Jurisdiction of Incorporation or (State or Other Jurisdiction of Incorporation or
Organization) Organization)
38-2730780 38-3144240
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
_______________
GARY A. SHIFFMAN
PRESIDENT
31700 MIDDLEBELT ROAD
SUITE 145
FARMINGTON HILLS, MICHIGAN 48334
(810) 932-3100
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
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Copies of all correspondence to:
JEFFREY L. FORMAN, ESQ.
JAFFE, RAITT, HEUER & WEISS, P.C.
ONE WOODWARD AVENUE
SUITE 2400
DETROIT, MICHIGAN 48226
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. ______
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box. ___X__
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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, 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. ______.
_______________
CALCULATION OF REGISTRATION FEE
Proposed Maximum Amount of
Title of Each Class of Securities Aggregate Offering Price (1) Registration Fee
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Company Debt Securities, Preferred Stock, $.01 par value, $47,787,500 $16,479 (2)(3)
Common Stock, $.01 par value, and Securities Warrants of Sun
Communities, Inc.
Partnership Debt Securities of Sun Communities Operating $225,000,000 $77,587 (2)(4)
Limited Partnership
(1) In United States dollars or the equivalent thereof in any other
currency, currency unit or units, or composite currency or currencies.
(2) Calculated pursuant to Rule 457(o) of the rules and regulations under
the Securities Act of 1933, as amended.
(3) In addition to the securities registered hereby, pursuant to Rule 429
of the Securities Act of 1933, the Prospectus included herein also
covers $202,212,500 of Company Debt Securities, Preferred Stock,
Common Stock, and Securities Warrants from previous registration
statements (No. 33-1822 and No. 33-2522), as to which a registration
fee of $69,728.45 was paid.
(4) In addition to the securities registered hereby, pursuant to Rule 429
of the Securities Act of 1933, the Prospectus included herein also
covers $25,000,000 of Partnership Debt Securities from a previous
registration statement (No. 33-2522), as to which a registration fee
of $8,602.69 was paid.
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PURSUANT TO RULE 429 UNDER THE SECURITIES ACT OF 1933, THE PROSPECTUS INCLUDED
HEREIN ALSO RELATES TO (i) $177,212,500 PRINCIPAL AMOUNT OF COMPANY DEBT
SECURITIES, PREFERRED STOCK, COMMON STOCK, AND SECURITIES WARRANTS REGISTERED
UNDER REGISTRATION STATEMENTS 333-1822 AND 33-95694, WHICH WERE DECLARED
EFFECTIVE ON OCTOBER 11, 1996 AND NOVEMBER 7, 1995, RESPECTIVELY, AND (ii)
$25,000,000 PRINCIPAL AMOUNT OF PARTNERSHIP DEBT SECURITIES AND $25,000,000
PRINCIPAL AMOUNT OF PREFERRED STOCK, COMMON STOCK, AND SECURITIES WARRANTS
REGISTERED UNDER REGISTRATION STATEMENT 33-2522, WHICH WAS DECLARED EFFECTIVE
ON APRIL 24, 1996. IN THE EVENT ANY OF SUCH PREVIOUSLY REGISTERED PARTNERSHIP
DEBT SECURITIES, COMPANY DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK, AND
SECURITIES WARRANTS ARE OFFERED PRIOR TO THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT, THEY WILL NOT BE INCLUDED IN ANY PROSPECTUS HEREUNDER.
THE AMOUNT OF PARTNERSHIP DEBT SECURITIES, COMPANY DEBT SECURITIES, PREFERRED
STOCK, COMMON STOCK, AND SECURITIES WARRANTS BEING REGISTERED, TOGETHER WITH
THE PARTNERSHIP DEBT SECURITIES, COMPANY DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK, AND SECURITIES WARRANTS REGISTERED UNDER REGISTRATION STATEMENTS
333-1822, 333-2522, AND 33-95694 REPRESENTS THE MAXIMUM AMOUNT OF PARTNERSHIP
DEBT SECURITIES, COMPANY DEBT SECURITIES, PREFERRED STOCK, COMMON STOCK, AND
SECURITIES WARRANTS WHICH ARE EXPECTED TO BE OFFERED FOR SALE.
__________________________________
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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.
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EXPLANATORY NOTE
This Registration Statement relates to securities which may be offered
from time to time by Sun Communities, Inc. (the "Company") and Sun Communities
Operating Limited Partnership, a majority-owned subsidiary of the Company (the
"Operating Partnership"). This Registration Statement contains a form of basic
prospectus (the "Basic Prospectus") relating to both the Company and the
Operating Partnership which will be used in connection with an offering of
securities by the Company or the Operating Partnership. The specific terms of
the securities to be offered will be set forth in a Prospectus Supplement
relating to such securities.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of securities in
any State in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
Subject to Completion
Prospectus dated _______________, 1996
PROSPECTUS
$500,000,000
SUN COMMUNITIES, INC.
COMPANY DEBT SECURITIES, PREFERRED STOCK,
COMMON STOCK, AND SECURITIES WARRANTS
SUN COMMUNITIES OPERATING LIMITED PARTNERSHIP
PARTNERSHIP DEBT SECURITIES
Sun Communities, Inc. (the "Company") may from time to time offer,
with an aggregate public offering price of up to $250,000,000 (or its
equivalent in another currency based on the exchange rate at the time of sale),
in one or more series: (i) unsecured debt securities ("Company Debt
Securities"), (ii) shares of its preferred stock, par value $0.01 per share
("Preferred Stock"), (iii) shares of its common stock, par value $0.01 per
share (the "Common Stock"), and (iv) its warrants exercisable for Preferred
Stock or Common Stock ("Securities Warrants"), and Sun Communities Operating
Limited Partnership (the "Operating Partnership") may from time to time offer
in one or more series its unsecured non-convertible investment grade debt
securities ("Partnership Debt Securities"; Company Debt Securities and
Partnership Debt Securities are sometimes hereinafter collectively referred to
as the "Debt Securities") with an aggregate public offering price of up to
$250,000,000 (or its equivalent in another currency based on the exchange rate
at the time of sale), in each case in amounts, at prices and on terms to be
determined at the time of offering. The Debt Securities, Preferred Stock,
Common Stock and Securities Warrants (collectively, the "Securities") may be
offered, separately or together, in separate series in amounts, at prices and
on terms to be described in one or more supplements to this Prospectus (a
"Prospectus Supplement").
With respect to the Debt Securities, the issuer, specific title,
aggregate principal amount, form (which may be registered or bearer, or
certificated or global), maturity, rate (or manner of calculation thereof) and
time of payment of interest, terms for redemption at the option of the issuer
or repayment at the option of the holder, any sinking fund provisions and any
conversion provisions will be set forth in the applicable Prospectus
Supplement. The terms of the Preferred Stock, including the specific
designation and stated value per share, any dividend, liquidation, redemption,
conversion, voting and other rights, and all other specific terms of the
Preferred Stock will be set forth in the applicable Prospectus Supplement. In
the case of the Common Stock, the specific number of shares and issuance price
per share will be set forth in the applicable Prospectus Supplement. In the
case of the Securities Warrants, the duration, offering price, exercise price
and detachability, if applicable, will be set forth in the applicable
Prospectus Supplement. In addition, such specific terms may include
limitations on direct or beneficial ownership and restrictions on transfer of
the Securities, in each case as may be appropriate to preserve the status of
the Company as a real estate investment trust ("REIT") for United States
federal income tax purposes. The applicable Prospectus Supplement will also
contain information, where applicable, about all material United States federal
income tax considerations relating to, and any listing on a securities exchange
of, the Securities covered by such Prospectus Supplement.
The Securities may be offered directly by the Company or the Operating
Partnership, through agents designated from time to time by the Company or the
Operating Partnership, or to or through underwriters or dealers. If any agents
or underwriters are involved in the sale of any of the Securities, their names,
and any applicable purchase price, fee, commission or discount arrangement
with, between or among them, will be set forth, or will be calculable from the
information set forth, in an accompanying Prospectus Supplement. See "Plan of
Distribution." No Securities may be sold without delivery of a Prospectus
Supplement describing the method and terms of the offering of such Securities.
SEE "RISK FACTORS" ON PAGE 3 FOR CERTAIN FACTORS RELATING TO AN INVESTMENT IN
THE SECURITIES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE ATTORNEY GENERAL OF THE STATE OF NEW YORK HAS NOT PASSED
ON OR ENDORSED THE MERITS OF THIS OFFERING. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
The date of this Prospectus is _______________, 1996.
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AVAILABLE INFORMATION
The Company and the Operating Partnership are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and, in accordance therewith, the Company and the
Operating Partnership file reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports, proxy statements and
other information filed can be inspected at the Public Reference Section
maintained by the Commission at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549 and the following regional offices of the Commission: 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and Seven World Trade
Center, 13th Floor, New York, New York 10048. Copies of such material can be
obtained from the Public Reference Section of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. In addition, the Company's
Common Stock is listed on the New York Stock Exchange and such reports, proxy
statements and other information concerning the Company can be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005.
The Company and the Operating Partnership have filed with the
Commission a registration statement on Form S-3 (the "Registration Statement"),
of which this Prospectus is a part, under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the Securities offered hereby.
This Prospectus does not contain portions of the information set forth in the
Registration Statement, certain portions of which have been omitted as
permitted by the rules and regulations of the Commission. Statements contained
in this Prospectus as to the contents of any contract or other documents are
not necessarily complete, and in each instance, reference is made to the copy
of such contract or documents filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference and the exhibits and schedules thereto. For further information
regarding the Company, the Operating Partnership and the Securities, reference
is hereby made to the Registration Statement and such exhibits and schedules
which may be obtained from the Commission at its principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company or the
Operating Partnership under the Exchange Act with the Commission and are
incorporated herein by reference.
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995, filed with the Commission on March 18,
1996, as amended by Form 10-K/A, filed with the Commission on
April 18, 1996, and as amended by Form 10-K/A, filed with the
Commission on May 3, 1996.
2. The Operating Partnership's Annual Report on Form 10-K for the
year ended December 31, 1995, filed with the Commission on
March 18, 1996.
3. The Company's current report on Form 8-K dated March 20, 1996
and filed with the Commission on March 26, 1996.
4. The Company's current report on Form 8-K dated April 2, 1996
and filed with the Commission on April 4, 1996.
5. The Company's current report on Form 8-K dated April 24, 1996
and filed with the Commission on April 29, 1996.
6. The Company's current report on Form 8-K dated May 1, 1996 and
filed with the Commission on May 3, 1996.
7. The Company's current report on Form 8-K dated August 20, 1996
and filed with the Commission on August 22, 1996.
8. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996, filed with the Commission on May 3,
1996.
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9. The Operating Partnership's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1996, filed with the Commission on
May 3, 1996.
10. The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996, filed with the Commission on August 14,
1996.
11. The Operating Partnership's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996, filed with the Commission on
August 14, 1996.
12. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A dated November 23, 1993,
No. 1-12616.
13. The information contained in the section "Policies With
Respect to Certain Activities" contained in the Registration
Statement on Form S-11 (File No. 33-80972) filed on June 30,
1994, as amended.
All documents filed by the Company or the Operating Partnership
subsequent to the date of this Prospectus pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act and prior to termination of the offering of all
Securities to which this Prospectus relates shall be deemed to be incorporated
by reference in this Prospectus and shall be part hereof from the date of
filing of such document.
Any statement contained herein or in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus (in the case of a statement in a previously filed
document incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of
Securities or in any other subsequently filed document that is also
incorporated or deemed to be incorporated by reference herein, modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of
this Prospectus or any accompanying Prospectus Supplement. Subject to the
foregoing, all information appearing in this Prospectus and each accompanying
Prospectus Supplement is qualified in its entirety by the information appearing
in the documents incorporated by reference.
The Company and the Operating Partnership will provide without charge
to each person, including any beneficial owner, to whom a copy of this
Prospectus is delivered, upon their written or oral request, a copy of any or
all of the documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
in such documents). Written requests for such copies should be addressed to
Jeffrey P. Jorissen, the Company's Senior Vice President and Chief Financial
Officer at Sun Communities, Inc., 31700 Middlebelt Road, Suite 145, Farmington
Hills, Michigan 48334, telephone number (810) 932-3100.
As used herein, the term "Company" includes Sun Communities, Inc., a
Maryland corporation, and one or more of its subsidiaries (including the
Operating Partnership, Sun Communities Finance Limited Partnership (the
"Financing Partnership"), Sun Home Services, Inc., and Sun Management, Inc.).
THE COMPANY AND THE OPERATING PARTNERSHIP
The Company owns and operates manufactured housing communities
concentrated in the midwestern and southeastern United States. The Company is
a fully integrated real estate company which, together with its affiliates and
predecessors, has been in the business of acquiring, operating, and expanding
manufactured housing communities since 1975. As of September 1, 1996, the
Company owned and managed a portfolio of 79 manufactured housing community
properties (the "Properties") located in twelve states and Canada containing an
aggregate of approximately 28,700 developed sites and approximately 2,800
potential expansion sites. Consistent with the Company's strategy of growth
through acquisitions, the Company has acquired 48 of the Properties since its
initial public offering in December 1993 (the "IPO").
The Company is the sole general partner of, and, as of September 1,
1996, held approximately 89% of the interests (not including Preferred OP
Units) in, the Operating Partnership. Substantially all of the
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Company's assets are held by or through the Operating Partnership and the
Operating Partnership receives substantially the same economic benefits as the
Company. The description of business, property information, policies with
respect to certain activities and management information for the Operating
Partnership are virtually identical to that of the Company. Such information
may be found in the Company's annual report on Form 10-K for the year ended
December 31, 1995 and in the Company's definitive prospectus, dated July 21,
1994, contained in its registration statement on Form S-11 (File No. 33-80972).
The ownership and management of the Properties is allocated among the
Subsidiaries; however, subject to the tax and other risks discussed in the
section entitled "Risk Factors": (i) the Company controls the management of all
the Properties either directly or through a management contract with Sun
Management, Inc., a Michigan corporation ("Sun Management") cancelable upon 30
days written notice; and (ii) stockholders in the Company achieve substantially
the same economic benefits as direct ownership, operation, and management of
the Properties, except that 5% of the cash flow from operating activities of
Sun Home Services, Inc., a Michigan corporation ("Home Services") and Sun
Management (estimated to be an aggregate of no greater than approximately
$2,000 in 1996) will be distributed to Gary A. Shiffman, Milton M. Shiffman
(Gary A. Shiffman and Milton M. Shiffman are sometimes hereinafter collectively
referred to as the "Principals"), and Jeffrey P. Jorissen, each an officer of
the Company, as the holders of all the common stock of Home Services and Sun
Management. There is no assurance that such distributions will not increase in
the future. As sole general partner of the Operating Partnership, the Company
has the exclusive power to manage and conduct the business of the Operating
Partnership, subject to certain limited exceptions.
The Company is a Maryland corporation and the Operating Partnership is
a Michigan limited partnership. The Operating Partnership was formed in 1993
in connection with the IPO. The Company's and the Operating Partnership's
executive and principal property management office is located at 31700
Middlebelt Road, Suite 145, Farmington Hills, Michigan 48334, and telephone
number is (810) 932-3100. The Company has regional property management offices
in Elkhart, Indiana and Tampa, Florida.
RISK FACTORS
Prospective investors should carefully consider, among other factors,
the matters described below.
CONFLICTS OF INTEREST
Failure to Enforce Terms of Management Contract. Through their
ownership of all of the common stock of Sun Management, the Principals and
Jeffrey P. Jorissen, an officer of the Company (the Principals and Jeffrey P.
Jorissen are sometimes hereinafter collectively referred to as the "Subsidiary
Shareholders") have a 5% interest in Sun Management. Sun Management has
entered into a management contract with the Financing Partnership with respect
to each of the Properties subject to the Mortgage Debt (as defined below),
which was not negotiated on an arm's length basis. The Subsidiary Shareholders
will have a conflict of interest with respect to their obligations as officers
and/or directors of the Company to enforce the terms of the management
contract. The failure to enforce the material terms of this agreement could
have an adverse effect on the Company. The Operating Partnership, on account
of its ownership of the preferred stock of Sun Management, and the Subsidiary
Shareholders, on account of their ownership of the common stock of Sun
Management, are entitled to 95% and 5%, respectively, of cash flow from
operating activities of Sun Management.
Failure to Enforce Terms of Home Services Agreement. Through their
ownership of all of the common stock of Home Services, the Subsidiary
Shareholders have a 5% interest in Home Services. Home Services has entered
into an agreement with the Operating Partnership for sales, brokerage, and
leasing services, which was not negotiated on an arm's length basis. The
Subsidiary Shareholders will have a conflict of interest with respect to their
obligations as officers and/or directors of the Company to enforce the terms of
the services agreement. The failure to enforce the material terms of this
agreement could have an adverse effect on the Company. The Operating
Partnership, on account of its ownership of the preferred stock of Home
Services, and the Subsidiary Shareholders, on account of their ownership of the
common stock of Home Services, are entitled to 95% and 5%, respectively, of the
cash flow from operating activities of Home Services.
