1
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
 
                                  FORM 10-K/A
                                AMENDMENT NO. 1
                             ---------------------
 

               
   (MARK ONE)
      [X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
                                      OR
      [  ]        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE TRANSITION PERIOD FROM ____________ TO ____________

 
                         COMMISSION FILE NUMBER 0-23917
                          CHASTAIN CAPITAL CORPORATION
      (Exact name of registrant as specified in its governing instrument)
 

                                            
                   GEORGIA                                      58-2354416
           (State of Organization)                           (I.R.S. Employer
                                                            Identification No.)
    3424 PEACHTREE ROAD N.E., SUITE 800,
              ATLANTA, GEORGIA                                     30326
   (Address of principal executive office)                      (Zip Code)

 
       Registrant's telephone number, including area code: (404) 848-8871
 
        Securities registered pursuant to Section 12(b) of the Act: NONE
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                          COMMON STOCK, $.01 PAR VALUE
                                (Title of Class)
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]  No [ ]
 
     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]
 
     Indicate the aggregate market value of the voting and non-voting common
equity held by non-affiliates. $27,613,436 as of March 31, 1999.
 
     Indicate the number of shares outstanding of each of issuer's classes of
common stock, as of the latest practicable date. 7,346,778 shares of common
stock outstanding as of March 31, 1999.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
     NONE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
   2
 
                                EXPLANATORY NOTE
 
     Pursuant to Rule 12b-5 under the Securities Exchange Act of 1934, as
amended, Chastain Capital Corporation (the "Company") hereby amends the
Company's Annual Report on Form 10-K as filed with the Securities and Exchange
Commission on March 31, 1999 (the "Annual Report"). This Amendment No. 1 to the
Annual Report adds the information required by Part III of Form 10-K in
accordance with General Instruction G to Form 10-K.
 
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
BOARD OF DIRECTORS
 
     Matthew Banks, 37, has served as Chairman of the Board since the Company's
inception in December 1997. Mr. Banks has been Chief Executive Officer of Lend
Lease since June 1997, responsible for its overall management as well as Lend
Lease's worldwide real estate investment management and advisory business. From
1995 to June 1997, he served as Chief Executive Officer of Lend Lease Property
Investment Services Group in Australia. From 1992 to 1995, he served in various
positions within Lend Lease, including Senior Project Manager, Branch Manager,
Development Manager, and General Manager.
 
     Kurt L. Wright, 39, has served as a director and Chief Executive Officer of
the Company since its inception in December 1997 and as President of the Company
since March 1999. Mr. Wright has been Executive Vice President of Lend Lease
since April 1997 and currently heads Lend Lease's Mortgage Debt and Public
Markets Group, which is responsible for all CMBS and REIT share management, loan
originations and securitization and high-yield investing. From 1995 to 1997, he
was Senior Vice President responsible for portfolio management for the Buckhead
Strategic Fund series and ERE Hyperion Capital Advisors. From 1993 to 1995, Mr.
Wright was a Vice President responsible for mortgage research, product
development and marketing activities within the Mortgage Investors Group.
 
     Harald R. Hansen, 67, has served as a director of the Company since
February 1998. He served as chairman of First Union National Bank of Georgia
from January 1989 until his retirement in September 1996. From January 1989 to
April 1996, he also served as Chief Executive Officer of First Union National
Bank of Georgia and prior to that he was executive vice president in charge of
the General Banking Group of First Union National Bank of Georgia.
 
     Elizabeth T. Kennan, 61, has served as a director of the Company since
February 1998. She has been President Emeritus of Mount Holyoke College since
1995. She was President and Professor of History of Mount Holyoke College from
1978 until 1995. Dr. Kennan is a director of Talbots Inc., the Putnam Funds,
Northeast Utilities, and Bell Atlantic Corporation.
 
     W.J. Smith, 66, has served as a director of the Company since February
1998. Mr. Smith has been President of W.J.S. & Associates, a company that
provides real estate consultant services to public pension funds and real estate
advisors to pension funds, since December 1991. Mr. Smith currently serves on
the board of directors of Shurgard Storage Centers and Franchise Finance
Corporation of America.
 
MEETINGS OF THE BOARD OF DIRECTORS
 
     During 1998, the Board of Directors held a total of   meetings. All of the
directors attended at least 75% of all Board and committee meetings in 1998.
 
