<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 1999
REGISTRATION NO. 333-81985
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
ALEXANDRIA REAL ESTATE EQUITIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
MARYLAND 95-4502084
(State or other jurisdiction (I.R.S. Employer
of
incorporation or organization) Identification
Number)
</TABLE>
135 NORTH LOS ROBLES AVENUE, SUITE 250
PASADENA, CALIFORNIA 91101
(626) 578-0777
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JOEL S. MARCUS
CHIEF EXECUTIVE OFFICER
135 NORTH LOS ROBLES AVENUE, SUITE 250
PASADENA, CALIFORNIA 91101
(626) 578-0777
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
COPY TO:
MICHAEL A. WORONOFF, ESQ.
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue
Los Angeles, California 90071
(213) 687-5000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT AS
DETERMINED BY MARKET CONDITIONS.
------------------------
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,
other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If the 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
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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 14, 1999
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND THE
SELLING STOCKHOLDERS ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE SUCH OFFER OF SALE IS NOT PERMITTED.
<PAGE>
743,589 SHARES
COMMON STOCK
ALEXANDRIA REAL ESTATE EQUITIES, INC.
135 North Los Robles Avenue
Suite 250
Pasadena, California 91101
------------------------
The stockholders of Alexandria Real Estate Equities, Inc. listed under the
caption "Selling Stockholders" may offer from time to time up to 743,589 shares
of our common stock under this prospectus. We will not receive any part of the
proceeds from such sales.
Our common stock is listed on the New York Stock Exchange, Inc. under the
symbol "ARE". The last reported sale price of our common stock on July 13, 1999
was $30 5/16 per share.
AN INVESTMENT IN OUR COMMON STOCK INVOLVES RISKS. PLEASE REVIEW THE RISK
FACTORS THAT WE HAVE DISCLOSED IN OUR PUBLIC FILINGS WITH THE SEC UNDER THE
SECURITIES EXCHANGE ACT OF 1934.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The date of this prospectus is July , 1999.
<PAGE>
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. You can identify some of the forward-looking statements by
the use of forward-looking words, such as "believes," "expects," "may," "will,"
"should," "seeks," "approximately," "intends," "plans," "estimates" or
"anticipates," or the negative of those words or other similar words.
Forward-looking statements involve inherent risks and uncertainties. A number of
important factors could cause actual results to differ materially from those in
the forward-looking statements, including our lack of industry diversification,
our dependence on tenants, our recent rapid growth, possible effects of the year
2000 problem and certain other considerations related to real estate financing,
acquisition and renovation. For a discussion of these and other factors that
could cause actual results to differ, please see the discussion under "Risk
Factors" contained in our publicly available SEC filings. We do not take any
responsibility to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or otherwise.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information...................................................................................... iii
The Company................................................................................................ 1
Use of Proceeds............................................................................................ 1
Selling Stockholders....................................................................................... 2
Certain Provisions of Maryland Law and of our Charter and Bylaws........................................... 6
Federal Income Tax Considerations.......................................................................... 10
Plan of Distribution....................................................................................... 20
Legal Matters.............................................................................................. 21
Experts.................................................................................................... 21
</TABLE>
ii
<PAGE>
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any documents we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at (800) SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's web site at "http://www.sec.gov."
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 we later file with the SEC will
automatically update and supercede this information. We incorporate by reference
the documents listed below and any future filings we will make with the SEC
under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act:
1. Annual Report on Form 10-K for the year ended December 31, 1998;
2. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
3. Current Report on Form 8-K (dated February 18, 1999), filed with the
Commission on
February 23, 1999;
4. Current Report on Form 8-K (dated June 8, 1999), filed with the
Commission on June 14, 1999; and
5. The description of our common stock contained in the Registration
Statement on Form 8-A filed by us on May 14, 1997, including any
amendment or reports filed for the purpose of updating such description.
You may request a copy of these filings by writing or telephoning us at the
following address:
Alexandria Real Estate Equities, Inc.
135 North Los Robles Avenue, Suite 250
Pasadena, California 91101
(626) 578-0777
Attention: Corporate Secretary
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different information. The selling stockholders
will not make an offer of the shares of our common stock in any state where the
offer is not permitted. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of those documents.
iii
<PAGE>
THE COMPANY
We are a real estate investment trust ("REIT"), formed in October 1994. We
own, operate, manage, acquire, convert, retrofit, expand and selectively develop
high quality, strategically located properties containing both office and
laboratory space. We lease our properties principally to tenants in the life
science industry, including pharmaceutical, biotechnology, diagnostic, contract
research and personal care products companies, major scientific research
institutions and related government agencies.
As of March 31, 1999:
- We owned 52 properties, containing approximately 3.7 million rentable
square feet of office and laboratory space.
- Our properties were located in the San Diego and San Francisco Bay areas
of California; Seattle, Washington; suburban Washington, D.C.; eastern
Massachusetts, including Boston and Cambridge; the Southeast, including
Georgia and North Carolina; and the New Jersey and suburban Philadelphia
areas.
USE OF PROCEEDS
All net proceeds from the sale of the shares of our common stock will go to
the stockholders who offer and sell their shares. Accordingly, we will not
receive any of the proceeds from the sales of the shares of our common stock.
1
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth, as of April 6, 1999, the number of shares
and the percentage of the outstanding common stock beneficially owned by the
selling stockholders and the number of shares and the percentage of outstanding
common stock to be beneficially owned by the selling stockholders after this
offering. The selling stockholders acquired their shares of our common stock as
the result of a liquidation of Health Science Properties Holding Corporation,
one of our significant stockholders. The number of shares of our common stock
owned by the selling stockholders after the offering assumes that all of the
shares being offered under this prospectus are sold, and that the selling
stockholders acquire no additional shares of our common stock before the
completion of this offering. All of the shares are currently issued and
outstanding.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING AFTER THE OFFERING
---------------------------- SHARES BEING ----------------------------
SELLING STOCKHOLDER NUMBER(#) PERCENT(%) OFFERED NUMBER(#) PERCENT(%)
- ------------------------------------------------ ----------- --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Jacobs Engineering Group, Inc................... 393,286 2.9 270,880 122,406 *
Joseph J. Jacobs(1)............................. 196,639 1.4 135,440 61,199 *
HG Finance Ltd.................................. 186,124 1.4 144,769 41,355 *
Jerry M. & Mildred Sudarsky, Trustees of the 2nd
Restated Trust Agreement, Jerry M. & Mildred
Sudarsky 1979 Revocable Trust dated
11/3/94(2).................................... 136,190 * 30,672 105,518 *
Southern Shipping & Energy, Inc.(3)............. 99,999 * 30,648 69,351 *
Victor Elmaleh.................................. 71,603 * 55,975 15,628 *
Joseph H. Flom, as Trustee of the Joseph H. Flom
1996 Real Estate GRAT under Agreement dated
12/9/96....................................... 65,668 * 4,469 61,199 *
J.O.E.L. Ltd.................................... 49,240 * 3,352 45,888 *
Claire Flom, as Trustee of the Flom 1998
Children's Trust f/b/o Peter Flom under
Agreement dated 2/2/98........................ 25,119 * 25,119 0 *
Claire Flom, as Trustee of the Flom 1998
Children's Trust f/b/o Jason Flom under
Agreement dated 2/2/98........................ 25,119 * 25,119 0 *
Dove Services Corp.............................. 19,636 * 15,130 4,506 *
Joseph Elmaleh(4)............................... 17,417 * 24 17,393 *
Joel S. Marcus(5)............................... 130,391 * 24 130,367 *
Roger S. Aaron.................................. 24 * 24 0 *
Virginia A. Aaron............................... 24 * 24 0 *
Douglas B. Adler................................ 24 * 24 0 *
Jim Alpi........................................ 24 * 24 0 *
Carol April..................................... 24 * 24 0 *
Rand S. April................................... 24 * 24 0 *
Laurie Atkins................................... 24 * 24 0 *
Peter Atkins.................................... 24 * 24 0 *
