Rule No. 424(b)(5)
Registration No. 33-61383
PROSPECTUS SUPPLEMENT
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(TO PROSPECTUS DATED NOVEMBER 8, 1995)
4,000,000 SHARES
LOGO NEW PLAN REALTY TRUST
COMMON SHARES
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New Plan Realty Trust ("New Plan" or the "Trust"), originally organized in
1962, is an equity real estate investment trust which invests in income-
producing real estate, principally consisting of shopping centers and garden
apartment communities. The Trust is one of the largest publicly traded real
estate investment trusts in the United States based on the aggregate market
value of its outstanding common shares of beneficial interest (the "Common
Shares"), and is self-administered and self-managed.
The Common Shares are listed on the New York Stock Exchange (symbol: NPR). On
November 8, 1995, the last reported sales price of the Common Shares on the New
York Stock Exchange was $21.25.
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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 SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
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- --------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) TRUST(2)
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Per Common Share................. $21.25 $1.12 $20.13
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Total(3)......................... $85,000,000 $4,480,000 $80,520,000
==============================================================================
(1) The Trust has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of $500,000 payable by the Trust.
(3) The Trust has granted the several Underwriters an option to purchase up to
an additional 600,000 Common Shares to cover over-allotments. If all such
Common Shares are purchased, the total Price to Public, Underwriting
Discount and Proceeds to Trust will be $97,750,000, $5,152,000 and
$92,598,000, respectively. See "Underwriting."
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.
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The Common Shares are offered by the several Underwriters, subject to prior
sale, when, as and if delivered to and accepted by them, subject to approval of
certain legal matters by counsel for the Underwriters. The Underwriters reserve
the right to withdraw, cancel or modify such offer and to reject orders in
whole or in part. It is expected that delivery of the Common Shares offered
hereby will be made in New York, New York on or about November 14, 1995.
----------------
MERRILL LYNCH & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
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The date of this Prospectus Supplement is November 8, 1995.
NOTE: The bar graphs illustrating New Plan's (i) funds from operations, (ii)
distributions, (iii) garden apartment units and (iv) shopping center square
footage for the fiscal year ended July 31, 1986 through the fiscal year ended
July 31, 1995 have been intentionally omitted from this Edgar filing pursuant
to Rule 304 of Regulation S-T.
There are four separate color bar graphs showing the following:
1. The funds from operations (net income plus depreciation and
amortization of real estate assets, excluding gains from the sales of properties
and securities) ("FFO") and FFO per share ranged from $17,974,000 FFO and $.88
FFO per share in fiscal 1986 to $77,543,000 FFO and $1.47 FFO per share in
fiscal 1995.
2. The distributions and distributions per share (adjusted to give
effect to the 3-for-2 share split on April 1, 1986), ranged from $14,747,000 and
$.73 per share in fiscal 1986 to $71,616,000 and $1.355 per share in fiscal
1995.
3. Garden apartment units (including acquisitions as of September 30,
1995) ranged from 839 units in fiscal 1986 to 5,341 units in fiscal 1995.
4. Shopping center square footage (including square footage of factory
outlets centers and shopping centers securing mortgages and acquistions as of
September 30, 1995) ranged from 4,115,000 square feet in fiscal 1986 to
16,160,000 square feet in fiscal 1995.
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IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON SHARES
AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE, IN THE OVER-THE-
COUNTER MARKET OR OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE
DISCONTINUED AT ANY TIME.
S-2
Unless otherwise indicated, the information contained in this Prospectus
Supplement assumes that the Underwriters' over-allotment option is not
exercised.
THE TRUST
New Plan, one of the largest publicly traded real estate investment trusts in
the United States based on the aggregate market value of its outstanding Common
Shares, is a self-administered and self-managed equity real estate investment
trust which primarily owns shopping centers and garden apartment communities.
The Trust's present equity investments consist principally of 104 shopping
centers, with approximately 13,930,000 gross rentable square feet, five factory
outlet centers with approximately 1,559,000 gross rentable square feet and 25
garden apartment communities containing 5,341 apartment units. These properties
are located in 21 states. See "Business." The Trust has also recently entered
into a contract to purchase nine shopping centers with approximately 1,679,000
gross rentable square feet for an aggregate purchase price of approximately
$126 million (the "Portfolio Acquisition"). See "Recent Developments."
Since the organization of the corporate predecessor of the Trust in 1962, the
Trust and its predecessor have been directed by members of the Newman family,
who own and control 3,022,699 Common Shares, or approximately 5.7% of the
currently outstanding Common Shares, and are the Trust's largest group of non-
institutional shareholders. See "Controlling Shareholders." The Newman family
has been active in real estate ownership and management since 1926.
The Trust has paid regular and uninterrupted cash distributions on its Common
Shares since it commenced operations as a real estate investment trust in 1972.
These distributions, which are paid quarterly, have increased from $0.19 per
Common Share in fiscal 1973 to $1.355 per Common Share in fiscal 1995 (and
$1.38 per Common Share on an annualized basis, based upon the first quarterly
distribution paid in fiscal 1996). Since inception, each distribution has
either been equal to or greater than the distribution preceding it, and the
distributions have been increased in each of the last 65 consecutive quarters.
The Trust intends to continue to declare quarterly distributions on its Common
Shares.
The Trust's primary investment strategy is to identify and purchase well-
located income-producing shopping centers and garden apartment communities at a
discount to replacement cost. The Trust also purchases selected factory outlet
centers. The Trust seeks to achieve income growth through a program of
expansion, renovation, leasing, re-leasing and improving the tenant mix. The
Trust minimizes development risks by generally purchasing existing income-
producing properties.
The Trust generally has acquired properties for cash. Management believes
that its ability to purchase available properties for cash enhances its
negotiating position in obtaining attractive purchase prices. In a few
instances properties have been acquired subject to existing non-recourse long-
term mortgages. During the fiscal year ended July 31, 1995, New Plan acquired
12 shopping centers aggregating approximately 1,840,000 gross rentable square
feet and five garden apartment communities containing 1,357 apartment units for
an aggregate purchase price of approximately $116 million. Since August 1,
1995, the Trust has acquired two shopping centers aggregating approximately
395,000 gross rentable square feet and one garden apartment community
containing 208 apartment units for an aggregate purchase price of approximately
$25.2 million.
Long-term debt of the Trust at October 31, 1995 consisted of $179.4 million
of unsecured senior notes (net of unamortized discount) and $27.2 million of
mortgage loans. At October 31, 1995, the Trust had no amounts outstanding under
its $100 million line of credit (the "Line of Credit") with The Bank of New
York, Fleet National Bank and CoreStates Bank N.A. (the "Banks"), which Line of
Credit expires on November 28, 1995. The Trust expects to extend the maturity
of the Line of Credit and is currently negotiating the terms for such extension
with the Banks.
No single tenant or chain of tenants currently accounts for more than 2% of
the Trust's revenues, other than Kmart, the Trust's largest tenant, which
currently accounts for approximately 5% of revenues. Many
S-3
of the shopping centers include supermarket and drug store tenants which
historically have been less susceptible to economic downturns. See "Business."
The Trust, a Massachusetts business trust, maintains its executive offices at
1120 Avenue of the Americas, New York, New York 10036, and its telephone number
is (212) 869-3000. The Trust employs approximately 385 individuals, including
executive, administrative and field personnel. Trust personnel lease, manage
and maintain or supervise the maintenance of all of the Trust's properties.
RECENT DEVELOPMENTS
THE PORTFOLIO ACQUISITION
The Trust has recently entered into a contract to purchase nine shopping
centers with approximately 1,679,000 gross rentable square feet for an
aggregate purchase price of approximately $126 million, $88 million of which
will be paid in cash and $38 million of which will be paid by assuming or
taking subject to existing non-recourse mortgages. The Portfolio Acquisition,
which is anticipated to close in November 1995, will increase the gross
rentable square feet in the Trust's retail portfolio to approximately
17,700,000 gross rentable square feet. Although the Trust has completed a
substantial portion of its due diligence review, there can be no assurance that
these properties will be purchased. Based upon information provided to the
Trust by the sellers in the Portfolio Acquisition, set forth below is certain
relevant information regarding the properties to be purchased in the Portfolio
Acquisition.
GROSS
RENTABLE OCCUPANCY
SQUARE YEAR AS OF
PROPERTY FEET BUILT ACRES OCTOBER 15, 1995 MAJOR TENANTS
- -------- -------- ----- ----- ---------------- -----------------------
Delta Center 173,619 1985 16 95% Service Merchandise
Lansing, MI Pet Food
TJ Maxx
Kids 'R Us
Farmington 84,310 1985 8 93% Farmer Jack
Crossroads Perry Drug
Farmington, MI
Fashion Corners 188,933 1986 15 94% Kids 'R Us
Saginaw, MI TJ Maxx
Best Products
Best Buy
Genessee Cross- 119,006 1988 10 99% Burlington Coat Factory
ing
Flint, MI
Hall Road Cross- 176,000 1985 27 93% Michaels
ing TJ Maxx
Shelby, MI Pet Food
Gander Mountain
Hampton Village 460,268 1990 91 96% Farmer Jack
Centre TJ Maxx
Rochester Hills, Dunham's
MI Office Max
Builders Square
Star Theatre
Michaels
Barnes & Noble
Westland Cross- 134,557 1985 20 90% Marshall's
ing Franks
Westland, MI
S-4
GROSS
RENTABLE OCCUPANCY
SQUARE YEAR AS OF
PROPERTY FEET BUILT ACRES OCTOBER 15, 1995 MAJOR TENANTS
- -------- --------- ----- ----- ---------------- --------------
Wallkill Plaza 203,234 1986 24 86% Shop-Rite
Middletown, NY Bradlee's(1)
Rite Aid
Midway Crossing 138,817 1986 15 100% Dunham's
Elyria, OH TJ Maxx
US Merchandise
--------- ---
TOTAL 1,678,744 226
========= ===
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(1) Bradlee's recently filed a petition for bankruptcy under Chapter 11 of the
United States Bankruptcy Code. The purchase contract for the Portfolio
Acquisition provides that if the Bradlee's lease is rejected in
bankruptcy, the aggregate purchase price for the Portfolio Acquisition
will be reduced by $1.2 million.
RECENT PROPERTY TRANSACTIONS
Since August 1, 1995, the Trust has acquired two shopping centers,
containing an aggregate of approximately 395,000 gross rentable square feet
and one garden apartment community containing 208 units for an aggregate
purchase price of approximately $25.2 million. The two shopping centers are
Ivy Ridge Shopping Center, located in Philadelphia, PA and Tinley Park
Shopping Center located in Chicago, IL. The apartment community is Harbour
Landing in Columbia, SC.
Ivy Ridge Shopping Center consists of approximately 112,000 gross rentable
square feet on approximately 9 acres and is currently 96% occupied. The major
tenants include A&P Supermarket, Woolworth, Mandee's and Boston Market. The
center, which was built in 1963, has been subsequently remodeled and expanded.
Tinley Park Shopping Center consists of approximately 283,000 gross rentable
square feet on approximately 21 acres and is currently 94% occupied. The major
tenants include Builders Square, Walts Finer Foods and TJ Maxx. The center was
built in 1995.
Harbour Landing consists of 208 units on approximately 15 acres and is
currently 96% occupied. This apartment community, which was built in 1972, has
landscaped grounds, a swimming pool and tennis courts.
The Trust also recently sold Chinoe Village Shopping Center in Lexington, KY
for approximately $3.25 million.
USE OF PROCEEDS
The net proceeds to the Trust from the sale of the Common Shares offered
hereby are estimated at approximately $80 million (approximately $92.1 million
if the Underwriters' over-allotment option is exercised in full). The Trust
currently anticipates that the net proceeds will be used to pay a portion of
the purchase price for the properties in the Portfolio Acquisition. In the
event the Portfolio Acquisition does not close as a result of the Trust's due
diligence review or for any other reason, the proceeds not used for the
Portfolio Acquisition will be applied to working capital and general trust
purposes, which may include the acquisition or development of shopping
centers, factory outlet centers and garden apartment communities as suitable
opportunities arise, the expansion and improvement of certain properties owned
or to be owned by the Trust, and the repayment of certain indebtedness
outstanding at such time. Pending such uses, the net proceeds may be invested
in short-term income producing investments, such as investments in commercial
paper, government securities or money market funds that invest in government
securities.
S-5
CAPITALIZATION
The following table sets forth the capitalization of the Trust as of July 31,
1995 and as adjusted to give effect to this offering and the anticipated use of
the proceeds thereof as described under "Use of Proceeds."
HISTORICAL AS ADJUSTED
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(IN THOUSANDS)
Long-term debt:
Mortgage notes payable(1)............................. $ 27,295 $ 64,885
Senior Notes, net of unamortized discount of
$1,642,917(2)........................................... 179,357 179,357
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$206,652 $244,242
======== ========
Shareholders' equity:
Common Shares of Beneficial Interest, without par val-
ue, unlimited Common Shares authorized; 53,262,565
Common Shares issued and outstanding; 57,262,565 Com-
mon Shares issued and outstanding, as adjusted(3).... $622,562 $702,582
-------- --------
Total shareholders' equity.............................. 570,529 650,549
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Total capitalization.................................... $777,181 $894,791
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(1) Includes current portion of long-term debt. The rates of interest on
outstanding mortgage indebtedness range from 7.2% to 11.625%; the weighted
average interest rate of the mortgages was 9.9% per annum at July 31, 1995.
The "As Adjusted" column also includes approximately $37.6 million of
mortgage notes relating to the Portfolio Acquisition. The rate of interest
on each of such mortgage notes is 9.375% per annum.
(2) In April 1995 the Trust issued $100 million of 7.75% unsecured Senior Notes
due April 6, 2005 at a discount, with an effective interest rate of 7.95%.
In June 1995 the Trust issued $81 million of 6.8% unsecured Senior Notes
due May 15, 2002 at a discount, with an effective interest rate of 6.87%.
(3) Does not include 2,650,000 Common Shares reserved for issuance under the
Trust's share option plans, 4,662,389 Common Shares reserved for issuance
under the Trust's Distribution Reinvestment and Share Purchase Plan, or
179,657 Common Shares issued or cancelled under all of such plans since
July 31, 1995.
S-6
SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the Trust and
should be read in conjunction with the financial statements of the Trust and
related notes thereto incorporated herein by reference.
YEAR ENDED JULY 31,
---------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues
Rental income......... $21,879 $26,164 $28,463 $33,763 $38,041 $41,395 $47,595 $65,308 $ 96,384 $126,448
Interest and
dividends........... 9,523 9,235 8,857 9,778 16,082 15,988 17,097 11,001 4,570 4,128
Other revenues........ 881 460 -- -- -- -- -- -- -- --
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
32,283 35,859 37,320 43,541 54,123 57,383 64,692 76,309 100,954 130,576
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Operating expenses
Property operating
costs............... 8,411 9,772 9,871 11,547 14,916 14,133 16,163 22,440 33,283 43,343
Interest on mortgages
& notes(1).......... 5,673 5,713 2,035 1,933 1,901 1,935 1,527 1,386 2,289 7,174
Depreciation and
amortization........ 2,057 2,406 2,569 3,164 3,563 4,205 5,051 7,574 11,342 15,055
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
16,141 17,891 14,475 16,644 20,380 20,273 22,741 31,400 46,914 65,572
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Operating income........ 16,142 17,968 22,845 26,897 33,743 37,110 41,951 44,909 54,040 65,004
Other income............ 701 1,454 2,223 2,153 3,262 4,789 10,064 940 990 228
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
16,843 19,422 25,068 29,050 37,005 41,899 52,015 45,849 55,030 65,232
Other deductions(1)..... 1,225 1,456 1,618 1,939 1,958 2,021 2,569 2,620 2,713 2,516
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Net income.............. $15,618 $17,966 $23,450 $27,111 $35,047 $39,878 $49,446 $43,229 $ 52,317 $ 62,716
======= ======= ======= ======= ======= ======= ======= ======= ======== ========
Net income per Common
Share(2)............... .78 .80 .88 .95 1.01 1.05 1.08 .89 1.06 1.19
OTHER DATA:
Funds from
operations(1)(3)........ $16,974 $20,413 $23,796 $28,123 $35,347 $39,294 $44,433 $49,863 $ 62,669 $ 77,543
Distributions paid...... 14,747 18,257 23,780 28,148 36,557 43,640 55,173 61,963 64,693 71,616
Distributions paid per
Common Share(2)........ .73 .81 .89 .97 1.05 1.13 1.21 1.275 1.315 1.355
Weighted average number
of Common Shares
outstanding(2)......... 20,033 22,585 26,734 28,620 34,844 38,138 45,971 48,838 49,502 52,894
JULY 31,
-----------------------------------------------------------------------------------------
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS)
BALANCE SHEET DATA:
Real estate (at cost)... $ 82,042 $ 92,867 $107,310 $137,081 $168,601 $180,361 $301,136 $388,228 $621,342 $765,080
Total assets............ 190,740 189,280 187,319 301,282 307,678 461,913 530,827 534,248 616,993 796,636
Long-term debt(4)....... 96,273 26,714 22,748 22,971 22,938 18,868 17,831 23,321 28,060 206,652
Shareholders' equity.... 90,884 159,368 161,866 274,199 279,490 437,206 506,339 500,571 565,493 570,529
- --------
(1) Certain amounts prior to 1993 have been reclassified to conform to the 1993
presentation.
