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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 27, 1999
REGISTRATION NO. 333-78061
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ARDEN REALTY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENTS)
MARYLAND 95-04578533
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
11601 WILSHIRE BOULEVARD
FOURTH FLOOR
LOS ANGELES, CALIFORNIA 90025
310.966.2600
(Address of Principal Executive Offices)
RICHARD S. ZIMAN
11601 WILSHIRE BOULEVARD
FOURTH FLOOR
LOS ANGELES, CALIFORNIA 90025
310.966.2600
(Name, Address, including Zip Code, and Telephone Number,
including Area Code, of Agent for Service)
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Copies To:
WILLIAM J. CERNIUS
LATHAM & WATKINS
650 TOWN CENTER DRIVE, SUITE 2000
COSTA MESA, CALIFORNIA 92626
714.540.1235
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APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box.[ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933 (the "Securities Act"), other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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P R O S P E C T U S
ARDEN REALTY, INC.
3,080,273 SHARES
COMMON STOCK
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This prospectus relates to the possible offer and sale from time to
time of up to 3,080,273 shares of our common stock, par value $.01 per share, by
the "Selling Stockholders" identified in this prospectus. See "Plan of
Distribution." We will not receive any proceeds from the sale of the shares of
common stock offered by the Selling Stockholders.
We are a self-administered and self-managed real estate investment
trust engaged in acquiring, developing, renovating, leasing and managing
commercial properties located in Southern California. We currently conduct all
of our operations through Arden Realty Limited Partnership, a Maryland limited
partnership referred to in this prospectus as the Operating Partnership, and our
subsidiaries. We are the sole general partner of the Operating Partnership and
as of March 31, 1999 owned a 95.26% interest in the Operating Partnership.
Although we and the Operating Partnership are separate entities, for ease of
reference and unless the context requires otherwise, all references in this
prospectus to Arden Realty, us, we or our refers to Arden Realty, Inc. and the
Operating Partnership, collectively.
Specified Selling Stockholders were issued 580,273 units of limited
partnership interests in the Operating Partnership, referred to in this
prospectus as OP Units. These Selling Stockholders have the contractual right to
tender their OP Units for cash redemption or, at our election, to exchange the
tendered OP Units on a one-for-one basis for shares of our common stock. In
addition, other specified Selling Stockholders were issued warrants to purchase
up to an aggregate of 2,500,000 shares of our common stock, referred to in this
prospectus as Warrants, at an exercise price of $29.56875 per share. We are
registering, and this prospectus relates to, the offer and sale by the Selling
Stockholders of shares of common stock to be received by the Selling
Stockholders in exchange for their OP Units or the exercise of their Warrants,
as applicable. The registration of these shares however, does not necessarily
mean that any or all of these shares will be offered or sold by the Selling
Stockholders. The registration statement of which this prospectus is a part is
being filed pursuant to our contractual obligations with the holders of the OP
Units and the Warrants. We have also agreed to pay all expenses of this
registration.
Our common stock is listed on the New York Stock Exchange under the
symbol "ARI." On April 30, 1999, the last reported sales price of our common
stock on the NYSE was $25 per share.
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SEE "RISK FACTORS" IN OUR ANNUAL REPORT ON FORM 10-K/A FOR THE FISCAL
YEAR ENDED DECEMBER 31, 1998, WHICH IS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS, FOR CERTAIN RELEVANT FACTORS TO CONSIDER BEFORE MAKING AN INVESTMENT
IN OUR COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is May 27, 1999
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FORWARD-LOOKING STATEMENTS
In addition to historical information, we have made forward-looking
statements in this prospectus and in the documents incorporated by reference in
this prospectus, such as those pertaining to our capital resources and
performance of our operations. "Forward-looking statements" are projections,
plans, objectives or assumptions about our company. Forward-looking statements
involve numerous risks and uncertainties, and you should not place undue
reliance on these statements since there can be no assurance that the events or
circumstances reflected in these statements will actually occur. Forward-looking
statements can be identified by the use of forward-looking terminology such as
"believes," "expects," "may," "will," "should," "seeks," "approximately,"
"intends," "plans," "pro forma," "estimates" or "anticipates" or the negative
thereof or other variations thereof or comparable terminology or by discussions
of strategy, plans or intentions. Forward-looking statements are necessarily
dependent on assumptions, data or methods that may be incorrect, imprecise and
incapable of being realized. The following factors, among others, could cause
actual results and future events to differ materially from those set forth or
contemplated in the forward-looking statements:
- our anticipated growth strategies;
- our intention to acquire additional properties;
- anticipated trends in our business, including trends in the
market for office building leases in the Southern California
market;
- future expenditures for development projects; and
- availability of capital to finance our business.
Readers are cautioned not to place undue reliance on forward-looking
statements. We assume no obligation to update forward-looking statements.
THE COMPANY
GENERAL
We are a self-administered and self-managed REIT engaged in
acquiring, developing, renovating, leasing and managing commercial properties
located in Southern California. As of December 31, 1998, we owned a portfolio of
138 primarily office properties containing approximately 18 million rentable
square feet (the "Properties"), making us the largest publicly traded owner of
office space in Southern California as measured by total rentable square feet
owned.
We operate from our Los Angeles, California headquarters and are a
fully-integrated real estate company with approximately 240 full-time employees
and in-house expertise in acquisitions, finance, asset management, leasing and
construction.
We seek to grow by continuing to acquire office properties that are
located in submarkets with growth potential, are underperforming or need
renovation and which offer opportunities for us to implement our value-added
strategy to increase cash flow. This strategy includes active management and
aggressive leasing efforts, a focused renovation and refurbishment program for
underperforming assets, reduction and containment of operating costs and
emphasis on tenant satisfaction (including efforts to maximize tenant retention
at lease expiration and programs to relocate tenants to other spaces within our
portfolio).
We are a Maryland corporation incorporated on May 1, 1996. Our
executive offices are located at 11601 Wilshire Boulevard, Fourth Floor, Los
Angeles, California 90025 and our telephone number is (310) 966-2600.
THE OPERATING PARTNERSHIP
Since the closing of our initial public offering in October 1996,
substantially all of our assets have been held directly or indirectly by, and
our operations conducted through, the Operating Partnership and our
subsidiaries. We are the sole general partner of the Operating Partnership and,
as of March 31, 1999, owned a 95.26% interest therein. Our interest in the
Operating Partnership
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entitles us to share in cash distributions from, and in the profits and losses
of, the Operating Partnership in proportion to such percentage ownership.
Certain individuals and entities own the remaining OP Units, including Messrs.
Ziman and Coleman, together with two entities which were issued OP Units in
connection with the Company's acquisition of certain Properties previously owned
by such entities. Holders of OP Units are entitled to cause the Operating
Partnership to redeem their OP Units for cash. However, the Company may, in lieu
of cash payment, elect to exchange such OP Units for shares of our common stock
(on a one-for-one basis), subject to certain limitations. With each redemption
or exchange of OP Units, the Company's percentage interest in the Operating
Partnership will increase (all other factors remaining unchanged).
