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EXHIBIT 8.1
[Letterhead of Andrews & Kurth L.L.P.]
December 31, 1997
American Realty Trust, Inc.
10670 North Central Expressway
Suite 300
Dallas, Texas 75231
Re: American Realty Trust, Inc.
Registration Statement on Form S-4
453,552 shares of Series F Cumulative Convertible Preferred Stock,
par value $2.00 per share
Ladies and Gentlemen:
We have acted as counsel for American Realty Trust, Inc., a Georgia
corporation (the "Company"), in connection with a Registration Statement on
Form S-4 filed with the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Registration Statement"), covering 453,552 shares
of the Company's Series F Cumulative Convertible Preferred Stock, par value
$2.00 per share (the "Preferred Stock"), to be offered in connection with the
proposed merger (the "Merger") of ART Newco, LLC, a Massachusetts limited
liability company (the "Massachusetts LLC"), of which the Company and ART Newco
Holdings LLC, a Texas limited liability company that is a wholly owned
subsidiary of the Company, are the sole members, with and into EQK Realty
Investors I, a Massachusetts business trust (the "Massachusetts Trust"), with
the Massachusetts Trust as the surviving entity. In that capacity, we have
examined the charter and bylaws of the Company and the Second Amended and
Restated Declaration of Trust, as amended, of the Trust, the Registration
Statement, the action taken by the Company, the Massachusetts LLC, and the
Massachusetts Trust in connection with the Merger, and the issuance of 453,552
shares of the Preferred Stock pursuant thereto, and such other materials and
matters as we have deemed necessary to the issuance of this opinion.
In all such examinations, we have assumed the genuineness of all
signatures, the authority to sign of all signatories, the due execution of all
original and certified documents, and the conformity to the original and
certified documents of all copies submitted to us as conformed, photostatic or
facsimile copies. As to various questions of fact material to our opinion, we
have relied upon statements and certificates of officers of the Company, the
Massachusetts LLC, the Massachusetts Trust, public officials and others. In
addition, we have assumed that the Agreement and Plan of Merger to be entered
into between the Massachusetts, LLC, Basic Capital Management, Inc., the
Massachusetts Trust, Compass Retail, Inc. and the Company in connection with
the Merger (the "Merger Agreement") will become effective substantially in the
form included in the
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American Realty Trust, Inc.
December 31, 1997
Page 2
Registration Statement. All capitalized terms used but not defined herein
shall have the meaning assigned to them in the Registration Statement.
Based upon our examination of the foregoing items, and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we
are of the opinion that (i) the payment of the EQK Merger Consideration to the
Public EQK Shareholders pursuant to the Merger will be treated as a taxable
transaction for Federal income tax purposes and (ii) the statements made in the
Proxy Statement/Prospectus included in the Registration Statement under the
headings "The Proposed Merger and Related Matters -- Certain Federal Income Tax
Consequences" to the extent they constitute matters of law or summaries of
legal matters or legal conclusions have been reviewed by us and are correct in
all material respects.
The opinions herein are based upon our interpretations of current law,
including court authority and existing Final and Temporary Regulations, which
are subject to change both prospectively and retroactively, and upon the facts
and assumptions discussed herein. This opinion letter is limited to the
matters set forth herein, and no opinions are intended to be implied or may be
inferred beyond those expressly stated herein. Our opinions are rendered as of
the date hereof and we assume no obligation to update or supplement these
opinions or any matter related to these opinions to reflect any change of fact,
circumstances, or law after the date hereof. In addition, our opinions are
based on the assumption that the matter, if litigated, will be properly
presented to the applicable court. Furthermore, our opinions are not binding
on the Internal Revenue Service or a court. In addition, we must note that our
opinions represent merely our best legal judgment on the matters presented and
that others may disagree with our conclusions. There can be no assurance that
the Internal Revenue Service will not take contrary positions or that a court
would agree with our opinions if litigated. In the event any one of the
statements, representations or assumptions we have relied upon to issue these
opinions is incorrect, our opinions might be adversely affected and may not be
relied upon.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the caption
"Summary -- Certain Federal Income Tax Consequences," "The Proposed Merger and
Related Matters -- Certain Federal Income Tax Consequences" and "Legal
Matters", in the Registration Statement and Proxy Statement/Prospectus that is
a part thereof. By giving such consent, we do not hereby admit that we are an
expert with respect to any part of the Registration Statement, including this
exhibit, within the meaning of the term "expert" as used in the Securities Act
of 1933, as amended.
Very truly yours,
/s/ Andrews & Kurth L.L.P.