1
Exhibit 8.1
March 25, 1998
RFS Hotel Investors, Inc.
850 Ridge Lake Boulevard, Suite 220
Memphis, Tennessee 38120
J.C. Bradford & Co., L.L.C.
330 Commerce Street
Nashville, Tennessee 37201
Ladies and Gentlemen:
We have acted as counsel to RFS Hotel Investors, Inc., a Tennessee
corporation (the "Company"), in connection with (i) the preparation of a
Registration Statement on Form S-3 filed with the Securities and Exchange
Commission ("SEC") on July 23, 1996 (the "Registration Statement"), (ii) the
offering and sale (the "Offering") of 547,946 shares of common stock, par value
$.01 per share, of the Company (the "Common Stock") pursuant to a prospectus
dated July 30, 1996 (the "Prospectus") and a related prospectus supplement dated
March 25, 1998 (the "Prospectus Supplement") related to the Registration
Statement, and (iii) the Company's contribution of the net proceeds of the
Offering to RFS Partnership, L.P., a Tennessee limited partnership (the
"Operating Partnership"), in exchange for an additional general partnership
interest in the Operating Partnership. You have requested our opinion regarding
certain U.S. federal income tax matters in connection with the Offering.
The Company, though the Operating Partnership and RFS Financing
Partnership, L.P., a Tennessee limited partnership (the "Subsidiary
Partnership"), owns 60 hotels and associated personal property (the "Hotels").
The Company leases all but one of those Hotels to wholly-owned subsidiaries of
Promus Hotel Corporation (the
2
RFS Hotel Investors, Inc.
J.C. Bradford & Co., L.L.C.
March 25, 1998
Page 2
"Lessees") pursuant to substantially similar operating leases (the "Leases").
The Lessees operate all but four of the Hotels directly. The remaining four
Hotels are operated by independent hotel managers pursuant to substantially
similar management agreements with the Lessees (the "Management Agreements").
In connection with the opinions rendered below, we have examined the
following:
1. the Company's Second Restated Charter, as filed with the Secretary of
State of the State of Tennessee on January 31, 1995, as amended on June 27,
1996;
2. the Company's Bylaws;
3. the Fourth Amended and Restated Agreement of Limited Partnership of the
Operating Partnership, dated as of January 3, 1997 (the "Operating Partnership
Agreement"), among the Company, as general partner, and several limited
partners;
4. the Limited Partnership Agreement of the Subsidiary Partnership, dated
October 4, 1996 (the "Subsidiary Partnership Agreement"), between RFS Financing
Corporation, as general partner, and the Operating Partnership, as limited
partner;
5. the Charter of Ridge Lake General Partner, Inc. ("Ridge Lake GP"), a
corporation 100% of whose nonvoting stock is owned by the Company and 100% of
whose voting stock is owned by Robert Solmson, as filed with the Secretary of
State of Tennessee on September 24, 1997;
6. the Limited Partnership Agreement of Ridge Lake, L.P., dated September
22, 1997, between Ridge Lake GP, as general partner, and the Operating
Partnership, as limited partner;
7. the Prospectus and the Prospectus Supplement;
8. the Leases;
9. the Management Agreements; and
10. such other documents as we have deemed necessary or appropriate for
purposes of this opinion.
In connection with the opinions rendered below, we have assumed generally
that:
3
RFS Hotel Investors, Inc.
J.C. Bradford & Co., L.L.C.
March 25, 1998
Page 3
1. each of the documents referred to above has been duly authorized,
executed, and delivered; is authentic, if an original, or is accurate, if a
copy; and has not been amended;
2. during its taxable year ending December 31, 1998 and subsequent taxable
years, the Company has operated and will continue to operate in such a manner
that makes and will continue to make the representations contained in a
certificate, dated the date hereof (the "Officer's Certificate"), and executed
by a duly appointed officer of the Company, true for such years;
3. the Company will not make any amendments to its organizational
documents, the Operating Partnership Agreement, or the Subsidiary Partnership
Agreement after the date of this opinion that would affect its qualification as
a real estate investment trust (a "REIT") for any taxable year;
4. each partner of the Operating Partnership and the Subsidiary Partnership
(each, a "Partner") that is a corporation or other entity has a valid legal
existence;
5. each Partner has full power, authority, and legal right to enter into
and to perform the terms of the Operating Partnership Agreement and the
Subsidiary Partnership Agreement and the transactions contemplated thereby; and
6. no action will be taken by the Company, the Operating Partnership, the
Subsidiary Partnership, or the Partners after the date hereof that would have
the effect of altering the facts upon which the opinions set forth below are
based.
In connection with the opinions rendered below, we also have relied upon
the correctness of the representations contained in the Officer's Certificate.
Based on the factual matters in the documents and assumptions set forth
above and the representations set forth in the Officer's Certificate, and
without further investigation as to such factual matters, we are of the opinion
that:
4
RFS Hotel Investors, Inc.
J.C. Bradford & Co., L.L.C.
March 25, 1998
Page 4
(a) the Company qualified to be taxed as a REIT pursuant to sections
856 through 860 of the Internal Revenue Code of 1986, as amended (the
"Code"), for its taxable years ended December 31, 1993 through
December 31, 1997, and the Company's organization and current and
proposed method of operation will enable it to continue to qualify as
a REIT for its taxable year ended December 31, 1998, and in the
future;
(b) the descriptions of the law and the legal conclusions contained in
the Prospectus Supplement under the caption "Federal Income Tax
Considerations" are correct in all material respects, and the
discussions thereunder fairly summarize the federal income tax
considerations that are likely to be material to a holder of the
Common Stock; and
(c) each of the Operating Partnership and the Subsidiary Partnership
will be treated for federal income tax purposes as a partnership and
not as a corporation or an association taxable as a corporation or as
a publicly traded partnership.
We have performed no due diligence and have made no efforts to verify the
accuracy and genuineness of the documents and assumptions set forth above, and
the representations set forth in the Officer's Certificate. We will not review
on a continuing basis the Company's compliance with such documents, assumptions
or representations. Accordingly, no assurance can be given that the actual
results of the Company's operations for its 1998 and subsequent taxable years
will satisfy the requirements for qualification and taxation as a REIT.
The foregoing opinions are based on current provisions of the Code and the
Treasury regulations thereunder, published administrative interpretations
thereof, and published court decisions. The Internal Revenue Service has not
issued regulations or administrative interpretations with respect to various
provisions of the Code relating to REIT qualification. No assurance can be given
that the law will not change in a way that will prevent the Company from
qualifying as a REIT.
We hereby consent to the filing of this opinion as an exhibit to the
Company's Form 8-K, filed on March 26, 1998. We also consent to the references
to
5
RFS Hotel Investors, Inc.
J.C. Bradford & Co., L.L.C.
March 25, 1998
Page 5
Hunton & Williams under the caption "Federal Income Tax Considerations" in
the Prospectus Supplement. In giving this consent, we do not admit that we are
in the category of persons whose consent is required by Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder by the SEC.
The foregoing opinions are limited to the U.S. federal income tax matters
addressed herein, and no other opinions are rendered with respect to other
federal tax or other matters or to any issues arising under the tax laws of any
other country, or any state or locality. We undertake no obligation to update
the opinions expressed herein after the date of this letter. This opinion letter
is solely for the information and use of the addressees, and it may not be
distributed, relied upon for any purpose by any other person, quoted in whole or
in part or otherwise reproduced in any document, or filed with any governmental
agency without our express written consent.
Very truly yours,
/s/ Hunton & Williams