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING AFTER THE OFFERING
---------------------------- SHARES BEING ----------------------------
SELLING STOCKHOLDER NUMBER(#) PERCENT(%) OFFERED NUMBER(#) PERCENT(%)
- ------------------------------------------------ ----------- --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Henry P. Baer................................... 24 * 24 0 *
Christopher Baker............................... 24 * 24 0 *
Kevin Barnette.................................. 24 * 24 0 *
Ronald C. Barusch............................... 24 * 24 0 *
Ann Bialkin..................................... 24 * 24 0 *
Kenneth Bialkin................................. 24 * 24 0 *
Katherine Bristor............................... 24 * 24 0 *
Richard Brusca.................................. 24 * 24 0 *
John W. M. Butler, Jr........................... 24 * 24 0 *
Ron Clapham..................................... 24 * 24 0 *
Carol R. Coben.................................. 24 * 24 0 *
Jerome L. Coben................................. 24 * 24 0 *
Jeffrey H. Cohen................................ 24 * 24 0 *
Lynn R. Coleman................................. 24 * 24 0 *
Jeff Dasteel.................................... 24 * 24 0 *
Katherine Del Tufo.............................. 24 * 24 0 *
Robert Del Tufo................................. 24 * 24 0 *
Randall H. Doud................................. 24 * 24 0 *
Pat Foye........................................ 24 * 24 0 *
Louis Freeman................................... 24 * 24 0 *
David J. Friedman............................... 24 * 24 0 *
John Gardiner................................... 24 * 24 0 *
Barry H. Garfinkel.............................. 24 * 24 0 *
Gloria Garfinkel................................ 24 * 24 0 *
Michael Gisser.................................. 24 * 24 0 *
Joseph J. Giunta................................ 24 * 24 0 *
Fred T. Goldberg................................ 24 * 24 0 *
Les Goldman..................................... 24 * 24 0 *
Sue Goldman..................................... 24 * 24 0 *
Ed Gonzalez..................................... 24 * 24 0 *
Jonathan Grunzweig.............................. 24 * 24 0 *
Laura J. Hagen.................................. 24 * 24 0 *
Joanne Janson................................... 24 * 24 0 *
Thomas Janson................................... 24 * 24 0 *
Richard Kalikow................................. 24 * 24 0 *
Jay Kasner...................................... 24 * 24 0 *
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING AFTER THE OFFERING
---------------------------- SHARES BEING ----------------------------
SELLING STOCKHOLDER NUMBER(#) PERCENT(%) OFFERED NUMBER(#) PERCENT(%)
- ------------------------------------------------ ----------- --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Tom Kennedy..................................... 24 * 24 0 *
Keith Krakaur................................... 24 * 24 0 *
Michael Lawson.................................. 24 * 24 0 *
Andre Le Duc.................................... 24 * 24 0 *
Richard Levin................................... 24 * 24 0 *
James A. Levitan................................ 24 * 24 0 *
Jeff Lichtman................................... 24 * 24 0 *
Bertil Lundqvist................................ 24 * 24 0 *
James E. Lyons.................................. 24 * 24 0 *
Brian J. McCarthy............................... 24 * 24 0 *
John Mendez..................................... 24 * 24 0 *
Max Miller...................................... 24 * 24 0 *
Benjamin F. Needell............................. 24 * 24 0 *
Kathleen Needell................................ 24 * 24 0 *
Pamela Olson.................................... 24 * 24 0 *
Paul W. Oosterhuis.............................. 24 * 24 0 *
Kenneth Plevan.................................. 24 * 24 0 *
Ann Pollock..................................... 24 * 24 0 *
Harriet Posner.................................. 24 * 24 0 *
Richard Prins................................... 24 * 24 0 *
John D. Rayis................................... 24 * 24 0 *
Mary Rayis...................................... 24 * 24 0 *
Michael Rogan................................... 24 * 24 0 *
Nick Saggese.................................... 24 * 24 0 *
Andrew Sandler.................................. 24 * 24 0 *
Jim Schell...................................... 24 * 24 0 *
William S. Scherman............................. 24 * 24 0 *
Thomas J. Schwarz............................... 24 * 24 0 *
Isaac Shapiro................................... 24 * 24 0 *
Jacqulene Shapiro............................... 24 * 24 0 *
Robert C. Sheehan............................... 24 * 24 0 *
Charles F. Smith................................ 24 * 24 0 *
Connie Steensma................................. 24 * 24 0 *
Cynthia A. Torres............................... 24 * 24 0 *
W. Kirk Wallace................................. 24 * 24 0 *
Garrett Waltzer................................. 24 * 24 0 *
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING AFTER THE OFFERING
---------------------------- SHARES BEING ----------------------------
SELLING STOCKHOLDER NUMBER(#) PERCENT(%) OFFERED NUMBER(#) PERCENT(%)
- ------------------------------------------------ ----------- --------------- ------------ ----------- ---------------
<S> <C> <C> <C> <C> <C>
Rod Ward........................................ 24 * 24 0 *
Susan Ward...................................... 24 * 24 0 *
</TABLE>
- ------------------------
(1) Includes shares owned by Mr. Jacobs as Trustee of the Jacobs Family Trust
Created on 10/13/80.
(2) Includes 22,524 shares owned by Mr. Sudarsky, which includes 22,500 shares
subject to currently exercisable stock options. Mr. Sudarsky is the Chairman
of the Board of our board of directors, and previously served as our Chief
Executive Officer from our inception until March 1997.
(3) Southern Shipping and Energy, Inc. is a company controlled by Mr. Elmaleh.
Mr. Elmaleh has been a member of our board of directors since our inception.
(4) Includes 12,500 shares subject to currently exercisable stock options.
(5) Includes 42,843 shares held by the Joel and Barbara Marcus Family Trust, of
which Mr. Marcus is the trustee, and 46,667 shares subject to currently
exercisable stock options. Mr. Marcus has been a member of our board of
directors since our inception, and has served as our Chief Executive Officer
since March 1997. Mr. Marcus previously served as our Vice Chairman of the
Board and Chief Operating Officer from our inception until March 1997, and
as our Secretary from our inception until April 1997.
5
<PAGE>
CERTAIN PROVISIONS OF MARYLAND LAW AND
OF OUR CHARTER AND BYLAWS
The following summary of certain provisions of Maryland law and of our
charter and bylaws is not complete and is subject to and qualified in its
entirety by reference to Maryland law and our charter and bylaws. See "Available
Information."
BOARD OF DIRECTORS
Our bylaws provide that our number of directors may be established by our
board of directors, but may not be fewer than the minimum number required by
Maryland law nor more than 15. Any vacancy will be filled, at any regular
meeting or at any special meeting called for that purpose, by a majority of the
remaining directors, except that a vacancy resulting from an increase in the
number of directors must be filled by a majority of the entire board of
directors. All directors are elected to hold office until our next annual
meeting of stockholders and until their successors are duly elected and qualify.
BUSINESS COMBINATIONS
Under Maryland law, "business combinations" between a Maryland corporation
and an interested stockholder or an affiliate of an interested stockholder are
prohibited for five years after the most recent date on which the interested
stockholder becomes an interested stockholder. These business combinations
include a merger, consolidation, share exchange, or, in circumstances specified
in the statute, an asset transfer or issuance or reclassification of equity
securities. An interested stockholder is defined as:
- any person who beneficially owns ten percent or more of the voting power
of the corporation's shares; or
- an affiliate of the corporation who, at any time within the two-year
period prior to the date in question, was the beneficial owner of ten
percent or more of the voting power of the then outstanding voting stock
of the corporation.
After the five-year prohibition, any business combination between the
Maryland corporation and an interested stockholder generally must be recommended
by the board of directors of the corporation and approved by two super-majority
stockholder votes, unless, among other conditions, the holders of our Common
Stock receive a minimum price, as defined by Maryland law, for their shares and
the consideration is received in cash or in the same form as previously paid by
the interested stockholder for its Common Stock. None of these provisions of
Maryland law will apply, however, to business combinations that are approved or
exempted by the board of directors of the corporation prior to the time that the
interested stockholder becomes an interested stockholder. Pursuant to an act of
our board of directors in accordance with Maryland law, we have exempted from
these provisions of Maryland law any business combination involving AEW Partners
II, L.P. ("AEW"). Additionally, our board of directors has adopted a resolution
providing that the "business combination" provisions of Maryland law shall not
apply to us generally and that such resolution is irrevocable unless revocation,
in whole or in part, is approved by the holders of a majority of the outstanding
shares of our common stock, but revocation will not affect any business
combination consummated, or contemplated by any agreement entered into prior to
the revocation. As a result, these persons may be able to enter into business
combinations with us that may not be in the best interest of our stockholders,
without compliance with the super-majority vote requirements and the other
provisions of the statute.