As the sole general partner of the Operating Partnership, we
generally have the exclusive power under the Partnership Agreement to manage and
conduct the business of the Operating Partnership, subject to limited
exceptions. Our Board of Directors will manage our affairs by directing the
affairs of the Operating Partnership. The Operating Partnership cannot be
terminated (except in connection with a sale of all or substantially all of our
assets, a business combination or as the result of judicial decree or the
redemption of all of the OP Units held by the Limited Partners) until the year
2096 without a vote of the partners of the Operating Partnership.
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SELLING STOCKHOLDERS
The following table provides the names of, and the maximum number of
shares of common stock that will be owned and offered from time to time under
this prospectus by, each Selling Stockholder following exchange of their
respective OP Units or exercise of their respective Warrants, as applicable.
Because the Selling Stockholders may sell all or part of their shares of common
stock pursuant to this prospectus, and the offering is not being underwritten on
a firm commitment basis, no estimate can be given as to the number and
percentage of shares of our common stock that will be held by each Selling
Stockholder upon termination of the offering.
<TABLE>
<CAPTION>
Maximum Number of
Shares of Common Shares of Common Percentage of
Stock Owned Stock Issuable in the Outstanding Common
Prior Exchange of Stock Following the
to the OP Units or Exchange of OP Units
Exchange of OP Exercise of or Exercise of
OP UNIT HOLDERS Units or Exercise Warrants and Available Warrants and Prior
Name of Warrants(1) for Resale(1) to Resale(1)(2)
- ---- ---------------- --------------------- ------------------
<S> <C> <C> <C>
Leonard & Joyce Wilstein Revocable Trust pf 1986 0 131,210 *
David & Susan Wilstein Family Trust - 1989 0 131,210 *
1987 Jenson Revocable Living Trust 0 17,598 *
Spectrum Investments III, LP (3) 0 122,753 *
Spectrum Investments, L.P. (4) 0 80,667 *
Highridge-Apollo Grand Plaza, LP 0 10,412 *
91 Freeway Partners 0 86,423 *
WARRANT HOLDERS
Name
- ----
Spectrum Investments II, L.P. 0 594,250 *
Eastrich No. 175, LLC 0 1,905,750 *
</TABLE>
* Less than 1%
(1) Based on information available to us as of April 15, 1999.
(2) Assumes all OP Units held by the Selling Stockholders are exchanged for
shares of common stock and all Warrants held by the Selling Stockholders
are exercised. Also assumes that no transactions with respect to the
shares of our common stock or the OP Units occur other than the exchange.
(3) Includes the individual interests of Phil Belling, Steve Layton, Dave
Thomas, Steve Briggs and Tom Rutherford whose ownership constitutes
40,496; 40,496; 23,411; 15,819 and 2,531 of the OP Units, respectively.
(4) Includes the individual interests of Phil Belling, Steve Layton, Dave
Thomas, Steve Briggs and Tom Rutherford whose ownership constitutes
31,003; 18,096; 23,368; 7,069 and 1,131 of the OP Units, respectively.
The Selling Stockholders identified above received the OP Units or
Warrants listed above in connection with our purchase of Properties from them.
In connection with such purchases and issuance of OP Units, we agreed to file a
registration statement with the Securities and Exchange Commission, or SEC,
covering the resale of the shares of common stock issued to each specified
Selling Stockholder upon exchange of OP Units. In addition, in connection with
such purchases and issuance of Warrants, we provided the holders of the Warrants
with the right to include the shares issuable upon exercise of the Warrants in a
registration statement that is otherwise filed. The holders of the Warrants have
elected to have the shares of Common Stock issuable upon exercise of the
Warrants included in this Registration Statement. In addition, we agreed to
indemnify each Selling Stockholder against claims made against them arising out
of, among other things, statements made in the registration statement.
The holding of the Warrants by the specified Selling Stockholders
should not be construed as a recommendation by the specified Selling
Stockholders of the investment quality of Arden Realty's common stock and the
Selling Stockholders will not be liable for any future liabilities of Arden
Realty.
FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the federal income tax considerations
anticipated to be material to purchasers of our common stock. This summary is
based on current law, is for general information only and is not tax advice.
Your tax treatment will vary depending on your particular situation and this
discussion does not purport to deal with all aspects of taxation that may be
relevant to a holder of common stock in light of his or her personal investments
or tax circumstances, or to stockholders who receive special treatment under the
federal income tax laws. Stockholders receiving special treatment include,
without limitation: insurance companies; financial institutions or
broker-dealers; tax-exempt organizations; stockholders holding securities as
part of a conversion transaction, or a hedge or hedging transaction, or as a
position in a straddle for tax purposes; foreign corporations or partnerships;
and persons who are not citizens or residents of the United States. In addition,
the summary below does not consider the effect of any foreign, state, local or
other tax laws that may be applicable to you as a holder of our common units or
our common stock.
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The information in this section is based on the Internal Revenue
Code; current, temporary and proposed Treasury regulations promulgated under the
Internal Revenue Code; the legislative history of the Internal Revenue Code;
current administrative interpretations and practices of the Internal Revenue
Service; and court decisions. The administrative interpretations and practices
of the Internal Revenue Service include its practices and policies as expressed
in private letter rulings which are not binding on the Internal Revenue Service,
except with respect to the particular taxpayers who requested and received these
rulings.
Future legislation, Treasury regulations, administrative
interpretations and practices and/or court decisions may adversely affect the
tax considerations contained in this discussion. Any change could apply
retroactively to transactions preceding the date of the change. We have not
requested, and do not plan to request, any rulings from the Internal Revenue
Service concerning our tax treatment, and the statements in this prospectus are
not binding on the Internal Revenue Service or any court. Thus, we can provide
no assurance that the tax considerations contained in this discussion will not
be challenged by the Internal Revenue Service or if challenged, will not be
sustained by a court.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF THE ACQUISITION, OWNERSHIP AND SALE OR OTHER DISPOSITION
OF OUR COMMON STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND OTHER TAX
CONSEQUENCES; OUR ELECTION TO BE TAXED AS A REIT FOR FEDERAL INCOME TAX
PURPOSES; AND POTENTIAL CHANGES IN THE TAX LAWS.
TAXATION OF ARDEN REALTY, INC.
GENERAL. We elected to be taxed as a REIT under Sections 856 through
860 of the Internal Revenue Code, commencing with our taxable year ended
December 31, 1996. We believe we have been organized and have operated in a
manner which allows us to qualify for taxation as a REIT under the Internal
Revenue Code commencing with our taxable year ended December 31, 1996. We intend
to continue to operate in this manner. However, our qualification and taxation
as a REIT depends upon our ability to meet, through actual annual operating
results, asset diversification, distribution levels and diversity of stock
ownership, the various qualification tests imposed under the Internal Revenue
Code. There is no assurance that we have operated or will continue to operate in
a manner so as to qualify or remain qualified as a REIT. See "--Failure to
qualify."
The sections of the Internal Revenue Code that relate to the
qualification and operation as a REIT are highly technical and complex. This
summary is qualified in its entirety by the Internal Revenue Code, relevant
rules and treasury regulations promulgated under the Internal Revenue Code, and
administrative and judicial interpretations of the Internal Revenue Code and
these rules and treasury regulations.