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Tax Consequences Upon Sale of Properties. Prior to the redemption of
partnership interests in the Operating Partnership ("OP Units") for Common
Stock, the Principals will have tax consequences different from those of the
Company and its public stockholders upon the sale of any of the 24 Properties
acquired from partnerships previously affiliated with the Principals (the "Sun
Partnerships") and, therefore, the Principals and the Company, as partners in
the Operating Partnership, may have different objectives regarding the
appropriate pricing and timing of any sale of those Properties. Consequently,
the Principals may influence the Company not to sell those Properties even
though such sale might otherwise be financially advantageous to the Company.
ADVERSE CONSEQUENCES OF DEBT FINANCING
The Company is subject to the risks normally associated with debt
financing, including the risk that the Company's cash flow will be insufficient
to meet required payments of principal and interest, the risk that existing
indebtedness will not be able to be refinanced, or that the terms of such
refinancing will not be as favorable as the terms of such indebtedness and the
risk that necessary capital expenditures for such purposes as renovations and
other improvements will not be able to be financed on favorable terms or at
all. If a property is mortgaged to secure payment of indebtedness and the
Company is unable to meet mortgage payments, the property could be transferred
to the mortgagee with a consequent loss of income and asset value to the
Company.
As of September 1, 1996, the Financing Partnership had outstanding
$30.0 million of indebtedness that is collateralized by mortgage liens on five
of the Properties (the "Mortgage Debt"). If the Company fails to meet its
obligations under the Mortgage Debt, the lender would be entitled to foreclose
on all or some of the Properties securing such debt, which could have a
material adverse effect on the Company and its ability to make expected
distributions and could threaten the continued viability of the Company.
The Company has a one-time right to obtain the release of one Property
from the lien of the Mortgage Debt. In the event the Company desires to obtain
the release of a Property from the lien of such debt, such release may only be
obtained by satisfaction of each of the following: (i) prepayment of such debt
in an amount equal to 125% of the loan amount allocated to the Property being
released; (ii) payment of certain prepayment expenses that may be incurred by
the lender in connection with a partial prepayment of such debt; and (iii)
satisfaction of a specified debt service coverage ratio with respect to the
remaining four Properties not being released. In the event the Company is
unable to obtain the release of a Property from any such lien, it would be
unable to consummate a sale of such Property which might otherwise be in the
best interest of the Company.
CHANGES IN INVESTMENT AND FINANCING POLICIES WITHOUT STOCKHOLDER APPROVAL
The investment and financing policies of the Company, and its policies
with respect to certain other activities, including its growth, debt,
capitalization, distributions, REIT status, and operating policies, are
determined by the Board of Directors. Although the Board of Directors has no
present intention to do so, these policies may be amended or revised from time
to time at the discretion of the Board of Directors without notice to or a vote
of the stockholders of the Company. Accordingly, stockholders may not have
control over changes in policies of the Company and changes in the Company's
policies may not fully serve the interests of all stockholders.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent on the efforts of its executive officers,
particularly the Principals. While the Company believes that it could find
replacements for these key personnel, the loss of their services could have a
temporary adverse effect on the operations of the Company. The Company does
not currently maintain or contemplate obtaining any "key-man" life insurance on
the Principals.
OWNERSHIP LIMIT AND LIMITS ON CHANGES IN CONTROL
9.8% Ownership Limit; Inapplicability to Founders. In order to
qualify and maintain its qualification as a REIT, not more than 50% of the
outstanding shares of the capital stock of the Company may be owned, directly
or indirectly, by five or fewer individuals. Thus, ownership of more than 9.8%
of the outstanding shares of Common Stock by any single stockholder has been
restricted, with certain
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exceptions, for the purpose of maintaining the Company's qualification as a
REIT under the Internal Revenue Code of 1986, as amended (the "Code"). Such
restrictions in the Company's charter do not apply to the Principals and Robert
B. Bayer, a former director and officer of the Company (Robert B. Bayer and the
Principals are sometimes hereinafter collectively referred to as the
"Founders"), who may acquire additional shares of Common Stock through the
redemption of OP Units, through the Stock Option Plan, from other stockholders
or otherwise, but in no event will they be entitled to acquire additional
shares such that the five largest beneficial owners of the Company's stock hold
more than 50% of the total outstanding stock. Additionally, the Company's
charter allows certain transfers of such shares without the transferees being
subject to the 9.8% ownership limit, provided such transfers do not result in
an increased concentration in the ownership of the Company. The Company's
Board of Directors, upon receipt of a ruling from the Internal Revenue Service
(the "Service"), an opinion of counsel or other evidence satisfactory to the
Board of Directors and upon such other conditions as the Board of Directors may
direct, may also exempt a proposed transferee from this restriction. See
"Description of Common Stock -- Restrictions on Ownership."
The 9.8% ownership limit, as well as the ability of the Company to
issue additional shares of Common Stock or shares of other stock (which may
have rights and preferences over the Common Stock), may discourage a change of
control of the Company and may also: (i) deter tender offers for the Common
Stock, which offers may be advantageous to stockholders; and (ii) limit the
opportunity for stockholders to receive a premium for their Common Stock that
might otherwise exist if an investor were attempting to assemble a block of
Common Stock in excess of 9.8% of the outstanding shares of the Company or
otherwise effect a change of control of the Company.
Staggered Board. The Board of Directors of the Company has been
divided into three classes of directors. The term of one class will expire
each year. Directors for each class will be chosen for a three-year term upon
the expiration of such class's term, and the directors in the other two classes
will continue in office. The staggered terms for directors may affect the
stockholders' ability to change control of the Company even if a change in
control were in the stockholders' interest.
Preferred Stock. The Company's charter authorizes the Board of
Directors to issue up to 10,000,000 shares of preferred stock and to establish
the preferences and rights (including the right to vote and the right to
convert into shares of Common Stock) of any shares issued. See "Description of
Preferred Stock." The power to issue preferred stock could have the effect of
delaying or preventing a change in control of the Company even if a change in
control were in the stockholders' interest.
REAL ESTATE INVESTMENT CONSIDERATIONS
General. Income from real property investments, and the Company's
resulting ability to make expected distributions to stockholders, may be
adversely affected by the general economic climate, local conditions such as
oversupply of manufactured housing sites or a reduction in demand for
manufactured housing sites in an area, the attractiveness of the Properties to
tenants, zoning or other regulatory restrictions, competition from other
available manufactured housing sites and alternative forms of housing (such as
apartment buildings and site-built single-family homes), the ability of the
Company to provide adequate maintenance and insurance, and increased operating
costs (including insurance premiums and real estate taxes). The Company's
income would also be adversely affected if tenants were unable to pay rent or
sites were unable to be rented on favorable terms. If the Company were unable
to promptly relet or renew the leases for a significant number of the sites, or
if the rental rates upon such renewal or reletting were significantly lower
than expected rates, then the Company's funds from operations and ability to
make expected distributions to stockholders could be adversely affected. In
addition, certain expenditures associated with each equity investment (such as
real estate taxes and maintenance costs) generally are not reduced when
circumstances cause a reduction in income from the investment. Furthermore,
real estate investments are relatively illiquid and, therefore, will tend to
limit the ability of the Company to vary its portfolio promptly in response to
changes in economic or other conditions.
Competition. All of the Properties are located in developed areas
that include other manufactured housing community properties. The number of
competitive manufactured housing community properties in a particular area
could have a material effect on the Company's ability to lease sites and on
rents charged at the Properties or at any newly acquired properties. The
Company may be competing with others that have greater resources than the
Company and whose officers and directors have more experience
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than the Company's officers and directors. In addition, other forms of
multi-family residential properties, such as private and federally funded or
assisted multi-family housing projects and single-family housing, provide
housing alternatives to potential tenants of manufactured housing communities.
Changes in Laws. Costs resulting from changes in real estate tax laws
generally may be passed through to tenants and will not affect the Company.
Increases in income, service or other taxes, however, generally are not passed
through to tenants under leases and may adversely affect the Company's funds
from operations and its ability to make distributions to stockholders.
Similarly, changes in laws increasing the potential liability for environmental
conditions existing on properties or increasing the restrictions on discharges
or other conditions may result in significant unanticipated expenditures, which
would adversely affect the Company's funds from operations and its ability to
make distributions to stockholders.
Investments in Mortgages. Although the Company currently has no plans
to invest in mortgages other than an approximately $4.0 million mortgage loan
it has made to an entity that operates two manufactured housing communities in
Alberta, Canada (the "Canadian Mortgage"), the Company may invest in additional
mortgages in the future. By virtue of its investment in the Canadian Mortgage
and if the Company were to invest in additional mortgages, it is and would be
subject to the risks of such investment, which include the risk that borrowers
may not be able to make debt service payments or pay principal when due, the
risk that the value of mortgaged property may be less than the amounts owed,
and the risk that interest rates payable on the mortgages may be lower than the
Company's costs of funds. If any of the above occurred, funds from operations
and the Company's ability to make expected distributions to stockholders could
be adversely affected.
Development of New Communities. The Company is not restricted from
engaging in the development of new communities in the future. The manufactured
housing community development business involves significant risks in addition
to those involved in the ownership and operation of established manufactured
housing communities, including the risks that financing may not be available on
favorable terms for development projects, that construction and lease-up may
not be completed on schedule resulting in increased debt service expense and
construction costs, that long-term financing may not be available upon
completion of construction, and that sites may not be leased on profitable
terms. If the Company entered the manufactured housing community development
business, and if any of the above occurred, the Company's ability to make
expected distributions to stockholders could be adversely affected.
Rent Control Legislation. State and local rent control laws in
certain jurisdictions may limit the Company's ability to increase rents and to
recover increases in operating expenses and the costs of capital improvements.
Enactment of such laws has been considered from time to time in other
jurisdictions. Certain of the Properties are located, and the Company may
purchase additional properties, in markets that are either subject to rent
control or in which rent-limiting legislation exists or may be enacted.
Environmental Matters. Under various Federal, state and local laws,
ordinances and regulations, an owner of real estate is liable for the costs of
removal or remediation of certain hazardous or toxic substances on or in such
property. Such laws often impose such liability without regard to whether the
owner knew of, or was responsible for, the presence of such hazardous or toxic
substances. The presence of such substances, or the failure to properly
remediate such substances, may adversely affect the owner's ability to sell or
rent such property or to borrow using such property as collateral. Persons who
arrange for the disposal or treatment of hazardous or toxic substances may also
be liable for the costs of removal or remediation of such substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by such person. Certain environmental laws impose liability for
release of asbestos-containing materials ("ACMs") into the air and third
parties may seek recovery from owners or operators of real properties for
personal injury associated with ACMs. In connection with the ownership (direct
or indirect), operation, management, and development of real properties, the
Company or the Operating Partnership, as the case may be, may be considered an
owner or operator of such properties or as having arranged for the disposal or
treatment of hazardous or toxic substances and, therefore, potentially liable
for removal or remediation costs, as well as certain other related costs,
including governmental fines and injuries to persons and property. All of the
Properties have been subject to a Phase I or similar environmental audit (which
involves general inspections without soil sampling or ground water analysis)
completed by independent environmental consultants. These environmental audits
have not revealed any significant environmental liability that would have a
material adverse effect on the Company's business. No assurances can be given
that existing environmental studies with respect to any of the Properties
reveal all
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environmental liabilities, that any prior owner of a Property did not create
any material environmental condition not known to the Company, or that a
material environmental condition does not otherwise exist as to any one or more
Properties.
Uninsured Loss. The Company maintains comprehensive liability, fire,
flood (where appropriate), extended coverage, and rental loss insurance with
respect to the Properties with policy specifications, limits, and deductibles
customarily carried for similar properties. Certain types of losses, however,
may be either uninsurable or not economically insurable, such as losses due to
earthquakes, riots, or acts of war. Should an uninsured loss occur, the
Company could lose both its investment in and anticipated profits and cash flow
from a property.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A REIT
Taxation as a Corporation. The Company expects to qualify and has
made an election to be taxed as a REIT under the Code, commencing with the
calendar year beginning January 1, 1994. Although the Company believes that it
is organized and will operate in such a manner, no assurance can be given that
the Company is organized or will be able to operate in a manner so as to
qualify or remain so qualified. Qualification as a REIT involves the
satisfaction of numerous requirements (some on an annual and quarterly basis)
established under highly technical and complex Code provisions for which there
are only limited judicial or administrative interpretations, and involves the
determination of various factual matters and circumstances not entirely within
the Company's control.
If the Company were to fail to qualify as a REIT in any taxable year,
the Company would be subject to Federal income tax (including any applicable
alternative minimum tax) on its taxable income at corporate rates. Moreover,
unless entitled to relief under certain statutory provisions, the Company also
would be disqualified from treatment as a REIT for the four taxable years
following the year during which qualification is lost. This treatment would
reduce the net earnings of the Company available for investment or distribution
to stockholders because of the additional tax liability to the Company for the
years involved. In addition, distributions to stockholders would no longer be
required to be made.
Other Tax Liabilities. Even though the Company qualifies as a REIT, it
is subject to certain Federal, state and local taxes on its income and
property. In addition, the management operations relating to the Properties
subject to the mortgages granted in connection with the Mortgage Debt and the
Company's sales operations, which are conducted through Sun Management and Home
Services, respectively, generally will be subject to Federal income tax at
regular corporate rates.
ADVERSE EFFECT OF DISTRIBUTION REQUIREMENTS
The Company may be required from time to time, under certain
circumstances, to accrue as income for tax purposes interest and rent earned
but not yet received. In such event, the Company could have taxable income
without sufficient cash to enable the Company to meet the distribution
requirements of a REIT. Accordingly, the Company could be required to borrow
funds or liquidate investments on adverse terms in order to meet such
distribution requirements.
ADVERSE CONSEQUENCES OF FAILURE TO QUALIFY AS A PARTNERSHIP
The Company believes that the Operating Partnership and the Financing
Partnership have each been organized as partnerships and will qualify for
treatment as such under the Code. If the Operating Partnership and the
Financing Partnership fail to qualify for such treatment under the Code, the
Company would cease to qualify as a REIT, and the Operating Partnership and the
Financing Partnership would be subject to Federal income tax (including any
alternative minimum tax) on their income at corporate rates.
ADVERSE EFFECT ON PRICE OF SHARES AVAILABLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing
market prices for shares. The Principals hold 943,456 shares of Common Stock.
In addition, up to 3,208,519 shares of Common Stock may be issued in the future
to the Principals, the general partners of the Sun Partnerships other than the
Principals (the "Former General Partners"), and the sellers of certain
properties as a result of the potential redemption of their outstanding
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OP Units (both Common and Preferred OP Units). Except in certain limited
circumstances or with the prior written consent of Lehman Brothers Inc. and the
Company, the Principals and the Former General Partners may not sell more than
one-third of such holder's shares prior to December 15, 1995 or two-thirds of
such holders' shares prior to December 15, 1996. After December 15, 1996, the
Principals and the Former General Partners may sell remaining unsold shares
pursuant to registration rights or an available exemption from registration.
Also, the former owner of one of the Properties will be issued OP Units with an
aggregate value of $10.85 million over the 11-year period beginning in January
1997 and continuing on an annual basis through 2007. In addition, 1,461,513
shares have been reserved for issuance pursuant to the Company's Stock Option
Plan and 1993 Non-Employee Director Stock Option Plan (of which 353,997 shares
were issued to the Principals upon the exercise of options pursuant to the
Company's Stock Option Plan), and the Principals' employment agreements provide
for incentive compensation payable in shares of Common Stock. These shares may
be sold without the consent of Lehman Brothers Inc. and the Company. No
prediction can be made regarding the effect that future sales of shares of
Common Stock will have on the market price of shares.
ADVERSE EFFECT OF MARKET INTEREST RATES ON PRICE OF COMMON STOCK
One of the factors that may influence the price of the Company's
shares in the public market will be the annual distributions to stockholders
relative to the prevailing market price of the Common Stock. An increase in
market interest rates may tend to make the Common Stock less attractive
relative to other investments, which could adversely affect the market price of
Common Stock.
USE OF PROCEEDS
Unless otherwise specified in the applicable Prospectus Supplement,
the Company intends to invest, contribute or otherwise transfer the net
proceeds of any sale of Common Stock, Preferred Stock, Company Debt Securities,
or Securities Warrants to the Operating Partnership. Unless otherwise
specified in the applicable Prospectus Supplement, the Operating Partnership
intends to use such net proceeds and the net proceeds from the sale of any
Partnership Debt Securities for general business purposes, including the
development and acquisition of additional properties and other acquisition
transactions, the payment of certain outstanding debt and improvements to
certain properties in the Company's portfolio.
RATIOS OF EARNINGS TO FIXED CHARGES
The Company's and the Operating Partnership's ratios of earning to
fixed charges for the six-month period ended June 30, 1996 and the years ended
December 31, 1991, 1992, 1993, 1994 and 1995 was 2.71:1, 0.95:1, 1.05:1,
1.05:1, 2.79:1, and 3.03:1, respectively. The ratio of earnings to fixed
charges for the years ended December 31, 1991 and 1992 relate to the
predecessor business of the Company.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and
provisions of the Debt Securities to which this Prospectus and any applicable
Prospectus Supplement may relate. The particular terms of the Debt Securities
being offered and the extent to which such general provisions may apply will be
set forth in the applicable Indenture or in one or more indentures supplemental
thereto and described in a Prospectus Supplement relating to such Debt
Securities. The forms of the Senior Indenture (as defined herein) and the
Subordinated Indenture (as defined herein) have been filed as exhibits to the
Registration Statement of which this Prospectus is a part.