(2) Adjusted to give effect to the 3-for-2 share split on April 1, 1986.
(3) Net income plus depreciation and amortization of real estate assets, less
gains from the sale of securities and properties and a non-cash accounting
charge of $1,495,000 in 1987. Industry analysts generally consider funds
from operations to be an appropriate measure of the performance of an
equity REIT. Funds from operations does not represent net income or cash
generated from operating activities in accordance with generally accepted
accounting principles and should not be considered as an alternative to net
income as an indicator of the Trust's operating performance or as an
alternative to cash flow as a measure of liquidity. The calculation of
funds from operations for the periods set forth above is based upon the
recommended guidelines adopted by the National Association of Real Estate
Investment Trusts.
(4) Includes current installments on mortgage notes payable.
S-7
PRICE RANGE OF THE COMMON SHARES AND DISTRIBUTIONS
The Common Shares are listed on the New York Stock Exchange under the symbol
NPR. The following table sets forth for the periods indicated, the high and low
sale prices of the Common Shares as reported by the New York Stock Exchange
and, prior to June 12, 1986, by the American Stock Exchange, and the cash
distributions paid in such periods (the Common Share prices and distributions
have been adjusted to give effect to a 2-for-1 split on February 1, 1983, and a
3-for-2 split on April 1, 1986).
CASH DISTRIBUTIONS PAID
FISCAL YEAR ENDED JULY 31, HIGH LOW PER COMMON SHARE
--------------------------- ------ ------ -----------------------
1980................................... $ 3.85 $ 2.51 $ .30
1981................................... 4.14 3.65 .34
1982................................... 5.33 3.46 .39
1983................................... 9.50 4.96 .51
1984................................... 8.50 7.25 .57
1985................................... 11.92 7.50 .65
1986................................... 14.50 10.00 .73
1987................................... 18.38 13.00 .81
1988................................... 17.63 10.75 .89
1989................................... 17.88 14.38 .97
1990................................... 19.13 14.88 1.05
1991................................... 21.25 13.75 1.13
1992................................... 25.00 19.63 1.21
1993................................... 26.38 21.50 1.275
1994................................... 26.38 20.88 1.315
1995................................... 22.63 18.75 1.355
1996
1st Quarter (through November 8,
1995)................................. 23.00 21.13 .3450
The last reported sale price of the Common Shares on the New York Stock
Exchange on November 8, 1995 was $21.25. The number of shareholders of record
at November 7, 1995 was 12,534. BancBoston State Street Investor Services is
registrar and transfer agent for the Common Shares.
Since its organization in 1972, the Trust has made regular and uninterrupted
distributions and such distributions have never been omitted or reduced.
Distributions have been increased in each of the last 65 consecutive quarters.
The Trust intends to continue to declare quarterly distributions on its
Common Shares. However, no assurances can be made as to the amounts of future
distributions since such distributions are subject to the Trust's cash flow
from operations, earnings, financial condition, capital requirements and such
other factors as the Board of Trustees deems relevant.
DISTRIBUTION REINVESTMENT AND SHARE PURCHASE PLAN
The Trust has a Distribution Reinvestment and Share Purchase Plan which
allows shareholders to acquire additional Common Shares by automatically
reinvesting distributions. Common Shares are acquired pursuant to the Plan at a
price equal to 95% of the market price of such Common Shares on the
distribution payment date, without payment of any brokerage commission or
service charge. The Plan also allows shareholders to purchase additional Common
Shares at 100% of the average of the high and low sales price of such Common
Shares on the distribution payment date in January, April, July and October of
each year, by making optional cash payments, without payment of any brokerage
commission or service charge. Shareholders who do not participate in the Plan
continue to receive cash distributions, as declared. William Newman, the
Chairman of the Board and Chief Executive Officer of the Trust, is the largest
individual participant in the Plan.
S-8
BUSINESS
The Trust presently owns or has leasehold interests in 104 shopping centers
containing an aggregate of approximately 13,930,000 gross rentable square feet.
Substantially all of the shopping centers are community and neighborhood
centers. The centers frequently include supermarket chains and drug stores as
major tenants and in some instances the centers include discount department
stores. Twenty-one of the shopping centers are located in New York, 16 in
Georgia, 14 in Ohio, 12 in Pennsylvania, six in Virginia, five each in Kentucky
and North Carolina, four each in Indiana, New Jersey and Tennessee, three in
West Virginia, two each in Delaware, Iowa, Michigan and Maryland and one each
in Alabama and Illinois. The Trust also owns five factory outlet centers
aggregating approximately 1,559,000 gross rentable square feet. Two of the
centers are located in Missouri and one center is located in each of
California, Florida and Virginia. As of July 31, 1995, the average occupancy
rates for the Trust's shopping centers and factory outlet centers were 89% and
93%, respectively.
The Trust also owns 25 garden apartment communities with an aggregate of
5,341 apartment units. Five of the apartment communities are located in each of
Kentucky and Tennessee, four in Alabama, two each in Delaware, New York, South
Carolina and Ohio, and one each in Florida, Missouri and Pennsylvania. Over 70%
of the apartment units have two or more bedrooms. As of July 31, 1995, the
average occupancy rate for the Trust's apartment communities was 96%.
In addition to the real estate properties described above, the Trust holds
three purchase money first mortgages at per annum interest rates of 9.375%,
9.875% and 10%, a second mortgage at a per annum interest rate of 10.5%, a
leasehold mortgage at a per annum interest rate of 12% and a note receivable at
a per annum interest rate of 11.5%. The mortgages and note receivable, all of
which are presently current, totalled approximately $22.9 million at July 31,
1995. The mortgages (other than the leasehold mortgage) are collateralized by
four shopping centers containing an aggregate of approximately 535,000 gross
rentable square feet. The Trust also owns 55 acres of vacant land in Jackson
Township, New Jersey, on which the Six Flags Factory Outlet Center is planned
to be built, a 51,000 square foot office building in Princeton, New Jersey and
minor interests in several publicly traded real estate entities, consisting of
convertible debentures and shares of beneficial interest.
The Trust intends to continue to invest in well-located income-producing real
estate, with a primary emphasis on shopping centers and garden apartment
communities. The Trust may also continue to invest in selected factory outlet
centers. An important part of the Trust's investment strategy is to enhance the
cash flow potential of its properties through a program of expansion,
renovation, leasing, re-leasing and improving the tenant mix. The recent
economic recession and tight real estate credit conditions have led to
financial difficulties for leveraged property owners and their lenders creating
an additional source of acquisitions for the Trust. Management expects the
number of properties available for purchase from these sources to continue.
The Trust often seeks properties located in smaller cities. Currently, none
of the Trust's shopping centers are enclosed malls. Many of the centers feature
supermarket and drug store tenants and some of the centers include discount
department stores. Supermarkets and drug stores historically have been less
susceptible to economic downturns. The Trust attempts to acquire each shopping
center and apartment community at a discount to replacement cost. Properties
purchased substantially below replacement cost generally have lower rent which
may allow for significant increases upon releasing. By primarily purchasing
completed income-producing properties rather than building them, the Trust has
avoided development risks.
Recently, the Trust has purchased newer and more modern shopping centers at
below replacement cost. The average size of the supermarkets in these centers
exceeds 44,000 square feet, representing current food store designs. The Trust
believes that such newer high-quality centers will continue to be available
below replacement cost.
S-9
The Trust's revenue base is diversified from an individual tenant and
property perspective, as well as geographically. No single tenant or chain of
tenants currently accounts for more than 2% of the Trust's revenues, other than
Kmart, the Trust's largest tenant, which currently accounts for approximately
5% of revenues. In addition, no single Trust property accounts for more than
approximately 6.1% of the Trust's total revenues.
Certain of the Trust's tenants, including Kmart, have recently experienced
economic difficulties. However, in that regard, 17 of the Trust's 18 Kmarts
represent the newer and larger prototype Kmart stores, 15 of which have been
built or renovated within the last seven years. The average size of all the
Trust's Kmart stores is approximately 90,000 square feet.
The Trust generally seeks to acquire properties in those states in which it
already owns property or in an adjacent state to allow for efficient
management. The Trust also attempts to acquire shopping centers which provide
opportunities for expansion or would benefit from renovation. See "Renovations,
Expansions and Development."
A substantial portion of the Trust's shopping center income consists of rents
received under long-term leases. Most of these shopping center leases provide
for payment by tenants of an annual minimum rent and additional rent calculated
generally as a percentage of gross sales in excess of a specified amount
("percentage rent"), and many leases also have cost-of-living escalation
clauses. Upon renewal of a shopping center lease, the Company seeks to increase
the annual minimum rent of a tenant to an amount which approaches or exceeds
the sum of the former annual minimum rent plus the most recent annual
percentage rent received from the tenant. The Trust's apartments are generally
rented on a one-year basis.
The Trust's shopping center leases usually provide that the Trust, as
landlord, must repair and maintain building exteriors (including roofs and
canopies and external utilities) and common areas, including parking lots. Most
of the shopping center leases also contain provisions for pro rata contribution
by tenants to the cost of maintaining common areas and payment of real estate
taxes. New leases generally provide for full pro rata recovery of these costs
from tenants.
In order to protect and enhance its investments, the Trust incurs
unreimbursed costs for renovation of its properties. The Trust also seeks to
commit tenants to make improvements to their premises, including sign
installation and store modernization. The management of the Trust believes that
because such renovations and improvements enhance the appearance of the
shopping centers, customer traffic may increase. To the extent that additional
customer traffic results in higher sales, percentage rents received by the
Trust with respect to that shopping center may increase. As a result, the Trust
is in a better position to receive higher minimum rents upon the expiration of
leases from existing tenants or new leases.
Under various Federal, state and local laws, ordinances and regulations, an
owner of real estate or interests therein may be liable for the costs of
removal or remediation of certain hazardous substances on or in such property.
Such enactments often impose such liability without regard to whether the owner
knew of, or was responsible for, the presence of such hazardous substances. The
cost of any required remediation and the owner's liability therefor as to any
property is generally not limited under such enactments and could exceed the
value of the property and/or the aggregate assets of the owner. The presence of
such substances, or the failure to properly remediate such substances, may also
adversely affect the owner's ability to sell or rent such property or to borrow
using such property as collateral.
The Trust's management is not aware of any environmental liability that it
believes could have a material adverse effect on the Trust's financial
condition or results of operations. In addition, since 1989, the Trust has
typically conducted Phase I environmental audits (which generally involve
inspection without soil sampling or ground water analysis) in connection with
property acquisitions and none of these audits has revealed the existence of
any environmental conditions that the Trust's management believes could have a
material adverse effect on the Trust's financial condition or results of
operations. No assurance, however, can
S-10
be given that these audits reveal all environmental liabilities, that
environmental liabilities may not have developed since such audits were
conducted or that no material adverse environmental condition exists that is
not known to the Trust.
The success of the Trust depends, among other factors, upon the trends of the
economy, including interest rates, construction costs, income tax laws and
increases or decreases in operating expenses, governmental regulations and
legislation, including environmental requirements, real estate fluctuations,
retailing trends, population trends, zoning laws, the financial condition and
stability of tenants, the availability of financing and capital on satisfactory
terms and the ability of the Trust to compete with others for tenants and keep
its properties leased at profitable levels. The Trust competes for properties
with an indeterminate number of investors, including domestic and foreign
corporations and financial institutions, real estate investment trusts, life
insurance companies, pension funds and trust funds. The Trust regularly reviews
its portfolio and from time to time considers the sale of certain of its
properties.
RENOVATIONS, EXPANSIONS AND DEVELOPMENT
The Trust is continuously engaged in a major program of renovation or
expansion of its existing properties and, from time to time, selectively
develops new properties. The Trust has recently completed major expansions in
four of its five existing factory outlet centers. In addition, renovations and
expansions of two shopping centers, Moundsville Plaza Shopping Center in
Moundsville, WV and Northland Plaza Shopping Center in Watertown, NY, have
recently been completed. New renovations and expansions are currently planned
or underway at four properties: Harbour Landing Apartments in Columbia, SC at
an estimated cost of $750,000; J-Town Plaza Shopping Center in Louisville, KY
at an estimated cost of $750,000; Oswego Plaza Shopping Center in Oswego, NY at
an estimated cost of $550,000; and Westgate Plaza Shopping Center in Rome, NY
at an estimated cost of $400,000.
The Trust has announced plans to develop a new factory outlet center to be
called Six Flags Factory Outlet Center in Jackson Township, NJ, located within
one mile of the Six Flags Great Adventure Theme Park, on property owned by the
Trust for approximately 25 years. The Trust has entered into an agreement with
Six Flags Theme Parks, Inc. for the joint advertising, marketing and promotion
of the outlet center and theme park. The projected cost for Phase I of this
development, which is projected to be 195,000 gross rentable square feet, will
be approximately $17 million. Construction of Phase I is expected to commence
prior to the end of calendar 1995.
S-11
MANAGEMENT
THE TRUST
The Trustees and executive officers of the Trust and their principal
occupations are as follows:
NAME AGE PRINCIPAL OCCUPATIONS AND AFFILIATIONS
- ---- --- --------------------------------------
William Newman.......... 69 Chairman of the Board and Chief Executive Officer of the
Chairman of the Board Trust since its organization in 1972, President of the Trust
of from 1972 to 1988 and President of the Trust's corporate
Trustees and Chief predecessor from 1962 to 1972; formerly Chairman of
Executive National Association of Real Estate Investment Trusts; active
Officer in real estate for more than 40 years.
Arnold Laubich.......... 65 President and Chief Operating Officer and Trustee of the
President, Chief Oper- Trust since August 1, 1988; President of Dover Management
ating Corp. (which managed the Trust's properties) from 1972 to
Officer and Trustee 1988; Senior Vice President of the Trust's predecessor from
1962 to 1972.
Norman Gold............. 65 Partner in the law firm of Altheimer & Gray; active in
Trustee the practice of law for 39 years; Trustee of the Trust since its
organization in 1972; Trustee of Banyan Short Term Income
Trust, Banyan Hotel Investment Fund and Banyan Strategic
Land Trust.
Melvin Newman........... 53 Private Investor; Vice President and General Counsel of the
Trustee Trust from 1972 to 1982; Trustee of the Trust since 1983.
Raymond H. Bottorf...... 53 President of U.S. Alpha, Inc., a wholly-owned subsidiary of
Trustee Algemeen Burgerlijk Pensionefonds; Trustee of the Trust
since 1991.
James M. Steuterman..... 39 Executive Vice President since October 1994; Trustee since
Executive Vice Presi- 1990; Senior Vice President from 1990 to 1994; Vice
dent President from 1988 to 1990.
and Trustee
Dean Bernstein.......... 37 Vice President--Administration and Finance since October
Vice President- 1994; Vice President and Trustee since 1992; Assistant
Administration and Vice President from 1991 to 1992; previously a Vice President in
Finance and Trustee the Real Estate Group at Chemical Bank for three years.
William Kirshenbaum..... 59 Vice President of the Trust since 1981; Treasurer since 1983.
Vice President, Trea-
surer
Leonard N. Cancell...... 62 Senior Vice President of the Trust since August 1, 1988;
Senior Vice President- Senior Vice President of Dover Management from 1972 to
Operations 1988; employee of the Trust's predecessor from 1964 to 1972.
Irwin E. Kwartler....... 69 Vice President of the Trust since 1982; previously, National
Vice President Sales Manager, Kimball Division of Litton Industries.
Michael I. Brown........ 53 Chief Financial Officer since 1991; Controller of the Trust
Chief Financial Offi- since 1987.
cer
and Controller
Steven F. Siegel........ 35 General Counsel and Secretary of the Trust since October
General Counsel and 1991; formerly an associate in the law firm of Miro, Miro &
Secretary Weiner for six years.
S-12
NAME AGE PRINCIPAL OCCUPATIONS AND AFFILIATIONS
- ---- --- --------------------------------------
Joseph Bosco............ 46 Vice President of the Trust since 1993; employee of the Trust
Vice President-Apart- since 1983.
ment Operations
John Wetzler............ 49 Trustee of the Trust since 1994; President of Nautica Retail
Trustee U.S.A., Inc., a subsidiary of Nautica Enterprises, Inc. since
July 1994; Executive Vice President of Nautica Retail U.S.A.,
Inc. from 1988 to 1994.
Gregory White........... 39 Trustee of the Trust since 1994; Founding Partner and the
Trustee Managing Director of Schroder Mortgage Associates since
1992; Managing Director of the Salomon Brothers Inc. real
estate finance department from 1988 to 1992.