If we qualify for taxation as a REIT, we generally will not be
required to pay federal corporate income taxes on our net income that is
currently distributed to our stockholders. This treatment substantially
eliminates the "double taxation" that ordinarily results from investment in a
corporation. Double taxation means taxation once at the corporate level when
income is earned and once again at the stockholder level when this income is
distributed. We will be required to pay federal income tax, however, under a
number of circumstances, as described in the Internal Revenue Code.
REQUIREMENTS FOR QUALIFICATION AS A REIT. The Internal Revenue Code
defines a REIT as a corporation, trust or association:
(1) that is managed by one or more trustees or directors;
(2) that issues transferable shares or transferable certificates to
evidence beneficial ownership;
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(3) that would be taxable as a domestic corporation but for Sections
856 through 860 of the Internal Revenue Code;
(4) that is not a financial institution or an insurance company
within the meaning of the Internal Revenue Code;
(5) that is beneficially owned by 100 or more persons;
(6) not more than 50% in value of the outstanding stock of which is
owned, actually or constructively, by five or fewer individuals, including
specified entities, during the last half of each taxable year; and
(7) that meets other tests, described below, regarding the nature of
its income and assets and the amount of its distributions.
We believe that we have satisfied conditions (1) through (7)
inclusive. In addition, our charter provides for restrictions regarding
ownership and transfer of our shares. These restrictions are intended to assist
us in continuing to satisfy the share ownership requirements described in (5)
and (6) above. However, they may not ensure that we will, in all cases, be able
to satisfy the share requirements.
OWNERSHIP OF A PARTNERSHIP INTEREST. Treasury regulations provide
that if we are a partner in a partnership, we will be deemed to own our
proportionate share of the assets of the partnership. Also, we will be deemed to
be entitled to our proportionate share of the income of the partnership. The
character of the assets and gross income of the partnership retains the same
character in our hands for purposes of Section 856 of the Internal Revenue Code,
including satisfying the gross income tests and the asset tests. Thus, our
proportionate share of the assets and items of income of the Operating
Partnership are treated as our assets and items of income for purposes of
applying the requirements described in this prospectus, including the income and
asset tests described below. In addition, for these purposes, the Operating
Partnership's assets and items of income include its share of assets and items
of income of any partnership in which it owns an interest. We have direct
control of the Operating Partnership and will continue to operate it in a manner
consistent with the requirements for qualification as a REIT.
INCOME TESTS. We must satisfy two gross income requirements annually
to maintain our qualification as a REIT:
- First, each taxable year we must derive directly or indirectly
at least 75% of our gross income, excluding gross income from
prohibited transactions, from (a) investments relating to real
property or mortgages on real property, including "rents from
real property" and, in some circumstances, interest, or (b)
specified types of temporary investments;
- Second, each taxable year we must derive at least 95% of our
gross income, excluding gross income from prohibited
transactions, from (a) the real property investments described
above, or (b) dividends, interest and gain from the sale or
disposition of stock or securities or (c) any combination of
the foregoing.
Rents we receive will qualify as "rents from real property" in
satisfying the gross income requirements for a REIT described above only if the
following conditions are met:
- the amount of rent must not be based in any way on the income
or profits of any person. An amount received or accrued
generally will not be excluded from the term "rents from real
property" solely because it is based on a fixed percentage or
percentages of receipts or sales;
- rents received from a tenant will not qualify as "rents from
real property" in satisfying the gross income tests if the
REIT, or an actual or constructive owner of 10% or more of the
REIT, actually or constructively owns 10% or more of the
interests in that tenant;
- 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 personal property will not qualify as "rents
from real property"; and
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- 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 the property,
subject to a 1% de minimis exception, other than through an
independent contractor from whom the REIT derives no revenue.
The REIT may, however, directly perform 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 Operating Partnership will not receive amounts from tenants which
will not qualify as "rents from real property" except to the extent that we
determine, based on the advice of our tax counsel, that receipt of such amounts
will not jeopardize our status as a REIT.
If we fail to satisfy one or both of the 75% or 95% gross income
tests for any taxable year, we may nevertheless qualify as a REIT for the year
if we are entitled to relief under the Internal Revenue Code. Generally, we may
avail ourselves of the relief provisions if:
- our failure to meet these tests was due to reasonable cause
and not due to willful neglect;
- we attach a schedule of the sources of our income to our
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 we
would be entitled to the benefit of these relief provisions. If these relief
provisions do not apply to a particular set of circumstances, we will not
qualify as a REIT. We may not always be able to maintain compliance with the
gross income tests for REIT qualification despite our periodic monitoring of our
income.
ASSET TESTS. At the close of each quarter of our taxable year, we
also must satisfy three tests relating to the nature and diversification of our
assets.
- First, at least 75% of the value of our total assets must be
represented by real estate assets, cash, cash items,
government securities and specified temporary investments.
- Second, not more than 25% of our total assets may be
represented by securities, other than those securities
includible in the 75% asset test.
- Third, of the investments included in the 25% asset class, the
value of any one issuer's securities may not exceed 5% of the
value of our total assets, and we may not own more than 10% of
any one issuer's outstanding voting securities.
After initially meeting the asset tests at the close of any quarter,
we will not lose our status as a REIT for failure to satisfy the asset tests at
the end of a later quarter solely by reason of changes in asset values. If we
fail to satisfy the asset tests because we acquire securities or other property
during a quarter, we can cure this failure by disposing of sufficient
nonqualifying assets within 30 days after the close of that quarter. For this
purpose, an increase in our interests in the Operating Partnership will be
treated as an acquisition of a portion of the securities or other property owned
by this partnership. We believe we have maintained and intend to continue to
maintain adequate records of the value of our assets to ensure compliance with
the asset tests. If we fail to comply with these tests and do not cure
noncompliance within the time period described above, we would cease to qualify
as a REIT.
ANNUAL DISTRIBUTION REQUIREMENTS. To maintain our qualification as a
REIT, we are required to distribute dividends, other than capital gain
dividends, to our stockholders in an amount at least equal to the sum of:
- 95% of our "REIT taxable income" as defined in the Internal
Revenue Code; and
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- 95% of our after tax net income, if any, from foreclosure
property; minus
- the excess of the sum of specified items of our noncash income
items over 5% of "REIT taxable income."
We must pay these distributions in the taxable year to which they
relate, or in the following taxable year if they are declared before we timely
file our tax return for that year and paid on or before the first regular
dividend payment following their declarations. Except as provided below, these
distributions are taxable to our stockholders in the year in which paid. This is
so even though these distributions relate to the prior year for purposes of our
95% distribution requirement. To the extent that we do not distribute all of our
net capital gain or distribute at least 95%, but less than 100%, of our "REIT
taxable income," as adjusted, we will be required to pay tax on such income at
regular ordinary and capital gain corporate tax rates. We believe we have made
and intend to continue to make timely distributions sufficient to satisfy these
annual distribution requirements.