GENERAL
The Debt Securities will be direct, unsecured obligations of the
Company or the Operating Partnership (the entity issuing the Debt Securities is
hereinafter referred to as the "Issuer"), and may be either senior Debt
Securities ("Senior Securities") or subordinated Debt Securities ("Subordinated
Securities"). The Debt Securities will be issued under one or more indentures
(the "Indentures"). Senior Securities and Subordinated Securities will be
issued pursuant to separate indentures (respectively, a
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"Senior Indenture" and a "Subordinated Indenture"), in each case between the
Issuer and a trustee (a "Trustee"). The Indentures will be subject to and
governed by the Trust Indenture Act of 1939, as amended (the "TIA"). The
statements made under this heading relating to the Debt Securities and the
Indentures are summaries of the anticipated provisions thereof, do not purport
to be complete and are qualified in their entirety by reference to the
Indentures and such Debt Securities. All section references appearing herein
are to sections of each Indenture unless otherwise indicated and capitalized
terms used but not defined below shall have the respective meanings set forth
in each Indenture.
The indebtedness represented by Subordinated Securities will be
subordinated in right of payment to the prior payment in full of the Senior
Debt (as defined below) of the Issuer as described under "--Subordination."
Except as set forth in the applicable Indenture or in one or more
indentures supplemental thereto and described in a Prospectus Supplement
relating thereto, the Debt Securities may be issued without limit as to
aggregate principal amount, in one or more series, in each case as established
from time to time in or pursuant to authority granted by a resolution of the
Board of Directors of the Company, either in its own capacity or in its
capacity as sole general partner of the Operating Partnership, or as
established in the applicable Indenture or in one or more indentures
supplemental to such Indenture. All Debt Securities of one series need not be
issued at the same time and, unless otherwise provided, a series may be
reopened, without the consent of the Holders of the Debt Securities of such
series, for issuances of additional Debt Securities of such series.
It is anticipated that each Indenture will provide that there may be
more than one Trustee thereunder, each with respect to one or more series of
Debt Securities. Any Trustee under an Indenture may resign or be removed with
respect to one or more series of Debt Securities, and a successor Trustee may
be appointed to act with respect to such series. In the event that two or more
persons are acting as Trustee with respect to different series of Debt
Securities, each such Trustee shall be a trustee of a trust under the
applicable Indenture separate and apart from the trust administered by any
other Trustee, and, except as otherwise indicated herein, any action described
herein to be taken by each Trustee may be taken by each such Trustee with
respect to the one or more series of Debt Securities for which it is Trustee
under the applicable Indenture.
The Prospectus Supplement relating to any series of Debt Securities
being offered will contain the specific terms thereof, including, without
limitation:
(1) The title of such Debt Securities and whether such Debt
Securities are Senior Securities or Subordinated Securities;
(2) The aggregate principal amount of such Debt Securities and any
limit on such aggregate principal amount;
(3) The percentage of the principal amount at which such Debt
Securities will be issued and, if other than the principal
amount thereof, the portion of the principal amount thereof
payable upon declaration of acceleration of the maturity
thereof;
(4) The date or dates, or the method for determining such date or
dates, on which the principal of such Debt Securities will be
payable;
(5) The rate or rates (which may be fixed or variable), or the
method by which such rate or rates shall be determined, at
which such Debt Securities will bear interest, if any;
(6) The date or dates, or the method for determining such date or
dates, from which any such interest will accrue, the dates on
which any such interest will be payable, the regular record
dates for such interest payment dates, or the method by which
such dates shall be determined, the persons to whom such
interest shall be payable, and the basis upon which interest
shall be calculated if other than that of a 360-day year of
twelve 30-day months;
(7) The place or places where the principal (and premium, if any)
and interest, if any, on such Debt Securities will be payable,
where such Debt Securities may be surrendered for
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conversion or registration of transfer or exchange and where
notices or demands to or upon the Issuer in respect of such
Debt Securities and the applicable Indenture may be served;
(8) The period or periods within which, the price or prices at
which and the other terms and conditions upon which such Debt
Securities may be redeemed, in whole or in part, at the option
of the Issuer, if the Issuer is to have such an option;
(9) The obligation, if any, of the Issuer to redeem, repay or
purchase such Debt Securities pursuant to any sinking fund or
analogous provision or at the option of a Holder thereof, and
the period or periods within which or the date and dates on
which, the price or prices at which and the other terms and
conditions upon which such Debt Securities will be redeemed,
repaid or purchased, in whole or in part, pursuant to such
obligation;
(10) If other than U.S. dollars, the currency or currencies in
which such Debt Securities are denominated and/or payable,
which may be a foreign currency or units of two or more
foreign currencies or a composite currency or currencies, and
the terms and conditions relating thereto;
(11) Whether the amount of payments of principal of (and premium,
if any) or interest, if any, on such Debt Securities may be
determined with reference to an index, formula or other method
(which index, formula or method may, but need not be, based on
a currency, currencies, currency unit or units or composite
currency or currencies) and the manner in which such amounts
shall be determined;
(12) Any additions to, modifications of or deletions from the terms
of such Debt Securities with respect to Events of Default or
covenants set forth in the applicable Indenture;
(13) Whether such Debt Securities will be issued in certificate or
book-entry form;
(14) Whether such Debt Securities will be in registered or bearer
form and, if in registered form, the denominations thereof if
other than $1,000 and any integral multiple thereof and, if in
bearer form, the denominations thereof and terms and
conditions relating thereto;
(15) The applicability, if any, of the defeasance and covenant
defeasance provisions of Article Fourteen of the applicable
Indenture;
(16) Whether and under what circumstances the Issuer will pay any
additional amounts on such Debt Securities in respect of any
tax, assessment or governmental charge and, if so, whether the
Issuer will have the option to redeem such Debt Securities in
lieu of mailing such payment; and
(17) Any other terms of such Debt Securities not inconsistent with
the provisions of the applicable Indenture (Section 301).
In addition, the Prospectus Supplement relating to any series of Debt
Securities that provides for redemption, prepayment, or conversion upon the
occurrence of certain events (i.e. a change of control) at the option of the
Holder thereof will disclose the following to the extent applicable:
(1) the effect that such provisions may have in deterring
certain mergers, tender offers or other takeover
attempts, as well as any possible adverse effect on
the market price of the Issuer's securities or the
ability to obtain additional financing in the future;
(2) the Issuer's compliance with the requirements of Rule
14e-1 under the Securities Exchange Act of 1934 and
any other applicable securities laws in connection
with such provisions and any related offers by the
Issuer;
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(3) whether the occurrence of the specified events may
give rise to cross-defaults on other indebtedness
such that payment on the Debt Securities may be
effectively subordinated;
(4) any limitations on the Issuer's financial or legal
ability to repurchase the Debt Securities upon the
triggering of an event risk provision requiring such
a repurchase or offer to repurchase;
(5) the impact, if any, under the governing instrument of
the failure to repurchase, including whether such
failure to make any required repurchases in the event
of a change of control will create an Event of
Default with respect to the Debt Securities or will
become an Event of Default only after the
continuation of such failure for a specified period
of time after written notice is given to the Issuer
by the Trustee or to the Issuer and the Trustee by
the holders of a specified percentage in aggregate
principal amount of the Debt Securities outstanding;
(6) to the extent true, that there can be no assurance
that sufficient funds will be available at the time
of the triggering of an event risk provision to make
any required repurchases;
(7) if the Debt Securities are to be subordinated to
other obligations of the Issuer or its subsidiaries
that would be accelerated upon the triggering of a
change in control, fundamental change or poison put
feature, the material effect thereof of a triggering
of the change in control, fundamental change or
poison put feature with respect to the Debt
Securities;
(8) if there is any anti-takeover device relating to the
Issuer's equity securities, any material effects
thereof on the Issuer's debt securities, including
the Debt Securities;
(9) to the extent that there is a definition of "Change
in Control" that includes the concept of "all or
substantially all," how such term will be quantified
or, in the alternative, the established meaning of
the phrase under the applicable governing law of the
Indenture will be provided. If an established
meaning for the phrase is not available, then
disclosure as to the effects of such an uncertainty
on the ability of a holder of the Debt Securities to
determine when a "Change of Control" has occurred
will be provided; and
(10) if applicable, the ramifications and limitations of
the "Change of Control" definition will be described
in a manner that clearly states whether the "Change
of Control" provisions will be triggered if a change
in control of the Board of Directors occurs as a
result of a proxy contest involving the solicitation
of revocable proxies.
The Debt Securities may provide for less than the entire principal
amount thereof to be payable upon declaration of acceleration of the maturity
thereof ("Original Issue Discount Securities"). Material federal income tax,
accounting and other considerations applicable to Original Issue Discount
Securities will be described in the applicable Prospectus Supplement.
Except as set forth in the applicable Indenture or in one or more
indentures supplemental thereto, the applicable Indenture will not contain any
provisions that would limit the ability of the Issuer to incur indebtedness or
that would afford Holders of Debt Securities protection in the event of a
highly leveraged or similar transaction involving the Issuer. However,
restrictions on ownership and transfers of the Company's Common Stock and
Preferred Stock, designed to preserve the Company's status as a REIT, may act
to prevent or hinder a change of control. See "Description of Preferred Stock
- -- Restrictions on Ownership" and "Description of Common Stock -- Restrictions
on Ownership." Reference is made to the applicable Prospectus Supplement for
information with respect to any deletions from, modifications of or additions
to the Events of Default or covenants of the Issuer that are described below,
including any addition of a covenant or other provision providing event risk or
similar protection.
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DENOMINATION, INTEREST, REGISTRATION AND TRANSFER
Unless otherwise described in the applicable Prospectus Supplement,
the Debt Securities of any series will be issuable in denominations of $1,000
and integral multiples thereof (Section 302).
Unless otherwise specified in the applicable Prospectus Supplement,
the principal of (and applicable premium, if any) and interest on any series of
Debt Securities will be payable at the corporate trust office of the Trustee,
the address of which will be stated in the applicable Prospectus Supplement;
provided that, at the option of the Issuer, payment of interest may be made by
check mailed to the address of the person entitled thereto as it appears in the
applicable register for such Debt Securities or by wire transfer of funds to
such person at an account maintained within the United States (Sections 301,
305, 306, 307 and 1002).
Any interest not punctually paid or duly provided for on any Interest
Payment Date with respect to a Debt Security ("Defaulted Interest") will
forthwith cease to be payable to the Holder on the applicable regular record
date and may either be paid to the person in whose name such Debt Security is
registered at the close of business on a special record date (the "Special
Record Date") for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to the Holder of such Debt Security not
less than ten days prior to such Special Record Date, or may be paid at any
time in any other lawful manner, all as more completely described in the
Indenture (Section 307).
Subject to certain limitations imposed upon Debt Securities issued in
book-entry form, the Debt Securities of any series will be exchangeable for
other Debt Securities of the same series and of a like aggregate principal
amount and tenor of different authorized denominations upon surrender of such
Debt Securities at the corporate trust office of the applicable Trustee
referred to above. In addition, subject to certain limitations imposed upon
Debt Securities issued in book-entry form, the Debt Securities of any series
may be surrendered for conversion or registration of transfer or exchange
thereof at the corporate trust office of the applicable Trustee. Every Debt
Security surrendered for conversion, registration of transfer or exchange must
be duly endorsed or accompanied by a written instrument of transfer. No
service charge will be made for any registration of transfer or exchange of any
Debt Securities, but the Issuer may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith. If
the applicable Prospectus Supplement refers to any transfer agent (in addition
to the applicable Trustee) initially designated by the Issuer with respect to
any series of Debt Securities, the Issuer may at any time rescind the
designation of any such transfer agent or approve a change in the location
through which any such transfer agent acts, except that the Issuer will be
required to maintain a transfer agent in each place of payment for such series.
The Issuer may at any time designate additional transfer agents with respect to
any series of Debt Securities (Section 1002).
Neither the Issuer nor any Trustee shall be required to (i) issue,
register the transfer of or exchange Debt Securities of any series during a
period beginning at the opening of business 15 days before any selection of
Debt Securities of that series to be redeemed and ending at the close of
business on the day of mailing of the relevant notice of redemption; (ii)
register the transfer of or exchange any Debt Security, or portion thereof,
called for redemption, except the unredeemed portion of any Debt Security being
redeemed in part; or (iii) issue, register the transfer of or exchange any Debt
Security that has been surrendered for repayment at the option of the Holder,
except the portion, if any, of such Debt Security not to be so repaid (Section
305).
MERGER, CONSOLIDATION OR SALE
The Issuer will be permitted to consolidate with, or sell, lease or
convey all or substantially all of its assets to, or merge with or into, any
other entity provided that (a) either the Issuer shall be the continuing
entity, or the successor entity (if other than the Issuer) formed by or
resulting from any such consolidation or merger or which shall have received
the transfer of such assets shall expressly assume payment of the principal of
(and premium, if any) and interest on all of the Debt Securities and the due
and punctual performance and observance of all of the covenants and conditions
contained in each Indenture; (b) immediately after giving effect to such
transaction and treating any indebtedness that becomes an obligation of the
Issuer or any Subsidiary as a result thereof as having been incurred by the
Issuer or such Subsidiary at the time of such transaction, no Event of Default
under the Indentures, and no event which, after notice or the lapse of time, or
both, would become such an Event of Default, shall have occurred and be
continuing; and (c) an officer's certificate of the Company, either in its own
capacity
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or in its capacity as sole general partner of the Operating Partnership, and
legal opinion covering such conditions shall be delivered to each Trustee
(Sections 801 and 803).
CERTAIN COVENANTS
Existence. Except as described above under "Merger, Consolidation or
Sale", the Issuer will be required to do or cause to be done all things
necessary to preserve and keep in full force and effect its existence, rights
(declaration and statutory) and franchises; provided, however, that the Issuer
shall not be required to preserve any right or franchise if it determines that
the preservation thereof is no longer desirable in the conduct of its business
and that the loss thereof is not disadvantageous in any material respect to the
Holders of the Debt Securities (Section 1006).
Maintenance of Properties. The Issuer will be required to cause all
of its material properties used or useful in the conduct of its business or the
business of any Subsidiary to be maintained and kept in good condition, repair
and working order and supplied with all necessary equipment and will cause to
be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in the judgment of the Issuer may be necessary so
that the business carried on in connection therewith may be properly and
advantageously conducted at all times; provided, however, that the issuer and
its Subsidiaries are not prevented from selling or disposing of for value its
or their properties in the ordinary course of business (Section 1007).
Insurance. The Issuer will be required to, and will be required to
cause each of its Subsidiaries to, keep all of its insurable properties insured
against loss or damage at least equal to their then full insurable value with
insurers of recognized responsibility and, if described in the applicable
Prospectus Supplement, having a specified rating from a recognized insurance
rating service (Section 1008).
Payment of Taxes and Other Claims. The Issuer will be required to pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all taxes, assessments and governmental charges levied or
imposed upon it or any Subsidiary or upon the income, profits or property of
the Issuer or any Subsidiary, and (ii) all lawful claims for labor, materials
and supplies which, if unpaid, might by law become a lien upon the property of
the Issuer or any Subsidiary; provided, however, that the Issuer shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings (Section 1009).
ADDITIONAL COVENANTS AND/OR MODIFICATIONS TO THE COVENANTS DESCRIBED ABOVE
Any additional covenants of the Issuer and/or modifications to the
covenants described above with respect to any Debt Securities or series
thereof, including any covenants relating to limitations on incurrence of
indebtedness or other financial covenants, will be set forth in the applicable
Indenture or an indenture supplemental thereto and described in the Prospectus
Supplement relating thereto.
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture will provide that the following events are "Events of
Default" with respect to any series of Debt Securities issued thereunder: (i)
default for 30 days in the payment of any installment of interest on any Debt
Security of such series; (ii) default in the payment of principal of (or
premium, if any, on) any Debt Security of such series at its maturity; (iii)
default in making any sinking fund payment as required for any Debt Security of
such series; (iv) default in the performance or breach of any other covenant or
warranty of the Issuer contained in the applicable Indenture (other than a
covenant added to the Indenture solely for the benefit of a series of Debt
Securities issued thereunder other than such series), continued for 60 days
after written notice as provided in the applicable Indenture; (v) default in
the payment of an aggregate principal amount exceeding $10,000,000 of any
indebtedness of the Issuer or any mortgage, indenture or other instrument under
which such indebtedness is issued or by which such indebtedness is secured,
such default having occurred after the expiration of any applicable grace
period and having resulted in the acceleration of the maturity of such
indebtedness, but only if such indebtedness is not discharged or such
acceleration is not rescinded or annulled; (vi) certain events of bankruptcy,
insolvency or reorganization, or court appointment of a receiver, liquidator or
trustee of the Issuer or any
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Significant Subsidiary or either of its property; and (vii) any other Event of
Default provided with respect to a particular series of Debt Securities
(Section 501).
