EXHIBIT 8.1
December 17, 2003
Capstead Mortgage Corporation
8401 N. Central Expressway
Suite 800
Dallas, Texas 75225
Re: Capstead Mortgage Corporation
Post-Effective Amendment No. 1 to Form S-3
Ladies and Gentlemen:
We have acted as counsel to Capstead Mortgage Corporation, a Maryland
corporation ("Capstead"), in connection with the offer and sale of up to 875,000
shares of Capstead's common stock, par value $.01 per share, and up to 1,000,000
shares of $1.26 cumulative convertible preferred stock, Series B, par value $.10
per share. The shares to be offered and sold have been registered under
Capstead's Registration Statement No. 333-68424 (the "Registration Statement")
and are being offered pursuant to a prospectus dated December 17, 2003 (the
"Prospectus"), which Prospectus was filed with the Securities and Exchange
Commission on or about the date hereof. This opinion is to be included as an
exhibit to the Registration Statement pursuant to a post-effective amendment No.
1 to the Registration Statement. You have requested our opinion regarding
Capstead's qualification as a real estate investment trust ("REIT") pursuant to
sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"), as set forth below. Capstead has and has had a number of wholly-owned
subsidiaries, the income, liabilities, and assets of which are not and were not
accounted for separately from Capstead for federal income tax purposes pursuant
to applicable provisions of the Code. This letter refers to Capstead, as
aggregated with such subsidiaries as were in existence during the period for
which reference is made, as "Capstead REIT." In addition, Capstead owned all of
the outstanding common stock of Capstead Securities Corporation I ("OLD CSC I")
from March 13, 1986, until December 30, 1993, the date of its merger with and
into CMC Liquidation Corporation (which corporation changed its name to Capstead
Securities Corporation I ("New CSC I")).
For the purpose of rendering our opinion, we have examined and are
relying upon the truth and accuracy, at all relevant times, of the statements,
covenants, representations and warranties contained in the following documents:
1. The Articles of Incorporation of Capstead and the Certificate
of Incorporation of (i) OLD CSC I, (ii) CMF Mortgage Funding
Corporation, (iii) Capstead Holdings, Inc.,
Capstead Mortgage Corporation
December 17, 2003
Page 2
(iv) Capstead Inc. and (v) each wholly owned subsidiary of Capstead,
each as amended and supplemented to the date hereof.
2. The By-Laws of Capstead and the Bylaws of OLD CSC I.
3. Capstead REIT's federal income tax returns for taxable years
1985 - 2002.
4. OLD CSC I's federal income tax returns for taxable years 1986
- 1993.
5. The registration statement with which this letter is being
filed.
6. Representations made to us by an officer of Capstead in a
certificate as of the date hereof and representations made to us by an
officer of New CSC I in a certificate as of the date hereof.
In connection with rendering this opinion, we have assumed and are
relying upon, without any independent investigation or review thereof, the
following:
1. The authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents
submitted to us as copies, and authenticity of the originals of such
documents.
2. The genuineness of all signatures, the due authorization,
execution and delivery of all documents by all parties thereto and the
due authority of all persons executing such documents.
3. None of Capstead, its wholly owned subsidiaries, or Capstead
Holdings, Inc. will make any amendments to its organizational documents
after the date of this opinion that would adversely affect Capstead
REIT's qualification as a REIT for any taxable year.
4. No actions will be taken by Capstead REIT after the date
hereof that would have the effect of altering the facts upon which the
opinion set forth below is based.
Based on the foregoing and subject to the assumptions, exceptions,
limitations and qualifications set forth herein, we are of the opinion that:
(i) For all of its taxable years beginning September 5,
1985, and ending December 31, 2002, Capstead REIT has met the
requirements for qualification as a REIT under the Code and
will be able to qualify as a REIT for taxable years beginning
on and after January 1, 2003, provided that Capstead REIT
continues to be organized and operated after the date of this
letter so as to satisfy the applicable REIT requirements under
the Code, and
Capstead Mortgage Corporation
December 17, 2003
Page 3
(ii) The statements in the Prospectus set forth under the
caption "Taxation" accurately describe the material federal
income tax consequences to the holders of Capstead's common
stock under existing law and subject to the qualifications and
assumptions stated therein.
In addition to the assumptions set forth above, this opinion is subject
to the following exceptions, limitations and qualifications:
1. Our opinion expressed herein is based upon our interpretation
of the current provisions of the Code and existing judicial decisions,
administrative regulations and published rulings and procedures. Our
opinion is not binding upon the Internal Revenue Service or courts and
there is no assurance that the Internal Revenue Service will not
successfully challenge the conclusion set forth herein. The Internal
Revenue Service has not yet issued regulations or administrative
interpretations with respect to various provisions of the Code relating
to REIT qualification. No assurance can be given that future
legislative, judicial or administrative changes, on either a
prospective or retroactive basis, would not adversely affect the
accuracy of the conclusions stated herein.
2. Our opinion is limited to the federal income tax matters
addressed herein, and no other opinions are rendered with respect to
any other matter not specifically set forth in the foregoing opinion.
3. Our opinion is limited in all respects to the federal law of
the United States, and we assume no responsibility as to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction.
4. Except as described in this letter, we have made no efforts to
verify the accuracy and genuineness of the documents, assumptions and
representations set forth above.
In the event any one of the statements, representations, warranties or
assumptions we have relied upon to issue this opinion is incorrect in a material
respect, our opinion might be adversely affected and may not be relied upon.
This opinion is delivered as of the date hereof and we disclaim any
responsibility to update this opinion at any time following the date hereof.
The ability of Capstead REIT to qualify as a REIT for its 2003 taxable
year and subsequent taxable years will depend on future events, some of which
are not within the control of Capstead REIT. Additionally, it is not possible to
predict whether the statements, representations, warranties or assumptions on
which we have relied on to issue this opinion will continue to be accurate in
the future. Thus, the treatment of the Capstead REIT for federal income tax
purposes may be altered for the taxable years affected thereby.
Capstead Mortgage Corporation
December 17, 2003
Page 4
We hereby consent to the reference to us under the caption "TAXATION"
in the Registration Statement, and to the filing of this opinion as an Exhibit
to the Registration Statement, without implying or admitting that we are experts
within the meaning of the Securities Act of 1933, as amended, with respect to
any part of the Registration Statement.
Very truly yours,
ANDREWS KURTH LLP
TWF; TRP