Under certain circumstances, we may not have sufficient cash or other
liquid assets to meet these distribution requirements because of timing
differences between the actual receipt of income and actual payment of
deductible expenses, and the inclusion of income and deduction of expenses in
determining our taxable income. If these timing differences occur, we may need
to arrange for short-term, or possibly long-term, borrowings or need to pay
dividends in the form of taxable stock dividends in order to meet the
distribution requirements.
We may be able to rectify an inadvertent failure to meet our
distribution requirement for a year by paying "deficiency dividends" to
stockholders in a later year, which we may include in our deduction for
dividends paid for the earlier year. Thus, we may be able to avoid being taxed
on amounts distributed as deficiency dividends. However, we will be required to
pay interest based upon the amount of any deduction taken for deficiency
dividends.
In addition, we will be required to pay a 4% excise tax on the excess
of the required distribution over the amounts actually distributed if we fail to
distribute during each calendar year, or in the case of distributions with
declaration and record dates falling in the last three months of the calendar
year, by the end of January immediately following that year, at least the sum of
85% of our REIT ordinary income for the year, 95% of our REIT capital gain
income for the year and any undistributed taxable income from prior periods.
FAILURE TO QUALIFY.
If we fail to qualify for taxation as a REIT in any taxable year, and
the relief provisions of the Internal Revenue Code do not apply, we will be
required to pay tax, including any alternative minimum tax, on our taxable
income at regular corporate rates. Distributions to stockholders in any year in
which we fail to qualify as a REIT will not be deductible by us and we will not
be required to distribute any amounts to our stockholders. As a result, we
anticipate that our failure to qualify as a REIT would reduce the cash available
for distribution by us to our stockholders. In addition, if we fail to qualify
as a REIT, all distributions to stockholders will be taxable at ordinary income
rates to the extent of our current and accumulated earnings and profits. In this
event, corporate distributees may be eligible for the dividends-received
deduction. Unless entitled to relief under specific statutory provisions, we
will also be disqualified from taxation as a REIT for the four taxable years
following the year during which we lose our qualification. It is not possible to
state whether in all circumstances we would be entitled to this statutory
relief. In addition, President Clinton's 2000 Federal Budget Proposal contains a
provision which, if enacted in its present form, would result in the immediate
taxation of all gain inherent in a C corporation's assets upon an election by
the corporation to become a REIT in taxable years beginning after January 1,
2000. If enacted, this provision could effectively preclude us from re-electing
to be taxed as a REIT following a loss of REIT status.
TAXATION OF TAXABLE U.S. STOCKHOLDERS.
DISTRIBUTIONS GENERALLY. Distributions out of our current or
accumulated earnings and profits, other than capital gain dividends discussed
below, will constitute dividends taxable to our taxable U.S. stockholders (i.e.,
stockholders who are U.S. persons as defined in the Internal Revenue Code) as
ordinary income. As long as we qualify as a REIT, these distributions will not
be eligible for the dividends-received deduction in the case of U.S.
stockholders that are corporations.
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For purposes of determining whether distributions to holders of common stock are
out of current or accumulated earnings and profits, our earnings and profits
will be allocated first to our outstanding preferred stock, if any, and then to
our common stock.
To the extent that we make distributions, other than capital gain
dividends discussed below, in excess of our current and accumulated earnings and
profits, these distributions will be treated first as a tax-free return of
capital to each U.S. stockholder. This treatment will reduce the adjusted basis
which each U.S. stockholder has in his or her shares of stock for tax purposes
by the amount of the distribution, but not below zero. Distributions in excess
of a U.S. stockholder's adjusted basis in his or her shares will be taxable as
capital gain, provided that the shares were held as capital assets. This gain
will be taxable as long-term capital gain if the shares have been held for more
than one year. Dividends we declare in October, November, or December of any
year and payable to a stockholder of record on a specified date in any of these
months will be treated as both paid by us and received by the stockholder on
December 31 of that year, provided we actually pay the dividend on or before
January 31 of the following calendar year. Stockholders may not include in their
own income tax returns any of our net operating losses or capital losses.
CAPITAL GAIN DISTRIBUTIONS. Distributions that we properly designate
as capital gain dividends will be taxable to taxable U.S. stockholders as gains
from the sale or disposition of a capital asset to the extent that these gains
do not exceed our actual net capital gain for the taxable year. Depending on the
tax characteristics of the assets which produced these gains, and on specified
designations, if any, which we may make, these gains may be taxable to
non-corporate U.S. stockholders at a 20% or 25% rate. U.S. stockholders that are
corporations may be required to treat up to 20% of some capital gain dividends
as ordinary income.
PASSIVE ACTIVITY LOSSES AND INVESTMENT INTEREST LIMITATIONS.
Distributions we make and gain arising from the sale or exchange by a U.S.
stockholder of our shares will not be treated as passive activity income. As a
result, U.S. stockholders will generally be unable to apply any "passive losses"
against this income or gain. Distributions we make, to the extent they do not
constitute a return of capital, generally will be treated as investment income
for purposes of computing the investment interest limitation. Gain arising from
the sale or other disposition of our shares, however, may not be treated as
investment income depending upon your particular situation.
RETENTION OF NET LONG-TERM CAPITAL GAINS. We may elect to retain,
rather than distribute as a capital gain dividend, our net long-term capital
gains. If we make this election, we would pay tax on our retained net long-term
capital gains. In addition, to the extent we designate, a U.S. stockholder
generally would: (a) include its proportionate share of our undistributed
long-term capital gains in computing its long-term capital gains in its return
for its taxable year in which the last day of our taxable year falls; (b) be
deemed to have paid its proportionate share of the capital gains tax imposed on
us on the designated amounts included in the U.S. stockholder's long-term
capital gains; (c) receive a credit or refund for the amount of tax deemed paid
by it; (d) increase the adjusted basis of its common stock by the difference
between the amount of includible gains and the tax deemed to have been paid by
it; and (e) in the case of a U.S. stockholder that is a corporation,
appropriately adjust its earnings and profits for the retained capital gains as
required by treasury regulations to be prescribed by the IRS.
DISPOSITIONS OF COMMON STOCK.
If you are a U.S. stockholder and you sell or dispose of your shares
of common stock, you will recognize gain or loss for federal income tax purposes
in an amount equal to the difference between the amount of cash and the fair
market value of any property you receive on the sale or other disposition and
your adjusted basis in the shares for tax purposes. This gain or loss will be
capital if you have held the common stock as a capital asset. This gain or loss
will be long-term capital gain or loss if you have held the common stock for
more than one year. In general, if you are a U.S. stockholder and you recognize
loss upon the sale or other disposition of common stock that you have held for
six months or less, then after applying the relevant holding period rules, the
loss you recognize will be treated as a long-term capital loss to the extent you
received distributions from us which were required to be treated as long-term
capital gains.
9
<PAGE> 11
BACKUP WITHHOLDING.
We report to our U.S. stockholders and the IRS the amount of
dividends paid during each calendar year and the amount of any tax withheld.