CONTROLLING SHAREHOLDERS
As of October 31, 1995, Algemeen Burgerlijk Pensionefonds ("ABP") owned
5,000,000 Common Shares, or approximately 9.4% of the outstanding Common Shares
and MNOPF Trustees Limited (formerly Merchant Navy Officers Pension Fund
Trustees Limited) ("MNOPF") owned 4,483,954 Common Shares or approximately 8.4%
of the outstanding Common Shares. The Newman family as a group, including
William Newman, Chairman of the Board of Trustees and Chief Executive Officer
of the Trust, Melvin Newman, a Trustee of the Trust, and the estate of Joseph
Newman, a former Trustee of the Trust, own and control an aggregate of
3,022,699 Common Shares, or approximately 5.7% of the outstanding Common
Shares.
MNOPF and ABP have agreed that until December 31, 2001, and December 24,
2001, respectively, they will vote their Common Shares in favor of management's
nominees to the Board of Trustees (the "Board"). The ABP agreement requires
that a specified degree of continuity exist in the Trust's management.
Additionally, the Trust has agreed to include among management's nominees to
the Board one person designated by ABP so long as ABP owns at least 9.9% of the
outstanding Common Shares.
ABP has further agreed that, until January 10, 2006, it will not acquire
Common Shares which would bring its holdings in excess of 15% of the
outstanding Common Shares, provided that a degree of continuity exists in the
Trust's management. The continuity requirement provides that a majority of the
Trust's Board shall consist of "Continuing Trustees" (who are defined as
Trustees who either were Trustees on January 10, 1991 or whose nomination at
any time thereafter is approved by a majority of Continuing Trustees) and that
a majority of the Trust's executive officers consist of officers who have been
executive officers for at least two years or who are elected to their office by
a majority of Continuing Trustees. ABP has also agreed that except under
certain specified circumstances it will not sell or transfer any of its Common
Shares without the Trust's consent prior to January 10, 2001.
In the event the Trust issues additional Common Shares for cash at a time
when ABP owns at least 9.9% of the outstanding Common Shares, such fund has the
right to maintain its percentage of ownership in the Trust by purchasing from
the Trust additional Common Shares at the same price as was paid by such
purchaser, less an amount equal to underwriter's commissions, if any.
ABP also has agreed that so long as the degree of continuity is maintained it
will vote its Common Shares in the manner recommended by the Trust's Board on
any proposal presented by the Board to the Trust's shareholders until January
10, 1996 (unless such vote would adversely affect ABP's Common Shares other
than pro rata in proportion to all of the Trust's outstanding Common Shares).
S-13
TAXATION
The Trust believes that it has operated, and the Trust intends to continue to
operate, in such manner as to qualify as a real estate investment trust under
the Internal Revenue Code of 1986, as amended (the "Code"), but no assurance
can be given that it will at all times so qualify. In the opinion of Altheimer
& Gray, tax counsel to the Trust, the Trust was organized in conformity with
the requirements for qualification as a "real estate investment trust" under
the Code, and the Trust since its organization has met and continues to meet
all requirements of the Code requisite to such qualification. In rendering its
opinion, Altheimer & Gray has relied, as to factual determinations and
conclusions necessary to its opinion, on representations of the Trust.
The provisions of the Code pertaining to real estate investment trusts are
highly technical and complex. The following is a brief and very general summary
of certain provisions which currently govern the federal income tax treatment
of the Trust and its shareholders. For the particular provisions which govern
the federal income tax treatment of the Trust and its shareholders, reference
is made to Sections 856 through 860 of the Code and the Income Tax Regulations
promulgated thereunder. The following summary is qualified in its entirety by
such reference.
Under the Code, if certain requirements are met in a taxable year, a real
estate investment trust will generally not be subject to federal income tax
with respect to income which it distributes to its shareholders. If the Trust
fails to qualify during any taxable year as a real estate investment trust,
unless certain relief provisions are available, it will be subject to tax
(including any applicable alternative minimum tax) on its taxable income at
regular corporate rates, which could have a material adverse effect upon its
shareholders.
In any year in which the Trust qualifies to be taxed as a real estate
investment trust, distributions made to its shareholders out of current or
accumulated earnings or profits will be treated as dividends except that
distributions of net capital gains designated by the Trust as capital gain
dividends will be taxed as long-term capital gains to the shareholders. To the
extent that distributions exceed current or accumulated earnings and profits,
they will constitute a return of capital, rather than dividend or capital gain
income, and will be applied in reducing the basis for the shareholders' Common
Shares, or if in excess of such basis, will be taxed in the same manner as gain
from the sale of those Common Shares.
Investors are urged to consult their own tax advisors with respect to the tax
consequences arising under federal law and the laws of any state, municipality
or other taxing jurisdiction. Foreign investors should consult their own tax
advisors concerning the tax consequences of an investment in the Trust
including the possibility of United States income tax withholding on Trust
distributions.
S-14
UNDERWRITING
Subject to the terms and conditions contained in the terms agreement and
related underwriting agreement (collectively, the "Underwriting Agreement"),
the Trust has agreed to sell to each of the Underwriters named below, and each
of the Underwriters for whom Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Lehman Brothers Inc., Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated, Prudential Securities Incorporated and Smith Barney
Inc. are acting as representatives (the "Representatives") has severally agreed
to purchase, the respective number of Common Shares set forth below opposite
their respective names. The Underwriting Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent,
and that the Underwriters will be obligated to purchase all of the Common
Shares if any are purchased.
NUMBER OF
UNDERWRITER COMMON SHARES
----------- -------------
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................ 411,670
Lehman Brothers Inc........................................... 411,666
Morgan Stanley & Co. Incorporated............................. 411,666
PaineWebber Incorporated...................................... 411,666
Prudential Securities Incorporated............................ 411,666
Smith Barney Inc.............................................. 411,666
Bear, Stearns & Co. Inc....................................... 70,000
Alex. Brown & Sons Incorporated............................... 70,000
Burnham Securities Inc........................................ 70,000
Dean Witter Reynolds Inc...................................... 70,000
Goldman, Sachs & Co........................................... 70,000
Legg Mason Wood Walker, Incorporated.......................... 70,000
Oppenheimer & Co., Inc........................................ 70,000
Advest, Inc................................................... 40,000
Robert W. Baird & Co. Incorporated............................ 40,000
Barclay Investments, Inc...................................... 40,000
J.C. Bradford & Co............................................ 40,000
Cowen & Company............................................... 40,000
Dain Bosworth Incorporated.................................... 40,000
Doft & Co., Inc............................................... 40,000
EVEREN Securities, Inc........................................ 40,000
Fahnestock & Co. Inc.......................................... 40,000
First Albany Corporation...................................... 40,000
Furman Selz Incorporated...................................... 40,000
Interstate/Johnson Lane Corporation........................... 40,000
Janney Montgomery Scott Inc................................... 40,000
Edward D. Jones & Co.......................................... 40,000
C.L. King & Associates, Inc................................... 40,000
McDonald & Company Securities, Inc............................ 40,000
Morgan Keegan & Company, Inc.................................. 40,000
Neuberger & Berman............................................ 40,000
Piper Jaffray Inc............................................. 40,000
Principal Financial Securities, Inc........................... 40,000
Raymond James & Associates, Inc............................... 40,000
The Robinson-Humphrey Company, Inc............................ 40,000
Wm Smith Securities, Incorporated............................. 40,000
Sutro & Co. Incorporated...................................... 40,000
Tucker Anthony Incorporated................................... 40,000
Wheat, First Securities, Inc.................................. 40,000
---------
Total.................................................... 4,000,000
=========
S-15
The Representatives have advised the Trust that the Underwriters propose
initially to offer the Common Shares to the public at the public offering price
set forth on the cover page of this Prospectus Supplement, and to certain
dealers at such price less a concession not in excess of $.63 per share. The
Underwriters may allow, and such dealers may reallow, a discount not in excess
of $.10 per share on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discounts may be changed.
The Trust has granted an option to the Underwriters, exercisable during the
30-day period after the date of this Prospectus Supplement, to purchase up to
an aggregate of 600,000 additional Common Shares at the price to the public set
forth on the cover page of this Prospectus Supplement, less the underwriting
discount. The Underwriters may exercise this option only to cover over-
allotments, if any. To the extent that the Underwriters exercise this option,
each Underwriter will be obligated, subject to certain conditions, to purchase
the number of additional Common Shares proportionate to such Underwriter's
initial amount reflected in the foregoing table.
The Trust intends to use the net proceeds of this offering to purchase the
properties in the Portfolio Acquisition from certain partnerships of which
affiliates of one of the Underwriters, who are not Representatives, are general
partners. See "Recent Developments--The Portfolio Acquisition."
The Trust has agreed to indemnify the Underwriters against certain civil
liabilities, including certain liabilities under the Securities Act of 1933, as
amended, or to contribute to payments the Underwriters may be required to make
in respect thereof.
S-16
PROSPECTUS
$250,000,000
NEW PLAN REALTY TRUST
DEBT SECURITIES, PREFERRED SHARES,
DEPOSITARY SHARES, COMMON SHARES, WARRANTS AND RIGHTS
New Plan Realty Trust ("New Plan" or the "Trust") may from time to time offer
in one or more series its (i) unsecured debt securities, which may be either
senior debt securities ("Senior Securities") or subordinated debt securities
("Subordinated Securities," and together with Senior Securities, the "Debt
Securities"), (ii) preferred shares of beneficial interest, par value $1.00 per
share ("Preferred Shares"), (iii) Preferred Shares represented by depositary
shares ("Depositary Shares"), (iv) common shares of beneficial interest without
par value ("Common Shares"), (v) warrants to purchase Debt Securities,
Preferred Shares or Common Shares (collectively, "Warrants"), or (vi) rights to
purchase Common Shares ("Rights"), with an aggregate initial public offering
price of up to $250,000,000 on terms to be determined at the time of offering.
Debt Securities, Preferred Shares, Depositary Shares, Common Shares, Warrants
and Rights (collectively, the "Offered Securities") may be offered, separately
or together, in separate series in amounts, at prices and on terms to be set
forth in a supplement to this Prospectus (a "Prospectus Supplement").
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement and will include, where applicable: (i) in the case of Debt
Securities, the specific title, aggregate principal amount, ranking, currency,
form (which may be registered or bearer, or certificated or global), authorized
denominations, maturity, rate (or manner of calculation thereof) and time of
payment of interest, terms for redemption at the option of the Trust or
repayment at the option of the Holder, terms for sinking fund payments, terms
for conversion into Preferred Shares or Common Shares, and any initial public
offering price; (ii) in the case of Preferred Shares, the specific title and
stated value, any dividend, liquidation, redemption, conversion, voting and
other terms and conditions, and any initial public offering price; (iii) in the
case of Depositary Shares, the fractional share of a Preferred Share
represented by each such Depositary Share; (iv) in the case of Common Shares,
any initial public offering price; (v) in the case of Warrants, the number and
terms thereof, the designation and the number of securities issuable upon their
exercise, the exercise price, the terms of the offering and sale thereof and,
where applicable, the duration and detachability thereof; and (vi) in the case
of Rights, the duration, exercise price and transferability thereof. In
addition, such specific terms may include limitations on direct or beneficial
ownership and restrictions on transfer of certain types of Offered Securities,
in each case as may be appropriate to preserve the status of the Trust as a
real estate investment trust ("REIT") for federal income tax purposes.
The applicable Prospectus Supplement will also contain information, where
applicable, about certain United States federal income tax considerations
relating to, and any listing on a securities exchange of, the Offered
Securities covered by such Prospectus Supplement.
The Offered Securities may be offered directly, through agents designated
from time to time by the Trust, or to or through underwriters or dealers. If
any agents or underwriters are involved in the sale of any of the Offered
Securities, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, will be set forth, or will be
calculable from the information set forth, in the applicable Prospectus
Supplement. See "Plan of Distribution." No Offered Securities may be sold
without delivery of the applicable Prospectus Supplement describing the method
and terms of the offering of such series of Offered 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 November 8, 1995.
AVAILABLE INFORMATION
The Trust is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). The reports, proxy
statements and other information filed by the Trust with the Commission in
accordance with the Exchange Act can be inspected and copied at the
Commission's Public Reference Section, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following regional offices of the Commission: Seven World
Trade Center, 13th Floor, New York, New York 10048 and 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. 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 Common Shares are
listed on the New York Stock Exchange and similar information concerning the
Trust can be inspected and copied at the offices of the New York Stock
Exchange, Inc., 20 Broad Street, New York, New York 10005.
The Trust has filed with the Commission a registration statement (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
Offered Securities. This Prospectus does not contain all 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
document are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document 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 Trust and the Offered 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 Trust under the Exchange
Act with the Commission and are incorporated herein by reference:
1. The Trust's Annual Report on Form 10-K for the year ended July 31,
1995, filed October 6, 1995 pursuant to the Exchange Act.
2. The Trust's Reports on Form 8-K dated July 25, 1995, filed July 25,
1995 pursuant to the Exchange Act, and on Form 8-K/A relating thereto dated
August 9, 1995, filed August 9, 1995 pursuant to the Exchange Act.
3. The Trust's Report on Form 8-K dated October 20, 1995, filed October
20, 1995 pursuant to the Exchange Act.
4. Item 1 of the Trust's registration statement on Form 8-A, as amended,
filed May 19, 1986 pursuant to Section 12 of the Exchange Act.
All documents filed by the Trust pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Offered Securities shall be deemed to
be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing such documents.
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 herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such
2
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.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such information, unless such exhibits are
specifically incorporated by reference in such information) will be provided
without charge to each person, including any beneficial owner, to whom this
Prospectus is delivered, upon written or oral request. Requests should be
directed to New Plan Realty Trust, Attention: Ronald Frankel, 1120 Avenue of
the Americas, New York, New York 10036; (212) 869-3000.
THE TRUST
New Plan, one of the largest publicly traded real estate investment trust in
the United States based on the aggregate market value of its outstanding Common
Shares, is a self-administered and self-managed equity real estate investment
trust which primarily owns shopping centers and garden apartment communities.
The Trust's present equity investments consist principally of 104 shopping
centers, with approximately 13,930,000 gross rentable square feet, five factory
outlet centers with approximately 1,559,000 gross rentable square feet and 25
garden apartment communities containing 5,341 apartment units. These properties
are located in 21 states. Since the organization of the corporate predecessor
of the Trust in 1962, the Trust and its predecessor have been directed by
members of the Newman family. The Newman family has been active in real estate
ownership and management since 1926.
The Trust has paid regular and uninterrupted cash distributions on its Common
Shares since it commenced operations as a real estate investment trust in 1972.
These distributions, which are paid quarterly, have increased from $0.19 per
Common Share in fiscal 1973 to $1.355 per Common Share in fiscal 1995. Since
inception, each distribution has either been equal to or greater than the
distribution preceding it, and the distributions have been increased in each of
the last 65 consecutive quarters. The Trust intends to continue to declare
quarterly distributions on its Common Shares.
The Trust invests its assets in income-producing real estate, with a primary
emphasis on shopping centers, including factory outlet centers, and garden
apartment communities. The Trust's primary investment strategy is to identify
and purchase well-located shopping centers, including factory outlet centers,
and garden apartments usually at a significant discount to replacement cost.
The Trust seeks to achieve income growth through a program of expansion,
renovation, leasing, re-leasing and improving the tenant mix of its shopping
centers and factory outlets. The Trust minimizes development risks by generally
purchasing existing income-producing properties.
The Trust, a Massachusetts business trust, maintains its executive offices at
1120 Avenue of the Americas, New York, New York 10036, and its telephone number
is (212) 869-3000.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth the historical ratios of earnings to fixed
charges of the Trust for the periods indicated:
1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ----
16.3 19.0 28.5 23.6 17.0 8.1
To date, the Trust has not issued any preferred shares; therefore, the ratios
of earnings to combined fixed charges and preferred share dividends are
unchanged from the ratios presented in this section. For purposes of computing
these ratios, earnings have been calculated by adding fixed charges (excluding
capitalized interest) to income (loss) before income taxes and extraordinary
items. Fixed charges consist of interest costs, whether expensed or
capitalized, the interest component of rental expense, if any, and amortization
of debt discounts and issue costs, whether expensed or capitalized.
3
USE OF PROCEEDS
Unless otherwise described in the applicable Prospectus Supplement, the Trust
intends to use the net proceeds from the sale of the Offered Securities for
working capital and general trust purposes, which may include the acquisition
of shopping centers, factory outlet centers and garden apartment communities as
suitable opportunities arise, the expansion and improvement of certain
properties owned or to be owned by the Trust, and the repayment of certain
indebtedness outstanding at such time.
DESCRIPTION OF DEBT SECURITIES
The following description sets forth certain general terms and provisions of
the Debt Securities to which any 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 described in a Prospectus Supplement
relating to such Debt Securities.