CONTROL SHARE ACQUISITIONS
Maryland law provides that "control shares" of a Maryland corporation
acquired in a "control share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the
6
<PAGE>
votes entitled to be cast on the matter. Shares of stock owned by the acquiror,
by officers or by directors who are employees of the corporation are excluded
from shares entitled to vote on the matter. "Control shares" are voting shares
of stock which, if aggregated with all other shares of stock owned by the
acquiror or shares of stock for which the acquiror is able to exercise or direct
the exercise of voting power except solely by virtue of a revocable proxy, would
entitle the acquiror to exercise voting power in electing directors within one
of the following ranges of voting power:
- one-fifth or more but less than one-third;
- one-third or more but less than a majority; or
- a majority or more of all voting power.
Control shares do not include shares the acquiring person is then entitled
to vote as a result of having previously obtained stockholder approval. Except
as otherwise specified in the statute, a "control share acquisition" means the
acquisition of control shares.
Once a person who has made or proposes to make a control share acquisition
has undertaken to pay expenses and satisfied other conditions, the person may
compel the board of directors to call a special meeting of stockholders to be
held within 50 days of demand to consider the voting rights of the shares. If no
request for a meeting is made the corporation may itself present the question at
any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to the conditions and limitations in the statute, the corporation may
redeem any or all of the control shares for fair value, except for control
shares for which voting rights previously have been approved. Fair value is
determined without regard to the absence of voting rights for control shares, as
of the date of the last control share acquisition or of any meeting of
stockholders at which the voting rights of control shares are considered and not
approved. If voting rights for control shares are approved at a stockholders
meeting and the acquiror becomes entitled to vote a majority of the shares
entitled to vote, all other stockholders may exercise appraisal rights. The fair
value of the shares as determined for purposes of these appraisal rights may not
be less than the highest price per share paid in the control share acquisition.
Some of the limitations and restrictions otherwise applicable to the exercise of
dissenters' rights do not apply in the context of a control share acquisition.
The control share acquisition statute does not apply to shares acquired in a
merger, consolidation or share exchange if the corporation is a party to the
transaction or to acquisitions approved or exempted by the charter or bylaws of
the corporation.
Our bylaws contain a provision exempting from the control share acquisition
statute any and all acquisitions by any person of our shares of stock. Our board
of directors has resolved that, subject to Maryland law, the provision may not
be amended or repealed without the approval of holders of at least a majority of
the outstanding shares of our common stock. We cannot assure you, however, that
this provision will not be amended or eliminated in the future or that such
resolution is enforceable under Maryland law.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
Our bylaws provide that with respect to an annual meeting of stockholders,
nominations of persons for election to the Board of Directors and the proposal
of business to be considered by stockholders may be made only:
- pursuant to our notice of the meeting,
- by or at the direction of our board of directors, or
7
<PAGE>
- by a stockholder who is entitled to vote at the meeting and has complied
with the advance notice procedures set forth in our bylaws.
With respect to special meetings of our stockholders, our bylaws provide
that only the business specified in our notice of meeting may be brought before
the meeting of stockholders and nominations of persons for election to our board
of directors may be made only:
- pursuant to our notice of the meeting,
- by or at the direction of our board of directors, or
- provided that our board of directors has determined that directors shall
be elected at such meeting, by a stockholder who is entitled to vote at
the meeting and has complied with the advance notice provisions set forth
in our bylaws.
AMENDMENT TO THE CHARTER OR BYLAWS
As permitted by Maryland law, our charter provides that it may be amended by
the affirmative vote of the holders of a majority of votes entitled to be cast
on the matter. Our board of directors has the exclusive power to adopt, alter,
repeal or amend our bylaws.
NEW MARYLAND LAW
As part of a broader legislative agenda to provide certain protections for
Maryland corporations to manage the process of responding to unsolicited
takeover bids, in its 1999 legislative session the General Assembly of Maryland
passed a bill which will become Title 3, Subtitle 8 of the Maryland General
Corporations Law (Sections 3-801 through and including 3-805) (the "Unsolicited
Takeovers Act"). The Unsolicited Takeovers Act was signed by the Governor on May
13, 1999 and became effective on June 1, 1999. The following summary of the
Unsolicited Takeovers Act is qualified in its entirety by reference to the
actual language of the Unsolicited Takeovers Act.
The Unsolicited Takeovers Act applies to Maryland corporations who are
reporting companies under the Securities Exchange Act of 1934 and have at least
three directors who (i) are not officers or employees of the corporation; (ii)
are not persons seeking to acquire control of the corporation ("Acquiring
Persons"); (iii) are not directors, officers, affiliates or associates of an
Acquiring Person; and (iv) were not nominated or designated as directors by an
Acquiring Person. The Unsolicited Takeover Act provides Maryland corporations
with the ability to opt into the following provisions, in whole or in part,
without obtaining stockholder approval to:
- Stagger their boards of directors into three classes;
- Provide that stockholders may remove any director by the affirmative vote
of at least two-third of all of the votes entitled to be cast by the
stockholders generally in the election of directors;
- Provide that the number of directors may be fixed only by the vote of the
board;
- Provide that each vacancy on the board of directors may be filled only by
the affirmative vote of a majority of the remaining directors in office,
even if the remaining directors do not constitute a quorum; and
- Provide that a special stockholders meeting may be called only upon the
written request of the stockholders entitled to cast at least a majority
of all the votes entitled to be cast at the meeting.
A Maryland corporation may prohibit its ability to opt into the foregoing
provisions by Board resolution or amendment to its charter. Although our charter
and bylaws already contain several of these optional provisions, because we have
not opted out of the Unsolicited Takeovers Act, our board of directors could
take a variety of actions without stockholder approval.
8
<PAGE>
DISSOLUTION
As permitted by Maryland law, our charter provides that our dissolution must
be approved by the affirmative vote of the holders of not less than a majority
of all of the votes entitled to be cast on the matter. See "Description of
Capital Stock--Common Stock."
ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER
AND BYLAWS
The business combination provisions and the control share acquisition
provisions of Maryland law, in each case if such provisions ever become
applicable to us, and the advance notice provisions of our bylaws could delay,
defer or prevent a transaction or a change in control that might involve a
premium price for holders of our common stock or otherwise be in their best
interest.
9
<PAGE>
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of the federal income tax consequences
anticipated to be material to an investor in our common stock. This summary is
based on current law, is for general information only and is not tax advice.
Your tax consequences related to an investment in our common stock may vary
depending on your particular situation and this discussion does not purport to
discuss all aspects of taxation that may be relevant to a holder of our
securities in light of his or her personal investment or tax circumstances, or
to holders of our securities who receive special treatment under the federal
income tax laws except to the extent discussed under the headings "--Taxation of
Tax-Exempt Stockholders" and "--Taxation of Non-U.S. Stockholders." Investors
receiving special treatment include, without limitation, insurance companies,
financial institutions, broker-dealers, tax-exempt organizations, investors
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 securities.
The information in this summary is based on the Internal Revenue Code of
1986, as amended, 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, all as of the date of this
prospectus. The administrative interpretations and practices of the Internal
Revenue Service upon which this summary is based 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 taxpayers who requested and
received such rulings. Future legislation, Treasury regulations, administrative
interpretations and practices, and court decisions may affect the tax
consequences contained in this summary, possibly on a retroactive basis. 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 a court. Thus, we can provide no
assurance that the tax consequences contained in this summary will not be
challenged by the Internal Revenue Service or sustained by a court if challenged
by the Internal Revenue Service.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF (1) THE ACQUISITION, OWNERSHIP AND SALE OR OTHER
DISPOSITION OF OUR COMMON STOCK, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN
AND OTHER TAX CONSEQUENCES, (2) OUR ELECTION TO BE TAXED AS A REAL ESTATE
INVESTMENT TRUST FOR FEDERAL INCOME TAX PURPOSES AND (3) POTENTIAL CHANGES IN
APPLICABLE TAX LAWS.