If an Event of Default under any Indenture with respect to Debt
Securities of any series at the time outstanding occurs and is continuing, then
in every such case the applicable Trustee or the Holders of not less than 25%
of the principal amount of the Outstanding Debt Securities of that series will
have the right to declare the principal amount (or, if the Debt Securities of
that series are Original Issue Discount Securities or indexed securities, such
portion of the principal amount as may be specified in the terms thereof) of
all the Debt Securities of that series to be due and payable immediately by
written notice thereof to the Issuer (and to the applicable Trustee if given by
the Holders); provided, however, that in the case of an Event of Default
described under clause (vi) of the preceding paragraph, acceleration is
automatic. However, at any time after such a declaration of acceleration with
respect to Debt Securities of such series (or of all Debt Securities then
Outstanding under any Indenture, as the case may be) has been made, but before
a judgment or decree for payment of the money due has been obtained by the
applicable Trustee, the Holders of not less than a majority in principal amount
of Outstanding Debt Securities of such series (or of all Debt Securities then
Outstanding under the applicable Indenture, as the case may be) may rescind and
annul such declaration and its consequences if (a) the Issuer shall have
deposited with the applicable Trustee all required payments of the principal of
(and premium, if any) and interest on the Debt Securities of such series (or of
all Debt Securities then Outstanding under the applicable Indenture, as the
case may be), plus certain fees, expenses, disbursements and advances of the
applicable Trustee and (b) all events of default, other than the non-payment of
accelerated principal (or specified portion thereof), with respect to Debt
Securities of such series (or of all Debt Securities then Outstanding under the
applicable Indenture, as the case may be) have been cured or waived as provided
in such Indenture (Section 502). Each Indenture also will provide that the
Holders of not less than a majority in principal amount of the Outstanding Debt
Securities of any series (or of all Debt Securities then Outstanding under the
applicable Indenture, as the case may be) may waive any past default with
respect to such series and its consequences, except a default (x) in the
payment of the principal of (or premium, if any) or interest on any Debt
Security of such series or (y) in respect of a covenant or provision contained
in the applicable Indenture that cannot be modified or amended without the
consent of the Holder of each Outstanding Debt Security affected thereby
(Section 513).
Each Trustee will be required to give notice to the Holders of Debt
Securities within 90 days of a default under the applicable Indenture unless
such default shall have been cured or waived; provided, however, that such
Trustee may withhold notice to the Holders of any series of Debt Securities of
any default with respect to such series (except a default in the payment of the
principal of (or premium, if any) or interest on any Debt Security of such
series or in the payment of any sinking fund installment in respect of any Debt
Security of such series) if specified responsible officers of such Trustee
consider such withholding to be in the interest of such Holders (Section 601).
Each Indenture will provide that no Holders of Debt Securities of any
series may institute any proceedings, judicial or otherwise, with respect to
such Indenture or for any remedy thereunder, except in the case of failure of
the applicable Trustee, for 60 days, to act after it has received a written
request to institute proceedings in respect of an Event of Default from the
Holders of not less than 25% in principal amount of the Outstanding Debt
Securities of such series, as well as an offer of indemnity reasonably
satisfactory to it (Section 507). This provision will not prevent, however,
any Holder of Debt Securities from instituting suit for the enforcement of
payment of the principal of (and premium, if any) and interest on such Debt
Securities at the respective due dates thereof (Section 508).
Subject to provisions in each Indenture relating to its duties in case
of default, no Trustee will be under any obligation to exercise any of its
rights or powers under an Indenture at the request or direction of any Holders
of any series of Debt Securities then Outstanding under such Indenture, unless
such Holders shall have offered to the Trustee thereunder reasonable security
or indemnity (Section 602). The Holders of not less than a majority in
principal amount of the Outstanding Debt Securities of any series (or of all
Debt Securities then Outstanding under an Indenture, as the case may be) shall
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the applicable Trustee, or of exercising
any trust or power conferred upon such Trustee. However, a Trustee may refuse
to follow any direction which is in conflict with any law or the applicable
Indenture, which may subject such Trustee to personal liability or which may be
unduly prejudicial to the Holders of Debt Securities of such series not joining
therein (Section 512).
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19
Within 120 days after the close of each fiscal year, the Issuer will
be required to deliver to each Trustee a certificate, signed by one of several
specified officers of the Company, either in its own capacity or in its
capacity as sole general partner of the Operating Partnership, stating whether
or not such officer has knowledge of any default under the applicable Indenture
and, if so, specifying each such default and the nature and status thereof
(Section 1013).
MODIFICATION OF THE INDENTURES
Modifications and amendments of an Indenture will be permitted to be
made only with the consent of the Holders of not less than a majority in
principal amount of all Outstanding Debt Securities issued under such Indenture
which are affected by such modification or amendment; provided, however, that
no such modification or amendment may, without the consent of the Holder of
each such Debt Security affected thereby, (a) change the stated maturity of the
principal of, or any installment of interest (or premium, if any) on, any such
Debt Security; (b) reduce the principal amount of, or the rate or amount of
interest on, or any premium payable on redemption of, any such Debt Security,
or reduce the amount of principal of an Original Issue Discount Security that
would be due and payable upon declaration of acceleration of the maturity
thereof or would be provable in bankruptcy, or adversely affect any right of
repayment of the Holder of any such Debt Security; (c) change the place of
payment, or the coin or currency, for payment of principal or premium, if any,
or interest on any such Debt Security; (d) impair the right to institute suit
for the enforcement of any payment on or with respect to any such Debt
Security; (e) reduce the above-stated percentage of Outstanding Debt Securities
of any series necessary to modify or amend the applicable Indenture, to waive
compliance with certain provisions thereof or certain defaults and consequences
thereunder or to reduce the quorum or voting requirements set forth in the
applicable Indenture; or (f) modify any of the foregoing provisions or any of
the provisions relating to the waiver of certain past defaults or certain
covenants, except to increase the required percentage to effect such action or
to provide that certain other provisions may not be modified or waived without
the consent of the Holder of such Debt Security (Section 902).
The Holders of not less than a majority in principal amount of
Outstanding Debt Securities of each series affected thereby will have the right
to waive compliance by the Issuer with certain covenants in such Indenture
(Section 1013).
Modifications and amendments of an Indenture will be permitted to be
made by the Issuer and the respective Trustee thereunder without the consent of
any Holder of Debt Securities for any of the following purposes: (i) to
evidence the succession of another person to the Issuer as obligor under such
Indenture; (ii) to add to the covenants of the Issuer for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Issuer in the Indenture; (iii) to add Events of
Default for the benefit of the Holders of all or any series of Debt Securities;
(iv) to add or change any provisions of an Indenture to facilitate the issuance
of, or to liberalize certain terms of, Debt Securities in bearer form, or to
permit or facilitate the issuance of Debt Securities in uncertificated form,
provided that such action shall not adversely affect the interests of the
Holders of the Debt Securities of any series in any material respect; (v) to
change or eliminate any provisions of an Indenture, provided that any such
change or elimination shall become effective only when there are no Debt
Securities Outstanding of any series created prior thereto which are entitled
to the benefit of such provision; (vi) to secure the Debt Securities; (vii) to
establish the form or terms of Debt Securities of any series, including the
provisions and procedures, if applicable, for the conversion of such Debt
Securities into Common Stock or Preferred Stock; (viii) to provide for the
acceptance of appointment by a successor Trustee or facilitate the
administration of the trusts under an Indenture by more than one Trustee; (ix)
to cure any ambiguity, defect or inconsistency in an Indenture, provided that
such action shall not adversely effect the interests of Holders of Debt
Securities of any series issued under such Indenture in any material respect;
or (x) to supplement any of the provisions of an Indenture to the extent
necessary to permit or facilitate defeasance and discharge of any series of
such Debt Securities, provided that such action shall not adversely effect the
interests of the Holders of the Debt Securities of any series in any material
respect (Section 901).
Each Indenture will provide that in determining whether the Holders of
the requisite principal amount of Outstanding Debt Securities of a series have
given any request, demand, authorization, direction, notice, consent or waiver
thereunder or whether a quorum is present at a meeting of Holders of Debt
Securities, (i) the principal amount of an Original Issue Discount Security
that shall be deemed to be Outstanding shall be the amount of the principal
thereof that would be due and payable as of the date of
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20
such determination upon declaration of acceleration of the maturity thereof,
(ii) the principal amount of any Debt Security denominated in a foreign
currency that shall be deemed Outstanding shall be the U.S. dollar equivalent,
determined on the issue date for such Debt Security, of the principal amount
(or, in the case of Original Issue Discount Security, the U.S. dollar
equivalent on the issue date of such Debt Security of the amount determined as
provided in (i) above), (iii) the principal amount of an indexed security that
shall be deemed Outstanding shall be the principal face amount of such indexed
security pursuant to the applicable Indenture, and (iv) Debt Securities owned
by the Issuer or any other obligor upon the Debt Securities or any affiliate of
the Issuer or of such other obligor shall be disregarded.
Each Indenture will contain provisions for convening meetings of the
Holders of Debt Securities of a series (Section 1501). A meeting will be
permitted to be called at any time by the applicable Trustee, and also, upon
request, by the Issuer or the Holders of at least 10% in principal amount of
the Outstanding Debt Securities of such series, in any such case upon notice
given as provided in the Indenture. Except for any consent that must be given
by the Holder of each Debt Security affected by certain modifications and
amendments of an Indenture, any resolution presented at a meeting or adjourned
meeting duly reconvened at which a quorum is present may be adopted by the
affirmative vote of the Holders of a majority in the principal amount of the
Outstanding Debt Securities of that series; provided, however, that, except as
referred to above, any resolution with respect to any request, demand,
authorization, direction, notice, consent, waiver or other action that may be
made, given or taken by the Holders of a specified percentage, which is less
than a majority, in principal amount of the Outstanding Debt Securities of a
series may be adopted at a meeting or adjourned meeting or at which a quorum is
present by the affirmative vote of the Holders of such specified percentage in
principal amount of the Outstanding Debt Securities of that series. Any
resolution passed or decision taken at any meeting of Holders of Debt
Securities of any series duly held in accordance with an Indenture will be
binding on all Holders of Debt Securities of that series. The quorum at any
meeting called to adopt a resolution, and at any reconvened meeting, will be
persons holding or representing a majority in principal amount of the
Outstanding Debt Securities of a series; provided, however, that if any action
is to be taken at such meeting with respect to a consent or waiver which may be
given by the Holders of not less than a specified percentage in principal
amount of the Outstanding Debt Securities of a series, the persons holding or
representing such specified percentage in principal amount of the Outstanding
Debt Securities of such series will constitute a quorum.
Notwithstanding the foregoing provisions, each Indenture will provide
that if any action is to be taken at a meeting of Holders of Debt Securities of
any series with respect to any request, demand, authorization, direction,
notice, consent, waiver and other action that such Indenture expressly provides
may be made, given or taken by the Holders of a specified percentage in
principal amount of all Outstanding Debt Securities affected thereby, or the
Holders of such series and one or more additional series: (i) there shall be no
minimum quorum requirement for such meeting, and (ii) the principal amount of
the Outstanding Debt Securities of such series that vote in favor of such
request, demand, authorization, direction, notice, consent, waiver or other
action shall be taken into account in determining whether such request, demand,
authorization, direction, notice, consent, waiver or other action has been
made, given or taken under such Indenture.
SUBORDINATION
Upon any distribution to creditors of the Issuer in a liquidation,
dissolution or reorganization, the payment of the principal of and interest on
any Subordinated Securities will be subordinated to the extent provided in the
applicable Indenture in right of payment to the prior payment in full of all
Senior Debt (Sections 1601 and 1602 of the Subordinated Indenture), but the
obligation of the Issuer to make payment of the principal and interest on such
Subordinated Securities will not otherwise be affected (Section 1608 of the
Subordinated Indenture). No payment of principal or interest will be permitted
to be made on Subordinated Securities at any time if a default on Senior Debt
exists that permits the Holders of such Senior Debt to accelerate its maturity
and the default is the subject of judicial proceedings or the Issuer receives
notice of the default (Section 1602 of the Subordinated Indenture). After all
Senior Debt is paid in full and until the Subordinated Securities are paid in
full, Holders will be subrogated to the right of Holders of Senior Debt to the
extent that distributions otherwise payable to Holders have been applied to the
payment of Senior Debt (Section 1607 of the Subordinated Indenture). By reason
of such subordination, in the event of a distribution of assets upon
insolvency, certain general creditors of the Issuer may recover more, ratably,
than Holders of Subordinated Securities.
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Senior Debt will be defined in the Subordinated Indenture as the
principal of and interest on, or substantially similar payments to be made by
the Issuer in respect of, the following; whether outstanding at the date of
execution of the applicable Indenture or thereafter incurred, created or
assumed: (i) indebtedness of the Issuer for money borrowed or represented by
purchase money obligations, (ii) indebtedness of the Issuer evidenced by notes,
debentures, or bonds or other securities issued under the provisions of an
indenture, fiscal agency agreement or other agreement, (iii) obligations of the
Issuer as lessee under leases of property either made as part of any sale and
leaseback transaction to which the Issuer is a party or otherwise, (iv)
indebtedness, obligations and liabilities of others in respect of which the
Issuer is liable contingently or otherwise to pay or advance money or property
or as guarantor, endorser or otherwise or which the Issuer has agreed to
purchase or otherwise acquire, and (v) any binding commitment of the Issuer to
fund any real estate investment or to fund any investment in any entity making
such real estate investment, in each case other than (1) any such indebtedness,
obligation or liability referred to in clauses (i) through (v) above as to
which, in the instrument creating or evidencing the same pursuant to which the
same is outstanding, it is provided that such indebtedness, obligation or
liability is not superior in right of payment to the Subordinated Securities or
ranks pari passu with the Subordinated Securities, (2) any such indebtedness,
obligation or liability which is subordinated to indebtedness of the Issuer to
substantially the same extent as or to a greater extent than the Subordinated
Securities are subordinated, and (3) the Subordinated Securities.
If this Prospectus is being delivered in connection with a series of
Subordinated Securities, the accompanying Prospectus Supplement or the
information incorporated herein by reference will contain the approximate
amount of Senior Debt outstanding as of the end of the Issuer's most recent
fiscal quarter.
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Issuer may be permitted under the applicable Indenture to
discharge certain obligations to Holders of any series of Debt Securities
issued thereunder that have not already been delivered to the applicable
Trustee for cancellation and that either have become due and payable or will
become due and payable within one year (or scheduled for redemption within one
year) by irrevocably depositing with the applicable Trustee, in trust, funds in
such currency or currencies, currency unit or units or composite currency or
currencies in which such Debt Securities are payable in an amount sufficient to
pay the entire indebtedness on such Debt Securities in respect of principal
(and premium, if any) and interest to the date of such deposit (if such Debt
Securities have become due and payable) or to the stated maturity or redemption
date, as the case may be.
Each Indenture will provide that, if the provisions of Article
Fourteen are made applicable to the Debt Securities of or within any series
pursuant to Section 301 of such Indenture, the Issuer may elect either (a) to
defease and be discharged from any and all obligations with respect to such
Debt Securities (except for the obligation to pay additional amounts, if any,
upon the occurrence of certain events of tax, assessment or governmental charge
with respect to payments on such Debt Securities, and the obligations to
register the transfer or exchange of such Debt Securities, to replace temporary
or mutilated, destroyed, lost or stolen Debt Securities, to maintain an office
or agency in respect of such Debt Securities and to hold moneys for payment in
trust) ("defeasance") (Section 1402) or (b) to be released from its obligations
with respect to such Debt Securities under certain specified sections of
Article Ten of such Indenture as specified in the applicable Prospectus
Supplement and any omission to comply with such obligations shall not
constitute an Event of Default with respect to such Debt Securities ("covenant
defeasance") (Section 1403), in either case upon the irrevocable deposit by the
Issuer with the applicable Trustee, in trust, of an amount, in such currency or
currencies, currency unit or units or composite currency or currencies in which
such Debt Securities are payable at stated maturity, or Government Obligations
(as defined below), or both, applicable to such Debt Securities which through
the scheduled payment of principal and interest in accordance with their terms
will provide money in an amount sufficient without reinvestment to pay the
principal of (and premium, if any) and interest on such Debt Securities, and
any mandatory sinking fund or analogous payments thereon, on the scheduled due
dates therefor.
Such a trust will only be permitted to be established if, among other
things, the Issuer has delivered to the applicable Trustee an opinion of
counsel (as specified in the applicable Indenture) to the effect that the
Holders of such Debt Securities will not recognize income, gain or loss for
federal income tax purposes as a result of such defeasance or covenant
defeasance and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case if such
defeasance or
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covenant defeasance had not occurred, and such opinion of counsel, in the case
of defeasance, will be required to refer to and be based upon a ruling of the
Internal Revenue Service or a change in applicable U.S. federal income tax law
occurring after the date of the Indenture (Section 1404).
"Government Obligations" means securities which are (i) direct
obligations of the United States of America or the government which issued the
foreign currency in which the Debt Securities of a particular series are
payable, for the payment of which its full faith and credit is pledged or (ii)
obligations of a person controlled or supervised by and acting as an agency or
instrumentality of the United States of America or such government which issued
the foreign currency in which the Debt Securities of such series are payable,
the timely payment of which is unconditionally guaranteed as a full faith and
credit obligation of the United States of America or such government, which, in
either case, are not callable or redeemable at the option of the issuer
thereof, and shall also include a depository receipt issued by a bank or trust
company as custodian with respect to any such Government Obligation or a
specific payment of interest on or principal of any such Government Obligation
held by such custodian for the account of the Holder of a depository receipt,
provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the Holder of such depository
receipt from any amount received by the custodian in respect of the Government
Obligation or the specific payment of interest on or principal of the
Government Obligation evidenced by such depository receipt (Section 101 of each
Indenture).