The Senior Securities are to be issued under an Indenture, dated as of March
29, 1995, as amended or supplemented from time to time (the "Senior Securities
Indenture"), between the Trust and The First National Bank of Boston, as
trustee (the "Senior Securities Trustee") and the Subordinated Securities are
to be issued under an Indenture, as amended or supplemented from time to time
(the "Subordinated Securities Indenture"), between the Trust and a trustee to
be selected by the Trust (the "Subordinated Securities Trustee"). The Senior
Securities Indenture and the Subordinated Securities Indenture are referred to
herein individually as the "Indenture" and collectively as the "Indentures,"
and the Senior Securities Trustee and the Subordinated Securities Trustee are
referred to herein individually as the "Trustee" and collectively as the
"Trustees." The Senior Securities Indenture and a form of the Subordinated
Securities Indenture have been filed as exhibits to the Registration Statement
of which this Prospectus is a part and will be available for inspection,
respectively, at the corporate trust office of the Senior Securities Trustee
and at the corporate trust office of the Subordinated Securities Trustee or as
described above under "Available Information." The Senior Securities Indenture
is, and the Subordinated Securities Indenture will be, subject to and governed
by the Trust Indenture Act of 1939, as amended (the "TIA"). The description of
the Subordinated Securities Indenture set forth below assumes that the Trust
has entered into the Subordinated Securities Indenture. The Trust will execute
the Subordinated Securities Indenture when and if the Trust issues Subordinated
Securities. The statements made hereunder relating to the Indentures and the
Debt Securities to be issued thereunder are summaries of certain provisions
thereof and do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all provisions of the Indentures and such
Debt Securities. Unless otherwise specified, all section references appearing
herein are to sections of the Indentures, and capitalized terms used but not
defined herein shall have the meanings set forth in the Indentures.
GENERAL
The Debt Securities will be direct, unsecured obligations of the Trust.
Senior Securities will rank pari passu with certain other senior debt of the
Company that may be outstanding from time to time and will rank senior to all
Subordinated Securities that may be outstanding from time to time. Subordinated
Securities will be subordinated in right of payment to the prior payment in
full of the Senior Debt of the Company, as described under "Subordination."
Each Indenture provides that 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 Trustees of the Trust or as established in one or
more indentures supplemental to the 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 (Section 301 of each Indenture).
4
Each Indenture provides that there may be more than one Trustee thereunder,
each with respect to one or more series of Debt Securities. Any Trustee under
either 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 (Section 608 of each Indenture). 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 (Section 609 of each Indenture) thereunder, and, except as
otherwise indicated herein, any action described herein to be taken by the
Trustee may be taken by each such Trustee with respect to, and only with
respect to, the one or more series of Debt Securities for which it is Trustee
under the applicable Indenture.
Reference is made to the Prospectus Supplement relating to the series of Debt
Securities being offered for the specific terms thereof, including:
(1) the title of such Debt Securities;
(2) the classification of such Debt Securities as Senior Securities or
Subordinated Securities;
(3) the aggregate principal amount of such Debt Securities and any limit
on such aggregate principal amount;
(4) 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, or (if applicable) the portion of the principal
amount of such Debt Securities which is convertible into Common Shares or
Preferred Shares, or the method by which any such portion shall be
determined;
(5) if convertible, in connection with the preservation of the Trust's
status as a REIT, any applicable limitations on the ownership or
transferability of the Common Shares or Preferred Shares into which such
Debt Securities are convertible;
(6) the date or dates, or the method for determining such date or dates,
on which the principal of such Debt Securities will be payable;
(7) 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;
(8) the date or dates, or the method for determining such date or dates,
from which any such interest will accrue, the Interest Payment 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 Person 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;
(9) the place or places where the principal of (and premium, if any) and
interest, if any, on such Debt Securities will be payable, such Debt
Securities may be surrendered for conversion or registration of transfer or
exchange and notices or demands to or upon the Trust in respect of such
Debt Securities and the applicable Indenture may be served;
(10) the period or periods within which, the price or prices at which and
the terms and conditions upon which such Debt Securities may be redeemed,
in whole or in part, at the option of the Trust, if the Trust is to have
such an option;
(11) the obligation, if any, of the Trust 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,
the price or prices at which and the terms and conditions upon which such
Debt Securities will be redeemed, repaid or purchased, in whole or in part,
pursuant to such obligation;
5
(12) if other than U.S. dollars, the currency or currencies in which such
Debt Securities are denominated and 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;
(13) 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
other 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;
(14) whether such Debt Securities will be issued in the form of one or
more global securities and whether such global securities are to be
issuable in a temporary global form or permanent global form;
(15) any additions to, modifications of or deletions from the terms of
such Debt Securities with respect to the Events of Default or covenants set
forth in the applicable Indenture;
(16) whether such Debt Securities will be issued in certificated or book-
entry form;
(17) 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 the terms and conditions relating thereto;
(18) the applicability, if any, of the defeasance and covenant defeasance
provisions of Article XIV of the applicable Indenture;
(19) if such Debt Securities are to be issued upon the exercise of
Warrants, the time, manner and place for such Debt Securities to be
authenticated and delivered;
(20) the terms, if any, upon which such Debt Securities may be
convertible into Common Shares or Preferred Shares of the Trust and the
terms and conditions upon which such conversion will be effected,
including, without limitation, the initial conversion price or rate and the
conversion period;
(21) whether and under what circumstances the Trust will pay Additional
Amounts as contemplated in the applicable Indenture on such Debt Securities
in respect of any tax, assessment or governmental charge and, if so,
whether the Trust will have the option to redeem such Debt Securities in
lieu of making such payment;
(22) the name of the applicable Trustee and the address of its corporate
trust office; and
(23) any other terms of such Debt Securities not inconsistent with the
provisions of the applicable Indenture (Section 301).
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"). Special U.S. 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 below under "Certain Covenants--Senior Securities
Indenture Limitations on Incurrence of Debt," neither Indenture contains any
other provisions that would limit the ability of the Trust to incur
indebtedness or that would afford Holders of Debt Securities protection in the
event of a highly leveraged or similar transaction involving the Trust or in
the event of a change of control. However, restrictions on ownership and
transfers of the Trust's Common Shares and Preferred Shares are designed to
preserve its status as a REIT and, therefore, may act to prevent or hinder a
change of control. See "Description of Preferred Shares" and "Description of
Common Shares." 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 Trust that are described below,
including any addition of a covenant or other provision providing event risk or
similar protection.
6
DENOMINATIONS, 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 of each Indenture).
Unless otherwise specified in the applicable Prospectus Supplement, the
principal of (and premium, if any) and interest on any series of Debt
Securities will be payable at the corporate trust office of the applicable
Trustee, provided that, at the option of the Trust, payment of interest may be
made by check mailed to the address of the Person entitled thereto as it
appears in the Security Register or by wire transfer of funds to such Person at
an account maintained within the United States (Sections 301, 305, 306, 307 and
1002 of each Indenture).
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 applicable Trustee,
notice whereof shall be given to the Holder of such Debt Security not less than
10 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 applicable
Indenture (Section 307 of each Indenture).
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. 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 thereof at the corporate trust office of
the applicable Trustee. Every Debt Security surrendered for conversion,
registration of transfer or exchange shall 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 Trust may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith (Section 305 of each Indenture). If the
applicable Prospectus Supplement refers to any transfer agent (in addition to
the Trustee) initially designated by the Trust with respect to any series of
Debt Securities, the Trust 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 Trust will be required to maintain a
transfer agent in each Place of Payment for such series. The Trust may at any
time designate additional transfer agents with respect to any series of Debt
Securities (Section 1002 of each Indenture).
Neither the Trust 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
which 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 of
each Indenture).
MERGER, CONSOLIDATION OR SALE
The Trust may merge with or into, consolidate with, or sell, lease or convey
all or substantially all of its assets to, any other trust or corporation,
provided that (a) either the Trust shall be the continuing trust or
corporation, or the successor trust or corporation (if other than the Trust)
formed by or resulting from any such merger or consolidation 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
7
punctual performance and observance of all of the covenants and conditions
contained in the Indentures; (b) immediately after giving effect to such
transaction and treating any indebtedness which becomes an obligation of the
Trust or any Subsidiary as a result thereof as having been incurred by the
Trust 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 and legal opinion covering such
conditions shall be delivered to the Trustees (Sections 801 and 803 of each
Indenture).
CERTAIN COVENANTS
Senior Securities Indenture Limitations on Incurrence of Debt. The Trust will
not, and will not permit any Subsidiary to, incur any Debt (as defined below)
if, immediately after giving effect to the incurrence of such additional Debt
and the application of the proceeds thereof, the aggregate principal amount of
all outstanding Debt of the Trust and its Subsidiaries on a consolidated basis
determined in accordance with generally accepted accounting principles is
greater than 65% of the sum of (i) the Trust's Total Assets (as defined below)
as of the end of the fiscal quarter covered in the Trust's Annual Report on
Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most recently
filed with the Commission (or, if such filing is not permitted under the
Exchange Act, with the Trustee) prior to the incurrence of such additional
Debt, (ii) the purchase price of any real estate assets or mortgages receivable
acquired by the Trust or any Subsidiary since the end of such fiscal quarter,
including those obtained in connection with the incurrence of such additional
Debt, and (iii) the amount of any securities offering proceeds received by the
Trust or any Subsidiary since the end of such fiscal quarter (to the extent
that such proceeds were not used to acquire such real estate assets or
mortgages receivable or used to reduce Debt) (Section 1004 of the Senior
Securities Indenture).
In addition to the foregoing limitation on the incurrence of Debt, the Trust
will not, and will not permit any Subsidiary to, incur any Debt secured by any
mortgage, lien, charge, pledge, encumbrance or security interest of any kind
upon any of the property of the Trust or any Subsidiary if, immediately after
giving effect to the incurrence of such additional Debt and the application of
the proceeds thereof, the aggregate principal amount of all outstanding Debt of
the Trust and its Subsidiaries on a consolidated basis which is secured by any
mortgage, lien, charge, pledge, encumbrance or security interest on property of
the Trust or any Subsidiary is greater than 40% of the sum of (i) the Trust's
Total Assets as of the end of the fiscal quarter covered in the Trust's Annual
Report on Form 10-K or Quarterly Report on Form 10-Q, as the case may be, most
recently filed with the Commission (or, if such filing is not permitted under
the Exchange Act, with the Trustee) prior to the incurrence of such additional
Debt, (ii) the purchase price of any real estate assets or mortgages receivable
acquired by the Trust or any Subsidiary since the end of such fiscal quarter,
including those obtained in connection with the incurrence of such additional
Debt and (iii) the amount of any securities offering proceeds received by the
Trust or any Subsidiary since the end of such fiscal quarter (to the extent
that such proceeds were not used to acquire such real estate assets or
mortgages receivable or used to reduce Debt) (Section 1004 of the Senior
Securities Indenture).
In addition to the foregoing limitations on the incurrence of Debt, the Trust
will not, and will not permit any Subsidiary to, incur any Debt if Consolidated
Income Available for Debt Service (as defined below) for any 12 consecutive
calendar months within the 15 calendar months immediately preceding the date on
which such additional Debt is to be incurred shall have been less than 1.5
times the Maximum Annual Service Charge (as defined below) on the Debt of the
Trust and all Subsidiaries to be outstanding immediately after the incurring of
such additional Debt (Section 1004 of the Senior Securities Indenture).
The Trust will at all times maintain an Unencumbered Total Asset Value in an
amount not less than 100% of the aggregate principal amount of all outstanding
Debt of the Trust and its Subsidiaries that is unsecured (Section 1004 of the
Senior Securities Indenture).
8
As used herein,
"Consolidated Income Available for Debt Service" for any period means
Consolidated Net Income (as defined below) of the Trust and its Subsidiaries
plus amounts which have been deducted for (a) interest on Debt of the Trust and
its Subsidiaries, (b) provision for taxes of the Trust and its Subsidiaries
based on income, (c) amortization of debt discount, (d) property depreciation
and amortization and (e) the effect of any noncash charge resulting from a
change in accounting principles in determining Consolidated Net Income for such
period.
"Consolidated Net Income" for any period means the amount of consolidated net
income (or loss) of the Trust and its Subsidiaries for such period determined
on a consolidated basis in accordance with generally accepted accounting
principles.
"Debt" of the Trust or any Subsidiary means any indebtedness of the Trust or
any Subsidiary, whether or not contingent, in respect of (i) borrowed money or
evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness
secured by any mortgage, pledge, lien, charge, encumbrance or any security
interest existing on property owned by the Trust or any Subsidiary, (iii)
letters of credit or amounts representing the balance deferred and unpaid of
the purchase price of any property except any such balance that constitutes an
accrued expense or trade payable or (iv) any lease of property by the Trust or
any Subsidiary as lessee which is reflected on the Trust's Consolidated Balance
Sheet as a capitalized lease in accordance with generally accepted accounting
principles, in the case of items of indebtedness under (i) through (iii) above
to the extent that any such items (other than letters of credit) would appear
as a liability on the Trust's Consolidated Balance Sheet in accordance with
generally accepted accounting principles, and also includes, to the extent not
otherwise included, any obligation by the Trust or any Subsidiary to be liable
for, or to pay, as obligor, guarantor or otherwise (other than for purposes of
collection in the ordinary course of business), indebtedness of another person
(other than the Trust or any Subsidiary) (it being understood that Debt shall
be deemed to be incurred by the Trust or any Subsidiary whenever the Trust or
such Subsidiary shall create, assume, guarantee or otherwise become liable in
respect thereof).
"Maximum Annual Service Charge" as of any date means the maximum amount which
may become payable in any period of 12 consecutive calendar months from such
date for interest on, and required amortization of, Debt. The amount payable
for amortization shall include the amount of any sinking fund or other
analogous fund for the retirement of Debt and the amount payable on account of
principal on any such Debt which matures serially other than at the final
maturity date of such Debt.
"Total Assets" as of any date means the sum of (i) Undepreciated Real Estate
Assets and (ii) all other assets of the Trust and its Subsidiaries determined
in accordance with generally accepted accounting principles (but excluding
accounts receivable and intangibles).
"Undepreciated Real Estate Assets" as of any date means the amount of real
estate assets of the Trust and its Subsidiaries on such date, before
depreciation and amortization determined on a consolidated basis in accordance
with generally accepted accounting principles.
"Unencumbered Total Asset Value" as of any date means the sum of the Trust's
Total Assets which are unencumbered by any mortgage, lien, charge, pledge or
security interest.
Existence. Except as permitted under "Merger, Consolidation or Sale," the
Trust will do or cause to be done all things necessary to preserve and keep in
full force and effect its corporate existence, rights (charter and statutory)
and franchises; provided, however, that the Trust 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 1005 of each Indenture).
Maintenance of Properties. The Trust will cause all of its 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
9
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 Trust 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 Trust and its Subsidiaries
shall not be prevented from selling or otherwise disposing for value its
properties in the ordinary course of business (Section 1006 of each Indenture).
Insurance. The Trust will, and will cause each of its Subsidiaries to, keep
all of its insurable properties adequately insured against loss or damage with
insurers of recognized responsibility and having an A.M. Best policy holder's
rating of not less than A-:V (Section 1007 of each Indenture).
Payment of Taxes and Other Claims. The Trust will pay or discharge or cause
to be paid or discharged, before the same shall become delinquent, (i) all
future taxes, assessments and governmental charges levied or imposed upon it or
any Subsidiary or upon the income, profits or property of the Trust 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 Trust or any
Subsidiary, unless such lien would not have a material adverse effect upon such
property; provided, however, that the Trust shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim (i) whose amount, applicability or validity is being contested in good
faith by appropriate proceedings or (ii) for which the Trust has set apart and
maintains an adequate reserve (Section 1008 of each Indenture).
Provision of Financial Information. Whether or not the Trust is subject to
Section 13 or 15(d) of the Exchange Act, the Trust will, to the extent
permitted under the Exchange Act, file with the Commission the annual reports,
quarterly reports and other documents which the Trust would have been required
to file with the Commission pursuant to such Section 13 or 15(d) if the Trust
were so subject, such documents to be filed with the Commission on or prior to
the respective dates (the "Required Filing Dates") by which the Trust would
have been required so to file such documents if the Trust were so subject. The
Trust will also in any event (x) within 15 days of each Required Filing Date
(i) transmit by mail to all Holders of Debt Securities, as their names and
addresses appear in the Security Register, without cost to such Holders, copies
of the annual reports and quarterly reports which the Trust would have been
required to file with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act if the Trust were subject to such Sections and (ii) file with the
Trustees copies of the annual reports, quarterly reports and other documents
which the Trust would have been required to file with the Commission pursuant
to Section 13 or 15(d) of the Exchange Act if the Trust were subject to such
Sections and (y) if filing such documents by the Trust with the Commission is
not permitted under the Exchange Act, promptly upon written request and payment
of the reasonable cost of duplication and delivery, supply copies of such
documents to any prospective Holder (Section 1009 of each Indenture).
EVENTS OF DEFAULT, NOTICE AND WAIVER
Each Indenture provides that the following events are "Events of Default"
with respect to any series of Debt Securities issued thereunder (a) default for
30 days in the payment of any installment of interest on any Debt Security of
such series; (b) default in the payment of the principal of (or premium, if
any, on) any Debt Security of such series at its Maturity; (c) default in
making any sinking fund payment as required for any Debt Security of such
series; (d) default in the performance of any other covenant of the Trust
contained in the applicable Indenture (other than a covenant added to such
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 such Indenture; (e) an event of default under any evidence of
indebtedness of the Trust or any mortgage, indenture or other instrument under
which such indebtedness is issued or by which such indebtedness is secured or
evidenced, such default having resulted in the acceleration of the maturity of
an aggregate principal amount exceeding $10,000,000 of such indebtedness, but
only if such indebtedness is not discharged or such acceleration is not
rescinded or annulled within a specified period of time; (f) certain events of
bankruptcy, insolvency or reorganization, or court appointment of a receiver,
liquidator or trustee of the Trust, any Significant Subsidiary or the property
of the Trust or any Significant Subsidiary; and (g) any other
10
Event of Default provided with respect to a particular series of Debt
Securities (Section 501 of each Indenture). The term "Significant Subsidiary"
means each significant subsidiary (as defined in Regulation S-X promulgated
under the Securities Act) of the Trust.