TAXATION OF ALEXANDRIA
GENERAL. We have 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, and we intend to continue to operate in a manner consistent
with such election and all rules with which a REIT must comply. Skadden, Arps,
Slate, Meagher & Flom LLP has issued an opinion that, commencing with our
taxable year ending December 31, 1996, we have been organized in conformity with
the requirements for qualification as a REIT, and our proposed method of
operation, and our actual method of operation since January 1, 1996 through the
date of the opinion, has and will enable us to meet the requirements for
qualification as a REIT under the Internal Revenue Code. It must be emphasized
the opinion of Skadden, Arps, Slate, Meagher & Flom LLP was based and
conditioned upon certain assumptions and representations made by us as to
factual matters, including representations made by us concerning, among other
things, our business and properties, the amount of rent we receive that is
attributable to personal property and other items regarding our ability to meet
the various requirements for qualification as a REIT. The opinion is expressed
as of its date, and Skadden, Arps, Slate, Meagher & Flom LLP will have no
obligation to advise holders of our common stock of any
10
<PAGE>
subsequent change in the matters stated, represented or assumed or of any
subsequent change in the applicable law. Moreover, our qualification and
taxation as a REIT depends upon our ability to meet, through actual annual
operating results, asset requirements, distribution levels, diversity of stock
ownership, and the various other qualification tests imposed under the Internal
Revenue Code, the results of which will not be reviewed by Skadden, Arps, Slate,
Meagher & Flom LLP. Accordingly, there can be 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 taxation of REITs are highly technical and complex. The following describes
the material aspects of the sections of the Internal Revenue Code that govern
the Federal income tax treatment of a REIT and its stockholders. This summary is
qualified in its entirety by the applicable Internal Revenue Code provisions,
rules and regulations promulgated under the Internal Revenue Code, and
administrative and judicial interpretations of the Internal Revenue Code.
Provided we qualify for taxation as a REIT, we generally will not be subject
to Federal corporate income tax on our net income that is currently distributed
to our stockholders. This treatment substantially eliminates the "double
taxation" that generally results from an 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 such income is distributed. Even if we
qualify for taxation as a REIT, however, we will be subject to Federal income
taxation as follows:
- We will be required to pay tax at regular corporate rates on any
undistributed REIT taxable income, including undistributed net capital
gains.
- We may be required to pay the "alternative minimum tax" on items of tax
preference, if any.
- We will be required to pay a 100% tax on any net income from prohibited
transactions. In general, prohibited transactions are sales or other
taxable dispositions of property, other than foreclosure property, held
for sale to customers in the ordinary course of business.
- If we fail to satisfy the 75% or 95% gross income tests, as described
below, but have maintained our qualification as a REIT, we will be
required to pay a 100% tax on an amount equal to (a) the gross income
attributable to the greater of the amount by which we fail the 75% or 95%
gross income test multiplied by (b) a fraction intended to reflect our
profitability.
- We will be required to pay a 4% excise tax on the amount by which our
annual distributions to our stockholders is less than the sum of (1) 85%
of our ordinary income for the year, (2) 95% of our real estate investment
trust capital gain net income for the year, and (3) any undistributed
taxable income from prior periods.
- If we acquire an asset from a corporation which is not a REIT in a
transaction in which the basis of the asset in our hands is determined by
reference to the basis of the asset in the hands of the transferor
corporation, and we subsequently sell the asset within ten years, then
under Treasury regulations not yet issued, we would be required to pay tax
at the highest regular corporate tax rate on this gain to the extent (a)
the fair market value of the asset exceeds (b) our adjusted tax basis in
the asset, in each case, determined as of the date on which we acquired
the asset. The results described in this paragraph assume that we will
elect this treatment in lieu of an immediate tax when the asset is
acquired.
REQUIREMENTS FOR QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST. 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 its
owners;
11
<PAGE>
(3) that would be taxable as a regular corporation, but for its election
to be taxed as a REIT;
(4) that is not a financial institution or an insurance company under
the Internal Revenue Code;
(5) that is 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, as defined
in the Internal Revenue Code to include some entities, during the last half
of each year; and
(7) that meets other tests, described below, regarding the nature of its
income and assets, and the amount of its distributions.
The Internal Revenue Code provides that conditions (1) to (4) must be met
during the entire year and that condition (5) must be met during at least 335
days of a year of twelve months, or during a proportionate part of a shorter
taxable year. Conditions (5) and (6) do not apply to the first taxable year for
which an election is made to be taxed as a REIT. For purposes of condition (6),
tax-exempt entities are generally treated as individuals, subject to a
"look-through" exception for pension funds.
We believe that we have issued sufficient shares to allow us to satisfy
conditions (5) and (6) above. In addition, our charter provides for restrictions
regarding ownership and transfer of our stock. These restrictions are intended
to assist us in satisfying the share ownership requirements described in (5) and
(6) above. These restrictions, however, may not ensure that we will, in all
cases, be able to satisfy the share ownership requirements described in (5) and
(6) above. If we fail to satisfy these share ownership requirements, our status
as a REIT would terminate. If, however, we comply with the rules contained in
applicable Treasury regulations that require us to determine the actual
ownership of our shares and we do not know, or would not have known through the
exercise of reasonable diligence, that we failed to meet the requirement
described in condition (6) above, we would not be disqualified as a REIT.
In addition, a corporation may not qualify as a REIT unless its taxable year
is the calendar year. We have and will continue to have a calendar taxable year.
If we should become a partner in a partnership, applicable Treasury
regulations provide that we will be deemed to own our proportionate share of the
partnership's assets and to earn our proportionate share of the partnership's
income. In addition, the assets and gross income of the partnership will retain
the same character in our hands for purposes of the gross income and asset tests
applicable to REITs as described below. There can be no assurance, however, that
any partnership in which we own an interest will be organized or operated in a
manner that will enable us to continue to satisfy the REIT requirements under
the Internal Revenue Code.
INCOME TESTS. We must meet two annual gross income requirements to qualify
as a REIT. First, each year we must derive, directly or indirectly, at least 75%
of our gross income, excluding gross income from prohibited transactions, from
investments relating to real property or mortgages on real property, including
"rents from real property" and mortgage interest, or from specified temporary
investments. Second, each year we must derive at least 95% of our gross income,
excluding gross income from prohibited transactions, from investments meeting
the 75% test described above, or from dividends, interest and gain from the sale
or disposition of stock or securities. For these purposes, the term "interest"
generally does not include any interest of which the amount received depends on
the income or profits of any person. An amount will generally not be excluded
from the term "interest," however, if such amount is based on a fixed percentage
of receipts or sales.
12
<PAGE>
Rents we receive will qualify as "rents from real property" only if the
following conditions are met:
- the amount of rent may not be based in whole or in part on the income or
profits of any person. "Rents from real property" may, however, include
rent based on a fixed percentage of receipts or sales;
- rents received from a tenant will not qualify as "rents from real
property" if the REIT, or an actual or constructive owner of 10% or more
of the REIT, actually or constructively owns 10% or more of such 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." The determination
of whether an item of property constitutes real property or personal
property is subject to both legal and factual considerations and, as such,
is subject to differing interpretations. Skadden, Arps, Slate, Meagher &
Flom LLP has advised us with respect to the legal considerations
underlying such determination. After consulting with Skadden, Arps, Slate,
Meagher & Flom LLP and considering such advice, we have reviewed our
properties and have determined that rents attributable to personal
property do not exceed 15% of the total rent with respect to any
particular lease. Because of the specialized nature of our properties,
however, there can be no assurance that the Internal Revenue Service will
not assert that the rent attributable to personal property with respect to
a particular lease is greater than 15% of the total rent with respect to
such lease. If the Internal Revenue Service were successful, and the
amount of such non-qualifying income, together with other non-qualifying
income, exceeds 5% of our taxable income, we may fail to qualify as a
REIT;
- an amount received or accrued will not qualify as rents from real property
if it is based in whole or in part on the income or profits of any person.
Rent will not be disqualified, however, solely by reason of being based on
a fixed percentage or percentages of receipts or sales; and
- to qualify as "rents from real property," the REIT generally may not
render services to tenants of the property, other than through an
independent contractor from whom the REIT derives no revenue. The REIT
may, however, provide 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. In
addition, a REIT may provide a DE MINIMIS amount of non-customary
services. We (or our affiliates) currently directly provide certain
services with respect to our properties. We believe that such services are
"usually or customarily rendered" in connection with the rental of space
for occupancy only. Accordingly, we believe that the provision of such
services will not cause the rents we receive with respect to our
properties to fail to qualify as rents from real property for purposes of
the REIT gross income tests.