COMPENSATION OF DIRECTORS
 
     The Company pays each director who is not an employee of Lend Lease (each
an "Independent Director") an annual director's fee equal to $30,000 per annum,
consisting of $15,000 in cash and $15,000 in shares of Common Stock. In April
1998, Messrs. Hansen and Smith and Dr. Kennan each received 1,000 shares of
Common Stock. The number of shares of Common Stock to be awarded to each
Independent
 
                                        1
   3
 
Director will be determined annually on the date of the Annual Meeting of
Shareholders by dividing $15,000 by the average closing price of the Common
Stock for the preceding ten business days. The shares of Common Stock are vested
when issued. Each Independent Director was also paid a fee of $1,000 for each
meeting of the Board of Directors over four attended in person by such
Independent Director. All directors are reimbursed for their costs and expenses
in attending all meetings of the Board of Directors and its committees. Messrs.
Banks and Wright are not separately compensated by the Company for their service
on the Board of Directors. In addition, each of the members of the Special
Committee (as defined below) was paid $4,500 in additional fees for service on
the committee.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
     Audit Committee.  The Board of Directors has established an Audit Committee
that consists of Mr. Hansen and Dr. Kennan. Mr. Hansen serves as the chairman of
the Audit Committee. The Audit Committee is responsible for recommending to the
Board the firm to be employed as independent auditors of the Company, reviewing
with the independent auditor the Company's financial statements and internal
accounting controls and the plans and results of the audit engagement, approving
the professional services provided by the independent auditor, reviewing the
independence of the independent auditor, considering the range of audit and
non-audit fees and reviewing the adequacy of the Company's internal accounting
controls. During 1998, the Audit Committee held   meetings.
 
     Compensation Committee.  The Board of Directors has established a
Compensation Committee that consists of Messrs. Smith and Hansen and Dr. Kennan.
Mr. Smith serves as the chairman of the Compensation Committee. The Compensation
Committee is responsible for making recommendations, at least annually, to the
Board of Directors regarding the policies of the Company relating to, and the
amounts and terms of, all compensation of executive officers of the Company and
administering and discharging in full the authority of the Board with respect to
the Company's Stock Option Plan. During 1998, the Compensation Committee held
meetings.
 
     Special Committee.  During the third and fourth quarter of 1998,
developments in the debt and equity markets resulted in a significant impact in
the value of the Company's portfolio and credit available. As a result, on
October 21, 1998, the Board of Directors formed a special committee of
Independent Directors (the "Special Committee") to (i) review and evaluate the
short term and long term strategic alternatives available to the Company and
report its recommendations to the full Board of Directors and (ii) negotiate the
terms of and approve any action that the Special Committee determines involves a
conflict of interest with Lend Lease. Harald R. Hansen, Elizabeth Kennan and
W.J. Smith, the Independent Directors of the Board, were appointed to serve on
the Special Committee. The Special Committee has engaged Alston & Bird LLP as
its independent counsel and Chase Securities, Inc. as its independent financial
advisor. Since its formation, the Special Committee has discussed and approved
the restructuring of the credit facilities with Morgan Guaranty Trust and
Merrill Lynch and the terms of the unsecured subordinated debt provided by an
affiliate of Lend Lease. During 1998, the Special Committee held 10 meetings.
 
     The Company does not have a nominating committee.
 
EXECUTIVE OFFICERS
 
     The executive officers of the Company and their positions are described
below, together with a biographical summary of the experience of such officers
for the past five years. The executive officers serve at the discretion of the
Board of Directors.
 


NAME                                                   AGE   POSITION WITH THE COMPANY
- ----                                                   ---   -------------------------
                                                       
Kurt L. Wright.......................................  39    President and Chief Executive Officer
D. Michael Jett......................................  49    Chief Operating Officer
Steven G. Grubenhoff.................................  35    Chief Financial Officer
Samuel F. Hatcher....................................  53    Secretary

 
                                        2
   4
 
     D. Michael Jett has served as Chief Operating Officer of the Company since
its inception. He has been Senior Vice President of Lend Lease since 1992. Since
1995, Mr. Jett has been responsible for coordinating new equity acquisitions for
three Lend Lease division offices.
 