Unless otherwise provided in the applicable Prospectus Supplement, if
after the Issuer has deposited funds and/or Government Obligations to effect
defeasance or covenant defeasance with respect to Debt Securities of any
series, (a) the Holder of a Debt Security of such series is entitled to, and
does, elect pursuant to the applicable Indenture or the terms of such Debt
Security to receive payment in a currency, currency unit or composite currency
other than that in which such deposit has been made in respect of such Debt
Security, or (b) a Conversion Event (as defined below) occurs in respect of the
currency, currency unit or composite currency in which such deposit has been
made, the indebtedness represented by such Debt Security will be deemed to have
been, and will be, fully discharged and satisfied through the payment of the
principal of (and premium, if any) and interest on such Debt Security as they
become due out of the proceeds yielded by converting the amount so deposited in
respect of such Debt Security into the currency, currency unit or composite
currency in which such Debt Security becomes payable as a result of such
election or such cessation of usage based on the applicable market exchange
rate. "Conversion Event" means the cessation of use of (i) a currency,
currency unit or composite currency both by the government of the country which
issued such currency and for the settlement of transactions by a central bank
or other public institutions of or within the international banking community,
(ii) the ECU both within the European Monetary System and for the settlement of
transactions by public institutions of or within the European Communities or
(iii) any currency unit or composite currency other than the ECU for the
purposes for which it was established. Unless otherwise provided in the
applicable Prospectus Supplement, all payments of principal of (and premium, if
any) and interest on any Debt Security that is payable in a foreign currency
that ceases to be used by its government of issuance shall be made in U.S.
dollars.
In the event the Issuer effects covenant defeasance with respect to
any Debt Securities and such Debt Securities are declared due and payable
because of the occurrence of any Event of Default other than the Event of
Default described in clause (iv) under "Events of Default, Notice and Waiver"
with respect to certain specified sections of Article Ten of each Indenture
(which sections would no longer be applicable to such Debt Securities as a
result of such covenant defeasance) or described in clause (vii) under "Events
of Default, Notice and Waiver" with respect to any other covenant as to which
there has been covenant defeasance, the amount in such currency, currency unit
or composite currency in which such Debt Securities are payable, and Government
Obligations on deposit with the applicable Trustee, will be sufficient to pay
amounts due on such Debt Securities at the time of their stated maturity but
may not be sufficient to pay amounts due on such Debt Securities at the time of
the acceleration resulting from such Default. However, the Issuer would remain
liable to make payment of such amounts due at the time of acceleration.
The applicable Prospectus Supplement may further describe the
provisions, if any, permitting such defeasance or covenant defeasance,
including any modifications to the provisions described above, with respect to
the Debt Securities of or within a particular series.
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REDEMPTION OF SECURITIES
The Indenture provides that the Debt Securities may be redeemed at any
time at the option of the Issuer, in whole or in part, at the Redemption Price,
except as may otherwise be provided in connection with any Debt Securities or
series thereof.
From and after notice has been given as provided in the Indenture, if
funds for the redemption of any Debt Securities called for redemption shall
have been made available on such redemption date, such Debt Securities will
cease to bear interest on the date fixed for such redemption specified in such
notice, and the only right of the Holders of the Debt Securities will be to
receive payment of the Redemption Price.
Notice of any optional redemption of any Debt Securities will be given
to Holders at their addresses, as shown in the Security Register, not more than
60 nor less than 30 days prior to the date fixed for redemption. The notice of
redemption will specify, among other items, the Redemption Price and the
principal amount of the Debt Securities held by such Holder to be redeemed.
If the Issuer elects to redeem Debt Securities, it will notify the
Trustee at least 45 days prior to the redemption date (or such shorter period
as satisfactory to the Trustee) of the aggregate principal amount of Debt
Securities to be redeemed and the redemption date. If less than all the Debt
Securities are to be redeemed, the Trustee shall select the Debt Securities to
be redeemed pro rata, by lot or in such manner as it shall deem fair and
appropriate.
GLOBAL SECURITIES
The Debt Securities of a series may be issued in whole or in part in
the form of one or more global securities (the "Global Securities") that will
be deposited with, or on behalf of, a depository identified in the applicable
Prospectus Supplement relating to such series. Global Securities may be issued
in either registered or bearer form and in either temporary or permanent form.
The specific terms of the depository arrangement with respect to a series of
Debt Securities, including the terms under which the depository may take any
action permitted to be taken by an owner or holder of the Debt Securities, will
be described in the applicable Prospectus Supplement relating to such series.
DESCRIPTION OF COMMON STOCK
The Company has the authority to issue 100,000,000 shares of capital
stock, of which 90,000,000 are Common Stock, par value $0.01 per share, and
10,000,000 are Preferred Stock, par value $0.01 per share. As of September 1,
1996, the Company had outstanding 15,127,092 shares of Common Stock and no
shares of Preferred Stock.
The following description of the Common Stock sets forth certain
general terms and provisions of the Common Stock to which any Prospectus
Supplement may relate, including a Prospectus Supplement providing that Common
Stock will be issuable upon conversion of Preferred Stock of the Company or
upon the exercise of the Securities Warrants issued by the Company. The
statements below describing the Common Stock are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of the
Company's Amended Articles of Incorporation (the "Articles") and Bylaws.
GENERAL
Holders of the Company's Common Stock will be entitled to receive
dividends when, as and if declared by the Board of Directors of the Company,
out of funds legally available therefor. Payment and declaration of dividends
on the Common Stock and purchases of shares thereof by the Company will be
subject to certain restrictions if the Company fails to pay dividends on the
Preferred Stock. See "Description of Preferred Stock." Upon any liquidation,
dissolution or winding up of the Company, holders of Common Stock will be
entitled to share equally and ratably in any assets available for distribution
to them, after payment or provision for payment of the debts and other
liabilities of the Company and the preferential amounts owing with respect to
any outstanding Preferred Stock or senior debt securities. The Common Stock
will possess ordinary voting rights for the election of directors and in
respect of other
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24
corporate matters, each share entitling the holder thereof to one vote.
Holders of Common Stock will not have cumulative voting rights in the election
of directors. Upon receipt by the Company of lawful payment therefor, the
Common Stock will, when issued, be fully paid and nonassessable, and will not
be subject to redemption except (as described in the Articles) as necessary to
preserve the Company's status as a REIT. A stockholder of the Company has no
preemptive rights to subscribe for additional shares of Common Stock or other
securities of the Company except as may be granted by the Board of Directors.
RESTRICTIONS ON OWNERSHIP
For the Company to qualify as a REIT under the Code, the Common Stock
must be beneficially owned by 100 or more persons during at least 335 days of a
taxable year of 12 months (other than the first year) or during a proportionate
part of a shorter taxable year. Also, not more than 50% of the value of the
issued and outstanding shares of capital stock may be owned, directly or
indirectly, by five or fewer individuals (as defined in the Code to include
certain entities such as qualified private pension plans) during the last half
of a taxable year (other than the first year) or during a proportionate part of
a shorter taxable year.
Because the Board of Directors believes it is essential for the
Company to continue to qualify as a REIT, the charter, subject to certain
exceptions, provides that no holder may own, or be deemed to own by virtue of
the attribution provisions of the Code, more than 9.8% (the "Ownership Limit")
of the value of the issued and outstanding shares of the Company's stock. The
Board of Directors may exempt a person from the Ownership Limit if evidence
satisfactory to the Board of Directors and the Company's tax counsel is
presented that the proposed transfer of stock to the intended transferee will
not then or in the future jeopardize the Company's status as a REIT. As a
condition of such exemption, the intended transferee must give written notice
to the Company of the proposed transfer and must furnish such opinions of
counsel, affidavits, undertakings, agreements, and information as may be
required by the Board of Directors no later than the fifteenth day prior to any
transfer which, if consummated, would result in the intended transferee owning
shares in excess of the Ownership Limit. The foregoing restrictions on
transferability and ownership will not apply if the Board of Directors
determines that it is no longer in the best interests of the Company to attempt
to qualify or to continue to qualify as a REIT. Any transfer of shares of
Common Stock that would: (i) create a direct or indirect ownership of shares of
stock in excess of the Ownership Limit; (ii) result in the shares of stock
being owned by fewer than 100 persons; or (iii) result in the Company being
"closely held" within the meaning of Section 856(h) of the Code, shall be null
and void, and the intended transferee will acquire no rights to the shares.
The Company's charter excludes the Principals and any brother, sister,
spouse, ancestor, or lineal descendant of a Principal from the Ownership Limit.
These persons may acquire additional shares of stock through the redemption of
OP Units, through the Stock Option Plan, from other stockholders or otherwise,
but in no event will they be entitled to acquire additional shares such that
the five largest beneficial owners of the Company's stock hold more than 50% of
the total outstanding stock.
Shares purported to be transferred in excess of the Ownership Limit
that are not otherwise permitted as provided above will constitute excess
shares ("Excess Shares"), which will be transferred by operation of law to the
Company as trustee for the exclusive benefit of the person or persons to whom
the Excess Shares are ultimately transferred, until such time as the intended
transferee retransfers the Excess Shares. While these Excess Shares are held
in trust, they will not be entitled to vote or to share in any dividends or
other distributions. Subject to the Ownership Limit, the Excess Shares may be
retransferred by the intended transferee to any person who may hold such Excess
Shares at a price not to exceed the price paid by the intended transferee, at
which point the Excess Shares will automatically be exchanged for the stock to
which the Excess Shares are attributable. In addition, such Excess Shares held
in trust are subject to purchase by the Company. The purchase price of any
Excess Shares shall be equal to the lesser of the price paid for the stock by
the intended transferee and the fair market value of such shares of stock
reflected in the closing sales price for the shares of stock, if then listed on
a national securities exchange, or such price for the shares of stock on the
principal exchange if then listed on more than one national securities
exchange, or, if the shares of stock are not then listed on a national
securities exchange, the latest bid quotation for the shares of stock if then
traded over-the-counter, or, if such quotation is not available, the fair
market value as determined by the Board of Directors in good faith, on the last
trading day immediately preceding the day on which notice of such proposed
purchase is sent by the Company. From and after the intended transfer to the
intended transferee of the Excess Shares, the intended transferee shall
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25
cease to be entitled to distributions, voting rights, and other benefits with
respect to such shares of the stock except the right to payment of the purchase
price for the shares of stock or the transfer of shares as provided above. Any
dividend or distribution paid to a proposed transferee on Excess Shares prior
to the discovery by the Company that such shares of stock have been transferred
in violation of the provisions of the Company's charter shall be repaid to the
Company upon demand. If the foregoing transfer restrictions are determined to
be void or invalid by virtue of any legal decision, statute, rule, or
regulation, then the intended transferee of any Excess Shares may be deemed, at
the option of the Company, to have acted as an agent on behalf of the Company
in acquiring such Excess Shares and to hold such Excess Shares on behalf of the
Company.
All certificates representing shares of stock will bear a legend
referring to the restrictions described above.
All persons who own, directly or by virtue of the attribution provisions
of the Code, more than 5% of the value of the outstanding shares of stock of
the Company must give a written notice to the Company containing the
information specified in the Company's charter by January 31 of each year. In
addition, each stockholder shall upon demand be required to disclose to the
Company in writing such information with respect to the direct, indirect and
constructive ownership of shares of Common Stock as the Board of Directors
deems necessary to comply with the provisions of the Code applicable to a REIT,
to comply with the requirements of any taxing authority or governmental agency
or to determine any such compliance.
These ownership limitations could have the effect of discouraging a
takeover or other transaction in which holders of some, or a majority of,
shares of Common Stock might receive a premium for their shares over the then
prevailing market price or which such holders might believe to be otherwise in
their best interest.
The registrar and transfer agent for the Common Stock is State Street
Bank and Trust Company.
DESCRIPTION OF PREFERRED STOCK
The following description of the terms of the Preferred Stock sets
forth certain general terms and provisions of the Preferred Stock to which any
Prospectus Supplement may relate. Certain other terms of any series of the
Preferred Stock offered by any Prospectus Supplement will be described in such
Prospectus Supplement. The description of certain provisions of the Preferred
Stock set forth below and in any Prospectus Supplement does not purport to be
complete and is subject to and qualified in its entirety by reference to the
Company's Articles (including the Articles Supplementary relating to each
series of the Preferred Stock) which will be filed with the Commission and
incorporated by reference as an exhibit to the Registration Statement of which
this Prospectus is a part at or prior to the time of the issuance of such
series of the Preferred Stock.
GENERAL
The Company is authorized to issue 10,000,000 shares of preferred
stock, par value $0.01 per share, of which no shares of Preferred Stock were
outstanding as of September 1, 1996.
Under the Company's Articles, the Board of Directors (without further
stockholder action) may from time to time establish and issue one or more
series of Preferred Stock with such designations, powers, preferences or rights
of the shares of such series and the qualifications, limitations or
restrictions thereon.
The Preferred Stock shall have the dividend, liquidation, redemption
and voting rights set forth below unless otherwise provided in a Prospectus
Supplement relating to a particular series of the Preferred Stock. Reference
is made to the Prospectus Supplement relating to the particular series of the
Preferred Stock offered thereby for specific terms, including: (i) the
designation and stated value per share of such Preferred Stock and the number
of shares offered; (ii) the amount of liquidation preference per share; (iii)
the initial public offering price at which such Preferred Stock will be issued;
(iv) the dividend rate (or method of calculation), the dates on which dividends
shall be payable and the dates from which dividends shall commence to
accumulate, if any; (v) any redemption or sinking fund provisions; (vi) any
conversion
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26
rights; and (vii) any additional voting, dividend, liquidation, redemption,
sinking fund and other rights, preferences, privileges, limitations and
restrictions. The Preferred Stock will, when issued for lawful consideration,
be fully paid and nonassessable and will have no preemptive rights.
RANK
Unless otherwise specified in the Prospectus Supplement, the Preferred
Stock will, with respect to dividend rights and rights upon liquidation,
dissolution or winding up of the Company, rank (i) senior to all classes or
series of Common Stock and to all equity securities ranking junior to such
Preferred Stock; (ii) on a parity with all equity securities issued by the
Company the terms of which specifically provide that such equity securities
rank on a parity with the Preferred Stock; and (iii) junior to all equity
securities issued by the Company the terms of which specifically provide that
such equity securities rank senior to the Preferred Stock. As used in the
Articles for these purposes, the term "equity securities" does not include
convertible debt securities. The rights of the holders of each series of the
Preferred Stock will be subordinate to those of the Company's general
creditors.
DIVIDENDS
Holders of shares of Preferred Stock of each series shall be entitled
to receive, when, as and if declared by the Board of Directors of the Company,
out of assets of the Company legally available for payment, cash dividends at
such rates and on such dates as will be set forth in the applicable Prospectus
Supplement. Such rate may be fixed or variable or both. Each such dividend
shall be payable to holders of record as they appear on the stock transfer
books of the Company on such record dates as shall be fixed by the Board of
Directors of the Company, as specified in the Prospectus Supplement relating to
such series of Preferred Stock.
Dividends on any series of Preferred Stock may be cumulative or
non-cumulative, as provided in the applicable Prospectus Supplement.
Dividends, if cumulative, will be cumulative from and after the date set forth
in the applicable Prospectus Supplement. If the Board of Directors of the
Company fails to declare a dividend payable on a dividend payment date on any
series of Preferred Stock for which dividends are noncumulative, then the
holders of such series of Preferred Stock will have no right to receive a
dividend in respect of the dividend period ending on such dividend payment
date, and the Company will have no obligation to pay the dividend accrued for
such period, whether or not dividends on such series are declared payable on
any future dividend payment date. Dividends on shares of each series of
Preferred Stock for which dividends are cumulative will accrue from the date on
which the Company initially issues shares of such series.
So long as the shares of any series of Preferred Stock shall be
outstanding, the Company may not declare or pay any dividends, make a
distribution, or purchase, acquire, redeem, pay monies to the holders of in
respect of, or set aside or make funds available for a sinking or other
analogous fund for the purchase or redemption of, any shares of Common Stock of
the Company or any other stock of the Company ranking as to dividends or
distributions of assets junior to such series of Preferred Stock (the Common
Stock and any such other stock being herein referred to as "Junior Stock"),
whether in cash or property or in obligations or stock of the Company, other
than Junior Stock which is neither convertible into, nor exchangeable or
exercisable for, any securities of the Company other than Junior Stock, unless
(i) full dividends (including if such Preferred Stock is cumulative, dividends
for prior dividend periods) shall have been paid or declared and set apart for
payment on all outstanding shares of the Preferred Stock of such series and all
other classes and series of Preferred Stock of the Company (other than Junior
Stock, as defined below); and (ii) all sinking or other analogous fund payments
and amounts for the repurchase or other mandatory retirement of any shares of
Preferred Stock of such series or any shares of any other Preferred Stock of
the Company of any class or series (other than Junior Stock) have been paid or
duly provided for.
Any dividend payment made on shares of a series of Preferred Stock
shall first be credited against the earliest accrued but unpaid dividend due
with respect to shares of such series which remains payable.