While we regularly attempt to monitor the foregoing requirements for amounts
we receive to qualify as rents from real property, no assurance can be given
that we will not realize income that does not so qualify, and that such amount,
when combined with other non-qualifying income, may exceed 5% of our taxable
income and thus disqualify us as a REIT.
13
<PAGE>
If we fail to satisfy one or both of the 75% or 95% gross income tests for
any year, we may still qualify as a REIT if we are entitled to relief under the
Internal Revenue Code. Generally, we may be entitled to relief if:
- our failure to meet the gross income 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 the
intent to evade tax.
It is not possible to state whether in all circumstances we would be
entitled to rely on these relief provisions. If these relief provisions do not
apply to a particular set of circumstances, we would not qualify as a REIT. As
discussed above in "--Taxation of Alexandria--General", even if these relief
provisions apply, and we retain our status as a REIT, a tax would be imposed
with respect to our income that does not meet the gross income tests. We may not
always be able to maintain compliance with the gross income tests for REIT
qualification despite periodically monitoring our income.
ASSET TESTS. At the close of each quarter of each year, we also must
satisfy three tests relating to our assets. First, at least 75% of the value of
our total assets must be real estate assets, cash, cash items and government
securities. For purposes of this test, real estate assets include real estate
mortgages, real property, interests in other REITs and stock or debt instruments
held for one year or less that are purchased with the proceeds of a stock
offering or a long-term public debt offering. Second, not more than 25% of our
total assets may be represented by securities, other than those securities
includable in the 75% asset class. Third, of the investments included in the 25%
asset class, the value of any one issuer's securities that we hold may not
exceed 5% of the value of our total assets, and we may not own more than 10% of
the voting stock of a corporation.
We indirectly hold interests in some of our properties through wholly-owned
corporate subsidiaries that are organized as "qualified REIT subsidiaries." A
"qualified REIT subsidiary" is a corporation, all of the stock of which is owned
by a REIT. Under the Internal Revenue Code, a qualified REIT subsidiary is not
treated as a separate corporation from the REIT. Rather, all of the assets,
liabilities, and items of income, deduction, and credit of the qualified REIT
subsidiary are treated as the assets, liabilities, and items of income,
deduction, and credit of the REIT for purposes of the REIT income and asset
tests.
After meeting the asset tests at the close of any quarter, we will not lose
our status as a REIT if we fail to satisfy the asset tests at the end of a later
quarter solely by reason of changes in asset values. In addition, 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.
We intend to monitor closely the purchase, holding and disposition of our
assets in order to comply with the REIT asset tests. In particular, we intend to
limit and diversify our ownership of any assets not qualifying as real estate
assets to less than 25% of the value of our assets and to less than (1) 5%, by
value, of any single issuer and (2) 10% of the outstanding voting securities of
any one issuer. If we anticipate that these limits would be exceeded, we intend
to take appropriate measures, including disposing of non-qualifying assets, to
avoid exceeding such limits.
ANNUAL DISTRIBUTION REQUIREMENTS. To qualify 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 (1) 95% of our "REIT taxable income" and
(2) 95% of our after tax net income, if any, from foreclosure property, minus
(3) the sum of certain items of noncash income. In general, "REIT taxable
income" means taxable ordinary income without regard to the dividends paid
deduction.
We are required to distribute income in the taxable year which it is earned,
or in the following taxable year before we timely file our tax return if such
dividend distributions are declared and paid on
14
<PAGE>
or before our first regular dividend payment. Except as provided in "--Taxation
of Taxable U.S. Stockholders" below, these distributions are taxable to holders
of common stock in the year in which paid, even though these distributions
relate to our 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% or our "REIT taxable income," we will be
subject to tax at regular corporate tax rates.
It is possible that from time to time we may not have sufficient cash or
other liquid assets to meet the above distribution requirements due to timing
differences between the actual receipt of cash and payment of expenses, and the
inclusion of income and deduction of expenses in arriving at our taxable income.
If these timing differences occur, in order to meet the REIT distribution
requirements, we may need to arrange for short-term, or possibly long-term,
borrowings (on terms that may not be favorable to us), or to pay dividends in
the form of taxable stock dividends.
Under certain circumstances, we may be able to rectify a failure to meet a
distribution requirement for a year by paying "deficiency dividends" to our
stockholders in a later year, which may be included in our deduction for
dividends paid for the earlier year. Thus, we may be able to avoid being subject
to tax on amounts distributed as deficiency dividends. We will be required,
however, to pay interest based upon the amount of any deduction claimed for
deficiency dividends. In addition, we will be subject to a 4% excise tax on the
excess of the required distribution over the amounts actually distributed if we
should fail to distribute each year at least the sum of 85% of our ordinary
income for the year, 95% of our capital gain income for the year, and any
undistributed taxable income from prior periods.
ABSENCE OF EARNINGS AND PROFITS. In order to qualify as a REIT, we must not
have accumulated earnings and profits attributable to any non-REIT years. A REIT
has until the close of its first taxable year in which it has non-REIT earnings
and profits to distribute any such accumulated earnings and profits. Unless the
"deficiency dividend" procedures described above apply and we comply with those
procedures, failure to distribute such accumulated earnings and profits would
result in our being disqualified as a REIT. We believe that we had no
accumulated earnings and profits as of December 31, 1995. The determination of
accumulated earnings and profits, however, depends upon a number of factual
matters related to our activities and operations during our entire corporate
existence and is subject to review and challenge by the Internal Revenue
Service. There can be no assurance that the Internal Revenue Service will not
examine our tax returns for prior years and propose adjustments to increase our
taxable income. In this regard, the Internal Revenue Service can consider all of
our taxable years as open for review for purposes of determining the amount of
such earnings and profits.
RECORDKEEPING REQUIREMENTS. We are required to maintain records and request
on an annual basis information from specified stockholders. This requirement is
designed to disclose the actual ownership of our outstanding stock.
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 described
above do not apply, we will be subject to tax, including any applicable
alternative minimum tax, and possibly increased state and local taxes, on our
taxable income at regular corporate rates. Such taxation would reduce the cash
available for distribution by us to our stockholders. 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. If we fail to qualify as a REIT, distributions to our stockholders
will be subject to tax as ordinary income to the extent of our current and
accumulated earnings and profits and, subject to certain limitations of the
Internal Revenue Code, corporate stockholders may be eligible for the dividends
received deduction. Unless entitled to relief under specific statutory
provisions, we would also be disqualified from taxation as a REIT for the four
taxable years following the year during which we lost our qualification. It is
not possible to state whether in all circumstances we would be entitled to
statutory relief.
15
<PAGE>
TAXATION OF TAXABLE U.S. STOCKHOLDERS
When we use the term "U.S. stockholders," we mean a holder of shares of our
stock who is, for United States federal income tax purposes:
- a citizen or resident of the United States;
- a corporation, partnership, or other entity created or organized in or
under the laws of the United States or of any state thereof or in the
District of Columbia, unless Treasury regulations provide otherwise;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
- a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who
have the authority to control all substantial decisions of the trust.
DISTRIBUTIONS GENERALLY. Distributions out of our current or accumulated
earnings and profits, other than capital gain dividends will be taxable to our
U.S. stockholders as ordinary income. Provided we qualify as a REIT, our
dividends will not be eligible for the dividends received deduction generally
available to U.S. stockholders that are corporations.
To the extent that we make distributions in excess of our current and
accumulated earnings and profits, our distributions will be treated as a
tax-free return of capital to each U.S. stockholder, and will reduce the
adjusted tax basis which each U.S. stockholder has in its shares of stock by the
amount of the distribution, but not below zero. Distributions in excess of a
U.S. stockholder's adjusted tax basis in its shares will be taxable as capital
gain, provided that the shares have been held as capital assets, and 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 pay
to a stockholder of record on a specified date in any of those 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 in January of the following
year. Stockholders may not include in their own income tax returns any of our
net operating losses or capital losses.
CAPITAL GAIN DISTRIBUTIONS. Distributions designated as net capital gain
dividends will be taxable to our U.S. stockholders as capital gain income. Such
capital gain income will be taxable to non-corporate U.S. stockholders at a 20%
or 25% rate based on the characteristics of the asset we sold that produced the
gain. U.S. stockholders that are corporations may be required to treat up to 20%
of certain capital gain dividends as ordinary income.