Under the backup withholding rules, a stockholder may be subject to backup
withholding at the rate of 31% with respect to dividends paid unless the holder
is a corporation or is otherwise exempt and, when required, demonstrates this
fact or provides a taxpayer identification number, certifies as to no loss of
exemption from backup withholding, and otherwise complies with the backup
withholding rules. A U.S. stockholder that does not provide us with his or her
correct taxpayer identification number may also be subject to penalties imposed
by the IRS. Backup withholding is not an additional tax. Any amount paid as
backup withholding will be creditable against the stockholder's income tax
liability. In addition, we may be required to withhold a portion of capital gain
distributions to any stockholders who fail to certify their non-foreign status.
TAXATION OF TAX-EXEMPT STOCKHOLDERS.
The IRS has ruled that amounts distributed as dividends by a
qualified REIT do not constitute unrelated business taxable income when received
by a tax-exempt entity. Based on that ruling, dividend income from us and gain
from the sale of our shares generally will not be unrelated business taxable
income to a tax-exempt stockholder. This income or gain will be unrelated
business taxable income, however, under certain circumstances, including where
the tax-exempt stockholder holds its shares as "debt financed property" within
the meaning of the Internal Revenue Code or if the shares are used in a trade or
business of the tax-exempt stockholder. Tax-exempt shareholders should consult
their tax advisors regarding the application of the unrelated business taxable
income provisions of the Internal Revenue Code.
TAXATION OF NON-U.S. STOCKHOLDERS.
The preceding discussion does not address the rules governing U.S.
federal income taxation of the ownership and disposition of common stock by
persons that are non-U.S. stockholders. In general, non-U.S. stockholders may be
subject to special tax withholding requirements on distributions from us and
with respect to their sale or other disposition of our common stock, except to
the extent reduced or eliminated by an income tax treaty between the United
States and an eligible non-U.S. stockholder's country. Non-U.S. stockholders
should consult their tax advisors concerning the federal income tax consequences
to them of an acquisition of shares of common stock, including the federal
income tax treatment of dispositions of interests in and the receipt of
distributions from us.
OTHER TAX CONSEQUENCES.
We may be required to pay state or local taxes in various state or
local jurisdictions, including those in which we transact business. Our
stockholders may be required to pay state or local taxes in various state or
local jurisdictions, including those in which they reside. Our state and local
tax treatment may not conform to the federal income tax consequences summarized
above. In addition, your state and local tax treatment may not conform to the
federal income tax consequences summarized above. Consequently, you should
consult your tax advisor regarding the effect of state and local tax laws on an
investment in our common stock.
10
<PAGE> 12
WHERE CAN YOU FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any materials we file with
the SEC at the SEC's Public Reference Rooms located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. We file information
electronically with the SEC. The SEC maintains an Internet site that contains
reports, proxy and information statements and other information regarding
issuers that file electronically with the SEC. The address of the SEC's Internet
site is "http://www.sec.gov." You also may inspect copies of these materials and
other information about us at the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we will file
later with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings that
we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, before the termination of the offering of the
Offered Shares under this prospectus:
- Annual Report on Form 10-K and related Form 10-K/A for the
fiscal year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the first quarter ended
March 31, 1999;
- Proxy Statement for Annual Meeting of Stockholders held
on May 18, 1999; and
- Our Current Report on Form 8-K, filed by us with the
Commission on April 20, 1999.
- The description of our common stock contained in our
Registration Statement on Form 8-A filed with the Commission on September 18,
1996, as amended and filed on October 3, 1996, including any subsequently filed
amendments and reports updating such description.
- The description of our Preferred Share Purchase Rights
contained in our Registration Statement in Form 8-A filed with the Commission on
August 26, 1998, including any subsequently filed amendments and reports
updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Arden Realty, Inc.
11601 Wilshire Boulevard, Fourth Floor
Los Angeles, California 90025
Attention: Secretary
Telephone number: (310) 966-2600
This prospectus is part of a registration statement we filed with the
SEC. This prospectus does not contain all of the information included in the
registration statement. We have omitted certain parts of the registration
statement in accordance with the rules and regulations of the SEC. For further
information, we refer you to the registration statement, including its exhibits
and schedules. We have authorized no one to provide you with any information
that differs from that contained in this prospectus. Accordingly, you should not
rely on any information that is not contained in this prospectus. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front cover of this
prospectus.
11
<PAGE> 13
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by
the Selling Stockholders of up to 3,080,273 shares of common stock that may be
issued to the Selling Stockholders in connection with the tendering by the
Selling Stockholders of their OP Units or the exercise of their Warrants, as
applicable. We are registering the offer and sale of shares of our common stock
by the Selling Stockholders, but the registration of these shares does not
necessarily mean that any or all of such shares will be offered or sold by any
of the Selling Stockholders.
We will not receive any proceeds from the sale of the shares by the
Selling Stockholders. "Selling Stockholder" includes donees, transferees and
pledgees selling shares received from a named Selling Stockholder after the date
of this prospectus.
The shares of our common stock issued upon exchange of their OP Units
or exercise of their Warrants may be offered and sold at various times by the
Selling Stockholders. Each of the Selling Stockholders will act independently of
us in making decisions with respect to these shares of common stock that are
being registered hereby and may offer those shares of our common stock in one or
more of the following transactions:
- on the New York Stock Exchange;
- in the over-the-counter market;
- in transactions other than on such exchanges or in the
over-the-counter market;
- in brokerage transactions;
- in block trades;
- through put or call options;
- in privately negotiated transactions;
- in connection with short sales of the shares of Common Stock;
- by pledge to secure debts and other obligations;
- in open market sales in reliance upon Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act");
- in connection with the writing of non-traded and
exchange-traded call options, in hedge transactions and in
settlement of other transactions in standardized or
over-the-counter options; or
- in a combination of any of the above transactions.
The Selling Stockholders may sell their shares of our common stock
issued upon exchange of their OP Units or exercise of their Warrants at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices or at fixed prices. The Selling Stockholders
reserve the sole right to accept and, together with any agent of the Selling
Stockholders, to reject in whole or in part any proposed purchase of the shares
of our common stock issued upon exchange of their OP Units or exercise of their
Warrants.
The shares of our common stock issued upon exchange of their OP
Units or exercise of their Warrants may be sold from time to time to purchasers
directly by any of the Selling Stockholders or through underwriters, dealers or
agents, who may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the shares of
our common stock for whom they may act as an agent (which compensation as to a
particular broker-dealer might be in excess of customary commissions). The
Selling Stockholders have advised the Company that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of our common stock issued
upon exchange of their OP Units or exercise of their Warrants, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of such shares of our common stock by the Selling Stockholders. The Selling
Stockholders and any dealers or agents that participate in the distribution of
the shares of our common stock issued upon exchange of their OP Units or
exercise of their Warrants may be deemed to
12
<PAGE> 14
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any profit on the sale of the shares of our common stock by them and any
commissions received by any dealers or agents might be deemed to be underwriting
commissions under the Securities Act.
Because the Selling Stockholders may be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, the Selling
Stockholders will be subject to the prospectus delivery requirements of the
Securities Act. We have informed the Selling Stockholders that the
anti-manipulative provisions of Regulation M promulgated under the Securities
Exchange Act of 1934, as amended, may apply to their sales in the market.