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27
REDEMPTION
A series of Preferred Stock may be redeemable, in whole or from time
to time in part, at the option of the Company, and may be subject to mandatory
redemption pursuant to a sinking fund or otherwise, in each case upon terms, at
the times and at the redemption prices set forth in the Prospectus Supplement
relating to such series. Shares of the Preferred Stock redeemed by the Company
will be restored to the status of authorized but unissued shares of Preferred
Stock.
The Prospectus Supplement relating to a series of Preferred Stock that
is subject to mandatory redemption will specify the number of shares of such
Preferred Stock that shall be redeemed by the Company in each year commencing
after a date to be specified, at a redemption price per share to be specified,
together with an amount equal to all accrued and unpaid dividends thereon
(which shall not, if such Preferred Stock does not have a cumulative dividend,
include any accumulation in respect of unpaid dividends for prior dividend
periods) to the date of redemption. The redemption price may be payable in
cash or other property, as specified in the applicable Prospectus Supplement.
If the redemption price for Preferred Stock of any series is payable only from
the net proceeds of the issuance of capital stock of the Company, the terms of
such Preferred Stock may provide that, if no such capital stock shall have been
issued or to the extent the net proceeds from any issuance are insufficient to
pay in full the aggregate redemption price then due, such Preferred Stock shall
automatically and mandatorily be converted into shares of the applicable
capital stock of the Company pursuant to conversion provisions specified in the
applicable Prospectus Supplement.
So long as any dividends on shares of any series of the Preferred
Stock or any other series of preferred stock of the Company ranking on a parity
as to dividends and distribution of assets with such series of the Preferred
Stock are in arrears, no shares of any such series of the Preferred Stock or
such other series of Preferred Stock of the Company will be redeemed (whether
by mandatory or optional redemption) unless all such shares are simultaneously
redeemed, and the Company will not purchase or otherwise acquire any such
shares; provided, however, that the foregoing will not prevent the purchase or
acquisition of such shares pursuant to a purchase or exchange offer made on the
same terms to holders of all such shares outstanding.
In the event that fewer than all of the outstanding shares of a series
of the Preferred Stock are to be redeemed, whether by mandatory or optional
redemption, the number of shares to be redeemed will be determined by lot or
pro rata (subject to rounding to avoid fractional shares) as may be determined
by the Company or by any other method as may be determined by the Company in
its sole discretion to be equitable. From and after the redemption date
(unless default shall be made by the Company in providing for the payment of
the redemption price plus accumulated and unpaid dividends, if any), dividends
shall cease to accumulate on the shares of the Preferred Stock called for
redemption and all rights of the holders thereof (except the right to receive
the redemption price plus accumulated and unpaid dividends, if any) shall
cease.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding
up of the affairs of the Company, then, before any distribution or payment
shall be made to the holders of any Junior Stock, the holders of each series of
Preferred Stock shall be entitled to receive out of assets of the Company
legally available for distribution to stockholders, liquidating distributions
in the amount of the liquidation preference per share (set forth in the
applicable Prospectus Supplement), plus an amount equal to all dividends
accrued and unpaid thereon (which shall not include any accumulation in respect
of unpaid dividends for prior dividend periods if such Preferred Stock does not
have a cumulative dividend). After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Preferred
Stock will have no right or claim to any of the remaining assets of the
Company. In the event that upon any such voluntary or involuntary liquidation,
dissolution or winding up, the available assets of the Company are insufficient
to pay the amount of the liquidating distributions on all outstanding shares of
Preferred Stock and the corresponding amounts payable on all shares of other
classes or series of capital stock of the Company ranking on a parity with the
Preferred Stock in the distribution of assets, then the holders of the
Preferred Stock and all other such classes or series of capital stock shall
share ratably in any such distribution of assets in proportion to the full
liquidating distributions to which they would otherwise be respectively
entitled.
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If liquidating distributions shall have been made in full to all
holders of shares of Preferred Stock, the remaining assets of the Company shall
be distributed among the holders of Junior Stock, according to their respective
rights and preferences and in each case according to their respective number of
shares. For such purposes, the consolidation or merger of the Company with or
into any other corporation, or the sale, lease or conveyance of all or
substantially all of the property or business of the Company, shall not be
deemed to constitute a liquidation, dissolution or winding up of the Company.
VOTING RIGHTS
Except as indicated below or in a Prospectus Supplement relating to a
particular series of the Preferred Stock, or except as required by applicable
law, holders of the Preferred Stock will not be entitled to vote for any
purpose.
So long as any shares of the Preferred Stock of a series remain
outstanding, the consent or the affirmative vote of the holders of at least
66-2/3% of the votes entitled to be cast with respect to the then outstanding
shares of such series of the Preferred Stock together with any Other Preferred
Stock (as defined below), voting as one class, either expressed in writing or
at a meeting called for that purpose, will be necessary (i) to permit, effect
or validate the authorization, or any increase in the authorized amount, of any
class or series of shares of the Company ranking prior to the Preferred Stock
of such series as to dividends, voting or upon distribution of assets; and (ii)
to repeal, amend or otherwise change any of the provisions applicable to the
Preferred Stock of such series in any manner which adversely affects the
powers, preferences, voting power or other rights or privileges of such series
of the Preferred Stock. In case any series of the Preferred Stock would be so
affected by any such action referred to in clause (ii) above in a different
manner than one or more series of the Other Preferred Stock which will be
similarly affected, the holders of such series of Preferred Stock will be
entitled to vote as a class, and the Company will not take such action without
the consent or affirmative vote, as above provided, of at least 66-2/3% of the
total number of votes entitled to be cast with respect to each such series of
the Preferred Stock and the Other Preferred Stock then outstanding, in lieu of
the consent or affirmative vote hereinabove otherwise required.
With respect to any matter as to which the Preferred Stock of any
series is entitled to vote, holders of the Preferred Stock of such series and
any other series of Preferred Stock of the Company ranking on a parity with
such series of the Preferred Stock as to dividends and distributions of assets
and which by its terms provides for similar voting rights (the "Other Preferred
Stock") will be entitled to cast the number of votes set forth in the
Prospectus Supplement with respect to that series of Preferred Stock. As a
result of the provisions described in the preceding paragraph requiring the
holders of shares of a series of the Preferred Stock to vote together as a
class with the holders of shares of one or more series of Other Preferred
Stock, it is possible that the holders of such shares of Other Preferred Stock
could approve action that would adversely affect such series of Preferred
Stock, including the creation of a class of capital stock ranking prior to such
series of Preferred Stock as to dividends, voting or distribution of assets.
CONVERSION RIGHTS
The terms and conditions, if any, upon which shares of any series of
Preferred Stock are convertible into Common Stock will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include the
number of shares of Common Stock into which the Preferred Stock is convertible,
the conversion price (or manner of calculation thereof), the conversion period,
provisions as to whether conversion will be at the option of the holders of the
Preferred Stock or the Company, the events requiring an adjustment of the
conversion price and provisions affecting conversion.
RESTRICTIONS ON OWNERSHIP
See "Description of Common Stock -- Restrictions on Ownership" for a
discussion of the restrictions on capital stock (Common Stock and Preferred
Stock) ownership necessary for the Company to qualify as a REIT under the Code.
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TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Preferred Stock will be set
forth in the applicable Prospectus Supplement.
DESCRIPTION OF SECURITIES WARRANTS
The Company may issue Securities Warrants for the purchase of
Preferred Stock or Common Stock. Securities Warrants may be issued
independently or together with any other Securities offered by any Prospectus
Supplement and may be attached to or separate from such Securities. Each
series of Securities Warrants will be issued under a separate warrant agreement
(each, a "Warrant Agreement") to be entered into between the Company and a
warrant agent specified in the applicable Prospectus Supplement (the "Warrant
Agent"). The Warrant Agent will act solely as an agent of the Company in
connection with the Securities Warrants of such series and will not assume any
obligation or relationship of agency or trust for or with any holders or
beneficial owners of Securities Warrants. The following summaries of certain
provisions of the Securities Warrant Agreement and the Securities Warrants do
not purport to be complete and are subject to, and are qualified in their
entirety by reference to, all the provisions of the Securities Warrant
Agreement and the Securities Warrant certificates relating to each series of
Securities Warrants which will be filed with the Commission and incorporated by
reference as an exhibit to the Registration Statement of which this Prospectus
is a part at or prior to the time of the issuance of such series of Securities
Warrants.
The applicable Prospectus Supplement will describe the terms of such
Securities Warrants, including the following where applicable: (i) the offering
price; (ii) the aggregate number of shares purchasable upon exercise of such
Securities Warrants, the exercise price, and in the case of Securities Warrants
for Preferred Stock, the designation, aggregate number and terms of the series
of Preferred Stock purchasable upon exercise of such Securities Warrants; (iii)
the designation and terms of any series of Preferred Stock with which such
Securities Warrants are being offered and the number of such Securities
Warrants being offered with such Preferred Stock; (iv) the date, if any, on and
after which such Securities Warrants and the related series of Preferred Stock
or Common Stock will be transferable separately; (v) the date on which the
right to exercise such Securities Warrants shall commence and the date on which
such right shall expire (the "Expiration Date"); (vi) any special United States
federal income tax consequences; and (vii) any other material terms of such
Securities Warrants.
Securities Warrant certificates may be exchanged for new Securities
Warrant certificates of different denominations, may (if in registered form) be
presented for registration of transfer, and may be exercised at the corporate
trust office of the Securities Warrant agent or any other office indicated in
the applicable Prospectus Supplement. Prior to the exercise of any Securities
Warrants, holders of such Securities Warrants will not have any rights of
holders of such Preferred Stock or Common Stock, including the right to receive
payments of dividends, if any, on such Preferred Stock or Common Stock, or to
exercise any applicable right to vote.
EXERCISE OF SECURITIES WARRANTS
Each Securities Warrant will entitle the holder thereof to purchase
such number of shares of Preferred Stock or Common Stock, as the case may be,
at such exercise price as shall in each case be set forth in, or calculable
from, the Prospectus Supplement relating to the offered Securities Warrants.
After the close of business on the Expiration Date (or such later date to which
such Expiration Date may be extended by the Company), unexercised Securities
Warrants will become void.
Securities Warrants may be exercised by delivering to the Securities
Warrant Agent payment as provided in the applicable Prospectus Supplement of
the amount required to purchase the Preferred Stock or Common Stock, as the
case may be, purchasable upon such exercise together with certain information
set forth on the reverse side of the Securities Warrant certificate.
Securities Warrants will be deemed to have been exercised upon receipt of
payment of the exercise price, subject to the receipt within five (5) business
days, of the Securities Warrant certificate evidencing such Securities
Warrants. Upon receipt of such payment and the Securities Warrant certificate
properly completed and duly executed at the corporate trust office of the
Securities Warrant agent or any other office indicated in the applicable
Prospectus
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Supplement, the Company will, as soon as practicable, issue and deliver the
Preferred Stock or Common Stock, as the case may be, purchasable upon such
exercise. If fewer than all of the Securities Warrants represented by such
Securities Warrant certificate are exercised, a new Securities Warrant
certificate will be issued for the remaining amount of Securities Warrants.
AMENDMENTS AND SUPPLEMENTS TO WARRANT AGREEMENT
The Warrant Agreements may be amended or supplemented without the
consent of the holders of the Securities Warrants issued thereunder to effect
changes that are not inconsistent with the provisions of the Securities
Warrants and that do not adversely affect the interests of the holders of the
Securities Warrants.
COMMON STOCK WARRANT ADJUSTMENTS
Unless otherwise indicated in the applicable Prospectus Supplement,
the exercise price of, and the number of shares of Common Stock covered by, a
Common Stock Warrant are subject to adjustment in certain events, including (i)
payment of a dividend on the Common Stock payable in capital stock and stock
splits, combinations or reclassification of the Common Stock; (ii) issuance to
all holders of Common Stock of rights or warrants to subscribe for or purchase
shares of Common Stock at less than their current market price (as defined in
the Warrant Agreement for such series of Securities Warrants); and (iii)
certain distributions of evidences of indebtedness or assets (including
securities but excluding cash dividends or distributions paid out of
consolidated earnings or retained earnings or dividends payable other than in
Common Stock) or of subscription rights and warrants (excluding those referred
to above).
No adjustment in the exercise price of, and the number of shares of
Common Stock covered by, a Common Stock Warrant will be made for regular
quarterly or other periodic or recurring cash dividends or distributions or for
cash dividends or distributions to the extent paid from consolidated earnings
or retained earnings. No adjustment will be required unless such adjustment
would require a change of at least 1% in the exercise price then in effect.
Except as stated above, the exercise price of, and the number of shares of
Common Stock covered by, a Common Stock Warrant will not be adjusted for the
issuance of Common Stock or any securities convertible into or exchangeable for
Common Stock, or carrying the right or option to purchase or otherwise acquire
the foregoing, in exchange for cash, other property or services.
In the event of any (i) consolidation or merger of the Company with or
into any entity (other than a consolidation or a merger that does not result in
any reclassification, conversion, exchange or cancellation of outstanding
shares of Common Stock); (ii) sale, transfer, lease or conveyance of all or
substantially all of the assets of the Company; or (iii) reclassification,
capital reorganization or change of the Common Stock (other than solely a
change in par value or from par value to no par value), then any holder of a
Common Stock Warrant will be entitled, on or after the occurrence of any such
event, to receive on exercise of such Common Stock Warrant the kind and amount
of shares of stock or other securities, cash or other property (or any
combination thereof) that the holder would have received had such holder
exercised such holder's Common Stock Warrant immediately prior to the
occurrence of such event. If the consideration to be received upon exercise of
the Common Stock Warrant following any such event consists of common stock of
the surviving entity, then from and after the occurrence of such event, the
exercise price of such Common Stock Warrant will be subject to the same
anti-dilution and other adjustments described in the second preceding
paragraph, applied as if such common stock were Common Stock.
FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain federal income tax considerations to
the Company is based on current law, is for general information only, and is
not tax advice. The tax treatment of a holder of any of the Securities will
vary depending upon the terms of the specific securities acquired by such
holder, as well as his particular situation, and this discussion does not
attempt to address any aspects of federal income taxation relating to holders
of Securities.
EACH INVESTOR IS ADVISED TO CONSULT HIS OWN TAX ADVISOR, REGARDING THE
TAX CONSEQUENCES TO HIM OF THE ACQUISITION, OWNERSHIP AND SALE OF THE
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SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES OF SUCH ACQUISITION, OWNERSHIP AND SALE AND OF POTENTIAL CHANGES
IN APPLICABLE TAX LAWS.
TAXATION OF THE COMPANY AS A REIT
General. The Company has elected to be taxed as a real estate
investment trust under Sections 856 through 860 of the Code, commencing with
its taxable year ended December 31, 1994. The Company believes that,
commencing with its taxable year ended December 31, 1994 it was organized and
has been operating in such a manner as to qualify for taxation as a REIT under
the Code and the Company intends to continue to operate in such manner, but no
assurance can be given that it will operate in a manner so as to qualify or
remain qualified.
These sections of the Code are highly technical and complex. The
following sets forth the material aspects of the sections that govern the
federal income tax treatment of a REIT. This summary is qualified in its
entirety by the applicable Code provisions, rules and regulations promulgated
thereunder, and administrative and judicial interpretations thereof.
In the opinion of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation, commencing with the Company's taxable year which ended December
31, 1994, the Company has been organized in conformity with the requirements
for qualification as a REIT, and its method of operation enabled it to meet the
requirements for qualification and taxation as a REIT under the Code. It must
be emphasized that this opinion is based on various assumptions and is
conditioned upon certain representations made by the Company as to factual
matters. In addition, such qualification and taxation as a REIT depends upon
the Company's ability to meet, through actual annual operating results,
distribution levels, diversity of stock ownership, and the various
qualification tests imposed under the Code discussed below, the results of
which have not been and will not be reviewed by Jaffe, Raitt, Heuer & Weiss,
Professional Corporation. Accordingly, no assurance can be given that the
actual results of the Company's operation in any particular taxable year will
satisfy such requirements. See "Taxation of the Company -- Failure to
Qualify".
In brief, if certain detailed conditions imposed by the REIT
provisions of the Code are met, entities, such as the Company, that invest
primarily in real estate and that otherwise would be treated for Federal income
tax purposes as corporations, are generally not taxed at the corporate level on
that portion of their ordinary income or capital gain that is currently
distributed to stockholders. This treatment substantially eliminates the
"double taxation" (at both the corporate and stockholder levels) that generally
results from the use of corporate investment vehicles.
If the Company fails to qualify as a REIT in any year, however, it
will be subject to Federal income tax as if it were a domestic corporation, and
its stockholders will be taxed in the same manner as stockholders of ordinary
corporations. In this event, the Company could be subject to potentially
significant tax liabilities, and therefore the amount of cash available for
distribution to its stockholders would be reduced.
The Company has elected REIT status for the taxable year beginning
January 1, 1994. The Board of Directors of the Company intends that the
Company will operate in a manner that permits it to continue qualification as a
REIT in each taxable year thereafter. There can be no assurance, however, that
this expectation will be fulfilled, since qualification as a REIT depends on
the Company continuing to satisfy numerous asset, income and distribution tests
described below, which in turn will be dependent in part on the Company's
operating results.