RETENTION OF NET CAPITAL GAINS. We may elect to retain, rather than
distribute as a capital gain dividend, our net capital gains. If we make this
election, we would pay tax on such retained capital gains. In such a case, our
stockholders would generally:
- include their proportionate share of our undistributed net capital gains
in their taxable income;
- receive a credit for their proportionate share of the tax paid by us; and
- increase the adjusted basis of their stock by the difference between the
amount of their capital gain and their share of the tax paid by us.
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 not be able to apply any "passive losses" against income or
gain relating to our stock. Distributions we make, to the extent they do not
constitute a return of
16
<PAGE>
capital, generally will be treated as investment income for purposes of
computing the investment interest limitation.
DISPOSITIONS OF STOCK. If you are a U.S. stockholder and you sell or
dispose of your shares of 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 tax basis in the shares of stock. This gain or
loss will be capital gain or loss if you have held the stock as a capital asset,
and will be long-term capital gain or loss if you have held the 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 stock that you have held for six months or
less, 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.
BACKUP WITHHOLDING. We report to our U.S. stockholders and the Internal
Revenue Service 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 comes within other exempt
categories and, when required, demonstrates this fact, or provides a taxpayer
identification number or social security number, certifies as to no loss of
exemption from backup withholding, and otherwise complies with applicable
requirements of the backup withholding rules. A U.S. stockholder that does not
provide us with his correct taxpayer identification number or social security
number may also be subject to penalties imposed by the Internal Revenue Service.
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 Internal Revenue Service has ruled that amounts distributed as dividends
by a REIT do not constitute unrelated business taxable income when received by a
tax-exempt entity. Based on that ruling, provided that a tax-exempt stockholder,
has not held its shares as "debt financed property" within the meaning of the
Internal Revenue Code and the shares are not otherwise used in a unrelated trade
or business, dividend income on our stock and income from the sale of our stock
should not be unrelated business taxable income to a tax-exempt stockholder.
Generally, debt financed property is property, the acquisition or holding of
which was financed through a borrowing by the tax-exempt stockholder.
For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from Federal income taxation under Sections
501(c)(7), (c)(9), (c)(17) and (c)(20) of the Internal Revenue Code,
respectively, income from an investment in our shares will constitute unrelated
business taxable income unless the organization is able to properly claim a
deduction for amounts set aside or placed in reserve for certain purposes so as
to offset the income generated by its investment in our shares. These
prospective investors should consult their tax advisors concerning these "set
aside" and reserve requirements.
We do not believe that we are, nor do we expect to become, a "pension-held
REIT." If we were to become a pension-held REIT, these rules would only apply to
certain pensions trusts that hold more than 10% of our stock.
17
<PAGE>
TAXATION OF NON-U.S. STOCKHOLDERS
The rules governing Federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
stockholders (collectively, "non-U.S. stockholders") are complex and no attempt
will be made herein to provide more than a summary of such rules.
PROSPECTIVE NON-U.S. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS TO
DETERMINE THE IMPACT OF FOREIGN, FEDERAL, STATE, AND LOCAL INCOME TAX LAWS WITH
REGARD TO AN INVESTMENT IN OUR SECURITIES AND OF OUR ELECTION TO BE TAXED AS A
REAL ESTATE INVESTMENT TRUST INCLUDING ANY REPORTING REQUIREMENTS.
Distributions to non-U.S. stockholders that are not attributable to gain
from sales or exchanges by us of U.S. real property interests and are not
designated by us as capital gain dividends or retained capital gains will be
treated as dividends of ordinary income to the extent that they are made out of
our current or accumulated earnings and profits. Such distributions will
generally be subject to a withholding tax equal to 30% of the distribution
unless an applicable tax treaty reduces or eliminates that tax. However, if
income from an investment in our stock is treated as effectively connected with
the non-U.S. stockholder's conduct of a U.S. trade or business, the non-U.S.
stockholder generally will be subject to Federal income tax at graduated rates,
in the same manner as U.S. stockholders are taxed with respect to such
distributions (and also may be subject to the 30% branch profits tax in the case
of a non-U.S. stockholder that is a corporation). We expect to withhold U.S.
income tax at the rate of 30% on the gross amount of any distributions made to a
non-U.S. stockholder unless (i) a lower treaty rate applies and any required
form, such as IRS Form 1001 or IRS Form W-8BEN, evidencing eligibility for that
reduced rate is filed by the non-U.S. stockholder with us or (ii) the non-U.S.
stockholder files an IRS Form 4224 or IRS Form W-8ECI with us claiming that the
distribution is effectively connected income.
Distributions in excess of our current and accumulated earnings and profits
will not be taxable to a stockholder to the extent that such distributions do
not exceed the adjusted basis of the stockholder's stock, but rather will reduce
the adjusted basis of such shares. To the extent that distributions in excess of
current and accumulated earnings and profits exceed the adjusted basis of a
non-U.S. stockholder's stock, such distributions will give rise to tax liability
if the non-U.S. stockholder would otherwise be subject to tax on any gain from
the sale or disposition of its stock, as described below. Because it generally
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the entire amount of any distribution normally will be subject to withholding at
the same rate as a dividend. However, amounts so withheld are refundable to the
extent it is subsequently determined that such distribution was, in fact, in
excess of our current and accumulated earnings and profits. We are also required
to withhold 10% of any distribution in excess of our current and accumulated
earnings and profits. Consequently, although we intend to withhold at a rate of
30% on the entire amount of any distribution, to the extent that we do not do
so, any portion of a distribution not subject to withholding at a rate of 30%
will be subject to withholding at a rate of 10%.
For any year in which we qualify as a REIT, distributions that are
attributable to gain from sales or exchanges of a U.S. real property interest,
which includes certain interests in real property, will be taxed to a Non-U.S.
stockholder under the provisions of the Foreign Investment in Real Property Tax
Act of 1980 ("FIRPTA"). Under FIRPTA, distributions attributable to gain from
sales of U.S. real property interests are taxed to a non-U.S. stockholder as if
such gain were effectively connected with a U.S. business. Non-U.S. stockholders
thus would be taxed at the normal capital gain rates applicable to U.S.
stockholders (subject to applicable alternative minimum tax and a special
alternative minimum tax in the case of nonresident alien individuals).
Distributions subject to FIRPTA also may be subject to the 30% branch profits
tax in the hands of a non-U.S. corporate stockholder. We are required to
withhold 35% of any distribution that is designated by us as a U.S. real
property capital gains dividend. The amount withheld is creditable against the
non-U.S. stockholder's FIRPTA tax liability.
18
<PAGE>
Gain recognized by a non-U.S. stockholder upon a sale of our stock generally
will not be taxed under FIRPTA if we are a "domestically controlled REIT," which
is a REIT in which at all times during a specified testing period less than 50%
in value of the stock was held directly or indirectly by non-U.S. persons.
Because our stock is publicly traded, no assurance can be given that we are or
will remain a "domestically controlled REIT." In addition, a non-U.S.
stockholder that owns, actually or constructively, 5% or less of our stock
throughout a specified testing period will not recognize taxable gain on the
sale of his stock under FIRPTA if the shares are traded on an established
securities market.
Gain not subject to FIRPTA will be taxable to a non-U.S. stockholder if (i)
the non-U.S. stockholder's investment in the stock is effectively connected with
a U.S. trade or business, in which case the non-U.S. stockholder will be subject
to the same treatment as U.S. stockholders with respect to such gain, or (ii)
the non-U.S. stockholder is a nonresident alien individual who was present in
the U.S. for 183 days or more during the taxable year and other conditions are
met, in which case the nonresident alien individual will be subject to a 30% tax
on the individual's capital gains. If the gain on the sale of the stock were to
be subject to taxation under FIRPTA, the non-U.S. stockholder would be subject
to the same treatment as U.S. stockholders with respect to such gain (subject to
applicable alternative minimum tax, a special alternative minimum tax in the
case of nonresident alien individuals, and the possible application of the 30%
branch profits tax in the case of non-U.S. corporations).
OTHER TAX CONSEQUENCES
STATE AND LOCAL TAXES. We may be required to pay state, local and foreign
taxes in various state, local and foreign jurisdictions, including those in
which we transact business or make investments, and our stockholders may be
required to pay state, local and foreign taxes in various state, local and
foreign jurisdictions, including those in which they reside. Our state, local
and foreign tax treatment may not conform to the Federal income tax consequences
summarized above. In addition, your state, local and foreign 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,
local and foreign tax laws on an investment in our securities.