At a time any particular offer of shares of our common stock issued
upon exchange of their OP Units or exercise of their Warrants is made by a
Selling Stockholder, a supplement to this prospectus, if required, will be
distributed setting forth their name and the names of any dealers or agents and
any commissions and other terms constituting compensation from the Selling
Stockholders and any other required information.
Pursuant to an agreement with the Selling Stockholders, we will pay
substantially all of the expenses incident to the registration of the resale of
the shares of common stock issuable upon the exchange of OP Units or exercise of
their Warrants, estimated to be approximately $44,599. Under agreements entered
into with the Selling Stockholders, they and any underwriter they may utilize
will be indemnified by us against certain civil liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters, including the validity under Maryland law of
the shares of our common stock offered hereby, will be passed upon for us by
Ballard Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our
consolidated financial statements and schedule in our Annual Report on Form
10-K, as amended on Form 10-K/A, for the year ended December 31, 1998, as set
forth in their report, which is incorporated by reference in this prospectus and
elsewhere in the registration statement. Our financial statements and schedule
are incorporated by reference in reliance on Ernst & Young LLP's report, given
on their authority as experts in accounting and auditing.
13
<PAGE> 15
================================================================================
WE HAVE NOT AUTHORIZED ANY PERSON TO MAKE A STATEMENT THAT DIFFERS
FROM WHAT IS CONTAINED IN THIS PROSPECTUS. IF ANY PERSON DOES MAKE A STATEMENT
THAT DIFFERS FROM WHAT IS CONTAINED IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON
IT. THIS PROSPECTUS IS NOT AN OFFER TO SELL, NOR IS IT SEEKING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE
INFORMATION IN THIS PROSPECTUS IS COMPLETE AND ACCURATE AS OF ITS DATE, BUT THE
INFORMATION MAY CHANGE AFTER THAT DATE.
3,080,273 SHARES
ARDEN REALTY, INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
MAY 27, 1999
================================================================================
14
<PAGE> 16
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table itemizes the expenses incurred by Arden Realty,
Inc. (the "Registrant") in connection with the registration of the shares of the
Registrant's common stock, par value $.01 per share ("common stock"), offered
hereby. All amounts shown are estimates except the Securities and Exchange
Commission's registration fee.
<TABLE>
<S> <C>
Registration Fee - Securities and Exchange Commission $21,599
Legal Fees and Expenses 20,000
Miscellaneous Expenses 3,000
-------
Total $44,599
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
The MGCL permits a Maryland corporation to include in its charter a
provision limiting the liability of its directors and officers to the
corporation and its stockholders for money damages except for liability
resulting from (a) actual receipt of an improper benefit or profit in money,
property or services or (b) active and deliberate dishonesty established by a
final judgment and which is material to the cause of action. The Charter of the
Company contains such a provision which eliminates such liability to the maximum
extent permitted by Maryland law.
The Charter of the Company authorizes it, to the maximum extent
permitted by Maryland law, to obligate itself to indemnify and to pay or
reimburse reasonable expenses in advance of final disposition of a proceeding to
(a) any individual who is a present or former director or officer who is made a
party to a proceeding by reason of his service in that capacity or (b) any
individual who, while a director of the Company and at the request of the
Company, serves or has served as a director, officer, partner or trustee of
another corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise from and against any claim or liability to which such person
may become subject or which such person may incur by reason of his status as a
present or former director or officer of the Company. The Bylaws of the Company
obligate it, to the maximum extent permitted by Maryland law, without requiring
a preliminary determination of the ultimate entitlement to indemnification, to
indemnify and to pay or reimburse reasonable expenses in advance of final
disposition of a proceeding to (a) any present or former director or officer who
is made a party to the proceeding by reason of his service in that capacity or
(b) any individual who, while a director of the Company and at the request of
the Company, serves or has served another corporation, partnership, joint
venture, trust, employee benefit plan or any other enterprise as a director,
officer, partner or trustee of such corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise and who is made a party to the
proceeding by reason of his service in that capacity. The Charter and Bylaws
also permit the Company to indemnify and advance expenses to any person who
served a predecessor of the Company in any of the capacities described above and
to any employee or agent of the Company or a predecessor of the Company.
The MGCL requires a corporation (unless its charter provides
otherwise, which our Charter does not) to indemnify a director or officer who
has been successful, on the merits or otherwise, in the defense of any
proceeding to which he is made a party by reason of his services in that
capacity against reasonable expenses incurred in connection therewith. The MGCL
permits a corporation to indemnify its present and former directors and
officers, among others, against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by them in connection with any proceeding
to which they may be made a party by reason of their service in such capacity
unless it is established that (a) the act or omission of the director or officer
was material to the matter giving rise to the proceeding and (i) was committed
in bad faith or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services or (c) in the case of any criminal proceeding, the director
or officer had reasonable cause to believe that the act or omission was
unlawful. However, a Maryland corporation may not indemnify for an adverse
judgment in a suit by or in the right of the corporation or for a judgment of
liability on the basis that a personal benefit was improperly received, unless,
in either case, a court orders indemnification and then only for expenses. In
addition, the MGCL permits a corporation to advance reasonable expenses to a
director or officer upon receipt by the corporation of (a) a written affirmation
by the director or officer of his good faith belief that he has met the standard
of conduct necessary for indemnification by the
II-1
<PAGE> 17
corporation and (b) a written undertaking by or on his behalf to repay the
amount paid or reimbursed by the corporation if it shall ultimately be
determined that the standard of conduct was not met.
The inclusion of the above provisions in our Charter and Bylaws may
have the effect of reducing the likelihood of stockholder derivative suits
against directors and may discourage or deter stockholders or management from
bringing a lawsuit against directors for breach of their duty of care, even
though such an action, if successful, might otherwise have benefited the Company
and its stockholders. Furthermore, it is the position of the Commission that
indemnification of directors and officers for liabilities arising under the
Securities Act is against public policy and is unenforceable pursuant to Section
14 of the Securities Act.
The Partnership Agreement also provides for indemnification and
advance of expenses of the Company and its officers and directors to a
substantially similar extent as indemnification and advance of expenses is
provided to officers and directors of the Company in our Charter and Bylaws, and
limits the liability of the Company to the Operating Partnership and its
partners to a substantially similar extent as liability of officers and
directors of the Company and its stockholders is limited under our Charter.
Item 16. Exhibits
See attached exhibit index.
Item 17. Undertaking.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent
post-effective amendment thereof) which,
individually or in the aggregate, represent a
fundamental change in the information set forth in
the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
SEC pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more
than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of
Registration Fee" table in the effective
registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed
in the registration statement or any material
change to such information in the registration
statement.
Provided, however, that paragraphs (i) and (ii) do not
apply if the registration statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be
included in a post-effective amendment by those paragraphs
is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
II-2
<PAGE> 18
The undersigned Registrant hereby further undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
the Registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
The undersigned Registrant hereby further undertakes to deliver or
cause to be delivered with the prospectus, to each person to whom the prospectus
is sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act;
and, where interim financial information required to be presented by Article 3
of Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act, and will be governed by the final adjudication of such issue.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Amendment No. 2 to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Los Angeles, State of
California, on May 27, 1999.