If an Event of Default under either Indenture with respect to Debt Securities
of any series at the time Outstanding occurs and is continuing, then in every
such case the Trustee or the Holders of not less than 25% in principal amount
of the Outstanding Debt Securities of that series may 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 of the Debt Securities of that series
to be due and payable immediately by written notice thereof to the Trust (and
to the applicable Trustee if given by the Holders). 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 the applicable
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 Trust 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 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 the applicable
Indenture (Section 502 of each Indenture). Each Indenture also provides 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 of each Indenture).
Each Trustee is required to give notice to the Holder of Debt Securities
within 90 days of a default under the applicable Indenture; provided, however,
that the 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 the Responsible Officers of the
Trustee consider such withholding to be in the interest of such Holders
(Section 601 of each Indenture).
Each Indenture provides that no Holders of Debt Securities of any series may
institute any proceedings, judicial or otherwise, with respect to the
applicable Indenture or for any remedy thereunder, except in the case of
failure of the Trustee thereunder 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 of each Indenture). 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 of
each Indenture).
Subject to provisions in each Indenture relating to its duties in case of
default, each Trustee is under no obligation to exercise any of its rights or
powers under the applicable 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 reasonable security or
indemnity (Section 602 of each Indenture). The Holders of not less than a
majority in principal amount of the applicable Outstanding Debt Securities of
any series (or of all Debt Securities then Outstanding under the applicable
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
11
the Trustee, or of exercising any trust or power conferred upon the Trustee.
However, the Trustee may refuse to follow any direction which is in conflict
with any law or the applicable Indenture, which may involve the Trustee in
personal liability or which may be unduly prejudicial to the Holders of Debt
Securities of such series not joining therein (Section 512 of each Indenture).
Within 120 days after the close of each fiscal year, the Trust must deliver
to each Trustee a certificate, signed by one of several specified officers,
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 1010 of each Indenture).
MODIFICATION OF THE INDENTURES
Modifications and amendments of each Indenture may 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 of, 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 such 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 of each Indenture).
The Holders of not less than a majority in principal amount of Outstanding
Debt Securities issued under either Indenture have the right to waive
compliance by the Trust with certain covenants in the applicable Indenture
(Section 1012 of each Indenture).
Modifications and amendments of each Indenture may be made by the Trust and
the applicable Trustee without the consent of any Holder of Debt Securities
issued thereunder for any of the following purposes: (i) to evidence the
succession of another Person to the Trust as obligor under the applicable
Indenture; (ii) to add to the covenants of the Trust for the benefit of the
Holders of all or any series of Debt Securities or to surrender any right or
power conferred upon the Trust in the applicable 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 the applicable 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 the applicable 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 Preferred Shares or Common Shares of
the Trust; (viii) to provide for the acceptance of appointment by a successor
Trustee or facilitate the administration of the trusts under the applicable
Indenture by more than one Trustee; (ix) to cure any ambiguity, defect or
inconsistency in the applicable Indenture, provided that such action shall not
adversely affect the interests of Holders of Debt Securities of any series in
any material respect; or (x) to
12
supplement any of the provisions of the applicable 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 affect the
interests of the Holders of the Debt Securities of any series in any material
respect (Section 901 of each Indenture).
Each Indenture provides 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 such determination upon
declaration of acceleration of the maturity thereof, (ii) the principal amount
of a 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 an 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 at original issuance,
unless otherwise provided with respect to such Indexed Security pursuant to
Section 301 of the applicable Indenture, and (iv) Debt Securities owned by the
Trust or any other obligor upon the Debt Securities or any Affiliate of the
Trust or of such other obligor shall be disregarded (Section 101 of each
Indenture).
Each Indenture contains provisions of convening meetings of the Holders of
Debt Securities of a series (Section 1501 of each Indenture). A meeting may be
called at any time by the applicable Trustee, and also, upon request, by the
Trust 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 applicable Indenture (Section 1502 of each Indenture). Except for any
consent that must be given by the Holder of each Debt Security affected by
certain modifications and amendments of the applicable 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 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 duly reconvened 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 the applicable 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 (Section 1504 of each Indenture).
Notwithstanding the foregoing provisions, 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 or other
action that the applicable 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 of 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
13
or other action has been made, given or taken under the applicable Indenture
(Section 1504 of each Indenture).
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Trust may discharge certain obligations to Holders of any series of Debt
Securities that have not already been delivered to the 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 (Section 401 of each Indenture).
Each Indenture provides that, if the provisions of Article XIV are made
applicable to the Debt Securities of or within any series pursuant to Section
301 of such Indenture, the Trust 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 of each Indenture) or (b) to be released
from its obligations with respect to such Debt Securities under Sections 1004
to 1009, inclusive, of the applicable Indenture (being the restrictions
described under "Certain Covenants") or, if provided pursuant to Section 301 of
such Indenture, its obligations with respect to any other covenant, and any
omission to comply with such obligations shall not constitute a default or an
Event of Default with respect to such Debt Securities ("covenant defeasance")
(Section 1403 of each Indenture), in either case upon the irrevocable deposit
by the Trust 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 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 may only be established if, among other things, the Trust 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 U.S. federal income tax purposes as
a result of such defeasance or covenant defeasance and will be subject to U.S.
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 covenant defeasance had
not occurred (Section 1404 of each Indenture).
"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 payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America or such other 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
14
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 Trust 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 Section 301 of 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 shall 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 (Section 1405 of each Indenture). "Conversion Event" means the
cessation of use of (i) a Foreign 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 (Section 101 of each
Indenture). 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 Trust 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 (d) under "Events of Default, Notice and Waiver" with respect to Section
1004 to 1009, inclusive, of the applicable Indenture (which Sections would no
longer be applicable to such Debt Securities) or described in clause (g) 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 Event of
Default. However, the Trust 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.
CONVERSION RIGHTS
The terms and conditions, if any, upon which the Debt Securities are
convertible into Preferred Shares or Common Shares will be set forth in the
applicable Prospectus Supplement relating thereto. Such terms will include
whether such Debt Securities are convertible into Preferred Shares or Common
Shares, the conversion price (or manner of calculation thereof), the conversion
period, provisions as to whether conversion will be at the option of the
Holders or the Trust, the events requiring an adjustment of the conversion
price and provisions affecting conversion in the event of the redemption of
such Debt Securities.
15
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 depositary (the "Depository") identified in
the applicable Prospectus Supplement relating to such series. Global Securities
are expected to be deposited with The Depository Trust Company, as Depository.
Global Securities may be issued in either registered or bearer form and in
either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual Debt
Securities represented thereby, a Global Security may not be transferred except
as a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by the Depository or any nominee of such
Depository to a successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series of
Debt Securities will be described in the applicable Prospectus Supplement
relating to such series. Unless otherwise indicated in the applicable
Prospectus Supplement, the Trust anticipates that the following provisions will
apply to depository arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Debt Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depository ("Participants"). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Debt
Securities or by the Trust if such Debt Securities are offered and sold
directly by the Trust. Ownership of beneficial interests in a Global Security
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depository or its nominee (with respect to
beneficial interests of Participants) and records of Participants (with respect
to beneficial interests of persons who hold through Participants). The laws of
some states require that certain purchasers of securities take physical
delivery of such securities in definitive form. Such limits and laws may impair
the ability to own, pledge or transfer beneficial interest in a Global
Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Debt
Securities represented by such Global Security for all purposes under the
applicable Indenture. Except as provided below or in the applicable Prospectus
Supplement, owners of beneficial interest in a Global Security will not be
entitled to have any of the individual Debt Securities of the series
represented by such Global Security registered in their names, will not receive
or be entitled to receive physical delivery of any such Debt Securities of such
series in definitive form and will not be considered the owners or holders
thereof under the applicable Indenture.
Payments of principal of, any premium and any interest on, or any Additional
Amounts payable with respect to, individual Debt Securities represented by a
Global Security registered in the name of a Depository or its nominee will be
made to the Depository or its nominee, as the case may be, as the registered
owner of the Global Security representing such Debt Securities. None of the
Trust, the Trustees, any Paying Agent or the Security Registrar for such Debt
Securities will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests in the Global Security for such Debt Securities or for maintaining,
supervising or reviewing any records relating to such beneficial ownership
interests.
The Trust expects that the Depository for a series of Debt Securities or its
nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Debt
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to
16
their respective beneficial interests in the principal amount of such Global
Security for such Debt Securities as shown on the records of such Depository or
its nominee. The Trust also expects that payments by Participants to owners of
beneficial interests in such Global Security held through such Participants
will be governed by standing instructions and customary practices, as is the
case with securities held for the account of customers in bearer form or
registered in "street name." Such payments will be the responsibility of such
Participants.
If a Depository for a series of Debt Securities is at any time unwilling,
unable or ineligible to continue as depository and a successor depository is
not appointed by the Trust within 90 days, the Trust will issue individual Debt
Securities of such series in exchange for the Global Security representing such
series of Debt Securities. In addition, the Trust may, at any time and in its
sole discretion, subject to any limitations described in the applicable
Prospectus Supplement relating to such Debt Securities, determine not to have
any Debt Securities of such series represented by one or more Global Securities
and, in such event, will issue individual Debt Securities of such series in
exchange for the Global Security or Securities representing such series of Debt
Securities. Individual Debt Securities of such series so issued will be issued
in denominations, unless otherwise specified by the Trust, of $1,000 and
integral multiples thereof.
SUBORDINATION
Upon any distribution to creditors of the Trust in a liquidation, dissolution
or reorganization, the payment of the principal of and interest on the
Subordinated Securities will be subordinated to the extent provided in the
Subordinated Securities Indenture in right of payment to the prior payment in
full of all Senior Debt (Sections 1601 and 1602 of the Subordinated Securities
Indenture), but the obligation of the Trust to make payment of the principal
and interest on the Subordinated Securities will not otherwise be affected
(Section 1608 of the Subordinated Securities Indenture). No payment of
principal or interest may be made on the 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 Trust receives notice of the default (Section 1603 of the Subordinated
Securities Indenture). After all Senior Debt is paid in full and until the
Subordinated Securities are paid in full, holders will be subrogated to the
rights 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 Securities Indenture). By reason of such
subordination, in the event of a distribution of assets upon insolvency,
certain general creditors of the Trust may recover more, ratably, than holders
of the Subordinated Securities.
Senior Debt is defined in the Subordinated Securities Indenture as the
principal of and interest on, or substantially similar payments to be made by
the Trust in respect of, the following, whether outstanding at the date of
execution of the Subordinated Securities Indenture or thereafter incurred,
created or assumed: (a) indebtedness of the Trust for money borrowed or
represented by purchase-money obligations, (b) indebtedness of the Trust
evidenced by notes, debentures, or bonds, or other securities issued under the
provisions of an indenture, fiscal agency agreement or other instrument, (c)
obligations of the Trust as lessee under leases of property either made as part
of any sale and leaseback transaction to which the Trust is a party or
otherwise, (d) indebtedness of partnerships and joint ventures that is included
in the consolidated financial statements of the Trust, (e) indebtedness,
obligations and liabilities of others in respect of which the Trust is liable
contingently or otherwise to pay or advance money or property or as guarantor,
endorser or otherwise or which the Trust has agreed to purchase or otherwise
acquire, and (f) any binding commitment of the Trust 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 (a) through (f) 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 Trust to
substantially the same extent as or to a greater extent than the Subordinated
Securities are subordinated, (3) any trade accounts
17
payable and (4) the Subordinated Securities (Section 101 of the Subordinated
Securities Indenture). There are no restrictions in the Subordinated Securities
Indenture upon the creation of additional Senior Debt. However, the Senior
Securities Indenture contains limitations on incurrence of indebtedness by the
Trust. See "--Certain Covenants--Senior Securities Indenture Limitations on
Incurrence of Debt."
DESCRIPTION OF PREFERRED SHARES
The Trust is authorized to issue 1,000,000 preferred shares of beneficial
interest, par value $1.00 per share, and no Preferred Shares were outstanding
as of the date of this Prospectus.
The following description of the Preferred Shares sets forth certain general
terms and provisions of the Preferred Shares to which any Prospectus Supplement
may relate. The particular terms of the Preferred Shares being offered and the
extent to which such general provisions may or may not apply will be described
in a Prospectus Supplement relating to such Preferred Shares. The statements
below describing the Preferred Shares are in all respects subject to and
qualified in their entirety by reference to the applicable provisions of the
Trust's Declaration of Trust, as amended.
GENERAL
The Declaration of Trust, as amended, authorizes the Board of Trustees to
issue Preferred Shares in series, and to establish the number of shares to be
included in each series and to fix the designation and relative rights,
preferences and limitations of the shares of each series, including, but not
limited to, the determination of the following: any dividend and distribution
rights; any terms on which Preferred Shares may be redeemed; any voting rights;
any rights in the event of the dissolution, liquidation or winding up of the
Trust; any conversion rights; and any other rights, preferences and
limitations. The Preferred Shares will, when issued, be fully paid and
nonassessable and will have no preemptive rights.
Reference is made to the Prospectus Supplement relating to the Preferred
Shares offered thereby for specific terms, including:
(1) The title and stated value of such Preferred Shares;
(2) The number of shares of such Preferred Shares being offered, the
liquidation preference per share and the offering price of such Preferred
Shares;
(3) The dividend rate(s), period(s) and/or payment date(s) or method(s)
of calculation thereof applicable to such Preferred Shares;
(4) The date from which dividends on such Preferred Shares shall
accumulate, if applicable;
(5) The procedures for any auction and remarketing, if any, for such
Preferred Shares;
(6) The provision for a sinking fund, if any, for such Preferred Shares;
(7) The provisions for redemption, if applicable, of such Preferred
Shares;
(8) Any listing of such Preferred Shares on any securities exchange;
(9) The terms and conditions, if applicable, upon which such Preferred
Shares will be convertible into Common Shares of the Trust, including the
conversion price (or manner of calculation thereof);
(10) Whether interests in such Preferred Shares will be represented by
Depositary Shares;
(11) A discussion of federal income tax considerations applicable to such
Preferred Shares;
(12) The relative ranking and preferences of such Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Trust;
18
(13) Any limitations on issuance of any series of preferred shares
ranking senior to or on a parity with such series of Preferred Shares as to
dividend rights and rights upon liquidation, dissolution or winding up of
the affairs of the Trust;
(14) Any limitations on direct or beneficial ownership and restrictions
on transfer of such Preferred Shares, in each case as may be appropriate to
preserve the status of the Trust as a REIT; and
(15) Any other specific terms, preferences, rights, limitations or
restrictions of such Preferred Shares.
RANK
Unless otherwise specified in the applicable Prospectus Supplement, the
Preferred Shares will, with respect to dividend rights and/or rights upon
liquidation, dissolution or winding up of the Trust, rank (i) senior to all
classes or series of Common Shares of the Trust, and to all equity securities
ranking junior to such Preferred Shares with respect to dividend rights and/or
rights upon liquidation, dissolution or winding up of the Trust, as the case
may be; (ii) on a parity with all equity securities issued by the Trust the
terms of which specifically provide that such equity securities rank on a
parity with the Preferred Shares with respect to dividend rights and/or rights
upon liquidation, dissolution or winding up of the Trust, as the case may be;
and (iii) junior to all equity securities issued by the Trust the terms of
which specifically provide that such equity securities rank senior to the
Preferred Shares with respect to dividend rights and/or rights upon
liquidation, dissolution or winding up of the Trust, as the case may be. As
used in the Declaration of Trust, as amended, for these purposes, the term
"equity securities" does not include convertible debt securities.
DIVIDENDS
Holders of Preferred Shares shall be entitled to receive, when, as and if
declared by the Board of Trustees of the Trust, out of assets of the Trust
legally available for payment, cash dividends at such rates (or method of
calculation thereof) and on such dates as will be set forth in the applicable
Prospectus Supplement. Each such dividend shall be payable to holders of record
as they appear on the stock transfer books of the Trust on such record dates as
shall be fixed by the Board of Trustees of the Trust.
Dividends on any series of the Preferred Shares 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 Trustees of the Trust fails
to declare a dividend payable on a dividend payment date on any series of the
Preferred Shares for which dividends are noncumulative, then the holders of
such series of the Preferred Shares will have no right to receive a dividend in
respect of the dividend period ending on such dividend payment date, and the
Trust 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.