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS. The rules dealing
with Federal income taxation are constantly under review by persons involved in
the legislative process and by the Internal Revenue Service and the U.S.
Treasury Department. Changes to the tax law, which may have retroactive
application, could adversely affect us and our investors. It cannot be predicted
whether, when, in what forms, or with what effective dates, the tax law
applicable to us or our investors will be changed.
19
<PAGE>
PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale from time to time by the
selling stockholders of up to 743,589 shares of common stock previously issued
by us. We have registered the shares for sale pursuant to certain agreements,
but registration of the shares does not necessarily mean that any of the shares
will be offered and sold.
We will not receive any proceeds from any offering by the selling
stockholders. The shares may be sold from time to time by the selling
stockholders in underwritten offerings or in open market or block transactions
or otherwise, on the New York Stock Exchange, or such other national securities
exchange or automated interdealer quotation system on which shares of common
stock are then listed, in the over-the-counter market, in private transactions
or otherwise at prices related to prevailing market prices at the time of the
sale or at negotiated prices. Some or all of the shares may be sold through
brokers acting on behalf of the selling stockholders or to dealers for resale by
such dealers. In connection with such sales, such brokers and dealers may
receive compensation in the form of discounts or commissions from the selling
stockholders and may receive commissions from the purchasers of such shares for
whom they act as broker or agent (which discounts and commissions are not
anticipated to exceed those customary in the types of transactions involved). In
effecting sales, brokers or dealers engaged by the selling stockholders and/or
purchasers of the shares may arrange for other brokers or dealers to
participate. In addition, any of the shares covered by this prospectus which
qualify for sale pursuant to Rule 144 under the Securities Act may be sold under
Rule 144 rather than pursuant to this prospectus.
If any of the shares are sold in an underwritten offering, the shares will
be acquired by the underwriters for their own accounts and may be resold from
time to time in one or more transactions, including negotiated transactions, at
a fixed public offering price or prices at the time of the sale or at negotiated
prices. Any initial public offering price and any discounts or commissions
allowed or reallowed or paid to dealers may be changed from time to time.
Underwriters may sell shares to or through brokers or dealers, and such brokers
and dealers may receive compensation in the form of discounts, commissions or
commissions from the underwriters and may receive commissions from the
purchasers of such shares for whom they act as broker or agent (which discounts
and commissions are not anticipated to exceed those customary in the types of
transactions involved).
If necessary, a supplemental prospectus will be distributed that describes
the method of sale in greater detail, including the name or names of any dealers
or agents and any commissions and other terms constituting compensation from the
selling stockholders and any other required information.
The selling stockholders and any underwriter, broker or dealer who acts in
connection with the sale of the shares under this prospectus hereunder may be
deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, and any compensation received by them and any profit on any
resale of the shares as principals may be deemed to be underwriting discounts
and commissions under the Securities Act.
In order to comply with the securities laws of certain jurisdictions, the
shares offered hereby will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain jurisdictions
the shares offered hereby may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or an exemption from
registration or qualification is available and is complied with.
We have agreed to pay all expenses in connection with the registration and
sale of the shares offered hereby, other than discounts or commissions payable
to brokers or dealers, the fees and expenses of counsel or other advisors to the
selling stockholders, and other selling expenses, all of which will be paid by
the selling stockholders. We also have agreed to indemnify each selling
stockholder, each of its respective officers and directors and any person who
controls such selling
20
<PAGE>
stockholder, against certain liabilities and expenses arising out of or based
upon the information set forth or incorporated by reference in this prospectus,
and the registration statement of which this prospectus is a part, including
liabilities under the Securities Act.
LEGAL MATTERS
Certain legal matters will be passed upon for us by Skadden, Arps, Slate,
Meagher & Flom LLP, Los Angeles, California. Certain partners of Skadden, Arps
beneficially own an aggregate of less than 1% of our outstanding common stock
and are selling stockholders under this prospectus. The validity of the shares
will be passed on for us by Ballard Spahr Andrews & Ingersoll, LLP, Baltimore,
Maryland.
EXPERTS
Our consolidated balance sheets as of December 31, 1998 and 1997 and the
related consolidated statements of operations, stockholders' equity and cash
flows for the years ended December 31, 1998, 1997, and 1996, and the
consolidated financial statement schedule III, rental properties and accumulated
depreciation appearing in our Annual Report on Form 10-K dated March 15, 1999,
incorporated by reference in this registration statement, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
incorporated by reference in this registration statement and are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS.
The estimated expenses payable by the Company in connection with the
offering of the Shares, are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 6,531
Printing and Engraving Expenses................................... 15,000
Legal Fees and Expenses (other than Blue Sky)..................... 150,000
Accounting Fees and Expenses...................................... 25,000
Miscellaneous..................................................... 25,000
---------
Total............................................................. $ 221,531
---------
---------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Maryland law permits a Maryland corporation to include in its charter a
provision eliminating the liability of its directors and officers to the
corporation and its stockholders for money damages. However, a Maryland
corporation may not eliminate liability resulting from actual receipt of an
improper benefit or profit in money, property or services. Also, liability
resulting from active and deliberate dishonesty may not be eliminated if a final
judgment establishes that the dishonesty is material to the cause of action. Our
charter contains a provision which eliminates liability of directors and
officers to the maximum extent permitted by Maryland law. This provision does
not limit our right or that of our stockholders to obtain equitable relief, such
as an injunction or rescission.
Our charter authorizes us and our bylaws obligate us to indemnify the
directors and officers, whether serving the Corporation or at its request any
other entity, to the full extent required or permitted by the Maryland law,
including the advance of expenses under the procedures and to the full extent
permitted by law, and other employees and agents to such extent as authorized by
the board of directors or our bylaws and as may be permitted by law. According
to our charter, no amendment of the charter or repeal of any of its provisions
will limit or eliminate the right to indemnification provided in our charter
with respect to acts or omissions occurring prior to such amendment or repeal.
Our bylaws specify the procedures for indemnification and advancement of
expenses.
Unless a corporation's charter provides otherwise, Maryland law requires a
corporation 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 service in that capacity. Our charter does not alter this
requirement. Maryland law 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
those or other capacities.
II-1
<PAGE>
Maryland law does not permit a corporation to indemnify its present and
former directors and officers if it is established that:
- the act or omission of the director or officer was material to the matter
giving rise to the proceeding and was committed in bad faith or was the
result of active and deliberate dishonesty;
- the director or officer actually received an improper personal benefit in
money, property or services; or
- in the case of any criminal proceeding, the director or officer had
reasonable cause to believe that the act or omission was unlawful.
Under Maryland law, a Maryland corporation generally may not indemnify for
an adverse judgment in a suit by or in the right of the corporation. Also, a
Maryland corporation generally may not indemnify for a judgment of liability on
the basis that personal benefit was improperly received. In either of these
cases, a Maryland corporation may indemnify for expenses only if a court so
orders.
Maryland law permits a corporation to advance reasonable expenses to a
director or officer. First, however, the corporation must receive 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 corporation. The
corporation must also receive a written undertaking, either by the director or
officer 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 termination of any proceeding by conviction, or upon a plea of
nolo contendere or its equivalent, or an entry of any order of probation prior
to judgment, creates a rebuttable presumption that the director or officer did
not meet the requisite standard of conduct required for indemnification to be
permitted.
Additionally, pursuant to Maryland law and our charter, we have entered into
indemnification agreements with certain of our officers and directors.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1+ Specimen Certificate representing shares of Common Stock
5.1* Opinion of Ballard Spahr Andrews & Ingersoll, LLP
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding certain federal income tax matters
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (filed with Exhibit 8.1)
23.2* Consent of Ballard Spahr Andrews & Ingersoll, LLP (filed with Exhibit 5.1)
23.3 Consent of Ernst & Young LLP
24.1* Powers of Attorney (included on the signature page of the Registration Statement)
</TABLE>
- ------------------------
* Previously filed.
+ Incorporated by reference to the Registrant's Registration Statement on Form
S-11 (No. 333-23545), declared effective by the Commission on May 27, 1997.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) 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 of 1933;
(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
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% 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 (a)(1)(i) and (a)(1)(ii) shall 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 with or
furnished to the Commission by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, 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 Securities Exchange Act of
1934) 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 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 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on this Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Los Angeles, State of California, on the 14th day of
July, 1999.