ARDEN REALTY, INC.
By: /s/ RICHARD S. ZIMAN
---------------------------
Richard S. Ziman
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities indicated on May 27, 1999.
<TABLE>
<CAPTION>
Signature Title
<S> <C>
/s/RICHARD S. ZIMAN Chairman of the Board, Chief Executive Officer and Director
- ------------------------------------------- (Principal Executive Officer)
Richard S. Ziman
/s/ VICTOR J. COLEMAN* President, Chief Operating Officer and Director
- -------------------------------------------
Victor J. Coleman
/s/ DIANA M. LAING* Chief Financial Officer and Secretary (Principal Financial
- ------------------------------------------- Officer and Accounting Officer)
Diana M. Laing
/s/ RICHARD S. DAVIS* Senior Vice President and Chief Accounting Officer
- -------------------------------------------
Richard S. Davis
/s/ CARL D. COVITZ* Director
- -------------------------------------------
Carl D. Covitz
/s/ LARRY S. FLAX* Director
- -------------------------------------------
Larry S. Flax
/s/ PERTER S. GOLD* Director
- -------------------------------------------
Peter S. Gold
/s/ STEVEN C. GOOD* Director
- -------------------------------------------
Steven C. Good
/s/ KENNETH B. ROATH* Director
- -------------------------------------------
Kenneth B. Roath
*By: /s/ RICHARD S. ZIMAN
- -------------------------------------------
Richard S. Ziman
as Attorney-in-Fact
</TABLE>
S-1
<PAGE> 20
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
<S> <C> <C>
4.1 Rights Agreement, dated as of August 14, 1998, between Arden
Realty, Inc. and the Bank of New York as filed as an exhibit to
the current report on Form 8-K, dated August 26, 1998, and
incorporated herein by reference.
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP regarding the
validity of the common stock being registered
8.1 Opinion of Latham & Watkins regarding certain federal income tax
matters
23.1 Consent of Ballard Spahr Andrews & Ingersoll, LLP (included in
Exhibit 5.1)
23.2 Consent of Latham & Watkins (included in Exhibit 8.1)
23.3 Consent of Ernst & Young LLP
24.1 Power of Attorney (included on signature page to the
Registration Statement as filed on May 7, 1999)
</TABLE>
S-2
<PAGE> 1
EXHIBIT 5.1
[LETTERHEAD OF BALLARD SPAHR ANDREWS & INGERSOLL, LLP]
May 27, 1999
Arden Realty, Inc.
11601 Wilshire Boulevard
Fourth Floor
Los Angeles, California 90025
Re: Registration Statement on Form S-3
Registration No. 333-78061
----------------------------------
Ladies and Gentlemen:
We have served as Maryland counsel to Arden Realty, Inc., a Maryland
corporation (the "Company"), in connection with certain matters of Maryland law
arising out of the registration of up to 3,080,273 shares of Common Stock, par
value $.01 per share, of the Company (the "Shares"), 580,273 of the Shares
issuable, together with the Preferred Share Purchase Rights (as hereinafter
defined) attached thereto, to certain shareholders of the Company (the "Selling
Shareholders") upon conversion of limited partnership interests ("Units") in
Arden Realty Limited Partnership, a Maryland limited partnership (the "Operating
Partnership"), and 2,500,000 of the Shares issuable, together with the Preferred
Share Purchase Rights (as hereinafter defined) attached thereto, upon the
exercise of certain warrants (the "Warrants") issued by the Company, all of the
Shares being covered by the above-referenced Registration Statement, and any
amendments thereto (the "Registration Statement"), filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "1933 Act"). As used herein, "Preferred Share Purchase
Rights" means the rights to purchase one one-hundredth of a share of the
Company's Class A Junior Participating Preferred Stock, issued as a dividend to
the holders of Common Stock, the terms of which are set forth in a Rights
Agreement, dated as of August 14, 1998 (the "Rights Agreement"), between the
Company and The Bank of New York, as Rights Agent. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings assigned to them
in the Registration Statement.
In connection with our representation of the Company, and as a basis
for the opinion hereinafter set forth, we have
<PAGE> 2
Arden Realty, Inc.
May 27, 1999
Page 2
examined originals, or copies certified or otherwise identified to our
satisfaction, of the following documents (hereinafter collectively referred to
as the "Documents"):
1. The Registration Statement and the related form of prospectus
included therein in the form in which it was transmitted to the Securities and
Exchange Commission (the "Commission") under the 1933 Act;
2. The charter of the Company (the "Charter"), certified as of a
recent date by the State Department of Assessments and Taxation of Maryland
(the "SDAT");
3. The Bylaws of the Company, certified as of the date hereof by
an officer of the Company;
4. Resolutions (the "Resolutions") adopted by the Board of
Directors of the Company, relating the issuance of the Shares to the Selling
Shareholders and the registration of the Shares under the above Registration
Statement, certified as of the date hereof by an officer of the Company;
5. The Agreement of Limited Partnership of the Operating
Partnership (the "Partnership Agreement");
6. Warrant Agreement, dated as of March 2, 1998, between the
Company and AEW/LBA Acquisition Co. II, LLC, (the "Warrant Agreement");
7. Form of Warrant Certificate attached to the Warrant Agreement
(the "Form Warrant Certificate");
8. A certificate of the SDAT as to the good standing of the
Company, dated as of a recent date;
9. A certificate executed by Diana M. Laing, Chief Financial
Officer of the Company, dated as of the date hereof; and
10. Such other documents and matters as we have deemed necessary or
appropriate to express the opinion set forth in this letter, subject to the
assumptions, limitations and qualifications stated herein.
In expressing the opinion set forth below, we have assumed, and so far
as is known to us there are no facts inconsistent with, the following:
1. Each individual executing any of the Documents, whether on
behalf of such individual or any other person, is legally competent to do so.
<PAGE> 3
Arden Realty, Inc.
May 27, 1999
Page 3
2. Each individual executing any of the Documents on behalf of a
party (other than the Company) is duly authorized to do so.
3. Each of the parties (other than the Company) executing any of
the Documents has duly and validly executed and delivered each of the Documents
to which such party is a signatory, and such party's obligations set forth
therein are legal, valid and binding.
4. Any Documents submitted to us as originals are authentic. The
form and content of the Documents submitted to us as unexecuted drafts do not
differ in any respect relevant to this opinion from the form and content of such
Documents as executed and delivered. Any Documents submitted to us as certified
or photostatic copies conform to the original documents. All signatures on all
such Documents are genuine. All public records reviewed or relied upon by us or
on our behalf are true and complete. All statements and information contained in
the Documents are true and complete. There has been no oral or written
modification of or amendment to any of the Documents, and there has been no
waiver of any provision of any of the Documents, by action or omission of the
parties or otherwise.
5. The form and content of the Form Warrant Certificate do not
and will not differ in any respect relevant to this opinion from the form and
content of the warrant certificates issued or to be issued by the Company
pursuant to the Warrant Agreement.