TAXATION OF THE COMPANY
General. In any year in which the Company qualifies as a REIT, in
general it will not be subject to Federal income tax on that portion of its
ordinary income or capital gain which is distributed to stockholders. The
Company may, however, be subject to tax at normal corporate rates upon any
taxable income or capital gain not distributed.
If the Company should fail either the 75% or the 95% gross income
tests (as discussed below), and nonetheless maintains its qualification as a
REIT because certain other requirements are met, it will be
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subject to a 100% tax on the greater of the amount by which the Company fails
either the 75% or the 95% test, multiplied by a fraction intended to reflect
the Company's profitability. The Company will also be subject to a tax of 100%
on net income from any "prohibited transaction," as described below. In
addition, if the Company should fail to distribute during each calendar year at
least the sum of: (i) 85% of its REIT ordinary income for such year; (ii) 95%
of its REIT capital gain net income for such year; and (iii) any undistributed
taxable income from prior years, the Company would be subject to a 4% excise
tax on the excess of such required distribution over the amounts actually
distributed. The Company may also be subject to the corporate "alternative
minimum tax," as well as tax in certain situations and on certain transactions
not presently contemplated. The Company will use the calendar year both for
Federal income tax purposes and for financial reporting purposes.
In order to qualify as a REIT, the Company must meet, among others,
the following requirements:
Share Ownership Test. The Company's Common Stock must be held by a
minimum of 100 persons for at least approximately 92% of the days in each
taxable year. In addition, at all times during the second half of each taxable
year, no more than 50% in value of the capital stock of the Company may be
owned, directly, or indirectly and by applying certain constructive ownership
rules, by five or fewer individuals. For this purpose, a pension and other
exempt trusts will generally not be treated as a single individual. Rather,
based upon a look through approach, the beneficial owners of the trust will be
treated as owners of the REIT in proportion to their actuarial interests in the
trust.
In order to ensure compliance with these requirements, the Company has
placed certain restrictions on the transfer of the Common Stock to prevent
further concentration of stock ownership. Moreover, to evidence compliance with
these requirements, the Company must maintain records which disclose the actual
ownership of its outstanding Common Stock. In fulfilling its obligations to
maintain records, the Company must and will demand written statements each year
from the record holders of designated percentages of its Common Stock
disclosing the actual owners of such Common Stock. A list of those persons
failing or refusing to comply with such demand must be maintained as a part of
the Company's records. A stockholder failing or refusing to comply with the
Company's written demand must submit with his tax returns a similar statement
disclosing the actual ownership of Common Stock and certain other information.
In addition, the Company's charter provides restrictions regarding the transfer
of its shares that are intended to assist the Company in continuing to satisfy
the share ownership requirements. See "Description of Common Stock --
Restrictions on Ownership."
Asset Tests. At the close of each quarter of the Company's taxable
year, the Company must satisfy two tests relating to the nature of its assets.
First, at least 75% of the value of the Company's total assets must be
represented by interests in real property, interests in mortgages on real
property, shares in other REITs, cash, cash items and government securities.
Second, although the remaining 25% of the Company's assets generally may be
invested without restriction, securities in this class may not exceed either:
(i) 5% of the value of the Company's total assets as to any one non-government
issuer; or (ii) 10% of the outstanding voting securities of any one issuer.
Where the Company invests in a partnership, it will be deemed to own a
proportionate share of the partnership's assets. See "Federal Income Tax
Considerations -- Tax Aspects of the Company's Investment in the Operating
Partnership -- General." The Company's investment in the Properties through its
interest in the Issuer will constitute a qualified asset for purposes of the
75% asset test.
Gross Income Tests. There are three separate percentage tests relating
to the sources of the Company's gross income which must be satisfied for each
taxable year. For purposes of these tests, where the Company invests in a
partnership, the Company will be treated as receiving its share of the
proportionate income and loss of the partnership, and the gross income of the
partnership will retain the same character in the hands of the Company as it
has in the hands of the partnership. See "Federal Income Tax Considerations --
Tax Aspects of the Company's Investment in the Operating Partnership --
General" below.
1. The 75% Test. At least 75% of the Company's gross income for the
taxable year must be "qualifying income." Qualifying income generally includes:
(i) rents from real property (except as modified below); (ii) interest on
obligations collateralized by mortgages on, or interests in, real property;
(iii) gains from the sale or other disposition of interests in real property
and real estate mortgages, other than gain from property held primarily for
sale to customers in the ordinary course of the Company's trade or
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33
business ("dealer property"); (iv) dividends or other distributions on shares
in other REITs, as well as gain from the sale of such shares; (v) abatements
and refunds of real property taxes; (vi) income from the operation, and gain
from the sale, of property acquired at or in lieu of a foreclosure of the
mortgage collateralized by such property ("foreclosure property"); and (vii)
commitment fees received for agreeing to make loans collateralized by mortgages
on real property or to purchase or lease real property.
Rents received from a tenant will not, however, qualify as rents from
real property in satisfying the 75% test (or the 95% gross income test
described below) if the Company, or an owner of 10% or more of the Company,
directly or constructively owns 10% or more of such tenant (a "Related Party
Tenant"). In addition, if rent attributable to personal property, leased in
connection with a lease of real property, is greater than 15% of the total rent
received under the lease, then the portion of rent attributable to such
personal property will not qualify as rents from real property. Moreover, an
amount received or accrued will not qualify as rents from real property (or as
interest income) for purposes of the 75% and 95% gross income tests if it is
based in whole or in part on the income or profits of any person. Finally, for
rents received to qualify as rents from real property, the Company generally
must not operate or manage the property or furnish or render services to
tenants, other than through an "independent contractor" from whom the Company
derives no revenue. The "independent contractor" requirement, however, does not
apply to the extent that the services provided by the Company are "usually or
customarily rendered" in connection with the rental of space for occupancy
only, and are not otherwise considered "rendered to the occupant."
The Company, through the Operating Partnership (which is not an
independent contractor), provides certain services with respect to the
Properties and any newly acquired manufactured housing community properties.
The Company believes that the services provided by the Operating Partnership
are usually or customarily rendered in connection with the rental of space for
occupancy only, and therefore that the provision of such services will not
cause the rents received with respect to the Properties to fail to qualify as
rents from real property for purposes of the 75% and 95% gross income tests.
The Company does not anticipate charging rent that is based in whole or in part
on the income or profits of any person. The Company does not anticipate
deriving rent attributable to personal property leased in connection with real
property that exceeds 15% of the total rent. Finally, the Company does not
anticipate receiving rent from Related Party Tenants.
2. The 95% Test. In addition to deriving 75% of its gross income from
the sources listed above, at least 95% of the Company's gross income for the
taxable year must be derived from the above-described qualifying income, or
from dividends, interest, or gains from the sale or disposition of stock or
other securities that are not dealer property. Dividends and interest on any
obligations not collateralized by an interest in real property are included for
purposes of the 95% test, but not for purposes of the 75% test.
For purposes of determining whether the Company complies with the 75%
and 95% income tests, gross income does not include income from prohibited
transactions. A "prohibited transaction" is a sale of dealer property,
excluding certain dealer property held by the Company for at least four years
and foreclosure property. See "Federal Income Tax Considerations -- Taxation of
the Company -- General" and "-- Tax Aspects of the Company's Investment in the
Operating Partnership -- Sale of the Properties."
The Company's investment in the Properties through the Operating
Partnership will in major part give rise to rental income qualifying under the
75% and 95% gross income tests. Gains on sales of the Properties, or of the
Company's interest in the Operating Partnership, will generally qualify under
the 75% and 95% gross income tests. The Company anticipates that income on its
other investments will not result in the Company failing the 75% or 95% gross
income test for any year.
Even if the Company fails to satisfy one or both of the 75% or 95%
gross income tests for any taxable year, it may still qualify as a REIT for
such year if it is entitled to relief under certain provisions of the Code.
These relief provisions will generally be available if: (i) the Company's
failure to comply was due to reasonable cause and not to willful neglect; (ii)
the Company reports the nature and amount of each item of its income included
in the tests on a schedule attached to its tax return; and (iii) any incorrect
information on this schedule is not due to fraud with intent to evade tax. If
these relief provisions apply, the Company will, however, still be subject to a
special tax upon the greater of the amount by which it fails either the 75% or
95% gross income test for that year. No similar mitigation provision provides
relief if the Company fails the 30% income test, and in such case, the Company
will cease to qualify as a REIT.
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34
3. The 30% Test. The Company must derive less than 30% of its gross
income for each taxable year from the sale or other disposition of: (i) real
property held for less than four years (other than foreclosure property and
involuntary conversion); (ii) stock or securities held for less than one year;
and (iii) property in a prohibited transaction. The Company does not anticipate
that it will have any substantial difficulty in complying with this test.
Annual Distribution Requirements. The Company, in order to qualify as
a REIT, is required to distribute dividends (other than capital gain dividends)
to its stockholders each year in an amount at least equal to: (i) the sum of:
(a) 95% of the Company's REIT taxable income (computed without regard to the
dividends paid deduction and the REIT's net capital gain); and (b) 95% of the
net income (after tax), if any, from foreclosure property; minus (ii) the sum
of certain items of non-cash income. Such distributions must be paid in the
taxable year to which they relate, or in the following taxable year if declared
before the Company timely files its tax return for such year and if paid on or
before the first regular dividend payment after such declaration. To the extent
that the Company does not distribute all of its net capital gain or distributes
at least 95%, but less than 100%, of its REIT taxable income, as adjusted, it
will be subject to tax on the undistributed amount at regular capital gains or
ordinary corporate tax rates, as the case may be. Moreover, if the Company
should fail to distribute during each calendar year at least the sum of: (i)
85% of its ordinary income for that year; (ii) 95% of its capital gain net
income for that year; and (iii) any undistributed taxable income from prior
periods, the Company would be subject to a 4% excise tax on the excess of such
required distribution over the amounts actually distributed. In addition,
during its Recognition Period (defined below), if the Company disposes of any
asset subject to the Built-In Gain Rules, the Company will be required,
pursuant to guidance issued by the Service, to distribute at least 95% of the
Built-In Gain (after tax), if any, recognized on the disposition of the asset.
The Company intends to make timely distributions sufficient to satisfy
the annual distribution requirements. In this regard, the partnership agreement
of the Operating Partnership authorizes the Company, as general partner, to
take such steps as may be necessary to cause the Operating Partnership to
distribute to its partners an amount sufficient to permit the Company to meet
these distribution requirements. It is possible that the Company may not have
sufficient cash or other liquid assets to meet the 95% distribution
requirement, due to timing differences between the actual report of income and
actual payment of expenses on the one hand, and the inclusion of such income
and deduction of such expenses in computing the Company's REIT taxable income
on the other hand. To avoid any problem with the 95% distribution requirement,
the Company will closely monitor the relationship between its REIT taxable
income and cash flow, and if necessary, will borrow funds (or cause the
Operating Partnership or other affiliates to borrow funds) in order to satisfy
the distribution requirement.
If the Company fails to meet the 95% distribution requirement as a
result of an adjustment to the Company's tax return by the Service, the Company
may retroactively cure the failure by paying a "deficiency dividend" (plus
applicable penalties and interest) within a specified period.
Failure to Qualify. If the Company fails to qualify for taxation as a
REIT in any taxable year and the relief provisions do not apply, the Company
will be subject to tax (including any applicable alternative minimum tax) on
its taxable income at regular corporate rates. Distributions to stockholders
in any year in which the Company fails to qualify will not be deductible by the
Company, nor will they be required to be made. In such event, to the extent of
current and accumulated earnings and profits, all distributions to stockholders
will be taxable as ordinary income, and, subject to certain limitations in the
Code, corporate distributees may be eligible for the dividends received
deduction. Unless entitled to relief under specific statutory provisions, the
Company also will be disqualified from taxation as a REIT for the four taxable
years following the year during which qualification was lost. It is not
possible to state whether in all circumstances the Company would be entitled to
such statutory relief.
TAX ASPECTS OF THE COMPANY'S INVESTMENT IN THE OPERATING PARTNERSHIP
General. The Company holds a direct interest in the Operating
Partnership, and an indirect interest in certain other Partnerships, including
the Financing Partnership (collectively, the "Partnerships"). In general,
partnerships are "pass-through" entities which are not subject to Federal
income tax. Rather, partners are allocated their proportionate shares of the
items of income, gain, loss, deduction, and credit of a partnership, and are
potentially subject to tax thereon, without regard to whether the partners
receive
- 31 -
35
a distribution from the partnership. The Company will include its proportionate
share of the foregoing partnership items for purposes of the various REIT
income tests and in the computation of its REIT taxable income. See "Federal
Income Tax Considerations -- Taxation of the Company -- General" and "-- Gross
Income Tests." Any resultant increase in the Company's REIT taxable income will
increase its distribution requirements (see "Federal Income Tax Considerations
- -- Taxation of the Company -- Annual Distribution Requirements"), but will not
be subject to Federal income tax in the hands of the Company provided that such
income is distributed by the Company to its stockholders. Moreover, for
purposes of the REIT asset tests (see "Federal Income Tax Considerations --
Taxation of the Company -- Asset Tests"), the Company includes its
proportionate share of assets held by the Partnerships.
Entity Classification. The Company's interests in the Partnerships
involve special tax considerations, including the possibility of a challenge by
the Service of the status of each Partnership as a partnership (as opposed to
an association taxable as a corporation) for Federal income tax purposes. If
the Operating Partnership or the Financing Partnership were to be treated as an
association, it would be taxable as a corporation and therefore subject to an
entity-level tax on its income. In such a situation, the character of the
Company's assets and items of gross income would change, which would preclude
the Company from satisfying the asset tests and possibly the income tests (see
"Federal Income Tax Considerations -- Taxation of the Company -- Asset Tests"
and "-- Gross Income Tests"), and in turn would prevent the Company from
qualifying as a REIT. See "Taxation of the Company -- Failure to Qualify" above
for a discussion of the effect of the Company's failure to meet such tests for
a taxable year. Based on certain representations of the Company, in the opinion
of Jaffe, Raitt, Heuer & Weiss, Professional Corporation, each Partnership will
be treated for Federal income tax purposes as a partnership (and not as an
association taxable as a corporation). Such opinion, however, is not binding on
the Service, and no assurance can be given that the Service will not challenge
the tax status of any Partnership.
Tax Allocations with Respect to the Properties. Pursuant to Section
704(c) of the Code, income, gain, loss, and deduction attributable to
appreciated or depreciated property that is contributed to a partnership in
exchange for an interest in the partnership (such as the Properties deemed
contributed by the Principals and the Former General Partners), must be
allocated in a manner such that the contributing partner is charged with, or
benefits from, respectively, the unrealized gain, or unrealized loss associated
with the property at the time of the contribution. The amount of such
unrealized gain or unrealized loss is generally equal to the difference between
the fair market value of contributed property at the time of contribution, and
the adjusted tax basis of such property at the time of contribution (a
"Book-Tax Difference"). Such allocations are solely for Federal income tax
purposes and do not affect the book capital accounts or other economic or legal
arrangements among the partners. The Operating Partnership was formed with
contributions of appreciated property (including the Properties deemed
contributed by the Principals and the Former General Partners). Consequently,
the partnership agreement will require such allocations to be made in a manner
consistent with Section 704(c) of the Code.
In general, the Principals, the Former General Partners, and certain
other persons and entities that contributed Properties to the Partnerships will
be allocated less depreciation, and increased taxable gain on sale of certain
Properties. This will tend to eliminate the Book-Tax Difference. However, the
special allocation rules of Section 704(c) do not always rectify the Book-Tax
Difference on an annual basis or with respect to a specific taxable transaction
such as a sale. Under the applicable Treasury Regulations, such special
allocations of income and gain and depreciation deductions must be made on a
property-by-property basis. Depreciation deductions resulting from the
carryover basis of a contributed property are used to eliminate the Book-Tax
Difference by allocating such deductions to the non-contributing partners
(i.e., the REIT) up to the amount of their share of book depreciation. Any
remaining tax depreciation for the contributed property would be allocated to
the partners who contributed the property. Each Partnership has elected the
traditional method of rectifying the Book-Tax Difference under the applicable
Treasury Regulations, pursuant to which, if depreciation deductions are less
than the non-contributing partners' share of book depreciation, then the
non-contributing partners lose the benefit of these deductions ("ceiling
rule"). When the property is sold, the resulting tax gain is used to the extent
possible to eliminate the Book-Tax Difference (reduced by any previous book
depreciation). Even under the traditional method, it is possible that the
carryover basis of the contributed assets in the hands of a Partnership may
cause the Company to be allocated lower depreciation and other deductions. This
may cause the Company to recognize taxable income in excess of cash proceeds,
which might adversely affect the Company's ability to comply with the REIT
distribution requirements. See "Federal Income Tax Considerations -- Taxation
of the Company -- Annual Distribution Requirements."
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With respect to any property purchased by the Operating Partnership
subsequent to the admission of the Company to the Operating Partnership, such
property will initially have a tax basis equal to its fair market value and
Section 704(c) of the Code will not apply.