<TABLE>
<S> <C> <C>
ALEXANDRIA REAL ESTATE EQUITIES, INC.
By: *
-----------------------------------------
Joel S. Marcus
CHIEF EXECUTIVE OFFICER
</TABLE>
Pursuant to the requirements of the Securities Act, this Amendment No. 1 to
the Registration Statement has been signed below by the following persons in the
capacities indicated on July 14, 1999.
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------ ---------------------------------------------------------------
<C> <S>
*
--------------------------------- Chairman of the Board of Directors
Jerry M. Sudarsky
*
--------------------------------- Chief Executive Officer (Principal Executive Officer) and
Joel S. Marcus Director
*
--------------------------------- President and Director
James H. Richardson
/s/ PETER J. NELSON Chief Financial Officer, Senior Vice
--------------------------------- President, Treasurer and Secretary
Peter J. Nelson (Principal Financial Officer)
*
--------------------------------- Director
Joseph Elmaleh
*
--------------------------------- Director
Richard B. Jennings
*
--------------------------------- Director
Viren Mehta
</TABLE>
S-1
<PAGE>
<TABLE>
<CAPTION>
SIGNATURES TITLE
- ------------------------------------------ ---------------------------------------------------------------
<C> <S>
*
--------------------------------- Director
David M. Petrone
*
--------------------------------- Director
Anthony M. Solomon
*
--------------------------------- Director
Alan G. Walton
</TABLE>
<TABLE>
<S> <C>
*By: /s/ PETER J. NELSON
-----------------------------
Peter J. Nelson
ATTORNEY-IN-FACT
</TABLE>
S-2
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
4.1+ Specimen Certificate representing shares of Common Stock
5.1* Opinion of Ballard Spahr Andrews & Ingersoll, LLP
8.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP regarding certain federal income tax matters
23.1 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (filed with Exhibit 8.1)
23.2* Consent of Ballard Spahr Andrews & Ingersoll, LLP (filed with Exhibit 5.1)
23.3 Consent of Ernst & Young LLP
24.1* Powers of Attorney (included on the signature page of the Registration Statement)
</TABLE>
- ------------------------
* Previously filed.
+ Incorporated by reference to the Registrant's Registration Statement on Form
S-11 (No. 333-23545), declared effective by the Commission on May 27, 1997.
<PAGE>
EXHIBIT 8.1
July 14, 1999
ALEXANDRIA REAL ESTATE EQUITIES, INC.
135 NORTH LOS ROBLES AVENUE
PASADENA, CALIFORNIA 91101
Re: Certain Federal Income Tax Considerations
Ladies and Gentlemen:
You have requested our opinion concerning certain Federal income tax
considerations in connection with the registration by Alexandria Real Estate
Equities, Inc., a Maryland corporation ("ARE," and together with the subsidiary
corporations, partnerships and limited liability companies in which ARE owns a
direct or indirect interest, the "Company"), of 743,589 shares of its common
stock, par value .01 per share, (the "Shares"), pursuant to the Registration
Statement on Form S-3 and all amendments thereto, filed by the Company with the
Securities Exchange Commission (the "SEC") (the "Registration Statement").(1)
In connection with this opinion we have reviewed certain documents
(collectively, the "Documents") that we have deemed necessary or appropriate as
a basis for our opinion, including, without limitation (i) organizational
documents of the entities comprising the Company, (ii) copies of certain leases,
management contracts and other agreements, (iii) a certificate executed by duly
appointed officers of ARE (the "Officer's Certificate") setting forth certain
factual representations, and (iv) certain schedules, memoranda, financial
information and other records.
In our examination, we have assumed the legal capacity of all natural
persons, the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies, and the
authenticity of the originals of such copies.
Our opinion is based on the correctness of the following specific
assumptions: (i) ARE will continue to be operated in accordance with the laws of
the State of Maryland in the manner described in its organizational documents;
(ii) there will be no changes in the applicable laws of the State of Maryland;
and (iii) each of the representations contained in the Officer's Certificate is
true, correct and complete. For purposes of our opinion, we have not made an
independent investigation of the facts set forth in the Officer's Certificate
and other Documents. No facts have come to our attention, however, that would
cause us to question the accuracy and completeness of such facts or documents in
a material way. We have, consequently, relied on ARE's representations that the
facts and information presented in the Officer's Certificate and other Documents
or otherwise furnished to us are true, correct, and complete.
In rendering our opinion, we have also considered and relied upon the Code,
the regulations promulgated thereunder by the Treasury Department (the
"Regulations"), administrative rulings and the other interpretations of the Code
and the Regulations by the courts and the Internal Revenue Service, all as they
exist at the date of this letter. With respect to the latter assumption, it
should be noted that statutes, regulations, judicial decisions, and
administrative interpretations are subject to change at any time and, in some
circumstances, with retroactive effect. A material change that is made after the
date hereof in any of the foregoing bases for our opinion could affect our
conclusions.
- ------------------------
(1) Unless otherwise specifically defined herein, all capitalized terms have
the meanings assigned to them in the Registration Statement, as amended to
date.
<PAGE>
ALEXANDRIA REAL ESTATE EQUITIES, INC.
July 14, 1999
Page 2
We express no opinion as to the laws of any jurisdiction other than the
Federal laws of the United States of America to the extent specifically referred
to herein.
Based on the foregoing, we are of the opinion that:
1. Commencing with ARE's taxable year ended December 31, 1996, ARE has been
organized and operated in conformity with the requirements for qualification as
a real estate investment trust ("REIT") under the Code, and its actual method of
operation through the date of this letter and its planned method of operation as
represented in the Officer's Certificate will continue to enable it to meet the
requirements for qualification and taxation as a REIT for the taxable year ended
December 31, 1999 and thereafter.
2. The discussion in the Prospectus under the heading "FEDERAL INCOME TAX
CONSIDERATIONS" is, in all material respects, a fair and accurate summary of the
Federal income tax consequences of the purchase, ownership, and disposition of
the Shares, subject to the qualifications set forth therein.
Qualification and taxation as a REIT will depend upon ARE's continuing
ability to meet, through actual annual operating results, certain requirements,
including requirements relating to distribution levels and diversity of stock
ownership, and the various qualification tests imposed under the Code, the
results of which will not be reviewed by us. Accordingly, no assurance can be
given that the actual results of ARE's operation for any one taxable year, if
inconsistent with ARE's projected results, will be able to satisfy or will
actually satisfy such requirements. We do not undertake to monitor whether the
Company will, in fact, through actual operating results, satisfy the various
qualification tests, and we express no opinion whether the Company will actually
satisfy these various qualification tests in the future.
Other than as expressly stated above, we express no opinion on any issue
relating to the Company or to any investment therein.
This opinion is intended for the exclusive use of the addressee hereto and,
except as expressly set forth herein, it may not be used, circulated, quoted or
relied upon for any other purpose without our prior written consent. This
opinion is expressed as of the date hereof, and we disclaim any undertaking to
advise you of any subsequent changes of the matters stated, represented, or
assumed herein or any subsequent changes in applicable law.
This opinion is intended for the exclusive use of the addressee hereto and
the shareholders of ARE and, except as expressly set forth herein, it may not be
used, circulated, quoted or relied upon for any other purpose without our prior
written consent. We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to Skadden, Arps, Slate, Meagher &
Flom LLP in the Registration Statement. In giving this consent, we do not
thereby admit that we are within the category of persons whose consent is
required under Section 7 of the Securities Act of 1933, as amended, or the rules
or regulations of the Securities and Exchange Commission thereunder. This
opinion is expressed as of the date hereof, and we disclaim any undertaking to
advise you of any subsequent changes of the matters stated, represented, or
assumed herein or any subsequent changes in applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher &
Flom LLP
<PAGE>
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement filed on Form S-3 (No. 333-81985)
and the related Prospectus of Alexandria Real Estate Equities, Inc. for the
registration of 743,589 shares of its common stock and to the incorporation by
reference therein of our report dated January 23, 1999, except for Note 15, as
to which the date is February 23, 1999, with respect to the consolidated
financial statements and schedules of Alexandria Real Estate Equities, Inc.
which are included in its Annual Report (Form 10-K) for the year ended December
31, 1998, filed with the Securities and Exchange Commission.
/S/ ERNST & YOUNG LLP
Los Angeles, California
July 14, 1999