6. The outstanding shares of Common Stock of the Company have not
been and will not be owned or transferred in violation of any restriction or
limitation contained in the Charter. The Shares will not be owned, sold or
transferred in violation of the provisions of Article VII of the Charter,
entitled "Restrictions on Ownership and Transfer to Preserve Tax Benefit," or
any other restriction or limitation contained in the Charter.
The phrase "known to us" is limited to the actual knowledge, without
independent inquiry, of the lawyers at our firm who have performed legal
services in connection with the issuance of this opinion.
<PAGE> 4
Arden Realty, Inc.
May 27, 1999
Page 4
Based upon the foregoing, and subject to the assumptions, limitations
and qualifications stated herein, it is our opinion that:
1. The Company is a corporation, duly incorporated and existing under
and by virtue of the laws of the State of Maryland and is in good standing with
the SDAT.
2. The issuance of the Shares has been duly authorized, and the Shares,
when and if delivered upon conversion of the Units or exercise of the Warrants,
as the case may be (and, in the case of exercise of the Warrants, upon receipt
by the Company of the Warrant exercise price), in accordance with the
Resolutions and the Partnership Agreement or the Warrant Agreement and the
applicable warrant certificate, as the case may be, (assuming that, upon
issuance, the total number of shares of Common Stock issued and outstanding will
not exceed the total number of shares of Common Stock that the Company is then
authorized to issue under the Charter), will be validly issued, fully paid and
nonassessable.
3. The issuance of the Preferred Share Purchase Rights has been duly
authorized, and the Preferred Share Purchase Rights, when issued in accordance
with the Rights Agreement, will be validly issued.
The foregoing opinion is limited to the substantive laws of the State
of Maryland and we do not express any opinion herein concerning any other law.
We express no opinion as to compliance with the securities (or "blue sky") laws
or the real estate syndication laws of the State of Maryland.
We assume no obligation to supplement this opinion if any applicable
law changes after the date hereof or if we become aware of any fact that might
change the opinion expressed herein after the date hereof.
This opinion is being furnished to you for submission to the Commission
as an exhibit to the Registration Statement, and, accordingly, may not be
relied upon by, quoted in any manner to, or delivered to any other person or
entity (except Latham & Watkins, counsel to the Company) without, in each
instance, our prior written consent.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of the name of our firm in the section
entitled "Legal Matters" in the Registration Statement. In giving this consent,
we do not admit that we are within the category of persons whose consent is
required by Section 7 of the 1933 Act.
Very truly yours,
/s/ BALLARD SPAHR ANDREWS & INGERSOLL, LLP
<PAGE> 1
EXHIBIT 8.1
[LETTERHEAD OF LATHAM & WATKINS]
May 27, 1999
Arden Realty, Inc.
11601 Wilshire Boulevard
4th Floor
Los Angeles, California 90025-1740
Re: Arden Realty, Inc.
Ladies and Gentlemen:
We have acted as tax counsel to Arden Realty, Inc., a Maryland
corporation (the "Company"), in connection with the issuance of up to 3,080,273
shares of $.01 par value common stock of the Company pursuant to the
registration statement filed with the Securities and Exchange Commission (the
"Commission") on Form S-3 on May 7, 1999, (file No. 333-78061), as amended as
of the date such statement became final (together with all exhibits thereto and
documents incorporated by reference therein, the "Registration Statement").
You have requested our opinion concerning certain of the federal
income tax consequences to the Company and the purchasers of the securities
described above in connection with the Registration Statement. This opinion is
based on various factual assumptions, including the facts set forth in the
Registration Statement concerning the business, properties and governing
documents of the Company, Arden Realty Limited Partnership, (the "Operating
Partnership") and their subsidiaries. We have also been furnished with, and with
your consent have relied upon, certain representations made by the Company, the
Operating Partnership and their subsidiaries with respect to certain factual
matters through a certificate of an officer of the Company (the "Officer's
Certificate").
In our capacity as tax counsel to the Company, we have made such
legal and factual examinations and inquiries, including an examination of
originals or copies certified or otherwise identified to our satisfaction of
such documents, corporate records
<PAGE> 2
and other instruments as we have deemed necessary or appropriate for purposes of
this opinion. For the purposes of our opinion, we have not made an independent
investigation or audit of the facts set forth in the above referenced documents
or in the Officer's Certificate. In our examination, we have assumed the
authenticity of all documents submitted to us as originals, the genuineness of
all signatures thereon, the legal capacity of natural persons executing such
documents and the conformity to authentic original documents of all documents
submitted to us as copies.
We are opining herein as to the effect on the subject transaction
only of the federal income tax laws of the United States and we express no
opinion with respect to the applicability thereto, or the effect thereon, of
other federal laws, the laws of any state or other jurisdiction or as to any
matters of municipal law or the laws of any other local agencies within any
state.
Based on such facts, assumptions and representations, it is our opinion that the
statements in the Registration Statement set forth under the caption "Federal
Income Tax Consequences" are, subject to the limitations set forth therein, the
material federal income tax considerations relevant to purchasers of the
Company's common stock pursuant to the Registration Statement.
No opinion is expressed as to any matter not discussed herein.
This opinion is rendered to you as of the date of this letter, and
we undertake no obligation to update this opinion subsequent to the date hereof.
This opinion is based on various statutory provisions, regulations promulgated
thereunder and interpretations thereof by the Internal Revenue Service and the
courts having jurisdiction over such matters, all of which are subject to change
either prospectively or retroactively. Also, any variation or difference in the
facts from those set forth in the Registration Statement or the Officer's
Certificate may affect the conclusions stated herein. Moreover, the Company's
qualification and taxation as a real estate investment trust depends upon the
Company's ability to meet, through actual annual operating results, asset
diversification, distribution levels and diversity of stock ownership, the
various qualification tests imposed under the Code, the results of which have
not been and will not be reviewed by Latham & Watkins. Accordingly, no assurance
can be given that the actual results of the Company's operation for any one
taxable year will satisfy such requirements.
Except as provided below, this opinion is rendered only to you, and
is for your use in connection with the issuance of common stock by the Company
pursuant to the Registration Statement. This opinion may not be relied upon by
you for any other purpose, or furnished to, quoted to, or relied upon by any
other person, firm or corporation, for any purpose, without our prior written
consent, except that this opinion may be relied upon by the investors who
acquire common stock of the Company pursuant to the Registration Statement. We
hereby consent to the filing of this opinion as an exhibit to the Registration
Statement. In giving this consent, we do not hereby
<PAGE> 3
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules or regulations of the
Commission promulgated thereunder.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in Amendment
No. 2 to the Registration Statement (Form S-3 No. 333-78061) and related
Prospectus of Arden Realty, Inc. for the registration of 3,080,273 shares of its
common stock and to the incorporation by reference therein of our report dated
February 2, 1999 (except for Note 9, as to which the date is March 9, 1999),
with respect to the consolidated financial statements and schedule of Arden
Realty, Inc. included in its Annual Report on Form 10-K, as amended on Form
10-K/A, for the year ended December 31, 1998, filed with the Securities and
Exchange Commission.
/s/ Ernst & Young LLP
Los Angeles, California
May 27, 1999