If any Preferred Shares of any series are outstanding, no full dividends
shall be declared or paid or set apart for payment on the preferred shares of
the Trust of any other series ranking, as to dividends, on a parity with or
junior to the Preferred Shares of such series for any period unless (i) if such
series of Preferred Shares has a cumulative dividend, full cumulative dividends
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Preferred
Shares of such series for all past dividend periods and the then current
dividend period or (ii) if such series of Preferred Shares does not have a
cumulative dividend, full dividends for the then current dividend period have
been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for such payment on the Preferred
Shares of such series. When dividends are not paid in full (or a sum sufficient
for such full payment is not so set apart) upon the Preferred Shares of any
series and the shares of any other series of preferred shares ranking on a
parity as to dividends with the Preferred Shares of such series, all dividends
declared upon the Preferred Shares of such series and any other series of
preferred shares ranking on a parity as to dividends with such Preferred Shares
shall be declared pro rata so that the
19
amount of dividends declared per share on the Preferred Shares of such series
and such other series of preferred shares shall in all cases bear to each other
the same ratio that accrued dividends per share on the Preferred Shares of such
series (which shall not include any accumulation in respect of unpaid dividends
for prior dividend periods if such Preferred Shares do not have a cumulative
dividend) and such other series of preferred shares bear to each other. No
interest, or sum of money in lieu of interest, shall be payable in respect of
any dividend payment or payments on Preferred Shares of such series which may
be in arrears.
Except as provided in the immediately preceding paragraph, unless (i) if such
series of Preferred Shares has a cumulative dividend, full cumulative dividends
on the Preferred Shares of such series have been or contemporaneously are
declared and paid or declared and a sum sufficient for the payment thereof set
apart for payment for all past dividend periods and the then current dividend
period and (ii) if such series of Preferred Shares does not have a cumulative
dividend, full dividends on the Preferred Shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for the then current dividend period,
no dividends (other than in common shares or other capital stock ranking junior
to the Preferred Shares of such series as to dividends and upon liquidation)
shall be declared or paid or set aside for payment or other distribution upon
the Common Shares or any other capital stock of the Trust ranking junior to or
on a parity with the Preferred Shares of such series as to dividends or upon
liquidation, nor shall any Common Shares or any other capital stock of the
Trust ranking junior to or on a parity with the Preferred Shares of such series
as to dividends or upon liquidation be redeemed, purchased or otherwise
acquired for any consideration (or any moneys be paid to or made available for
a sinking fund for the redemption of any shares of any such stock) by the Trust
(except by conversion into or exchange for other capital stock of the Trust
ranking junior to the Preferred Shares of such series as to dividends and upon
liquidation).
Any dividend payment made on a series of Preferred Shares shall first be
credited against the earliest accrued but unpaid dividend due with respect to
shares of such series which remains payable.
REDEMPTION
If so provided in the applicable Prospectus Supplement, the Preferred Shares
of any series will be subject to mandatory redemption or redemption at the
option of the Trust, as a whole or in part, in each case upon the terms, at the
times and at the redemption prices set forth in such Prospectus Supplement.
The Prospectus Supplement relating to a series of Preferred Shares that is
subject to mandatory redemption will specify the number of such Preferred
Shares that shall be redeemed by the Trust 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 Shares do 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 Shares of any series is payable only from the
net proceeds of the issuance of capital stock of the Trust, the terms of such
Preferred Shares 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 Shares
shall automatically and mandatorily be converted into shares of the applicable
capital stock of the Trust pursuant to conversion provisions specified in the
applicable Prospectus Supplement.
Notwithstanding the foregoing, unless (i) if such series of Preferred Shares
has a cumulative dividend, full cumulative dividends on all shares of such
series have been or contemporaneously are declared and paid or declared and a
sum sufficient for the payment thereof set apart for payment for all past
dividend periods and the then current dividend period and (ii) if such series
of Preferred Shares does not have a cumulative dividend, full dividends on all
shares of such series have been or contemporaneously are declared and paid or
declared and a sum sufficient for the payment thereof set apart for payment for
the then current dividend period, no shares of such series of Preferred Shares
shall be redeemed unless all outstanding Preferred Shares
20
of such series are simultaneously redeemed; provided, however, that the
foregoing shall not prevent the purchase or acquisition of Preferred Shares of
such series pursuant to a purchase or exchange offer made on the same terms to
holders of all outstanding Preferred Shares of such series, and, unless (i) if
such series of Preferred Shares has a cumulative dividend, full cumulative
dividends on all outstanding shares of such series have been or
contemporaneously are declared and paid or declared and a sum sufficient for
the payment thereof set apart for payment for all past dividend periods and the
then current dividend period and (ii) if such series of Preferred Shares does
not have a cumulative dividend, full dividends on all shares of such series
have been or contemporaneously are declared and paid or declared and a sum
sufficient for the payment thereof set apart for payment for the then current
dividend period, the Trust shall not purchase or otherwise acquire directly or
indirectly any Preferred Shares of such series (except by conversion into or
exchange for capital stock of the Trust ranking junior to the Preferred Shares
of such series as to dividends and upon liquidation).
If fewer than all of the outstanding Preferred Shares of any series are to be
redeemed, the number of shares to be redeemed will be determined by the Trust
and such shares may be redeemed pro rata from the holders of record of such
shares in proportion to the number of such shares held by such holders (with
adjustments to avoid redemption of fractional shares) or any other equitable
method determined by the Trust.
Notice of redemption will be mailed at least 30 days but not more than 60
days before the redemption date to each holder of record of Preferred Shares of
any series to be redeemed at the address shown on the stock transfer books of
the Trust. Each notice shall state: (i) the redemption date; (ii) the number of
shares and series of the Preferred Shares to be redeemed; (iii) the redemption
price; (iv) the place or places where certificates for such Preferred Shares
are to be surrendered for payment of the redemption price; (v) that dividends
on the shares to be redeemed will cease to accrue on such redemption date; and
(vi) the date upon which the holder's conversion rights, if any, as to such
shares shall terminate. If fewer than all the Preferred Shares of any series
are to be redeemed, the notice mailed to each such holder thereof shall also
specify the number of Preferred Shares to be redeemed from each such holder. If
notice of redemption of any Preferred Shares has been properly given and if the
funds necessary for such redemption have been irrevocably set aside by the
Trust in trust for the benefit of the holders of any Preferred Shares so called
for redemption, then from and after the redemption date dividends will cease to
accrue on such Preferred Shares, such Preferred Shares shall no longer be
deemed outstanding and all rights of the holders of such shares will terminate,
except the right to receive the redemption price. Any moneys so deposited which
remain unclaimed by the holders of such Preferred Shares at the end of two
years after the redemption date will be returned by the applicable bank or
trust company to the Trust.
LIQUIDATION PREFERENCE
Upon any voluntary or involuntary liquidation, dissolution or winding up of
the affairs of the Trust, then, before any distribution or payment shall be
made to the holders of any Common Shares or any other class or series of
capital stock of the Trust ranking junior to any series of Preferred Shares in
the distribution of assets upon any liquidation, dissolution or winding up of
the Trust, the holders of such series of Preferred Shares shall be entitled to
receive, after payment or provision for payment of the Trust's debts and other
liabilities, out of assets of the Trust legally available for distribution to
shareholders, 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 Shares do not have a cumulative dividend). After
payment of the full amount of the liquidating distributions to which they are
entitled, the holders of such series of Preferred Shares will have no right or
claim to any of the remaining assets of the Trust. In the event that, upon any
such voluntary or involuntary liquidation, dissolution or winding up, the
legally available assets of the Trust are insufficient to pay the amount of the
liquidating distributions on all such outstanding Preferred Shares and the
corresponding amounts payable on all shares of other classes or series of
capital stock of the Trust ranking on a parity with such series of Preferred
Shares in the distribution
21
of assets upon liquidation, dissolution or winding up, then the holders of such
series of Preferred Shares 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.
If the liquidating distributions shall have been made in full to all holders
of a series of Preferred Shares, the remaining assets of the Trust shall be
distributed among the holders of any other classes or series of capital stock
ranking junior to such series of Preferred Shares upon liquidation, dissolution
or winding up, according to their respective rights and preferences and in each
case according to their respective number of shares. For purposes of this
section, a distribution of assets in any dissolution, winding up or liquidation
will not include (i) any consolidation or merger of the Trust with or into any
other corporation, (ii) any dissolution, liquidation, winding up, or
reorganization of the Trust immediately followed by incorporation of another
corporation to which such assets are distributed or (iii) a sale or other
disposition of all or substantially all of the Trust's assets to another
corporation; provided that, in each case, effective provision is made in the
charter of the resulting and surviving corporation or otherwise for the
recognition, preservation and protection of the rights of the holders of
Preferred Shares.
VOTING RIGHTS
Holders of any series of Preferred Shares will not have any voting rights,
except as set forth below or as otherwise from time to time required by law or
as indicated in the applicable Prospectus Supplement. The Declaration of Trust,
as amended, provides that no holders of Preferred Shares shall have the right
to elect one or more separate trustees. However, if the Trust elects to issue a
series of Preferred Shares, it may amend the Declaration of Trust to provide
for certain additional voting rights to holders of Preferred Shares.
So long as any Preferred Shares remain outstanding, the Trust will not,
without the affirmative vote or consent of the holders of two-thirds ( 2/3) of
the shares of each series of Preferred Shares outstanding at the time, given in
person or by proxy, either in writing or at a meeting (such series voting
separately as a class), (i) authorize or create, or increase the authorized or
issued amount of, any class or series of capital stock ranking prior to such
series of Preferred Shares with respect to payment of dividends or the
distribution of assets upon liquidation, dissolution or winding up, or
reclassify any authorized capital stock of the Trust into any such shares, or
create, authorize or issue any obligation or security convertible into or
evidencing the right to purchase any such shares; or (ii) amend, alter or
repeal the provisions of the Trust's Declaration of Trust, as amended, whether
by merger, consolidation or otherwise, so as to materially and adversely affect
any right, preference, privilege or voting power of such series of Preferred
Shares or the holders thereof; provided, however, that any increase in the
amount of the authorized preferred shares or the creation or issuance of any
other series of preferred shares, or any increase in the amount of authorized
shares of such series or any other series of Preferred Shares, in each case
ranking on a parity with or junior to the Preferred Shares of such series with
respect to payment of dividends or the distribution of assets upon liquidation,
dissolution or winding up, shall not be deemed to materially and adversely
affect such rights, preferences, privileges or voting powers.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be affected, all outstanding shares of such series of Preferred Shares shall
have been redeemed or called for redemption upon proper notice and sufficient
funds shall have been irrevocably deposited in trust to effect such redemption.
CONVERSION RIGHTS
The terms and conditions, if any, upon which any series of Preferred Shares
are convertible into Common Shares will be set forth in the applicable
Prospectus Supplement relating thereto. Such terms will include the number of
Common Shares into which the Preferred Shares are convertible, the conversion
price (or manner of calculation thereof), the conversion period, provisions as
to whether conversion will be at the option of the
22
holders of the Preferred Shares or the Trust, the events requiring an
adjustment of the conversion price and provisions affecting conversion in the
event of the redemption of such Preferred Shares.
RESTRICTIONS ON OWNERSHIP
For the Trust to qualify as a REIT under the Code, not more than 50% in value
of its outstanding capital stock may be owned, directly or constructively, by
five or fewer individuals (as defined in the Code) during the last half of a
taxable year, and the capital stock must be beneficially owned by 100 or more
persons during at least 335 days of a taxable year of 12 months (or during a
proportionate part of a shorter taxable year). Therefore, the Declaration of
Trust, as amended, imposes certain restrictions on the ownership and
transferability of Preferred Shares. All certificates representing Preferred
Shares will bear a legend referring to these restrictions. For a general
description of such restrictions, see "Description of Common Shares--
Restrictions on Ownership."
DESCRIPTION OF DEPOSITARY SHARES
GENERAL
The Trust may issue receipts ("Depositary Receipts") for Depositary Shares,
each of which will represent a fractional interest of a share of a particular
series of Preferred Shares, as specified in the applicable Prospectus
Supplement. Preferred Shares of each series represented by Depositary Shares
will be deposited under a separate Deposit Agreement (each, a "Deposit
Agreement") among the Trust, the depositary named therein (the "Preferred
Shares Depositary") and the holders from time to time of the Depositary
Receipts. Subject to the terms of the Deposit Agreement, each owner of a
Depositary Receipt will be entitled, in proportion to the fractional interest
of a share of a particular series of Preferred Shares represented by the
Depositary Shares evidenced by such Depositary Receipt, to all rights and
preferences of the Preferred Shares represented by such Depositary Shares
(including dividend, voting, conversion, redemption and liquidation rights).
The Depositary Shares will be evidenced by Depositary Receipts issued
pursuant to the applicable Deposit Agreement. Immediately following the
issuance and delivery of the Preferred Shares by the Trust to the Preferred
Shares Depositary, the Trust will cause the Preferred Shares Depositary to
issue, on behalf of the Trust, the Depositary Receipts. Copies of the
applicable form of Deposit Agreement and Depositary Receipt may be obtained
from the Trust upon request, and the following summary of the form thereof
filed as an exhibit to the Registration Statement of which this Prospectus is a
part is qualified in its entirety by reference thereto.
DIVIDENDS AND OTHER DISTRIBUTIONS
The Preferred Shares Depositary will distribute all cash dividends or other
cash distributions received in respect of the Preferred Shares to the record
holders of Depositary Receipts evidencing the related Depositary Shares in
proportion to the number of such Depositary Receipts owned by such holders,
subject to certain obligations of holders to file proofs, certificates and
other information and to pay certain charges and expenses to the Preferred
Shares Depositary.
In the event of a distribution other than in cash, the Preferred Shares
Depositary will distribute property received by it to the record holders of
Depositary Receipts entitled thereto, subject to certain obligations of holders
to file proofs, certificates and other information and to pay certain charges
and expenses to the Preferred Shares Depositary, unless the Preferred Shares
Depositary determines that it is not feasible to make such distribution, in
which case the Preferred Shares Depositary may, with the approval of the Trust,
sell such property and distribute the net proceeds from such sale to such
holders.
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WITHDRAWAL OF SHARES
Upon surrender of the Depositary Receipts at the corporate trust office of
the Preferred Shares Depositary (unless the related Depositary Shares have
previously been called for redemption), the holders thereof will be entitled to
delivery at such office, to or upon such holder's order, of the number of whole
or fractional Preferred Shares and any money or other property represented by
the Depositary Shares evidenced by such Depositary Receipts. Holders of
Depositary Receipts will be entitled to receive whole or fractional shares of
the related Preferred Shares on the basis of the proportion of Preferred Shares
represented by each Depositary Share as specified in the applicable Prospectus
Supplement, but holders of such Preferred Shares will not thereafter be
entitled to receive Depositary Shares therefor. If the Depositary Receipts
delivered by the holder evidence a number of Depositary Shares in excess of the
number of Depositary Shares representing the number of shares of Preferred
Shares to be withdrawn, the Preferred Shares Depositary will deliver to such
holder at the same time a new Depositary Receipt evidencing such excess number
of Depositary Shares. The Trust does not expect that there will be any public
market for Preferred Shares that are withdrawn as described in this paragraph.
REDEMPTION OF DEPOSITARY SHARES
Whenever the Trust redeems Preferred Shares held by the Preferred Shares
Depositary, the Preferred Shares Depositary will redeem as of the same
redemption date the number of Depositary Shares representing the Preferred
Shares so redeemed, provided the Trust shall have paid in full to the Preferred
Shares Depositary the redemption price of the Preferred Shares to be redeemed
plus an amount equal to any accrued and unpaid dividends thereon to the date
fixed for redemption. The redemption price per Depositary Share will be equal
to the redemption price and any other amounts per share payable with respect to
the Preferred Shares. If fewer than all the Depositary Shares are to be
redeemed, the Depositary Shares to be redeemed will be selected pro rata (as
nearly as may be practicable without creating fractional Depositary Shares) or
by any other equitable method determined by the Trust.
From and after the date fixed for redemption, all dividends in respect of the
Preferred Shares so called for redemption will cease to accrue, the Depositary
Shares so called for redemption will no longer be deemed to be outstanding and
all rights of the holders of the Depositary Receipts evidencing the Depositary
Shares so called for redemption will cease, except the right to receive any
moneys payable upon such redemption and any money or other property to which
the holders of such Depositary Receipts were entitled upon such redemption upon
surrender thereof to the Preferred Shares Depositary.
VOTING OF THE PREFERRED SHARES
Upon receipt of notice of any meeting at which the holders of the Preferred
Shares are entitled to vote, the Preferred Shares Depositary will mail the
information contained in such notice of meeting to the record holders of the
Depositary Receipts evidencing the Depositary Shares which represent such
Preferred Shares. Each record holder of Depositary Receipts evidencing
Depositary Shares on the record date (which will be the same date as the record
date for the Preferred Shares) will be entitled to instruct the Preferred
Shares Depositary as to the exercise of the voting rights pertaining to the
amount of Preferred Shares represented by such holder's Depositary Shares. The
Preferred Shares Depositary will vote the amount of Preferred Shares
represented by such Depositary Shares in accordance with such instructions, and
the Trust will agree to take all reasonable action which may be deemed
necessary by the Preferred Shares Depositary in order to enable the Preferred
Shares Depositary to do so. The Preferred Shares Depositary will abstain from
voting the amount of Preferred Shares represented by such Depositary Shares to
the extent it does not receive specific instructions from the holders of
Depositary Receipts evidencing such Depositary Shares. The Preferred Shares
Depositary shall not be responsible for any failure to carry out any
instruction to vote, or for the manner or effect of any such vote made, as long
as any such action or non-action is in good faith and does not result from
negligence or willful misconduct of the Preferred Shares Depositary.