Sale of the Properties. The Company's share of any gain realized by
the Operating Partnership on the sale of any dealer property generally will be
treated as income from a prohibited transaction that is subject to a 100%
penalty tax. See "Federal Income Tax Considerations -- Taxation of the Company
- -- General" and "-- Gross Income Tests -- The 95% Test." Under existing law,
whether property is dealer property is a question of fact that depends on all
the facts and circumstances with respect to the particular transaction. The
Partnerships intend to hold the Properties for investment with a view to
long-term appreciation, to engage in the business of acquiring, developing,
owning, and operating the Properties and other manufactured housing
communities, and to make such occasional sales of the Properties as are
consistent with the Company's investment objectives. Based upon such investment
objectives, the Company believes that in general the Properties should not be
considered dealer property and that the amount of income from prohibited
transactions, if any, will not be material.
TAX CONSEQUENCES OF CONVERSION TO REIT STATUS
The Company elected to be taxed as a REIT by filing such an election
with its United States Federal income tax return for the taxable year beginning
January 1, 1994. The Code provides that, in the case of an entity such as the
Company, such corporation is eligible to be taxed as a REIT for a taxable year
only if, as of the close of such year, it has no earnings and profits
accumulated in any non-REIT year. Under the Code, in order to distribute all
earnings and profits accumulated as of the end of a prior taxable year it is
necessary to distribute all earnings and profits accumulated in the current
taxable year. Although calculations of earnings and profits are complex and it
is possible for divergences of opinion with respect to the amount of
accumulated earnings and profits, the Company believes that its pre-1995
distributions have satisfied the special distribution requirements of the Code
in a timely fashion.
If during the 10-year period (the "Recognition Period") beginning on
the first day of the first taxable year for which the Company qualified as a
REIT, the Company recognizes gain on the disposition of any asset held by the
Company as of the beginning of such Recognition Period, then, to the extent of
the excess of: (i) the fair market value of such asset as of the beginning of
such Recognition Period; over (ii) the Company's adjusted basis in such asset
as of the beginning of such Recognition period (the "Built-in Gain"), such gain
will be subject to tax at the highest regular corporate rate to the extent of
the Company's net Built-in Gain as of the beginning of such Recognition Period,
pursuant to regulations that have not yet been promulgated by the Service.
Furthermore, if the Company acquires any asset from a corporation in a
transaction in which the basis of the asset in the Company's hands is
determined by reference to the basis of the asset (or any other property) in
the hands of the transferor, and the Company recognizes gain on the disposition
of such asset during the Recognition Period beginning on the date on which such
asset was acquired by the Company, then, pursuant to regulations that have not
yet been promulgated by the Service, to the extent of the Built-in Gain, such
gain will be subject to tax at the highest regular corporate rate.
These provisions regarding the potential taxation of Built-in Gains
would not be applicable to the Properties and would only be applicable to the
assets owned by the Company prior to January 1, 1994, the first day of the
first year that the Company elected to be taxed as a REIT. Accordingly, the
Company does not expect this provision to have any significant effect.
PLAN OF DISTRIBUTION
The Company and the Operating Partnership may sell the Securities to
one or more underwriters for public offering and sale by them or may sell the
Securities to investors directly or through agents, which agents may be
affiliated with the Company. Direct sales to investors may be accomplished
through subscription rights distributed to the Company's stockholders. In
connection with the distribution of subscription rights to stockholders, if all
of the underlying Securities are not subscribed for, the Company and the
Operating Partnership may sell such unsubscribed Securities directly to third
parties or may engage the services of an underwriter to sell such unsubscribed
Securities to third parties. Any underwriter or
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agent involved in the offer and sale of the Securities will be named in the
applicable Prospectus Supplement.
The distribution of the Securities may be effected from time to time in
one or more transactions at a fixed price or prices, or at prices related to the
prevailing market prices at the time of sale or at negotiated prices (any of
which may represent a discount from the prevailing market prices). The Company
and the Operating Partnership also may, from time to time, authorize
underwriters acting as the Company's agents to offer and sell the Securities
upon the terms and conditions as are set forth in the applicable Prospectus
Supplement. In connection with the sale of Securities, underwriters may be
deemed to have received compensation from the Company or from the Operating
Partnership in the form of underwriting discounts or commissions and may also
receive commissions from purchasers of Securities for whom they may act as
agent. Underwriters may sell Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agent.
Any underwriting compensation paid by the Company or the Operating
Partnership to underwriters or agents in connection with the offering of
Securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers, will be set forth in the applicable
Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the Securities may be deemed to be underwriting discounts and
commissions, under the Securities Act. Underwriters, dealers and agents may be
entitled, under agreements entered into with the Company, to indemnification
against and contribution toward certain civil liabilities, including
liabilities under the Securities Act. Any such indemnification agreements will
be described in the applicable Prospectus Supplement.
If so indicated in the applicable Prospectus Supplement, the Company
or the Operating Partnership, as the case may be, will authorize dealers acting
as the Company's or the Operating Partnership's agents to solicit offers by
certain institutions to purchase Securities from the Company or the Operating
Partnership at the public offering price set forth in such Prospectus
Supplement pursuant to Delayed Delivery Contracts ("Contracts") providing for
payment and delivery on the date or dates stated in such Prospectus Supplement.
Each Contract will be for an amount not less than, and the aggregate principal
amount of Securities sold pursuant to Contracts shall be not less nor more
than, the respective amounts stated in the applicable Prospectus Supplement.
Institutions with whom Contracts, when authorized, may be made include
commercial and savings banks, insurance companies, pension funds, investment
companies, educational and charitable institutions, and other institutions but
will in all cases be subject to the approval of the Company or the Operating
Partnership, as the case may be. Contracts will not be subject to any
conditions except (i) the purchase by an institution of the Securities covered
by its Contracts shall not at the time of delivery be prohibited under the laws
of any jurisdiction in the United States to which such institution is subject;
and (ii) if the Securities are being sold to underwriters, the Company shall
have sold to such underwriters the total principal amount of the Securities
less the principal amount thereof covered by the Contracts.
Certain of the underwriters and their affiliates may be customers of,
engage in transactions with and perform services for the Company or the
Operating Partnership in the ordinary course of business.
LEGAL MATTERS
The legality of the Securities will be passed upon for the Company and
the Operating Partnership by Jaffe, Raitt, Heuer & Weiss, Professional
Corporation. In addition, Jaffe, Raitt, Heuer & Weiss, Professional
Corporation, will provide an opinion as to the basis of the description of
Federal income tax consequences contained in the section titled "Federal Income
Tax Consequences."
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EXPERTS
The consolidated financial statements and consolidated financial
statement schedules of the Company as of December 31, 1995 and 1994, and for
the years ended December 31, 1995, 1994 and 1993 included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1995 and
incorporated by reference herein, and the consolidated financial statements of
the Operating Partnership, which report is included in the Operating
Partnership's Form 10-K for the year ended December 31, 1995, incorporated by
reference herein, have been audited by Coopers & Lybrand L.L.P., independent
certified public accountants, to the extent and for the periods indicated in
their reports and have been incorporated herein in reliance on such reports
given on the authority of that firm as experts in accounting and auditing.
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39
No dealer, salesperson or other individual has
been authorized to give any information or to make any
representations not contained or incorporated by
reference in this Prospectus in connection with any
offering to be made by the Prospectus. If given or
made, such information or representations must not be
relied upon as having been authorized by the Company.
This Prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, the Securities,
in any jurisdiction where, or to any person to whom,
it is unlawful to make such offer or solicitation.
Neither the delivery of this Prospectus nor any offer
or sale made hereunder shall, under any circumstance,
create an implication that there has been no change in
the facts set forth in this Prospectus or in the
affairs of the Company since the date hereof.
TABLE OF CONTENTS
PROSPECTUS
Page
----
Available Information . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . 2
The Company and the Operating Partnership . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . 9
Ratios of Earnings to Fixed Charges . . . . . . . . . 9
Description of Debt Securities . . . . . . . . . . . 9
Description of Common Stock . . . . . . . . . . . . 20
Description of Preferred Stock . . . . . . . . . . 22
Description of Securities Warrants . . . . . . . . 26
Federal Income Tax Considerations . . . . . . . . . 27
Plan of Distribution . . . . . . . . . . . . . . . 33
Legal Matters . . . . . . . . . . . . . . . . . . . 34
Experts . . . . . . . . . . . . . . . . . . . . . . 35
SUN COMMUNITIES, INC.
SUN COMMUNITIES OPERATING
LIMITED PARTNERSHIP
$500,000,000
______________
PROSPECTUS
______________
40
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred
in connection with the issuance and distribution of the securities being
registered.
Registration Fee . . . . . . . . . . . . . . . . . . . . . . . . $172,414
Fees of Rating Agencies . . . . . . . . . . . . . . . . . . . . 75,000
Printing and Duplicating Expenses . . . . . . . . . . . . . . . 50,000
Legal Fees and Expenses . . . . . . . . . . . . . . . . . . . . 100,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . . 25,000
Blue Sky Fees and expenses . . . . . . . . . . . . . . . . . . . 30,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 100,000
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $552,414
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's charter authorizes the Company to obligate itself to
indemnify its present and former directors and officers and to pay or reimburse
expenses for such individuals in advance of the final disposition of a
proceeding to the maximum extent permitted from time to time by Maryland law.
The Company's bylaws obligate it to indemnify and advance expenses to present
and former directors and officers to the maximum extent permitted by Maryland
law. The MGCL permits a 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 capacities unless it is established that: (i) the act or
omission of the director or officer was material to the matter giving rise to
the proceeding; and (a) was committed in bad faith or, (b) was the result of
active and deliberate dishonesty; (ii) the director or officer actually
received an improper personal benefit in money, property, or services; or (iii)
in the case of any criminal proceeding, the director or officer had reasonable
cause to believe that the act or omission was unlawful.
The MGCL permits the charter of a Maryland corporation to include a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages, except to the extent that:
(i) it is proved that the person actually received an improper benefit or
profit in money, property or services; or (ii) a judgment or other final
adjudication is entered in a proceeding based on a finding that the person's
action, or failure to act, was the result of active and deliberate dishonesty
and was material to the cause of action adjudicated in the proceeding. The
Company's charter contains a provision providing for elimination of the
liability of its directors or officers to the Company or its stockholders for
money damages to the maximum extent permitted by Maryland law from time to
time.
The partnership agreement of the Operating Partnership also provides
for indemnification of the Company and its officers and directors to the same
extent indemnification is provided to officers and directors of the Company in
its charter, and limits the liability of the Company and its officers and
directors to the Operating Partnership and its respective partners to the same
extent the liability of the officers and directors of the Company to the
Company and its stockholders is limited under the Company's charter.
41
ITEM 16. EXHIBITS
Exhibit No. Description
----------- -----------
*4.1 Form of Senior Indenture
*4.2 Form of Subordinated Indenture
4.3 Form of Common Stock Certificate (Incorporated by reference from
Exhibit 2 to Amendment No. 1 to Form S-11 filed by the Company on
November 5, 1993, File No. 33-69340)
4.4 Articles VI and VII of the Company's Amended and Restated Articles
of Incorporation (Incorporated by reference from Exhibit 3.1 to
Amendment No. 1 to Form S-11 filed by the Company on November 5,
1993, File No. 33-69340)
**4.5 Form of Debt Security
**4.6 Form of Securities Warranty Agreement
**4.7 Form of Articles Supplementary for Preferred Stock
**4.8 Form of Preferred Stock Certificate
*5.1 Opinion of Jaffe, Raitt, Heuer & Weiss, P.C. as to legality of
securities
*8.1 Opinion of Jaffe, Raitt, Heuer & Weiss, P.C. as to certain tax
matters
12.1 Calculation of Ratios of Earnings to Fixed Charges (Incorporated by
reference from Exhibit 12.1 to each of the Company's and Operating
Partnership's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, filed with the Commission on August 14, 1996)
*23.1 Consent of Coopers & Lybrand L.L.P., independent accountants
*23.2 Consent of Jaffe, Raitt, Heuer & Weiss, P.C. (included in Exhibits
5.1 and 8.1)
*24.1 Power of Attorney (included on the signature page of this
Registration Statement)
**25.1 Statement of Eligibility of Trustee on Form T-1 (filed under
separate cover)
* Filed herewith
** To be filed by amendment or incorporated by reference in
connection with the offering of the Securities.
ITEM 17. UNDERTAKINGS
Each of the undersigned Registrants hereby undertake:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective of the registration
statement (or the most recent post-effective
amendment thereof) which,
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42
individually or in the aggregate, represent a
fundamental change in the information set forth in
this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent
no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table set forth in this
registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
this registration statement or any material change to
such information in this registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
registration statement.
(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 herein, and
the offering of such Securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the Securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrants hereby undertake that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrants' annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof; and
insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 15 above or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted against the Registrants by such
director, officer or controlling person in connection with the securities being
registered, the registrant 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 whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
The undersigned Registrants hereby undertake that:
(1) For the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed a part of this Registration Statement
as of the time it was declared effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus 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 undersigned Registrants hereby undertake, in connection with
securities to be offered pursuant to warrants, to supplement the prospectus,
after the expiration of the subscription period, to set forth the
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43
results of the subscription offer, the transactions by the underwriters during
the subscription period, the amount of unsubscribed securities to be purchased
by the underwriters, and the terms of any subsequent reoffering thereof. If any
public offering by the underwriters is to be made on terms differing from those
set forth on the cover page of the prospectus, a post-effective amendment will
be filed to set forth the terms of such offering.
The undersigned Registrants hereby undertake to file an application
for purposes of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Commission under Section 305(b)(2) of
the Act.
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44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, each
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Farmington Hills, State of Michigan, on October
21, 1996.
SUN COMMUNITIES, INC., a Maryland corporation
By: /s/ Jeffrey P. Jorissen
----------------------------------
Jeffrey P. Jorissen, Senior Vice
President and Secretary
SUN COMMUNITIES OPERATING LIMITED
PARTNERSHIP, a Michigan limited partnership
By: Sun Communities, Inc., General Partner
By: /s/ Jeffrey P. Jorissen
-----------------------------
Jeffrey P. Jorissen, Senior Vice
President and Secretary
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers
and directors of Sun Communities, Inc. hereby constitutes and appoints Milton
M. Shiffman, Gary A. Shiffman, and Jeffrey P. Jorissen, or any of them, his
attorneys-in-fact and agents, with full power of substitution and
resubstitution for him in any and all capacities, to sign any or all amendments
or post-effective amendments to this Registration Statement, and to file the
same, with exhibits thereto and other documents in connection therewith or in
connection with the registration of the Debt Securities, Common Stock,
Preferred Stock, and Securities Warranties under the Securities Act of 1933,
with the Securities and Exchange Commission, granting unto each of such
attorneys-in-fact and agents full power and authority to do and perform each
and every act and thing requisite and necessary in connection with such matters
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that each of such attorneys-in-fact and agents or
his substitute or substitutes may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
NAME TITLE DATE
---- ----- ----
/s/ Milton M. Shiffman Chairman of the Board of Directors October 21, 1996
-------------------------------
Milton M. Shiffman
/s/ Gary A. Shiffman President and Director October 21, 1996
-------------------------------
Gary A. Shiffman
/s/ Jeffrey P. Jorissen Chief Financial Officer, Senior Vice President, October 21, 1996
------------------------------- Secretary, and Principal Accounting Officer
Jeffrey P. Jorissen
/s/ Carl R. Weinert Director October 12, 1996
-------------------------------
Carl R. Weinert
/s/ Paul D. Lapides Director October 21, 1996
-------------------------------
Paul D. Lapides
/s/ Ted J. Simon Director October 21, 1996
-------------------------------
Ted J. Simon
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45
/s/ Clunet R. Lewis Director October 15, 1996
-------------------------------
Clunet R. Lewis
/s/ Ronald L. Piasecki Director October 14, 1996
-------------------------------
Ronald L. Piasecki
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INDEX TO EXHIBITS
Exhibit
No. Description
--------- -----------
*4.1 Form of Senior Indenture
*4.2 Form of Subordinated Indenture
4.3 Form of Common Stock certificate (Incorporated by reference from Exhibit
4.1 to Amendment No. 1 to Form S-11 filed by the Company on November 5,
1993, File No. 33-69340)
4.4 Articles VI and VII of the Company's Amended and Restated Articles of
Incorporation (Incorporated by reference from Exhibit 3.1 to Amendment
No. 1 to Form S-11 filed by the Company on November 5, 1993, File
No. 33-69340)
**4.5 Form of Debt Security
**4.6 Form of Securities Warranty Agreement
**4.7 Form of Articles Supplementary for Preferred Stock
**4.8 Form of Preferred Stock Certificate
*5.1 Opinion of Jaffe, Raitt, Heuer & Weiss, P.C. as to legality of
securities
*8.1 Opinion of Jaffe, Raitt, Heuer & Weiss, P.C. as to certain tax matters
12.1 Calculation of Ratios of Earnings to Fixed Charges (Incorporated by
reference from Exhibit 12.1 to each of the Company's and Operating
Partnership's Quarterly Report on Form 10-Q for the quarter ended June
30, 1996, filed with the Commission on August 14, 1996)
*23.1 Consent of Coopers & Lybrand L.L.P., independent accountants
*23.2 Consent of Jaffe, Raitt, Heuer & Weiss, P.C. (included in Exhibits 5.1
and 8.1)
*24.1 Power of Attorney (included on the signature page of this Registration
Statement)
**25.1 Statement of Eligibility of Trustee on Form T-1 (filed under separate
cover)
* Filed herewith
** To be filed by amendment or
incorporated by reference in connection
with the offering of the Securities.
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