     Steven G. Grubenhoff has served as Chief Financial Officer of the Company
since its inception. He was a Vice President of Lend Lease from 1995 to 1998 and
has been a Senior Vice President of Lend Lease since 1998. In addition, Mr.
Grubenhoff has served as chief financial officer for two commingled
opportunistic real estate limited partnerships since 1995. Mr. Grubenhoff's
responsibilities have included all financial reporting requirements, developing
portfolio financial strategies, ensuring that optimum tax and legal structures
are being utilized; performing financial due diligence on new investments and
managing interest rate exposures.
 
     Samuel F. Hatcher has served as Secretary of the Company since its
inception. He has been Senior Executive Vice President and General Counsel for
Lend Lease since June 1997 and, prior thereto, was Executive Vice President and
General Counsel of Equitable Real Estate Investment Management, Inc. ("ERE")
since 1989.
 
ITEM 11.  EXECUTIVE COMPENSATION
 
     The Company has not paid, and does not intend to pay, any annual
compensation to the Company's executive officers for their services as executive
officers. However, the Company has established a Compensation Committee, which
is responsible for making recommendations, at least annually, to the Board of
Directors regarding the policies of the Company relating to, and the amounts and
terms of, all compensation of executive officers of the Company and
administering and discharging in full the authority of the Board with respect to
the Company's Stock Option Plan.
 
ITEM 12.  SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
     The following table and notes thereto set forth information, as of March
31, 1999 (unless otherwise indicated), with respect to the beneficial ownership
of shares of Common Stock (i) by persons known by the Company to own more than
5% of the outstanding shares of Common Stock, (ii) by each director and (iii) by
the directors and executive officers of the Company as a group, based upon
information furnished to the Company by such persons. The executive officers of
the Company, other than the Chief Executive Officer, are not included
individually because they receive no compensation from the Company. Except as
otherwise indicated, each person included in the table exercises sole voting and
dispositive power over such shares.
 


                                                               NUMBER OF SHARES     PERCENT OF
NAME OF BENEFICIAL OWNER                                      BENEFICIALLY OWNED     CLASS(1)
- ------------------------                                      ------------------    ----------
                                                                              
DIRECTORS AND CHIEF EXECUTIVE OFFICER
Matthew Banks(2)............................................            469               *
Harald R. Hansen(3).........................................          3,800               *
Samuel F. Hatcher(4)........................................            469               *
Elizabeth Kennan(5).........................................          2,400               *
W.J. Smith(6)...............................................          2,400               *
Kurt L. Wright(7)...........................................          9,332               *
All executive officers and directors as a group (8
  persons)(8)...............................................         22,870               *
OTHER FIVE PERCENT HOLDERS
Friedman, Billings, Ramsey Group, Inc.(9)...................        968,847            13.2%
Capital Guardian Trust Company(10)..........................        943,000            12.8%
Putnam Investments, Inc.(11)................................        507,900             6.9%
Lend Lease Investment Holdings, Inc.(12)....................      1,254,481            17.0%

 
- ---------------
 
   * Less than 1%
 (1) Based on an aggregate of 7,346,778 shares of Common Stock issued and
     outstanding as of April 24, 1999. Assumes that all options beneficially
     owned by the person are exercised. The total number of
 