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LIQUIDATION PREFERENCE
In the event of the liquidation, dissolution or winding up of the Trust,
whether voluntary or involuntary, the holders of each Depositary Receipt will
be entitled to the fraction of the liquidation preference accorded each
Preferred Share represented by the Depositary Share evidenced by such
Depositary Receipt, as set forth in the applicable Prospectus Supplement.
CONVERSION OF PREFERRED SHARES
The Depositary Shares, as such, are not convertible into Common Shares or any
other securities or property of the Trust. Nevertheless, if so specified in the
applicable Prospectus Supplement relating to an offering of the Depositary
Shares, the Depositary Receipts may be surrendered by holders thereof to the
Preferred Shares Depositary with written instructions to the Preferred Shares
Depositary to instruct the Trust to cause conversion of the Preferred Shares
represented by the Depositary Shares evidenced by such Depositary Receipts into
whole shares of Common Shares, other shares of Preferred Shares of the Trust or
other shares of capital stock, and the Trust has agreed that upon receipt of
such instructions and any amounts payable in respect thereof, it will cause the
conversion thereof utilizing the same procedures as those provided for delivery
of Preferred Shares to effect such conversion. If the Depositary Shares
evidenced by a Depositary Receipt are to be converted in part only, a new
Depositary Receipt will be issued for any Depositary Shares not to be
converted. No fractional shares of Common Shares will be issued upon
conversion, and if such conversion will result in a fractional share being
issued, an amount will be paid in cash by the Trust equal to the value of the
fractional interest based upon the closing price of the Common Shares on the
last business day prior to the conversion.
AMENDMENT AND TERMINATION OF THE DEPOSIT AGREEMENT
The form of Depositary Receipt evidencing the Depositary Shares which
represent the Preferred Shares and any provision of the Deposit Agreement may
at any time be amended by agreement between the Trust and the Preferred Shares
Depositary. However, any amendment that materially and adversely alters the
rights of the holders of Depositary Receipts or that would be materially and
adversely inconsistent with the rights granted to the holders of the related
Preferred Shares will not be effective unless such amendment has been approved
by the existing holders of at least a majority of the Depositary Shares
evidenced by the Depositary Receipts then outstanding. No amendment shall
impair the right, subject to certain exceptions in the Deposit Agreement, of
any holder of Depositary Receipts to surrender any Depositary Receipt with
instructions to deliver to the holder the related Preferred Shares and all
money and other property, if any, represented thereby, except in order to
comply with law. Every holder of an outstanding Depositary Receipt at the time
any such amendment becomes effective shall be deemed, by continuing to hold
such Depositary Receipt, to consent and agree to such amendment and to be bound
by the Deposit Agreement as amended thereby.
The Deposit Agreement may be terminated by the Trust upon not less than 30
days' prior written notice to the Preferred Shares Depositary if (i) such
termination is necessary to preserve the Trust's status as a REIT or (ii) at
least two-thirds of each series of Preferred Shares affected by such
termination consents to such termination, whereupon the Preferred Shares
Depositary shall deliver or make available to each holder of Depositary
Receipts, upon surrender of the Depositary Receipts held by such holder, such
number of whole or fractional shares of Preferred Shares as are represented by
the Depositary Shares evidenced by such Depositary Receipts together with any
other property held by the Preferred Shares Depositary with respect to such
Depositary Receipt. The Trust has agreed that if the Deposit Agreement is
terminated to preserve the Trust's status as a REIT, then the Trust will use
its best efforts to list the Preferred Shares issued upon surrender of the
related Depositary Shares on a national securities exchange. In addition, the
Deposit Agreement will automatically terminate if (i) all outstanding
Depositary Shares shall have been redeemed or converted, or (ii) there shall
have been a final distribution in respect of the related Preferred Shares in
connection with any liquidation, dissolution or winding up of the Trust and
such distribution shall have been
25
distributed to the holders of Depositary Receipts evidencing the Depositary
Shares representing such Preferred Shares.
CHARGES OF PREFERRED SHARES DEPOSITARY
The Trust will pay all transfer and other taxes and governmental charges
arising solely from the existence of the Deposit Agreement. In addition, the
Trust will pay the fees and expenses of the Preferred Shares Depositary in
connection with the performance of its duties under the Deposit Agreement.
However, holders of Depositary Receipts will pay certain other transfer and
other taxes and governmental charges as well as the fees and expenses of the
Preferred Shares Depositary for any duties requested by such holders to be
performed which are outside of those expressly provided for in the Deposit
Agreement.
RESIGNATION AND REMOVAL OF DEPOSITARY
The Preferred Shares Depositary may resign at any time by delivering to the
Trust notice of its election to do so, and the Trust may at any time remove the
Preferred Shares Depositary, any such resignation or removal to take effect
upon the appointment of a successor Preferred Shares Depositary. A successor
Preferred Shares Depositary must be appointed within 60 days after delivery of
the notice of resignation or removal and must be a bank or trust company having
its principal office in the United States and having a combined capital and
surplus of at least $50,000,000.
MISCELLANEOUS
The Preferred Shares Depositary will forward to holders of Depositary
Receipts any reports and communications from the Trust which are received by
the Preferred Shares Depositary with respect to the related Preferred Shares.
Neither the Preferred Shares Depositary nor the Trust will be liable if it is
prevented from or delayed in, by law or any circumstances beyond its control,
performing its obligations under the Deposit Agreement. The obligations of the
Trust and the Preferred Shares Depositary under the Deposit Agreement will be
limited to performing their duties thereunder in good faith and without
negligence or willful misconduct, and the Trust and the Preferred Shares
Depositary will not be obligated to prosecute or defend any legal proceeding in
respect of any Depositary Receipts, Depositary Shares or Preferred Shares
represented thereby unless satisfactory indemnity is furnished. The Trust and
the Preferred Shares Depositary may rely on written advice of counsel or
accountants, or information provided by persons presenting Preferred Shares
represented thereby for deposit, holders of Depositary Receipts or other
persons believed in good faith to be competent to give such information, and on
documents believed in good faith to be genuine and signed by a proper party.
In the event the Preferred Shares Depositary shall receive conflicting
claims, requests or instructions from any holders of Depositary Receipts, on
the one hand, and the Trust, on the other hand, the Preferred Shares Depositary
shall be entitled to act on such claims, requests or instructions received from
the Trust.
DESCRIPTION OF COMMON SHARES
The Trust has the authority to issue an unlimited number of common shares of
beneficial interest without par value. At July 31, 1995, the Trust had
outstanding 53,262,565 common shares of beneficial interest without par value.
The following description of the Common Shares sets forth certain general
terms and provisions of the Common Shares to which any Prospectus Supplement
may relate, including a Prospectus Supplement providing that Common Shares will
be issuable upon conversion of Debt Securities or Preferred Shares or
26
upon the exercise of Warrants. The statements below describing the Common
Shares are in all respects subject to and qualified in their entirety by
reference to the applicable provisions of the Trust's Declaration of Trust, as
amended.
Holders of the Trust's Common Shares will be entitled to receive dividends
when, as and if declared by the Board of Trustees of the Trust, out of funds
legally available therefor. Payment and declaration of dividends on the Common
Shares and purchases of Common Shares by the Trust will be subject to certain
restrictions if the Trust fails to pay dividends on the Preferred Shares. See
"Description of Preferred Shares". Upon any liquidation, dissolution or winding
up of the Trust, holders of Common Shares 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 Trust and the
preferential amounts owing with respect to any outstanding Preferred Shares.
The Common Shares will possess ordinary voting rights for the election of
trustees and in respect of other corporate matters, each share entitling the
holder thereof to one vote. Trustees are elected in classes for terms expiring
at the third succeeding annual meeting. Holders of Common Shares do not have
cumulative voting rights in the election of trustees, which means that holders
of more than 50% of all of the Trust's Common Shares voting for the election of
trustees at any annual meeting can elect all of the trustees to be elected at
such meeting if they choose to do so and the holders of the remaining shares
cannot elect any trustees at such meeting. Approval of the following matters
requires the affirmative vote of the holders of at least 66 2/3% of all
outstanding Common Shares: amendments to the Trust's Declaration of Trust, as
amended, termination of the Trust, certain mergers, reorganizations or
consolidations of the Trust or the sale, conveyance, exchange or other
disposition of more than 50% of the Trust's property, and the removal of any
trustee by the shareholders. Holders of Common Shares will not have preemptive
rights, which means they have no right to acquire any additional Common Shares
that may be issued by the Trust at a subsequent date. The Common Shares will,
when issued, be fully paid and nonassessable.
RESTRICTIONS ON OWNERSHIP
For the Trust to qualify as a REIT under the Code, not more than 50% in value
of its outstanding capital stock may be owned, directly or indirectly, by five
or fewer individuals (as defined in the Code) during the last half of a taxable
year, and its capital stock must be beneficially owned by 100 or more persons
during at least 335 days of a taxable year of 12 months (or during a
proportionate part of a shorter taxable year). The Declaration of Trust, as
amended, imposes certain restrictions on the ownership and transferability of
Common Shares and Preferred Shares (collectively, "Shares"). If two-thirds (
2/3) of the Trustees determine that ownership of Shares has become, or that
there is a substantial possibility it may become, concentrated to an extent
which would prevent the Trust from continuing to be qualified as a REIT, then
the Trustees may redeem (by lot or other manner deemed equitable by the
Trustees) a sufficient number of Shares to bring the ownership of the Shares
into conformity with the requirements of the Code, or prohibit the transfer of
Shares to prevent the ownership of Shares from being concentrated to an extent
which may not allow the Trust to qualify as a REIT under the Code. The
redemption price to be paid will be (i) the last reported sale price of the
applicable Shares on the last business day prior to the redemption date on the
principal national securities exchange on which such Shares are listed, or (ii)
if the applicable Shares are not so listed, the average of the highest bid and
lowest asked prices on such last business day as reported by the National
Quotation Bureau Incorporated or a similar organization selected from time to
time by the Trustees for the purpose, or (iii) if not determinable as
aforesaid, as determined in good faith by the Trustees. From and after the date
fixed for redemption by the Trustees, the holder of any Shares so called for
redemption shall cease to be entitled to any distributions, voting rights and
other benefits with respect to the Shares called for redemption, except the
right to payment of the applicable redemption price. Under certain
circumstances the proceeds of redemption might be taxed as a dividend to the
recipient.
In order to insure that the Trust remains qualified as a REIT for federal
income tax purposes, the Declaration of Trust, as amended, also provides that
any transfer of Shares that would prevent the Trust from continuing to be so
qualified shall be void ab initio, and the intended transferee of such Shares
shall be
27
deemed never to have had an interest therein. If the foregoing provision is
determined to be void or invalid by virtue of any legal decision, statute, rule
or regulation, then the transferee of such Shares shall be deemed to have acted
as agent on behalf of the Trustees in acquiring such Shares, and to hold such
Shares on behalf of the Trustees.
All certificates representing Common Shares will bear a legend referring to
these restrictions.
If a shareholder has knowledge that he owns, directly or indirectly, together
with certain related persons, 5,000 or more Shares (including Shares into which
convertible securities, options and warrants may be converted or purchased
pursuant thereto), within 10 days of becoming aware of such ownership, whether
or not connected with any acquisition of Shares, he must notify the Trust in
writing of such fact and must similarly notify the Trust of any subsequent
acquisition of Shares (or convertible securities, options or warrants) by
himself or related persons of which he has knowledge within 10 days of becoming
aware of such acquisition. In addition, each shareholder shall upon demand be
required to disclose to the Trust in writing such information with respect to
the direct, indirect and constructive ownership of Shares as the Board of
Trustees deems necessary to comply with the provisions of the Code applicable
to a REIT or to comply with the requirements of any taxing authority or
governmental agency.
The Registrar and Transfer Agent for the Trust's Common Shares is BancBoston
State Street Investor Services.
DESCRIPTION OF WARRANTS
The Trust may issue Warrants for the purchase of Debt Securities, Preferred
Shares, Depositary Shares or Common Shares. Warrants may be issued
independently or together with any Offered Securities and may be attached to or
separate from such securities. Each series of Warrants will be issued under a
separate warrant agreement (each, a "Warrant Agreement") to be entered into
between the Trust and a warrant agent ("Warrant Agent"). The Warrant Agent will
act solely as an agent of the Trust in connection with the 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 Warrants. The following sets
forth certain general terms and provisions of the Warrants offered hereby.
Further terms of the Warrants and the applicable Warrant Agreement will be set
forth in the applicable Prospectus Supplement.
The applicable Prospectus Supplement will describe the following terms, where
applicable, of the Warrants in respect of which this Prospectus is being
delivered: (1) the title of such Warrants; (2) the aggregate number of such
Warrants; (3) the price or prices at which such Warrants will be issued; (4)
the currencies in which the price of such Warrants may be payable; (5) the
designation, aggregate principal amount and terms of the securities purchasable
upon exercise of such Warrants; (6) the designation and terms of the Offered
Securities with which such Warrants are issued and the number of such Warrants
issued with each such security; (7) the currency or currencies, including
composite currencies, in which the principal of or any premium or interest on
the securities purchasable upon exercise of such Warrants will be payable;
(8) if applicable, the date on and after which such Warrants and the related
securities will be separately transferable; (9) the price at which and currency
or currencies, including composite currencies, in which the securities
purchasable upon exercise of such Warrants may be purchased; (10) the date on
which the right to exercise such Warrants shall commence and the date on which
such right shall expire; (11) the minimum or maximum amount of such Warrants
which may be exercised at any one time; (12) information with respect to book-
entry procedures, if any; (13) a discussion of certain Federal income tax
considerations; and (14) any other terms of such Warrants, including terms,
procedures and limitations relating to the exchange and exercise of such
Warrants.
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DESCRIPTION OF RIGHTS
The Trust may issue Rights to its shareholders for the purchase of Common
Shares. Each series of Rights will be issued under a separate rights agreement
(a "Rights Agreement") to be entered into between the Trust and a bank or trust
company, as Rights agent, all as set forth in the Prospectus Supplement
relating to the particular issue of Rights. The Rights agent will act solely as
an agent of the Trust in connection with the certificates relating to the
Rights and will not assume any obligation or relationship of agency or trust
for or with any holders of Rights certificates or beneficial owners of Rights.
The Rights Agreement and the Rights certificates relating to each series of
Rights 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 Rights.
The applicable Prospectus Supplement will describe the terms of the Rights to
be issued, including the following where applicable: (i) the date for
determining the shareholders entitled to the Rights distribution; (ii) the
aggregate number of Common Shares purchasable upon exercise of such Rights and
the exercise price; (iii) the aggregate number of Rights being issued; (iv) the
date, if any, on and after which such Rights may be transferable separately;
(v) the date on which the right to exercise such Rights shall commence and the
date on which such right shall expire; (vi) any special United States federal
income tax consequences; and (vii) any other terms of such Rights, including
terms, procedures and limitations relating to the distribution, exchange and
exercise of such Rights.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
TO THE TRUST OF ITS REIT ELECTION
The following summary of certain federal income tax considerations to the
Trust 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 Offered 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 Offered Securities. Certain federal income tax considerations relevant to
holders of the Offered Securities will be provided in the applicable Prospectus
Supplement relating thereto.
EACH INVESTOR IS ADVISED TO CONSULT THE APPLICABLE PROSPECTUS SUPPLEMENT, AS
WELL AS HIS OWN TAX ADVISOR, REGARDING THE TAX CONSEQUENCES TO HIM OF THE
ACQUISITION, OWNERSHIP AND SALE OF THE OFFERED 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 TRUST AS A REIT
General. The Trust 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 July 31, 1972. The Trust believes that, commencing with its taxable year
ended July 31, 1972, it was organized and has been operating in such a manner
as to qualify for taxation as a REIT under the Code and the Trust intends to
continue to operate in such a 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 Altheimer & Gray, commencing with the Trust's taxable year
which ended July 31, 1972, the Trust has been organized in conformity with the
requirements for qualification as a REIT, and its
29
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 Trust as to factual matters. In addition, this opinion is based
upon the factual representations of the Trust concerning its business and
properties as set forth in this Prospectus. Moreover, such qualification and
taxation as a REIT depends upon the Trust'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 Altheimer & Gray.
Accordingly, no assurance can be given that the actual results of the Trust's
operation in any particular taxable year will satisfy such requirements. See
"--Failure to Qualify."