                                        3
   5
 
     shares outstanding used in calculating this percentage assumes that none of
     the options beneficially owned by other persons are exercised.
 (2) Includes 134 shares of Common Stock issuable upon the exercise of
     outstanding options.
 (3) Includes 800 shares of Common Stock issuable upon the exercise of
     outstanding options.
 (4) Includes 134 shares of Common Stock issuable upon the exercise of
     outstanding options.
 (5) Includes 400 shares of Common Stock issuable upon the exercise of
     outstanding options.
 (6) Includes 400 shares of Common Stock issuable upon the exercise of
     outstanding options.
 (7) Includes 2,666 shares of Common Stock issuable upon the exercise of
     outstanding options.
 (8) Includes 4,534 shares of Common Stock issuable upon the exercise of
     outstanding options.
 (9) Represents shares owned by Friedman, Billings, Ramsey Group, Inc. ("FBR")
     and certain affiliates of FBR. FBR has sole voting power over 968,847
     shares of Common Stock and sole dispositive power over 968,847 shares of
     Common Stock. This information is included in reliance on a Schedule 13G
     filed by FBR with the Securities and Exchange Commission ("the SEC") on
     February 16, 1999. FBR's address is 1001 19th Street North, Arlington, VA
     22209-1710.
(10) This information is included in reliance on a Schedule 13G filed by Capital
     Guardian Trust Company ("CGT") with the SEC on February 16, 1999. CGT has
     sole voting power over 668,000 shares of Common Stock and sole dispositive
     power over 943,000 shares of Common Stock. CGT's address is 11100 Santa
     Monica Boulevard, Los Angeles, CA 90025-3384.
(11) Represents shares beneficially owned by Putnam Investments, Inc. ("PI"),
     Marsh & McLennan Companies, Inc. and certain subsidiaries of PI. PI has
     sole voting power over 0 shares of Common Stock, sole dispositive power
     over 0 shares of Common Stock and shared dispositive power over 507,900
     shares of Common Stock. This information is included in reliance on a
     Schedule 13G filed by PI with the SEC on February 12, 1999. PI's address is
     One Post Office Square, Boston, Massachusetts 02109.
(12) This information is included in reliance on a Schedule 13D filed by Lend
     Lease Investment Holdings, Inc. ("LLIH") (formerly ERE Yarmouth Holdings,
     Inc.) with the SEC on May 8, 1998. LLIH has sole voting power over
     1,254,481 shares of Common Stock and sole dispositive power over 1,254,481
     shares of Common Stock. LLIH's address is 3424 Peachtree Road, Suite 800,
     Atlanta, GA 30326.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
MANAGEMENT AGREEMENT
 
     The Manager, subject to the supervision of the Board of Directors of the
Company, manages the Company pursuant to a management agreement. The management
agreement provides for an annual base management fee, calculated and paid
quarterly based upon 1% of the "Average Invested Assets" (as defined below) of
the Company for such quarter for the first four fiscal quarters commencing with
the fiscal quarter ended June 30, 1998. In subsequent fiscal quarters, the
annual base management fee is equal to 0.85% of the Average Invested Assets up
to $1 billion, 0.75% of the Average Invested Assets from $1 billion to $1.25
billion and 0.50% of the Average Invested Assets in excess of $1.25 billion. The
term "Average Invested Assets" for any period means the average of the aggregate
book value of the assets of the Company, including a proportionate amount of the
assets of all of its direct and indirect subsidiaries, before reserves for
depreciation or bad debts or other similar non-cash reserves, less (i)
uninvested cash balances and (ii) the book value of the Company's CMO
liabilities, computed by dividing (a) the sum of such values for each of the
three months during such quarter (based on the book value of such assets as of
the last day of each month) by (b) three.
 
     The Manager is also entitled to receive incentive compensation for each
fiscal quarter in an amount equal to the product of (A) 25% of the dollar amount
by which (1) (a) "Funds From Operations" (as defined below) before the incentive
fee of the Company for the applicable quarter per weighted average number of
shares of Common Stock outstanding plus (or minus) (b) gains (or losses) from
debt restructuring or sales of assets not included in Funds From Operations of
the Company for such quarter per weighted average number of shares of Common
Stock outstanding, exceeds (2) an amount equal to (a) the weighted average of
the price per share at the initial public offering and the prices per share at
any secondary offerings by the Company multiplied by (b) 25% of the sum of the
Ten-Year U.S. Treasury Rate plus four percent, and (B) the
 
                                        4
   6
 
weighted average number of shares of Common Stock outstanding. The quarterly
incentive fee is non-cumulative. "Funds from Operations" as defined by the
National Association of Real Estate Investment Trusts means net income (computed
in accordance with generally accepted accounting principles) excluding gains (or
losses) from debt restructuring and sales of property, plus depreciation and
amortization on real estate assets, and after deduction of preferred stock
dividends, if any, and similar adjustments for unconsolidated partnerships and
joint ventures. Funds from Operations does not represent cash generated from
operating activities in accordance with GAAP and should not be considered as an
alternative to net income as an indication of the Company's performance or to
cash flows as a measure of liquidity or ability to make distributions.
 
     The Manager is reimbursed for (or charges the Company directly for) the
Manager's out-of-pocket costs incurred in performing its duties under the
management agreement. There is no cap on the reimbursement of out-of-pocket
expenses.
 