If the Trust qualifies for taxation as a REIT, it generally will not be
subject to federal corporate income taxes on its net income that is currently
distributed to shareholders. This treatment substantially eliminates the
"double taxation" (at both the corporate and shareholder levels) that generally
results from investment in a regular corporation. However, the Trust will be
subject to federal income tax as follows: First, the Trust will be taxed at
regular corporate rates on any undistributed real estate investment trust
taxable income, including undistributed net capital gains. Second, under
certain circumstances, the Trust may be subject to the "alternative minimum
tax" on its items of tax preference. Third, if the Trust has (i) net income
from the sale or other disposition of "foreclosure property" which is held
primarily for sale to customers in the ordinary course of business or (ii)
other non-qualifying income from foreclosure property, it will be subject to
tax at the highest corporate rate on such income. Fourth, if the Trust has net
income from prohibited transactions (which are, in general, certain sales or
other dispositions of property held primarily for sale to customers in the
ordinary course of business other than foreclosure property), such income will
be subject to a 100% tax. Fifth, if the Trust should fail to satisfy the 75%
gross income test or the 95% gross income test (as discussed below), but has
nonetheless maintained its qualification as a REIT because certain other
requirements have been met, it will be subject to a 100% tax on an amount equal
to (a) the gross income attributable to the greater of the amount by which the
Trust fails the 75% or 95% test, multiplied by (b) a fraction intended to
reflect the Trust's profitability. Sixth, if the Trust 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 periods, the
Trust would be subject to a 4% excise tax on the excess of such required
distribution over the amounts actually distributed. Seventh, if the Trust
acquires any asset from a C corporation (i.e., generally a corporation subject
to full corporate-level tax) in certain transactions in which the basis of the
asset in the hands of the Trust is determined by reference to the basis of the
asset (or any other property) in the hands of the C corporation, and the Trust
recognizes gain on the disposition of such asset during the 10-year period (the
"Recognition Period") beginning on the date on which such asset was acquired by
the Trust, then, to the extent of the excess, if any, of the fair market value
over the adjusted basis of any such asset as of the beginning of the
Recognition Period (the "Built-in Gain"), such gain will be subject to tax at
the highest regular corporate rate pursuant to Internal Revenue Service ("IRS")
regulations that have not yet been promulgated.
Requirements for Qualification. The Code defines a REIT as a corporation,
trust or association (1) which is managed by one or more trustees or directors,
(2) the beneficial ownership of which is evidenced by transferable shares, or
by transferable certificates of beneficial interest, (3) which would be taxable
as a domestic corporation, but for Section 856 through 859 of the Code, (4)
which is neither a financial institution nor an insurance company subject to
certain provisions of the Code, (5) the beneficial ownership of which is held
by 100 or more persons, (6) during the last half of each taxable year, not more
than 50% in value of the outstanding stock of which is owned, directly or
constructively, by five or fewer individuals (as defined in the Code) and (7)
which meets certain other tests, described below, regarding the nature of its
income and assets. The Code provides that conditions (1) to (4) must be met
during the entire taxable year and that condition (5) must be met during at
least 335 days of a taxable year of 12 months, or during a proportionate part
of a taxable year of less than 12 months. Conditions (5) and (6) will not apply
until after the first taxable year for which an election is made to be taxed as
a REIT.
30
The Trust has satisfied condition (5) and believes that it has issued
sufficient shares to allow it to satisfy condition (6). In addition, the
Trust's Declaration of Trust, as amended, provides for restrictions regarding
ownership and transfer of the Trust's capital stock, which restrictions are
intended to assist the Trust in continuing to satisfy the share ownership
requirements described in (5) and (6) above. The ownership and transfer
restrictions pertaining to a particular series of Preferred Shares are
described in "Description of Preferred Shares--Restrictions on Ownership."
The Trust owns and operates a number of properties through subsidiaries. Code
Section 856(i) provides that a corporation which is a "qualified REIT
subsidiary" shall not be treated as a separate corporation, and all assets,
liabilities, and items of income, deduction, and credit of a "qualified REIT
subsidiary" shall be treated as assets, liabilities and such items (as the case
may be) of the REIT. Thus, in applying the requirements described herein, the
Trust's "qualified REIT subsidiaries" will be ignored, and all assets,
liabilities and items of income, deduction, and credit of such subsidiaries
will be treated as assets, liabilities and items of the Trust.
Income Tests. In order to maintain qualification as a REIT, the Trust
annually must satisfy three gross income requirements. First, at least 75% of
the Trust's gross income (excluding gross income from prohibited transactions)
for each taxable year must be derived directly or indirectly from investments
relating to real property or mortgages on real property (including "rents from
real property" and, in certain circumstances, interest) or from certain types
of temporary investments. Second, at least 95% of the Trust's gross income
(excluding gross income from prohibited transactions) for each taxable year
must be derived from such real property investments, dividends, interest and
gain from the sale or disposition of stock or securities (or from any
combination of the foregoing). Third, short-term gain from the sale or other
disposition of stock or securities, gain from prohibited transactions and gain
on the sale or other disposition of real property held for less than four years
(apart from involuntary conversions and sales of foreclosure property) must
represent less than 30% of the Trust's gross income (including gross income
from prohibited transactions) for each taxable year.
Rents received by the Trust will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if
several conditions are met. First, the amount of rent must not be based in
whole or in part on the income or profits of any person. However, an amount
received or accrued generally will not be excluded from the term "rents from
real property" solely by reason of being based on a fixed percentage or
percentages of receipts or sales. Second, the Code provides that rents received
from a tenant will not qualify as "rents from real property" in satisfying the
gross income tests if the real estate investment trust, or an owner of 10% or
more of the REIT, directly or constructively owns 10% or more of such tenant (a
"Related Party Tenant"). Third, 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." Finally,
for rents received to qualify as "rents from real property," the REIT generally
must not operate or manage the property or furnish or render services to the
tenants of such property, other than through an independent contractor from
whom the REIT derives no revenue; provided, however, the Trust may directly
perform certain services that are "usually or customarily rendered" in
connection with the rental of space for occupancy only and are not otherwise
considered "rendered to the occupant" of the property. The Trust does not and
will not charge rent for any property that is based in whole or in part on the
income or profits of any person (except by reason of being based on a
percentage of receipts of sales, as described above), the Trust does not and
will not rent any property to a Related Party Tenant, and the Trust does not
and will not derive rental income attributable to personal property (other than
personal property leased in connection with the lease of real property, the
amount of which is less than 15% of the total rent received under the lease).
The Trust directly performs services under certain of its leases.
The term "interest" generally does not include any amount received or accrued
(directly or indirectly) if the determination of such amount depends in whole
or in part on the income or profits of any person.
31
However, an amount received or accrued generally will not be excluded from the
term "interest" solely by reason of being based on a fixed percentage or
percentages of receipts or sales.
If the Trust fails to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, it may nevertheless 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 the Trust's failure to meet such
tests was due to reasonable cause and not due to willful neglect, the Trust
attaches a schedule of the sources of its income to its federal income tax
return, and any incorrect information on the schedule was not due to fraud with
intent to evade tax. It is not possible, however, to state whether in all
circumstances the Trust would be entitled to the benefit of these relief
provisions. As discussed above under "--General," even if these relief
provisions apply, a tax would be imposed with respect to the excess net income.
Asset Tests. The Trust, at the close of each quarter of its taxable year,
must also satisfy three tests relating to the nature of its assets. First, at
least 75% of the value of the Trust's total assets must be represented by real
estate assets (including (i) assets held by the Trust's qualified REIT
subsidiaries and the Trust's allocable share of real estate assets held by
partnerships in which the Trust owns an interest and (ii) stock or debt
instruments held for not more than one year purchased with the proceeds of a
stock offering or long-term (at least five years) debt offering of the Trust),
cash, cash items and government securities. Second, not more than 25% of the
Trust's total assets may be represented by securities other than those in the
75% asset class. Third, of the investments included in the 25% asset class, the
value of any one issuer's securities owned by the Trust may not exceed 5% of
the value of the Trust's total assets and the Trust may not own more than 10%
of any one issuer's outstanding voting securities.
The Trust currently has numerous wholly-owned subsidiaries. As set forth
above, the ownership of more than 10% of the voting securities of any one
issuer by a REIT is prohibited by the asset tests. However, if the Trust's
subsidiaries are "qualified REIT subsidiaries" as defined in the Code, such
subsidiaries will not be treated as separate corporations for federal income
tax purposes. Thus, the Trust's ownership of stock of a "qualified REIT
subsidiary" will not cause the Trust to fail the asset tests.
Annual Distribution Requirements. The Trust, in order to qualify as a REIT,
is required to distribute dividends (other than capital gain dividends) to its
shareholders in an amount at least equal to (A) the sum of (i) 95% of the
Trust's "REIT taxable income" (computed without regard to the dividends paid
deduction and the Trust's net capital gain) and (ii) 95% of the net income
(after tax), if any, from foreclosure property, minus (B) the sum of certain
items of non-cash income. In addition, if the Trust disposes of any asset
during a Recognition Period, the Trust will be required, pursuant to IRS
regulations which have not yet been promulgated, to distribute at least 95% of
the Built-in Gain (after tax), if any, recognized on the disposition of such
asset. Such distributions must be paid in the taxable year to which they
relate, or in the following taxable year if declared before the Trust 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 Trust does not
distribute all of its net capital gain or distributes at least 95%, but less
than 100%, of its "real estate investment trust taxable income," as adjusted,
it will be subject to tax thereon at regular ordinary and capital gain
corporate tax rates. Furthermore, if the Trust 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 income for such year, and (iii)
any undistributed taxable income from prior periods, the Trust would be subject
to a 4% excise tax on the excess of such required distribution over the amounts
actually distributed. The Trust intends to make timely distributions sufficient
to satisfy this annual distribution requirement.
It is possible that the Trust, from time to time, may not have sufficient
cash or other liquid assets to meet the above distribution requirements due to
timing differences between (i) the actual receipt of income and actual payment
of deductible expenses and (ii) the inclusion of such income and deduction of
such expenses in arriving at taxable income of the Trust. In the event that
such timing differences occur, in order to meet the 95% distribution
requirement, the Trust may find it necessary to arrange for short-term, or
possibly long-term borrowings or to pay dividends in the form of taxable stock
dividends.
32
Under certain circumstances, the Trust may be able to rectify a failure to
meet the distribution requirement for a year by paying "deficiency dividends"
to stockholders in a later year, which may be included in the Trust's deduction
for dividends paid for the earlier year. Thus, the Trust may be able to avoid
being taxed on amounts distributed as deficiency dividends; however, the Trust
will be required to pay interest based upon the amount of any deduction taken
for deficiency dividends.
FAILURE TO QUALIFY
If the Trust fails to qualify for taxation as a REIT in any taxable year, and
the relief provisions do not apply, the Trust will be subject to tax (including
any applicable alternative minimum tax) on its taxable income at regular
corporate rates. Distributions to shareholders in any year in which the Trust
fails to qualify will not be deductible by the Trust nor will they be required
to be made. In such event, to the extent of current and accumulated earnings
and profits, all distributions to shareholders will be taxable as ordinary
income and, subject to certain limitations of the Code, corporate distributees
may be eligible for the dividends received deduction. Unless entitled to relief
under specific statutory provisions, the Trust will also 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 Trust would be entitled to such statutory relief.
PLAN OF DISTRIBUTION
The Trust may sell the Offered Securities to one or more underwriters for
public offering and sale by them or may sell the Offered Securities to
investors directly or through agents. Any such underwriter or agent involved in
the offer and sale of the Offered Securities will be named in the applicable
Prospectus Supplement.
Underwriters may offer and sell the Offered Securities at a fixed price or
prices, which may be changed, at prices related to the prevailing market prices
at the time of sale or at negotiated prices. The Trust also may, from time to
time, authorize underwriters acting as the Trust's agents to offer and sell the
Offered Securities upon the terms and conditions as are set forth in the
applicable Prospectus Supplement. In connection with the sale of Offered
Securities, underwriters may be deemed to have received compensation from the
Trust in the form of underwriting discounts or commissions and may also receive
commissions from purchasers of Offered Securities for whom they may act as
agent. Underwriters may sell Offered 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 Trust to underwriters or agents in
connection with the offering of Offered 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 Offered 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 Offered 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 Trust, to indemnification against and contribution toward certain
civil liabilities, including liabilities under the Securities Act.
If so indicated in a Prospectus Supplement, the Trust will authorize agents,
underwriters or dealers to solicit offers by certain institutional investors to
purchase Offered Securities of the series to which such Prospectus Supplement
relates providing for payment and delivery on a future date specified in such
Prospectus Supplement. There may be limitations on the minimum amount which may
be purchased by any such institutional investor or on the portion of the
aggregate principal amount of the particular Offered Securities which may be
sold pursuant to such arrangements. Institutional investors to which such
offers may
33
be made, when authorized, include commercial and savings banks, insurance
companies, pension funds, investment companies, educational and charitable
institutions and such other institutions as may be approved by the Trust. The
obligations of any such purchasers pursuant to such delayed delivery and
payment arrangements will not be subject to any conditions except that (i) the
purchase by an institution of the particular Offered Securities 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 particular
Offered Securities are being sold to underwriters, the Trust shall have sold to
such underwriters the total principal amount of such Offered Securities or
number of Warrants less the principal amount or number thereof, as the case may
be, covered by such arrangements. Underwriters will not have any responsibility
in respect of the validity of such arrangements or the performance of the Trust
or such institutional investors thereunder.
Certain of the underwriters and their affiliates may be customers of, engage
in transactions with and perform services for the Trust and its subsidiaries in
the ordinary course of business.
ERISA MATTERS
The Trust may be considered a "party in interest" within the meaning of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and a
"disqualified person" under corresponding provisions of the Code with respect
to certain employee benefit plans. Certain transactions between an employee
benefit plan and a party in interest or disqualified person may result in
"prohibited transactions" within the meaning of ERISA and the Code, unless such
transactions are effected pursuant to an applicable exemption. Any employee
benefit plan or other entity subject to such provisions of ERISA or the Code
proposing to invest in the Offered Securities should consult with its legal
counsel.
LEGAL OPINIONS
Certain legal matters will be passed upon for the Trust by Robinson Silverman
Pearce Aronsohn & Berman, New York, New York. Robinson Silverman Pearce
Aronsohn & Berman will rely on Goodwin, Procter & Hoar, Boston, Massachusetts,
as to matters of Massachusetts law. The legal authorization and issuance of the
Offered Securities will be passed upon for the Trust by Goodwin, Procter &
Hoar. Altheimer & Gray, Chicago, Illinois, has acted as counsel to the Trust on
tax and certain other matters. Norman Gold, a member of Altheimer & Gray, is a
Trustee. Mr. Gold beneficially owns 10,899 Common Shares.
EXPERTS
The consolidated balance sheets as of July 31, 1995 and 1994 and the
consolidated statements of income, changes in shareholders' equity, and cash
flows and the consolidated financial statement schedules of the Trust for each
of the three years in the period ended July 31, 1995, which appear in the
Annual Report on the Form 10-K incorporated by reference in this Prospectus,
have been incorporated herein in reliance on the report of Coopers & Lybrand
L.L.P., independent accountants, given on the authority of that firm as experts
in accounting and auditing.
The historical summary of revenues and certain operating expenses of certain
properties acquired by the Trust for various year ends appearing in the Trust's
Report on Form 8-K/A dated August 9, 1995 and the historical summary of revenues
and certain operating expenses of certain properties acquired by the Trust for
the year ended July 31, 1995 appearing in the Trust's Report on Form 8-K dated
October 20, 1995, have been audited by Eichler Bergsman & Co., LLP, independent
accountants, as set forth in their reports thereon, included therein and
incorporated herein by reference. Such historical summaries of revenues and
certain operating expenses are incorporated herein by reference in reliance upon
such reports given on the authority of that firm as experts in accounting and
auditing.
34
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NO DEALER, SALESMAN OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN
CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE TRUST OR THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS NOR ANY
SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCE, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS SUPPLEMENT
OR IN THE PROSPECTUS OR IN THE AFFAIRS OF THE TRUST SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER OR
SOLICITATION BY ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION.
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TABLE OF CONTENTS
PAGE
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PROSPECTUS SUPPLEMENT
The Trust................................................................. S-3
Recent Developments....................................................... S-4
Use of Proceeds........................................................... S-5
Capitalization............................................................ S-6
Selected Financial Data................................................... S-7
Price Range of the Common Shares and Distributions........................ S-8
Business.................................................................. S-9
Management................................................................ S-12
Taxation.................................................................. S-14
Underwriting.............................................................. S-15
PROSPECTUS
Available Information..................................................... 2
Incorporation of Certain Documents by Reference........................... 2
The Trust................................................................. 3
Ratios of Earnings to Fixed Charges....................................... 3
Use of Proceeds........................................................... 4
Description of Debt Securities............................................ 4
Description of Preferred Shares........................................... 18
Description of Depositary Shares.......................................... 23
Description of Common Shares.............................................. 26
Description of Warrants................................................... 28
Description of Rights..................................................... 29
Certain Federal Income Tax Considerations to the Trust of its REIT
Election................................................................. 29
Plan of Distribution...................................................... 33
ERISA Matters............................................................. 34
Legal Opinions............................................................ 34
Experts................................................................... 34
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4,000,000 SHARES
NEW PLAN
REALTY TRUST
COMMON SHARES
-------------------------
PROSPECTUS SUPPLEMENT
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MERRILL LYNCH & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO.
INCORPORATED
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES INCORPORATED
SMITH BARNEY INC.
NOVEMBER 8, 1995
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