     The ability of the Company to generate Funds from Operations in excess of
the Ten-Year U.S. Treasury Rate, and of the Manager to earn the incentive
compensation described in the above table, is dependent upon the level and
volatility of interest rates, the Company's ability to react to changes in
interest rates and other factors, many of which are not within the Company's
control.
 
     The management fees are payable in arrears. The Manager's base and
incentive fees are calculated by the Manager within 45 days after the end of
each quarter, and such calculation is delivered to the Company. The Company is
obligated to pay such fees and expenses within 60 days after the end of each
fiscal quarter.
 
     The Manager is expected to use the proceeds from its base management fee
and incentive compensation in part to pay compensation to its officers who,
although they also are officers of the Company, receive no cash compensation
directly from the Company. During 1998, the Manager earned $1,096,562 in base
management fees and no incentive fees. There were approximately $671,000
expenses for which the Company reimbursed the Manager.
 
TRANSACTIONS WITH THE MANAGER AND ITS AFFILIATES
 
     On April 28, 1998, concurrently with the completion of its initial public
offering, the Company issued and sold 897,678 shares of Common Stock to Lend
Lease Investment Holdings, Inc. ("LLIH"), an indirect wholly owned subsidiary of
the Manager. The purchase price was $13.95 per share, for an aggregate purchase
price of approximately $12.5 million.
 
     On November 13, 1998, the Company entered into a subordinated loan
agreement with LLIH (the "LLIH Agreement"). The agreement provided for a $40
million line of credit for the Company. The Company made an initial draw of $17
million under the LLIH Agreement. As of December 31, 1998, borrowings under the
LLIH Agreement were $9 million. Amounts borrowed under the LLIH Agreement
accrued interest at a rate of 14% per annum through January 31, 1999, and 16%
thereafter. The Company accrued a total of approximately $141,000 in interest
expenses with respect to borrowings under the LLIH Agreement in 1998. The
Company repaid all of the outstanding indebtedness under the LLIH Agreement on
April 5, 1999, and the agreement was terminated. Reference is also made to the
disclosure under the caption "Option Plan" in Item 1 to the Company's Annual
Report on Form 10-K filed on March 31, 1999, which is incorporated herein by
this reference.
 
EXECUTIVE OFFICERS AND DIRECTORS
 
     In addition to being Chairman of the Board of Directors, Matthew Banks is
Chief Executive Officer of the Manager. Kurt L. Wright, the Company's President
and Chief Executive Officer, is Executive Vice President of the Manager.
Similarly, each of the executive officers of the Company is employed by the
Manager.
 
                                        5
   7
 
TRANSACTIONS WITH SIGNIFICANT SHAREHOLDERS
 
     An affiliate of FBR, listed above as a holder of more than 5% of the Common
Stock, acted as a managing underwriter for the Company's initial public offering
in April 1997. Concurrently with the initial public offering, the Company issued
in a private placement 700,000 shares of Common Stock to an affiliate of FBR at
a purchase price of $13.95 per share, with total proceeds to the Company of
$22,287,608.
 
                                        6
   8
 
                                   SIGNATURES
 
     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this amendment
to be signed on its behalf by the undersigned, thereunto duly authorized on the
30th day of April, 1999.
 
                                          CHASTAIN CAPITAL CORPORATION
 
                                          By:     /s/ KURT L. WRIGHT
                                          --------------------------------------
                                                      Kurt L. Wright
                                           Chief Executive Officer and Director
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, this
amendment has been signed below by the following persons on behalf of the
registrant and in the capacities indicated on April 30, 1999.
 
                                                   /s/ MATTHEW BANKS
 
                                          --------------------------------------
                                                      Matthew Banks
                                                  Chairman of the Board
 
                                                  /s/ KURT L. WRIGHT
 
                                          --------------------------------------
                                                      Kurt L. Wright
                                           Chief Executive Officer and Director
                                              (Principal Executive Officer)
 
                                               /s/ STEVEN G. GRUBENHOFF
 
                                          --------------------------------------
                                                   Steven G. Grubenhoff
                                            Chief Financial Officer (Principal
                                            Financial and Accounting Officer)
 
                                                 /s/ HARALD R. HANSEN
 
                                          --------------------------------------
                                                     Harald R. Hansen
                                                         Director
 
                                          --------------------------------------
                                                     Elizabeth Kennan
                                                         Director
 
                                          --------------------------------------
                                                        W.J. Smith
                                                         Director
 
                                        7